SIND EMPLOYEES SOCIAL SECURITY INSTITUTION AND ANOTHER vs DAWOOD
This matter concerns petitions for leave to appeal against a High Court judgment regarding the definition of 'wages' under the West Pakistan Employees' Social Security Ordinance, 1965. The respondents, textile mill owners, paid wages and attendance allowances to employees during periods when mills were closed due to civil commotion. The petitioner, Sind Employees Social Security Institution, sought social security contributions on these payments. The respondents refused, arguing the payments were ex gratia, not wages for work done. The High Court ruled in favor of the respondents, holding that 'wages' implies a quid pro quo for services rendered, and since no services were performed during the closure, the payments were not wages. The Supreme Court granted leave to appeal, noting that the interpretation of 'wages' under Section 2(30) of the Ordinance is a question of general public importance and a matter of first impression. The operation of the High Court's order was suspended pending the final hearing of the appeals.
- Does the definition of 'wages' under the West Pakistan Employees' Social Security Ordinance 1965 require a quid pro quo of services rendered?
- Are payments made to employees during periods of mill closure due to civil commotion considered 'wages' for the purpose of calculating social security contributions?
- Can payments characterized as ex gratia be classified as 'wages' under the West Pakistan Employees' Social Security Ordinance 1965?
- Section 2(30), West Pakistan Employees' Social Security Ordinance 1965
- Section 59, West Pakistan Employees' Social Security Ordinance 1965
- West Pakistan Land Revenue Act 1967
ORDER
1. ' MUHAMMAD GUI., L-This order deals with the above two petitions which proceed on similar facts and give rise to a common question of law.
2. ' The respondent in each petition is a limited joint stock company owning textile mills and are governed under the Scheme promulgated under the W. P. Ordinance No, X of 1965. Under the provisions of the Ordinance, the respondents are liable to pay to petitioner No, 1, social security contribution at the prescribed rate on all the wages paid by them to their employees drawing wages not exceeding Rs, 500 p.m.
3. ' There was wide-spread civil commotion in the city of Karachi on account of which the respondent's mills remained closed from 7th and 8th June and again from 11th July to 14th July 1972, (hereinafter called the periods in question). It appears that respondents paid wages and attendance allowance to their employees for the periods in question, notwithstanding that their mills remained closed during these periods, because of civil commotion.
4. ' Under the Rules framed under the Ordinance, the respondents are required to pay within 15 days of the end of each calendar month or such extended period not exceeding 45 days thereafter, the total amount of contribution at the prescribed rate, on the wages paid to the secured employees.
5. The respondents in these two cases, however, declined to pay contributions on the wages and attendance allowances paid during the periods in question on the ground that these payments were ex gratia and were not in the nature of wages for any work done by the employees during the period; in question. A demand notice followed by a notice under the West Pakistan Land Revenue Act, 1967 for the recovery of contribution as arrears of land revenue were also issued in each case.
6. This obliged the respondents to take the matter to the Social Security Court in appeal under section 59 of the Ordinance, to challenge the validity of the demand notices in respect of the periods in question. The appeals before the Social Security Court having been dismissed, the respondents took further appeals to the High Court, which succeeded and the demand notices were set aside on the ground that the payments made by the respondents to their employees in respect of the periods in question could not be treated as remuneration or wages for the purposes of the Ordinance. The learned Judge in the High Court based himself on the grammatical meaning of the words "wages" and "remuneration", which in his opinion are paid as quid pro quo for the services rendered. Since that element was missing in the instant cases, the payments made to the employees in respect of the periods in question were entirely ex gratia and not "wages" within the meaning of the section 2(30) of the Ordinance. The petitioners seek leave against this order of the High Court.
7. ' Having heard the learned counsel for the petitioners, we are of the view that these two petitions raise a question of general public importance as to the interpretation of section 2(30) of the Ordinance, which is also a matter of first impression Accordingly, we grant leave.
8. ' The operation of the High Court's order in each case is suspended.
9. ' The appeal shall be made ready early. Either party will be at liberty to mention these cases for an early hearing after the appeals are made ready.