COMMISSIONER, PUNJAB EMPLOYEES' SOCIAL SECURITY INSTITUTION, LAHORE
This matter concerns petitions for leave to appeal against a High Court judgment regarding the liability for social security contributions for an establishment previously nationalized by the Federal Government. The core legal question was whether the Federal Government or the private respondent (the entity to which the establishment was returned) was liable for social security contributions accrued during the period the establishment was under government control. The Supreme Court upheld the High Court’s decision, holding that the Federal Government was liable for the disputed contributions. The Court reasoned that under the West Pakistan Employees Social Security Ordinance 1965, the definition of 'employer' includes a 'manager' or 'agent.' Given that the Federal Government controlled the establishment during the relevant period, it functioned as an employer, and the High Court's direction for the government to pay was legally sound. The Court clarified that this holding did not preclude the Federal Government from seeking recovery of the paid amount from other parties, including the respondent, if such recovery is permitted under mutual liabilities governed by relevant laws.
- Does the definition of 'employer' under the West Pakistan Employees Social Security Ordinance 1965 include a government entity acting as a manager or agent?
- Can the Federal Government be held liable for social security contributions accrued during the period an establishment was under its control following nationalization?
- Does the discretionary power under Article 8 of the Protection of Economic Reforms (Protection of Industries) Order 1979 absolve the government from liability for social security contributions?
- Section 2(9), West Pakistan Employees Social Security Ordinance 1965
- Article 8, Protection of Economic Reforms (Protection of Industries) Order 1979
ORDER
1. ' MUHAMMAD AFZAL ZULLAH, J.--Leave to at peal has been sought in these two petitions against the acceptance by the High Court of a writ petition filed by Respondent No,l. It challenged the demand for contribution by the Social Security Institution from the respondent No,1.
2. ' The respondent company was taken over by the Federal Government in the so called nationalisation process, in 1972 under P.0.1 of 1972. It was returned in the so-called restoration process in 1979 under P.O.No,12 of 1978. The disputed contribution relates to a short period prior to the return of the establishment. The Social Security functionaries were of the view that the transferee (Respondent No,1) was liable to pay the contribution for the disputed period. The High Court on respondent's writ petition found that the Federal Government was responsible for the payment; and that amount, "shall have to be recovered from it." Both the Federal Government and the Social Security institution have sought leave to appeal.
3. In the circumstances of present case the liability to pay the contribution to the Institution is not denied. Nor, that it was the liability of the "Empolyer" as defined in section 2(9) of the W.P.Employees Social Security Ordinance 1965. The establishment taken over under P.O.No,1 was the "Ittefaq Foundry and Works Limited." It was however, when under the control of the Government, turned into and renamed as the "Lahore Engineering Foundries Limited."
4. ' Subsequently the latter was put in "the charge of the Federal Light Engineering Corporation. "The employer" includes the "manager" and the "agent". Even if it be assumed that during the period of liability under discussion, the Federal Government was not the owner; yet, it cannot be accepted that it or the other two concerns named above, were not liable as "agent" and/or "manager."
5. Therefore the direction of the High Court that the contribution in dispute shall be made by the Federal Government is not unjust. Regarding legality also, as 'agent' or `manager' the direction cannot be objected to, as illegal.
6. ' Art.8 of the P.0.12 of 1979 does not prohibit this direction either. Granting that the government has, on account of the use of the word "may" in Art.8, an option to assume a liability, but under that provision, it has to be of the "managed Establishment" alone. Where it is of the Government exclusively or together with any other party, as noted above, the option will not absolve it under the Social Security Law. In this view of the matter Federal Government has to make the disputed contribution. Leave to appeal, therefore is refused.
7. ' It is however observed that this Supreme Courts order shall not bar the recovery by the Federal Government of this amount (after the payment) from any other party including Respondent No,1; if so entitled, due to mutual liabilities under any law, including P.0.12.