HYDERABAD ALLWYN METAL WORKS LIMITED SANATHNAGAR HYDERABAD Vs. EMPLOYEES STATE INSURANCE CORPORATION

JUDGEMENT

(1.) The question for our consideration in these two appeals is whether over-time allowance is not 'wages' within the meaning of sect,on 2 (22) of the Employees' State Insurance Act, 1948?

(2.) In C M A. No. 79/1979, the appellant is the Hyderabad Allwyn Metal Works Limited. Hyderabad. It is a Company manfacturing refrigerators, bus-bodies, and military appliances. It is covered by the provisions of the Employees' State Insurance Act, 1948 (here in after referred to as 'the Act'). The appellant was paying both the employed and employees contribution to the respondent, The Employees' State Insurance Corporation, Hyderabad (hereinafter referred to as the Corporation) While so, the Insurance Inspector visited the factory on some days m November and December, 1974. and inspected the records He found that the appellant was not including the Over-time allowance paid to ito employees for calculating the rate of contribution payable under the Act. Therefore, the, Corporation wrote a letter on 7th April 1975, callng upon the appellant to pay contribution on overtime allowance paid to its employees retrospectively for the period from 1st August 1973 to 31st July. 1974. The appellant represented that overtime allowance pa,d to its employees was not wages within the meaning the Act. Nevertheless, by its letter dated 10th November, 1976, the Corporation called upon the appellant to pay a sum of Rs 1, 12, 601-79 by way of contribution on the payment of overtime allowance and interest thereon on ad hoc basis. Questioning that notice, the appellant fled a petition under Section 75 in the Employees' State Insurance court at Hyderabad, contending that overtime allowance paid to its employees was not wages within the meaning of Section 2 (22) of the Act, and no contribution need be paid on such allowance and the demand to pay contribution by the Corporation on such allowance was illegal. The Employees' Insurance Court, following the decisions of Bombay and Delhi High Courts held that overtime ailowanca was wages. Questioning that order, the appellant has filed C M A No. 79/1973.

(3.) In C.M.A. No.150/1980. the Employee's State Insurance Corporation is the appellant. The respondent is the Indian Drugs & Pharmaceuticals Limited, Hyderabad. It is a Government Undertaking dealing in the manufacture and sale of drugs. Most of the employees are covered by the Employee's State Insurance Scheme. It was paying contribution of the employers and employees on the basis of the weekly wages. On 3rd July. 1978, the appellant-Corporation issued a notice to the respondent Company to pay Rs.8,331/- towards contribution for the period from 31st December, 1969 to 30th September, 1970 on the overtime allowance paid to its employees and also stipends paid to the apprentices. Questioning that notice, the respondent. Company filed a petitioner under Section 75 of the Act before the Employee's Insurance Court at Hyderabad. The court held that the stipend paid to the apprentices could not be treated as wages and the apprentices could not be considered as employees under the Act. and therefore, the demand of the Corporation for contribution on the stipend amounts paid to the apprentices was not valid. On the question whether the overtime allowance was wages within the meaning of Section 2(22) of the Act, relying upon a decision of the Calcutta High Court and also the provisions of the Act, the Insurance Court held that overetime allowance was not wages within the meaning of the Act and, therefore, the respondent-Company was not liable to pay contribution on that amount. In the result, the petition was allowed. Questioning that order, the Corporation has filed C. M.A.No.150/1980.