2000 P L C 336

[Peshawar High Court]

Before Sardar Muhammad Raza Khan and Mrs. Khalida Rachid, JJ,

Messrs GLOBE TRADERS

Versus

EOBI and others

Writ Petition No. 1836 of 1997, decided on 29th July, 1999.

(a) Employees' Old-Age Benefits Act (XIV of 1976)---

----Ss. 1(4), 2(c), 2(bb), 11(3) & 33---Constitution of Pakistan (1973), Art. 199 ---
Constitutional petition---Registration of company for payment of
contribution---Company was registered under S.11(3), Employees' Old-Age Benefits
Act, 1976 and was directed to make contribution---Company resisted the registration by
filing complaint under S-33, Employees' Old-Age Benefits Act, 1976 alleging that
number of employees in the Company during the whole period had never exceeded eight
employees and application for the Act required the strength of ten
employees---Complaint of Company was dismissed on the ground that three Directors
of Company would also be included as employees of the company---Pay roll of
Company had shown only eight employees therein and three Directors were members of
one family---Even otherwise said Directors did not fall within the definition of
"employee" as given in S.2(bb) of Employees' Old-Age Benefits Act, 1976---Total
number of employees in the Company being less than required number of ten employees
Old-Age Benefits Act, 1976 was not applicable to the Company---Order of Institution
whereby Company was registered and was asked to make contribution was set aside by
High Court, in exercise of Constitutional jurisdiction.

(b) Words and phrases--

----"Employee"---Definition and connotation---Employee is a person who is engaged

by another on payment of wages---It connotes relationship between master and servant.

Qazi Abdur Rashid and Qazi Abdul Basit for Petitioner.

Salim Dil Khan for Respondents.

Dates of hearing: 15th and 16th June, 1999.

JUDGMENT
MRS. KHALIDA RACHID, J.---Through instant Constitutional petition, the petitioner,
challenging the order, dated 27-10-1996 issued by respondent No. 1, Employees'
Old-Age Benefits Institutions, Ministry of Labour Manpower (Labour Division) sought
the indulgence of this Court to declare the same as illegal, ultra vires and without lawful
authority.

2. The petitioner, a private limited company, registered under the Companies Ordinance,
1984 under the name and style of Globe Trader (Pvt.) Ltd., Peshawar located at
Peshawar, Medical Centre, Khyber Bazar, Peshawar, runs a business of distribution of
medical equipment since 27-3-1985. Employees' Old-Age Benefits Institution,
respondent No. 1, registered the petitioner-Company under section 11(3) of the
Employee' Old-Age Benefits Act, 1976 (hereinafter referred to as the Act) on
27-10-1996, vide Registration No.CCA 00673 and asked the petitioner to make
contribution payable either with effect from 1-7-1996 or from 1-7-1993, the date of
establishment of the organization, whichever, is later. The petitioner resisted the
registration by filing a complaint under section 33 of the Act, before the Adjudicating
Authority, alleging that the number of employees on the pay roll of the petitioner's
establishment, during the whole period from July, 1993 to June, 1996, has never been
more than eight, therefore, the petitioner-Company has wrongly been registered. The
Adjudicating Authority vide order, dated 16-1-1997 dismissed the complaint. The
Review Petition, under section 34 of the Act, was moved on the plea that Adjudicating
Authority has misinterpreted the term 'employee' by including three directors as
employees in its definition. In fact, industry had only 8 employees on their pay roll,
excluding the directors. The review petition was dismissed with the observations that
three Directors were rightly included, in the definition of the employee, thus, increasing
the strength of employees to eleven: Therefore, the industry has rightly been registered on
its full strength of eleven employees. Being dissatisfied with the said order the petitioner
preferred an appeal before respondent No.3, (Board of Trustees, Employees Old-Age
Benefits Institution at Karachi) which was' also dismissed vide order, dated 30-7-1997.

3. Praying to declare the impugned order, dated 27-10-1996 and subsequent orders
passed by the respondents as illegal, null and void. Qazi Abdur Rashid, Advocate,
appearing for the petitioner argued that the Act, cannot be applied to the petitioners
concern as it is being run by less than ten employees i.e. below the required strength.
Therefore, the establishment has wrongly been registered by respondent No. 1. It was
further argued that the Managing Director, Director and Assistant Director of the
petitioner's establishment do not fall under the definition of employee, hence they cannot
be calculated towards the total strength of the employees under section 2(bb) of the Act.

4. Disagreeing with the submission of petitioner's counsel, Mr. Salim Dil Khan, learned
counsel for the respondents, insisted that the directors very much fall within the provision
of section 2(bb). Despite repeated reminder to disclose the actual strength of employees
the petitioner did not care to provide the required information, therefore, the Institution
(respondent No. l), after receiving information and fully satisfying themselves about the
number of employees, suo motu registered, the petitioner-Company in accordance with
the law.
5. The above resume of the facts and arguments of the learned counsel for the parties
boiled down to a solitary moot question of definition of term 'employee' and as to
whether Managing Director and other Directors could be considered as employees in
terms of section 2(bb) of the Act. According to section 1(4) of the Act, this Act is
applicable to every industry which is being run with ten employees who - are employed
by employer defined in section 2(c) of the Act.

6. For the purpose of convenience and proper appreciation, the relevant provisions of law
are reproduced as under:---

"S.2. Definition--In this Act, unless the context otherwise requires,--(a)

benefits………………

(aa) board........

(b) contribution

(bb) employee' means any person employed, whether directly or through any other
person, for wages or otherwise, to do any skilled or unskilled work, supervisory, clerical,
manual or other work in or in connection with the affairs of an industry or establishment,
under a contract of service or apprenticeship, whether written or oral, express or implied,
and includes such person when laid off:

Provided that a director of a limited company or of a corporation set up under any law
shall not be treated as an employee under this act, irrespective of his wages or
emoluments.

(c) 'employer’ in relation to an industry or establishment, means any person who

employs, either directly or through any other person, any employee, and includes--

(i) in the case of an individual, an heir, successor, administrator or assign; .

(ii) a person who has ultimate control over the affairs of an industry or establishment or
where the affairs of an industry or establishment are entrusted to any other person
(whether called a managing agent, managing director, manager, superintendent, secretary
or by any other name), such other person.

Proviso to section 2(bb) above categorically exempts/excludes a director of a limited

company from the definition of an employee. Similarly section 2(c) 'describes employer a
person who may be managing director if has a control over the affairs of the industry or
where the affairs of the industry are entrusted to him. "

7. We may also refer to the dictionary meaning of word "employee". According to the
Concise Oxford Dictionary it means 'a person employed for wages'. The Collins Compact
Thesaurus Dictionary provides alternate words as 'job holder', staff member and wage
earner. The American Heritage Dictionary defines the term 'employee' as 'one who works
for another.' According to Chambers Twentieth Century Dictionary, it means 'a person
employed'. More elaborate definition is provided in 'Law Terms and Phrases' as employee
means any person who was employed for hire or reward to any work skilled or unskilled,
manual or clerical in a scheduled employment in respect of which minimum rates of
wages had been taken'.

8. In coming to the conclusion, after considering the above definitions employee is a

person who is engaged by another on payment of wages. It connotes relationship between
Master and Servant. The aforesaid three directors who are admittedly the owners of the
petitioner concern and had employed the eight employees for wages cannot be termed as
employee.

Furthermore, section 47 of the Act enumerates the person to whom this Act shall not
apply which says:--

S.47. Act not to apply to certain persons. ---Nothing in this Act shall apply to--

(a) persons in the service of the State, including members of the armed forces, police
force and railway servants;

(b) persons in the service of a local council, a municipal committee, a cantonment board
or any other local authority;

(c) persons who are employed in services or installations connected with or incidental to
the Armed Forces of Pakistan including an ordnance factory maintained by the Federal
Government or Railway Administration;

(d) persons in the service of Water and Power Development Authority;

(e) persons in the service of a bank or a banking company;

(f) persons in the service of statutory bodies other than those employed in or in
connection with the affairs, of a factory (as defined in) section 2(j) of the Factories Act,
1934 (XXIV of 1934), or (as defined in the) Mines Act, 1923 (IV of 1923):

Provided that workships maintained exclusively for the purposes of repair or maintenance
of equipment or vehicles used in such statutory bodies shall not be treated as factories for
the purposes of this clause.

(g) members of the employer's family that is to say the husband or wife and dependent
children of the employer) living in his house, in respect of their work for him.

9. Section 47(g) of the Act specifically lays down that this Act shall not be applicable to
members of the employer's family, that is to say, the husband or wife and dependent
children of the employer living in his house, in respect of their work for him.
10. Copy of pay roll of the petitioner-company at page 17 of the petition shows that
Managing Director, Director Finance and Director namely:--Assadullah Khan Lodhi,
Ms. Robina Lodhi and Ms. Safia Khanum Lodhi are members of one family, hence this
Act ostensibly shall not apply to the petitioner-concern.

11. We may also refer to the preamble of this Act. It is specifically mentioned that this
law is enacted for the benefit of the persons employed in industrial, commercial and other
organizations.

12. For the foregoing reasons, we accept the petition by setting aside the impugned orders
of the respondent. The parties shall bear their own costs.

H.B.T./409/P Petition accepted.

1995 P L C 494

[Lahore High Court]

Before Ihsan-ul-Haq Chaudhry, J

LAHORE RACE CLUB

versus

DEPUTY DIRECTOR, E.O.B.I. and others

Writ Petition No. 4335 of 1994, decided on 6th April, 1995.

(a) Interpretation of statutes—

---Beneficial statute is to be liberally construed.

(b) Employees' Old-Age Benefits Act (XIV of 1976)---

----Preamble---Employees' Old-Age Benefits Act, 1976, being a beneficial statute

should be liberally construed.

Koninoor Chemical Co. Ltd. and another v. Sindh Employees' Social Security Institution
and another PLD 1977 SC 197; Don Basco High School v. Assistant Director, E.O.B.I.
and others PLD 1989 SC 128; Anjuman Faizul Islam v. Pakistan etc. 1988 PLC 937;
Crescent Educational Trust v. E.O.B.I. W.P No. 8263 of 1989; Punjab Club v. E.O.B.I.
W.P. No. 1373 of 1985; Quadri brothers others Foundry and Workshop, Karachi v. Sindh
Employees' Social Security PLD 1977 Kar. 112 and Adamjee Foundation and another v.
First Sindh Labour Court, Karachi and another PLD 1979 Kar. 510 ref.

(c) Employees Old-Age Benefits Act (XIV of 1976)----

----Ss.1(4) & 2(e)---Application of provisions of Employees' Old-Age Benefits Act,

1976, to an establishment---Definition of establishment covers all organisations, clubs,
hospitals, clinics, etc. employing more than ten persons-Establishment conducting horse
races was covered by the provisions of Employees' Old-Age Benefits Act, 1976.

Crescent Educational Trust v. E.O.B.1. W.P. No. 8263 of 1989; Punjab Club v. E.O.B.I.
W.P. No. 1373 of 1985; Don Basco High School v. Assistant Director, E.O.B.I. PLD 1989
SC 128 and Lahore Gymkhana Club v. Employees' Old-Age Benefit Institution W.P. No.
5084 of 1985 rel.

(d) Employees' Old-Age Benefits Act (XIV of 1976)---

----S. 11---Constitution of Pakistan (1973), Art. 199---Constitutional
petition--Maintainability---Question whether petitioner was liable to pay contribution
in respect of its employees or not being a factual controversy, could not be allowed to be
raised in Constitutional petition---Constitutional petition was, thus, not maintainable in
circumstances.

(e) Employees' Old-Age Benefits Act (XIV of 1976)---

----S. 2(bb)---"Employee"---Definition---Part-time employees of an establishment

working twice a week whether covered by the definition of employee as given in S. 2(bb)
of the Act---Definition of "employee" as given in S. 2(bb), Employees' Old-Age
Benefits Act, 1976 being comprehensive would cover employment of every type and kind
including part-time employee of establishment who worked twice a week.

(f) Employees' Old-Age Benefits Act (XIV of 1976)---

----Ss. 11 & 12---Constitution of Pakistan (1973), Art. 199---Constitutional

jurisdiction, exercise of---Demand notice and show-cause notice served upon
establishment to pay specified amount in terms of S. 11, Employees' Old-Age Benefits
Act, 1976---Validity---Every establishment was required in terms of S. 11 of the Act to
seek registration with the Institution, work out amount of contribution and pay the
same---Such legal obligation having not been discharged by establishment, Institution
was at liberty to press into service provision of S. 12 of the Act---Establishment was,
thus, not entitled to relief in Constitutional jurisdiction which was dismissed in
circumstances.

Muhammad Umar Alvi for Petitioner.

MA. Hayee Khan for Respondents.

ORDER

The petitioner through this Constitutional petition has challenged the demand and
show-cause notice dated 27-1-1992 issued by the Deputy Director of respondent No. 1,
and orders dated 12-11-1992 of the Adjudicating Authority respondent No. 2 and
25-8-1993 of the Board of Trustees-respondent No. 3.

2. The brief background of the matter is that the petitioner, who is engaged in holding
races at Lahore and employ persons for that purpose while the respondent No. 1 has been
established under provisions of Employees' Old-Age Benefits Act, 1976 (hereinafter to
be referred as Act of 1976). The petitioner was served with a demand and show-cause
notice whereby it was required to pay a sum of Rs.88,185. The notice was challenged by
it through complaint under section 33 of the Act, 1976 before respondent No. 2, who
framed issues, recorded evidence and dismissed the complaint vide Order dated
12-11-1992, which was assailed through an appeal before the respondent No. 3. The
appeal was dismissed by the said respondent and petitioner was intimated vide memo.
dated 19-1-1994. Hence present writ petition, in which respondent No. 1 was directed to
submit report and para-wise comments. The order has been complied with. The
respondents have entered appearance through Mr. MA. Hayee Khan, Advocate and
contested the petition.

3. The learned counsel for the petitioner raised two-fold argument. It was argued that the
petitioner is not covered by Act of 1976, therefore, all the proceedings of the respondents
are without jurisdiction and ultra vires of the statute. The second argument is that an
`establishment' can be required to make the payment of contribution in respect of those
employees, who are eligible to any-benefit under Act of 1976. It is submitted that the
petitioner is employing some workers on regular basis while the others are just casual
workers. It is explained that the races are held only on Friday and Sunday in a week and
in those days number of persons are employed for race hours only. They are neither
regular employees nor paid salary on monthly basis. It is added that there is difference
between `tax' and `fee'. In this behalf, the learned counsel has referred to sections 3 and
22 of Act, 1976 and case of Kohinoor Chemical Co. Ltd. and another v. Sindh
Employees' Social Security Institution and another (PLD 1977 SC 197).

4. On the other hand, the learned counsel for the respondents argued that the petitioner is
an establishment and fully covered by the provisions of Act, 1976. The learned counsel in
this behalf has referred to section 2, subsections (bb) and (c) to maintain that Act 1976 is
applicable to the petitioner and has placed reliance on the judgments of Hon'ble Supreme
Court in the cases of Kohinoor Chemical Co. Ltd. and another (supra), Don Basco High
School v. The Assistant Director, E.O.B.I: and others (PLD 1989 SC 128) beside decision
of this Court in Anjuman Faizul Islam v. Pakistan etc. (1988 PLC 937). He has also
referred to two unreported judgments in W.P. No. 8263/89 "Crescent Educational Trust v.
E.O.B.I" " and W.P. No. 13t/85 "M/s. Punjab Club v. E.O.B.I." It is added that it is a
beneficial legislation, therefore, to be interpreted liberally so the purpose of the law could
be carried out to the fullest extent. The learned counsel in this behalf has referred to cases
of Don Basco High School (supra) and Quadri Brothers Foundry and Workshop, Karachi
v. Sindh Employees' Social Security (PLD 1977 Kar. 112).

5. I have given my anxious consideration to the arguments of the learned counsel for the
parties and gone through the record, relevant provisions of law and precedents. The first
question for determination is whether the provisions of Act 1976 are applicable to the
petitioner or not? The learned counsel for the petitioner argued that the petitioner is
neither industry nor establishment, therefore, demand and show-cause notice issued by
the respondent No. 1 was illegal. Therefore, before proceeding any further, it is
worthwhile to ascertain the scope of Act 1976, the Act as per section 1(4) applies to every
industry and establishment in which more than 20 persons are employed. While
establishment' has been defined in clause (e) of section 2, which reads as under:--

"(e) establishment" means---

(i) an establishment to which the West Pakistan Shops and Establishments Ordinance,
1969 (West Pakistan Ordinance No. VIII of 1969), for the time being applies, and,
notwithstanding anything contained in section 5 thereof, includes clubs, hostels,
organisations and messes, not maintained for profit or gain and establishments, including
hospitals, for the treatment or care of sick, infirm, destitute or mentally unfit persons;

(ii) a construction industry, as defined in the West Pakistan Industrial and Commercial
Employment (Standing Orders) Ordinance, 1968 Pakistan Ordinance No. VI of 1968);

(iii) a factory as defined in the Factories Act, 1934 (XXV of 1934);

(iv) a mine as defined in the Mines Act, 1923 (IV of 1923);

(v) a road transport service as defined in the Road Transport Workers Ordinance,
1961 (XXVIII of 1961); 'and includes any class of industries or establishments which the
Federal Government may, by notification in the official Gazette, declare to be
establishments for the purposes of this Act."

Act 1976 is a beneficial statute, therefore, the same is to be liberally interpreted. The
learned counsel for the respondents has rightly referred to the case of Kohinoor Chemical
Co. Ltd. (supra). I am fortified in my view by the judgments of Hon'ble Supreme Court in
the cases of Don Basco High School, Anjuman Faizul Islam (supra) and Adamjee
Foundation and another v. First Sindh Labour Court, Karachi and another (PLD 1979
Kar. 510) as well as two unreported judgments in the cases of Crescent Educational Trust
and M/s. Punjab Club (supra). The Hon'ble Supreme Court in the case of Don Basco
High School (supra) observed as under:-- '

"Then in the definition of `establishment' as given in the Act, before the words, clubs,
hotels, organisations and messes word `includes' is used which enlarges the scope and
meaning of the word `establishment'. It will include petitioner school as the word
`include' is generally used in the interpretation clauses in order to enlarge the meaning of
the words and phrases occurring in the body of the statute. M/s. Usmania Glass Sheet
Factory Limited, Chitagong v. Sales Tax Officer, Chitagong PLD 1971 SC 205.
Reference may also be had to Dilworth v. Newzealand Commissioner of Stamps 1899 AC
99, wherein the meaning of the word `include' is stated as follows:--

'The word `include' is very generally used in interpretation clauses is order to enlarge the
meaning of words and phrases occurring in the body of the statute.'

Further, the word `organisation' in itself is broad enough to include school. According to
Black's Law Dictionary word `organisation' includes a corporation, Government or
Governmental sub-division or agency, business trust, estate, trust, partnership or
association, two or more persons having a joint or common interest, or any other legal or
commercial entity. This covers petitioner school."

While in the case of Anjuman Faizul Islam (supra) it was argued that "the case of the
petitioner is that according to the aims, objects and constitution of the Anjuman
(Annexure `B') the Society receive its income largely from voluntary OK contribution. Its
aims and objects are the protection and care of the orphans and other educational and
religious pursuits. It has been stated that since the donations received by the Anjuman are
uncertain the Anjuman is not a regular employer and all persons engaged in the service of
the Orphans and Orphanage are not regular employees but are participants in a sacred
cause". This argument was repelled and it was held that:---

"…….. It is a beneficial legislation and therefore the purpose behind this law will have to
be kept in mind before applying the principle of ejusdem generis. The organisation which
have a certain number of employees working for them have been asked to pay a certain
percentage of the salary of the employees to the fund which in turn will try and provide
for the old-age of the employees of such organisations:'

The writ petition was accordingly dismissed. The same view was followed in W.P. No.
8263/89 titled "Crescent Educational Trust v. E.O.B.I:", W.P. No. 1373 of 1985'titled
"Punjab Club v. E.O.B.I " and W.P. No. 5084 of 1985 titled "Lahore Gymkhana Club v.
Employees' Old-Age Benefit Institution".

6. It is clear from the above definition of establishment and precedents that it covers all
organisations, clubs, hospitals, clinics. In short the important and relevant consideration is
employment of more than 10 persons and not the object, purpose, business, pursuit of the
employer. Therefore, there is no merit in the argument that the Act 1976 is not applicable
to the petitioner.

7. Now coming to the question whether the petitioner is liable to pay contribution in
respect of its employees or not? I may point out at the very outset that this is a factual
controversy which cannot be allowed to be raised in the Constitutional petition.
Moreover, the petitioner has not pinpointed objection with reference to the particular
employees. The learned counsel for the respondents very candidly conceded that
petitioner is at liberty to point out any person employed by it after the age of 60 years.
The respondents shall not press for the contribution in respect of such employee.

8. The main thrust of the argument of the learned counsel for the petitioner was that large
number of persons are employed by the petitioner twice a week on race days for couple
of hours, therefore, they cannot be treated as employees. Therefore, before proceeding
any further it is relevant to refer to section 2, subsection (bb), which reads as under:-

"(bb) `employee' means any person employed, whether directly or through any other
person, for wages or otherwise, to do any skilled or unskilled, supervisory, clerical,
manual or other work in or in connection with the affairs of an industry or establishment,
under a contract of service or apprenticeship, whether written or oral, express or
implied, and includes such person when laid off-

Provided that a director of a limited company or of a corporation set up under any law
shall not be treated as an employee under this Act, irrespective of his wages or
emoluments:'
It is clear from the above definition that it is comprehensive and cover' employment of
every type and kind. The learned counsel for the respondents with reference to Annexure
`F' appearing at pages 37 to 56 showed that in fact the petitioner was employing same
persons but it has only placed on record statements showing the wages paid on one date.
It would be seen from the definition of the employee that there is nothing as to working
hours or mode of payment of wages. The only ingredients are employment and payment
of wages. The learned counsel for the respondents on Court query explained that the
contribution is payable at the rate of 5% of the wages and similarly, pension payable to
the workers is also worked on the basis of contribution received. This is complete reply to
the argument of the learned counsel for the petitioner.

It is needless to add here that it is the duty of the every establishment under section 11 of
the Act 1976 to seek registration with the Institution, work out the amount of contribution
and pay the same. This legal obligation was admittedly not discharged by the petitioner.
Therefore, the respondent No. I was at liberty to press into service provisions of section
12 of Act 1976. If looked from this angle the petitioner is not entitled to relief in
Constitutional jurisdiction.

9. The upshot of the above discussion is that there is no merit in this petition. The same is
dismissed with costs.

A.A./L-101/L Petition dismissed.