REGIONAL DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION BANGALORE Vs. MANAGEMENT OF THERMIT ALLOYS PRIVATELIMITED SHIMOGA

JUDGEMENT

(1.) The scope and ambit of the definition of wages as defined in Section 2(22) of the Employees' State Insurance Act, 1948 ('the Act' for short) arises for our consideration in this appeal.

(2.) The facts giving rise to this appeal, briefly stated, are as under: The 1st respondent is a Private Limited Company registered under the Companies Act of 1956. It is a small scale industry situated at Industrial Estate, Shimoga. This company is covered by the provisions of the Employees' State Insurance Act. The Management has been paying production incentive to its employees since 1982. It has paid a total production incentive of Rs. 3,21,691-25.

(3.) On 22-12-1987, one M.P. CoutiAccounts Officer, Employees' State Insurance Corporation, visited the respondent-factory and conducted a test inspection. He noticed that the Management has paid a sum of Rs. 3,21,691-25 as production incentive to its employees. Hence, he prepared a report as per Ex.Rl and submitted the same to the Corporation. The Corporation issued a show cause notice dated 13-6-1988 to respondent No. 1. The respondent wrote a letter dated 22-8-1988 stating that the so called incentive payments were paid as ex-gratia payments and they were not made regularly every month and that it was paid at the discretion of the management and not as wages as per employment service condition. However, the appellant passed the impugned order dated 27-2-1989 under Section 45-A of the Act holding the respondent liable to pay contribution of Rs. 23,323/-. The Management challenged the said order by filing an application before the Employees' Insurance Court, Hubli, under Section 75 of the Act. Both the parties have let in oral and documentary evidence before the Court below. On consideration of the rival contentions, the learned Judge of the Employees' Insurance Court held that the production incentive was paid to the employees pursuant to the agreement between the workmen and the Management once in 3 months or 4 months at the discretion of the Management and the payment of production incentive is not part of the contract of the employment. It further held, since the production incentive is paid beyond the period of 2 months, it does not fall under the definition of "wages' as defined in Section 2(22) of the Act.