Security Organizor vs Employee Old Age etc.

Stereo. HCJDA 38

Judgment Sheet

IN THE LAHORE HIGH COURT

MULTAN BENCH, MULTAN

JUDICIAL DEPARTMENT

W.P.No.800/2020

Security Organizing Versus Employees Old Age System Pakistan Private Benefits Institution etc. Limited

JUDGMENT

Date of hearing: 29.09.2026 Petitioner By: Barrister M.A. Hayat Haraj and Mr. Ahmad Raza, ASCs.

Respondent(s) By: Mian Khalid Hussain Mitroo, Advocate for EOBI.

Rana Muhammad Javaid Iqbal, Assistant Attorney General and M/s Bashir Ahmed Buzdar and Rao Imran Shaukat, Assistant Advocate Generals.

Jawad Hassan, J. This judgment shall dispose of the titled writ petition filed by the Petitioner under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973 (the “Constitution”), whereby the Petitioner has called in question the validity of the impugned decision dated 12.12.2018 and order dated 26.08.2019, passed by the Employees’ Old-Age Benefits Institution Adjudicating Authority, Lahore (the “Authority”) and the Appellate Board, Board of Trustees, Employees’ Old-Age Benefits Institution, Faisalabad Camp Office (the “Appellate Board”), respectively. The Petitioner has also challenged the validity of the demand notice dated 14.05.2015 issued under Section 12(3) of the Employees’ Old-Age Benefits Institution Act, 1976 (the “EOBI Act”) as well as the subsequent show cause notice dated 25.08.2015 issued under Section 79 of the Punjab Land Revenue Act, 1967 (the

“Revenue Act”) by the Employees’ Old-Age Benefits Institution (the “Institution”).

I. CONTEXT

2.The facts necessary for the disposal of the lis are that the Petitioner/Security Organizing System Pakistan (Private) Limited is a private limited company duly incorporated under the Companies Ordinance, 1984 [now the Companies Act, 2017 (the “Companies Act”] and is engaged in providing services to different banks and commercial institutions. Its head office is situated at Multan and it was registered with the Institution under Section 11 of the EOBI Act. The Petitioner commenced its operations in Dera Ghazi Khan by establishing an office there in July 2013 and, according to the record placed before the Court, had been regularly paying the contributions in accordance with law. The Respondent No.3 subsequently issued the impugned demand notice requiring the Petitioner to pay an amount allegedly due for a specified period. Aggrieved thereof, the Petitioner invoked the jurisdiction of the Authority under Section 33 of the EOBI Act. The said petition, however, was dismissed by the Authority vide impugned decision dated 12.12.2018, principally on account of the Petitioner’s absence. The Petitioner thereafter preferred an appeal under Section 35 of the EOBI Act, which was also dismissed by the Appellate Board vide impugned order dated 26.08.2019, hence, the instant petition.

II. PETITIONER’S SUBMISSIONS

3.Learned counsel for the Petitioner, Barrister M.A. Hayat Haraj, ASC, primarily contended that the EOBI proceeded directly under sub-section (3) of Section 12 of the EOBI Act without first undertaking or following the procedure prescribed under sub- section (1) thereof. He claimed that such a course is contrary to the statutory scheme of Section 12 and the Doctrine of Intertwined developed by this Court in the judgment reported as Tariq Iqbal

Malik versus Messrs Multiplierz Group Pvt. Ltd. and 4 others (2022 CLD 468). He submitted that sub-section (1) provides the mechanism through which the Institution is required to examine the employer’s records, returns and other relevant material whereas sub-section (3) comes into operation where the employer’s failure to maintain records, submit returns or otherwise comply with the requirements of sub-section (1) makes it difficult to ascertain the identity of insured persons or the amount of contribution payable. He maintained that where the foundational statutory procedure has not been followed, the assessment allegedly made under sub- section (3) of Section 12 cannot validly constitute the basis for consequential recovery proceedings. He vociferously argued that the subsequent show cause notice issued under Section 79 of the Revenue Act is also without lawful foundation. He further contended that the Appellate Board itself was not properly constituted in accordance with Section 35 read with Sections 7 and 2(aa) of the EOBI Act and, therefore, the impugned (appellate) order dated 26.08.2019 is also without lawful authority.

III. RESPONDENTS’ SUBMISSIONS

4.Conversely, learned counsel, Mian Khalid Hussain Mitroo, Advocate, appearing on behalf of the Respondents has opposed the petition and submitted that no illegality or infirmity is attributable to the impugned proceedings. He maintained that the demand notice was lawfully issued and that the decisions of the Authority and the Appellate Board do not suffer from any jurisdictional defect warranting interference by this Court. He prayed for dismissal of the petition.

IV. MOOT POINTS

5.From the pleadings and submissions of the parties, the following moot points arise for determination:

(i)Whether the provisions of sub-section (3) of Section 12 of the EOBI Act can be invoked without first undertaking the procedure contemplated under sub- section (1) of the said Section?

(ii)What is the legal effect and consequence of proceedings initiated directly under Section 12(3) of the EOBI Act without first complying with the procedure prescribed under Section 12(1)?

V. DISCUSSION AND FINDINGS

(i)Discussion on the Sections of the EOBI Act 6. Before proceeding to examine the moot points, it would be appropriate to notice the relevant statutory provisions. Firstly, a quick glance is taken on Section 9 of the EOBI Act, which is reproduced hereunder:

9.Rates and assessment. — (1) On and from the first day of July, 1976, contributions shall be payable every month by the employer to the Institution in respect of every person in his insurable employment, at the rate of 1 percent of his wages in the prescribed manner.

[Provided] that no contribution shall be payable in respect of an insured person who is in receipt of 5 [old-age pension] under this Act or has attained the age of sixty years, or fiftyfive years in the case of a woman.

(2)Where an insured person does not receive any wages from the employer for any period, the Institution shall, subject to regulations, determine the amount of wages with reference to which the contributions shall be computed.

(3)Notwithstanding any agreement to the contrary, the employer shall not deduct from the wages of an insured person or otherwise recover from him any portion of employer’s share of contribution.

The Section 9 of the EOBI Act provides the statutory mechanism concerning rates and assessment of contributions. Under sub- section (1) of Section 9, contributions are payable by the employer every month in respect of every person in his insurable employment at the prescribed rate. Sub-section (2) of Section 9 empowers the Institution, subject to the regulations, to determine the wages with reference to which contributions are to be computed where an insured person does not receive wages from the employer for any period. Sub-section (3) of Section 9, in turn, protects the insured person by prohibiting the employer from deducting or recovering from his wages the employer’s share of contribution. The statutory

scheme, thus, places the primary obligation of payment of contribution upon the employer and simultaneously provides a mechanism for determining the contribution payable in circumstances where the relevant wage particulars are not otherwise available. The Petitioner has placed on record documents showing payment of the EOBI contributions for the period from July 2013 to April 2015. Whether such payments fully discharged the Petitioner’s statutory liability or whether any additional contribution was in fact payable, is essentially a matter which requires determination on the basis of the relevant record and in accordance with the procedure prescribed by the statute. Moot Point (i)

7.Now, a discussion is made on the provisions of Section 12 of the EOBI Act, under which the demand notice dated 14.05.2015 has been issued by the Respondent/EOBI to the Petitioner. The same is reproduced hereunder for ready reference:

12.Officials of Institution to check employer’s books.—(1) Any official of the Institution, duly authorised by a certificate in a form specified in the regulations, may, for the purpose of inquiring into the correctness of any of the particulars stated in the records or returns referred to in section 10 or for the purpose of ascertaining whether any of the provisions of this Act have been compiled with—

(a)require an employer to furnish to him such information as he may consider necessary; or

(b)at any reasonable time, enter any establishment or other premises occupied by such employer and require any person found in charge thereof to produce and allow him to examine such accounts books and other documents relating to the employment of persons and payment of wages, or to furnish to him such information, as he may consider necessary; or

(c)examine, with respect to any matter relevant to the purposes aforesaid, the employer, his agent or any other person found in such establishment or other premises, or any other person whom the said official has reasonable cause to believe to be or to have been an insured person.

(2)The official referred to in sub-section (1) shall not demand production of account book and other documents

referred to in clause (b) of sub-section (1) for a period of two years from the date of registration of the establishment or the 1st day of July, 2005, whichever is later, if the employer does not reduce the number of insured persons in respect of whom contribution are paid under section 9:

[Provided that on expiry of two years’ period, if the employer enhances the number of insured persons by at least ten percent, it shall be accepted without any question otherwise checking of record shall be done as provided in sub-section (1), by an officer not below the rank of Assistant Director, duly authorized in this behalf and no question shall be asked about the previous two years.]

(3)If an employer fails to maintain records or to submit returns as required by the regulations, or otherwise fails to comply with the provisions of sub-section (1) and thereby makes it difficult to ascertain the identity of persons required to be insured or the amount of contribution payable, the contribution shall be assessed on the basis of such evidence as the Institution may find satisfactory for this purpose [in the prescribed manner].

(ii)Reading the Statute as a Whole (Ex Visceribus Actus)

8.A Court will never cherry-pick or dissect a single isolated paragraph of law. Every clause must be measured against the collective text. It is a settled principle that the Legislature's true intention cannot be parsed from one standalone sentence. The context of surrounding chapters, definitions and sections gives the target clause its actual weight. The Courts engage in interstatutory cross-referencing all the time, relying on one statute to help interpret another. From bare reading of the afore-quoted provisions, Section 12 of the EOBI Act assumes central significance for the controversy. Sub-section (1) authorizes a duly authorized official of the Institution, for the purpose of examining the correctness of particulars contained in records or returns referred to in Section 10 or for ascertaining compliance with the provisions of the Act, to require the employer to furnish necessary information, enter the establishment at a reasonable time and inspect relevant account books and documents and examine the employer, his agent, employees or other persons having relevant knowledge. Sub-

section (2) places certain limitations upon the demand for production of account books and other documents in the circumstances specified therein. It also contemplates subsequent checking of the record in the manner prescribed where the conditions stipulated in the proviso are attracted. Sub-section (3) of Section 12, which is the provision directly involved in the present controversy, provides that where an employer fails to maintain records or submit returns as required by the regulations, or otherwise fails to comply with the provisions of sub-section (1), and thereby makes it difficult to ascertain the identity of persons required to be insured or the amount of contribution payable, the contribution may be assessed on the basis of such evidence as the Institution may find satisfactory, in the prescribed manner. A plain reading of the provision reveals that the power under sub-section (3) is not an unregulated or unfettered power to make an assessment merely because the Institution considers an amount to be payable.

9.The statutory trigger for its exercise is specifically linked to the employer’s failure to maintain records, submit returns or otherwise comply with the requirements of sub-section (1), resulting in difficulty in ascertaining the identity of the insured persons or the amount of contribution payable. The interrelationship between sub-sections (1) and (3) of Section 12, therefore, assumes considerable importance. Sub-section (1) lays down the statutory means by which the Institution is to inquire into the correctness of records and returns and ascertain compliance with the Act. Sub-section (3), on the other hand, provides an alternative assessment mechanism for the situation where the employer’s failure to comply with the statutory requirements frustrates or renders difficult such ascertainment. It follows that the two provisions cannot be construed as wholly isolated from one another. The applicability of sub-section (3) is itself dependent upon the existence of the circumstances contemplated therein, including failure on the part of the employer to comply with the

requirements referred to in sub-section (1) of Section 12 of the EOBI Act. Thus, before resorting to the assessment mechanism under sub-section (3), the Authority is required to determine, on the basis of the record, whether the statutory conditions necessary for invoking that provision actually exist. As the Petitioner had duly placed on record, alongwith the petition, the complete record of the Monthly Contributions pertaining to the disputed period, the Respondent/EOBI was in possession of the relevant material necessary to ascertain the Petitioner’s liability, if any. In such circumstances, the EOBI could not straightaway resort to the assessment mechanism contemplated under Section 12(3) of the EOBI Act without first examining the record so furnished and determining whether the statutory preconditions for invoking the said provision were satisfied. The recourse to the assessment mechanism under Section 12(3), therefore, was required to be preceded by due consideration of the Monthly Contributions record already available on the file and a determination of the basis on which any deficiency or outstanding contribution was alleged.

(iii)Judicial Anthology of the Doctrine of Intertwined 10. This approach is consistent with the Doctrine of Intertwined discussed by this Court in Tariq Iqbal Malik Case (2022 CLD 468) wherein it has been held that this doctrine emphasizes that statutory provisions forming part of one legislative scheme are to be examined harmoniously and in their proper context rather than by isolating one provision while disregarding the operation and purpose of another. The object is to give meaningful effect to the statute as a whole. The same principle has subsequently been considered in the judgment reported as Malik Mehboob versus Commissioner, Rawalpindi and others (PLD 2023 Lahore 97), wherein this Court emphasized that a statute, including the subsections of a particular section, is to be read together with its overall scheme and purpose in order to ascertain the true meaning and effect of the provision under consideration. The Doctrine of

Intertwined was also discussed by this Court in the case of Messrs Nordex Singapore Equipment Limited versus Federal Board of Revenue, CIR and FFC Energy Ltd. (2024 PTD 208). It is equally important, however, that the Doctrine of Intertwined should not be understood to mean that one statutory provision extinguishes or renders redundant the independent power conferred by another. As observed by this Court in the case of Messrs Future Vision Advertising (Private) Limited versus Federation of Pakistan and others (2024 CLD 890), where the law confers separate powers under different provisions, each provision is to be given its own effect and the powers conferred thereunder continue to operate in their respective fields. The exercise of power under one provision does not, by itself, take away or diminish the power available under another. Therefore, the correct interpretation of Section 12 is not that sub-section (3) is subordinate to, or rendered ineffective by, sub-section (1). Rather, both provisions are to be read harmoniously. Sub-section (1) of Section 12 provides the statutory mechanism for verification and ascertainment, whereas sub-section (3) enables assessment where the statutory conditions specified therein arise because the employer’s failure has made such ascertainment difficult.

11.In the present case, the material placed before the Court does not demonstrate that the procedure contemplated by sub-section (1) of Section 12 was first undertaken against the Petitioner or that, after such process, the Authority recorded a finding that the Petitioner had failed to maintain records, submit returns or otherwise comply with the requirements of sub-section (1), thereby making it difficult to ascertain the identity of insured persons or the amount of contribution payable. The Petitioner’s specific case is that the demand was straightaway raised under Section 12(3) of the EOBI Act on 15 May, 2015 and then 25 August, 2015 with an opportunity to deposit the same. This aspect goes to the very foundation of the assessment and could not be treated as a mere

procedural irregularity. The statutory conditions authorizing resort to sub-section (3) must first be established before the power thereunder can validly be exercised. Accordingly, moot point No.(i) is answered in the negative, in the sense that sub-section (3) of Section 12 cannot be invoked in disregard of the statutory requirements and circumstances contemplated by sub-section (1). The Institution is required to undertake the process contemplated by sub-section (1) and, where the requisite statutory conditions exist, may thereafter proceed in accordance with sub-section (3). This does not curtail the independent statutory power available under sub-section (3) rather, it ensures that such power is exercised within the parameters prescribed by the legislature.

Moot Point (ii)

12.As regards moot point No.(ii), proceedings initiated directly under sub-section (3) of Section 12 of the EOBI Act, without first establishing the statutory circumstances contemplated by the scheme given in sub-section (1) of this Section, cannot validly sustain the resulting assessment merely on the basis of the assertion that an amount is recoverable from the employer. The assessment must have a lawful statutory foundation. Where the foundational procedure has not been followed, the matter requires reconsideration by the competent Authority in accordance with law. It is also relevant to note that the petition filed by the Petitioner before the Authority was dismissed primarily on the ground of absence. Such dismissal, particularly where the controversy involves determination of statutory liability and the validity of the underlying assessment procedure, does not substitute for a determination of the substantive controversy in accordance with the statutory scheme. The Petitioner’s objection regarding the manner in which the demand was initiated, therefore, requires examination by the competent Authority. Moreover, no demand on account of the alleged arrears can be made unless it is first properly ascertained, determined, calculated and duly tabulated by the

competent authority in accordance with law. In this regard, reliance is placed upon the principles enunciated by the Hon’ble Supreme Court of Pakistan in the cases of Agricultural Development Bank of Pakistan and another versus Abid Akhtar and others (2003 SCMR 1547) and Pirzadah Muhammad Yusuf Qureshi versus Azad Government of the State of J&K through Chief Secretary and 5 others (1997 CLC 201).

13.The principle that interconnected statutory provisions, contractual obligations and their attendant legal consequences are to be read and construed conjointly rather than in isolation, is a well-established canon of interpretation and has received recognition in various jurisdictions, including the judgments reported as 2022 CLD 468, PLD 2023 Lahore 97, 2024 PTD 208 and 2024 CLD 890. It is a settled principle that a statute must be read as a whole with its various provisions interpreted harmoniously so as to give effect to each of them. However, the different provisions of the same enactment cannot ordinarily be construed in isolation or in a manner that renders another provision redundant, ineffective or otiose. Rather, each provision must be understood in the context of the statutory scheme as a whole and, where necessary, with reference to the other provisions of the enactment, so as to arrive at a construction that makes the statute internally consistent and gives meaningful effect to the legislative intent. The Court must ascertain the intention of the Legislature not merely by examining the particular clause under consideration but by directing its attention to the entire statute. The provision in question must be considered in its proper context keeping in view the language, scheme, object and purpose of the enactment and must be read in conjunction with the other provisions of the law and the setting in which it occurs. The principles of statutory interpretation, therefore, require the Court to adopt an interpretation that preserves the efficacy of the enactment as a whole and avoids rendering any of its provisions nugatory, redundant or superfluous.

By examining this principle on the touchstone of the EOBI Act, it can now safely be said that the statute must, therefore, be construed as a coherent and integrated whole in which every provision is presumed to have been enacted for a purpose and is capable of meaningful operation. Where two provisions appear, at first glance, to be inconsistent or in tension with one another, the Court should endeavour to reconcile them rather than treat one as overriding or defeating the other. The preferred construction is one which enables both provisions to operate within their respective spheres and thereby gives effect to the underlying legislative scheme and intent. This approach is founded upon the salutary principle of harmonious construction, according to which two provisions of the same statute, though seemingly conflicting, must, as far as possible, be interpreted in a manner that avoids conflict and permits both to have full and effective operation. The same principle applies where different limbs, clauses or expressions contained in a single statutory provision appear to pull in different directions. They must be read together and reconciled in a manner that preserves the integrity of the provision rather than adopting an interpretation that creates an internal contradiction. It is, therefore, settled that a construction which has the effect of reducing any provision of a statute to futility, redundancy or mere surplus-age ought to be avoided. The Court is required, as far as possible, to adopt an interpretation which gives meaning and effect to every part of the enactment, advances its object and maintains the coherence of the legislative scheme. In essence, the doctrine of harmonious construction requires that the provisions of a statute be read together in such a manner that none is rendered ineffective and the legislative intent, as discernible from the statute considered as a whole, is given full and meaningful effect.

VI. CONCLUSION

14.For what has been discussed above, the impugned decision and the (appellate) order cannot be sustained. However, since the

determination of the actual contribution liability, if any, involves examination of the relevant record and falls within the statutory domain of the competent Authority, this Court considers it appropriate to remand the matter for a fresh decision. This writ petition is, therefore, allowed. The impugned decision dated 12.12.2018 and order dated 26.08.2019 are set-aside. The matter is remanded to the Authority for fresh decision, after providing the Petitioner due opportunity of hearing and after strictly following the procedure prescribed under sub-section (1) of Section 12 of the EOBI Act. Thereafter, if the statutory conditions for invocation of sub-section (3) of Section 12 are found to exist, the Authority may proceed thereunder and determine the Petitioner’s liability, if any, in accordance with law. The Authority shall pass a speaking and reasoned order after considering the record and the respective contentions of the parties, within a period of two months from the date of receipt of certified copy of this judgment. Nothing contained in this judgment shall be construed as an expression of opinion on the merits or quantum of the alleged contribution liability.

(JAWAD HASSAN)

JUDGE

APPROVED FOR REPORTING

JUDGE

*Mãjîd