LHC sets aside EOBI orders over additional contribution demand
“The Lahore High Court has ruled that the Employees’ Old-Age Benefits Institution (EOBI) is bound to examine a company’s records and details of its employees in accordance with law before demanding add…”
Justice Javed Hassan issued the written judgment on a petition filed by Security Organizing System Pakistan (Private) Limited, setting aside the decision of EOBI’s adjudicating authority and the order of its appellate board. The company had contended that EOBI demanded additional contributions without examining its records as required under Section 12(1) of the EOBI Act.
The petitioner argued that the company’s records, returns and other documents were required to be examined before determining any outstanding amount., Section 12(3) could only be invoked when an employer failed to maintain records or provide the required information, making it difficult to determine the contributions payable in respect of insured employees.
The company monthly EOBI contributions for the relevant period had been paid and that records of those payments were available. Despite this, the company argued, EOBI imposed additional liabilities without examining the available records and subsequently initiated recovery proceedings.
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In its judgment, the Lahore High Court held that where a company’s records are available and can be used to determine the contributions already paid and those payable, EOBI cannot directly assess liabilities under Section 12(3). The institution must first examine the available record and determine whether the legal conditions for applying Section 12(3) have been fulfilled.
Justice Javed Hassan observed that Section 12(3) can be invoked only when an employer fails to maintain records, submit returns or comply with the requirements of Section 12(1), resulting in difficulty in determining the insured employees or contributions payable.
The court noted that in the present case, no record had been produced showing that EOBI had first examined the company’s documents in accordance with the legal requirements or determined that the company had failed to provide the required records and returns.
The court therefore remanded the matter to the relevant authority, directing it to provide the company a full opportunity to present its case, examine its records and decide the matter afresh in accordance with law. The court directed that a reasoned decision be issued within two months of receipt of the certified copy of the judgment.
It clarified that EOBI could determine the contributions under Section 12(3) if, after examining the record, the legal requirements for applying the provision were found to have been met.
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