Order Sheet

IN THE HIGH COURT OF SINDH, KARACHI.

Const. Petition No.D-267 of 2012

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Date                                      Order with signature of Judge                                                               

Present:

                                                                     1. Mr. Justice Faisal Arab

                                                                     2. Mr. Justice Nadeem Akhtar

1. For Katcha Peshi:

2. For hearing of Misc. No.1459/12 (Stay):

24.5.2012:   Mr. Muhammad Nawaz Shaikh for the petitioners.

                        Mr. Muhammad Qasim, Standing Counsel.

                        Mr. Sarfaraz Ali Metlo for respondents.

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FAISAL  ARAB,  J.-Petitioner No.1 is an association of private security guards companies, registered under the Companies Ordinance, 1984 and its member companies provide security guard services to its customers. The remaining petitioners are membersof petitioner No.1.Respondent No.2 ('EOBI') initiated recovery proceedings against such security guard providing companies that were not paying contributionsunder Employees Old-Age Benefits Act, 1976. To stall recovery proceedings, the present petition was filed. The main plea that was taken was that an agreement was reached between petitioner No.1-Association and EOBI on 02.02.2008 and following terms were settled:

               "Please refer to your letter dated 7th January, 2008 and subsequent discussions on the following points, which have mutually been agreed for provision of hassle free services to the Security Agencies and their employees.

1)           Un-registered establishments would immediately be registered. 

2)           Defaulting establishments would start payment.

3)           All the registered establishments shall increase their IPs by 10% from July, 2007 as per Sub Section 3(2) of Section 12 of EOB Act, 1976.

4)           They would provide PR-02A for their employees on whose behalf they are paying contribution.

5)           All the outstanding cases would be examined by a committee comprising of the representatives ofAPSAA from Karachi & Lahore and the representatives of EOBI.

6)           In case EOBI officials need to visit the office of any Security Agency, it would be coordinated through APSAA.

2.           The Chairman, EOBI has desired that all out-                              standing cases must be settled by 31-3-2008.

3.           The Institution would be represented by the                               following members in the Committee to                                       examine the outstanding cases of APSAA                                    members :-

               1. Mr. Nayyar Mehmood, Director, City Region               Karachi

               2. Mr. Zarar Malik, Director, Lahore (North)                     Lahore

4.           Before the committee formally take up the                                   cases, we may decide modus operandi for                               clearance of the pending cases in a meeting                                  on 6-2-2008 at 2.00 p.m. at EOBI, Head Office,      Karachi."

            It is contended by the counsel for the petitioners that without any lawful justification the commitments made under the agreement were resiled and on 17.08.2011 recovery proceedings were initiated. Atentative assessment was made whereby each security guard company was assessed to have 1500 employees and after deducting contribution that these companies had already paid a demand for the balance was raised.The case of the petitioners is that first there should have been determination as to the number of employees working with the security guard companies and only thereafter the demand should have been raised. He also contended that even though the remedy is provided under Section 33 to challenge such a demand, but since the demand of the respondents was violative of the Constitution, therefore, the petition is maintainable. He relied upon the following case law in support of his case:

   1.     2001 SCMR 209                            2.        1997 SCMR 66

   3.     2009 PLC (CS) 917                      4.        PLD 1972 SC 279

   5.     PLD 1989 Karachi 157                  6.     2003 SBLR SC 64

            On the other hand, counsel for respondent No.2 argued that where there is a specific remedy provided under the law then the petitioner ought to have availed such remedy. He referred to Section 33 of the Employees Old-Age Benefits Act, 1976 ('Act'), which provides a forum for determination of claims. He referred to The Employees' Old-Age Benefits (Determination of Complaints, Questions & Disputes) Regulations, 2007, wherein regulation 4 provides the procedure for filing of the complaints and resolution of the disputes. He contended that where a person is aggrieved by the decision made under Section 33 of the Act, the remedy of review and appeal is available under Sections 34 & 35 of the Act. He contended that the contribution towards employees' old-age benefits is utilized for providing pensionerybenefits to the employees of the employer.After the agreement, as recorded in the EOBI's letter dated 02.02.2008 various reminders for providing necessary information and getting unregistered employees registered were sent to the members of the petitioner Association but they failed to do so.Even then no immediate action of recovery was taken but the petitioners were called upon from time to time to comply with the commitments made under the agreement dated 02.02.2008. In this regard counsel for respondent No.2 has referred to various letters that weresent to petitioner No.1 by respondent No.2. Respondent No.2 on 14.10.2009 reminded petitioner No.1 of its commitment made under the letter dated 02.02.2008 and sought compliance, but of no avail. Letter dated 14.10.2009 was followed by letters dated 19.10.2009, 04.11.2009 and 12.03.2010, but none of them were responded. Counsel for respondent No.2 then referred to show cause notices that wereultimately issued in June, 2011 to the members of petitioner No.1-Association, wherein the members were called upon to show cause within seven days of the receipt of such notice as to the validity of the demand raised by respondent No.2. He submitted that the members of the petitioner-Association were extendedevery opportunity to present their respective points of view and controvert the demand made in the show cause notices, but the show cause noticeswere not responded, leaving no option with respondent No.2 to finalize the assessment and issue demand notices to the members of petitioner No.1-Association under Section 12(3) of the Act which are impugned in this petition.

            In response to this argument counsel for the petitioners contended that after the agreement it was the bonded duty of the petitioner to ascertain number of employees working with each member which obligation was not discharged, therefore, there was no justification to issuedemand notices.

            From the above it is quite evident that under the agreement dated 02.02.2008 it was incumbent upon the petitioner No.1's members to divulge to the EOB institution the details with regard to the number of employees,got them registered and started paying contribution under the law. In the present case at no stage, not even at the time of filing of this petition the petitioners disclosed to respondent No.2 (EOBI) as to the number of employees in order to rebut the demand made by respondent No.2. The principles of natural justice were met by EOBI when show cause notices were issued and the petitioners were given opportunity of hearing. The petitioners themselves chose not to contests the tentative assessment of respondent No.2, but throughout the proceedings avoided to come forward with necessary details. Therefore, we are of the opinion that the petitioners have not come to the Court with clean hands. Under Section 33 of the EOB Act, 1976 the remedy was available with the petitioners but they failed to avail such remedy. Several other members of petitioner No.1-Association have availed such remedy. Hence this petition having no substance is dismissed in limine.

            However, we are of the view that for the present the recovery proceedings should be based on the number of employees provided by the Capital City Police, Karachi (annexure R/2 to the respondent No.2's reply).Recovery proceedings according to such list would only be a tentative arrangement. The members of petitioner No.1-Association are given one more opportunity to establish from their record the number of employees that were working with them at the relevant times. If the figures that are not in consonance with the list of the Capital City Police, Karachi andhave been duly established then another assessment shall be made by EOBI to resolve the issue finally.

            In the end we highly appreciate the manner in which Mr. Sarfaraz Ali Metlo, counsel for respondent No.2, has presented his case before this Court. He was precise both on facts and law. His presentation of case was excellent. Being a young lawyer he deserves all the appreciation.

JUDGE

                                                                                                            JUDGE.

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*CP D-267-12/Orders/ARK/D*