LAHORE: The Lahore High Court Multan Bench has set aside an Employees Old Age Benefits Institution assessment against Security Organizing System Pakistan Private Limited, ruling that EOBI cannot directly assess an employer under Section 12(3) of the EOBI Act, 1976 without first following the verification procedure provided under Section 12(1), except where statutory conditions for such assessment are shown to exist.
Justice Jawad Hassan announced the judgment on September 29, 2026 in W.P. No. 800/2020, filed by Security Organizing System Pakistan Private Limited against the Employees Old Age Benefits Institution and others.
The court held that the two parts of Section 12 must be read together and that EOBI is required to first examine the employer’s record before invoking the special assessment power under Section 12(3). It observed that the said provision does not confer an unlimited authority to raise an assessment merely on the belief that an amount is payable.
The petitioner company, which provides services to banks and commercial institutions, has its head office in Multan and was registered with EOBI under Section 11 of the Act. The company had started its Dera Ghazi Khan office in July 2013. The record before the court showed that the company had been paying EOBI contributions and had placed material regarding payments from July 2013 to April 2015.
EOBI had issued a demand notice on May 14, 2015 under Section 12(3) of the EOBI Act. A subsequent show-cause notice was issued on August 25, 2015 under Section 79 of the Punjab Land Revenue Act, 1967. The company challenged the action before the EOBI Adjudicating Authority, Lahore, but the petition was dismissed on December 12, 2018, mainly on account of the company’s absence. Its appeal was later dismissed by the Appellate Board, Board of Trustees, EOBI, Faisalabad Camp Office, on August 26, 2019.
Barrister M.A. Hayat Haraj, appearing for the petitioner, argued that EOBI had proceeded directly under Section 12(3) without first undertaking the process required under Section 12(1). He relied upon the Doctrine of Intertwined developed by the Lahore High Court in Tariq Iqbal Malik versus Messrs Multiplierz Group Private Limited and others, reported as 2022 CLD 468. Ahmad Raza also appeared as counsel for the petitioner.
Mian Khalid Hussain Mitroo, Advocate, represented EOBI and opposed the petition. He contended that the demand notice was lawful and that the decisions of the Authority and the Appellate Board suffered from no legal defect requiring interference by the High Court. Rana Muhammad Javaid Iqbal, Assistant Attorney General, and Bashir Ahmed Buzdar and Rao Imran Shaukat, Assistant Advocate Generals, also appeared in the case.
The High Court examined Section 12 of the EOBI Act in detail. It noted that Section 12(1) empowers EOBI officials to seek information from employers, enter business premises, inspect accounts and other records, and examine employers, employees and other relevant persons. Section 12(3), the court held, allows assessment on the basis of available evidence only where an employer fails to maintain records, submit returns or otherwise comply with Section 12(1), and such failure makes it difficult to determine the insured persons or the amount of contribution payable.
Justice Jawad Hassan ruled that the legal conditions for invoking Section 12(3) must first exist and must be established from the record. The court observed that since the company had already placed its monthly contribution record before EOBI, the institution could not straightaway resort to Section 12(3) without first examining the available material and determining whether the statutory conditions for such assessment were present.
The court said the assessment process under Section 12(3) had to be preceded by proper consideration of the available record and identification of the basis for any alleged outstanding contribution.
The judgment also applied the Doctrine of Intertwined, under which connected statutory provisions are to be read together rather than treating one provision as if it exists in isolation. The court referred to earlier judgments including Tariq Iqbal Malik, Malik Mehboob versus Commissioner Rawalpindi, Messrs Nordex Singapore Equipment Limited versus Federal Board of Revenue and Messrs Future Vision Advertising Private Limited versus Federation of Pakistan.
The court found that the material before it did not show that the procedure under Section 12(1) had first been carried out, or that any finding had been recorded that the company had failed to maintain records or submit returns, making it difficult to determine the contribution. Justice Jawad Hassan held that this was not a mere procedural lapse, as the required statutory conditions went to the foundation of the assessment.
The court further held that no demand for alleged arrears could be made unless the amount was properly ascertained, determined, calculated and tabulated by the competent authority in accordance with law. It also observed that dismissal of the company’s earlier petition mainly due to absence could not substitute a proper decision on the legal and factual questions relating to the assessment.
The Lahore High Court allowed the writ petition and set aside the EOBI Adjudicating Authority’s decision dated December 12, 2018 and the Appellate Board’s order dated August 26, 2019. The matter was remanded to the competent Authority for a fresh decision after providing the petitioner a proper opportunity of hearing and strictly following Section 12(1).
The court held that if the legal conditions for Section 12(3) are subsequently found to exist, EOBI may proceed under that provision in accordance with law. It directed the Authority to pass a speaking and reasoned order within two months of receiving the certified copy of the judgment.
The bench clarified that the judgment should not be treated as a decision on the actual merits or the amount of the alleged contribution liability.
The judgment also explained that under Section 9 of the EOBI Act, the employer is responsible for paying the monthly contribution and cannot recover the employer’s share from the wages of an insured employee.
