Judgment : ( 1 ) THIS writ petition is for the issue of writ of certiorari to call for the records of the respondent in proceedings No. C4/ TN/2709/ ENF/ MDU/89 dated March 21, 1989 and quash the same. ( 2 ) THE case of the petitioner is that they are doing business of jewellery sales. They engage employees of various categories like Accountants, Clerks, Salesman, Attenders, Watchmen etc. It is contended on behalf of the petitioner that the wages paid to the employees are more than the minimum wages fixed by the Government of Tamil Nadu. The wages include Basic pay and Dearness Allowance. Apart from the wages, it is averred in the writ petition that some of its employees are being paid ex-gratia amount on the 15th of every month as a special allowance. It is also the case of the petitioner that the said allowance is not paid to all its employees and even in respect of some of the employees they have stopped payment also. It has been contended that the special allowance was never treated as a part of their basic wages and as a matter of fact, when the leave salary has to be paid, this allowance is not taken into account for payment of leave salary. Even when the gratuity is to be paid on the superannuation of any employee, the special allowance is not taken into account for the purpose of computation of gratuity. It is also averred that so far as Provident Fund is concerned, the Management has been making its contribution to the authorities under Section 6 of R. Ramanathan Chettair Jewellers vs. Regional Commissioner, Employees Provident Fun. . . Page 3 of 8 the Employees Provident Funds and Miscellaneous Provisions Act, 1952. Learned counsel for the petitioner has brought to the notice of this Court the provisions of Section 6 of the Act, which reads as under: "the contribution which shall be paid by the employer to the fund shall be six and a quarter per cent of the basic wages, Dear-ness allowance and retaining allowance (if any) for the time being payable to each of the employees. " It is contended that the contribution depends upon the basic wages and dearness allowances payable to each of the employees. " It is contended that the contribution depends upon the basic wages and dearness allowances payable to each of the employees. Learned counsel for the petitioner has brought to notice Section 2 (b) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 which defines basic wages as under: " "basic wages" means all emoluments which are earned by an employee while on duty or on leave with wages in accordance with the terms of the contract of employment and which are paid or payable to him, but does not include: (i) the cash value of any food concession, (ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment; (iii) any presents made by the employer. " It is also contended that the special allowance will not come under the definition of wages as they are not paid to all the employees nor under the terms of any contract of employment entered into between the Management and the workmen. It is further argued that the special allowance will come within the scope of the exclusions in the definition of Section 2 (b) of the Act. In the view of the above position, the petitioner has not been paying any contribution or administrative charges on the special allowance which is paid to the workmen. As the matter stood thus, the respondent issued a notice dated May 13, 1998 R. Ramanathan Chettair Jewellers vs. Regional Commissioner, Employees Provident Fun. . . Page 4 of 8 calling upon the petitioner to make contribution and pay the administrative charges in respect of the special allowance. It is also contended that another notice dated September 26, 1998 calling upon the petitioner to furnish the supplementary returns for the period from July 1974 till date has been issued. The respondent seems to have conducted an enquiry under Section 7-A of the Act and the petitioner submitted its objections and they have raised the contention that the special allowance will not come within the meaning of basic wages. The respondent seems to have conducted an enquiry under Section 7-A of the Act and the petitioner submitted its objections and they have raised the contention that the special allowance will not come within the meaning of basic wages. It is also contended on behalf of the petitioner that the respondent has issued the orders on March 21, 1989 which was received by the petitioner on March 25, 1989, overruling all the contentions of the petitioner and has determined contribution for the period from July 1974, to May 1988 as Rs. 91,180/- Family Fund contribution at Rs. 20, 946/-deposit linked insurance fund contribution at Rs. 2, 254. 25, administrative charges at Rs. 1,853. 90 and deposit linked insurance fund at Rs. 434. 40, in total making the petitioner liable to pay a sum of Rs. 1,16,669. 55. The above order has been impugned in this writ petition. It is contended on behalf of the petitioner, relying upon the definition of basic wages as defined under Section 2 (b) that the special allowance would not take part of the wages under Section 2 (b ). It is also contended that any emoluments which is to form part of basic wages should be earned in accordance with the terms of a contract of employment between the parties. In this case, it is argued that inasmuch as there was no express or implied contract of employment between the management and its workers regarding the question of payment of special allowance, the word basic wages will not include the special allowance. Hence the special allowances are excluded from the definition of Section 2 (b ). It has also been argued that as the payment of special allowance is not regulated by the terms of the contract it will not come within the definition of basic wages. Hence the order of the respondent is erroneous and is liable to be set aside. ( 3 ) THE respondents have filed a counter in this case. It has been argued that the payment of the special allowance is only to avoid the contribution towards the provident fund. Hence the order of the respondent is erroneous and is liable to be set aside. ( 3 ) THE respondents have filed a counter in this case. It has been argued that the payment of the special allowance is only to avoid the contribution towards the provident fund. It has also been argued that the contention of the petitioner that the special allowance will not take part of the basic wages is not correct as the basic wages and the dearness allowance paid to the employees are not based on any agreement or contract entered into between the Management and the employees. The petitioner establishment is a small concern not R. Ramanathan Chettair Jewellers vs. Regional Commissioner, Employees Provident Fun. . . Page 5 of 8 following any fixed or standard scale of pay or D. A. after entering into an agreement with the employees. When the petitioner is paying Provident Fund contribution on basic pay and dearness allowance it is absolutely necessary that they have to pay special allowance or interim relief on basic pay and dearness allowance paid to the employees every month. It has been argued on behalf of the respondent that "interim relief special allowance" is not linked to any items such as price index, demand for increase in wages, production, attendance etc. , and the terms interim relief and special allowance are separate ones and are being clubbed only with a view to avoid statutory obligations so as not to make any contribution towards the provident fund. Based on the above arguments, the respondents counsel tried to sustain the orders passed by the respondent. ( 4 ) NOW the question for consideration is whether a Special Allowance which is not paid under any Contract of Employment, Settlement or Award, but is paid purely out of the Managements own will and pleasure, should be included in the resolution of wages for purpose of calculating the contribution payable by the petitioner. ( 5 ) LEARNED counsel for the petitioner has relied upon a number of judgments to substantiate his contention that the "interim relief special allowance" will not come under the definition of the basic wages. One of the judgments is Bridge and Roof Company (India) Ltd. And Ors. v. Union of India and Ors. (1962 2llj-490) (SC ). ( 5 ) LEARNED counsel for the petitioner has relied upon a number of judgments to substantiate his contention that the "interim relief special allowance" will not come under the definition of the basic wages. One of the judgments is Bridge and Roof Company (India) Ltd. And Ors. v. Union of India and Ors. (1962 2llj-490) (SC ). In the said decision, the Apex Court has held thus at p 493: "production bonus paid under the terms of the scheme in question could not be considered part of the basic wages for labour. The schemes in question provide extra payments for superior performance beyond a particular base or standard. In such case the workers are not bound to anything beyond the base or standard that is set out. The performance might even fall below the base or standard but the minimum basic wages would have to be paid whether the base or standard is reached or not. Whenever the workers produce beyond the base or standard, what they earn would not be basic wages but production bonus or incentive wage. Such production bonus must be held to be outside the definition of basic wages in Section 2 (b) of the Act because of exception of all kinds of R. Ramanathan Chettair Jewellers vs. Regional Commissioner, Employees Provident Fun. . . Page 6 of 8 bonus from the main definition". In the above decision, the Apex Court had an occasion to deal with sub Clause (ii) of Section 2 (b) of the Act. The petitioners counsel also relied upon the judgment in Greysham and Co. , v. Regional Provident Fund Commissioner, New Delhi (1978ii-LLJ-95) (Del ). It was held that the payment of inam under the incentive scheme by virtue of the memorandum of settlement dated October 26, 1965 is not included in the definition of "basic wages" as contained in Section 2 (b) of the Act. It has also been held by the Apex Court in that case that the management reserved the right to amend/withdraw the scheme with out any reason/notice at any time and the workmen shall have no objection to the same. The payment of the incentive under the scheme was made payable monthly, quarterly, half-yearly, even fortnightly as it may suit the convenience of the management. The above decision was rendered based on the decision of the Supreme Court reported in Bridge and Roofs Co. The payment of the incentive under the scheme was made payable monthly, quarterly, half-yearly, even fortnightly as it may suit the convenience of the management. The above decision was rendered based on the decision of the Supreme Court reported in Bridge and Roofs Co. Ltd. v. Union of India, (supra ). In the above said decision, the Supreme Court has relied upon the decision in wherein it has been held by the Supreme Court that the payment production bonus depends upon production and is in addition to wages. In effect, it is an incentive to higher production and is in the nature of an incentive wages. The workers have been paid the incentive wage as extra payments for superior performance. This extra payment may be called incentive wage and is also called production bonus. The performance may even fall below the base or standard but the minimum basic wages will have to be paid whether the base or standard is reached or not. It has been further held by the Supreme Court that when however the workers produce beyond the base or standard what they earn is not basic wages but production bonus or incentive wage. It is this production bonus which is outside the definition of "basic wages" in Section 2 (b ). It has also been further held that the production in that case is a typical production bonus scheme of this kind and whatever is earned as production bonus is payable beyond a base or standard and it cannot form part of the definition of "basic wages" in Section 2 (b) because of the exception of all kinds of bonus from the definition. The Supreme Court in the above decision also held that the production bonus is R. Ramanathan Chettair Jewellers vs. Regional Commissioner, Employees Provident Fun. . . Page 7 of 8 exempted from the terms "basic wages". The petitioners counsel also relied upon the decision of the Gujarat High Court in Associated Cement Company Ltd. and Ors. v. R. M. Gandhi, Regional Provident Fund Commissioner, Gujarat (1995-III-LLJ (Suppl.)-368 ). In the above judgment, it has been held that lumpsum ad hoc payment made to eligible employees and not to all employees under agreement which provided that the said payment will not count towards provident fund contribution etc. does not form part of basic wages. v. R. M. Gandhi, Regional Provident Fund Commissioner, Gujarat (1995-III-LLJ (Suppl.)-368 ). In the above judgment, it has been held that lumpsum ad hoc payment made to eligible employees and not to all employees under agreement which provided that the said payment will not count towards provident fund contribution etc. does not form part of basic wages. The learned counsel further relied on the decision reported in Vayitri Plantations Ltd. v. Babu Mathew and Ors. (1994-I-LLJ-1131) (Ker) to substantiate his contention. In the above judgment it has been held that ex gratia payment is not part of contract of employment and does not form part of wages. Based on the above judgment, learned counsel for the petitioner has argued that special allowance is not part of the original contract of the employment but it is being paid in addition to the normal salary and allowance and it is liable to be increased or decreased or totally withdrawn at the discretion of the employer, and it is a gratuitous payment and it is not to be mixed up with wages and employees could not claim it as a matter of right and he has stressed the argument that the special allowance should be excluded from the definition of the terms "wages". ( 6 ) ON the other hand, the respondents counsel tried to substantiate his contention that the special allowance are only inventory in nature to avoid the payment of the contribution towards the provident fund. He tried to substantiate his contention based on the judgment in Harihar Pofyfibres v. The Regional Director (1984 2llj-475) wherein the Supreme Court has held that wages as defined under Section 2 (22) includes remuneration paid or payable under the terms of the contract of employment, express or implied, but further extends to other additional remuneration, if any, paid at intervals, not exceeding two months, though outside the terms of employment. In the case on hand, the payment was made beyond the period of two months and in such circumstances, the facts of this case will not apply to the present case. He also relied upon the decision in Amal Kumar Ghatak v. Regional Provident Fund Commissioner And Ors. (1980 2llj308) (Cal) wherein, it has been held that extra leaf price is not payment of something which was not done during the normal working hours but thereafter. He also relied upon the decision in Amal Kumar Ghatak v. Regional Provident Fund Commissioner And Ors. (1980 2llj308) (Cal) wherein, it has been held that extra leaf price is not payment of something which was not done during the normal working hours but thereafter. As the extra work is done during the normal working hours, R. Ramanathan Chettair Jewellers vs. Regional Commissioner, Employees Provident Fun. . . Page 8 of 8 the payment received therefor cannot be termed "overtime" which means work done not on time but thereafter. Extra leaf price, therefore, cannot fall within "overtime allowance" which is excluded from the definition of "basic wages" by Section 2 (b) (ii) and the employer has to pay contribution under the Act in respect thereof. In that case, learned single Judge, relied upon the decision of the Supreme Court in Bridge And Roofs Co. Ltd. v. Union of India and Ors. (supra) wherein the Apex Court has held that the production bonus is outside the definition of basic wages as defined under Section 2 (b), has held that the extra leaf price comes under the definition of the terms "basic wages". The above judgment is distinguishable even though the learned single Judge has relief upon the judgment of the Supreme Court in M/s Bridge and Roofs Co. Ltds case (supra) which held that the production bonus will not come under the definition of wages, and held that the extra leaf price will come under the definition of the basic wages and liable for provident fund contribution. ( 7 ) ON the basis of the above decisions of the Apex Court as well as the decision of the Gujarat High Court in Associated Cement Company Ltds case (supra) and the decision of the Kerala High Court in Vayitri Plantations Ltd. v. Babu Mathew and Ors. (supra) it is held that the special allowance paid to the employees will not form part of wages and hence the contention of the petitioner that they are not liable to pay provident fund contribution on the special incentive allowance is sustainable. In view of the above position, the writ petition is allowed. No costs. Consequently, W. M. P. No. 8453 of 1989 is dismissed.