JUDGMENT
Bhat, J.
1. This appeal is directed against common judgment in I.C. Nos. 73, 76, 79, 80 and 81 of 1983 on the file of the Employees’ Insurance Court, Quilon. Of the five cases, relief was granted to the applicant in four cases. The Employees’ State Insurance Corporation being aggrieved by the relief so granted has filed the appeal.
2. Common respondent herein is a private limited company running cashew factories at various places. The respondent paid holiday wages to the workers. Employees’ State Insurance contribution was levied and paid on the holiday wages also during the years 1981 and 1982. The respondent filed five applications before the Employees’ Insurance Court seeking refund of the contribution so paid on the basis of wages paid for holidays and in the alternative seeking a direction to the Corporation to adjust the amount so paid towards future subscription. The respondent contended that holiday wages are not wages as defined in Section 2(22) of the Employees’ State Insurance Act, 1948, and, therefore, contribution could not have been levied on such wages. The Corporation took the stand that holiday wages are also wages as defined in the Act and contribution was lawfully levied. Relying on a decision of a Division Bench of the Bombay High Court in Nutan Mills v. Employees’ State Insurance Corporation, (1956-I-LLJ-215) and the decision of a learned single Judge of the Gujarat High Court in Employees’ State Insurance Corporation v. N.A. Manufacturing Co. Ltd., (1981-II-LLJ-141) the Employees’ Insurance Court accepted the respondent’s contention and held that holiday wages are not wages as defined in the Act and contribution could not have been levied thereon and granted relief in regard to the contribution so paid for the year 1982 but denied relief for the year 1981 on the ground of limitation.
3. The dispute relates to wages paid for certain holidays under the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958 (for short “the Holidays Act”). Section 3 of the Act, as it then stood, directed that every employee shall be allowed in each calendar year holidays for January 26, August 15, May 1, and three other holidays to be so declared by the Inspector in consultation with both parties. Section 4-A states that notwithstanding anything contained in Secion 3, an employer may, by notice in writing, require any employee to work on any holiday allowed under that section. Section 5 requires, inter alia, that every employee shall be paid wages for each of the holidays allowed to him under Section 3 whether or not the employer has not required, or could not require him, under Sub-section (1) of Section 4-A to work on that holiday. Sub-section (2) requires that where an employee works on any holiday allowed under Section 3, he shall be entitled to twice the wages and to avail himself of a substituted holiday on any other day. The disputed wages in this case relate to wages paid for holidays actually allowed to employees under Sub-section (1) of Section 5 and not wages paid under Sub-section (2).
4. The expression “wages” is defined in Section 2(22) of the Employees’ State Insurance Act, 1948. The definition, as it originally stood, stated that 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. It includes other additional remuneration, if any, paid at intervals not exceeding two months; however it does not include any contribution paid by the employer to any pension fund or provident fund or under the Employees’ State Insurance Act, any travelling allowance or the value of any travelling concession or any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment or any gratuity payable on discharge. Explanation III to para 2 of Schedule I to the Employees’ State Insurance Act as it originally stood stated that except as provided by regulations, wages, pay, salaries or allowances paid in respect of any period of leave or holidays other than the weekly holidays shall not be taken into account in calculating wages. Section 73-A is the transitory provision in regard to employer’s special contribution to be paid at the rate specified in Sub-section (3). Section 41 deals with recovery of contribution from immediate employer. The section originally contained an explanation stating that for the purpose of Sections 40 and 41, “wages” shall be deemed to include payment to an employee in respect of any period of authorised leave, lockout or legal strike.
5. Some of the above provisions have undergone changes by amendments to the Employees’ Slate Insurance Act. The definition of “wages” as it stands at present specifically includes any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff. Consequently, Explanation to Section 41 has been omitted, so also the provisions in the First Schedule to the Act have been omitted.
6. As observed by the Supreme Court in B.M. Lakshmanamurthy v. Employees’ State Insurance Corporation, (1974-I-LLJ-304), the Act is a beneficial piece of social security legislation in the interest of labour in factories and provisions of the Act will have to be construed with that end in view to promote the scheme and avoid the mischief. The Supreme Court in Hariliar Polyfibres v. E.S.I. Corporation, (1984-II-LLJ-475), observed that the Act is a welfare legislation and the definition of “wages” is designedly wide and any ambiguous expression should receive a beneficent construction.
7. “Wages” means all remuneration paid or payable if the terms of the contract of employment, express or implied, were fulfilled. It has been observed by the Supreme Court in Divisional Engineer, G.I.P. Railway v. Mahadeo Raghoo, (1955-I-LLJ-359), that “Shorn of all verbiage, “wages” are remuneration payable by an employer to his employee for services rendered according to the terms of the contract between them” (p.361). It may be noticed that the terms of the contract need not be express; they could be implied also as stated in the definition. The Supreme Court has observed in Bala Subrahmanya Rajaratn v. B.C. Patil, (1958-59) 14 FJR 167, that “wages” means all remuneration and remuneration is only a more formal version of payment and payment is a recompense for service rendered. The Supreme Court in Accountant General, Bihar v. N. Bakshi, (AIR) 1962 SC 505, 509, observed that “The expression ‘remuneration’, in its ordinary connotation, means ‘reward, recompense, pay, wages or salary for service rendered”. Justice Blackburn in R. v. Postmaster General, (1876) 1QBD 658, 663 stated: “I think the word ‘remuneration’… means a quid pro quo. If a man gives his services, whatever consideratin he gets for giving his services seems to me a remuneration for them’. Section 22 of the Employees’ State Insurance Act mentions “if the terms of the contract of employment, express or implied, were fulfilled”. There may be express terms in the contract entered into between the employer and the employee at the commencement of the contract. Even at that time several of the terms may be implied. Terms of agreements entered into between the employer and employees, provisions of statutes enacted for the benefit of employees – all these will be regarded as implied terms of the contract as long as they are enforceable in law. Support for this view can be sought from the observations of the Supreme Court in Divisional Engineer, G.I.P. Railway v. Mahadeo Raghoo, (supra) to the following effect (at page 362):
“In our opinion, it is clear beyond all reasonable doubt that the rules which must be included in the terms of contract between the employer and the employee contemplate that….”
8. While wages are renumeralion or recompense for services rendered, they need not necessarily be in every case for services rendered on the particular day.
9. The Supreme Court in H.L. Mehra v. Union of India, (1974) 4 SCC 396, had to deal with a case of a person under suspension under the Central Services (Classification, Control and Appeal) Rules, 1965. The Supreme Court observed that when an order of suspension is made against a Government servant pending an enquiry into his conduct, the relationship of master and sevant does not come to an end. He is only suspended from performing the duties of his office. Government issues directions forbidding the Government servant from doing the work which he was required to do under the terms of the contract of service or the statute or rules governing his conditions of service, at the same time keeping in force the relationship of master and servant and as such he would be entitled to his remuneration for the period of suspension unless there is some provision in the statute or rules governing his conditions of service which provides for withholding of such remuneration.
10. When an employee is under the terms of a valid statute entitled to be allowed a holiday and to be paid wages for that holiday, that provision in the statute becomes part of his conditions of service and it cannot be said that what he is paid is not wages since he has not rendered service on the particular day. He is entitled to that right by virtue of the fact that he has contracted to render services and has rendered services on other days. As observed by Krishna Iyer, J,, in Sreedharan Nair v. Sanku Sreedharan(l969-I-LLU-627), if bonus is made payable in return for service rendered it has to be regarded as wages. This of course is subject to the condition that bonus must be payable as of right and not merely as ex gratia or in some other form. See Braithwaite and Co. (India)Ltd. v. Employees’ State Insurance Corporation, (1968-II-LLJ-550) and Employees’ State Insurance Corporation v. Bata Shoe Co. (P) Ltd. (1986) 68 FJR 13 (SC). If the employee is entitled to a holiday and entitled to be paid wages for the holiday in fulfilment of the terms of contract, express or implied, wages so paid must be regarded as wages as defined in Section 2(22).
11. In the present case, employees are entitled to holidays by virtue of the Holidays Act and they are entitled to be paid wages for those holidays. In other words, even though they did not work on the particular days they are entitled
to avail of the holidays and to be paid wages for
those holidays by virtue of the implied terms of
the contract and as such wages paid for the
holidays are wages as defined.
12. Reliance placed by Insurance Court on the decision of a learned single Judge of the Gujarat High Court in Employees’ State Insurance Corporation v. New Asarwa Manufacturing Co. Ltd. (supra) cannot be justified since the decision has been reversed by a Division Bench of the same High Court in the decision in Employees’ State Insurance Corporation v. NewAsarwa Mfg. Co. Ltd., (1984) 64 FJR 367. Our attention has been invited to two other direct decisions on the point. One is noticed at page 187 of Compendium of Case Law issued by the Director-General of the Employees’ State Insurance Corporation in 1986. The reference is to a decision of the Bombay High Court holding that holiday compensation paid to employees is wages as defined in Section 2(22). The Bombay High Court in Lal and Co. v. Kulkarni(l968-I-LLJ-518), held that wages for weekly holidays payable under the Bombay Shops and Establishments Act are wages within the meaning of the provisions of the Payment of Wages Act. These two direct decisions support our view. No other direct authority has been placed before us which will support the view taken by the Employees’ State Insurance Court.
13. Our attention has been invited to a number of other decisions which do not have any direct bearing on the question in controversy in this case. We will briefly refer to the same. In Nutan Mills v. Employees’ State Insurance Corporation (supra) and Anusuyabai Vithal v. Mehta, (1959-II-LLJ-742), the view taken is that lay-off compensation is not wages. Payment made under inam scheme which is voluntary and gratuitous and liable to be withdrawn at any moment by the employer has been held to be not wages in Braithwaite and Co. (India) Ltd. v. Employees’ State Insurance Corporation (supra). Prior to the amendment of 1966, payment made for authorised leave has been held to be not wages by the Bombay High Court in Employees’ State Insurance Corporation v. Model Mills, Nagpur Ltd., (l975)LabI.C.84 and Asst, Regional Director v. Model Mills, Nagpur Ltd. (AIR) 1991 SC 314. Right to passage for an ICS Officer has been held to be remuneration in Accountant-General v. N. Bakshi, (supra). Statutory bonus has been held to be wages in Sreedharan Nair v. Sanku Sreedharan, (supra). Ex gratia bonus has been held to be not wages in Employees’ State Insurance Corporation v. Bata Shoe Co. (P.) Ltd., (supra). Bonus paid under Industrial awards and not by virtue of contract or by statute is held to be not wages in Bala Subranmanya Rajaram v. B.C. Patil, (supra). This decision observes that if bonus is paid as per contract or by statute it should be regarded as wages. House rent allowance has been held to be not wages for the purpose of the Payment of Wages Act in Divisional Engineer, G.I.P. Railway v. Mahadeo Raghoo (supra). It has been noticed in that case that the Rules allowing allowance do not require the allowance to be paid uniformly and compulsorily to all employees. This view has been asserted once again by the Supreme Court in Harihar Polyfibres v. Employees’ State Insurance Corporation, (supra). Thus it can be seen that the general trend of authority is in favour of the view taken by us.
14. In this view we reverse the decision of the Employees’ Insurance Court and dismiss all the applications filed by the employer. The appeal is allowed with costs.