IN THE HIGH COURT OF KERALA AT ERNAKULAM
MFA No. 1479 of 1998(B)
1. EMPLOYEES STATE INSURANCE CORPN
... Petitioner
Vs
1. M/S.RAJAGOPAL TEXTILE MILLS (P) LTD
... Respondent
For Petitioner :SRI.TPM.IBRAHIM KHAN
For Respondent :SRI.M.P.ASHOK KUMAR
The Hon'ble MR. Justice K.T.SANKARAN
Dated :11/01/2007
O R D E R
K.T.SANKARAN, J
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M.F.A.No.1479 of 1998
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Dated this the 11th day of January, 2007
JUDGMENT
In this appeal, the Employees State Insurance Corporation
challenges the order dated 25th August, 1997 in I.C.No.25 of 96
passed by the Employees Insurance Court, Palakkad. The
respondent herein runs a factory covered under the ESI Act.
The ESI Corporation demanded contributions for the period from
1.4.1994 to 31.3.1995 on amounts paid as holiday wages and
interim relief. The respondent herein challenged the demand
made by the ESI Corporation before the Insurance Court.
2. The Employees Insurance Court held that the interim
relief paid to the employees is “wages” within the meaning of
Section 2(22) of the Act and that the applicant before the court
was liable to pay the contribution amounting to Rs.31,300/- in
respect of the period from 1.4.1994 to 31.3.1995 as demanded
by the Corporation. However, the Employees Insurance Court
held, relying on the Full Bench decision of this court in
Employees State Insurance Corporation v. Malabar Cashewnut &
MFA 1479/1998 2
Allied Products (1993(1) LLJ 596) that wages paid for national
and festival holidays will not form part of the wages. On that
finding, the court below held that the demand made by the ESI
Corporation for contribution of Rs.23,191/- on holiday wages for
the period from 1.4.1994 to 31.3.1995 is unsustainable. The
proceedings initiated by the Corporation to recover that amount
were quashed. The E.I. court also held that interest is payable
by the applicant. As per order dated 4th May 1998 in I.A. No. 24
of 1998 filed by the ESI Corporation, the E.I. court modified the
period during which the respondent herein is liable to pay
interest.
3. As per the judgment dated 16th October 2001, the
Miscellaneous First Appeal was dismissed. That judgment was
reviewed by the order dated 26.10.2006 in R.P.No.626 of 2001
and the appeal was directed to be posted for hearing and
disposal afresh.
4. The E.I. court held that holiday wages would form
part of the wages only on the basis of the decision reported in
1993 (1) LLJ 596 in Malabar Cashewnut & Allied Products case.
MFA 1479/1998 3
The judgment of the Full Bench was challenged by the
Corporation before the Supreme Court. The Supreme Court
allowed the appeal by judgment dated 3.12.1997 and it was held
thus:
“It is not in dispute that the decision of this Court in Regional
Director, Employees State Insurance Corpn. vs. Popular
Automobiles & Ors. [(1997) 7 SCC 665] answers the point raised
in these appeals. Accordingly, we hold that the wages paid as
per the Kerala Industrial Establishments National and Festival
Holidays Act, 1958 on holidays to the employees would form part
part of ‘wages’ as per Section 2(22) of the Employees’ State
Insurance Act, 1948.
The order of the High Court taking a contrary view is set
aside. The appeals are allowed. No order as to costs.”
In view of the decision of the Supreme Court reversing the Full
Bench decision in E.S.I. Corpn. v. Malabar Cashewnut & Allied
Products, the order passed by the E.I. court holding that holiday
wages will not form part of wages is liable to be interfered with.
The finding rendered by E.I. court in paragraph 28 of the
MFA 1479/1998 4
judgment is set aside and the application filed by the respondent
herein, challenging the demand made and the proceedings
initiated by the Corporation, is dismissed.
MFA is allowed as above.
K.T.SANKARAN,
JUDGE
csl
MFA 1479/1998 5