BAIDYANATH AYURVED BHAWAN Vs. EMPLOYEES STATE INSURANCE …

JUDGEMENT

(1.) M/s. Baidyanath Ayurved Bhawan (Private) Limited, Patna--hereinafter referred to as "the employer"--deals in manufacturing Ayurvedic medicines. Undisputedly it is a factory within the meaning of the term as defined in the Employees' State Insurance Act (Act 34 of 1948)--hereinafter referred to as "the Act". As per award of the Industrial Tribunal dated 21st of April, 1948, it used to pay house rent allowance to its employees who were not provided with house or had no house in Patna or its vicinity at the rate of Rs. 2 if their salary was less than Rs. 50 per month. By another award of the Tribunal dated 25th of May, 1959; this amount of house rent allowance was raised to 5 per cent of the wages with the minimum of Rs. 3. By a settlement dated 4th of January, 1964, the allowance was further raised to 7 per cent with the minimum of Rs. 5. It had been regularly paying employer's special contribution as well as employees' contribution to the Employees' State Insurance Corporation--hereinafter referred to as "the Corporation." The contribution, however, was not paid on the house rent allowance. By a letter dated 20th of June, 1967, the Regional Director of the Corporation called upon the employer to pay within 15 days the employees' contribution and employer's special contribution on the house rent allowance paid to the workers for the previous 7-8 years. The Corporation claimed that house rent allowance was wages as denned in Section 2(22) of the Act. It wanted compliance of the demand under threat of legal proceedings and refused the request of the employer to get the claim determined by the Employees' State Insurance Court--hereinafter referred to as "the Court." By a notice dated 2nd of December, 1967, the Corporation threatened prosecution of the director and the manager of the employer. The employer also received, on 26th of December, 1967, copies of two applications sent by the Corporation to the Collector of Patna for realisation under Section 5 of the Revenue Recovery Act (Act 1 of 1890), the employees' contribution and employer's special contribution amounting to Rs. 3,938 and Rs. 3,227 respectively for the period 1st of January, 1559 to 30th of September, 1967, in respect of house rent allowance. Thereafter, the employer filed before the Court an application under Section 77 of the Act. These two appeals, one by the employer and another by the Corporation, are directed against the order passed by the Court on the said application.

(2.) Besides alleging the facts stated in the preceding paragraph, the employer an its application under Section 77 of the Act before the Court claimed that house rent allowance paid to the employees were not wages and as such the Corporation was not entitled to realise any contribution on that amount. It further averred that though the Corporation had in its possession the records to show what amounts were paid to the employees as house rent allowances, it with mala fide intention arbitrarily assessed the amount on ad hoc basis. The employer had all along maintained and made available its registers and papers to the Corporation authorities and never had violated any of the provisions of the Act. The allegation of the Corporation in the applications to the Collector under Section 5 of the Revenue Recovery Act that the employer had violated provisions of Section 45A of the Act was not correct. When the employer disputed the claim of the Corporation to realise employees' contribution or employer's special contribution in respect of house rent allowance, the latter could not claim any recovery unless it got the matter determined by the Court under Section 75(1)(c) and 75(2)(a) of the Act. A plea was also taken that the claims were barred by limitation. The reliefs claimed by the employer in the said petition were:

(3.) The Corporation filed a written statement and contested the application. According to it, house rent allowance paid by the employer to its employees wag wage as defined in Section 2(22) of the Act. The employer was, therefore, liable to pay employees' contribution as well as employer's special contribution under the Act. The Corporation never made any arbitrary assessment of the contribution, rather the asessment was made on the basis of information available to it as required under the law. On refusal by the employer to comply with the demand, the Corporation proceeded against the employer as provided under Section 45B, 73D and 85 of the Act. The proceedings before the Collector, Patna, under Section 5 of the Revenue Recovery Act were legal and valid and could not be questioned in a proceeding before the Court. The claims were also not barred by limitation.