' SAJJAD ALI SHAH, J.---This appeal with leave of the Court calls in question judgment dated 18-11- 1990 of the High Court of Sindh, Karachi, whereby M.A. No, 35 of 1989 filed under section 64 of Employees' Social Security Ordinance of 1965 by appellant herein, is dismissed holding that orders passed by Institution and Labour Court impugned therein declaring liability of appellant for social secuirty constribution in respect of stipend of trainees/students, as legal and proper.
2. Breifly stated the relevant facts in the background giving rise to this appeal are that appellant claims to be a firm of Chartered Accountants registered as Member of the Institute of Chartered Accountants established under the Chartered Accountants Ordinance, 1961. Appellant gives practical training to a number of students preparing for examination of Chartered Accountancy, which is a compulsory requirement as contemplated under the abovementioned Ordinance and rules framed thereunder. Such students are paid token stipend of Rs, 400 per month to cover their pocket expenses. Appellant received letter of demand dated 5-3-1986 for payment of Rs,1,25,727.88 for the period. From August 1978 to December 1985 as social security contribution in respect of students receiving training in the establishment. Appellant objected to the contribution on the grounds that the students were not employees and there was no contract of service or apprenticeship with them. Payment of stipend was not covered by definition of wages as envisaged under Employees' Social Security Ordinance of 1965. Training imparted was to enable such students to obaint professional degrees of Chartered Accountants.
3. Appellant approached Commissioner, Sindh Employees' Social Security Institution under section 57 of the Provinicial Employees' Social Security Ordinance, 1965 (to be referred hereafter as Social Security Ordinance) who, vide his decision dated 5-2-1987 rejected objections and upheld demand of contribution. Appellant then filed appeal under section 59 of Social Security Oridnance which was dismissed by Ist Sindh Labour Court at Karachi, vide order dated 10-8-1989. Appellant then filed Misc. Appeal No, 35 of 1989 in the High Court of Sindh at Karachi, under section 64 of the Social Security Oridnance, which is dismissed vide judgment impugned before us as stated above.
4. Leave has been granted by this Court vide order dated 9-9-1991 for examination of contentions which are mentioned in the relevant paragraph reproduced as under:- "It was contended on behalf of the petitioner before us that students are not employees of the petitioners as firstly there is no privity of contract between them, secondly, remuneration paid to them does not fall within the category of wages and thirdly, these students are receiving training from appellant as contemplated under the Chartered Accountants Oridnance, 1961 and cannot be termed as `employees' as envisaged under section 1(8) of the West Pakistan Employees' Social Security Ordinance, 1965. It was further contended that reliance placed by the High Court on the case of Sindh Employees' Social Security Institute v. Consolidated Sugar Mills Ltd. (1989 SCM R 888) is not apt for the reason that the facts of the reported case are distinguishable and are not attracted to the facts of this case. Mr. Shahenshah Hussain submitted that so far there is no authoritative decision from the Supreme Court on his point which is point of first impression."
5. First contention is that students/trainees are not employees and there is no privity of contract between them and appellant. In this context, it would be pertinent to mention that provisions of Social Security Ordinance were applied to the appellant vide Notification dated 16-8-1978 and appellant became obligated to pay contribution on "wages" as defined in section 2(30) of the said Ordinance. It is submitted on behalf of the appellant that demand is made for contribution in respect of trainees, who are students of the Institute of Chartered Accountants of Pakistan as contemplated under section 2(gg) of Chartered Accountants Ordinance, 1961 and they are not employees of the appellant and there is no private of contract between them. Under the said abovesaid Ordinance "student" is defined to mean a person who is or has been trainee under a training contract with a member of the Institute entitled to train students under this Ordinance and the bye-laws made thereunder, and has not successfully completed the examination of the Institute. This is very much so and trainee is student undoubtedly for the purpose of Chartered Accountants Ordinance, 1961 but so far the relationship between such trainee/student and appellant is concerned that stands reflected in the contract executed between them. During the hearing we inquired from the learned counsel for the appellant whether appellant was receiving any benefit from the training of students in lieu of stipend paid to them and thereby efficiency of the company is increased, but there was no statisfactory answer. On our asking pro forma of training contract was produced which shows that the trainee/student binds himself to be trained by the principal to serve him for a term of 4 years. Further that during the term of service he would not practise as public accountant or engage in any other business or occupation. It is, therefore, clear that trainees are students of the Institute of the Chartered Accountants but are serving appellant's establishment as "apprentices" who are also called as "articled clerks". Appellant is not providing them training for nothing but derives benefits from such training which is done for the purposes of binding the trainee down for service in the establishment of the appellant for 4 years after qualifying for the job. Trainee also does the same kind of work which is normally done in the establishment, hence benefit accrues during service of trainee and efficiency is increased in turn whereof remuneration is paid which is called "stipend". It is mentioned in paragraph 3(c) of the Contract Form that the trainee shall keep the secrets. Of the principal and his clients and will not divulge the names and affairs of the employers. In the circumstances, argument raised on behalf of appellant has no substance that students are not employees and there is no privity of contract.
6. Second contention is that remuneration paid is low and does not fall within the category of "wages". "Wages" is defined in section 2 (30) of Social Security Ordinance and the definition is reproduced as under:- "Wages' means remuneration for service paid or payable in cash or in kind to a secured person, not being less than remuneration based on the minimum rates or wages declared under the Minimum Wages Ordinance, 1961 (XXXIX of 1961), without taking account of deductions for any purpose, under a contract of service or apprenticeship, expressed or implied, and shall be deemed to include any dearness allowance or other addition in respect of the cost of living and any payment by the employer to secured person in respect of any period of authorised leave, illegal lock-out or legal strike, but does not include--
(a) any payment for overtime; or
(b) any sum paid to the person employed to defray special expenses entitled by the nature of his employment; or
(c) any gratuity payable on discharge; or
(d) any sum paid as bonus by the employer."
7. Under section 2(a) of Apprenticeship Ordinance, 1962 "apprentice" is defined to mean person undergoing training through the system of apprenticeship. "Apprenticeship" is defined in clause (c) to mean a system of training in which an emlpoyer undertakes to employ person and to train him or or have him trained systematically in an apprenticeable trade for a period the duration of which had been fixed in advance and in the course of which the apprentice is bound to work in the employer's service. In clause (e) of above section "employer" is defined to mean any person who employs five or more persons in an apprenticeable trade in an undertaking, either directly or through another person, whether on behalf of himself or any other person, and includes any person who has ultimate control over, or is responsible to the owner thereof, for the affairs of an undertaking. If students are not notified as apprentices and this argument is to be ignored, then also there is sufficient other material to prove that they are employees.
8. Coming back to Social Security Ordinance definition of "wages" mentioned therein as stated above, is to be read in conjunction with definition of "employee" as is given in section 2(8) thereof, which is as under:- "'employee' means any person working, normally for at least twenty-four hours per week, for wages, in or in connection with the work of any industry, business, undertaking or establishment, under any contract of service or apprenticeship, whether written or oral, express or implied but does not include--
(a) persons in the service of the State, inlcuding members of the Armed Forces, Police and Railway servants;
(b) persons employed in any undertaking under the control of any Defence orgainsation or Railway administration;
(c) persons in the service of a local council, a municipal committee, a cantonment board or any other local authority;
(d) any person in the service of his father, mother, wife, son or daughter, or of her husband; (e)
(f) any person employed on wages execeding one thousand rupees per mensem;"
9. When definition of "wages" is read in juxtaposition with definition of "employee" as mentioned in the Social Security Ordinance, it appears that there is contract of service between trainees/students and appellant in this case and non-compliance of requirement of Minimum Wages Ordinance, 1961 would not take the case out of ambit of application of Social Security Ordinance for the reason that in this case the contract is between the student and appellant and student is not regular employee and cannot and does not put in same number of working hours and for that reason his remuneration is rather low in cash but is supplemented in kind by training.
Contention is not tenable that remuneration being less would take the case out of definition of "wages".
10. Next contention is that students receiving training under the provisions of Chartered Accountants Ordinance, 1961 cannot be treated as employees under section 2(8) of Social Security Ordinance. There is already discussion on this. Aspect of the matter in the foregoing paragraphs and for reasons stated above, we are of the view that trainees are students for the purposes of Chartered Accountants Ordinance, 1961, but they are employees of appellant because there is a contract executed between them, terms and conditions of which clearly indicate that by giving training appellant is also benefited as assistance is rendered in the same routine work and further after completion of training students are supposed to serve the appellant for specified term of years.
11. It was submitted on behalf of the appellant that High Court in the impugned judgment should not have relied upon the case of Sindh Employees' Social Security Institution v. Consolidation Sugar Mills Limited 1989 SCM R 888 for the reason that it is not relevant and does not support the stand of respondent. Assertion so made is not correct as reading of the judgment clearly shows that in that case section 20 of the Social Security Ordinance has been constructed in the light of definitions of "employer" and "employee" contained in the same Ordinance and it is held that owner respondent is obliged to contribute to the social security fund for employees engaged through the contractor in the circumstances. Relevant paragraph from the report which supports the stand of the respondent in this case is reproduced as under:-- "Coming to the definition of employee, the requirements are that (i) he must normally be working for at least twenty-four hours per week; (ii) he must be working for wages; (iii) he must be working in connection with the work of the industry, business, undertaking or establishment; (iv) he must be working under a contract of service or apprenticeship. The exclusions are for the present not relevant. What the High Court considered as deficient was that 'neither the amount or wages nor the terms and conditions on which these workers will be employed by the contractors is spelt out from these agreements'. These deficiencies were not the requirements of the defmition. It was not the finding that no wages were at all paid by the contractor or that they were not employed on contract of service. All the terms of the contract have not to be established once the contractual relationship is established. There appears to be a mistaken impression that the contract of employment has to be between the owner and the employee. The definitions of employer and employee do not contain or exhibit any such constraint or limitation."
12. In the instant case students are taken in for training after execution of contract and remuneration is paid to the students. Terms and conditions of the contract clearly show relationship of employer and employees between the G parties. Contention that trainees are students and receive training and payment made to them is stipend or pocket money does not detract from actuality of valid contract of service between the parties with terms and conditions and undertaking of regular service for 4 years by the student/trainee in favour of appellant after qualifying as Chartered Accountant. For the facts and reasons mentioned above, we find no flaw or infirmity in the impugned judgment which is hereby upheld and the appeal having no merits, is dismissed.