Huzaima Bukhari & Dr. Ikramul Haq
It is strange that Sindh and Punjab Assemblies, while enacting the Sindh Workers Welfare Fund Act, 2014 and Punjab Workers Welfare Act 2019, respectively, failed to realise that entities having trans-provincial operations earn income from more than one province. How can a province demand percentage of taxable income not earned in that province? It is a gross violation of Article 141 of the Constitution of Islamic Republic of Pakistan and order of the Supreme Court in Messers Sui Southern Gas Ltd & Others v Federation of Pakistan & Other 2018 SCMR 802 holding in para 20: “At this juncture it is to be noted that when a provincial legislature is not competent to legislate with regard to the workmen of trans-provincial establishments, obviously the Federation has to interfere in the matter with a Federal Legislation to preserve and protect the fundamental rights of the said workmen ensured under Article 17 of the Constitution….”
Earlier, the Supreme Court of Pakistan in SRB v Civil Aviation Authority of Pakistan 2017 SCMR 1344 held as under:
23. Item 59 of Part I and item 18 of Part II of the Federal Legislative List of our Constitution provide that the “matters incidental or ancillary to any matter enumerated in the Federal Legislative List” are also within the exclusive domain of the Federal Legislature. These provisions are similar to the American “necessary and proper” powers. Chief Justice Muhammad Haleem, writing for the Supreme Court, in the case of Abdur Rahim v Federation of Pakistan (PLD 1988 Supreme Court 670, at page 676) opined that the words incidental or ancillary should not be construed narrowly and they don’t necessarily mean lesser things:
“Although the words ‘incidental’ and ‘ancillary’ literally mean things of lesser or subordinate degree or of consequential nature but in the legislative interpretation they mean more than this. While interpreting the words ‘incidental’ and ‘ancillary’ in Messrs Haider Automobile Ltd. v. Pakistan (PLD 1969 SC 623), it was observed:
“The items in the legislative list, as was observed in the case of United Provinces v. Atiqa Begum and others are not to be read in any narrow or pedantic sense. Each general word therein should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended within it. These items describe only comprehensive categories of legislation by a word of broad and general meaning.”
The Supreme Court of Pakistan in the above case also held as under:
34. The case of Pakistan Workers Federation, Balochistan v Government of Pakistan (2014 PLC 351) involved the post Eighteenth Amendment scenario and the constitutional power to legislate on the subject of trade unions, industrial and labour disputes and labour welfare (items 26, 27, 28, 30 and 31 of the Concurrent Legislative List). The Concurrent Legislative List was omitted by the Eighteenth Amendment. The question arose whether the Federal Legislature could still make laws in respect of matters that were mentioned in the Concurrent Legislative List. A Divisional Bench of the Balochistan High Court appointed Mr. Raza Rabbani as amicus to assist the Court. Mr. Rabbani in addition to being a senior counsel was a senator and the Chairman of the Senate of Pakistan. The judgment in the case was authored by me as Chief Justice of the Balochistan High Court. It will be appropriate to reproduce the following extracts from the judgment to show what was sought to be achieved by the Eighteenth Amendment:
“6. Mr. Raza Rabbani brought a rare insight into the deliberations as he was the Chairman of the Parliamentary Committee on Constitutional Reforms (hereinafter referred to as “the Committee”) whose report dated 31st March, 2010 resulted in the Constitution (Eighteenth Amendment) Act, 2010. The Committee comprised of 26 Members representing all political parties, including those political parties which did not have representation in Parliament.” (paragraph 6, page 361)
“We were informed that the first meeting of the Committee took place on 25th June, 2009, when the Committee elected its Chairman, namely Mr. Raza Rabbani. Mr. Rabbani stated that all the decisions of the Committee were by consensus and only notes of reiteration were recorded by ‘dissenters’. The Committee proposed 102 amendments to 97 Articles of the Constitution, primarily with a view to do away with the mischief of the Eighth and Seventeenth Amendments to the Constitution that had been enacted by dictators. Section 96 of the Constitution (Eighteen Amendment) Act, 2010 substituted Article 270-AA; the earlier Article 270-AA had been validated and substituted by the Constitution (Seventeenth Amendment) Act, 2003 and had been inserted by the Legal Framework Order (Chief Executive Order No.24 of 2002).” (paragraph 6, page 360)
“7. Mr. Raza Rabbani referred to clauses (6), (8) and (9) of Article 270AA, which are reproduced hereunder:
“(6) Notwithstanding omission of the Concurrent Legislative List by the Constitution (Eighteenth Amendment) Act, 2010, all laws with respect to any of the matters enumerated in the said List (including Ordinances, Orders, rules, bye-laws, regulations and notifications and other legal instruments having the force of law) in force in Pakistan or any part thereof, or having extra-territorial operation, immediately before the commencement of the Constitution (Eighteenth Amendment) Act, 2010, shall continue to remain in force until altered, repealed or amended by the competent authority.”
“(8) On the omission of the Concurrent Legislative List, the process of devolution of the matters mentioned in the said List to the Provinces shall be completed by the thirtieth day of June, two thousand and eleven.”
“(9) For purposes of the devolution process under clause (8), the Federal Government shall constitute an Implementation Commission as it may deem fit within fifteen days of the commencement of the Constitution (Eighteenth Amendment) Act, 2010.”
“The Implementation Commission, referred to in Article 270-AA(9), held 68 meetings and devolved 17 ministries in three phases, as per notifications issued by the Federal Cabinet Establishment Division dated 2nd December, 2010 (First Phase), 5th April, 2011 (Second Phase) and 29th June, 2011 (Third Phase). The process of devolution was required to be completed by the 30th June, 2011, as stipulated in Article 270-AA (8), thus stood concluded one day before the last date.”
“Mr. Rabbani stated that, to the extent that Parliament can make laws for Islamabad Capital Territory there is no objection or challenge to the Industrial Relations Act, 2012. He submitted that Parliament can also legislate in respect of the subjects mentioned in the Federal Legislative List including Item 31 of Part I in respect of ‘corporation’ and matters related therewith.”
“He also referred to Items 4 and 13 of Part II of the Fourth Schedule respectively “Council of Common Interests” and “Inter-provincial matters and co-ordination”. Article 154 of the Constitution provides that, “the Council shall formulate and regulate the policies in relation to matters in Part II of the Federal Legislative List and shall exercise supervision and control over related institutions” and that the highlighted words are noteworthy. Part II of the Fourth Schedule includes ‘railways’ (Item 1), ‘mineral oil and natural gas’ (item 2), ‘development of industries’ (item 3), ‘electricity’ (item 4), ‘major ports’ (item 5) ‘all regulatory authorities established under a Federal Law’ (item 6).”
“In his opinion Parliament could legislate in respect of inter or trans-provincial bodies or institutions that covered any of the said items. Reference was then made to Article 38(a), which requires that the State shall ensure “equitable adjustment of rights between employers and employees” and that the definition of ‘State’ is to be read in the context, and could mean Federal Government/Parliament or a Provincial Government/Provincial Assembly (Article 7 of the Constitution); however, as “inter-provincial matters and coordination” fell within the domain of Parliament the ‘State’ means Parliament, which is competent to enact laws in respect whereof.” (paragraph 7, pages 361-2)
35. Mr. Raza Rabbani’s submissions in the aforesaid case also help in understanding the background and the manner in which the Eighteenth Amendment to the Constitution was discussed, enacted and implemented and also what were the objectives that were sought to be achieved. Mr. Rabbani stated, and the Balochistan High Court agreed with him, that despite the removal of the Concurrent Legislative List from the Constitution the Federal Legislature may still legislate in respect of a subject that was mentioned in the Concurrent Legislative List provided it came within the purview of another subject on the Federal Legislative List or was incidental or ancillary thereto…..”
The above pronouncement of the Supreme Court clearly says that all the laws related to “equitable adjustment of rights between employers and employees” and welfare of workers and providing social security to citizens exclusively fall in the domain of the Parliament and not provincial assemblies even after the 18th Amendment. In the light of above orders of the Supreme Court, the provincial laws in conflict with federal laws, enacted before or after the 18th Amendment can be void under Article 143 of the Constitution which reads as under:
143.—Inconsistency between Federal and Provincial law. — If any provision of an Act of a Provincial Assembly is repugnant to any provision of an Act of Majlis-e-Shoora (Parliament) which Majlis-e-Shoora (Parliament) is competent to enact, then the Act of Majlis-e-Shoora (Parliament), whether passed before or after the Act of the Provincial Assembly, shall prevail and the Act of the Provincial Assembly shall, to the extent of the repugnancy, be void.
The judgement of Sindh High Court in Shafiquddin Moinee v Federation of Pakistan through Secretary, Ministry of Human Resources Development, Islamabad & 2 Others 2018 CLD 1088, while upholding the vires of Sindh Companies Profits (Workers’ Participation) Act, 2015 , concluded as under:
“34. In view of the foregoing discussion, we therefore answer the issue specified in para 2 above, which relates to the third category identified in the order of 19.09.2017, as follows. In the case of trans-provincial companies, it is the Sindh Act that applies, but interpreted, read and applied such that the obligation under the Act is only to make distribution to the workers in this Province, and only of an amount that is proportionate to their number here. It is irrelevant where the registered office and/or the industrial undertaking of the trans-provincial company are located, i.e., they could be located in this Province or elsewhere. Furthermore, in making the computation, the whole of the profits made by the company are to be used, regardless of where they were earned in the country”.
The above judgemnet, impugned in the Supreme Court, and its operation was suspended on 10.7.2018. Since it is yet not reversed by the Supreme Court, the bench of co-equal strength presently hearing the cases of levy under Sindh Workers Welfare Fund Act, 2014 and Sindh Companies Profits (Workers’ Participation) Act, 2015 cannot take a different view unless a larger bench is constituted as held by Supreme Court in PLD 1995 Supreme Court 423. It is also worth mentioning that in all these cases, the dispute is between the Federal and Provincial Governments and High Courts cannot hear these matters in view of Article 184(1) of the Constitution as held in The Punjab Province v Federation of Pakistan [(1960) 2-TAX (Suppl.–3) (S.C.Pak).
It is also worth noting that that the Supreme Court in Human Right Case No. 33954-P of 2018, in its order of March 3, 2020, directed: “The learned Additional Advocate General, Sindh shall also submit a comprehensive report in line with the report submitted by the Province of Punjab as to how many factories are operating in the Province of Sindh and the number of workers employed therein. Similar information, as required from the Province of Sindh, shall also be furnished by the Provinces of Khyber Pakhtunkhwa, Balochistan and the ICT. Adjourned to a date after one month”.
The Sindh High Court in a number of cases challenging the levy of WWF and WPPT by Sindh Government has asked the petitioners to deposit the amount with the Nazir till the disposal of the matter, even though it has no jurisdiction to hear the matter.
In the meantime, the Federal Government and the Punjab Government in utter disrespect of judicial pronouncements and knowing that the matter is sub judice before the Supreme Court have issued administrative instructions creating further confusion. The Punjab Law and Parliamentary Affairs Department, in Letter No. Legis.13-77/2010(C-II)(P-I)6218, issued on December 15, 2020, addressed to the Secretary of the Government of the Punjab, Labour & Human Resource Department, claimed that the Federal Government or any of its agencies is not legally competent to collect workers welfare fund form the Punjab after the enactment of the Punjab Workers Welfare Fund Act 2019, which came into force on 13.12.2019. Earlier, the Federal Board of Revenue (FBR), in response to a letter by a chartered accountant firm in its Letter C.No.1(110)R&S/2020 dated December 3, 2020, provided the diametrically opposite view claiming: “In view of decision by the Council of Common Interest (CCI) “WWF shall remain with the Federal Government till such time a mutually agreed mechanism is developed”. It is clarified that Federal WWF Ordinance, 1971 will apply all over Pakistan and FBR is the collecting authority in this regard. It is strange that in Punjab, the coalition Government of PTI, has issued contradictory statement and that too after agreement in CCI as per claim of FBR.
On December 21, 2020, a war of words took place between PPP and PTI on the issue of WWF and EOIB. According to a Press report, the Sindh Education and Labour Minister, Saeed Ghani, “slammed the illegal and unconstitutional seizure of the EOBI and Workers Welfare Fund by the Federal Government”. In retaliation, Leader of the Opposition in the Sindh Assembly, Firdous Shamim Naqvi, reportedly said, the PPP minister was “misleading the people only for political point-scoring”. He added that “the federation wrote a letter asking FBR to collect taxes from the agencies that operate inter-provincially. And such a simple thing is not understood by a minister”. He claimed that all formalities on part of the federal government “are already done and the people of Sindh have not been able to avail the benefits of these institutions [EOBI and Workers Welfare Fund] only due to incompetence of the Sindh government”. Neither the Sindh Education and Labour Minister nor Leader of the Opposition in the Sindh Assembly must realise that the issue is already sub-judice before Supreme Court and Sindh High Court. Either, they were not aware of it or deliberately showing disrespect towards orders of the superior courts and Constitution.
It is time that the Federal and Provincial Governments, instead of issuing contradictory instructions and creating further confusion in business and professional circles, should request the Supreme Court for declaratory judgement, especially when the matter is already seized by the Supreme Court in Human Right Case [33954-P of 2018] though it did not take note of Article 184 when dispute is between or among the governments. Nobody assisted the Supreme Court that it has original and exclusive jurisdiction, ousting all courts, including Sindh High Court where petitions are pending. The governments must approach the Supreme Court for a declaratory judgement under Article 184(1) & (2) that reads as under:
184. Original jurisdiction of Supreme Court.-(1) The Supreme Court shall, to the exclusion of every other Court, have original jurisdiction in any dispute between any two or more Governments.
Explanation.-In this clause, “Governments” means the Federal Government and the Provincial Governments.
(2) In the exercise of the jurisdiction conferred on it by clause (1), the Supreme Court shall pronounce declaratory judgments only.
The representatives of workers have been consistently emphasising the view that social security net should not be distributed among the provinces, rather it should be managed through the federation and implemented by the federating units. The trans-provincial fund, assets, institutions and the programs run by EOBI and Workers Welfare Fund (WWF) are difficult to be divided among the provinces. Besides, migration of workers would be a big challenge. They rightly pointed out that subject can be devolved but welfare of the workers/citizens cannot.
The Supreme Court already held in the case of Government of Sindh through Secretary Health Department and Others v Dr. Nadeem Rizvi and others [2020 SCMR 1]: “The performance of its positive obligations under the fundamental rights, for example right to life, prevention of slavery, forced labour, human trafficking, etc. constitute a “purpose” of the Federation for which it can carry out projects throughout Pakistan. For performance of the said purpose, it is not necessary to look into the legislative list when the main body of the Constitution provides the requisite powers. Refer to Province of Sindh v. MQM (PLD 2014 SC 531)”. Thus subject of labour though devolved through 18thAmendment, the workers and citizens are not—they remain the responsibility of Federation as elaborated in Pakistan Workers Federation, Balochistan v Government of Pakistan (2014 PLC 351).
The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS)