M. HUSSAIN ADIL KHATRI, J.-In this appeal, filed under Sec. 64 of the Provincial Employees Social Security Ordinance (X of 1965) (hereinafter referred to as the "said Ordinance"), the order passed by the Presiding Officer, 1st Sindh Labour Court, Karachi, has been challenged.
2. The facts giving rise to this appeal are that the provisions of the said Ordinance were made applicable to the respondent under Notification dated 8.7.1985. The appellant continued to function as manufacturer of garments till 30th June 1987 and paid the contribution upto the aforesaid date.
The respondent then closed the business of manufacturing garments and rented out the ground floor of the factory to M/s Aishama (Pvt) Ltd and first floor thereof to Suria Garments (Pvt) Ltd. The respondent accordingly vide its letter dated 16.8.1987, brought the aforesaid fact of closure of the factory to appellant's Director Landhi. Nonetheless the Director of the appellant by his letter dated 29.12.1988, raised a demand of Rs. 81.004.02 towards arrears of contribution towards social security fund.
3. The aforesaid demand was challenged by way of application under section 57 of the said Ordinance before the Commissioner, Sindh Employees Social Security Institution, who, by his order dated 4.12.1989, maintained the demand. The above order was challenged in appeal under section 59 of the said Ordinance before the 1st Sindh Labour Court, Karachi, who reached the conclusion that the respondent having closed the business with effect from 1.7.1987, was not liable to pay the aforesaid contribution.
4. I have heard the learned counsel Mr. Khalid Habibullah for the appellant and Mr. Aga Faquir Muhammad for the respondent.
5. The learned advocate for the appellant has contended that the respondent had not closed his business but had only changed the name of his establishment from M/s Aishama International to Aishama (Pvt) Ltd and it is established from the fact that previously the aforesaid establishment was owned by two brothers, namely, Idrees Patel and Ashraf Patel and after change of the name, the father and mother of the said owners were also joined as partners and the same business of manufacturing the garments is being carried on at the same place under the new name and, therefore, the respondent cannot disown the liability. The learned counsel has relied on an unreported judgement of the Hon'ble Supreme Court in Civil Appeal No. K-40 of 1981 (Al- Muhammadi Tiles Industry Vs. Sind Employees Social Security Institution) and on the cases of Mac Donald Layton constain Ltd, west wharf^karachi Vs. Punjab employees social security institution.
Lahore and 2 others (PLD 1991 SC 1055), Kohinoor Chemical Co. Ltd and another Vs. Sind Employees Social Security Institution and another (PLD 1977 SC 197) and the president-the referring authority Vs. Mr. Justice Shaukat Ali (PLD 1971 SC 585).
6. The learned counsel for the Respondent on the other hand contended that the respondent M/s Aishama International was a partnership firm and due to unavoidable circumstances the said partnership, which was between two brothers, was dissolved and the factory was closed.
Subsequently under written agreement the ground floor premises of the factory was rented out to M/s Aishama (Pvt) Ltd which is altogether a different entity, incorporated under the Companies Ordinance, 1984 and the first floor of the factory was rented out to M/s Suria Garments (Pvt) Ltd under another written agreement and the said company is also incorporated, it is further contended by him that the aforesaid establishments were already in operation and were carrying on the garment manufacturing business at different places, when the respondent closed its establishment. Under these circumstances it cannot be said that M/s Aishama (Pvt) Ltd is a new name of M/s Aishama International or that it is the same establishment. He further pointed out that the appellant before the learned Sindh Labour Court had conceded to the fact that M/s Suria Garments (Pvt) was a separate establishment and, therefore, the demand raised in respect of the workers of the said establishment, in the aforesaid demand notice, was not proper. This fact by itself is sufficient that the demand was raised illegally.
7. In the unreported case of Al-Muhammadi Tiles Industry (supra), the facts were that previously the business was being carried on in the name of M/s Muhammadi Tiles Industry & Concrete Works, which was constituted in the year 1950 with Abdul Rasool and Sharif Bhai Abdullah as its partners. It was registered. In the year 1965 one Abbas joined as the third partner. In 1970 Sharif Bhai Abdullah retired. Thereafter Abdul Rasool and Muhammad Abbas continued as partners of the firm.
A gazette Notification was issued on 18.6.1970, whereby M/s Muhammadi Tiles & Concrete Works were notified under subsection (3) of section 1 of the said Ordinance and the provisions of the said Ordinance were applied to it from the first day of July, 1970. By a 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 also the Director, Sindh Employees Social Security Institution on 23.10.1974. On 10.12.1974, a new partnership by the name of Al-Muhammadi Tiles Industry came into existence with three partners, namely, Abdul Rasool, Muhammad Abbas, the earlier partners and Mrs. Marzia J. Ali, who was also related to the said partners. When the demand was made from the said partners for monthwise contribution, the dispute was raised that it was a new partnership which had come into existence, was altogether a different legal entity and, therefore, the demand was illegal. It was ultimately held by this Court in appeal filed under section 64 of the said Ordinance, as under:- "The liability of the owner as employer in respect of every employee to contribute to the employees social security fund, cannot possibly be interpreted to depend on the name or composition of partnership concerning the establishment. The change of name and addition of a partner, therefore, do not exclude the application of the Social Security Ordinance to the notified establishment."
8. The appeal filed before the Supreme Court was dismissed. On the facts of that case the Supreme Court made the following observations:- "This statement of Abdul Rasool establishes that though the partnership had been reconstituted after dissolving the earlier partnership, the continuity of the establishment remained and so did the Enterprise in which it was engaged."
And the law was laid down as under:- "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."
9. In the above case relied upon by the learned counsel, the admitted facts clearly established that it was the same establishment which continued to work with change of name and change in its composition. But the facts of the present case are distinguishable.
10. In so far as this case is concerned., the facts disclose that M/s Aishama (Pvt) Ltd was constituted and incorporated in the month of May, 1986 and had established a garment factory at New Karachi. M/s Aishama International was dissolved with effect from 30.6.1987 and at the time of dissolution, the respondent terminated services of its employees and paid them their dues. The said enterprise was being carried on at plot No. 98, Industrial Area. Malir Colony, Karachi. Similarly M/s Suria Garment (Pvt) Ltd was carrying on its manufacturing enterprise at a different place before acquiring the first floor of the factory premises on rent belonging to the respondent. The above facts are neither disputed by the appellant nor any evidence to the contrary has been brought to my notice.
The simultaneous independent existence of the said three establishments at different places, Malir, New Karachi and Landhi, with their respective independent employees and machinery was not disputed or disproved. If it is so, M/s Aishama (Pvt) Ltd cannot be continuity of the dissolved firm M/s Aihasma International. The two partners of the respondent's firm were directors of M/s Aishama (Pvt) Ltd at the same time when they were also partners of M/s Aishama International.
11. The learned 1st Sindh Labour Court has found that no worker from amongst the workers terminated from the service by Aishama International were employed in Aishama (Pvt) Ltd. It is also not the case of the appellant that the machinery of M/s Aishama International is being used by M/s Aishama (Pvt) Ltd. In view of the above facts, it is not possible to reach the conclusion that M/s Aishama (Pvt) Ltd and M/s Suria Garments (Pvt) Ltd are continuity of the same establishment which was being run in the name of respondent firm. Merely the fact that the same enterprise of manufacturing the garment is being carried on by the said private limited companies, would not be enough by itself to hold that the said establishments are continuity of respondent's erstwhile establishment.
12. It is not a case of change of partners or members of an association of persons who were holding or running the establishment and the same establishment has been continued to work with a break, in point of time, and or with change in its composition.
13. There is nothing extra ordinary if one or more persons at the same time join different associations of persons carrying on enterprises of the same or different nature. Merely for the fact that some of the persons in such two or more associations are common will not permit treatment of such enterprises as one or the same establishment.
14. It may be pointed out that admittedly M/s Suria Garments (Pvt) Ltd has been separately assessed for social security contribution and by the impugned demand notice, the contribution payable on account of the workers of the said company, also has been demanded.
15. No exception, therefore, can be taken to the impugned order. This appeal is, therefore, dismissed with costs.