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FAO No. 230 of 2002.

H C J D A 38

JUDGMENT SHEET
IN THE LAHORE HIGH COURT LAHORE
JUDICIAL DEPARTMENT

F.A.O.No. 230 of 2002.

(M/S NestleMilkpak Limited vs. Judge Social Security Court, Lahore &2 others)

J U D G M E N T

Date of hearing. 13.10.2015.

Appellant by Mr. Umer Abdullah, Advocate.

Mr. Anwar Hussain, Assistant Advocate-General

Respondents by Punjab.
Mr. Mohammad Nauman Aslam Raza, Advocate.

IBAD-UR-REHMAN LODHI J.:- Although this appeal was

not only filed, but entertained and registered as FAO; however, keeping
in view the fact that, in the scheme of law, as has been promulgated by
means of Provincial Social Security Ordinance, 1965 (hereinafter to be
referred as “the Ordinance”), first appeal lies before the Social Security
Court in view of Section 59 of the Ordinance against a decision of the
Institution under Section 57 or on a review under Section 58, as such,
the appeal to the High Court within the meaning of Section 64of the
Ordinance is always to be considered as „Second Appeal‟ in the
relevant scheme of law and, thus, office is directed to entertain and
register such appeals as SAO in future.

2. Earlier, this Court on 20.11.2002 allowed the present appeal;

however, the same was called-in-question by The Vice Commissioner,
Punjab Employees Social Security Institution (PESSI) before the
Hon‟ble Supreme Court of Pakistan, where Civil Petition, after grant of
leave, was converted intoCivil Appeal No. 2217 of 2008, which finally
was decided on 12.02.2015 by the apex Court, in the manner that, the
judgment passed by this Court on 20.11.2002 was set-aside and case
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FAO No. 230 of 2002.

was remanded to this Court for rehearing of the appeal and passing a
fresh orderinter-alia taking into account the Notification dated
29.06.1994.

3. In compliance of such directions, this appeal was again heard

and is being decided by means of present judgment.

4. The controversy started, when the local office of Punjab

Employees Social Security Institution, Shahdara, Lahore, issued a
demand notice on 13.01.1999 to Nestle Milkpak Limited, present
appellant, directing to pay less paid Social Security contribution for the
periodfrom January, 1995 to December, 1998alongwith50% increase
and total recoverable amount was calculated as Rs.2,99,664/- (rupees
two lac, ninety nine thousand, six hundred and sixty four only).

5. The appellant having its own reservations filed a Complaint

under section 57 of the Ordinance before the Commissioner, Punjab
Employees Social Security Institution. The Vice Commissionerin the
Institution was entrusted the hearing of the complaint, who by means of
order, announced on 02.03.2001, did not agree with the appellant by
not accepting the interpretation of wages as was attempted to be given
effect by the present appellantby including therein all expenses incurred
by the Establishment for providing the facilities to the workers
connected with their job performance during the working hours, as
such, encashment of Festival Holidays, meal subsidy, Uniform and its
washing allowance, leave fare assistance and transportation expenses,
were not included in the wages of the workers and, therefore, the
Director of Social Security was allowed to effect the recovery of
demand.

6. Such findings of the Vice Commissioner were challenged by the

Institution-appellant before the learned Judge, Social Security Court
Punjab, Lahore, by means of Appeal No.9/S/2001, under Section 59 of
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FAO No. 230 of 2002.

the Ordinance. The first appellate court, vide order dated 11.05.2002,
proceeded to dismiss the appeal upholding the findings of the Vice
Commissioner; hence, this appeal before this Court.

7. The pivotal question, to be interpreted, is the effect of proviso

added in Section 2(8)(f) of the Ordinance, by virtue ofLabourLaws
(Amendment) Act, 1994 (Act XI of 1994), which reads as under:-

“Provided that an employee shall not cease to be an

employee for the reason that his monthly wages exceed
three thousand rupees”.

8. In order to better understand the provision of Section 2(8)(f) of

the Ordinance, it would be beneficial to trace out its history. The
relevant provision of Section 2(8)(f) of the Ordinance has been
underwent with certainamendments and changes, after the enactment of
the originalOrdinance. The original position of Section 2(8)(f) of the
Ordinance, as was promulgated by means of Ordinance X of 1965,
West Pakistan Employees‟ Social Security Ordinance, 1965, was to the
following effect:-

“8. “employee” means any personworking, 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 apprenticeship, whether written or oral,
express or implied, but does not include---
(a) -----------------------------------------------
(b) -----------------------------------------------
(c) -----------------------------------------------
(d) -----------------------------------------------
(e) -----------------------------------------------
(f) any person employed on wages exceeding
five hundred rupees per mensem”

Through Act No.XI of 1976 i.e. Labour Laws (Amendment) Act,

1976, the said provision was further amended and words “five
hundred” were substituted with the words “one thousand”
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FAO No. 230 of 2002.

In 1985, Act No.XVI of 1985 i.e. Labour Laws (Amendment)

Act, 1985, in Section 2(8)(f), for the words “one thousand”, the words
“one thousand five hundred” were substituted.

By means of Ordinance XXIII of 1993 i.e. LabourLaws

(Amendment) Ordinance, 1993, the provision, under consideration, was
further amended and for the words “one thousand five hundred”, the
words “three thousand” were substituted.

In 1994, by virtue of Act XI of 1994 i.e. Labour Laws

(Amendment) Act, 1994, this clause was further amended and this time,
the above noted proviso was also added in Section 2(8)(f) of the
Ordinance.

In 2001, again there was some Legislative change and by means

of Ordinance No.LIII of 2001 i.e. LabourLaws (Amendment)
Ordinance, 2001, whereby, in Section 2(8)(f), for the words “three
thousand”, the words “five thousand” were substituted.

In 2008, by virtue of Act No.1 of 2008 i.e. The Finance Act,

2008, Section 2(8)(f) of the Ordinance was further amended and for the
word “five” occurring twice earlier, the word “ten” was substituted; and

lastlyby virtue of Act, XXIV of 2013 i.e. Provincial Employees‟

Social Security (Amendment) Act, 2013, after amendment, Section
2(8)(f) of the Ordinance was substituted in the following position:-

“(a) in clause (8), for sub-clause (f), the following shall

be substituted:--

“(f) any person employed on wages exceeding

the wages determined by the Government under
Section 71,”.

9. The learned counsel for the appellant has mainly placed much
emphasis on his point that, if there is a direct conflict in between the
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FAO No. 230 of 2002.

main provision and the proviso attached therewith, then the proviso is
to be ignored and in support of his such contention, has placed reliance
on Province of Sindh through Chief Secretary and others vs. M.Q.M.
through Deputy Convener and others (PLD 2014 Supreme Court
531), which provides that a proviso could not be construed to nullify
the enacted clause. He has further placed his reliance on Dr.
Muhammad Anwar Kurd and 2 others vs. The State through Regional
Accountability Bureau, Quetta (2011 SCMR 1560) to contend that,
natural presumption of providing such proviso is to exclude general
application of relevant section/subsection in the matter notified under
the proviso. Proper function of proviso is that it qualifies generality of
main enactment by providing an exception and taking out as it were,
from main enactment. To say,proviso should normally be construed nor
merely to limit or control but nullify the enactment and taking away
completely a right conferred by enactment is incorrect.

10. While responding to such contentions raised by the learned

counsel for the appellant, the learned Assistant Advocate-General
Punjab assisted by the learned counsel for the respondents has
contended that Section 2(8) of the Ordinance defines the term
“employee”, whereas, while a proviso was added to such provision; it
simply extended such definition, but never nullified the basic statutory
provision. The learned Assistant Advocate-General Punjab has further
referred Section 20 of the Ordinance, which is a charging Section and
contended that, it is the duty of the employer to pay in respect of every
employee, whether employed by him directly or through any other
person,to the Institution a contribution at such times, at such rate and
subject to such conditions as may be prescribed, provided that no
contribution shall be payable on so much of an employee‟s wages,
which is in excess of three thousand rupees. Although this amount of
rupees three thousand was subsequently enhanced, but keeping in view
the relevant period in this particular case, which is from January, 1995
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FAO No. 230 of 2002.

to December, 1998,such amount is being referred, which remains

applicable during whole of such referred period.The learned Assistant
Advocate-General Punjab, in support of his arguments, has referred an
elaborated judgment passed by the erstwhile Karachi High Court in
case of Reckitt &Colman of Pakistan Limited, Karachi and others vs.
The Commissioner, Sindh Employees‟ Social Security Institution,
Awan-e-MehnatkashGulshan-e-Iqbal, Karachi and others (2001 PLC
245).Relevant portion of said findings, which have a direct bearing
upon the issue involved in the present appeal, is re-produced herein-
below:-

“ Consequent to the above discussion it is held

that although amendment has been made in section
2(8)(f) of the Ordinance, in the form of proviso but a
bare perusal of the provision leaves no scintilla of
doubt, that in effect and in substance it is not in the
nature of proviso. In substance it is a leading
provision. The reason being that the provision is
generally an exception to the section preceding the
proviso and being in the nature of an exception it is
interpreted very narrowly and strictly. A bar perusal of
the proviso under consideration shows that „it has
enlarging effect. It is further held that the provision
under consideration is part of section containing
definition and therefore, it is declaratory in nature as
held by Hon‟ble Supreme Court of Pakistan, in the
judgment reported as (PLD 1964 SC616).

As already held by the Hon‟ble Supreme Court

of Pakistan in the judgments cited above, the entire law
contained in the Ordinance is beneficial in nature,
therefore, the provision under consideration is also a
beneficial and welfare legislation and thus, is required
to be interpreted liberally and in a way which has the
effect of advancing the relief and suppressing the
mischief. It is further held that the provisions contained
in proviso are explanatory in nature and explanation
added by the legislature is deemed to be a note of
caution indicating the real intention of the legislature
and purpose of the enactment as well as removal of any
doubt. Thus, the provision is clarificatoryas well. The
presumption is that the legislature while enacting any
law or making any amendment is conscious of the
circumstances prevailing at the time of
enactment/amendment/substitution, and therefore, it is
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FAO No. 230 of 2002.

held that the legislature was aware that questions were

being raised about the exclusion of a worker from the
purview of the terms employee used in the Ordinance
as defined in Section 2(8)(f)and a view was prevailing
which was prejudicial to the interest of worker and was
not in consonance with the avowed object and purpose
of legislation, therefore, an amendment was inserted
whereby it was clearly provided without any ambiguity
that once a person/worker is included within the
definition of employee under the Ordinance, he shall
continue to be so, notwithstanding crossing the ceiling
of wages.Thus, the law curative in nature as well.
Thus, the proviso to section 2(8)(f) of the Ordinance
being a part of definition section is declaratory and at
the same time it is beneficial, curative, remedial and
welfare legislation and has to be given retroactive
effect.

As a result of above findings, it is held that the

proviso to section 2(8)(f) of the Ordinance, being
retroactive in effect, the respondents have rightly‟ held
that the employees who have crossed the ceiling
continue to be employees and therefore, the
respondents are justified in demanding contribution in
respect of such employees from the appellant in
accordance with the provisions contained in the
Ordinance”.

11. A fact, which is to be kept in mind is that the period relevant in

this case is from January, 1995 to December, 1998 and during whole of
this period, the proviso added by virtue of Act XI of 1994 i.e. Labour
Laws (Amendment) Act, 1994, remained effective and by no stretch of
imagination, it can be argued that, the employees of the establishment
even if, were getting wages exceeding three thousand rupees, were
ceased to be the employees of the establishment and, therefore, when
such proviso was effective with full force, it has to be given effect in
the same force.

12. The conclusion on the basis of above discussion is that, the

demand raised by the Institution vide notice dated 13.01.1999, directing
the appellant to pay less paid Social Security contribution for the period
from January, 1995 to December, 1998 alongwith 50% statutory
increase, was a valid and legal act on the part of the Institution and the
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FAO No. 230 of 2002.

refusal on the part of the establishment-appellant was having no

justification.

The result is that this appeal fails and is dismissed.

JUDGE
Announced in open Court on 30.10.2015.

JUDGE
Approved for reporting.
JUDGE

*M.AYYUB*