Decided on March 03,1983

Regional Director Esi Corporation Ahmedabad Appellant
New Asarwa Mfg Company Limited Respondents


A.S.QURESHI, B.K.MEHTA - (1.) A short but interesting question arising in this group of appeals is whether payment of wages and dearness allowances to workers in respect of the unsubstituted festival religious and national holidays is wages within the meaning of sec. 2(22) of the Employees State Insurance Act 1948 (hereinafter referred to as the ESI Act) as it stood prior to its amendment by Act No. 44 of 1966. The question arises in the following circumstances: 1. Before the Employees State Insurance Court (hereinafter referred to as the ESI Court) five applications were moved by five different mill-companies of this city under sec. 73-B of the ESI Act for declaration that the respective mill company was not liable to pay employers special contributions on the wages paid to its employees in respect of the unsubstituted holidays. The Mill companies which had moved the ESI Court were (1) The New Asarwa Mfg. Co. Ltd. (9) The Aryodaya Spg. & Wvg. Co. Ltd. (3) The Aryodaya Ginning & Mfg. Co. Ltd. (4) Shri Ambica Mills Ltd. No. 1 & No. 2 and (5) Arbuda Mills Ltd. It is not necessary to go into the details as to what were the precise amounts claimed by the Regional Director Employees State Insurance Corporation but suffice it to say that these Mill-companies were called upon to make contributions for the period comprising of two quarters ending on 31/03/1966 and 30/06/1966 The Regional Director had called upon these different companies by letters of different dates which need not be referred to and set out to make contributions on the wages paid for unsubstituted paid holidays. The Mill-companies resisted the demands made in the said letters on the ground that the payment mad for such unsubstituted holidays were not wages within the terms of the definition of the expression wages under the ESI Act. They therefore moved the High Court for declaration that they were not liable and also prayed for interim injunction restraining the Corporation from enforcing the demands made by the different letters addressed to the said companies.
(2.) The applications were resisted by the Corporation inter alia on the grounds that the wages for the unsubstituted paid holidays were paid under the agreement between the workers and the Mill-companies and since the payment made to the workers for such unsubstituted holidays comprised of basic wages and dearness allowance the payment must be treated as remuneration paid or payable in cash to the employees as if the terms of contract of employment were fulfilled.
(3.) On the aforesaid pleadings the ESI Court proceeded to consider the dispute on the legal submissions urged by the respective parties before it though admittedly no oral evidence was led before it. The ESI Court therefore examined the question in light of the definition of the there wages and following the decision of a Division Bench of the Bombay High Court in NUTAN MILLS V. ESI CORPORATION. AIR 1956 BOMBAY 336 held that the impugned payments were in effect and substance merely a benefit and not payments for the services rendered. The ESI Court therefore granted the declaration and restrained the Corporation from recovering the demands made by the Corporation from these different Mill-companies by its judgment and order of 30/07/1971;

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