1. The above appeals involve the interpretation of clause (30) of section 2 of the West Pakistan Employees' Social Security Ordi--nance, 1965 (hereinafter referred to as the Ordinance) and, therefore, I intend to dispose of the above appeals by this judgment. The facts of the above appeals are as follows :- M. A. 22 of 1977.-The facts disclosed in the memo. Of appeal are that the appellants are an Industrial Unit registered under the Factories Act, and that the appellants have been paying to their workers from time to time certain payments including leave encashment, motor--cycle allowance and payment for festival holidays. It has also been asserted that on 21-6-75 the appellants received a notice from the Director of the respondents in which it was alleged that the appellants had failed to make their contribution to the Social Security Institution for the following items;
(1) Conveyance allowance.
(2) Leave Encashment.
(3) Supplementary payments.
(4) Festival Holidays.
2. The appellants were called upon to pay a sum of Rs. 44,708.98 being the alleged outstanding contribution and Rs. 22,207.78 being the alleged increase for the failure to deposit the above contribution. The appellants were also given the option to furnish a representation in writing along with all relevant documents/evidence etc. In case they did not agree with the above demand so that the assessm ent of the dues or contribution and increase outstanding against them might be revised accordingly. It was also stated that in case the appellants failed to avail of the opportunity of furnishing representation within 15 days along with the relevant documents/evidence etc. To support of their representation, the provisional assessment of the Social Security contribution and increase mentioned in the notice shall be confirmed on the basis of the evidence already available with the Director, and that the recovery of the dues shall be made in accordance with the prescribed procedure. The appellants were also asked to deposit the contribution and increase outstanding against them for the months of April 1975 onwards. In response to the above notice, the appellants through their letter dated 1-7-75 addressed to the Director of the respondent pointed out to him that his demand was not justified for the reasons mentioned therein. It was also pointed out that the demand of the respondent with effect from 1-3-67 was also not justified for the reason that the above various items were paid from various dates, namely, (1) conveyance w.e.f.
3. January 1971. (2) Leave encashment w.e.f. June 1972, (3) Payment in lieu of festival holidays w. e. f.
4. February 1974. The attention of the Director was drawn to the fact that if the above allowances were included in the salaries of the employees whose salaries were on the margin then the total wages of these employees would be over Rs. 500. It was also asserted that, in that event they would not be liable to pay any contribution in respect of those staff whose salary would exceed Rs. 500 per month. The appellants' above letter was followed by their Advocate's letter dated 10-7-74 in which also the appellants raised the plea that the above items did not fall within the definition of wages and that they were not liable to pay any amount.
5. After that the appellants filed a review application before the Director under section 58 of the Ordinance, which, according to the appellants was rejected by the Director of the respondent without granting personal hearing. After that the appellants filed an appeal in the Social Security Court under section 59 of the Ordinance, which was allowed on the technical ground that the matter was referred back to the respondent for deciding the aforesaid. Review application on merits. It has also been asserted that the Commissioner of the respondent after hearing the review application partially accepted the appellants' representation, but held that the payment for leave encashment was within the ambit of wages and that the Social Security contribution was payable in that respect. The Commissioner also took the view that the contribution was also payable on the supple--mentary payments, conveyance allowance and payments made for festival holidays under the Ordinance, but at the same time the Commissioner accepted the appellants' contention that they had started making payments in respect of the above items to the employees on the various dates referred to herein above. Accordingly, the Commissioner ordered that the contri-- bution for leave encashment was payable with effect from 1-6-72, contribution for conveyance allowance was payable w.e.f. 1-10-71 and payment for festival holidays was payable with effect from 1-2-74. Aggrieved by the above order of the Commissioner, the appellants filed an appeal under section 59 of the Ordinance in the Social Security Court, which appeal was rejected by the Court by the judgment dated 14-7-77. The appellants being aggrieved by the above judgment have filed this appeal.
6. I may mention here that out of the above four items in the above demand notice dated 21-6-75 in respect of which contribution was demanded from the appellants, the learned counsel for the appellants Mr. Khurshid Anwar Shaikh in his submissions has challenged the demand for contribution in respect of three items only, namely, (a) leave encashment payments, (h) festival holidays, and (c) motor-cycle allowance. The learned counsel concedes that the appellants are liable to make contribution for the fourth item, namely, supplementary payments.
7. Appeals Nos. 23/77 and 26/77 The above two appeals have common facts as in both the appeals the same order has been impugned.
8. The facts of the above appeals are that the Director of the Sind Employees' Social Security Institution for the first time issued a notice dated 1-8-76 to Messrs Firdous Textile Mills Limited (hereinafter referred to as Messrs Firdaus) stating therein, that on their visit to the Mill and the Head Office of the Mill, it was found that the above mill had not paid social contri--bution on following payments; Payment madeS. S. Contribution Rs.
1. Leave encashment3,04,509.9918,270.54
2. Sick leave and casual leave1,98,216.4211,892.96 (2 yrs.)
3. Amenities of Labours1,80,658.2410,839.48
4. Rewards52,268.033,136.08 It was also stated that the amounts mentioned above pertained to the three years i.e. 1973-74, 1974-75 and 1975-76 (up to June 1976) and according to their calculation the total alleged evasion of contribution worked out to Rs. 44,139.06. It was also asserted that the amount of the remaining period i.e. March 1967 to June 1973 had been provisionally assessed on the above basis of the alleged evasion detected by them. Messrs Firdous were also called upon to pay a sum of Rs. 1,32,471 plus an increase of Rs. 66,235.50. Thus a total amount of Rs: 1,98,706.50 was demanded. It was also mentioned that if Messrs Firdous were not satisfied with the amount so provisionally assessed, they may prove the same by producing the records within three days of the receipt of the above notice.
9. It was also stated that failing which the amount demanded by the institution would be deemed to he confirmed and it would be recovered as land revenue. In the above notice it teas further asserted that as per verification of the general ledger, it had also been found that the mill had been subsidising canteen expenditure for provid--ing cheaper meal facilities to their workers at Rs.
10. 6,000 per month, and that the contribution for the period of 112 months i.e. From 1-3-67 to 30-6-76 worked out to Rs. 40,000 and that the increase thereon worked out to Rs. 20,000. Thus Messrs Firdous were also asked to snake payment of an additional sum of Rs. 60,000 in respect of the above item. In response to the above notice Messrs Firdous through their letter dated 24-8-76 pointed out that the above notice was received by them on 21-8-76 which was Saturday. It was also pointed out that in the notice the Director had given to them 3 days time to prove their dissatisfaction of the alleged assessment. It was also stated that since the records related to the period of 9 years they should be given 15 days time to produce the record. Thereupon, the Director through his letter dated 25-8-76 declined to grant time as requested by Messrs Firdous in their above letter dated 24-8-76. It was also stated by him that the assessment already made by him stood confirmed as no, objections were filed and that a notice under Land Revenue Act had already been issued by the Assistant Collector (Gr. I), Karachi (who was no other person than himself). After that the Director who was also acting as Assistant Collector (Gr. I) issued on the same day i.e. On.25-8-76 a notice under section 81 of the Land Revenue Act, 1967 and rule 118 of the Land Revenue Rules, 1922, demanding the payment of a total sum of Rs. 2,58,706.50, the detail of which was given in the above notice. It is also stated that unless the amount demanded was paid within 10 days from the date of the issue of the notice together with the sum of Re. 1 being the fee chargeable for the notice, compulsory proceeding would be taken according to law for the recovery of the whole of the revenue amount. It appeals that after that the Director of the Institution sealed the godowns of Messrs Firdous in pursuance of his above notice issued by him in the capacity of the Assistant Collector (Gr.l). Thereupon Messrs Firdous through their letter dated 7-9- 76 addressed to the Commissioner of the Institution pointed out that the Director, Social Security Mr. Bhutto visited their office and informed them that no Social Security contribution had been paid on canteen subsidy, rewards and ex gratia payments etc. It was also stated that they had requested, that the alleged outstanding amount had to be determined whether it was at all payable, and if so, to what extent. It was also asserted that the Director was also requested to allow reasonable time for the above purpose, but instead of allowing them time he gave three days' notice and before the expiry of the above period, contrary to law sealed their godowns. After that Messrs Firdous addressed another letter dated 8-9-76 to the Commissioner of the Institution stating therein, that they had a personal meeting with him on 7-9-76, when he had ordered the unsealing of the godowns and staying of any further action subject to the payment of Rs. 5,000 (which amount was deposited by them), and subject to furnishing a bank guarantee for the balance amount. It was also stated that they undertook to produce the record from 1967 to 1972/73 within three days for verification. It was also pointed out that the godowns contrary to his order were not unsealed. The attention was also invited to the fact that the consignment of 440 bags was to be exported which was in the godowns sealed by the Director and that the steamer was already in the port for loading the above consignment. Thereafter, Messrs Firdous through their letter dated 9-9-76 forwarded a bank guarantee of Rs. 75,000 as per order dated 8-9-76 passed by the Social Security Court in the appeal filed by them. After that there was some further correspondence between Messrs Firdous and the Institution. Mr. Sarwana, Advocate has stated at the Bar on behalf of the Institution that the Institution had issued several letters to Messrs Firdous asking them to produce account books and Institution to vouchers etc., as was promised by them, for the purpose of enabling the institu--petition to assess the amount of contribution. The letters referred to by Mr. Sar--wana, Advocate have not been filed either before the Social Security Court or along with the Memo. Of appeal in this Court. On the other hand, Mr. Nizam Ahmed, Advocate for Messrs Firdous submitted that as the matter was sub--judice before the Social Security Court since 8-9-76 there was no occasion for Messrs Firdous to produce the account books and the vouchers etc. Before the Institution. Be that as it may, the above controversy has no relevancy in view of the impugned judgment dated 27-6-77 passed by the Court below referred to hereinbelow.
11. It may be pertinent to mention here that Messrs Firdous in the appeal filed by them in the Social Security Court (namely, Appeal No. 11/763had challenged the Institution's demand for contribution on the payments made for the following items;
(1) Leave encashment.
(2) Sick leave and casual leave.
(3) Amenities to Labour.
(4) Rewards.
(5) Subsidy to canteen.
12. The Social Security Court in its impugned judgment has held that Messrs Firdous are liable to make contribution in respect of the Items Nos. 1 and 2 referred to hereinabove but they are not liable to make any contribution in respect of the Items Nos. 3, 4 and 5, mentioned hereinabove. In consequence thereof the Social Security Court has set aside the notice order dated 21-8-76 and dated 25-8-76 issued by the Director of the Institution referred to hereinabove. The Court has also directed the Institution to examine the records and to make a fresh assessment of the Social Security contribution payable by Messrs Firdous in respect of the above two items.
13. The Social Security Institution, being aggrieved by the above judgment of the Social Security Court No. 1 disallowing the claim for the contribution in respect of the above items filed Miscellaneous Appeal 23/77, whereas Messrs Firdous being aggrieved by the above judgment of the Social Security Court by disallowing their objections to the Items Nos. 1 and 2 referred to hereinabove filed Miscellaneous Appeal No. 26/77 in this Court.
14. " `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 (XXIX of 1961) without taking into 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
(c) any gratuity payable on discharge ; or
(d) any sum paid as bonus by the employer.
15. A perusal of the above definition shows that any remuneration for services paid or payable in cash or in kind to a secured person which is not less than the remuneration based on the minimum rates of wages declared under the Minimum Wages Ordinance, 1961 (XXIX of 1961) shall be construed as wages without taking into account any deduction for any purpose under a contract of service or apprenticeship express or implied. It also provides that the wages would also include dearness allowance or other additions in respect of the cost of living and any payment by the employer to a secured person in respect of any period of (a) authorised leave, (b) illegal lock-out, (c) legal strike.
16. At the same time the above definition excludes from its ambit four items specified therein and provides that the wages do 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
(c) any gratuity payable on discharge, or
(d) any sum paid as bonus by the employer.
(a) Leave encashment.
(b) Payment for the festival holidays.
(c) Payment for sick leave and casual leave, It has been contended by Messrs Khurshid Anwar Shaikh and Nizam Ahmed, Advocates that the payment for leave encashment is not covered by the definition of wages. According to them the definition covers a payment made for the authorised leave and not any payment made for not availing of the authorised leave. It has also been urged that the above item is covered by the exception (o) mentioned in clause (30) of section 2 of the Ordinance, namely, any payment for overtime. The contention of the learned counsel is that the payment for the leave period to an employee who has not availed of the same is in the nature of payment for overtime and not wages. The above contention is devoid of any force as the word `over--time' has a definite meaning. As there is no definition provided for the above word in the Ordinance or the rules/regulations framed thereunder I will have to refer to the ordinary meaning of the above term given in the various dictionaries. In this connection I may refer to the Shorter Oxford English Dictionary, Vol. II, third Edn. Where the word `overtime' has been defined as; "Time worked over and above the regular hours ; extra time."
17. Reference can also be made to Oxford English Dictionary (Reprinted Edition of 1961) where the above term has been defined as follows;---- "Time during which one works over and above the regular hours ; extra time."
18. From the above definitions, given in the above dictionaries it is clear that the work done by an employee during the regular hours of a day though during the period in which he was entitled to leave cannot be covered by the term 'overtime'. If an employee is liable to pay a contribution for the authorised leave period, it will be an unreasonable interpretation to say that he is not liable on the amount of wages which he has paid to his employee for the work done by him during the above period. The above item, namely, leave encashment, has been the subject-matter of discussion of a judgment of this Court given by a learned Single Judge in the case of Messrs Quadri Brothers Foundary do Workshop, Karachi v. Sind Employees' Social Security Institution, Karachi (PLD 1977 Kar. 112), where his Lordship Mr. Justice Z. A. Channa in para. 18 has observed as follows;----- "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 by 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 purpose of the Ordinance and "contribution" was, in my opinion, rightly levied thereon."
19. I am in respectful agreement with the above observation of his Lords hi and I am also of the view that the item of leave encashment is covered within the ambit of the definition of wages given in the Ordinance. In this connection it may also be pertinent to refer to the ruling of our Supreme Court in the case of Sind Employees' Social Security Institution v. Messrs Dawood Cotton Mills (PLD 1977 SC 177), wherein my Lord the present Chief Justice while discussing the term "wages" with reference to clause (30) of section 2 of the Ordinance has been pleased to observe as follows;---- "This definition accords with the dictionary meaning of the term "wages" which is construed as the amount paid periodically, specially by the day or week or month, for time during which workman or servant is at employer's disposal. The word 'remuneration' as used in the definition means, according to the Oxford Dictionary, a reward payable for service rendered. It would be seen that the rendering of service, or at least the availability of the employee at the disposal of the employer for service, is an essential requirement or pre-requisite for the payment of wages. The definition by including payments made by the employer in respect of any period of illegal lock--out or legal strike has indeed given effect to the principle that during these periods the employee must be deemed to be available for service with the employer. By specifically including the payment made for any period of authorised leave, the definition accorded a statutory status to this payment as if it were included in every contract of service."
20. If we examine the payment for the leave encashment keeping in view the above observation of our Supreme Court, it becomes clear that the payment for leave encashment is nothing but wages for all intents and purposes.
21. Mr. Nizam, Advocate has also contended that in any case the payment for leave encashment is in the nature of a bonus and, therefore, it is excluded by sub-clause (d) of clause (30) of section 2 of the Ordinance. The above contention is also devoid of any force inasmuch as the accepted meaning of the term 'bonus' as interpreted by the various Courts is, that it is generally an annual payment made by an employer to his employees either under a contract or under a statutory provision. The original concept of the payment of bonus was that it was an ex gratis payment by an employer to his employee, but this view stands modified in view of the various pronouncements made by the various Courts, holding that bon generally is no longer a bounty or an ex gratia payment by an employer. It is generally either a contractual payment or a payment under the statutory provisions. In Pakistan section 10-C of the Schedule to the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance (VI of 1968) provides payment of bonus compulsorily in case an employer earns profit, during a year.
22. Reverting to the payment for the festival holidays, it was contended by Mr. Khurshid Anwar Shaikh, Advocate thatthe item is also excluded from the definition of wages given in the Ordinance by implication. It is well-established principle of construction of a statute that nothing can be implied in a clear and unambiguous provision of it and, therefore, this item cannot be excluded by any implication. As a matter of fact the payment for festival holidays is on the same footing as any payment for lea v encashment. An employer makes payment for the festival holidays to hi employees because the employees could not avail of the leave which they were entitled to. The employees instead of having a leave on any working day opt to work and to encash their leave.
23. This payment is made by the employer at the rate of normal wages for any other day and, therefore, it cannot be contended that the payment for festival holidays is in the nature of compensation for festival holidays, which might have fallen on a day which is already a regular holiday.
24. The payments for casual leave and sick leave are also akin to the payment for leave encashment and festival holidays and I am of the view that they) are also covered by the definition of wages given in the Ordinance. In these case also an employee opts to encash casual and sick leave instead of availing of the same which he was entitled to, as a matter of right. In other words the employee works during the casual and sick leave period and receives normal wages in addition to the payment for the leave period. I, therefore, hold that the Institution was justified in claiming contribution from the appellants mills in respect of the above items.
25. Messrs Khurshid Anwar Shaikh and Nizam Ahmed learned counsel for the appellants mills have also relied upon the case of Messrs Pakistan Tobacco Co. Ltd. v. Pakistan Tobacco Company Employees' Union, Dacca and others (PLD1961SC403) (relevant portion at page 417), 'Muhammad Yousus v. Central Board of Revenue, Government of Pakistan and others (PLD1964SC113) (relevant portion at page 119) and contended that this Court while interpreting the provisions of the Ordinance should give reasonable construction and should also keep in mind that though the Ordinance is a beneficial legislation but at the same time it is a taxing legislation and should be construed strictly. There cannot be any quarrel for the proposition that a reasonable construction i, should be placed to the provisions of an enactment but the contention that the Ordinance is a taxing piece of legislation is not correct. Mr. Justice Yaqoob A.I Khan (My Lord the then Chief Justice of. Pakistan) in the case of Messrs Kohinoor Chemical Co. Ltd. Referred to hereinabove had observed that, the contribution under the Social Security Ordinance was in the nature of a fee and not a tax. The relevant observation is at p. 211 of PLD 1977 SC which reads as follows;--- "It was stated from the bar by the learned counsel for the employer, respondent herein, that the workers employed at the Head Office have all along been provided, under an agreement, some of the services which the respondent would have rendered to them had they been registered with it under the West Pakistan Employees' Social Security Ordinance. If that be so then the appellant will have no liability to make additional contribution to the fund of the Social Security Institution. A distinction must be made in this respect between a tax and a fee. The contribution which the employer and the workers are required to pay to the Social Security Institution is in the nature of a fee for rendition of Services enumerated in the West Pakistan Employees' Social Security Ordinance and not a tax. There is thus no absolute liability to pay on the part of the employer as well as the workers."
26. Messrs Khurshid Anwar Shaikh and Nizam Ahmed, Advocates, have relied upon the case of Hirjina & Co. (Pakistan) v. Commissioner of Sales Tax, Central, Karachi (1971 SCMR 128) and the Commissioner of Agricultural Income-tax, West Bengal v. B. W. M. Abdul Rahman, Manager, Taki Bara Taraf Wards Estate (1973 SCMR 445), in order to support their contentions that nothing can be implied in an enactment when there is no ambiguity nor the Court can impute any intendment in a fiscal statute. There cannot be any dispute about the above propositions, and therefore, there is no need of any further discussion on the above point.
27. It, has also been urged by the learned counsel for the appellants mills in the two Miscellaneous Appeals, namely, 22/77 and 26/77, that if the payments for the above items, namely, payments for leave encashment, festival holidays, casual and sick leave and motor-cycle allowance are to be included as a part of wages, in that event the appellants mills might not be liable to pay any contribution in respect of some of their employees for the reason that their wages might exceed Rs.
28. 20 per day, in view of subsection (4) of section 20 of the Ordinance. It may be advantageous to reproduce the same hereinbelow, which reads as follows;--- "(4) Subject to the provisions of subsection (2) of section 71----
(a) no contribution shall be payable on wages which are in excess of rupees twenty per day ; and"
29. As a reference has been made to subsection (2) of section 71 of the Ordinance in the above quoted subsection, it may be pertinent to reproduce the same hereinbelow which reads as under :-- "(2) Government may, after considering the said report and recommen--dation, by notification, enhance or reduce the wage limits specified in subsection (4) of section 20 or the rates of benefits payable under this Ordinance"
30. "(4) Manner of calculating daily wages for purpose of determining the amount of contribution.- Where, for the purpose of determining whether the wages of an employee exceed rupees twenty per day, or determining whether they are less than rupees two per day it is necessary to calculate the wage of an employee, the following provisions shall apply--
(i) if the wage of the secured person is paid on a monthly basis then the daily wage shall be the monthly wage divided by 30 ;
(ii) if the wage is paid on a weekly basis, the daily wage shall be the weekly wage divided by 7 ;
(iii) if the wage is paid at any other interval of time, the daily wage shall be the wage divided by the number of days covered by the interval."
31. The learned counsel for the Social Security Institution Mr. Sarwana has contended that the original definition of an employee given in clause (8) of section 2 of the Ordinance excluded from its ambit those employees whose salaries were more than Rs. 500 per mensum, but this amount of Rs. 500 was substituted by Rs. 1,000 in 1975 by Ordinances XXVI of 1975. It was further contended that it was due to mistake that necessary amendment had not been made in subsection (4) of section 20 in Regulation 4 referred to above. The above contention of the learned counsel for the Institution can not be accepted as nothing can be read into a clear provision of an enactment. The Court cannot presume that on account of any mistake necessary amendment could not be made in the above subsection and/or in the aforesaid Regulation. As this aspect has not been adverted to either by the Institution or by the Social Security Court, it will be just and fair that I should remand the above appeals to the Institution with the direction to investigate into the question as to whether the payment demanded by it in respect of the above item if included would make the wages of some of the employees more than Rs.20 per day. The wages paid to employees whose wages are more than Rs. 20 per day are to be excluded in computing the amount of contribution in view of the aforesaid subsection (4) of section 20 of the Ordinance.
32. It was also contended by Messrs Khurshid Anwar Shaikh and Nizam Ahmed, Advocates that the increase demanded by the institution under section 23 on account of the alleged failure on the part of the appellants mills to pay contribution was not justified inasmuch as the Institution itself had not claimed any contribution on the various items in dispute for about 9 years though they were auditing the mills' account books, wherein the above items were shown. In this connection it will be advantageous to reproduce section 23 of the Ordinance which reads as follows;---- "(i) If any employer fails to pay, on the due date the contribution payable by him under subsection
(1) of section 20, the amount so payable by him shall be increased by such percentage or amount as may be pre--scribed: Provided that in no case shall such increase exceed fifty per centum of the amount due; Provided further that no part of such increase shall be payable by, or the liability to pay the same be passed on by the employer to his employees.
(2) Without prejudice to any other remedy, the amount of the contribu--petition due together with the increase provided for under subsection (l), may be recovered as arrears of land revenue."
33. As perusal of the above section shows that the provisions of the above section are attracted when an employer fails to pay on due date the contribu--petition payable by him under subsection (1) of section 20. The contention of the learned counsel was that as no payment was demanded by the Institution for about 9 years, the Institution was not justified in urging that there was any failure on the part of the appellants mills. The above contention has no I force inasmuch as the scheme of the Ordinance and the Rules and Regulations framed thereunder clearly shows that the obligation has been imposed on an employer to make payment without receiving any demand notice. In this connection it may be pertinent to refer to the ruling of our Supreme Court in the case of Messrs Kohinoor Chemical Ltd. v. Sind Employees' Social Security Institution, the relevant observation of my Lord the present Chief Justice on the point in issue is at page 207 which reads as under;--- "Reading the two sections together, it appears to me that once a notifica--petition has been issued under subsection (3) of section 1 of the Ordinance notifying the areas, classes of persons and industries or estab--lishments to which the Ordinance is to apply, then the obligations of the employers spelt out in sections 20 and 21 come into play, and it is incumbent upon them to make the necessary contribution and keep the necessary records and furnish the necessary returns as may be prescribed by the Social Security Institution under rules or regula--tions made under the Ordinance. These obligations are not dependent upon any action to be taken or initiated on the part of the Institu--petition ; on the contrary, they are statutory obligations incurred under the relevant provisions of the Social Security Ordinance."
34. The learned counsel for the appellants mills have also contended that before issuing the impugned demand notice for the alleged due amounts of contribu--petition, no personal hearing was given and, therefore, the original demands are vitiated. It will suffice to say that there is no express provision in the Ordinance or the rules or regulations framed thereunder for providing personal hearing by the Institution. This point has also been dealt with in the above-quoted Supreme Court ruling in the case of (Sind Social Security Institution v. Messrs Dawood Cotton Mills Ltd. (relevant portion at p. 180) and in Karachi case of Messrs Quadri Brothers Foundry Workshop referred to hereinabove (the relevant portion at p. 115). In both the above cases it has been held that the law does not enjoin the Institution to give a personal hearing before issuing of a notice of demand. If a party relies only on the principle of natural justice and its violation, the Court may call upon the party alleging violation, to satisfy it that the violation of the principle of natural justice has caused prejudice to him before the Court sets aside the impugned order. In the instant case, as the re-assessm ent is to be made by the Institution on the basis of the records to be produced by the appellants mills after bearing them, the above objection needs no further discussion.
35. Reverting to the third item of Miscellaneous Appeal 22/77, namely, motor--cycle allowance it had been contended by Mr. Khurshid Anwar Shaikh Advocate that the above item is excluded by sub- clause (b) of clause (30) of section 2 of the Ordinance which provides that any sum paid to the person employed to defray special expenses entailed by the nature of his duties is to be excluded for the purpose of computing wages under the Ordinance. 1n order to attract the above sub-clause it is necessary first to establish that the motor-cycle allowance has been paid only to those employees, whose nature of duty required the use of motor-cycles, for example, if an employee working as a messenger or as a delivery peon, the payment of motor-cycle allowance to him may have to be excluded in view of the above sub-clause, but the payment of motor-cycle allowance to all the employees of an establish--ment irrespective of their nature of duties shall not attract the above exclusion. The motor-cycle allowance can be construed as a conveyance allowance. If that is so, in that event the above sub-clause is not attracted in view of the ruling of a Division Bench of the defunct High Court of West Pakistan, Karachi Bench, in the ca3e of Messrs Bawmi Woollen Textile Mills Ltd. v. Employees' Social Security Institution (Law Notes 1969 Kar. 162), wherein their Lordships while dismissing the writ petition in limine were pleased to observe that conveyance allowance was covered by the definition of wages given in clause 30 of sec--petition 2 of the Ordinance and it was not to be excluded while computing wages. It is an admitted position that the Institution first time has made demand for contribution in respect of the amount paid by the appellant mills to its employees as a motor-cycle allowance under the impugned demand notice issued in 1975 and, therefore, I am of the view that it will be fair and just to remand the case on this point to the Institution with the direction to investigate, as to whether the motor-cycle allowance is paid by the appellant mill to its employees, on account of the nature of their duties. If that is so, then this item is to be excluded while computing the amount of contribution.
36. Reverting back to the Miscellaneous Appeal 23/77, which has been filed by the Social Security Institution against the judgment dated 27-6-1977 passed by the Sind Social Security Court No. I disallowing the demand for contri--bution on the amounts paid for the following items;
(a) Amenities to labour.
(b) Rewards.
(c) Subsidy to Canteen.
37. I am of the view that the judgment passed by the Social Security Court is just and proper and the above items cannot be included within the ambit of wages as defined in the Ordinance. It was contended by the learned counsel for respondent mill before the Social Security Court that the item of amenity included free distribution of cloth among the workers on the occasion of Eid, purchase of crockery for the canteen and railway fare/transportation charges for carrying the dead bodies of the workers in case of their death during the course of their employment in the company. The above items by their very nature indicate that they are ex gratin payments or ex gratin expenses incurred by the employer for the benefit of the employees. Mr. Sarwana, learned counsel for the appellant Institution, contended that there was no evidence before the Social Security Court on the point that the item of "amenities to labour" comprises the above three items referred to hereinabove and, there--fore, disallowing all these items by the Social Security Court amounts to acting without having any evidence. The judgment does not indicate that the appellant Institution had contended before the Social Security Court that the item of amenities to labour did not comprise the above three items. But, on the contrary, both the parties proceeded on the assumption that the detail of the item given by respondent was correct. In any case I may clarify that if the above item includes any other item which cannot be construed to be an ex gratin payment or an ex gratis expense but payment in the discharge of a contractual or statutory obligation on the part of the employer, in that event the Institution shall be justified to initiate proper inquiry and to make a demand in respect of such payments/ expenses.
38. Referring to the second item, namely, rewards, it was contended by the respondent mill before the Social Security Court that this item was also an ex gratin payment made by the respondent mill in order to promote efficiency and cordial relations and was given to some employees in appreciation of their good work. It was also contended that the workers were not entitled under any law to claim the above reward as a matter of right and, therefore, it was in the nature of an ex gratin payment. Mr. Sarwana, learned counsel for the appellant Institution, contended that for this item also there was no evidence, before the Social Security Court warranting the exclusion of the same. The judgment does not indicate that any such objection was raised by the appellant Institution before the Social Security Court, on the contrary, the judgment indicates that both the parties, proceeded on the assumption that the item of rewards included only those payments which could be termed as rewards in the ordinary sense. If an employer pays any amount which he is not under any contractual or statutory obligation to pay, in that event, such payment will be an ex gratia payment and the same cannot be included within the ambit of wages. I am, therefore, of the view that the Social Security Court's finding that the item cannot be included, while computing wages, for the purpose of Social Security contribution, is correct. However, I may also clarify here that any payment made under this item by the respondent mill to its employees discharging its contractual or statutory obli--gation is to be included for computing wages (except four items excluded under sub-clauses (a) to (d) of clause 30 of section 2 of the Ordinance.
39. The third item relates to subsidy' to canteen. There is no dispute about the factual position in respect of the above item. It is an admitted position that the respondent mill has been contributing Rs. 6,000 per month to subsidise the canteen. It has been contended by Mr. Sarwana, learned counsel for the appellant Institution that this payment is in fact a payment in kind by the employer to its employees. The above contention is devoid of any force for the reason that all the employees of the respondent mill may not have been purchasing eatable items from the canteen. It is possible that some of the employees may have been bringing their own meals to the factory and, therefore, it cannot be contended that this payment by the res--pondent mill is towards wages of its employees The object of the Social Security Ordinance is to promote the welfare of the working class. This Court cannot place construction to any provision of the Ordinance which may defeat the very object of it. If all the payments and expenses incurred by an employer for the welfare and well-being of his employees are to be included within the definition of wages for the purpose of computing the contribution to be paid by the employer, this may discharge a good employer frommaking such payment or incurring such expenses, which in fact will defeat the very object of the Ordinance. I am of the view that all the expenses which are being incurred by an employee for the welfare and well being of his employees which he is not obliged to incur either under his contractual or statutory obligation are to be excluded for computing the wages under the Ordinance. It will be pertinent to refer to the ruling of the Supreme Court in the case of I Sind Employees' Social Security Institution and another v. Messrs Dawood Cotton Mills Ltd, the present Chief Justice at page 181 was pleased to observe as follows;------ "We cannot, however, agree with the learned counsel for the appellant that the definition should be so extended as to include therein every payment made by the employer to an employee. The definition being clear and unambiguous, its extension in the manner suggested by Mr. Sarwana would be unwarranted. Even otherwise, such an extension can produce absurd results. There may be a case, for instance, where an employer agrees to make an ex gratia or a charitable grant for the marriage of employee's children, or scholarship for their education. Such payments could not be regarded as wages merely because they are made by an employer to his employees. The statutory definition being clear, payments not covered by it cannot be included."
40. Reverting to M. A. Nos. 22 of 1977 and 26 of 1977, I hold that the Institution is entitled to claim contribution in respect of the payments made for (a) leave encashment; (b) for festival holidays;
(c) for sick and casual leave, and (d) for motor cycle allowance if not paid to any employee with the object p to defray social expenses entitled by the nature of his employment. Both the above two appeals are hereby remanded to the Institution for the purpose of making re-assessment of the amount of contribution payable by the appellants mills, after examining the records of the appellants mills in the above two appeals, and after taking into consideration the limit imposed by subsection (4) of section 20 of the Ordinance read with Regulation 4 of the West Pakistan Employees' Social (Contribution) Regulation, 1967, in accordance with the finding of this Court discussed hereinabove, and also to ascertain as to whether the motor-cycle allowance is paid to some of the employees on account of the nature of their duties as to attract to sub-clause (b) of clause 30 of section 2 of the Ordinance warranting exclusion of payment so made for computing the amount of contribution under the Ordinance. Before making any assessment appellants mills should be provided an opportunity to explain their point of view. With the above findings and directions the above two appeals stand disposed of with no order as to costs.