REGIONAL DIRECTOR EMPLOYEES MATE INSURANCE CORPORATION HYDERABAD Vs. VAZIR SULTAN TABACCO CO LTD
LAWS(APH)-1972-4-16
HIGH COURT OF ANDHRA PRADESH
Decided on April 17,1972

REGIONAL DIRECTOR, EMPLOYEES MATE INSURANCE CORPORATION, HYDERABAD Appellant
VERSUS
VAZIR SULTAN TOBACCO COMPANY LTD. Respondents

JUDGEMENT

Kondaiah, J. - (1.) This appeal by the appellant is directed against the order of the Employees' State Insurance Court, Andhra Pradesh, Hyderabad allowing the application of the respondent under Section 75 of the Employees State Insurance Act, 1948 thereinafter called 'the Act' restraining the appellant from collecting Employees' State Insurance contributions on Productivity Index Plan Bonus.
(2.) The admitted or proved facts leading to this appeal, which lie in a short compass, may briefly he stated. The respondent -company which manufactures cigarettes, has employed about 2,400 workmen who are paid wages, dearness allowances and other allowances payable to the employees by an industrial establishment. Under the payment of Bonus Act, 1965, employees are entitled for a minimum bonus of 4% up to a maximum of 20% depending upon the profits earned by the employer. The respondent company and the Employees' Union there of have entered into in 1965 and 1970 two settlements evidenced by Exs. A-1 and A-2 respectively where under the payment of bonus as per the Productivity Index Plan has been agreed upon. According to the terms of Ex. A-2, which is now in force, the employees would be eligible to annual bonus provided the minimum target of 1885 M. Per man hour is reached. The rate of payment of bonus under the Productivity Index Plan is shown as per the slabs indicated at page 35 in Ex. A-2 Unless and until the minimum productivity index is 1. 885 M. or above per man hour, the employees would not be entitled for any bonus for the relevant period (vide Ex. A-4.) The right to payment of the annual bonus under the Productivity Index Plan would accrue in law only after 12 months and before the completion of 20 months. The company, at the request of the employees, has agreed to pay the bonus in advance every month for the first eleven months and finally settle the account after the end of the year. The employees have no right to insist upon monthly payments as they are entitled in law for the payment of this annual bonus only after the expiry of 12 months and before 20 months. Clause (c) of the settlement Ex: A-2 empowers the respondent-company either to modify or cancel any part or the whole of the comprehensive annual bonus if during the subsistence of the settlement period, any legislation, rule, order, direction, decree or award is passed or made applicable to the company enforcing any scheme for bonus or payment under any incentive or production scheme or plan. The terms of the settlement have been made by mutual agreement of the parties. In view of the settlement, Ex A-2, the employees of the respondent-company are not entitled for any bonus payable under the Payment of Bonus Act, 1965.
(3.) The respondent is paying the contribution for its employees on the wages dearness and other allowances due and payable to them. No contribution in respect of comprehensive annual bonus paid or payable as per the Productivity Index Plan was being made at any time by the respondent prior to the present controversy. The appellant for the first time in his letter dated 7-4-1971, demanded the respondent for the payment of contribution on the annual bonus paid or payable to its employees on ths ground that it is wages within the meaning of section 2(22) of the Act. The respondent-company took the stand that the annual bonus paid or payable by it to the employees under the Productivity Index Plan is not wages, and, therefore, no contribution need be paid thereon. The appellant had sent an Insurance Inspector to visit the respondent's factory on 23-4-1971 and verify its record and accounts. Thereafter, the District Collector, Hyderabad was requpsted to recover by recourse to the Revenue Recovery Act the employer's contribution payments under the Productivity Bonus Scheme.;


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