ORDER SHEET

ORDER SHEET

IN THE HIGH COURT OF SINDH, KARACHI

C.P. No. D-1346 of 2012

Date	Order with signature of Judge

Present: Mr.Justice Muhammad Ali Mazhar.

Mr.Justice Abdul Rasool Memon

M/s.M.R.Industries _______________ Petitioner

Versus

SESSI & others _______________Respondents

1.For Katcha Peshi.

2.For hearing of CMA No.8020/2012

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Date of hearing 30.01.2014.

Mr.S.M.Iqbal Advocate, Advocate for petitioner.

Mr.Jawad A.Sarwana, Advocate for the respondent Nos.1 & 3

Mr.Abdul Jalil Zubedi, AAG

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Muhammad Ali Mazhar J. This petition is brought to challenge the order dated 31.3.2012 passed by First Sindh Social Security Court at Karachi in Appeal No.02 of 2011 preferred under Section 59 of the Provincial Employees’ Social Security Ordinance, 1965.

2. The brief facts of the case are that the petitioner was notified under Section 1(3) of the Provincial Employees Social Security Ordinance, 1965 and it was regularly paying contribution to the Sind Employees Social Security Institution. The respondent No.3 made a demand of contribution in the sum of Rs.11,25,600/- for 268 employees since July, 2004 to April, 2005. The petitioner filed a complaint under Section 57 of the Provincial Employees Social Security Ordinance, 1965, to challenge the demand which was dismissed. An appeal was filed and the matter was remanded to the respondent No.2 back in the year 2007 however, the demand of contribution was maintained again so the petitioner filed another Appeal No.3 of 2011 on various grounds. The petitioner did not apply for the restraining order against the impugned demand but the respondent No.2 on the objection raised by the counsel for the respondent No.1 that surety is required to be furnished in the Social Security Court against the impugned demand, on which the counsel for the appellant requested for time to furnish security and at his request 15 days’ time was allowed. Later on instead of furnishing security, the appellant’s counsel filed objections before the Social Security Court in which it was alleged that Social Security Court cannot issue directions to furnish security as all powers of the civil court cannot be exercised by the Social Security Court. After hearing the counsel for the appellant and the respondent, the learned Social Security Court dismissed the objections and directions were reaffirmed to be complied with within 15 days’ time.

3. Learned counsel for the petitioner argued that there is no provision under the Provincial Employees Social Security Ordinance, 1965 in which the amount impugned in the appeal is required to be deposited as prerequisite of institution of appeal. In order to strength this argument learned counsel referred to Section 17 of the Payment of Wages Act and Section 30 of the Workman Compensation Act, in which at the time of institution of appeal under both the special enactments a certificate is required to be appended with the memo of appeal to show that the demand of compensation amount/withheld wages liable to be paid in the impugned order has been deposited with the authority below without which the appeal is not maintainable in the above laws. He argued that no such provision is available in the Provincial Employees Social Security Ordinance, 1965, hence, the Social Security Court cannot pass the order directing the appellant either to deposit this amount in cash or to furnish any security. The proceedings arising from the Section 57 are departmental proceedings against which appeal lies under Section 59. He further referred to Section 62 of the Provincial Employees Social Security Ordinance, 1965 which provides that the Social Security Court shall have all the powers of civil court for the purposes of granting and enforcing the attendance of the witnesses, compelling the discovery and production of documents and material objects administrating oath and recording evidence and such a court shall be deemed to be civil court within the meaning of Section 195 of the Cr.P.C. It was averred that keeping in view the limited powers of CPC conferred upon the Social Security Court the Social Security Court cannot exercise full-fledged powers of civil court and while exercising its appellate jurisdiction no direction could have been issued to the appellant to furnish security against the impugned demand. Under Section 62 of the aforesaid Ordinance the order of Social Security Court may be enforceable as if it were a decree of civil court so the learned counsel argued that the order passed by the institution under Section 57 has no status of decree of civil court. Learned counsel further argued that during pendency of the appeal, Social Security Intuition in order to effect the recovery of contribution demand cannot resort to the provision of Land Revenue Act and such powers cannot be exercised by the employees of the institution. In support of his arguments he relied upon the following case law:-

(1) 2009 PLC (C.S.) 799 (M/s.Axact Private Limited v. Province of Sindh through Secretary Labour, Government of Sindh) Section 20, 22 and 23. Constitution of Pakistan (1973), Article 199. Constitutional Petition. Attachment of vehicle. Petitioner establishment contended that it was not entitled to pay contribution as its employees were getting more salary. Petitioner assailed notice of recovery and raised the plea that authorities had no power to attach its vehicle for recovery of contribution. Notice of recovery was silent to show that on what evidence or strength, authorities calculated arrears mentioned therein. Notice also did not speak about holding of any inquiry as envisaged under section 22 of Provincial Social Security Ordinance, 1965. Authorities did not adopt procedure provided in Provincial Social Security Ordinance, 1965, for assessing contribution and penalizing petitioner. Act of authorities was declared as illegal.

(2) 1993 PLC 335 (Mumtaz Ahmed Silk Mills Ltd., v. Director, Sindh Employees Social Security Institution and another). Section 57 Sindh Employees’ Social Security (Procedure for Deciding Complaints and Review of Decisions) Regulations, 1983, Regulation 5. Regulation 5 is ultra vires of the powers of Authority which framed the regulations. In the absence of any provisions in section 57 of the West Pakistan Employees’ Social Security Ordinance, 1965, the framers of the Regulations had no power to provide depositing of 25% of the amount in dispute as a condition precedent to the entertainment of a complaint. The Regulation is ultra vires the power of the Authority.

4. On the contrary, learned counsel for the respondent Nos.1 and 3 argued that each establishment notified under the Provincial Employees’ Social Security Ordinance, 1965 is required to pay contribution and the amount of contribution due along with increase if any may be recovered as the arrears of land revenue. The amount of contribution was determined by the institution under Section 57 of the Provincial Employees' Social Security Ordinance, 1965. Learned counsel further argued that the learned Social Security Court has ample power to grant interim relief subject to furnishing security or the bank guarantee which is necessary to protect the interest of the institution as no prejudice will cause to the petitioner and it would advance the cause of justice to furnish security to the extent of the amount of contribution determined by the institution and if appeal is allowed by the Social Security Court, the security will be discharged. He robustly opposed the plea of petitioner’s counsel that Social Security Court is not vested with any power to grant interim relief. In support of his argument he relied upon the following case law:-

(1) PLD 1975 S.C. 32 (SESSI v. Adamjee Cotton Mills Ltd.). Appeal under Section 59 of Ordinance X of 1965. Appellate Court, pending appeal, has power to stay execution of order appealed against. It was argued that by that section, it was not the intention to bring the Social Security Court on a par with an ordinary civil court, so as to make it possible to invoke Order XXXIX, Rule 1 and 2, CPC. It is however, important to point out that power to grant interim relief, in this case is “ancillary or incidental” to the main appellate jurisdiction expressly conferred by the statute. The power to grant interim relief is exercisable by the Social Security Court, not because of the inherent character or the attribute of the court itself, but only to enable it to exercise its appellate jurisdiction expressly conferred upon it more effectively and in accordance with what indisputably are requirements of justice and reason.

(2) 1998 PLC 115 (SESSI v. M/s.Corn Pak Ltd.). Section 20 and 59 CPC (V of 1908) Social Security Court staying demand of contribution against establishment without calling upon it to furnish securities for payment thereof in case its liability to pay the same was established. Social Security Court erred in not directing establishment to furnish security for payment of amounts determined by forums against such establishment. Impugned order was modified to the effect that establishment would furnish security to the satisfaction of Social Security Court.

5. Learned counsel for the parties extensively argued the matter and agreed that this petition may be disposed of at Katcha Peshi stage. At the very outset it is clarified that the impugned order was not passed on any application moved by the petitioner in the Social Security Court for staying the operation of the impugned demand/order. What is visible from the contents of the impugned order is that after notice to the institution, their advocate raised the objection that appeal was not maintainable without furnishing security. It is also transpired from the impugned order that the petitioner’s counsel in appeal requested for time to furnish security, but instead of furnishing security within time granted to him he filed legal objections challenging the jurisdiction of the Social Security Court to issue directions for furnishing security. The institution took the plea in the Social Security Court that since the appeal has been admitted therefore, they cannot initiate recovery under Land Revenue Act. It was further contended that the appellant is bound to deposit bank guarantee for the subject amount. On the contrary, petitioner’s counsel took the plea before the appellate court that the appellant is not seeking stay order against the impugned order, therefore, the question of furnishing security does not arise. The Social Security Court observed in the impugned order that when the appellant has knocked the door of Social Security Court, they are bound to furnish security against the impugned demand. What further deciphers from the impugned order that the learned Social Security Court out rightly passed the order for furnishing security under the impression that on filing appeal the appellant is automatically bound to furnish security, no matter they asked for the suspension of the impugned order or not and this order was passed on the request of the counsel for the institution that on filing appeal they cannot resort to provision of Land Revenue Act for recovery of contribution.

6. So far as the arguments of learned counsel for the petitioner that there is no direct provision available under the Provincial Employees’ Social Security Ordinance, 1965 in which the amount of impugned demand is required to be deposited prior to filing of appeal as made mandatory under the provisions of Payment of Wages Act or Workman Compensation Act as prerequisite for filing appeal and production of certificate of payment hence, in the absence of any such provision under Provincial Employees’ Social Security Ordinance, 1965, the Social Security Court does not possess any such power to give directions to the petitioner to furnish bank guarantee to the extent of non-availability of similar provision as provided under the Payment of Wages Act and Workman Compensation Act. In this regard, we would like to hold that due to non-availability of similar provisions, it does not mean that the Social Security Court being an appellate court cannot issue directions either for furnishing security or bank guarantee equivalent to the amount of impugned demand. It is also correct that the applicability of C.P.C has limited application, and the Social Security Court cannot exercise all powers of civil court but the right of appeal where it exists is a matter of substance and not as a mere procedure. In the case of SESSI v. Adamjee Cotton Mills Ltd. (supra) the hon’ble Supreme Court has already dilated upon the powers of Social Security Court exercisable under Section 59 of the Provincial Employees’ Social Security Ordinance, 1965. In that case also demand of contribution was raised and certificate regarding the amount due was forwarded to Assistant Collector with the request to recover the amount of arrears of land revenue. Aggrieved by the above proceedings the employer filed an appeal before the Social Security Court under Section 59 of the Provincial Employees’ Social Security Ordinance, 1965. Along with memo of appeal an application under Order 39 Rule 1 and 2 CPC was also moved for the stay of recovery proceedings. Social Security Court stayed the recovery of amount subject to furnishing bank guarantee. On behalf of institution it was argued that Section 62 of the Provincial Employees’ Social Security Ordinance, 1965 confers jurisdiction of an ordinary civil court upon the Social Security Court for the limited purposes. This argument was based on the maxim “expressio unius exclusion altertus” which enshrines the well-established principle of interpretation that when a statute mentions one or more things of a particular class, it may be regarded as silent excluding other things of the same class or similar classes not expressly mentioned. But the rule is not absolute in its application. It is equally well established principle that in construing a statute the construction which is most agreeable to justice and reason is to be preferred. The hon’ble Supreme Court held that the power to grant interim relief is ancillary or incidental to the main appellate jurisdiction expressly conferred by the statute. This should not be confused with what is sometimes, claimed as the inherent jurisdiction of a court. What is inherent is an inseparable incident of a thing or an institution in which it inheres. The power to grant interim relief is exercisable by the Social Security Court not because of the inherent character or the attribute of the Court itself, but only to enable it to exercise its appellate jurisdiction expressly conferred upon it more effectively and in accordance with what indisputably are requirement of justice and reason.

7. The question is whether on institution of appeal in the Social Security Court and even without applying for stay order against the impugned demand, the Social Security Court can pass the order without any application of interim relief to furnish security or bank guarantee? In this regard, we are clear in our mind that filing of appeal against the impugned order and filing interlocutory application for staying the impugned order both are two distinct steps/proceedings though the powers to grant interim relief are incidental and ancillary to the appellate jurisdiction but Provincial Employees’ Social Security Ordinance, 1965 does not compel the appellant to ask for the restraining order at the time of filing of appeal, however, it is left open for the appellant before the Social Security Court to protect him from the rigors of execution of impugned demand who may apply for the interim relief which will be of course decided by the appellate court and stay of the impugned demand may be subject to furnishing solvent security or the bank guarantee. Simultaneously, we are also like to hold that if an appellant before the Social Security Court does not apply or is not interested in the interim relief or to protect it from the execution of order, it does not mean that the institution without any restraining order passed by the appellate court should wait for the execution till such time the appeal is decided by the Social Security Court, which is not the true interpretation and construction of law. Under Section 20 of the Provincial Employees’ Social Security Ordinance, 1965, the provisions are made for the payment of contribution while under Section 23 mechanism of recovery is provided which is reproduced as under :-

“23. Increase of unpaid contribution and recovery of contributions, etc., as arrears of land revenue:- (1) If any employer fails to pay, on the due date, the contributions payable by him under sub-section (1) of section 20, the amount so payable by him shall be increased by such percentage as may be prescribed:

Provided that in no case shall such increase exceed fifty per centum of the amount due.

Provided further that no part of such increase shall be payable by, or the liability to pay the same be passed on by the employer to his employees.

(2) without prejudice to any other remedy, the amount of the contribution due, together with the increase provided for under sub-section (1), may be recovered as arrears of land revenue.”

8. The sub-section (2) of Section 23 makes it clear that recovery of contribution can be effected through the procedure and the machinery provided under the Land Revenue Act so despite filing of appeal in the Social Security Court, the letter of law is clear that the recovery can be effected through Land Revenue Act unless the demand is stayed by the appellate court subject to furnishing security or bank guarantee for which law has already been made clear by the dictum of hon’ble Supreme Court as discussed (supra). The appellant may file appeal or may not ask for suspension of the order at their own will and they cannot expect as mere filing of appeal will protect them from the execution of demand of contribution. In this case the complaint was filed before the institution under Section 57 of the Provincial Employees’ Social Security Ordinance, 1965 in which ample opportunity was provided to the petitioner but they failed to produce the record before the institution and thereafter the demand was raised.

9. Learned counsel for the petitioner placed reliance on the case of M/s.Axact Private Limited in which learned Divisional Bench of this court set aside the notice of recovery and the attachment of vehicle on the ground that notice of recovery was silent to show that on what evidence or strength, authorities calculated arrears. Notice also did not specify holding of any inquiry as envisaged under Section 22 of Provincial Social Security Ordinance, 1965. Facts and circumstances of this case are distinguishable and not attracted to the facts and circumstances of the present case in which the petitioner itself filed complaint under Section 57 of the Provincial Employees’ Social Security Ordinance, 1965. In the case of M/s.Axact Private Limited the management took the plea before this court that it was not liable to pay contribution as it employees were getting more salary but in the present case learned counsel for the petitioner himself filed a statement along with certain documents including the complaint filed under Section 57 of the Provincial Employees’ Social Security Ordinance, 1965 to show that the petitioner was making payment of social security contribution regularly but in the complaint there were some factual disputes regarding the payment. He next cited the case of Mumtaz Ahmed Silk Mills Ltd., which is also distinguishable. The learned Divisional Bench of this court held that Regulation 5 of the Social Security (Procedure for Deciding Complaints and Review of Decisions) Regulations, 1983 is ultra vires of the powers of Authority which framed the regulations, in which the regulation was made that complaint in term of Section 57 cannot be entertained without asking to deposit of 25% of the alleged claim. No such controversy is involved in the present case.

10. So far as the impugned order is concerned, the Social Security Court does not possess automatic power to ask for furnishing security or bank guarantee on institution of appeal but it can grant interim relief on an application filed by appellant for staying the impugned demand subject to furnishing security or bank guarantee. Mere filing of appeal does not amount to stay. Simultaneously, if the appellant is not asking for any interim relief there was no need to pass interim order for suspending the demand subject to furnishing security or bank guarantee and the institution was free to effect the recovery under the provisions of Land Revenue Act, which is clearly provided under Section 23 of the Provincial Employees’ Social Security Ordinance, 1965. In the case of M/s.Corn Pak Ltd. reported in 1988 PLC 115 the SESSI filed the appeal under Section 64 of the Ordinance, in which plea was taken that the Social Security Court stayed the demand of contribution without asking the security. The learned Single Judge of this court held that the Social Security Court erred in not directing the respondent to furnish security for the payment of amount determined by the machinery/forums hence, the order was modified to the effect that the respondent shall furnish security.

11. As a result of above discussion this petition is admitted to regular hearing and disposed of with listed application in the following terms:-

(a) The Social Security Court does not possess the powers to pass orders for furnishing security/bank guarantee on its own motion as a pre-requisite or precondition of filing of appeal under Section 59 of the Provincial Employees’ Social Security Ordinance, 1965. Consequently, the impugned order is set-aside.

(b) If the petitioner wants suspension of the impugned demand/order, they may apply to the Social Security Court and if any such application is filed the Social Security Court may stay the impugned demand subject to furnishing solvent security and or bank guarantee till such time the appeal is decided.

(c) The institution during pendency of appeal may initiate and continue the proceedings for the recovery of due contribution in accordance with the provisions of Land Revenue Act unless the impugned demand is stayed by the Social Security Court.

Judge

Karachi:

Dated: 12.05.2014