Employees State Insurance Act, 1948 – Ss. 2 (22), 75 r/w. 77 – Security Guards – Allowance – Contribution towards on uniform allowance, utility allowance, travelling allowance, other allowances – Whether uniform allowance, utility allowance and other allowances paid by the respondent, at uniform rate in every month, are payments made to the employees to defray special expenses entailed on them by the nature of their employment – Held, the statutory registers and other records maintained by the establishment were not produced before the court below to prove that such allowances are paid to defray such special expenses. The court below, merely relying on the oral evidence of the proprietor arrived at a conclusion that, uniform allowance, utility allowance and other allowances are payments made to defray special expenses incurred by the security guards, in view of the peculiar nature of their employment, and such payments are excluded from the purview of ‘wages’ as per clause (c) of sub-section (22) of Section 2 of the Act. Since the conclusion as aforesaid made by the court below is merely relying on the oral evidence, the same cannot be sustained in law.
IN THE HIGH COURT OF KERALAAT ERNAKULAM
P.R. RAMACHANDRA MENON & ANIL K. NARENDRAN, JJ.
Ins. Appeal No.43 of 2010
DATED THIS THE 17 TH DAY OF MAY, 2016
AGAINST THE JUDGMENT IN IC 39/2007 of EMPLOYEES INSURANCE COURT, ALAPPUZHA DATED 20-11-2009
THE REGIONAL DIRECTOR E.S.I. CORPORATION, PANCHADEEP BHAVAN, THRISSUR-20.
BY ADV. SRI.SANDESH RAJA K.
UNO SECURITY SERVICES 39/4024 C, PENGALTU BUILDING, SREEKANDATH ROAD, RAVIPURAM, KOCHI-16, REP.BY ITS PROPRIETOR, LT.COL (RETD) JOHN ABRAHAM.
BY ADV. SRI.A.V.XAVIER ADV. SRI.K.JOLLY JOHN
J U D G M E N T
ANIL K. NARENDRAN, J.
This appeal arises out of the judgment of the Employees Insurance Court, Alappuzha in I.C.No.39/2007, an application filed by the respondent herein under
Section 75 read with Section 77 of the Employees State Insurance Act, 1948
(hereinafter referred to as ‘the Act’), seeking for a declaration that Ext.P5 order dated 11.5.2007 of the appellant assessing and demanding ₹1,71,482/- under Section 45A of the Act towards contribution on omitted wages, relating to the period from 1.7.2000 to 30.6.2006 is unsustainable. 2. By judgment dated 20.11.2009, the court below held that the respondent is not liable to pay ₹13,923/- towards contribution on difference in salary as per ledger and challan for the year 2000-01; ₹10,490/-, ₹20,535/- and ₹19,043/- towards contribution on uniform allowance; ₹18,234/- towards contribution on utility allowance; ₹46,854/- towards contribution on travelling and utility allowance; and ₹38,766/- towards other allowances. The claim made on other heads were declined holding that the respondent is liable to pay ₹260/- towards short payment; ₹202/-, ₹868/- and ₹2365/- towards contribution on wages paid to casual labourers; and ₹202/- towards contribution on office cleaning charges.
3. Aggrieved by the judgment of the court below dated 20.11.2009, the appellant is before this Court in this appeal under Section 82 of the Act.
4. Heard the learned Standing Counsel for the Employees State Insurance Corporation, representing the appellant and also the learned counsel for the respondent establishment.
5. The pleadings and materials on record would show that the respondent is an establishment covered under the Act, assigned with Code No.54-12300-01. On 10.8.2006, 11.8.2006 and 14.8.2006, the Inspector attached to the appellant Corporation inspected the establishment in question and verified the General Ledger for the period 2000-01, 2001-02 and 2004- 05 and also the Profit and Loss Account for the period 2001-03 and 2003-04. He reported that the respondent failed to take into account certain items of wage payments for the purpose of contribution under the Act and that a total sum of ₹1,71,742/- is payable as contribution in this regard. Based on the said report, the respondent was issued with Ext.P3 notice dated 9.10.2006. On receipt of the said notice, the respondent submitted Ext.P4 reply dated 25.10.2006 raising various objections. The respondent was afforded an opportunity of personal hearing on 7.12.2006 and thereafter on 9.1.2007. After considering the objections raised by the respondent, the appellant passed Ext.P5 order dated 11.5.2007, under Section 45A of the Act, assessing and demanding ₹1,71,482/- towards contribution on omitted wages relating to the period from 1.7.2000 to 30.6.2006.
6. Aggrieved by the assessment and demand made in Ext.P5 order, the respondent filed I.C.No.39/2007 before the court below. As far as payment of contribution in respect of uniform allowance, utility allowance, travelling allowance, etc., is concerned, the respondent contended that the payments made to the employees under the above heads do not constitute ‘wages’ as defined under sub-section (22) of Section 2 of the Act.
7. Before the court below, the proprietor of the respondent establishment was examined as PW1 and Exts.P1 to P5 were marked on their side. On the side of the appellant Corporation, Exts.D1 to D4 were marked.
8. After considering the pleadings and materials on record, the court below came to the conclusion that the assessment and demand made in Ext.P5 order towards contribution on wages paid to casual labourers and on the amount booked under the head office cleaning charges are legal and correct. However, the court below set aside the demand of contribution under other heads, namely, difference in salary as per ledger and challan, uniform allowance, utility allowance, travelling allowance and other allowances.
9. Aggrieved by the said judgment dated 20.11.2009, the appellant is before this Court in this appeal, raising the following substantial question of law;
Whether the demand of contribution on payment of wages for uniform allowance, utility allowance and travelling allowance, which comes under the definition of ‘wages’ under sub-section (22) of Section 2 of the Act, is sustainable as ‘wages’ means all remuneration paid or payable in cash to an employee?
10. Sub-section (22) of Section 2 of the Act, which defines the term ‘wages’ reads thus;
“2. Definitions.- In this Act, unless there is anything repugnant in the subject or context,-
xxx xxx xxx
(22) “wages” means 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 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.”