SIND EMPLOYEES' SOCIAL SECURITY INSTITUTION Versus DAWOOD COTTON MILLS LTD.

1. ANWARDL HAQ, J.-This judgment will dispose of Civil Appeals bearing Nos. K-20 and K-2 i of 1976, which raise identical questions of law and fact regarding the meaning of the term "wages" as defined in the West Pakistan Employees Social Security Ordinance, 1965, and the liability of the employer to pay contribution thereon to the Social Security Institution.

2. I! appears that the respondent concerns in these cases, namely, Dawood Cotton Mills Ltd. and Adamjee Cotton Mills Ltd. remained closed for a few days in June 1972 on account of industrial unrest, and again for a few days in July 1972 due to language riots in Karachi. However, in response to a press note issued by the Director of Labour, Sind, on the 30th of June 1972, the periods of absence were treated as on duty and wages paid for the same by the employers including the respondents. On the 12th of December 1972 and on the 29th of March 1973 a demand was made by the Sind Employees Social Security Institution calling upon the respondents to pay social security contribution on the ex gratis payment made to the secured workers for the days on which work remained stopped during the months of June and July 1972.

3. The employers resisted this demand and filed appeals before the Social Security Court at Karachi, but both the appeals were dismissed by identical orders on 11-2-1974. Thereupon, the employers filed appeals before the High Court of Sind and Baluchistan under section 64 of the Ordinance, which were accepted by a learned Judge of that Court by his order dated the 5th of April 1974. He has held that ex gratia payments made for periods when the employee had withheld his services from the employer against the terms of the contract of service, could not be regarded as wages within the meaning of the definition of that term as contained in clause (30) of section 2 of the Ordinance. He has further taken the view that even the payments made for days when there was stoppage of work due to civil commotion could not be regarded as wages but merely as compensation as provided in clause (3) of Standing Order No. 11. As a result, he has come to the conclusion that social security contributions were not payable on these ex grads payments. Finally, he has also observed that the demand made by the Social Security Institution stood vitiated on account of the fact that no hearing was given to the employers before making the same.

4. Mr. S. A. Sarwana, learned counsel appearing for the appellant in both these cases, contends that the learned Judge in the High Court was in error in thinking that the Social Security Institution was under an obligation, statutory or otherwise, to afford an opportunity of hearing to the employers before calling upon them to pay the social security contributions for the periods in question. He submits that the omission in any case stood rectified by the fact that the employers were given full hearing in appeal by the Social Security Court, and the High Court should not, therefore, have set aside the demands on this account. The learned counsel further contends that the High Court is also in error in thinking that the payments made by the employers for the periods in dispute did not fall within the definition of the term "wages" as contained in the relevant provision of the Ordinance. According to him. all payments made by the employers to the employees must be deemed to be wages as long as the contract of service between them continues to subsist.

5. The question whether the demand made by the Social Security Institution stood vitiated on account of the failure of the Institution to afford to the employers an opportunity of being heard stands amply answered by the opinion expressed by this Court in The Collector, Sahiwal v. Muhammad Akhtar (1971 S C M R 681). It was observed in that case that "the Courts in Pakistan have taken the view that where the giving of a notice is provided for by the statute itself, then the failure to give such a notice is fatal and cannot be cured. But where there is no specific statutory provision and reliance is only placed on the principles of natural justice and audi alterm p.rrtem there, if at some stage or other, the person aggrieved has been given a fair opportunity of representing his point of view, then the defect, if any in the initial order may be deemed to have been cured. Each case will have to be determined on its own facts. If the statutory provision for notice be of a mandatory nature, then an order without any notice would be wholly void; but if there be no such provision or if the provision be merely of a directory nature, then, wherever a violation of this principle of natural justice is alleged, the Court may call upon the party alleging the same to prove prejudice before it sets aside the order. Such prejudice would obviously not be there if it is found that the party had been actually given a full bearing by the appellate or revisional authority and afforded every opportunity of showing cause against the allegations made.

6. To more or less the same effect is the decision in Alta Muhammad Qureshi v. The Settlement Commissioner (P L D 1971 S C 61). In view of these direct authorities on the point, the observations appearing in the University of Dacca v. Zakir Ahmed (PLD 1965 SC 90), as relied upon by the learned Judge in the High Court, are not directly relevant. for in that case the question of considering the effect of hearing given by an appellate or revisional authority did not arise. We have not been shown any statutory provision in the Ordinance, on the Rules and Regulations framed there under, requiring a mandatory notice or hearing before the creation of a demand for social security contributions. It appears to us, therefore, that the demand made by the Social Security Institution could not be struck down on the ground that a prior hearing was not given to the employers. '

7. Coming now to the main question in the case, namely, whether the payments made for the days when there was stoppage of work fell within the definition of the term 'wages' as contained m clause (30) of section 2 of the Ordinance, we are inclined to agree with the view taken by the High Court that they do not.

8. According to this clause, the term '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, 19o1 (XXXIX of 1961), without taking account of deductions for any purpose, under a contract of service or apprenticeship, 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 o authorised leave, illegal lock-out or legal strike." The definition then excludes certain items of payment, with which we are not directly concerned in the present case.

9. 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- B 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 then periods they 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 has accorded a statutory status to this payment as if it were included in every contract of service.

10. 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 gratis or a charitable grant for the marriage of the 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 employee. The statutory definition being clear, payments not covered by it cannot be included.

11. As to the payment made for the days in July 1972 when the stoppage/Q of work was caused by civil commotion, it seems to us that the learned Judge in the High Court has rightly taken assistance from the provision contained in Standing Order No. 11, as then does not seem to be any provision for such an eventuality in the definition o1 wages contained i clause (30) of section 2 of the Ordinance. The relevant clause of the Standing Order makes it clear that such a payment is to be an amount equal to one-half of the daily wages during the fourteen days of lay-off as compensation. The Standing Order itself, therefore, makes it clear that the amount is merely being paid as compensation and not as wages although its amount is being fixed with reference to the daily wages.

12. For the foregoing reasons, we are in agreement with the view taken by the High Court that the ex gratia payments made during the days of the stoppage of work in June and July 1972 did not fall within the definition o the term 'wages' as contained in the Ordinance. Accordingly, the employers were under no obligation to pay social security contributions in respect of these payments.

13. In Civil Appeal No. 1C-21 of 1976, a question was raised as to the liability to pay the necessary contribution on some petty cash payments made in May 1972. However, this part of the case was not pressed in appeal before the High Court, and accordingly we are not inclined to examine the same. As a result, the decision of the Social Security Court on this point .remains unaffected.

14. Both the appeals fail and are hereby dismissed, but we would leave the parties to bear their own costs. a. A.1:. Appeals dismissed.