STATE ENTERPRISES CANNOT OVERRIDE LABOUR LEGISLATION

LEGAL ANALYSIS BY OSMANI LEGAL FIRMS

Case Reference

2026 PLC (Labour) 1 Gujranwala Electric Power Company (GEPCO) v. Ahsan & others Writ Petition No. 2296 of 2020 Decided on: 29 May 2025

Court: Lahore High Court Judge: Shujaat Ali Khan, J

Appropriate Legal Analysis

1. Scope of State-Owned Enterprises (Governance and Operations) Act, 2023

The Court examined whether the State-Owned Enterprises (Governance and Operations) Act, 2023 governs the terms and conditions of employees of state-owned companies. It was held that the Act is primarily concerned with the appointment, role, and duties of the Chief Executive Officer and Board of Directors, and does not regulate employee service conditions.

2. SOE Act Cannot Override Labour Laws

The Court categorically ruled that the SOE Act, 2023 cannot be stretched beyond its express scope to control or alter employment terms governed by labour statutes. Any such extension would amount to arbitrary exercise of power by state-owned enterprises.

3. Whether GEPCO Qualifies as an “Industry”

Addressing the plea that GEPCO was not an “industry,” the Court held that any entity engaged in electrical undertakings—including distribution, service, and sale of electricity—squarely falls within the definition of an industry under labour laws.

4. Applicability of Standing Orders Ordinance, 1968

Since GEPCO qualifies as an industry, its employees are governed by the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, and disputes relating to termination and service conditions fall within the jurisdiction of Labour Courts.

5. Jurisdiction of Labour Courts Under Article 175 of the Constitution

Relying on Article 175 of the Constitution, the Court reaffirmed that Labour Courts are lawfully established forums and cannot be divested of jurisdiction in matters expressly covered by labour statutes.

6. Interpretation of Statutory Rules: Adoption vs Statutory Status

The Court reiterated the settled principle that mere adoption of rules from another entity does not confer statutory status upon them unless they are framed under express legislative authority.

7. Legislative Lists Under the Constitution: Clarifying Scope

The Court clarified that mere mention of a subject in the Fourth Schedule of the Constitution does not determine legislative competence but only indicates which level of government may legislate on the subject.

8. Equality and Non-Discrimination Under Article 25

Invoking Article 25 of the Constitution, the Court held that any executive action tainted with mala fide intent or discrimination cannot be sustained, and equality before law remains a constitutional shield for employees.

9. Termination Based on Eligibility Criteria

The Court scrutinized the respondents’ appointments and found that they did not meet the eligibility criteria prescribed in the public advertisement. Possessing higher qualification than the prescribed Matriculation rendered them ineligible for appointment as Assistant Linemen.

10. Invalid Appointments Cannot Be Protected

The Court held that appointments made in violation of eligibility criteria cannot be allowed to remain in the field, even if employees have served for some time. Labour fora had misdirected themselves by ignoring this fundamental illegality.

11. Conflicting Outcomes and Final Determination

While the Court initially upheld labour court jurisdiction, it ultimately set aside the orders accepting grievance notices, dismissed the employees’ claims, and allowed the constitutional petition filed by GEPCO.

Key Legal Principles Laid Down

• SOE Act, 2023 does not govern employee service terms
• Electricity distribution companies qualify as industries
• Standing Orders Ordinance, 1968 applies to SOEs
• Labour Courts retain full jurisdiction under Article 175
• Adoption of rules ≠ statutory force
• Appointments violating eligibility criteria are void
• Equality clause protects against discriminatory executive action

Summary of the Judgment

The Lahore High Court held that the State-Owned Enterprises (Governance and Operations) Act, 2023 does not regulate the service conditions of employees of state-owned companies and cannot override labour legislation. Gujranwala Electric Power Company was declared an “industry,” making its employees subject to the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 and within the jurisdiction of Labour Courts. However, the Court found that the respondent employees were appointed in violation of advertised eligibility criteria, rendering their appointments void. Consequently, the Court set aside the orders passed by labour fora, dismissed the employees’ grievance petitions, and allowed GEPCO’s constitutional petition.

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