NAIMUDDIN, J.---This appeal, by leave, is directed against the judgment of the High Court of Sindh dated 23-12-1987 passed in Misc. Appeal No.3 of 1987 in the following circumstances:
2. The appellants were registered with Sind Employees' Social Security Institution, the respondents, for the purpose of making contribution under section 20 of the Sind Employees' Social Security Ordinance, 1965 (hereafter referred to as "the Ordinance") since 1979.
3. By a letter dated 31-3-1983 the appellants were informed that a team of officers of the Institution is deputed to check the relevant record of the appellants relating to the payment of social security contribution and its correctness on 16-4-1983. Accordingly, the appellants were requested to produce the following record on the said date to the officers on their visit: ---(i) Ledgers,
(ii) Cash Books,
(iii) Wages Sheets,
(iv) Payment Vouchers,
(v) Contribution Schedules, and
(vi) any other relevant, record." .
4. In reply to the notice the appellants stated that their office remains closed on Fridays and Saturdays; and 16th April, 1983 being a Saturday, its office will remain closed and requested that any other day, excepting Saturday, may be fixed for the inspection of the record. On the copy of the letter produced by the respondents, we find that there is an endorsement that the officers will visit on 19-4-1983. Thereafter, in May, 1983 the officers of the respondents checked the relevant record of the appellants relating to the payment made by them and by a letter dated 14-6-1983, informed the appellant that as a result of the checking of appellants' record by the team of officers for the year 1982 an under payment of Rs.55,455.21, as per details attached was detected for the year. The appellants were further informed that for the period of 1978 to 1981 a provisional assessment on the basis of findings for 1982 was made and it came to Rs.2,77,276.05. Therefore, the respondents requested the appellants to deposit the said amount within 7 days of the receipt of the letter. The appellants were further informed that if they had any objection as to the demand representation within the same 7 days be made to the Director of the respondents failing which, the appellants were informed, the dues shall stand confirmed and shall be recovered as arrears of Land Revenue under Land Revenue Act. The respondents alongvA7th the letter dated 14-6--1983 sent details how they had arrived at the figure of short contribution for the year 1982 and the total amount due from 1978 to 1982 on that basis.
5. The appellants by the letter dated 22-6-1983 took the stand that the inspection made by the team of officers deputed by the Directorate of the Institution was improper, wrong and based on assumptions. No relevant record such as Schedules, Wage Sheets and Attendance Registers/Cards were checked by the team. They only depended upon their General Ledger which was not entirely understandable to them. Therefore, the following objections were raised by the appellants:
(a) No relevant record of the Year 1982 was checked.
(b) The hourly-rated workers were paid on the fortnightly basis as sue their monthly salary is based on two fortnights for the purpose of contribution, but the inspecting team only checked one fortnight and the amount of another fortnight was based on assumption. This is completely wrong and is not acceptable as per settled principles.
(c) The final payments to workers consist of gratuity, fund, leave encashment, notice pay etc. And is recorded in our account as wages and salaries but the inspecting team have ignored this fact and such amounts have not been exempted for the purpose of contribution to SESSI as the same crosses the level of Rs.1,000 per worker.
(d) The payment of bonus was made alongwith the monthly/fortnightly wages, as such the wages of individual worker crosses the level of Rs.1,000. The inspecting team have also, failed to exempt the wages of the concerned month.
(e) The Canteen wages of Rs.11,760 have wrongly been mentioned for payment of contribution as we have already paid the contribution for this amount and further demand of payment amounts to double payment.
(f) On the basis of improper inspection of the record of the year 1982, provisional assessment for the year 1978 to 1981 is not understandable to us as previously inspections were made by your teams and nothing was advised nor any discrepancy was pointed to us. Moreover, we were registered with SESSI City Directorate in October, 1979 as such your demand for payment of contribution w.e.f 1978 is baseless. Accordingly as per settled principles of Law and Equity the demand of Rs.2,77,276.05 is without any valid reason, base and proper justification."
And requested the respondents to withdraw the demand for payment of arrears.
6. The respondents, by their letter dated 30-6-1983, replied to all the objections. However, they admitted that it was a mistake to make the demand from 1978 and accordingly reduced the demand and claimed the arrears from 1979 to 1982, which came to Rs.2,21,820.84.
7. This led the appellants to file an appeal before the Social Security Court, but the same was dismissed on the question of jurisdiction as according to the Social Security Court, no dispute has been raised by the appellants as contemplated by section 57 of the Ordinance.
8. Consequently, the appellants filed an appeal under section 64 of the Ordinance in the High Court of Sindh in which the judgment impugned in this appeal was passed, whereby the High Court dismissed the appeal.
9. Before the High Court it was urged on behalf of the appellant that although the appellants have maintained a complete record pertaining to their liability for the year 1982, but the respondents have failed to make their assessm ent in accordance with the method provided in section 20 of the Ordinance as only their ledgers and cash books had been checked without going into other details.
So far as the assessm ent of liability in respect of period from 1979 to 1981 is concerned, the counsel for the appellants had contended that since admittedly the liability was assessed on the basis of the record of 1982 the same is equally unjustified as liability of each year is to be assessed individually and the liability of one year could not be made basis for assessment of the liability for another year. It was also argued on behalf of the appellants that there was, no justification for the respondents' officials to proceed on the basis of improper record when the appellants had supplied the required information and relevant documents to them.
10. It was argued on behalf of the appellants before the High Court that the assessment has been made on the basis of the record which failed to provide necessary details to the officials. This contention was rejected by the High Court, observing as follows:--- "I have not been impressed by Mr. Rahimtoola's arguments in this respect. As has been already pointed out above, section 22(1) of the Ordinance gives very wide powers to the officials of the respondents to check the records, books and other relevant documents for the purpose of ascertaining the employer's liability in respect of the contributions. Section 22 clearly places the onus on the employer to produce the relevant record before the officials of the Social Security Institution. If in the opinion of the officials such record fails to provide proper assistance to the officials to asserting the exact liability of the employer, then section 22(3) empowers the institution to assess the contribution on the basis of any evidence which may be found satisfactory in this respect by the officials of the institution. The correspondence exchanged between the parties clearly indicates, that in spite of the opportunity afforded to the appellants they failed to produce the relevant record before the officials of the respondents which according to the former's claim could only provide proper assistance in the matter. In that case, the latter, in my opinion, were empowered to make the assessm ent on the basis of the record produced before and checked by their officials--------
11. As regards the second contention that the liability assessed by the respondents for the year 1982 could not be made the basis for the assessment of the liability for the period from 1979 to 1981, the High Court observed that it had force but further observed that under section 22(3) of the Ordinance the respondents possess wide powers to proceed on the basis of any evidence which may be found satisfactory by them, if the employer fails to produce before them the relevant record or provide sufficient assistance as required by section 22(1) of the Ordinance to assertain actual liability, and accordingly rejected this contention also.
12. We have heard Mr. J. Rahimtoola, learned counsel for the appellants and Mr. S.A. Sarwana, learned counsel for the respondents.
13. Mr. Rahimtoola raised the same contentions as were raised before the learned Single Judge in the High Court.
14. So far as the assessm ent and demand for the year 1982 is concerned, the respondents, alongwith their letter dated 14-6-1983, had submitted detailed statement showing the amount of wages paid at Rs.44,41,268.00, and the amount of exemption, including daily wages bonus at Rs.22,44,065.00. It also shows the difference between total wages paid and the total amount exempted and also amount of contribution required to be paid by the appellants and the actual amount paid on account thereof, showing the Contribution difference at Rs.36,970.21 and the increase at the rate of 50 per cent for one year at Rs.18,485.00, thus claiming Rs.55,455.21 for the year 1982., Now, it was for the appellants to object and prove that any amount mentioned in the statement was incorrect or the amount of Contribution claimed was not justified. But they failed to do so before the Social Court or in the appeal before the High Court or even before us. And since this assessm ent was made on inspection of the ledgers and books of accounts, it was for the appellants to object to any amount and prove that the same was incorrectly mentioned or claimed in the statement of account. Therefore, the demand for the year 1982 was according to law and unexceptionable.
15. As regards the contention that the assessment for the years 1979 to 1981 was based on the figures of 1982 which basis was not correct, it may be stated that such an assessment could be made only if a demand for the production and inspection of ledgers, cash books etc. For those years was specifically made and not met. The letter dated 31-3-1983 does not specify the years for which the ledgers, cash books and other documents were required to be produced for inspection of the officials of the respondents. It is not the case of the respondents that their officials specifically demanded the aforesaid books and the appellants failed to produce the same.
Therefore, no foundation was laid for assessment on the basis of the figures for the assessment year 1982 in accordance with the provisions of section 22(3) of the Ordinance, which reads as follows: "22(3) If any employer fails to maintain records or to submit returns as required by regulations, or otherwise fails to comply with the provisions of subsection (1) and thereby makes it difficult to ascertain the identity of persons required to be secured or the amount of contribution payable, the contribution shall be assessed on the basis of such evidence as the Institution may find satisfactory for this purpose."
It is, however, admitted fact that the appellants had filed the returns for each year alongwith pay roll or Contribution Schedule. If the respondents' officials had inspected the relevant record and found any discrepancy, they should have pointed out the same to the appellants as they did for the year 1982. If the appellants had not shown the record for the years 1979 to 1981, the respondents should have stated so. Indeed, we find that there was no specific notice or demand for production of the relevant record for those years. Therefore, therewas no basis to create excess demand for the years 1979 to 1981 on the basis of findings for the year 1982 because for each year the number of employees might be different and the amount of wages paid might also vary. Therefore, the figures of one year could not be made basis for assessment of liabilities for another year, specially when there is no grievance that any demand for production of ledgers, cash books and other relevant documents for inspection was made and the appellants had failed to produce or show the same. There is no doubt that the stand of the appellants was that they had produced the wages schedules/cards '--and contri-schedules and other documents required by the respondents and that the ledgers, cash books and payment vouchers were not necessary.
Nonetheless, since the respondents had not made any specific demand for the production of the aforesaid documents for inspection for the years from 1979 to 1981, therefore the respondents could not resort to the powers contained in section 22(3) of the Ordinance.
15-A. We may; however, add that under section 22 of the Ordinance any official of the Institution, duly authorised by a certificate in a form specified in the Regulations, is entitled for the purpose of inquiring into the correctness of any of the particulars stated in the records or returns referred to in section 21, inter alia, to ask to produce and allow him to examine such account books and other documents relating to the employment of persons and payment of wages and to furnish him such information as may be considered necessary. Therefore, the 'respondents' officials were entitled to inspect and examine any document or books in which the entries made in the Pay Roll or Contribution Schedule are reflected. In this connection, we think that cash books and ledgers of the appellants could be relevant as it is on examination of these books that the entries made in the pay roll or the contribution schedule could be directly or indirectly checked and verified. We may, however, observe that' the respondents' officials, in exercise of powers under section 22 of the Ordinance, are not entitled to see those books which have no relevancy to the employment of persons or the wages paid to the employees.
16. For all these reasons, we partly allow this appeal, upholding the assessment and demand for the year 1982 but set aside the assessment and demand for the years 1979 to 1981.
It will, however be open to the respondents to serve fresh specific notice on the appellants, requiring them to produce any relevant documents and books of account relating to the three years and inspect them and verify the return and to proceed according to law.
17. In the circumstances of the case, we leave the parties to bear their own costs.