,With a view to provide for old age benefit to the persons employed in industrial commercial and other organizations, Employees' Old-Age Benefits Act, 1976, (Act No,XIV of 1976) was enforced on 15- 4-1976 (hereinafter referred to as the Act of 1976). Every employer registered under section 11 of the Act of 1976 was required to pay with effect from 1-7-1976 contribution payable every months, in respect of every person in his insurable employment, at the rate of 5% of his wages, in the prescribed manner. Act of 1976 in section 2(p) defines wages as "wages means wages as defined in clause (vi) of section 2 of the payment of Wages Act, 1936 (Act No,IV of 1936) (hereinafter referred to as the Act No,IV of 1936)".
2. Another statute namely Employees' Cost of living (Relief) Act, 1973, Act No,1 of 1974 (hereinafter referred to as the Act No,1 of 1974) was assented to on 31-12-1973 and was published in the gazette of Pakistan extra ordinary on 7-1-1974 as Act. No,1 of 1974. This Act repeals the Employees Cost of Living (Relief) Ordinance, 1973 which, was promulgated by the President on 17-8-1973. Section 2(e) of this Act defines wages as:-- "Wages means remuneration for services, other than cost of living allowance, payable in cash to an employee without taking account of deductions for any purpose, under a contract of service or apprenticeship, written, oral, express or implied, and includes any dearness allowance or other addition in respect of the cost of living payable or paid for the period preceding the first day of August, 1973, and any payment by the employer to an employee in respect of any period of authorized leave, but does not include--
(i) any payment for overtime, or
(ii) any sum paid to an employee to defray special expenses entailed by the nature of his employment; or
(iii) any gratuity payable on discharge; or
(iv) any sum paid as bonus, house rent, conveyance allowance, travelling allowance or any other allowance.
3. By Act XXVI of 1977 enforced w,e,f, 1-5-1977 the word "Other Than Cost of Living Allowance" were omitted from the above definition: Section 3 of the Act of 1974 obliges every employer to pay eost of Living Allowance to every employee in the manner and in the amount stated therein. Section 7 as originally enacted laid down that "notwithstanding anything contained in this Act or any other law or the time being in force, the Cost of Living Allowance shall not form part of wages of a worker for the purposes of any other law, including the purposes of contribution to Provident Fund, Gratuity, Bonus, Social Security Scheme and calculating wages for overtime. Work." By the same amending Act (XXVI of 1977), the word "not" in section 7 was omitted and the following proviso was added.
[Provided that, for the purposes of the Workman's Compensation Act, 1923 (VIII of 1923), except section 4 thereof, the payment of Wages Act, 1936 (IV of 1936), the Companies' Profits (Workers'
Participation ) Act, 1968 (XII of 1968), or. The Industrial Relation Ordinance, 1969, (XXIII of 1969), the cost of living allowance shall not form part of the wages of a worker.]
4. The petitioner was an establishment registered under section 11 of the Act of 1976. It was paying contribution under the Act in respect of its insured employees. It seems after the amendment in the Act No,1 of 1974 as noted above, respondent No,2 demanded further contribution in the sum of Rs,29,250 and this claim was described as short payment. This claim was made vide Annexure-A, dated 2-12-1979. Initially the petitioner claimed explanation and details of this short payment and when pointed out that with the amendment in the Act No,1 of 1974 the cost of living allowance became part of wages and, therefore, the petitioner became liable to make a contribution on the same with effect from 1-5-1977, correspondence ensure wherein, the petitioner denied its liability.
The correspondence is on record as Annexures-B to K are indicates the legal discussion between the parties in respect of the applicability and interpretation of the relevant statutory provision.
Respondent No,2 stuck to his claim which led the petitioner to file an appeal to the Board of Trustees/Institution (respondent No,1), under section 35 of the Act of 1976. The appeal was rejected and the rejection was communicated to the petitioner vide letter, dated 12-1-1985, Annexure-N. The appellate authority by dismissing the appeal directed certain adjustment in respect .Of calculating the late payment dues under section 13 of the Act of 1976. Being dissatisfied the petitioner has filed this Constitutional petition praying that the circular letter, dated 22-4-1978, Annexure-K and demand of respondent as well as the appellate order be declared as without lawful authority.
5. The main argument of the learned counsel for the petitioner is that ' the assertion of respondent to the effect that with the amendment of the definition of wages as well as section 7 of the Act No,1 of 1974, the cost of living allowance became part of wages with effect from 1-5-1977, is incorrect. It is urged that the expression "wages" as original defined in Act of 1976 was changed by Ordinance XVII of 1983 and it is this changed definition which, for the first time included the cost of living allowance as part of wages and it is only thereafter that respondent can legally claim contribution on the same. It is elaborated that from -1976 when the Act of 1976 was enforcing 1-7-1983 when the definition of wages was amended, the expression wages as defined in Payment of Wages Act, 1936 was operative and this definition did not include the cost of living allowance as part of the wages.
Support for the argument is drawn from the case of K.G. Old Principal, Christian Technical Training Centre, Gujranwala v. Presiding Officer, Punjab Labour Court, Northerin Zone and 6 others PLD 1976.
Lahore 1097; Muhammad Ebrahim Hussain Sarkar v. Mst. Solemannessa PLD 1968 Dacca 376 and M.S. Faruki, Chief Officer, Lahore Municipal Corporation, Lahore v. The Province of West Pakistan and others (PLD 1970 Lahore 195). It is also contended that in any case the demand for payment of additional charges under section 13 of the Act of 1976 is illegal in view of the difficult question of law involved and it is not a case where it can be said that the petitioner deliberately withheld the payment of contribution. Learned counsel for the respondent, on the other hand, has contended that when the amendment in section 7 of the Act No,1 of 1974 took place, the cost of living allowance became part of wages and independent of definitions of expression "wages." in various statute the petitioner became liable to pay the contribution with effect from 1-5-1977 on the amount of allowance. He has contended that the Act of 1976 is beneficial statute and has to be liberally construed so as to serve the purposes of the Act. Reliance has been placed on' the case of National Embroidery Mills Ltd. And others v. Punjab Employees' Social Security Institution (1993 SCM R 1201) and Don Basco High School v. The Assistant Director, E.O.B.I., and other (PLD 1989 Supreme Court 128). He has denied any ambiguity in the application of law and has stressed that the petitioner has been deliberately raising this controversy and has avoid to make the payment for the last about two decades.
6. The controversy in the case, in my judgment, can be sorted out not with reference to the definition of the expression "wages" as given in Payment of Wages Act, 1936, the Costs of Living (Relief) Act, 1973 and Employees' Old-age Benefits Institution Act, 1976, original and amended but with reference to the change/amendment brought about in section 7 of the Act No,1 of 1974 through Act XXVI of 1977. In its unamended form, section 7 clearly stated that the cost of living allowance shall not be part of the wages. After amendment and with the deletion of word "not", section 7 enjoins that cost of living allowance shall be part of wages for the purposes of any other law including the purposes of contribution to Provident Fund, Gratuity, Bonus, Social Security Scheme and Calculating of Wages for overtime work. The expression "shall form part of wages of a worker for the purposes of any other law" will certainly have reference to Act of 1976. This intention was made further clear by the legislature when while inserting proviso to this section, did not mention Act No,1 of 1976 as the law for which purpose the cost of living allowance shall not form part of the wages of a worker. I, therefore, conclude that with effect from 1-5-1977, the allowance paid to a worker under Act No,1 of 1974 was part of the wages of a worker and the petitioner became liable to pay contribution under the Act of 1976, accordingly. I further hold that the impugned circular as well as the impugned appellant order correctly interpret the law.
7. A notice may be taken of the argument that the amendment that the amendment of the expression "wages" in of 1976, by Ordinance XXVII of 1983 confirms the legal submission that the cost of living allowance became part of wages for the first time rough this amendment. Learned counsel submitted that by making amendment the law giver indicated beyond any shadow of doubt that previously cost of living allowance was not part of the wages of a worker. This argument ignores the impact of change brought about in section 7 of the Act No,1 of 1974, as discussed above. If section 7 of Act No, of 1974 had not been amended, this argument of the learned counsel would have been helpful. It is not for this Court to go behind the wisdom of the legislature in amending the definition of wages as given in section 2(p) of the Act of 1976 through Ordinance XVII of 1983. However, it may be safe to surmise that the change was brought about to make the intention of the legislature cleared and beyond doubt and possibly to bring application of Act to complete harmony, independent of the provisions of other statutes. As has been noted, the Act of 1976 defines wages as in the Act of 1936. With the amendment, the referential legislation has been dispensed with. Once the definition of wages has been directly given in the Act of 1976, the same became certain and thereafter, there was no need to refer to other statute for this purpose. But whatever be the reason of the change, to me, it is clear that the, petitioner became liable to pay the contribution on the cost of living allowance with effect from 1-5-1977, by virtue of the amendment brought about in section 7 of the Act No,1 of 1974.
8. Section 13 of the Act, 1976 does authorize the increase by such percentage or amount as may be prescribed upon the payment which can employer fails to pay on the due date. Learned counsel for the respondent is right in submitting that the Act of 1976 is a beneficial legislation and has to be liberally construed so as to further the purpose of the Act. Respondent No,1 vide its order has already granted certain concession to the petitioner in respect of the increase and in my opinion this suffices to meet the ends of justice, particularly, keeping in view the object of the Act of 1976 in view. It goes without saying that the petitioner could have paid the demanded amount under protest and then contested the same.
9. For all the above reasons, there is no merit in this petition which is hereby dismissed without any order as to costs.