IN THE SUPREME COURT OF PAKISTAN 
(Appellate Jurisdiction) 
 
 
PRESENT: Mr. Justice Mian Saqib Nisar 
 
 
 
Mr. Justice Iqbal Hameedur Rahman 
 
 
 
Mr. Justice Tariq Parvez 
 
CIVIL APPEAL NO. 95/2005 
(Against the judgment dated 5.12.2003 
passed by High Court of Sindh, Karachi 
passed in Cons.P. No.1443/1996)  
 
M/s Pakistan International Airlines Corporation 
Appellant(s) 
Versus 
 
The Board of Trustees, EOBI etc. 
Respondent(s) 
 
 
For the Appellant(s): 
 
Mr. Anwar Mansoor Khan, Sr. ASC. 
 
 
 
 
 
Mr. Mehr Khan Malik, AOR. 
 
For the Respondent(s):  
Mr. Tariq Bilal, ASC. 
 
 
 
 
 
Mr. Babar Bilal, ASC. 
 
 
 
 
 
Mr. M. S. Khattak, AOR. 
 
 
 
 
 
Noor Ahmed, Dy. Director, Law, EOBI 
 
On Court’s Notice: 
 
Mr. Abdul Rasheed Awan, D.A.G. 
 
Date of Hearing:  
 
20.01.2016. 
 
ORDER 
 
 
 
MIAN SAQIB NISAR, J:- This appeal, by leave of the Court, 
entails the facts, in that, the appellant had challenged the order dated 
24.11.1995 passed by the Adjudicating Authority of the Employees’ Old 
Age Benefits Institutions (EOBI), whereby the kitchen and engineering 
departments of the appellant were declared to be establishments within 
the purview of the Employees’ Old-Age Benefits Act, 1976 (the Act), before 
the Board of Trustees of EOBI/respondent No.1 which dismissed the 
appeal vide order dated 10.6.1996. Both these orders were assailed by 
the appellant by filing a constitutional petition before the learned High 
Court of Sindh, which (petition) was dismissed vide the impugned 
judgment, hence the appellant approached this Court. Leave in this case 
Civil Appeal No. 95/2005 
 
2
was granted vide order dated 3.2.2005, the relevant part wherefrom is 
reproduced as under:-  
“(i) 
Whether clause (c) & (f) and proviso of section 47 of 
Employees Old Age Benefits Act XIV of 1976 read 
with section 33 of the said Act have been correctly 
and rightly interpreted by the High Court? 
(ii) 
Whether the definition of “Manufacture” and 
“Manufacturing Process” given in the various 
dictionaries in the absence of definition under the 
Factories Act could be made basis of the judgment 
against the petitioner? 
(iii) 
Whether the provision of Act XIV, 1976 and Factories 
Act, 1934 and the P.I.A.C. Act, 1956 have been 
erroneously interpreted/considered in the impugned 
judgment? and 
(iv) 
Whether the petitioner-Corporation being statutory 
corporation under Government of Pakistan through 
Ministry of Defence, would be governed by any other 
law than P.I.A.C. Act, 1956 and Rules & Regulations 
made thereunder?” 
 
Adding to the facts, it may be mentioned that the Assistant Director 
(Inspection), EOBI moved a complaint under Section 33 of the Act before 
the Adjudicating Authority, EOBI that the kitchen and the engineering 
departments of the appellant require compulsory registration with EOBI 
and are liable to pay contributions under the Act, which the appellant 
has not so done and this is a lapse on its part, thus a direction to that 
effect be given. The Adjudicating Officer, after seeking a reply from the 
appellant, passed the order dated 24.10.1995 wherein considering that 
both the kitchen and the engineering departments have been registered 
by the appellant under the Factories Act, 1934 (Factories Act) and also by 
Civil Appeal No. 95/2005 
 
3
interpreting various relevant provisions of the Act has come to the 
conclusion that the departments are “establishments” within the purview 
of the law and they require compulsory registration. It may be mentioned 
that with regard to the interpretation of the relevant provisions the 
working/functioning of both the departments have been taken into 
consideration. In appeal before respondent No.1, the order dated 
24.10.1995 has been upheld but on examination of the order dated 
10.6.1996 passed by it, we find that such upholding has been done 
without giving any separate or additional reasons.  
2. 
 
Learned counsel for the appellant has argued that clauses (c) 
and (f) of Section 47 read with Section 33 of the Act have not been 
correctly and rightly interpreted by the learned High Court; the 
departments, such as the kitchen and engineering departments, of the 
appellant cannot be segregated into separate entities to be termed as 
“establishments” for the purposes of invoking the provisions of the Act; 
Section 3 of the Act contemplates the concept of an “establishment” 
which is an organization as a whole and not of its different 
departments/components; the term “establishment” as defined in 
Section 2(e) of the Act is not applicable to the various departments of an 
establishment as a whole; the fact that the two departments were 
registered under the Factories Act, cannot be taken as a ground for 
registering those departments for the purposes of the Act on account of 
Section 2(e)(iii) (of the Act); the kitchen and engineering departments do not 
engage in manufacturing process. 
3. 
 
On the other hand learned counsel for the respondent has 
argued that the factum of registration of the kitchen and engineering 
departments under the Factories Act is sufficient per se to render them 
to be liable to registration under the Act and therefore the question of 
Civil Appeal No. 95/2005 
 
4
whether or not they are “factories” by virtue of their respective functions 
does not remain. Further, he made reference to Section 4(2)(e) of the 
Pakistan International Airlines Corporation Act, 1956 (PIAC Act) and the 
relevant portion of the impugned judgment, to argue that since the 
appellant repairs equipment of other airlines, the exemption under 
Section 47 of the Act does not apply. He further stated that the appellant 
being a corporation registered under the Companies Ordinance, 1984 
(Ordinance) was no longer immune from the applicability of the Act. To 
support his arguments, learned counsel for the respondent relied upon 
Province of N.W.F.P. through Secretary, Local Government and 
Rural Development, Peshawar v. Pakistan Telecommunication 
Corporation through Chairman and others (PLD 2005 SC 670), Don 
Basco High School v. Assistant Director, E.O.B.I. and others (PLD 
1989 SC 128) and Lahore Race Club through Secretary v. Deputy 
Director, Employees’ Old-Age Benefits Institution, Lahore and 2 
others (1998 SCMR 1571). The learned Deputy Attorney General has 
submitted that the order of respondent No.1 is sketchy and that there 
was no proper adjudication of the matter neither by the Adjudicating 
Authority nor the respondent No.1, making this a case fit for remand. 
4. 
 
Heard. The key questions involved in this matter are:- first, 
whether the kitchen and engineering departments of the appellant are 
“establishments” within the meaning assigned in the Act; and secondly, 
whether the Act is not applicable to the appellant by virtue of Section 47 
of the Act. In order to appreciate the above, the relevant provisions (parts) 
of the law are reproduced as below:- 
 
“Employees’ Old-Age Benefits Act, 1976 
2. 
 Definitions. – In this Act, unless the context otherwise 
requires,– 
Civil Appeal No. 95/2005 
 
5
(e) "establishment" means-  
(iii) 
a factory as defined in the Factories Act, 
1934 (XXV of 1934); 
47. 
Act Not to Apply to Certain Persons.– Nothing in this 
Act shall apply to– 
(f) 
person in the service of statutory bodies other than 
those employed in or in connection with the affairs of a 
factory as defined in section 2 (j) of the Factories  Act, 
1934 (XXV of 1934), or a mine as defined in the Mines 
Act, 1923 (IV of 1923):  
Provided that workshop maintained exclusively 
for the purposes of repair or maintenance of equipment 
or vehicles used in such statutory bodies shall not be 
treated as factories for the purposes of this clause; 
 
Factories Act, 1934 
2. 
Definitions.– In this Act, unless there is anything 
repugnant in the subject or context— 
 
 
 
 
(g) 
“manufacturing process” means any process— 
 
 
 
(i) 
for making, altering, repairing, ornamenting, 
finishing or packing, or otherwise treating any article 
or substance with a view to its use, sale, transport, 
delivery or disposal, or 
 
(j) 
“factory” means any premises, including the precincts 
thereof, wherein ten or more workers are working, or were 
working on any day of the preceding twelve months, and in any 
part of which a manufacturing process is being carried on or 
is ordinarily carried on with or without the aid of power but 
does not include a mine, subject to the operation of the Mines 
Act, 1923 (IV of 1923);” 
 
5. 
 
Now coming to the first question as to whether the kitchen 
and engineering departments of the appellant are “establishments” 
Civil Appeal No. 95/2005 
 
6
within the meaning assigned in the Act, Section 1(4) of the Act provides 
for the Act to be applicable to every establishment, Section 3 states that 
there is to be compulsory insurance of all employees in an establishment, 
and Section 11 deals with registration of establishments, which 
(registration) was directed by all the fora below in the instant matter, thus 
an elucidation of the meaning of “establishment” is necessary. However 
before proceeding we find it pertinent to deal with the argument of the 
learned counsel for the appellant that the various departments of an 
organisation cannot be “establishments” rather it has to be the 
organisation as a whole; suffice it to say that there may very well be 
organisations comprising of a vast array of sub-organisations wherein 
each sub-organisation carries out an activity that may be wholly or 
substantially different from that of another sub-organisation, rendering 
only one or some of the sub-organisations as “establishment(s)” under 
the Act and not the others. To hold that an “establishment” as provided 
for under the Act only contemplates organisations as a whole/composite 
and not its individual departments/sub-organisations would mean to 
deprive the employees of insurance benefits who would otherwise be 
entitled as the sub-organisation they work for may fall within the 
definition of “establishment” under the Act. Hence, we are of the opinion 
that the kitchen and engineering departments of the appellant are not 
precluded from falling within the definition of “establishment” as 
provided for under the Act.  
The definition of “establishment” has been provided in Section 2(e), 
the relevant sub-clause of which is (iii), that is, a “factory as defined in the 
Factories Act, 1934”. “Factory” has been defined in Section 2(j) of the 
Factories Act (reproduced above), wherein the determinative factor for our 
purposes is that of “manufacturing process”, which in turn has been 
Civil Appeal No. 95/2005 
 
7
assigned a meaning in Section 2(g) of the Factories Act, the germane sub-
clause of which is (i). The question boils down to whether such 
“manufacturing process” is being carried out in the kitchen and/or 
engineering departments of the appellant. With regard to the kitchen 
department, flight kitchen production or flight catering consists of mass-
scale food production, where food is prepared, cooked and arranged for 
final service for countless number of passengers and flight crew on 
numerous local and international fights round the clock every day. This 
makes it lose its semblance to a regular kitchen, and renders it more 
akin to a food manufacturing plant, where finished dishes are made from 
the raw material (fresh food items, etc.) and finally packed and loaded onto 
flight catering carts for use on-board the appellant’s air carriers, thereby 
bringing such process within the “process for making…packing…any article or 
substance with a view to its use…” making it a “manufacturing process” and 
consequently rendering the kitchen department a “factory” in terms of 
the Factories Act. Accordingly, such department would necessarily 
constitute an “establishment” for the purposes of the Act. Suffice it to say 
that there is no provision in the Act which provides that objects ancillary 
to the main object of an organisation such as the appellant would not be 
subject to the application of the Act, and the argument of the learned 
counsel for the appellant in this regard is unconvincing. Further with 
regard to his submission that the food is being prepared for the 
appellant’s own use, we do not find this to be a reason within the 
relevant law to make the Act inapplicable to the kitchen department, and 
in any case, the services being provided by the said department are very 
much a part and parcel of the appellant’s object to provide air-transport 
to passengers. With respect to the engineering department, even if it is 
accepted that no manufacturing whatsoever is taking place within such 
Civil Appeal No. 95/2005 
 
8
department as submitted by the learned counsel for the appellant, but 
repairing and servicing of airplanes, which is admittedly being carried 
out, would certainly bring it within the definition of “factory” since a 
“manufacturing process” is taking place, which encompasses “repairing” 
of the airplanes “with a view to its use” as per Sections 2(g)(i) and 2(j) of the 
Factories Act. Consequently, the engineering department is also an 
“establishment” under the Act.  
6. 
 
Adverting to the second question, we find it important to 
state at this juncture that this appeal was previously decided vide 
judgment dated 19.4.2011 on the primary ground that Section 47 was 
only meant for “persons” employed to be excused from making 
payments/contributions as required by the Act, and not the appellant as 
an employer. Subsequently the review petition filed by the appellant was 
allowed and the appeal restored to its original number for re-hearing vide 
order dated 4.3.2015 on the main ground that Section 47 was a part of 
the original Act at which time employees were under no obligation to 
make any payments/contributions to the EOBI Fund, suffice it to say 
that we find this to be the correct position and thus the appellant as an 
employer is entitled to take the benefit of the provisions of Section 47.  
 
For ease of reference, Section 47(f) may be divided into three 
parts:- (i) persons in the service of statutory bodies; (ii) other than those 
employed in or in connection with the affairs of a factory as defined in 
Section 2(j) of the Factories Act; and (iii) the proviso, that workshops 
maintained exclusively for the purposes of repair or maintenance of 
equipment or vehicles used in such statutory bodies shall not be treated 
as factories for the purposes of Section 47(f). It is an undisputed fact, 
that the appellant is a statutory body, having been established by 
statute, i.e. the Pakistan International Airlines Corporation Act, 1956, 
Civil Appeal No. 95/2005 
 
9
and its employees consequently in the service of a statutory body. It may 
be pertinent to mention here that we find force in the argument of the 
learned counsel for the appellant that the mere factum of registration of 
the kitchen and engineering departments under the Factories Act (which is 
undisputed) will not be sufficient to satisfy the second part of Section 47 for 
the reason that the phrase “registered under” was taken out of Section 47(f) 
of the Act and replaced with “as defined in” by virtue of an amendment 
(Employees’ Old-Age Benefits (Amendment) Ordinance, 1983). Be that as it may, as 
opined above in paragraph 5, the kitchen and engineering departments 
are nevertheless “factories” within the meaning provided in Section 2(j) of 
the Factories Act, hence the Act would be applicable to the employees of 
the appellant working in the said departments. The attempt of the 
learned counsel for the appellant to bring at least the engineering 
department within the purview of the proviso to Section 47(f) by stating 
that such department repairs airplanes of the appellant only is inapt, as 
it has come on the record (in the form of an affidavit vide CMA No.385/2016) that 
repair and maintenance services are also being provided to airplanes of 
airlines other than that of the appellant, which in any case is a public 
domain fact in our opinion; and that the appellant also repairs and 
services the aircrafts and equipment of the Pakistan Navy and Air Force 
was admitted by the appellant in the proceedings before the Adjudicating 
Authority, EOBI, therefore, bringing the appellant out of the ambit of the 
proviso to Section 47(f), consequently rendering the provisions of the Act 
applicable to the persons working in the engineering department of the 
appellant.  
7. 
 
Finally, there is nothing on the record such as a Form A or 
Form 29 issued by the Securities & Exchange Commission of Pakistan to 
suggest that the appellant has been conclusively converted into a limited 
Civil Appeal No. 95/2005 
 
10
company under the Ordinance to enable us to decisively hold that the 
Act would apply to the appellant on this account.  
8. 
 
In light of the foregoing, we find that no case for interference 
with the impugned judgment has been made out; therefore, this appeal is 
dismissed with no order as to costs. 
 
 
 
Judge 
 
 
 
Judge 
 
 
 
Judge 
  
 
 
Announced in open Court 
on 09.02.2016 at Islamabad 
Not Approved For Reporting 
Ghulam Raza/*