' This appeal filed under section 64 (2) of the West Pakistan Employees Social Security Ordinance (X of 1965) is directed against the decision dated 22.34977, whereby the Punjab Social Security Court (1), Lahore, dismissed the appellant's appeal being premature and legally not competent.
2. The appellant is an industrial and business concern carrying on its business of manufacturing cigarettes at Jhelum in the name and style of the Pakistan Tobacco Company Ltd., Jhelum. Being a notified establishment, the appellant-Company is stated to be regularly paying its Social Security Contribution in respect of its employees who were enrolled by it directly and through no person or agency whatsoever. 81 is stated that certain jobs of occasional nature were contracted out from time to time to the suitable contractors and it was on 4-5-1971 that the appellant-Company bad sniped a lob-contraire to Maws Ch. Muhammad Adam. Contractors and General Order Suppliers, Adam, for cleaning and washing 'aria factory demimonde and areas on specified terms and conditions agreed to at different rates for various items of work.
3. By his letter dated 20-11-1974, the Social Security Met, begun, enquired from the appellant Company whether the amount of contribution paid in-respect of its employees included the amount for the workers engaged by the contractors. According to the appellant-Company, the position was explained through correspondence that the appellant's liability extended to its own employees engaged directly under contract of service and not to the employees of the establishment of the contractors, but the Directorate of the Institution at Rawalpindi, by their letter dated 244-1974 demanded contribution in respect of the worker by the contractors Begin that they were employed by the apply through the contracting agency. Peeling aggrieved, the appellant- Company iced a complaint under section 57 (41) of the Ordinance against the order of demand, and the Commissioner, Punjab Employees' Social Security Institution, Lahore, by his decision dated 24-1975, accepted the complaint may on the pop that neither the appellant-Company could dismiss the western employed by the contractors, nor did it pay wages to them for their work. It was, threats, found that such workers, being not nadir the control of the Company directly or indirectly, were not seamed persons and no contribution was payable for them.
4. In the meantime, the Punjab Social Security Court. Lahore, had passed an order on 3-2-1976 in the matter of Mares Shalimar (Pakistan) Lyallpur holding that the employer was liable to pay contribution in respect of the workmen even if they were by the Contractor and were paid by him.
Having known about this order, the Director (Contribution and Benefit) on 22-5-1976 hoed on behalf of the Commissioner a circular to all the local Directors of the Institution informing them about the decision taken by the Social Security Court on 3-2-1976 and also served on the appellant Company a notice dated 17-7-1976 holding it liable to the payment with immediate effect of contribution in respect of the contractual labor. On a protest made by the appellant-Company naiad its liability to be subject to such payment, the Institution by their notice dated 264-1976 required the appellant-Company to appear before the Commissioner on 74-1976 in connection with the review of the earlier order passed by his predecessor on 24-1975, and the Commissioner consequently made a decision on 78-9-1976 and refused to withdraw the notice breed on 17-7- 1976. By his decision, he warned the appellant-Company of its liability to pay for the contractual labour, if and when it was so found to be employed within the meaning of the term "employee'.
However, a right to file a complaint under section 57 of the Ordinance, if over aggrieved by a specie order, was provided to the appellant-Company. The appellant-Company, instead of resorting to another complaint, preferred an appeal before the Social Security Court, but the same was demised being premature and not maintainable.
5. The horned Court waned that the Commissioner had not reviewed the order of his predecessor and is fact he Gould not do so, and that the appellant-Company was not held liable by the Commissioner to pay contribution in respect_ of the dispute already resolved by the order dated 244975 bet he bad imply advised his subordinate functionaries that the decision of the Court given in the ease of the Shalimar (Pakistan) Ltd., Lyallpur, an employer was liable to pay contribution in respect of the workers even if they were employed by the contractors. The Court was of the view that the order of the Commissioner was not an order under section 57 of the Ordinance, therefore, no appeal was competent under section 59.
6. The learned Court was wrong in deciding that the Commissioner, Punjab Employees' Social Security Institution, by his order passed on 28-94976, while dealing with the question of contribution, had not reviewed the order of his predecessor. The correct position is that the appellant-Company bad, by a contract dated 4-5.1972, assigned to Messrs Ch. Muhammad Allem, the work of washing and cleaning its factory areas and for the compliance thereof the Contractors had engaged labour of their own. The demand of contribution In respect of the labour employed by the contractors was considered by the Commissioner not valid for the reason that the appellant-Company had no administrative control over the workers engaged by the Contractor, and that the Company did not pay wages to those workers for the work done by them. The case of the appellant was stated to be not covered by section 20 (8) of the Ordinance as it was not a contract for the construction work where the owner would guarantee the payment of contribution by the contractor. That decision once for all negatived the claim of the Institution to recover contribution from the appellant-Company for that particular work done by the contractors. That order was final and was not appealed against in the competent Court. The contribution was not demanded until the Social Security Court had, in an altogether unconcerned matter, pronounced the view that the contractual labour was included in the establishment of the notified concern. The Directorate had circulated the order of the Court for purposes of future guidance and that too if the facto and circumstances of that ONO were similar to the cases before the Institution. It was a sad affair that the Commissioner took up the matter once again although it was finally disposed of by his predecessor, and by his Letter No, SSPSC/PBSS1/74/17C (36)/ 74/74(17, dated 17-f-1976 addressed to the appellant-Company stated with reference to the matter of the Shalimar (Pakistan) Limited, Lyallpur, decided by the Court con 3-2-1976 that the appellant-Company would also be subject to the payment of contribution on payment made for contractual labor with immediate effect. It was pointed out that if the Company had any cause to show to the contrary, it might do so within 14 days of the receipt of that intimation. The Commissioner, In the exercise of his review made up a mind to undo the effect of the decision taken by his and issued a notice No,.
PSC/PESSI/76.9042, dated 264-1976 for the appearance of the Company on 7-6-1976 and another notice on 44-1976 for 14 9-1976. However, on pointing out that he had no jurisdiction to review an order beyond 60 days, the Commissioner was constrained to remark that he had no such powers, but he tried to wriggle out of the situation by stating that his proposed action was not to re-open the old case or to review the old position but to apply the law as it then stood after it was ultimately interpreted by the Social Security Court, and that the -exercise of his power was only to create uniformity. Ma learned appellate Court, while deciding the appeal against that order. Interpreted the situation in the same manner. If seen minutely, the Commissioner had discussed the merits of the case once again and formed an opinion with reference to the definition of an "employer as in section 2 (9) of the Ordinance that where contract labour working in connection with the work of a notified establishment falls within the definition of an "employer" and the Contractor himself is not separately notified as an establishment under section 1(3) of the Ordinance, the dues could and had to be recovered under section 20, from the notified establish. Meat treating it as the "employer". The conclusion thus drawn was that the notice issued on 17-7-1976 to the appellant- Company, warning it of its liability to pay for contractual labour if and when it was so found to be employed within the meaning of the term "employees", could not be withdrawn. All what can be gathered from the order is that the firestorm dated 24-1975 which was final for all purposes was virtually set aside by the Commissioner, which he could not otherwise vary, substitute or set said except in review. In spite of all this, the Commissioner as well as t learned appellate Court tried to give an Impression that the order was no passed in review. The learned Social Security Court was, thus, wrong in holding that the Commissioner, through his order dated 28-9-1976, had no reviewed the earlier decision dated 2-8-1975 of his predecessor.
7. Section 58 of the Ordinance empowers the Institution to review decision given by it under section 57, if new facts were brought to its notice. Para. 7 of the Punjab Employees' Social Security (Determination of Man and Time for Deciding Complaints and Disputes and Review of Decision Regulation, 1973, contemplates that a review can be made within sixty da of the decision and that too on discovery of new facts. Since both t conditions were not present, the question of a review did not arise at all. The order dated 28-9-76, thus passed in review, is without jurisdiction and deserves to be ignored. The learned Social Security Court was in such circumstances not justified in holding that the order of the Commissioner was neither a decision under section 57 nor a decision on review under section 58.
8. The next question which requires determination it whether the appellant-Company was liable to pay contribution in respect of the workers employed by the contractors. An owner of an industry, business, undertaking or establishment notified under section 1 (3) of the Ordinance, herein alter called "an employer" shall be liable under section 20 (1) for contribution in respect of every employee, whether employed by him directly or through other person at such times and at such rate and subject to such conditions as may be prescribed. The word "employee" is defined in section 2 (8) of the Ordinance to mean 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 apprenticed*, whether written or oral, express or implied.
9. An employee, according to the definition mentioned above said a person who works (I) normally for at least twenty-four hours per week, (II) for wages, (ill) in or in connection with the work of the employer (Si) under a contract of service or apprenticeship, whether such a contract is written or oral, express or implied. Each case, on its facts and circumstances differs from the other and the question whether a is an employee has to be seen in each case in the light of the lion provided in the Statute with reference to the particular material on record. The expression "employee" is a relative term with the employer who is an owner of the industry, business, undertaking or establishment in which the employee worst for his wages. It, More ton, means that where there is an employee there is an employer. An employee works for his wages under a contract of service or apprenticeship, whether that contract is written or oral. Such a contract is between the employee and the employer or his manager or representative. In case of a contract of service entered into by the employee on the one hand and by the employer or his manager or representative on the other, the natural consequence thereof is that some rights and obligations, as are provided in the contract or regulated by some Statute, are created between the employee and the employer. In that case the employee is bound to perform his duties assigned to him and work for the employer. On the other hand, the employer is obliged to pay the employee his wages for the work done. The natural consequence which emerges from the above discussion is that the employer has a supervisory and administrative control over his employee for the performance of his duties in the manner regular by the contract. In any cue, it is the contract of service which creates the relationship between them of an employee and the employer. As deter in Taj Din and others v. Punjab Labor Court No, 3, Lyallpur (1) the can of employment involves three ingredients (0 employer, (10 employee and (NO the contract of employment. The employer is one who employs Le one who engages the service of other persons. The employee is one who works for another for hire. The employment is contract of service between the employer and the employee where under the employee agrees to serve the employer subject to his control and supervision.
Employment brings in the contract of service between the employer and the employee. The control of the management which is the necessary element of the relationship of an employer and the employee is not directed towards providing or dictating the nature of the article to be produced or the work to be done, but refers to the other incidents having a bearing on the process of work the person carries out in the execution of the work. All what can be gathered from the principle enunciated above is that essential of the contract of service, is not only to direct the employee to work assigned to him, but also to determine the manner in which he shall do his work. Where the workers employed by the contractor are not under the contract of service of the employer and the contractor is at liberty to select any set of workers for the compliance of his own contract, the necessary consequence is that the workers are the appointees of the contractor and it is his responsibility to take work out of them, to pay the their wages accordingly, to keep a control on them, to remove them or t deal with them in any manner. Such workers, are thus answerable to contractor alone and not to the employer for whom the contractor carrying on work. Such workers, having no contract of service with t employer, therefore, cannot be deemed to be "employees" as defined in Statute, and the employer is in no way liable to pay contribution in respect of them.
10. In the present cue, the appellant-Company had entered into a contract with Messrs Co.
Muhammad Aslam for cleaning and washing of various Factory Departments and areas on different terms and condition.. For this work done the contractors were to be paid a monthly sum of Rs, 2,075 in arrears. Should the contractors fail to provide adequate labour, resulting in discontinuation or slow down of any of the stipulated operations, it was agreed to that a deduction from their bills would, be made at Rs, 50 per day, for all such days, and in this respect whether adequate labor (1) PLD 1978 Lah. 1169was supplied, the decision of the appellant's production manager was final. It was also stipulated that with regard to any person employed by the Contractors for the purpose of performing his obligations under the agreement, the contractors would be responsible for compliance with all the provisions of the relevant laws viz. West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance (VI of 1968), Workmen's Compensation Act (VIII of 1923), West Pakistan Minimum Wages for Unskilled Workers Ordinance (XX of 1969) etc. As might be applicable to such persons employed by the contractors. The above terms amply clarify that the parties to the contract were conscious enough that the workers engaged to carry out the work entrusted to the contractors were not the employees of the appellant Company and that the Company was in no way responsible to compensate, them in case of an injury or accident caused to them or to ensure the payment of wages, compulsory group insurance and such other facilities-To say it in other words, the contract was entered Into by the contractors with the appellant-Company without an approval from or any understanding with the workers. It was a mere lob contract" of a casual nature for a specified period and for a specified purpose. The workers thus engaged by the contractors were meant only to carry out the job assigned to the contractors and for that reason the appellant-Company had no administrative control over the workers, nor was it obliged under any agreement to pay wages to them for the work done for the contractors.
11. It was argued on behalf of the respondent that an employer is not only a person who owns an industry, business, undertaking or establishment in which the employee works, but includes any agent, manager or representative of the owner. Referring to Nazir Muhammad and others v.
Presiding Officer, Shad Labour Court No, III (1) it was contended that the worker who is employed through a contractor would be deemed to be an employee of the said employer. In the above case, a distinction was made between the two situations, the one where a workers was employed through a contractor and the other where the contractor himself employed workers for carrying on the contract which he had undertaken. In the latter situation, the industry was held to be paying only for the finished goods and could not be said to have any control or supervision over the workers, and as a logical corollary the employees were the employees of the contractor alone. It was further laid down that the proper test was whether or not the hirer had authority to control the manner of execution of the act in question. In Shad Employees' Social Security Institution v. Philips Electrical Industries of Pakistan Ltd. And another (2) the dispute arose whether persons working in the canteen as well as in the Fair Price Shop were the employees of the respondents within the meaning of the expression contained in section 2 (8) "f the Ordinance. It was held that an independent contractor was not an agent or representative of the person for whom he had agreed to do the assigned work, represent the person who had employed him to do that work. The conclusion arrived at was that such a contractor was a contractor whose obligation was to complete the assigned work, and that lie was an independent contractor and his obligation was to complete the assigned work without any interference from his employer. It was further laid down that the acts of a contractor were not acts of his employer as acts of an agent were that of his principal. A person to be an "employee" under the West Pakistan Employees' Social Security Ordinance has, therefore, to be under contract of service with his employer for the work done in consideration of wages (1) PLD 1977 Kat 214 (2) PLD 1977 Kar. 451 payable by such an employer. A similar view is taken in Qadri Brothers Foundry and Workshop, Karachi v. Sind Employees' Social Security Institution, Karachi (1), With reference to the terms and conditions of the contract In the present case, it comes out that the workers appointed by the contractors were not under contract of service of the appellant.
12. The intention of the Statute was not to give every person working in the factory or a business concern the status of an employee, but only to a person working for wages in or in connection with the work of an industry, business, undertaking or establishment under a contract of service. The appellant-Company it carrying on a business of manufacturing, distribution and sale of cigarettes.
Any work directly or even indirectly in connection with this business, right from the stage of purchasing raw material to the ultimate sale and disposal of the manufacturing goods, is "work" of the appellant-Company; and the persons enlisted by the appellant-Company under a contract of service on being employed either directly or through another including those employed through another person for carrying out such work of the Company are "employees" of its establishment.
Washing and cleaning various departments and areas of the factory certainly did not appertain to the work or business of the appellant-Company nor was it subservient-thereto. Therefore, workers having no contract of service with e the appellant-Company and engaged by the contractors for a purpose different from the trade and business of the appellant-Company could not be treated as "employees" working in or In connection with the work of thee appellant-Company.
13. For the foregoing reasons, the appeal is accepted. The decisions appealed against, being against law, are set aside. The appellant-Company is, thus, held not liable to pay contribution in respect of the workers engaged by the contractors for the compliance of the contract dated 45.1972. The parties are, however, left to bear their own costs.