This appeal under section 64 of the Sind Employees' Social Security Ordinance, 1972, hereinafter referred to as the Ordinance, seeks to impugn a decision of the Sind Social Security Court at Karachi given on 2-3-1974, By that decision, which affirmed an order of the Director of the Social Security Institution, dated 30th May, 1973, the appellant firm was held liable to pay 'contribution' on an amount of Rs. 93,746.60, which had been paid by the appellant firm to its contractors and as ex gratia payment to its workers.
2. The brief facts of the case for the purposes of this appeal are that on the basis of an inspection of the appellant firm carried out by a team of officers of the Social Security institution, headed by the Deputy Director, Audit. a letter was issued to the appellant firm on 31-5-1973, intimating it that 'contribution' by it had not been paid on the following amounts, on which it was due, and requiring it to deposit with the Institution such contribution along with 11 increase till date of payment (which was fixed as 8th June, 1973), failing which the amount due would be recovered from it as arrears of land revenue:- "S.Contribution Evaded toPeriodAmount payable No. respect ofat 6 1.Ex gratin payment in lieu8-6-72 toRs. 245.26 of wages for Rs. 4,087.7415-6-72 2.Leave encashment toApril 72 toRs. 2,584.11 secured workersMarch 73 Rs. 34,068.74
3. Payment to Contractor AllahApril 72 to Ditta Rs. 37,010.75March 73Rs. 2,220.63
4. Payment to Building Contractor (Imamuddin) Rs. 9,579.37. . . .do. . . . .Rs. 574.76 Total Amount Payable Rs. 5,624.76."
3. The appellants submitted objections to the institution against the aforesaid demand, but as the same were overruled and coercive measures were sought to have taken against the appellants on the basis of the aforesaid demand, they filed an appeal to the Social Security Court, which was unsuccessful. The appellate Court repelled the contentions of the appellants that no 'contribution' vies due on ex gratia payments, leave encashment or payments to contractors made by the appellants or that the failure of the Institution to give the appellants an opportunity of showing cause and adducing evidence before making the demand contained in its letter of 30th May, 1973, was violative of the provisions of sections 57 and 58 of the Ordinance and thus the demand as well as all subsequent proceedings based on that demand or letter were without legal effect. Against this decision, the appellants have come up in second appeal under section 64 of the Ordinance.
4. Mr. Sher Afghan, the learned counsel for the appellants, has raised before me the same contentions that he had raised before the lower Appellate Court, namely:--
(i) that no show-cause or opportunity of bearing was given to the appellant before assessment and demand of contribution made in the Institution's letter of 30-5-1973, thereby infringing the rule of natural justice;
(ii) that the payment of Rs. 4,081:74 to the workers for the period from 8-6-1972 to 15-6-1972 was an ex gratia payment, made pursuant to the Government directive contained in the Press release of 30th June, 1972, when the appellant's mill was not working on account of strikes and general disturbances in the S. L T. F. area, and does not fall within the definition of wages, as contained in the Ordinance;
(iii) that similarly the leave encashment, amounting to Rs. 34,068.74 was an ex gratis payment made to the workers, pursuant to an agreement made with the workmen on 25-1-1972, and does not fall within the definition of wages as contained in the Ordinance and
(IV) that the payments made to the two contractors, Allahditta and Imamdin, also cannot be construed as wages for the purposes of the Ordinance.
5. Mr. Sarwana, the learned counsel for the respondents, on the other hand contended that though no show-cause notice or hearing was given to the appellant prior to the issuance of the .institution's letter of 30-5-1973, the requirements of natural justice have been fulfilled, as not only full hearing was given. to the applicants ac the appellate stage but further they were at that stage allowed to lead evidence. The learned counsel contended that the rule of natural justice did not require a show-cause notice or even as opportunity of hearing at every stage and that the proper stage for such opportunity and adducing of evidence was in appeal before the Social Security Court. In support of his contention he relied upon a decision reported as Mohammad Ishaq v.
Saiduddln Swaleh (1) PLD 1959 Kar. 669,
6. It is a well-settled rule that before an order, whether by a judicial or administrative authority, is passed adversely affecting a person or a right vested in or enjoyed by him, then an opportunity of hearing has to be given to him before the adverse order is passed against him, unless the right of hearing is expressly excluded by law. In the c3.;e reported as University of Dacca v. Zakir Ahmad (2)
PLD 1965 SC 90, Hamoodur Rehman, J. (as he then was), after reviewing the authorities on the subject observed as follows :-- "From a careful review of the decisions cited before us it appears that whenever any person or body of persons is empowered to take decisions after ex post facto investigation into facts which would result in consequences affecting the person, property or other right of another person, then in the absence of express words in the enactment giving such power excluding the application of the principles of natural justice; may be applicable in the facts and circumstances of a given case."
7. In the case reported in 1 969 SCMR 212, it was held by their Lordships of the Supreme Court that the final order of a statutory authority, without hearing the person affected, was without lawful authority. However, the principles of natural justice are not of universal application, and as held by vie Supreme Court in Abul A'ala Moudoo:li v. Government of West B Pakistan (3) PLD 1964 SC 073, considerations of nature of thing, manner aid circumstances in which it is to be done are to be taken into account in determining whether principles of natural justice are to be applied in a particular case.
8. If the Ordinance bad provided that the Institution, before assessing or levying 'contribution', or making a demand for the same is required to issue a show-cause notice to the person liable to pay the 'contribution' and afford him an opportunity of being heard, then the failure to issue to such person a notice or afford him an opportunity of hearing would have been a violation of a statutory provision and the defect would not have been cured even if at the appellate stage such notice or opportunity had been given to him (see PLD 1971 SC 124).
However, in the instant case, the grievance is not in regard to the violation of any statutory provision, but of a rule of natural justice. In such cases, if any adequate opportunity of showing cause has been given before final orders are passed, then the requirements of natural justice would be fulfilled. In such cases, it is not necessary that a hearing or an opportunity of showing cause should be given at every stage of the proceedings. In Ishaque's case, relied upon by the learned counsel for the respondents, the question referred to the Full Bench was-,- "Whether an Order of ejectment passed against a person in possession of evacuee property should be set aside as void on the ground that it was passed without an opportunity to show cause although the party was heard by the App-Mate and provisional authorities."
The answer of the Full Bench to this question was- "that it will have to be determined in each case whether the principle of natural justice had been sufficiently complied with on account of an opportunity of hearing before an appellate or provisional authority. The fact that the original order was passed without notice does not necessarily mean that the order is to be set aside.
On the basis of that answer, it was held in that case- "If the party to whom notice was not given by the first Tribunal was able, taking the original, appellant and provisional proceedings together and as whole, to present his case substantially as lie wanted and was entitled to present it, then the decision of the Tribunal is not bad merely on the ground that notice was not given by the first Tribunal."
9. In the instant case a full and adequate hearing was given to the appellant at the appeal stage during which even evidence tendered by the appellants was recorded. It may be mentioned that under section 62 of the Ordinance, which details the powers oaf the Social Security Court, such Court is not only to be deemed to be a civil Court, but has also the power, for the purposes of deciding any appeal, of thinking such evidence as it considers necessary. This would, in my humble opinion, mean that a proper opportunity of hearing, and where necessary, even of adducing evidence, Is a statutory requirement in case of an appeal before the Social Security Court.
10. It next falls to be considered whether the various payments referred to in the letter of the respondents of 8-6-1973 constitution "wages" as defined in the Ordinance. It may be mentioned that under the Ordinance "Contribu--tion" is levied only upon such payments as come within the ambit of "wages" It was contended by Mr. Afgan that though the payments for the period from 8-6- 1972 to 15-6-1972 an amount of leave encashment items 1 and 2 of the respondent's letter) were made to the petitioners' workers, it is not every payment made to a worker by the employer that amounts to "wages". His precise argument was that in order that any payment or remuneration made by the employer should amount to "wages" upon which "contribution" under the Ordinance is leviable, firstly such payment must be made to a secured person, secondly it must be for service and lastly such payment must not be excluded from the definition of wages. His submission was that the first two payments referred to in respondent's letter of 8-6-73 were ex gratis payments and not for any service done or rendered by the workers and hence they did not amount to "wages" under the Ordinance. In regard to the payments made to the contractors, he submitted that the contractors employed their own workers to do the work contracted to them by tile petitioners -end since there is no evidence that such workers had been employed by the contractor for such wont fox at least 24 hours a week, such workers cannot he deemed to be "employees" for the purposes of the Ordinance, on the wages paid to whom any "contribution" was leviable.
11. Mr. Sarwara, the learned counsel for the respondents, on the other hand contended that the Ordinance was a beneficial piece of legislation and hence it should be construed liberally so that its object, which was to provide maximum benefits to the workers, was achieved, and such object could only be achieved if a wide and liberal construction was given to the expression "wages", and the provisions in regard to levy of contribution were interpreted liberally in favour of the respondents. In support of this contention he relied upon the decisions in John Summers & Sons Ltd. v. Frost (1) (1959) l All E L R I, Trim John District School Board of Management v. Kelly (2) 1914 A C 667, Divisional Superintendent, Railway v. Bashir Ahmad (3) PLD 1973 SC 589, and Marker Employees' Upon v. Marker Alkaloids Ltd, (4) 1976 SCMR 82,
12. In Frost's case, the question before the House of Lords was whether the respondent (Frost) who was injured while grinding apart on a power-driven grinding machine, in the appellant's Steel Works, was entitled to claim damages, even though the respondent may have been careless or inattentive. It was held that as the grinding wheel was a dangerous part of machinery under section 14 (1) of the Factories Act, 1935, there was an absolute obligation under that subsection that the grinding wheel be securely fenced and that a dangerous part of machinery is securely fenced only if the presence of the fence makes it no longer dangerous in the sense that there is no longer a reasonably foreseeable risk of injury to the workman using the machine, even though he is careless or inattentive. In Kelly's case, the facts were that while he was engaged as an assistant master at an industrial school, he was assaulted by two of the pupils in pursuance of a preconcerned plan of attach and killed, It was held by the House of Lords that the death of Kelly was caused by accident and that there was evidence to support the finding of the arbitrator that the accident arose out of his employment. In Bashir Ahmad's case, their Lordships of the Supreme Court of Pakistan, observed with reference to the provisions of the Payment of Wages Act as follows- ._ "It is also important to point out that the statute is remedial in its subject, and it is well established principle of interpretation that remedial statute should be construed in a manner so as to advance -- the remedy and suppress the mischief or else it would frustrate the legislative Intendment."
13. In the above case, the Supreme Court also reiterated the view earlier held by it in Mohammad Sharif's case (5) P G D 1963 SC 340, that "wages" as defined in section 7 of the Payment of Wages Act does not necessarily mean earned wages and that where an employee to whom the Act applies, is ready and willing to render service, but the employer is not affording him an opportunity to render such service, the employee is entitled to full wages, unless a deduction is allowed under the Act.
14. In the case of Marker Employees' Union, the Supreme Court held that the provision of a notice in a beneficial statute, such as, the Industrial Relations Ordinance, 1969, are not to be equated with similar provisions in laws dealing with rights in property.
15. Mr. Sarwana contended that if a liberal construction is put upon the definition of "wages" as contained in the Ordinance then it would include all payments made by the employer to his employees, except the payments specifically excluded, and the expression "remuneration for service" should be construed as remuneration or payment on account of relationship of employer and employee. In order to appreciate the contention of the learned counsel it would be appropriate to reproduce the definition of "Wages" as contained in the Ordinance. It reads thus:-- "(30) '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 of 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 apprentice. ship, 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 a 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 entailed by the nature of his employment; or
(e) any gratuity payable on discharge; or
(d) any sum paid as bonus by the employer."
16. Now, the above definition uses the words "means", "includes" asp also "does not include". In Craise on Statute Law, seventh Edition, it is stated that there are two forms of interpretation clause- in one, where the word defined is declared to "mean" so and so, the definition is explanation and prima facie restrictive, while in the other, where the word defined is declared to "include" so and so, the declaration is exhaustive. However, where the definition contains the words "means and includes", there will inevitably be a doubt as to interpretation. It is apparently, in an effort to avoid this doubt, that the words "but does not include" have been used in the instant case. Now, if I were to accept the submission of Mr. Sarwana that extended definition be given to the words "remuneration for service paid or payable" appearing in the definition of "wages", so as to include all payments made by the employer to the employee on account of relation--ship of service, irrespective of the fact whether service was actually rendered or not, excluding only the payments which are covered by the words "does not include," then there was no purpose in specifically including in the definition of "wages" dearness allowance, addition to cost of living allowance, and more important, payments for any period of authorised leave, illegal lock-out or legal strike. The words "shall be deemed to- include" in the definition of "wages" clearly indicate a legal fiction, whereby payments which are not wages are to be deemed to be wages. The payment made by the petitioners to his workers for the period from 8-6-1972 to 15-6-1972, was neither in respect of any service nor for any period of illegal strike or lock-out. It was simply an ex gratin payment in compliance with the Government directive contained in the Press release of 30th June, 1972. Had such payment been made under the provisions of a statute, the case may have been different, for then it would have been remuneration payable and the decisions of their Lordships of the Supreme Court in cases of Mohammad Sharif and Bashir Ahmed may have been appropriately relied upon, but the above payment was a mere ex gratin payment, in deference to the wishes of Government and not founded upon any statutury liability. Reference on this point may also be made to a Division Bench decision of the defunct High Court of West Pakistan, reported in Law Notes 1969 Kar.
162, where it was held that the word "payable" in the definition of "wages" under the Ordinance appears to refer to that remuneration which, as a matter of legal obligation, an employer must pay to his worker."
17. The payment made by the petitioners to their workers for the period from 8-6-1972 to 15-6-19'1'2, being a mere ex gratia payment, and not for service nor a statutory liability, such payment cannot be considered to "wages" for the purposes of the Ordinance. I am fortified in my view by a decision of this Court in the case of Adamjee Cotton Mills v. Sind Employees Social Security Institution (1)1974 PLC 213, where it has been held that though the word "remuneration" is a word of wide import, it cannot include any ex-gratin payment; that wages are the remuneration for a contract of service and that failure of workmen to work during disturbed period amounts to suspension of their contract of employment, relieving the Management of obligation to pay wages to such workmen during the period that they failed to work.
18. So far as the second item in the respondent's letter of 8th June, 1973, is concerned, namely leave encashment, the amount in question was paid to the workmen for the period of leave which they had earned or was due to them. According to the definition of "wages" in the Ordinance, it includes, payment to workmen in respect of any period of authorised leave. The leave encashment being payment in respect of period of authorised leave, whether such leave was actually taken or not, would thus amount to "wages" for the purposes of the Ordinance and "contribution" was, in my opinion, rightly levied thereon.
19. So .far as the payments to the two Contractors are concerned, namely items 3 and 4 of the respondent's letter of 8th June, 1873, no doubt the plaintiffs would be deemed to be the employer of any workmen engaged by these Contractors, to whom -they had assigned work in connection with their establishment, by yeas,:-n of the definition of "employer" contained in the Ordinance, as the Contractors would be deemed to be the representa--tives of the employer, but in order that "contribution" should be levied upon such payment, it has to be established by the respondents that the workmen employed by the contractors fall within the definition of "employee" as contained in the Ordinance, for "contributions" are payable only in respect of employees. Now only such persons are deemed to be "employees" for the purposes of the Ordinance as have been working normally for at least twenty-four hours per week for wages in or in connection with an industry, business, undertaking or establishment. Mr. Sarwana conceded that there was no evidence can record to show that the workmen employed by tile plaintiff's Contractors had been engaged in connection with the work of the plaintiffs or their establishment for a period of not less than twenty- four hours per week. In fact, there is no evidence on this point whatsoever. As such, these workmen would not come within the definition of "employees" for the purposes of the Ordinance, and no "contribution" would be payable by the employer on remuneration paid to them.
20. For the foregoing reasons, I hold that no "contribution" is leviable on the ex gratia payments made by the plaintiffs to their workers for the Period from 8.6.1972, to 15-6-1972 or to their two contractors, Allahditta and Imamuddin, and would allow the appeal to that extent. As the plaintiffs have only been partially successful in their appeal, there would be no order as to costs.