1. ' This miscellaneous appeal under section 64 of the Social Security Ordinance, 1965, is directed against the order dated 29-3-1988 passed by the Second Special Security Court, Karachi whereby he accepted the appeal filed by the respondent and directed that Cost of Living Allowance from 1- 7-1981 till 29-6-1984 Cost of Living Allowance of Rs,40 be refunded to the respondent.
2. ' The facts leading to the filing of the above appeal are that the Government had allowed Cost of Living Allowance of Rs,40 per month to be paid to each worker employed in industrial/commercial establishment. This was allowed with effect from 1-7-1981. This Cost of Living Allowance was not to be treated as part of wages on which Social Security contributions is payable. The respondent voluntarily started and continued to pay contributions to the institution right from 1-7-1981. The respondent did not inform the institution that it was paying contribution on Cost of Living Allowance of Rs,40 per month. The appellant's Director for the Kotri Directorate wrote a letter dated 6-12-1983 to the respondent wherein he mistakenly stated that Social Security contribution is also payable on the Cost of Living Allowance of Rs,40 per month. By letter dated 30-1-1984 the respondent sought a refund of the entire contribution that it had made since 1-7-1981 on the Cost of Living AL Iowa The appellant refunded the contribution paid by the respondent from 30th December, 1983 to April, 1984 after deducting the amount paid as cash benefits to the respondents' employees in accordance with section 25 of the Ordinance. The amount refunded was Rs,9,737.52.Commissioner by order dated 17-9-1987, treated the respondents' letter dated 301-1984 as an application under section 25 of the Ordinance and ordered a further refund for the period from 30-7-1983 to 30-1-1984.
3. ' The respondent being aggrieved filed appeal under section 59 of the Ordinance before the Social Security Court No, 2, Karachi. The Social Security Court No, 2, by his judgment dated 29-3-1988 allowed the appeal for the reasons given in the said judgment.
4. ' The appellant above named, being aggrieved by the judgment dated 29-31988 of the Social Security Court, has preferred this Miscellaneous on the ground mentioned in the memo. Of appeal.
5. ' I have heard the learned counsel for the parties. I have perused the record. It is not in dispute that the Government of Pakistan had allowed Cost of Living Allowance of Rs,40 per month to be paid to each worker employed in the Industrial/Commercial establishments w,e,f, 1-7-1981. The respondent paid the said allowance to the workers in their employment. This Cost of Living did not form part of wages for the purpose of social security contribution. The respondent started and continued to pay contribution to the institution right from 1-7-1981. The Director of Institution, Kotri, by his letter dated 6-12-1983 asked the respondent to pay contribution on Costs of Living Allowance although the said amount was not treated to be part of the wages. The respondent by their letter dated 30-1-1984 called upon the Director of the Institution either to refund the amount or to adjust the same against the future contribution payable by the respondent. This letter was followed by a letter dated 23-6- 1984. The Director of the Institution by his letter dated 24-6-1984 informed the respondent that Social Security Contribution was not payable on the amount or additional Cost of Living Allowance of Rs,40 allowed from 1-7-1981. The respondent by their letter dated 18/26-7-1984 called upon the institution to refund contribution on Additional Cost of Living Allowance paid to the institution from 1-7-1981. The Director of the Institution by his letter dated 30-7-1984 informed the respondent that Social Security Contribution was not demanded, on Cost of Living Allownace by the Institution and the same was paid by the respondent to the Institution and the same was paid by the respondent of their own accord. However, the Director of the Institution allowed refund on contribution for the period of December, 1983 to April, 1984 after deducting the amount of cash benefits extended to the workers on the said amount of COLA. The case of the respondent was that a sum of Rs,69,375.79 was paid towards social security contribution on additional Cost of Living Allowance and only a sum of Rs,9,737.52 was only refunded and refused to refund the remaining amount of Rs,59,638.27.
6. ' The respondent lodged a complaint under section 57 of the Social Security Ordinance, 1965 before the Commissioner. By an order dated 17-9-1987 the appellant was ordered to refund contribution paid by the respondent on COLA for the period from 30-7-1983 to 30-1-1984.
7. ' The respondent being aggrieved filed an appeal under section 59 of the Social Security Ordinance, 1965 before the Social Security Court No, 11, Karachi, which was allowed as stated in the earlier part of the judgment.
8. ' Section 20 of the Social Security Ordinance, 1965 (hereinafter referred to as the Ordinance) casts a duty on the employer, shall in respect of every employee, whether employed directly or through any other person pay to the Institution a contribution at such terms at such rate and subject to such contribution as may be prescribed.
9. ' There is no dispute that the respondent had paid contribution on Cost of Living Allowance of Rs,40 commencing from 1-7-1981.
10. ' This position, indeed, was accepted by the Institution when they ordered refund for the period from 30-7-1983 to 30-4-1984, such refund could only have been ordered on the footing that contribution on Cost of Living Allowance had been received without the authority of law and therefore without jurisdiction.
11. Proviso of section 25 of the Ordinance on which the appellant relied in its turn, provides that no contribution or excess amount on any contribution shall be refunded unless an application for such refund is made within six months of the date on which the contribution was paid. Section 25 of the Ordinance clearly applied only to cases where any contribution paid to the Institution under the erroneous belief that it was payable under the provisions of the Ordinance and shall be entitled to the refund of the excess amount of the contribution where such contribution had been paid at higher rate than the rate prescribed, and where refund application had to be made within six months from the date of such contribution.
12. ' The present case was one where such contribution had been paid on the Cost of Living Allowance of Rs,40. That being the position, the proviso to section 25 of the Ordinance did apply and could have been relied upon by the Institution for refusing to refund the contribution on Cost of Living Allowance of Rs,40.
13. ' In the U.S.A. It is generally held that in the absence of a statute to the country, taxes, voluntarily paid under a mistake of law with full knowledge of facts cannot be recovered back while taxes paid under a mistake of fact may ordinarily be recovered hack (See Corpus Juris Secundum Vol. 84, p.
14. 637).
15. ' Mr. Sarwana contended that the application for refund was filed after gross delay and the contribution were voluntarily made. The application for refund has been filed after the expiry of the prescribed period of six months. It was on or about 24-4-1984 that the respondent discovered their mistake.
16. The juristic basis of the obligation under section 25 is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or restitution. The object with which section 25 is enacted is on one hand to prevent unjust enrichment of person to whom any contribution is paid and on the other to restore money to its real or proper owner. No one can be allowed to enrich himself unjustly at the cost or expense of another. And it is with this object in view that section 25 is enacted. In Fibrosa v. Fair Brain etc. Ltd. (1943) AC 32: (1942) 2 A.E.R. 122, Lord Wright has stated the legal position as follows:-- ' any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep. Such remedies in English Law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contractor restitution."
17. ' In Nelson v. Larholt (1948) I.K.B. 339: (1947) 2 A.E.R. 751, Lord Denning has observed as follows:-- "It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the rights, not on whether they can be fitted into a particular framework. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the Court orders restitution if the justice of the case so requires."
18. In my opinion, therefore, the person claiming repayment or refund must establish that justice of the case requires such repayment or refund of C contribution paid to the Institution.
19. ' In the present case, the respondent has established that the contribution was not payable on Cost of Living Allowance of Rs,40 from 1-7-1981 till 29-6-1984. The Institution had refunded contribution from 30-7-1983 to 30-4-1984.
20. ' Mr. Sarvvana contended that the contribution was voluntarily made by the respondent, knowing full well the correct legal position, is equally unfounded. The amounts were contributed by the respondents but they cannot be said to be voluntary payments by a person" who is under no misapprehension as to his legal rights. Till 23-6-1984 both the respondent and the appellant were under a misapprehension as to what the correct legal position was.
21. ' The respondent claimed refund in the application with respect to the period 1-7-1981. The Commissioner had adjudged that the respondent was entitled to refund from 30-7-1983 to 30-1- 1984 deducting the amount of cash benefits extended to the workers.
22. The proviso has prescribed a period of six months of the date on which the contribution was made.
23. The refund can be claimed within the period prescribed by the proviso to section 25 of the Ordinance. The refund claimed prior to six months of the date on which the contribution was made, the institution would hold that the owner guilty of delay and would not grant his petition for refund.
24. ' I am, therefore, unable to agree with the view taken by the Presiding Officer of the Second Special Security Court that the respondent was entitled to refund from 1-7-1981.
25. ' The result, therefore, is that the appeal is allowed. The decision of the learned Presiding Officer is set aside and the order of the Commissioner is restored. In the circumstances of the case the parties shall bear their own costs.