THE REGIONAL DIRECTOR Vs. TAURUS SECURITY SERVICES

JUDGEMENT

(1.) The Regional Director, Employees State Insurance Corporation, the respondent in I.C.No.54/2007 on the files of the Employees Insurance Court, Alappuzha has preferred this appeal challenging the legality and correctness of the findings of the Insurance Court that the amount paid to the security guards/supervisory officers by the respondents herein as uniform wash/maintenance cost, inspection expenses and special equipment cost, does not form a part of wages defined under Section 2(22) of the Employees State Insurance Act, 1948 ('ESI Act' for short) as the same excluded under Clause (c) of the said Section. The parties are referred to as in the Insurance Case.

(2.) According to the Appellants/respondents, the respondent/applicant had omitted to pay contribution in respect of Rs. 36,70,362.58 during the year 2004-2005 and 2005- 2006, paid to the security guards/supervisory officers, under the heads uniform wash/maintenance cost, inspection expenses and special equipment cost and an amount of Rs. 2,38,576 is due towards ESI contribution in this regard. Consequently, the respondent issued Ext A4 C-18 notice proposing to assess contribution for the said amount. The applicant entered appearance before the respondent and submitted Ext. D2 reply stating that the amount paid as uniform wash/maintenance cost, inspection expenses and special equipment cost does not form a part of wages or remuneration and the said amount was being paid, considering as a sum paid to the person employed, to defray a special expenses entailed on him by nature of his employment and therefore the said amount is not included in the definition of wages contemplated under Section 2(22) of the ESI Act, 1948. The respondent considered the said reply and rejected it by passing Ext. A6 order assessing and demanding Rs. 2,38,576 as contribution in this regard.

(3.) Feeling aggrieved, the applicant filed the above Insurance Case before the Insurance Court under Section 75 read with section 77 of the ESI Act, 1948 seeking a declaration that Ext. A6 order of the respondent passed under Section 45 of the said Act assessing and demanding an amount of Rs. 2,38,576 towards ESI contribution is illegal and unsustainable under law. The respondent challenged the said application contending that omitted amount would fall under 'wages' contemplated under Section 2(22) of the ESI Act and thereby the applicant was liable to pay contribution in this regard. After considering the rival contentions, the Insurance Court allowed the application and declared that Ext. A6 order of the respondent passed under section 45 A of the ESI Act is illegal and unsustainable under law.