JUDGMENT
K. Venkataraman, J.
1. The respondent in E.S.I.O.P. No. 18/1991 before the I Additional Judge, City Civil Court, Chennai is the appellant before this Court.
2. The respondent has filed the said Original Petition under Section 75 of the E.S.I. Act praying for setting aside the order dated 30.3.1990/4.4.1990 passed by the Regional Director in his order under Section 45A of the ESI Act, 1948. The appellant herein has passed an order under Section 45A of the said Act, directing the respondent herein to contribute a sum of Rs.8,766/- stating that the respondent herein has not paid the contribution as per the provisions of law in respect of the coffee allowance and security charges. Challenging the said order, the respondent herein has filed ESIOP. No. 18/1991 before the I Additional Judge, City Civil Court, Chennai. The said Original Petition has been resisted by the appellant herein by filing a written statement. The learned Judge of the E.S.I. Court has allowed the said Original Petition and hence, an appeal has been preferred by the Regional Director (Tamil Nadu), Employees State Insurance Corporation, Chennai.
3. I have heard the learned Counsel appearing for the appellant as well as the respondent.
4. The learned Counsel appearing for the appellant strenuously contended that the Staff Welfare and coffee allowance and the security charges fall within the definition of Section 2(22) of the Act and that they have been properly assessed for computing the contribution. Per contra, the learned Counsel appearing for the respondent contended that no contract between the employer and employee in respect of the payment of coffee allowance. Further, the learned Counsel for the respondent contended that security people were engaged for safe-guarding the property and no business transaction was done in the premises. Thus, according to the learned Counsel appearing for the respondent, Section 2(22) of the said Act will not attract.
5. Regarding the coffee allowance, it has been clearly stated by the respondent that instead of paying directly to the vendor, the employer is paying to the staff with a ceiling limit of Rs.35/- per month per staff. On the side of the employer, a note book containing the initials of the staff taking coffee and tea from the vendor has been produced before the authority, when notice under Section 45A of the Act was served on it. Thus, it could be seen that the coffee allowance, without paying directly to the vendor, is being paid to the employee, whoever takes coffee and also the note book, containing the initials of the staffs who are taking coffee, has been produced before the authority. Further, a sum of Rs.15/- is being paid by the employer to the peons for washing. It is stated on the side of the respondent that clothes are being supplied to the peons, for washing the liveries they are paying the said allowance. In this connection, it will be useful to refer Section 2(22) of the said Act.
Section 2(22) reads as follows:
“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 additional remuneration, if any, (paid at intervals not exceeding two months), but does not include.
The above definition makes it very clear that wages means all remunerations paid or payable in cash to an employee in pursuance to the terms of contract of employment express or implied. Admittedly, the respondent even in the claim application under Section 75 of the Act clearly stated that the supply of tea or coffee to the staff with a ceiling limit of Rs.35/- and the payment of Rs.15/- to peons as washing allowance are ex-gratia payments and are not a term of contract of employment, express or implied. Though a written statement has been filed at the instance of the appellant, nowhere it has been stated that the said amounts have been paid by the respondent herein in pursuance of the contract of employment whether express or implied. Unless and otherwise, it is shown that those payments are made or paid in pursuance to the contract of employment whether express or implied, then it cannot be termed as wages as defined under Section 2(22) of the said Act. The ESI Court has considered that aspect of the matter and clearly stated that no contract is produced by the appellant Corporation with regard to the payment of the above amounts as wages and has decided the issue in favour of the respondent herein. I am unable to take a different view in this regard.
6. As regard the claim in respect of the security charges, it is the plea of the respondent herein that they have engaged M/s.Nasey and Ace Security Services for safe guarding the property and no business transaction was done in the premises. Thus, it is the case of the respondent herein that the security charges are paid for safe-guarding the property elsewhere and not in the place of business. Section 2(9) of the Act clearly reads as follows:
9. “employee” means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and-
(i) Who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer, on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) Whose service are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service.
The above definition of “employee” clearly says that any person employed for wages in or in connection with the work of the factory or establishment in which the Act applies, alone can be considered as “employees”.
7. As stated already, the security service has been provided for safe-guarding the property which has been purchased elsewhere and they have not been employed in the business premises. The security personnel engaged through M/s.Nasey and Ace Security Services cannot be treated as employees of the respondent and they do not fall under the definition of an employee as set out in Section 2(9) of the said Act. Hence, the payments made for security arrangements to the agency cannot therefore be treated as wages, to attract the levy of contribution under the ESI Act.
8. The learned Counsel appearing for the appellant has cited a decision reported in 2005 LLR page 905 (Employees’ State Insurance Corporation v. Gnanambigail Mills Limited). The Hon’ble Apex Court while dealing with Section 2(22) of the said Act has said that any remuneration paid or payable in cash to the employee in terms of the contract of the employment shall be considered as wages. But, in the case on hand as already discussed above, the amount towards coffee charges and washing allowance are not in terms of contract and hence, the said judgment will not be applicable to the case on hand. The other judgment that has been cited by the learned Counsel for the appellant is reported in 2001 I LLJ page 37 (Ratna Cafe v. E.S.I. Corporation). There the consideration was the food allowance and service charges paid to the employees. Since it was a term of contract of employment for providing food allowance, service charges etc, it was considered as wages as per Section 2(22) of the said Act. But, in the case on hand, it has been clearly stated by the respondent that the said payments are only ex-gratia payments and not a term of contract of employment express or implied. Hence, the decision will not be of any use to the appellant.
9. The learned I Additional Judge, City Civil Court, Chennai has considered all the aspects of the matter and has allowed the application filed by the respondent under Section 75 of the said Act. I do not see any error in the said order. Hence, the order of the learned I Additional Judge, City Civil Court, Chennai made in E.S. No. 18/1991 dated 31.03.2000 is liable to be confirmed and accordingly confirmed. C.M.A. Stands dismissed. There is no order as to costs.
