' The petitioner-Company M/s Pakistan Services Limited, being aggrieved of show-cause notice dated 2nd of May, 1992 for the nonenforcement of Companies Profits (Workers' Participation) Act, 1968 on chain of Pearl Continental Hotels, letter of the Labour Division, Ministry of Labour, Manpower and Overseas Pakistanis, Government of Pakistan, dated 25-6-1992, order dated 26-10-1992 (Annex-C) and order dated 10-2-1993 of the respondents, has filed the present writ petition alleging that the petitioners are operating residential hotels which are not 'industrial undertaking' as given in the Scheme framed under the Companies Profits (Workers Participation) Act, 1968. The definition of 'industrial undertaking' as given in the Scheme is not applicable to the petitioners.
2. The Pakistan Services Limited, the petitioners, are incorporated under the Companies Act, 1913 as a Public Limited Company and are engaged in the business of running hotels in Pakistan. Originally the petitioner was operating chain of hotels known as 'Intercontinental Hotels' ; later on, the name of the chain of hotels was changed to 'Pearl Continental'. The Company is a Public Limited one and its majority of shares are held by the Pakistani Nationals. The petitioner contributed the funds in compliance with the provisions of the Companies Profit (Workers Participation) Act, 1968 till 1989.
The petitioner's case is that notwithstanding the fact that the Act was not applicable to the Hotels and that Hotels are not industrial undertaking within the meaning of the Act, the law was applied and the then Management was constrained to contribute 5% of profits to the funds established under the Act, which was illegal.
3. Mr. Fakhar-ud-Din G. Ibrahim, Advocate, learned counsel for the petitioner contends that the number of workers employed by the petitioner-Company was 50 or more at any time during a year and that its paid-up capital as on the last day of its accounting year exceeds Rs,20 Lakhs and the value of its fixed assets (at cost) as on, the last day of the accounting year also exceeds Rs,40 Lakhs, but, he submits that the further essential requirement for the application of the Scheme, viz it should be engaged in an 'industrial undertaking' as defined in the Scheme, was lacking. He submits that the petitioner-Company is not engaged in any undertaking as its essential function was merely to run residential hotels and therefore, there was neither any process or industrial undertaking which changed the original condition of the commodity or adds its value. He relies not he definition of the 'Commercial undertaking' as given in section 2(ix) of the Industrial Relations Ordinance, 1969, the definition of 'Commercial Establishment' and 'Industrial Establishment' in section 2 (b) and (f) of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, definition of the 'Industrial establishment' in the West Pakistan Shops and Establishments Ordinance, 1969 in section 2(j) and in section 2(f) of the Workers' Welfare Fund Ordinance, 1971. He refers to the definition of the 'Industrial Undertaking' as given in the 1st Schedule Part IV(B)(i) of the Income Tax Ordinance, 1979, to contend that hotel is not an industrial concern.
He further states that ordinary dictionary meanings should be given to the expression 'industrial undertaking'. Finally be contends that no reasons have been given by the respondent while passing the impugned order dated 2-5-1992 and rejecting the review application vide order dated 26-10- 1992 and the same are without application of mind. He states that the respondents were under legal obligation under section 24-A of the General Clauses Act to give reasons for passing the impugned order and that the Labour Court is of the opinion that Hotel Holiday Inn is not industrial concern, therefore, on the same analogy the Pearl Continental/Intercontinental Hotel of the petitioner is not an industrial concern.
4. Ch. Sultan Mansoor, Deputy Attorney-General .Ontends that the 'hotel' falls within the definition of 'Industrial Undertaking' as defined in the Scheme framed under the Companies Profits (Workers'
Participation) Act, 1968. The petitioner was contributing fund till 1973, they are estopped by their word and conduct to challenge the contribution of Workers Participation Fund under the Act. The case of the Holiday Inn is not applicable to the petitioner because the Holiday Inn is not a Company registered under the Companies Ordinance and that the definition of 'establishment' as appearing in section 2 (ix) of the Industrial Relations Ordinance, 1969, of 'industrial establishment' in section 2(f) of the West Pakistan Industrial and Commercial Employment (Standing Orders)
Ordinance, 1968, and the definition of 'Industrial Establishment' as appeared in section 2(f) of the Workers' Welfare Fund Ordinance, 1971 have no nexus with the 'industrial undertaking' as defined in the Companies Profit (Workers' Participation) Act, 1968.
5. The sole point for determination in this case is whether the petitioner-Company is 'industrial undertaking' as defined in the Scheme framed under the Companies Profits (Workers'
Participation) Act, 1968 in pursuance of the provisions of section 2(e) of the said Act.
6. Section 2(e) of the Companies Profits (Workers' Participation) Act, 1968 defines 'Scheme' as under:- "(e) 'Scheme' means the scheme set out in the Schedule;"
' According to the Schedule, wherein the details of the Scheme referred to in section 2(e) are set out, it is provided, inter alia, as follows:- Scope of the Scheme---The scheme applies to all companies engaged in industrial undertakings which satisfy any one of the following conditions, and to such other companies as the Federal Government may, by notification in the official Gazette, specify in this behalf, namely:-
(i) The number of workers employed by the company at any time during a year is 50 or more.
(ii) The paid-up capital of the company as on the last day of its accounting year is Rs,20 lakhs or more.
(iii) The value of the fixed assets of the company (at cost) as on the last day of the accounting year is Rs,40 lakhs or more.
Explanation.--- in this scheme--
(a) 'industrial undertaking' means an institution, organization, enterprise or establishment which involves the use of electrical, mechanical, thermal, nuclear or any other form of energy transmitted, mechanically and not generated by human or animal agency and which is engaged in any one or more of the following operations, namely:-
(i) the subjection of goods or materials to any manufacturing, assembly, finishing or other artificial or natural process, which changes their original condition or adds to their value;
(ii) ship-building;
(iii) the transformation, generation, conversion, transmission or distribution of electrical energy, including hydraulic power; and
(iv) the working of a mine, oil-well or any other source, of mineral deposit, including blending, refining, and purification of oils and gases; and includes companies engaged in the marketing and distribution of gas or oil or in the carriage of men or goods by sea or air, and any other institution, organization, enterprise or establishment which the Federal Government may, by notification in the official gazette, declare to be an industrial undertaking for the purposes of this scheme; and
(b) reference to the paid-up capital and the value of the fixed assets of the company shall, in the case of a company incorporated outside Pakistan but having a branch in Pakistan, be construed as reference respectively to the capital invested in such branch and the value of the fixed assets of the branch.
Note:---The Federal Government is empowered to apply the scheme to companies it may specify by notification besides those mentioned in the scheme viz., industrial undertaking employing 50 or more workers or having paid up capital of Rs,20 lakhs or having the value of fixed assets (at cost) equal to Rs,40 lakhs or more."
7. Before I proceed to decide whether the petitioner is an 'industrial undertaking' as defined in the Scheme framed under the Companies Profits (Workers' Participation) Act, 1968, I may say that the case of the Holiday Inn decided by the Lahore Court under section 34 of the Industrial Relations Ordinance, 1969, referred to by the learned counsel for the petitioners, is not applicable to the petitioner, because Holiday Inn was not a Company as defined in the Companies Ordinance. There is no dispute about the fact that the petitioner is a Company which falls within the definition of the word 'Company' as envisaged in section 2(b) of the Companies Ordinance, 1984. Even the management of the fund (under section 4 of the Companies Profits (W.P.) Act. 1968) is to be done by the Board of Trustees comprising, (a) two persons elected by the workers of the company from amongst themselves, and (b) two persons nominated by the management of the company of whom at least one shall be a person from the accounts branch of the company. Since the petitioner is a Company and Holiday Inn is neither a company nor an 'industrial undertaking' to which the provisions of Companies Profits (Workers' Participation) Act, 1968 could be made applicable, therefore, the application of the Holiday Inn Employees Union under section 34 of the Industrial Relations Ordinance, 1969 against the Management of the Holiday Inn was misconceived and was dismissed.
8. The meanings of words ' industry', 'industrial' and 'undertaking' have been given in the Chambers English Dictionary as under:- " ' industry' ... Systemic economic activity; any branch of manufacture and trade 'industrial' - relating to or consisting in industry. 'undertaking'.- any business or project engaged in; a task one sets oneself."
9. No doubt the petitioner-Company is engaged in the business of hotel and accommodates the customers of stay for temporary purposes and does not indulge in any process, undertaking or contributes to substantial change, both in appearance of the commodity and the enhancement of its value. It is undisputed that the material for cooking is brought to the hotel and is cooked. There are also items of bakery for which the material is brought. In food-cooking and in the process of baking the material is used, which is mixed with other items. The true position is that in order to ensure proper quality of food and bakery items fit for human consumption the hotel management, subject to purchase of different raw-material/items has to go through various process and for this purpose the hotel management has installed its own godowns, stores, a number of machines which, are operated by electricity and the mechanical power. By this process food is cooked and bakery items are prepared; substantial amount of labour and experience is involved in these operations, which are undertaken with a view to enhance the value of the commodities and for making them acceptable to the customers. In result their price is enhanced. Thus by subjection of the goods/ramaterial to the process its value is increased.
10. However, there is force in the argument of the learned counsel that by renting out the rooms of the hotel neither any material is used nor the value of the material is increased by any process or use of the machinery. Therefore, I conclude that the petitioner indulges in industrial undertaking as far as preparation of food and baking is concerned; to that extent the petitioner-Company is liable to contribute to the Fund established under section 4 of the Companies Profits (Workers'
Participation) Act, 1968.
' With the above observations, this writ petition is disposed of.