GREYSHAM AND CO Vs. REGIONAL PROVIDENT FUND COMMISSIONER

JUDGEMENT

(1.) THE question raised in this writ petition is whether the so-called " Inam" under the incentive scheme introduced in pursuance of a voluntary settlement reached between the petitioner and its employees and recorded on 26th October, 1956, is a part of " basic wages" for the purpose of calculating the contributions under the Employees' Provident Funds and Family Pension Fund Act, 1952 (hereinafter referred to as the Act ).

(2.) THE facts lie in a very narrow compass and many now be stated. In 1961, the petitioner was brought within the purview of the Act and the Scheme framed thereunder. Section 6 of the Act provides for the contribution of the employer and the employees and this contribution is a specified percentage of the basic wages, dearness allowance and retaining allowance for the time being payable to each of the employees. An employer to whom the Act applies is under a duty, in view of para 30 of the scheme to pay both its share and employees' share of the contribution, irrespective of whether a demand has been made on it or not and whether the employees have or have not paid their share. On 26th October, 1965, a memorandum of settlement was recorded between the petitioner and its employees. Norms of production of various units and jobs were prescribed after negotiations with the employees and it was agreed that excess production will be rewarded by payment of incentives at the determined rates. A notice was also issued on 26th October, 1965, by the petitioner informing all employees about the framing of the production incentive (Inam) scheme which came into force immediately. It appears that in 1971 the petitioner's establishment was inspected by an Inspector of respondent No. 1 and it revealed that the petitioner had failed to remit the Provident Fund money due in accordance with law. Respondent No. 1 believed that the payment made as Inam was part of basic wages. The Regional Provident Fund Commissioner called upon the petitioner in exercise of the powers conferred under Section 7a to furnish information about the details of the amount paid to the employees as Inam. During the pendency of the proceedings before respondent No. 1, the petitioner filed a representation dated 12th February, 1973, under Section 19a of the Act. By this representation the petitioner raised the question that the amount paid by him as Inam under the incentive scheme introduced on 26th October, 1965, should not be made part of the basic wages for the purpose of calculating the contributions under the Act and asked the Central Government to express its opinion. The Central Government by its order dated 26th April, 1975, directed that the incentive Inam disbursed to the employees by the petitioner forms part of the basic wages as envisaged by Section 2 (b) of the Act and the representation of the petitioner under Section 19a of the Act was rejected. On 30th of May, 1975, respondent No. 1 issued another notice under Section 7a for determination of the dues/contributions of the provident fund as well as administration charges. On 9th June, 1975, the petitioner made a written submission before respondent No. 1. On 2nd July, 1975, the petitioner filed a petition before the Central Government seeking review of the order of the Central Government dated 26th April, 1975. On 7th July, 1975, the proceedings for determination under Section 7a of the Act were concluded by respondent No. 1 and the dues were determined. By letter dated 28th July, 1975, the petitioner was communicated the dues as determined by respondent No. 1. The present petition was filed on 28th August, 1975 and is seeking a writ of certiorari quashing the order dated 28th July, 1975, and further proceedings and/or actions pursuant thereto and for a declaration that the payment of Inam under the incentive scheme by virtue of the settlement dated 26th October, 1965, does not form part of the wages as defined under the Act.

(3.) BEFORE dealing with the main question that falls for decision as to whether the Inam under the incentive scheme dated 26th October, 1965, is excluded from the definition of " basic wages " as given in the Act, I may deal with the feeble points raised by the counsel for the parties,