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Deccan Chronicle Vs. Employees' State Insurance Corporation (14.07.1980 - APHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtAndhra Pradesh High Court
Decided On
Case NumberA.A.O. No. 481 of 1977
Judge
Reported in[1981(42)FLR132]; (1980)IILLJ474AP
ActsIndustrial Disputes Act, 1947 - Sections 12(1), 12(3) and 18(1); Employees' State Insurance Act, 1948 - Sections 2(22), 75 and 82(2)
AppellantDeccan Chronicle
RespondentEmployees' State Insurance Corporation
Excerpt:
.....conditions of employment between the management and their workmen and, therefore, the quarterly special allowance agreed to be paid and being paid by the management to beneficiary employees is being paid in discharge of a contractual obligation entered into between the parties and that, therefore, the amount so paid clearly answers the description of wage, as given in s. we, therefore, hold that the payment of quarterly special allowance is clearly wage and is liable to be counted for the purpose of making contribution under the employees' state insurance act. b) but, in that case, the full bench held that both the incentive bonus as well as the house rent allowance agreed to be paid by the management to the employees constitute wages for the purpose of the employees' state insurance..........chronicle working in the departments of job, news, lino and rotary sections, etc., should he paid a special allowance once in every quarter for the extra work done over and beyond norms in connection with the extra pages on certain terms and conditions. this agreement was entered into under s. 18(1) of the industrial disputes act, and covered only the non-editorial staff of the newspaper. some of the terms and conditions, which are mentioned in the agreement are to the effect that the payment is to be made once in every quarter and that it should not form part of either of the basic or the dearness allowance or pay of the recipient, and that it is purely a special allowance for efficient work beyond the norms. it is particularly stated that this agreement is purely temporary......
Judgment:

Choudary, J.

1. This is an appeal preferred by the Management of the Deccan Chronicle against judgment of the Employees' Insurance Court, made in E.I. Case No. 47 of 1976 dated 14th March, 1977, holding that the quarterly payments made to certain categories of employees of the Deccan Chronicle under a settlement entered into between the management and the workmen under S. 12(3) of the , on 31st March, 1973, as subsequently revised on 28th April, 1976 constitute as and account for wages within the meaning of S. 2(22) of the Employees' State Insurance Act, 1948.

2. It appears that the management of the Deccan Chronicle and their employees had originally entered into an agreement on 3rd September, 1970, whereunder it is provided, that the employees of the Deccan Chronicle working in the departments of job, news, lino and rotary sections, etc., should he paid a special allowance once in every quarter for the extra work done over and beyond norms in connection with the extra pages on certain terms and conditions. This agreement was entered into under S. 18(1) of the Industrial Disputes Act, and covered only the non-editorial staff of the newspaper. Some of the terms and conditions, which are mentioned in the agreement are to the effect that the payment is to be made once in every quarter and that it should not form part of either of the basic or the Dearness Allowance or pay of the recipient, and that it is purely a Special Allowance for efficient work beyond the norms. It is particularly stated that this agreement is purely temporary. Subsequently, on 31st March, 1973, the management have entered into a similar agreement with the Sub-editors, Reporters, Chief Sub-editors, Chief Reporters and News Editors of the Deccan Chronicle. This agreement is one which has been entered into under S. 12(3) of the Industrial Disputes Act, 1947. The terms and conditions of this agreement are more or less the same as those to be found in the agreement above referred to and entered into between the management and the employees, on 3rd September, 1970. This agreement is also temporary and it is also agreed between the parties that that payment should not form part of either the basis or the Dearness Allowance or pay of the recipients of the quarterly special allowance for efficient work beyond the norms. It is mentioned that only permanent employees employed in the Editorial Department shall be eligible for the special allowance payable under that agreement. This agreement dated 31st March, 1973 has been revised on 28th April, 1976 by means of a fresh agreement entered into between the management and the employees, under S. 18(1) of the Industrial Disputes Act, 1947. We need not only one extra feature of this agreement dated 28th April, 1976. In clause (2) of the agreement it is, stated that the payment should not form part of either the basic or the Dearness Allowance or pay of the recipients of this quarterly special allowance for any purpose whatsoever. The words alike bonus, E.P.P. and E.S.l., were specifically added. The quarterly Special Allowance payable to the News Editors, Chief Sub-Editors, Chief Reporter, Sub-Editors and Reporters has been enhanced and it was specifically mentioned under clause (6) of the agreement that it will be strictly paid once in every quarter only since it is not a wage. It may be mentioned that thee agreements entered into between the management of the Deccan Chronicle and their employees are still in force and terms of the agreements are being observed by the parties thereto, throughout giving the agreements a high degree of permanency. But the management treating the payments being made to their employees under the above Special Allowance scheme as not not been taking that amount into account for the purpose of making its contribution under the Employees' State Insurance Act, 1948. Under the First Schedule, the amount of weekly contribution payable in a contribution period in respect of an employee shall be calculated with reference to the average daily wages during the first wage period in respect of that employee ending in such contribution period. This Schedule would, therefore, require the determination of the wages being paid to the employees by the management. For the purpose of contribution being made by the management under Chapter IV of the above Act the management is treating this quarterly Special Allowance being paid to the employees as not constituting a wage. The department disagreeing with that view of the management had called upon the management to make contribution treating the Special Allowance being paid to the employees as wage. The management has thereupon disputed this claim and went before the Employees' Insurance Court at Hyderabad, under S. 75 of the above Act. The Employees' Insurance Court by its judgment dated 14th March, 1977. Held that the quarterly special allowance being paid by the management to the employees is wage and is, therefore, liable to be taken account of for the purpose of calculating the amount of contribution to be made by the management under the above Act. The findings of the Insurance Court are, that the quarterly special allowance agreed to be paid by the Management to the employees falls under 'additional remuneration', if any, referred to in later part of S. 2(22) of the above Act. Having been aggrieved by that finding of the Employees' Insurance Court, the Management has filed this Civil Miscellaneous Appeal under S. 82(2) of the above Act.

3. Mr. Srinivasa Murthy, learned counsel appearing for the management, has argued that this quarterly special allowance cannot be regarded as wage coming under the definition clause of S. 2(22) of the above Act. This argument is that the agreement entered into between the management and the employees is merely a temporary agreement and that is more it expressly provides that the quarterly Special Allowance shall not be treated and accounted as wage for the purpose of Employees' State Insurance Act, and therefore, the Employees' Insurance Court is in error in holding that the quarterly Special Allowance is a wage for the purpose of the Act. He particularly attacked the judgment of the Employees' Insurance Court which held that the quarterly special allowance, which is made payable at the end of every quarter, still falls under the description of 'Additional remuneration' by reason of the fact that it is being paid every month. He has argued that the settlement entered into between the parties on 31st March, 1973, as revised on 28th April 1976, does not form part of contract of employment between the management and their workmen and, therefore, the finding of the Employee's Insurance Court that it is wage is wrong.

4. On the other hand, Mr. I. A. Naidu, appearing for the Employees' State Insurance Corporation, argued that the settlement entered into between the management and the employees on 31st March, 1973, as revised by the agreement entered into on 28th April. 1976, has force of a statute and it constitutes an integral part of the terms and conditions of employment between the management and their workmen and, therefore, the quarterly special allowance agreed to be paid and being paid by the management to beneficiary employees is being paid in discharge of a contractual obligation entered into between the parties and that, therefore, the amount so paid clearly answers the description of wage, as given in S. 2(22) of the above Act. He has also argued that in any case that this amount of quarterly special allowance is an additional remuneration, coming within the later part of the definition clause, and that, therefore, the amount so paid should be taken account of for the purpose of calculating the amount of contribution, which the management must make to the Employees' State Insurance Corporation.

5. Although there are several judgments which have been cited by Mr. Srinivasa Murthy, learned counsel for tie appellant, and also by Mr. Naidu, learned counsel for the respondent, we think that this is a matter which should be disposed of in the ultimate analysis on the basis of the meaning to be given to S. 2(22) which defines the word wages' in the following terms :

2(22). '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 mouths, but does not include

(a) any contribution paid by the employer to any pension, fund or provident fund, or under this Act;

(b) any travelling allowance or the value of any travelling concession

(c) any sum paid to the person employed to defrary special expenses entailed on him by the nature of his employment; or

(d) any gratuity payable on discharge'.

6. A reading of S. 2(22) makes it clear any remuneration paid to an employee, the management or payable by the management to its employee in terms of the contract of employment, is treated as wage for the purposes of the Employees' State Insurance Act. Now this definition separately raises the question whether the quarterly special allowance originally agree to be paid by the management to their employees on 31st March, 1973 by reason of a settlement entered into under S. 12(3) of the Industrial Disputes Act, 1947, forms part of the terms and conditions, of the contract of employment A contract of employment is an agreement entered into between two parties giving rise to mutual rights and obligations. Now, in this case, by reason of the settlement entered into between the management, and employees on 31st March, 1973, the management has agreed to pay to their employees under certain conditions the quarterly special allowance. Now the agreement to pay this quarterly special allowance is a condition of employment because it relates to the employment of the workmen by the management in their establishment. These features of the agreement would make it abundantly clear that the agreement dated 31st March, 1973 is an agreement fixing the terms of the contract of employment between management of the Deccan Chronicle and their employees. It would, therefore, appear to us rather exceedingly difficult, if not impossible, to contend that the agreement dated 31st March, 1973, does not constitute a contract of employment. What is more it is not merely a contract of employment entered into between the two parties, but it has acquired a statutory flavour by reason of the fact that it has been into in the form of settlement under S. 12(3) of the Industrial Disputes Act, 1947. Section 12(1) of the industrial Disputes Act. 1947, provides, that where any industrial dispute exist or is apprehended, the conciliation officer may, or where the dispute relates to a public utility service and a notice under S. 22 has been given, shall hold conciliation proceedings in the prescribed manner. S. 12(3) says, that if a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceeding the conciliation officer shall send a report thereof to the appropriate Government together with memorandum of the settlement signed by the parties to the dispute. It is clear the management and the employees have entered into an agreement employing various terms and conditions, including the obligation to pay the quarterly special allowance under the agreement dated 31st March, 1973, now under S. 18(3) of the Industrial Disputes Act, 1947, a settlement arrived at in the course of conciliation proceedings under that Act, is made binding on all parties to the industrial dispute. From this it is clear that the management is bound, as a matter of statutory obligation to pay to the employees the quarterly special allowance. The payment of quarterly special allowance is thus a matter, which constitutes a part of the contract entered into between the management and the employees and sanctioned by law. It is, therefore, difficult to agree with Mr. Srinivasa Murthy, learned counsel for the appellant, that because this agreement is called temporary and because this agreement says that this payment shall not be counted as wages for the purpose of the Employees' State Insurance Act, the payment shall not be treated as wage. We are of the opinion that the description of the agreement as temporary has no particular meaning to be attached. There is no period fixed under the agreement by the lapse of which the agreement would become inoperative. What is more under the provisions of the Industrial Disputes Act. this agreement, notwithstanding the fact that it has been described as temporary, would continue to be operative, until it is terminated by following the procedure prescribed. As a fact that the agreement is still in force. For this reason we hold that the description of the agreement as temporary is of no significance in deciding the question whether the quarterly special allowance should be treated as wage, or not. We are equally of the opinion that the, parties by their agreement not to treat the quarterly special allowance as wages, cannot exclude the operation of the Employees' State, Insurance Act. Whether the payment made by, the management to its workmen is a wage or not is a question which must he decided independently of the agreement between the employer and employees. That question must prilimarily be decided by reference to the legislative definition contained in S. 2(22). Where we have found, on an appraisal of the whole facts, in the case, that the quarterly special allowance paid by the management to the employees, in pursuance of an agreement entered into between them with employees and in consideration for the extra work done by the employees we will be justified in holding that this payment is wages, notwithstanding the fact that the parties to that agreement have decided to call it something other than wages. The interpretation and enforcement of law made by the Parliament is no more dependent upon the volition of the parties and the description which the parties choose to give to a transaction, then the pull of gravitation is dependent upon the will of an object. We, therefore, hold that the payment of quarterly special allowance is clearly wage and is liable to be counted for the purpose of making contribution under the Employees' State Insurance Act.

7. Mr. Srinivasa Murthy, learned counsel for the appellant, placed the strongest reliance on a judgment of the Supreme Court reported in Braith Wait and Co. Employees' State Insurance Corporation, : (1968)ILLJ550SC . But, that is a case which has too many dissimilarities with the one on hand and, in fact, it has been so distinguished by the decision of a Division Bench of this Court in Regional Director, Employees State insurance Corporation v. Hyderabad Asbestos Cement Product, [1972-11 L.L.J. 602). In the Supreme Court judgment the management has announced a unilateral scheme of granting inam. The Supreme Court has, therefore, held that it is not part of a term of the agreement : but in this case, as we have already seen the agreement to pay quarterly special allowance is arrived at by reason of mutual settlement of an Industrial dispute. For the reasons which have been mentioned by the learned Judges in Regional Director, Employees State Insurance Corporation v. Hyderabad Asbestos Cement Products (supra) we hold that the facts in Braith Wait and Co. v. Employees' State Insurance Corporation (supra) are wholly different from the facts of this case, making ratio of the judgment of the Supreme Court inapplicable to the facts of the present case.

Mr. Srinivasa Murthy had also referred to a Full Bench decision of this Court reported in Employees State Insurance Corporation. Hyderabad v. Andhra Pradesh Paper Mills, : (1978)ILLJ469AP (F.B) But, in that case, the Full Bench held that both the incentive bonus as well as the house rent allowance agreed to be paid by the Management to the employees constitute wages for the purpose of the Employees' State Insurance Act. We find the Full Bench reasoning not to be in support of the appellant's contention. The Full Bench reasoned that whether any payment made amounts to wages must be decided by finding out whether the payments so made, are made in pursuance of the terms of the contract of employment. This single decisive test to find out the character of the payments made, as applied to our case, yields an answer which is wholly against the contention of the appellant. For this reason though we are unable to agree with the Employees' Insurance Court below, which has found the payment of quarterly special allowance does not constitute wages within the first limb of that definition, we affirm its conclusion on the basis of our reasoning above mentioned.

8. Mr. Srinivasa Murthy, learned counsel for the appellant, has next attacked the findings of the Employees' Insurance Court holding that payments in this case come under Additional remuneration, on the ground that under the settlement entered into between the Management and the employees, as revised on 28th April, 1976, the quarterly special allowance is payable once in every quarter only, he said that notwithstanding the fact hat the Management is paying an advance amount every month to the employee the payment so made cannot be treated as wages, coming under the category of 'additional remuneration' paid at intervals not exceeding two months. It has been found as a fact by the Employees' Insurance Court, a finding which has not been attacked by the learned counsel for the appellant, that the Management is paying at the beginning of every month some amount in the name of advance to the employees. The argument of the appellant is that this cannot be called as 'additional remuneration' within the meaning of S. 2(22) of the Employees' State Insurance Act, 1948, because the employees have no right to be paid every month their right to receive the quarterly special allowance being limited to only once in a quarter. In other words, the contention of the appellant is that what is being paid every month is only an advance and ex-gratia, without there being any corresponding right in the employees to demand it. In support of this contention the learned counsel for the appellant has placed reliance on a judgment of a Division Bench of this Court reported in Regional Director, Employees' State Insurance Corporation v. M/s. Vazir Sultan, [1972-II L.L.J. 602] at 604. It appears that this judgment lends support to the contention of the appellant, But, a perusal of the language of S. 2(22) would clearly show that the contention of the appellant is not well, founded. Section 2(22) which is in three parts, firstly, defines 'wages' as those paid or payable 01,-pursuance of the terms, of the contract; In its second part is included payments made to an employee in respect of any period of authorised leave, lock-out, strike, etc.., and its last and final part refers to 'other additional remuneration'. If any, paid at intervals not exceeding two months. The difference in language used in the first part of this clause and the last part of this clause is significant. 'Whereas in the first part 'wages' are defined as remuneration paid or payable in pursuance of terms of the contract, in the last part, wages' are defined merely as 'additional remuneration 'if any paid. Therefore, for the purpose of determining whether 'additional remuneration' constitutes 'wages' for the purpose of this Act under part three of S. 2(22), what is important is not the legal right or obligation of the parties but the actual fact of payment made. When the statute has used both the words 'paid' or 'payable' in the first part of the S. 2(22) and it had deliberately omitted the word 'payable' from the third part of the section. We cannot but give a different meaning to the word 'paid' from the meaning to the word 'payable'. When the statute uses the word 'paid' or 'payable' in juxtaposition we must give different meaning to these words. Therefore, under part three of the definition the words 'additional remuneration' 'paid' cannot be read as they have been read in Regional Director, Employees' State Insurance Corpo. ration v. M/s. Vazir Sultan (supra) as. additional remuneration 'payable'. In fact, there is much more deeper reason why we cannot agree with decision reported in Regional Director, Employees' State Insurance Corporation v. M/s. Vazir Sultan (supra). That decision is based upon an unargued assumption that the additional remuneration is also payable. An amount can only become payable' in pursuance of an express or implied contract. The moment an amount becomes 'payable', it ceases to fall under part three of S. 2(22) and comes directly under the first part of that section. The language of the statute' additional remuneration if any paid 'clearly contemplates the remuneration paid, otherwise than in pursuance of the terms of the contract. For these reasons, we cannot agree with Mr. Srinivasa Murthy on this part of his argument also.

9. For the aforesaid reasons, we dismiss this appeal, but in the circumstances of the case, there shall be no order as to costs.

10. Mr. Srinivasa Murthy's oral request to grant leave to appeal to the Supreme Court under Art. 134(A) of the Constitution, is rejected, as we see no reason to grant the same.


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