{"id":86623,"date":"2005-07-19T00:00:00","date_gmt":"2005-07-18T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/employees-state-insurance-vs-gnanambigai-mills-ltd-on-19-july-2005"},"modified":"2016-03-22T05:39:16","modified_gmt":"2016-03-22T00:09:16","slug":"employees-state-insurance-vs-gnanambigai-mills-ltd-on-19-july-2005","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/employees-state-insurance-vs-gnanambigai-mills-ltd-on-19-july-2005","title":{"rendered":"Employees State Insurance &#8230; vs Gnanambigai Mills Ltd on 19 July, 2005"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Employees State Insurance &#8230; vs Gnanambigai Mills Ltd on 19 July, 2005<\/div>\n<div class=\"doc_bench\">Bench: S.N. Variava, Dr. Ar. Lakshmanan<\/div>\n<pre>           CASE NO.:\nAppeal (civil)  695 of 2004\n\nPETITIONER:\nEMPLOYEES STATE INSURANCE CORPORATION\t\n\nRESPONDENT:\nGNANAMBIGAI MILLS LTD.\t\t\t\n\nDATE OF JUDGMENT: 19\/07\/2005\n\nBENCH:\nS.N. Variava &amp; Dr. AR. Lakshmanan\n\nJUDGMENT:\n<\/pre>\n<p>JUDGEMENT<br \/>\nO R D E R<\/p>\n<p>\tThis Appeal is against the Judgment of the Madras High Court dated 7th<br \/>\nAugust, 2002. Briefly stated the facts are as follows:-\n<\/p>\n<p>\tThe Employees of Respondent Company raised a demand for increase<br \/>\nof wages.  The dispute was referred to the Special Tribunal, Madras for<br \/>\nadjudication.  By virtue of Section 10-B, Industrial Disputes Act, 1947<br \/>\nwhich had been introduced in the State of Tamil Nadu, the Government<br \/>\npassed orders dated 15th July, 1985 and 29th July, 1985 directing certain<br \/>\npayments to be made to the workmen pending the disputes. Both orders<br \/>\ncontained a clause that any money paid in pursuance of the order could<br \/>\nbe deducted by the employer from out of the monetary benefits to which<br \/>\nthe employee would become entitled under the Award which may be<br \/>\npassed by the Tribunal.\n<\/p>\n<p>\tAt this stage, it would be convenient to set out Section 10-B of the<br \/>\nIndustrial Disputes Act,1947, under which the Orders were passed.<br \/>\nSection 10-B reads as follows:-\n<\/p>\n<p>\t&#8220;10-B  Power to issue order regarding terms and<br \/>\nconditions of service pending settlement of disputes. &#8211;\n<\/p>\n<p>\t(1)\tWhere an industrial dispute has been referred<br \/>\nby the State Government to a Labour Court or a Tribunal<br \/>\nunder  sub-section (1) of Section 10 and if, in the opinion<br \/>\nof the State Government it is necessary or expedient so to<br \/>\ndo for securing the public safety or convenience or the<br \/>\nmaintenance of public order or supplies and services<br \/>\nessential to the life of the community or for maintaining<br \/>\nemployment or industrial peace in the establishment<br \/>\nconcerning which such reference has been made, it may,<br \/>\nby general or special order, make provision, &#8211;\n<\/p>\n<p>\t(a)for requiring the employer or workman or both to<br \/>\nobserve such terms and conditions of employment as may<br \/>\nbe specified in the order or as may be determined in<br \/>\naccordance with the order, including payment of money by<br \/>\nthe employer to any person who is or has been a<br \/>\nworkman;\n<\/p>\n<p>\t(b) for requiring any public utility service not to close<br \/>\nor remain closed and to work or continue to work on such<br \/>\nterms and conditions as may be specified in the order; and <\/p>\n<p>\t(c) for any incidental or supplementary matter which<br \/>\nappears to it to be necessary or expedient for the purpose<br \/>\nof the order;\n<\/p>\n<p>\tProvided that no order made under this sub-section<br \/>\nshall require any employer to observe terms and<br \/>\nconditions of employment less favourable to the workman<br \/>\nthan those which were applicable to them at any time<br \/>\nwithin three months immediately preceding the date of the<br \/>\norder.\n<\/p>\n<p>\tExplanation. &#8211; For the purpose of this sub-section,<br \/>\n&#8220;public utility service&#8221; means &#8211;\n<\/p>\n<p>\t(i)\tany section of an industrial establishment on<br \/>\nthe working of which the safety of the establishment or the<br \/>\nworkman employed therein depends;\n<\/p>\n<p>\t(ii)\tany industry which supplies power, light or<br \/>\nwater to the pubic;\n<\/p>\n<p>\t(iii)\tany industry which has been declared by the<br \/>\nState Government to be a public utility service for the<br \/>\npurpose of this Act.\n<\/p>\n<p>(2)\tAn order made under sub-section (1) shall cease to<br \/>\noperate on the expiry of a period of six months from the<br \/>\ndate of the order or on the date of the award of the Labour<br \/>\nCourt or the Tribunal, as the case may be, whichever is<br \/>\nearlier.\n<\/p>\n<p>(3)\tAny money paid by an employer to any person in<br \/>\npursuance of an order under sub-section (1), may be<br \/>\ndeducted by that employer from out of any monetary<br \/>\nbenefit to which such person becomes entitled under the<br \/>\nprovisions of any award passed by the Labour Court or the<br \/>\nTribunal as the case may be.&#8221;\n<\/p>\n<p>\tThe Respondent paid the amounts as directed by the Government.<br \/>\nUltimately, the Respondent Company entered into a Memo of Compromise<br \/>\nwith the employees and in terms of the Memo of Compromise an Order<br \/>\nwas taken from the Special Tribunal which reads as follows:-\n<\/p>\n<p>&#8220;To the workmen in the textile mills falling in Group (D) the<br \/>\nrelief granted shall be in the terms contained in Annexures<br \/>\nI and III to the memorandum of compromise, dated 21st<br \/>\nMarch, 1986 (Appendix III), which have been adopted by me<br \/>\nas my own findings and adjudication on the relevant<br \/>\nissues and the same shall be effective from 1st May, 1986.&#8221;\n<\/p>\n<p>Thus, the Special Tribunal never went into the question and did not decide<br \/>\nwhether or not the amounts paid (under the Government order) were<br \/>\nwages or not.  It merely gave its  imprimatur to a compromise arrived at<br \/>\nbetween the parties.  Clause 3(c) of the Memorandum of Compromise,<br \/>\nwhich has been strongly relied upon, reads as follows:-\n<\/p>\n<p>&#8220;It is agreed that the lump sum payment of Rs.500\/-Rs.260\/-<br \/>\nand Rs.75\/-, Rs.65\/- per month, as the case may be paid or<br \/>\npayable to the workmen upto April 30, 1986 as per the<br \/>\nGovernment orders No.1399, dated 15th July, 1985 and<br \/>\nNo.1546, dated 29th July, 1985 under Section 10-B of the<br \/>\nIndustrial Disputes Act and consent letter, dated 14th<br \/>\nFebruary, 1986 by the Special Industrial Tribunal, be<br \/>\ntreated as an ex-gratia payment and shall not be adjusted<br \/>\nagainst the future benefits covered under this settlement.&#8221;\n<\/p>\n<p>\tThe Employees State Insurance Corporation claimed contributions, on<br \/>\nthe amounts paid under the afore-mentioned two Government orders. The<br \/>\nEmployees State Insurance Corporation then sought to recover the<br \/>\ncontribution.  A Writ Petition was thus filed before the High Court. A Single<br \/>\nJudge of the High Court held that the amounts paid did not amount to<br \/>\n&#8220;wages&#8221;.  The LPA filed by the Corporation has been dismissed by the<br \/>\nimpugned Judgment.  The Judgments of the High Court proceed on the<br \/>\nfooting that the amounts paid under the orders of the Government would<br \/>\nbe &#8220;wages&#8221; within the meaning of the definition of the term &#8220;wages&#8221; as<br \/>\ngiven under Section 2(22) of The Employees&#8217; State Insurance Act, 1948.<br \/>\nHowever, they conclude that as the Award of the Tribunal terms these<br \/>\npayments as &#8220;ex-gratia payments&#8221;, therefore they cannot now be<br \/>\nconsidered to be &#8216;wages&#8217;.\n<\/p>\n<p>\tWe have heard parties at great length.  In our view, the High Court was<br \/>\nabsolutely right in concluding that the payments made pursuant to the<br \/>\norders of the Government were &#8216;wages&#8217; within the meaning of the term as<br \/>\ndefined under The Employees&#8217; State Insurance Act, 1948.  We are unable<br \/>\nto agree with the submissions made on behalf of the Respondent that<br \/>\neven at that stage these were not &#8216;wages&#8217;.  The term &#8216;wage&#8217; as defined in<br \/>\nSection 2(22) reads as follows:-\n<\/p>\n<p>&#8220;2(22) &#8220;wages&#8221; means all remuneration paid or payable in<br \/>\ncash to an employee, if the terms of the contract of<br \/>\nemployment, express or implied, were fulfilled and<br \/>\nincludes [any payment to an employee in respect of any<br \/>\nperiod of authorised leave, lock-out, strike which is not<br \/>\nillegal or lay-off and] other additional remuneration, if any,<br \/>\n[paid at intervals not exceeding two months], but does not<br \/>\ninclude &#8211;\n<\/p>\n<p>\t(a)\tany contribution paid by the employer to any<br \/>\npension fund or provident fund, or under this Act;\n<\/p>\n<p>\t(b)\tany travelling allowance or the value of any<br \/>\ntravelling concession;\n<\/p>\n<p>\t(c)\tany sum paid to the person employed to defray<br \/>\nspecial expenses entailed on him by the nature of his<br \/>\nemployment; or <\/p>\n<p>\t(d)\tany gratuity payable on discharge;&#8221;\n<\/p>\n<p>Thus, any remuneration paid or payable in cash to an employee if the<br \/>\nterms of the contract of employment, express or implied, are fulfilled<br \/>\nwould be a &#8216;wage&#8217;. The Government order clearly indicates that the<br \/>\npayment was to be adjusted towards the &#8216;wages&#8217; after the Award is<br \/>\npassed.  By virtue of the Government order it is a payment in terms of the<br \/>\ncontract of employment and therefore it would be a wage.\n<\/p>\n<p>\tIn our view the High Court has gone completely wrong in concluding<br \/>\nthat by virtue of the Award it ceases to be wages.  As stated above, the<br \/>\nTribunal has not applied its mind as to whether or not the payments were<br \/>\nwages. All that the Tribunal did was to give its imprimatur to a<br \/>\ncompromise between the parties.  Merely because the parties in their<br \/>\ncompromise chose to term the payments as &#8216;ex-gratia payments&#8217; does not<br \/>\nmean that those payments cease to be wages if they were otherwise<br \/>\nwages. As stated above, they were wages at the time that they were paid.<br \/>\nThey did not cease to be wages after the Award merely because the terms<br \/>\nof Compromise termed them as &#8216;ex-gratia payment&#8217;.  We are therefore<br \/>\nunable to accept the reasoning of the Judgments of the High Court.  The<br \/>\nJudgment of the Division Bench as well as that of the Single Judge<br \/>\naccordingly stand set aside.  It is held that the amounts paid are wages<br \/>\nand contribution will have to be made on those amounts also.  We,<br \/>\nhowever, make it clear that payments of the interest will be as per the<br \/>\nstatutory provisions.\n<\/p>\n<p>\tIn this view of the matter, the Appeal stands allowed.  There will be no<br \/>\norder as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Employees State Insurance &#8230; vs Gnanambigai Mills Ltd on 19 July, 2005 Bench: S.N. Variava, Dr. Ar. Lakshmanan CASE NO.: Appeal (civil) 695 of 2004 PETITIONER: EMPLOYEES STATE INSURANCE CORPORATION RESPONDENT: GNANAMBIGAI MILLS LTD. DATE OF JUDGMENT: 19\/07\/2005 BENCH: S.N. Variava &amp; Dr. AR. Lakshmanan JUDGMENT: JUDGEMENT O R D E [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-86623","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Employees State Insurance ... vs Gnanambigai Mills Ltd on 19 July, 2005 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/employees-state-insurance-vs-gnanambigai-mills-ltd-on-19-july-2005\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Employees State Insurance ... vs Gnanambigai Mills Ltd on 19 July, 2005 - Free Judgements of Supreme Court &amp; 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