Employees State Insurance Corporation v. Mukund Iron and Steel Works Ltd
2000-06-08
D.K.DESHMUKH
body2000
DigiLaw.ai
JUDGMENT- D.K. DESHMUKH, J.:---By this appeal, the Employees' State Insurance Corporation challenges the order dated July 30, 1982 passed by the Employees' Insurance Court, Bombay in Application (E.S.I.) No. 17 of 1976. That application was taken out by the respondents. By the order impugned, the trial Court has declared that the respondent company is not liable to pay contribution on the amount of Rs. 12,95,832.20 paid by them as ex gratia and the appellant Corporation is restrained from recovering contributions on the said amount. The above referred amount was required to be paid by the respondent to its employees pursuant to the memorandum of settlement arrived at between the respondent and the representatives of its employees. There are various terms of this settlement. One of the terms of the settlement is for making payment of some amount ex gratia at one time by the respondent employer to the employees. The trial Court has held that this payment does not amount to wages within the meaning of the Employees' State Insurance Act, 1948, hereinafter referred to as the said Act. 2. The learned Counsel appearing for the appellant Corporation submits that one time ex gratia payment made by the respondents to its employees is covered by the definition of 'wages' as defined in the Act. The learned Counsel submits that one time ex gratia payment made is a remuneration paid in cash to the employees by the respondents in terms of the contract of employment. The learned Counsel submits that the settlement arrived at between the respondents and the representatives of its employees is a contract of employment and as the payment is being made pursuant to that contract, it amounts to payment of wages within the meaning of the Act. The learned Counsel, in support of this submission, relies on a judgment of the Supreme Court in the case of (Harihar Polyfibres v. Regional Director, E.S.I. Corporation)1, A.I.R. 1984 S.C. 1680. The learned Counsel submits that in any case, one time ex-gratia payment made by the respondents to its employees under the settlement could be other additional remuneration paid by the respondents to its employees and therefore, it would amount to wages within the meaning of the Act.
The learned Counsel submits that in any case, one time ex-gratia payment made by the respondents to its employees under the settlement could be other additional remuneration paid by the respondents to its employees and therefore, it would amount to wages within the meaning of the Act. The learned Counsel submits that the payment has been made at one time and has not been made at intervals and therefore, would not take it out of the definition of the term 'wages' found in section 2(22) of the Act. The learned Counsel submits that while considering the provisions of section 2(22) of the Act, the Court has to take into consideration that in the first part of the definition, the legislature has used the words 'payment or payments' whereas in the third part, it has used the word payment. 3. The learned Counsel appearing for the respondents, on the other hand, submits that the one time ex gratia payment made pursuant to the settlement made by the respondents will be covered by the first part of the definition 'wages' because there is a clear term incorporated in the settlement that this ex gratia payment shall not form part of wages under any law. The learned Counsel submits that as by contract between the parties, the parties have themselves decided that this ex gratia payment would not amount to wages for the purpose of any law, does not cover by the first part of the definition 'wages'. The learned Counsel further submits that so far as one time ex gratia payment is concerned, it would have been covered by third part of the definition of the term 'wages' if payment had to be made at intervals. If the payment is made at one time and not at intervals, does not cover by the third part of the definition 'wages'. 4. Now, if in the light of these rival submissions the record of the case is perused, it is revealed that the ex gratia payment was made by the respondents to its employees pursuant to settlement arrived at between the respondents and the representatives of its employees. That payment was made at one time by the respondents to its employees.
4. Now, if in the light of these rival submissions the record of the case is perused, it is revealed that the ex gratia payment was made by the respondents to its employees pursuant to settlement arrived at between the respondents and the representatives of its employees. That payment was made at one time by the respondents to its employees. Clause 3(b)(iv) of the settlement reads as under: “Ex gratia amount payable under the terms of this Clause shall not form part of wages under any laws and/or any service conditions and the payments under this Clause shall not be relied on by either pay (sic party) as a precedent for the future.” 5. Perusal of the judgment of the Supreme Court in the case of Harihar Polyfibres referred to above shows that in paragraph 5 of that judgment, the Supreme Court has approved the Full Bench judgment of the Andhra Pradesh High Court in the case of (Employees' State Insurance Corporation, Hyderabad v. Andhra Pradesh Paper Mills Ltd., Rajahmundry)2, 1978(1) L.L.J. 469 (A.P. F.B.). The Full Bench of the Andhra Pradesh High Court has considered a clause similar to Clause 3(b)(iv) quoted above in paragraph 19 of its judgment and has held that if by contract between the employer and the employees it is decided that the payment to be made will not form part of 'wages', then that payment is not covered by first part of the definition of the term 'wages' appearing in section 2(22) of the Act. Paragraph 19 of the judgment in the case of Employee's State Insurance Corporation v. Andhra Pradesh Paper Mills Ltd. (supra) reads as under : “19. The word 'other' appearing at the commencement of the third part of the definition of 'wages' under section 2(22) indicates that it must be remuneration or additional remuneration other than the remuneration which is referred to in the earlier part of the definition viz., all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and incentive bonus in the present scheme is certainly additional remuneration. It must be emphasized at this stage that under the third part of the definition of 'wages' it is actual factum word used which counts because the word used is 'paid' as distinguished from 'paid or payable'.
It must be emphasized at this stage that under the third part of the definition of 'wages' it is actual factum word used which counts because the word used is 'paid' as distinguished from 'paid or payable'. The moment you get any additional remuneration other than the remuneration payable under the contract of employment and if this additional remuneration is paid at intervals not exceeding two months, it becomes wages by virtue of the third part of the definition of 'wages'.” 6. It is thus clear that the one time ex gratia payment could not be covered by first part of the definition of the term wages found in section 2(22) of the Act because of Clause 3 of the settlement. 7. So far as the next submission of the learned Counsel is concerned, section 2(22) of the Act reads as under: “all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include--- (a) any contribution paid by the employer to any pension fund or provident fund, or under this Act; (b) any travelling allowance or the value of any travelling concession; (c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (d) any gratuity payable on discharge.” 8. Perusal of this definition shows that in order to include other additional remuneration within the term 'wages', that additional remuneration has to be paid at intervals. If any additional remuneration is required to be paid by the employer to the employees but it is not required to be paid at intervals, then it will not amount to wages. The learned Counsel appearing for the appellants, relying on the observations in paragraphs 9 and 10 of the judgment of the Supreme Court in the case of Harihar Polyfibres (supra), submits that while interpreting the term 'wages', according to the Supreme Court, a wider interpretation has to be given because the Act is a piece of social welfare legislation enacted for the benefit of the employees.
Now it is true that the Court has to interpret the provisions of law in case there is any doubt about the meaning to be attributed to the words used in the provision. But if the language in the provision is clear, there is no room for the Court to interpret and consequently therefore, there is no room either to give wider or narrow interpretation. Insofar as the present case is concerned, in order to include other additional remuneration paid by the employer to its employees within the definition of the term 'wages', that other additional remuneration has to be paid at intervals. Therefore, any payment that is to be paid at one time and if liability of the employer for making that payment is not recurring liability, it will not be covered by the definition of the term 'wages'. In my opinion, the legislature has used clear words and there is no room to place any interpretation on those words because the meaning of the words is absolutely clear. The learned Counsel appearing for the appellants submits that if payment is made at intervals exceeding two months, then also according to the definition of the term, it is not to be included. However, so far as the latter part of the provision is concerned, which governs the word interval, does not fall for consideration in the present case. Therefore, I do not want to express any opinion on that aspect of the matter. Insofar as decision of the present case is concerned, to my mind, it is clear that unless the payment is to be made at intervals, the payment would not be covered by the definition of the term 'wages' under section 2(22) of the Act. In this view of the matter, I find that there is no room to interfere with the order which is impugned in this appeal. The appeal thus fails and is dismissed with no orders as to costs. 9. Parties to act on the copy of this order duly authenticated by the Sheristedar/Personal Secretary as true copy. 10. Certified copy expedited. Appeal dismissed. -----