Statutory Body under Employees’ Old-Age Benefits Act, 1976

Statutory Body under Employees’ Old-Age Benefits Act, 1976 Case Laws Constitutional Law Corporate Law Employment & Incentives Knowledge - Constitutional Law Knowledge – Corporate Law Litigation & Arbitration Solutions - Constitutional Law Solutions - Corporate Law Supreme Court Telecom TMT Mr. Justice Faisal Arab in his judgment has decided the issue as to what is a statutory body under Employees’ Old-Age Benefits Act, 1976 in Civil Appeal No. 908 OF 2012.

1. Telegraph & Telephone Department was originally a department of the Federal Government. Under Pakistan Telecommunication Corporation Act, 1991 (Act XVIII of 1991) the Telegraph & Telephone Department was transformed into a Corporation and its affairs were entrusted to a board comprising of a chairman and 11 other directors appointed by the Federal Government. In the year 1996, for the purposes of reorganizing the telecommunication system in the country, the Pakistan Telecommunication (Re-organization) Act, 1996 (Act XVII of 1996) was passed. It was intended to dissolve the Corporation and in its place create five different entities in which the rights, properties and liabilities of the Corporation were to vest. These five entities that were to form under the said Act are (i) Pakistan Telecommunication Authority, (ii) Frequency Allocation Board, (iii) National Telecommunication Corporation, (iv) Pakistan Telecommunication Employees Trust and (v) Pakistan Telecommunication Company Limited. Out of these five entities, the entity mentioned last was to be incorporated as a company limited by shares under the Companies Ordinance, 1984. The remaining entities were to come into existence as four distinct statutory bodies that were to perform various functions under the administrative control of the Federal Government. Relevant for the purposes of these proceedings is the status of ‘Pakistan Telecommunication Company Limited’ a company limited by shares which was incorporated with effect from 1.1.1996. This limited company that was formed is the appellant in the present proceedings. Under the Pakistan Telecommunication (Reorganization) Act, 1996, all employees of the defunct Corporation were to be transferred to the five distinct entities out of which a very large number was transferred to the appellant company. The employees of the defunct Corporation, who were transferred to the appellant company, their terms and conditions of service were secured under Section 36 of the Pakistan Telecommunication (Reorganization) Act, 1996.

2. In the year 1998, respondent No. 1 called upon the appellant company to pay contributions in terms of Sections 9 & 9-B of the Employees Old-Age Benefits Act, 1976 from the date of its incorporation. Such demand was resisted by the appellant company by taking the plea that Section 47(f) of the said Act exempts all statutory bodies from the application of the said Act and as the appellant company was created under the Pakistan Telecommunication (Re-organization) Act, 1996, it enjoys the status of statutory body and thus not liable to pay contributions. This led to the issuance of show cause notice, which was then followed by registration of the appellant company under the Employees Old-Age Benefits Act, 1976. To challenge it registration on the ground that the appellant Company being a statutory body was not liable to make contributions, it first lodged a complaint with the Institution under Sections 33 of the Employees’ Old-Age Benefits Act, 1976 and when its complaint was rejected it appealed to the Board of the Institution as envisaged under Section 35 of the said Act. Having availed both the statutory remedies provided under Sections 33 and 35 the Employees’ Old-Age Benefits Act, 1976 and failed, the appellant company was served with a demand notice in March, 2007. Faced with coercive action in the wake of the demand notice, the appellant company challenged the demand notice in a Constitution Petition filed under Article 199 of the Constitution of Pakistan. This petition was initially filed in the Rawalpindi Bench of the Lahore High Court. However, after the establishment of the Islamabad High Court, the same was transferred to it for disposal. The Constitution Petition was eventually dismissed vide impugned judgment dated 17.5.2012. Aggrieved by such decision, leave to appeal was filed in this Court, that was granted and Civil Petition No.1299 of 2012 was converted into present appeal.

3. Learned counsel for the appellant Mr. Hamid Khan argued that the appellant Company was the creation of a statute as it was created under Pakistan Telecommunication (Reorganization) Act, 1996 and thus being a statutory body, by virtue of Section 47(f) nothing in the Employees Old-Age Benefits Act, 1976 applies to the persons who are in service of statutory bodies. He, therefore, submitted that the demand raised by the respondent No. 1 for realizing contributions under Employees’ Old-Age Benefits Act, 1976 was without jurisdiction. In the alternative, it was also argued that as many employees of the Pakistan Telecommunication Corporation were originally the employees of Telegraph & Telephone Department, who at that time enjoyed the status of civil servants and thereafter as employees of the statutory body, their terms and conditions of service were protected under Section 36 of the Pakistan Telecommunication (Re-organization) Act, 1996, therefore, the appellant company was not liable to make contributions under the provisions of Employees’ Old-Age Benefits Act, 1976 in so far as such employees are concerned.

4. The only question that needs to be decided is whether the appellant company can be described as a statutory body as stated in Section 47(f) of Employees’ Old-Age Benefits Act, 1976 and therefore not amenable to the provisions of the said Act.

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