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The Industrial Relations Advisers,

Management & Labour Laws Consultants

 

Room 3, 1st floor, Falaknuma Building, Near The Laboratory & Haroon Radio, Abdullah Haroon Road, Karachi

Phone: 32727266 & 32729770 Fax: 32729770 (S M Iqbal) Email: iqbalblund@hotmail.com 

 

 

 

Circular No. C 140 Dated: 25-06-2013

 

 

 

Consequences of the Sindh High Court decision reported at PLJ 2013

Karachi 24 Soneri Bank Ltd. V/s Federation of Pakistan

 

 

1.            The Federal Government adopted an easy course to amend labour laws not being part of the Money Bill through the Finance Acts such as the Finance Acts of 2006, 2007 and 2008. The Senate has no say on the Finance Bill and in the National Assembly debates took place only on financial proposals of the Bill, and the amendments in the labour laws got automatically passed without discussion/debate on the same along-with the financial matters of the Finance Acts.

 

2.            Previously the petition No. D-260/2008, Employer Federation of Pakistan & others V/s Federation of Pakistan challenged the amendments made in five labour laws by the Finance Act, 2007 as the same did not constitute part of the Money Bill as provided by the Article 73 of the Constitution of Pakistan. It may also be noted that the Labour Laws being not part of the Money Bill any amendments in the same would go to both the houses of the Parliament but amending the same through the Finance Act deprives the Senate its Constitutional right as the Senate has no say on the Money Bill/Finance Act.

 

3.            The said D.B. decision of the Sindh High Court has elaborately discussed the Articles 73, other relevant Articles of the Constitution and various case laws cited by the parties and mainly based its decision on the Supreme Court decision reported at PLD 2009 SC 879, Sindh High Court Bar Association V/s Federation of Pakistan holding the amendments brought about by Sections 2,6,7,10, and 12 of the Finance Act, 2007 as ultra-vires of the provisions of the Constitution, be treated as without lawful authority and of no legal effect as the same did not constitute part of the Money Bill under the Article 73 of the Constitution of Pakistan having no link with the Federal Consolidated Fund and payment or charge upon money from it. We issued our circular on the same which can be perused at http://www.smyaqoob.com/c-127.htm.

 

4.            On the basis of the said decision, another Const. Petition challenged therein the Finance Act, 2008. In the decision reported at PLJ 2013 Karachi 24, the DB Bench of the Sindh High Court held that the EOBI contribution is in nature of fee and not a tax and the amendments made in the EOB Act, 1976 by the Finance Act, 2008 were without lawful authority and of no legal effect.

5.            It may be noted that through the said Finance Act, 2008 certain amendments were made in other Labour Laws & in EOB Act, 1976 which included applicability of the EOB Act, 1976 from 10 employees to 5 employees by amending sub-clause (i) of Section 1(4).

 

6.            This way the above two DB Decisions of the Sindh High Court declared the Finance Acts, 2007 & 2008 amending the Labour Laws through finance Bills as unlawful and without authority consequently amendments made by the Govt. through the Finance Acts, 2006, 2007, & 2008 in various Labor Laws including in the EOB, Act 1976 and the Social Security Ordinance, 1965 as void and illegal as the same could not be done through the Finance Act/Bill.

 

7.            In view of the above establishments illegally registered by the EOBI on the basis of 5 to 9 employees as illegal and employers are entitled to claim refund u/s 15 of the EOB Act, 1976 from the date of their illegal registration till they have/had not employed 10 or more employees. Since these three amendments being illegal and void, the principle of limitation would not applying to the same and same is the legal position of amending all the labour laws through the Finance Bill.

 

8.            To avoid controversy, refund applications be addressed to both, the Regional Head and Chairman of the EOB Institution and in respect of the Social Security the Director and the Commissioner of the Institution. The refund applications can be perused from our web site at http://www.smyaqoob.com/refund_sessi.htm and http://www.smyaqoob.com/refund_eobi.htm

 

9.            The employers would be within their legal right to ignore these amendments and move fast to register their claims of due refunds from EOBI and the Social Security Institution connected with Finance Acts 2006, 2007 & 2008 as provided by Section 15 of the EOB Act, 1976 and Section 25 of the P.E. Social Security Ordinance, 1965 by making applications as early as possible stating that the detail figures of the refund are being worked out which shall be provided shortly before 6 months in the same manner as both these Institutions frequently demand arrears of contributions from the employers.

 

10.        Our comments on any similar amendments made through the Finance Act, 2013 and Consequences airship due to the 18th amendment of the Condition would be given after perusal and study of the same.

 

 

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