1. Syed HAIDER ALI PIRZADA, J.---This appeal is directed against the decision dated 5-10-1987 passed by the Social Security Court No, 11, Karachi, whereby it held that the respondents are not liable to pay Rs, 30,235,75 as social security contribution to the appellants.
2. The facts leading to the filing of the above appeal are that by Gazette Notification dated October 15, 1968, certain provisions of the West Pakistan Employees' Social Security Ordinance, 1965 (hereinafter referred to as the Ordinance) were made applicable to the employer and employees of Messrs Premier Tobacco Company Ltd. By gazette Notification dated November 28, 1968, certain provisions of the Ordinance were made applicable to the employer and employees of M/s. Sindh Tobacco Company Ltd. On June 28, 1969 the name of Premier Tobacco Company Ltd. was changed to Premier Tobacco Industries Ltd. The establishment of the respondent is engaged, inter alia, in the business including and/or manufacture of cigarettes and goods ancilliary thereto. According to the provisions of the Ordinance and the Rules and Regulations made there under, the employer of a notified establishment is required to pay to the appellants contribution at the rate of seven per cent of the wages paid to any employee working in or in connection with the work of the industry, business, undertaking of the notified establishment under any contract of service, whether written or oral, express or implied provided that such wages are not (presently) in excess of Rs, 60 per day.
3. Consequently, the respondents started paying contributions on the wages of their employees. In 1984, the appellants on checking the records of the respondents found that the respondents were not paying contribution with the business, industry and/or undertaking of the respondents establishment. The excuse given for the same was that these persons were engaged through the contractors for the purpose of shifting and stacking of tobacco and cigarettes. Prior to engaging the independent contractors, the employer of the establishment was paying social security contributions in respect of the same workers engaged in the loading, shifting and stacking of tobacco and cigarettes. The Directorate of the appellants Kotri called upon the respondents to pay the arrears of social security contribution in respect of persons employed/engaged through contractors who were working in or in connection with the work of the respondent establishment.
4. The respondents raised a dispute under section 57 of the Ordinance before the Commissioner of the Institution. The Commissioner by his order dated 29-7-1986 held that contribution in respect of the workers engaged through the contractors was payable by the employer of the respondent's establishment and upheld the demand raised by the Director, Kotri Directorate. The respondents went in appeal before the Social Security Court No,11, Karachi. The Social Security Court allowed the appeal filed by the respondents vide decision dated 5-10-1987.
5. The appellants being aggrieved against the decision dated 5-10-1987 of the Social Security Court No, 11, Karachi, have filed the present appeal. I have heard the learned counsel for the parties and perused the R & P of the case.
6. Mr. S.A. Sarwana the learned counsel for the appellants urged before me that the employer of the respondents establishment is liable to pay social security contribution for employees engaged through contractors.
7. On the other hand Mr. Mohammad Humayoon the learned counsel for the respondent raised the following submissions:--
1. That the establishment of Messrs Premier Tobacco Industries Ltd. was not the same establishment which was notified in the Gazette dated 1510-1968 Or 28-11-1968.
2. The Respondent establishment is not liable to pay the contribution to the appellants. The learned counsel supported the decision of the Social Security Court.
8. Reverting to the first submission of Mr.Mohammad Humayoon that the establishment of Messrs.
9. Premier Tobacco Industries was not the same establishment which was notified in the gazette dated 15-10-1968 and 28-11-1968, Mr. Sarwana produced photostat copy of the Gazette of West Pakistan containing notification No, Lab-III-SSS-11-1/67 dated 15-10-1968 which reads as under:-- "In exercise of the powers conferred by subsection (3) of section 1 of the West Pakistan Employees'
10. Social Security Ordinance, 1965 (West Pakistan Ordinance No, X of 1965), the Governor of West Pakistan is pleased to apply, with effect from the first day of November, 1968, the said Ordinance to the areas mentioned in column 2 of the Schedule annexed hereto and to the employers and the employees of establishments mentioned against each of such areas in column 3 thereof, and to direct that the employees of such establishment shall be entitled to the benefits as provided in sections 35, 36, 37, 38, 39, 40, 41, 42, 43, 44 and 45 of the said Ordinance.
11. S.No. Name of Area Name of Establishment
1. Karachi District 1..............
12. To 81.............
82. Premier Tobacco Co., D/28, Manghopir Road, The notification No, Lab-III-SSS-11-1/67 dated 28-11-1968 was published in the Gazette of West Pakistan extraordinary dated 28-11-1968. A perusal of the photostat copy would show that name of Sindh Tobacco Company is appearing at serial No,53.
13. In Pakistan Shipping Corporation, Karachi v. Sindh Employee's Social Security Institution, Karachi (1981 PLC 9 (Karachi High Court)), this question was considered by Mr. Zafar Hussain Mirza, J. He, after giving cogent reasons, came to the conclusion as under:-- "The position as regards the Muhammadi Engineering Works Limited is more clear than the other establishment. In this case the entire undertaking has not been transferred to the appellant- Corporation but only the shareholding of the Company and its Management has been transferred.
14. The existence of the company as a Corporate body continues as owner of the establishment. It was however, contended that where the Management of a managed establishment is transferred to the Corporation, by virtue of section 22 of the Act of 1974 every employee of such establishment becomes an employee of the Corporation and therefore unless the Corporation itself is notified under section 1(3) of the Ordinance, its provisions will not be applicable to such a new employees of the Corporation for the reason that such employees cease to be the employees of the previous establishment and become the employees of the Corporation. The argument has no merit. As long as the employees continue to work in or in connection with the work of the establishment, they will continue to be employees within the meaning of section 20 of the Ordinance , irrespective of the question as to who is their employer for the time being. As already pointed out the Company owned the business and its establishment still subsists notwithstanding the transfer of its shareholding and Management to the Corporation, and therefore it is clear that the establishment as an organization continues to be in existence."
15. The petitioner filed petition for leave to appeal which was granted but subsequently it was recalled as the petitioner failed to comply with the leave granting order.
16. In Al-Muhammadi Tiles Industry v. Sindh Employees Social Security Institution (Civil Appeal No, 40 of 1981) decided on 16-1-1989, the facts were that a firm M/s. Muhammadi Tiles Industry and Concrete Works was constituted in the year 1950 with Abdul Rasool and Sharif Bhai Abdullah as its partners.
17. In the year 1965, one Abbas joined as their partner. In 1970 Sharif Bahi retired. Thereafter Abdul Rasool Muhammad Abbas continued as partners of the firm. A Gazette notification issued on the 18th June, 1970, whereby at serial No, 106 Muhammadi Tiles and Concrete Works was notified under subsection (3) of section 1 of the Ordinance and the provisions were applied to it. By deed of dissolution/retirement executed on 26-7-1974 the partnership was dissolved as from 30-6-1974 and the business of the partnership discontinued as from that date. The Registrar of Firms was informed accordingly on 29-3-1975 and so was the Director, Sindh Employee's Social Security Institution on 23-10-1974. However, on 10-12-1974 a new partnership came into existence. The name and style of the firm was Al-Muhammadi Tiles Industry. The partnership was at will, a notice was served on the appellants by the Director of Institution on 17-9-1976 calling upon the appellants to deposit a sum of Rs, 6,300 alongwith monthwise contribution within three days of the receipt of the notice failing which it was to be recovered as arrears of land revenue. The appellants filed an appeal under section 79 of the Ordinance. Its case was that a new partnership had come into existence which was an altogether different legal entity. It had not been notified under subsection
(3) of section 1 of the Ordinance and as such was not liable under section 20 or any other provision of the Ordinance to make the contribution which it was called upon to make. The Social Security Court upheld the contention of the appellants. An appeal was filed by the Institution/respondent under section 64 of the Ordinance in this Court which was allowed. The appellants filed petition for leave to appeal before the Supreme Court which was granted. The Supreme Court dismissed the appeal observing as under:-- "The cases of M/s. Rivoli Theatres versus Commissioner of Income-tax and Akhtar Ali and another v.
18. Umatul Islam, are not very relevant in the context because there cases dealt with either the Partnership Act or the Income-tax Act, or both, where the legal identity of the Firm had to be determined and not the identity of the establishment as such. The employers and the employees may change, their identities may differ from time to time but as long as the establishment remained the same, the liability under the Ordinance, once the requisite notification had appeared, could not be avoided either by discontinuing the services of the employees or by changing the number or the identity of the employer. The decision of the High Court has taken correct view of the law on the facts of the case."
19. I am inclined to hold that the dictum of their lordships in the above case that as long as the employees continue to work in or in connection with the work of the establishment, they will continue to be employees within the meaning of section 20 of the Ordinance irrespective of the question as to who is their employer for the time being, is applicable in this case. It, therefore, follows that the provisions of the Ordinance will continue to apply to the establishment of the respondent. In view of the above matter the objection/submission is over-ruled.
20. Reverting to the contention of Mr. Sarwana that the employer of the respondent is liable to pay contribution for employees engaged through contractor. This question was considered by me in the un-reported judgment dated 26-41989 (MA. 50 of 1986 Sindh Employees' Social Security Institution v. Burshane Pakistan Limited and M.A. 19 of 1988, Sindh Employees' Social Security Institution v. M/s. Central Cotton Mills Ltd.) in which I have come to the conclusion after giving cogent reasons which are fully supported by the decision of Supreme Court in Civil Appeal No, 49 of 1988 of Social Security Institution v. Consolidated Sugar Mills, discussed by me in the said judgment that the employer of the respondent is liable to pay contribution for employees engaged for establishment through the contractors. I hold that the employer of the respondent establishment is liable to pay contribution on the wages of persons engaged by him directly or through contractors at such rate and subject to such contributions as may be prescribed.
21. I would accept this appeal and set aside the decision dated 5-10-1987 of the Social Security Court and restore the order of the Commissioner. In the circumstances of the case, the parties shall bear their own costs.