S.B. Majage, J.
1. In this appeal, the appellant-Corporation has challenged the order dated 24-2-2001 passed by Employees' Insurance Court at Hubli in ESI Application No. 26 of 2000, by which Form No. 'C-18', dated 20-6-2000 and Form No. 'C-19', dated 19-7-2000 have been set aside holding that the respondent-Society, is not liable to pay contribution demanded on the wages paid to the employees for work done on holidays.
2. Facts giving rise to this appeal are:
The employees working under the respondent had worked on holidays during the period from July 1997 to January 2000 and for that, they were paid wages, but respondent had not computed those wages while calculating the contribution paid by it under the Act. When that was noticed by an Inspector of the Corporation, notice was issued. For that, reply was given by respondent. However, after giving personal hearing, Forms 'C-18' and 'C-19' came to be issued by the Corporation claiming contribution on said wages. So, the respondent filed an application before the Employees' Insurance Court under Section 75 of the Act, requesting to set aside the said Forms 'C-18' and 'C-19'. Accordingly, the Employees' Insurance Court set aside the Forms 'C-18' and 'C-19'. Hence, the Corporation is before this Court by way of appeal, in which following substantial question of law arises for consideration:
'Whether on the wages paid to employees for the work on holidays, contributions are required to be paid under the ESI Act?' '
3. Heard both sides. The learned Counsel for the appellant, placing reliance on the decision of the Supreme Court in the case of Indian Drugs and Pharmaceuticals Limited and Ors. v. Employees' State Insurance Corporation and Ors., : (1997)IILLJ700SC submitted that, on the wages paid to employees for work extracted by the employer on the holidays, the respondent-Society was liable to pay contribution, but the Employees' Insurance Court has taken a view, which is not sustainable under law. On the other hand, the learned Counsel for the respondent-Society placed reliance on the decision of the Supreme Court in the case of Employees' State Insurance Corporation v. Model Mills Nagpur Limited, (1992)80 FJR SC 81 (SC) and also a Full Bench decision of Kerala High Court in the case of Employees' State Insurance Corporation v. Malabar Cashewnut and Allied Products and Ors., 1993-I-LLJ-596 (Ker.); in support of his argument that wages paid to the employees for work done on holidays cannot be taken into consideration for calculating or making payment of contribution under the Act. Perused the records carefully.
4. It is true that relying on the said decision of the Supreme Court, a Full Bench of Kerala High Court held in the case of Malabar Cashewnut and Allied Products, supra, that wages paid to the employees for national holidays are not wages for the purpose of the Act. However, the same Full Bench held so keeping in mind Article 141 of the Constitution, as is clear from the following observation made by it:
'14. Though there is no independent discussion of the matter by the Supreme Court, their Lordships have approved the interpretation given to Section 2(22) of the ESI Act by the Bombay High Court (Employees' State Insurance Corporation, Nagpur v. Model Mills Limited, Nagpur, (1974) 45 FJR 538 (Bom.)) and we are bound by the same under Article 141 of the Constitution of India. Though the view taken in Employees' State Insurance Corporation v. Raj Cashew Company, 1992-I-LLJ-206 (Ker.) and in Employees' State Insurance Corporation v. New Asarwa Manufacturing Company Limited, (1984)64 FJR 367 (Guj.); is also a plausible view, in the light of the aforesaid decision of the Supreme Court which this Court is bound to follow, it has to be held that the wages paid under the Holidays Act is not 'remuneration paid or payable' and will not form part of the wages as defined in the ESI Act'.
5. Not only that, in the case of Model Mills Limited, supra, the Supreme Court was dealing with wages paid for 'authorised absence' in relation to the word 'wages', as defined in the Act before it was amended in the year 1966 and also considered Explanation III to Para 2 of Schedule I besides Sections 40 and 41 of the Act as they were in the Statute Book earlier to the year 1966. However, definition of the word 'wages' has been amended in the year 1966 and thereby, a wider ambit has been provided by adding inclusive definition while maintaining exclusive Clauses (a) to (d), which cannot be lost sight.
6. Further, in both the decisions referred to above and relied on for respondent, neither there was payment of wages for any work performed by them on holidays or during authorised leave period nor the employees had worked on such days and as such, considered from any angle, they do not help the respondent in the present case in which the employees were paid wages for the work done on holidays.
7. So, what is required to be considered is, whether the wages, paid to employees for work done on holidays, come within the meaning of the word 'wages', as defined in the Act so as to say that contribution was required to be paid under the Act by the respondent or not. For this, following definition of the word 'wages' given in Section 2(22) of the Act require to be noted:
'Section 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, lockout, strike which is not illegal or layoff and other additional remuneration, if any, paid at intervals not exceeding two months, 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 defray special expenses entailed on him by the nature of his employment; or
(d) any gratuity payable on discharge',
8. It need not be said that since the Act is a welfare legislation, the definition of wages is kept designedly wide and as such, any ambiguous expression in it, requires to be construed keeping that in mind, In other words, it should receive a beneficial construction. Of course, said word has been interpreted in a number of decisions by various High Courts and also by the Supreme Court. It consists of three parts. The first part covers all remuneration paid or payable in cash to the employees as per terms of the employment expressed or implied. The second part is an inclusive part, in which any payment to an employee for any period of authorised leave, lockout, strike, which is not illegal, or layoff comes. The third part covers other additional remuneration paid at intervals not exceeding two months to an employee. However, there is an exclusive clause under which it is made clear that payments made and covered by Clauses (a) to (d) found in the said provision do not come within the meaning of the word 'wages'. Admittedly, wages paid to employees for work done by them on holidays is not covered by any of the said exclusive clauses so as to take it out of the purview of the definition of wages given in the Act. So, let me see, whether said wages come in any of the three parts of the word 'wages' defined and referred to above.
9. So far as first part of definition is concerned, the primary requirement is, it must be remuneration whereas, second requirement is, such remuneration is paid or payable to an employee and the third requirement is, such remuneration must be under the terms of contract of employment, which may be either express or implied. It need not be said that the word 'remuneration' means reward, recompense, pay, wages or salary for services rendered. Since wages were paid to employees for work done on holidays, certainly it is remuneration. So, first and second requirements are satisfied. For the third/last requirement, of course, there is no record that the wages paid to the employees for work done by them on holidays was covered by the terms of contract of employment. However, that does not put an end to the matter for the reason that admittedly, the employees had received wages for work done by them and extracted by the employer-respondent (Society) on holidays.
10. So, the following observations made by the Supreme Court in the case of Indian Drugs and Pharmaceuticals Limited, supra, squarely applies to the present case:
'. . . . if remuneration is paid to the employee in terms of the original contract of employment or in terms of a settlement which by necessary implication becomes part of the contract of employment, it is wages. ..... When the admitted position is that an employee has done the overtime work and received or is due to receive remuneration towards the work done for his rendering service, necessarily, it is a wage paid or payable by virtue of the implied contract. The contract of employment is entered into only at the initial entry into the service. In the course of the employment, as and when the employer finds the need to have work done expeditiously, in addition to the normal work during the course of the working hours, the employer offers to the employee to do overtime work after the working hours. When an employee does overtime work, it amounts to acceptance of the same. There emerges concluded implied contract between the employer and employee. There is no need to write on each occasion separately on the letter of appointment. It becomes integral part of original or revised contract of employment from time to time. The employer is obligated to pay wages when the employee does work. This will be, in addition to payment of the wages he receives for normal work. In other words, both the remuneration received during the working hours and overtime constitute a composite wages and thereby it is a wage within the meaning of Section 2(22) of the Act'.
(emphasis supplied)
11. It may also be noted that other additional remuneration, if any, paid at intervals, not exceeding two months, is also 'wages' under third part of the definition as noted already. In the case on hand, wages were paid for the work done by employees on general holidays and second Saturdays and as such, they come even under third part of the definition of wages as well,
12. So, considered from any angle, wages paid to the employees for work done on holidays come within the meaning of the word 'wages', as defined under the Act and as such, the view taken by the Employees' Insurance Court placing reliance on the decisions in the case of Model Mills, supra and Malabar Cashewnut and Allied Products, supra, which are not at all applicable to the case on hand, cannot be sustained. Accordingly, the substantial question of law is answered in affirmative. Consequently, the impugned order requires to be set aside. No other point has been raised nor remained to be considered.
In the result, the appeal is allowed and the impugned order is set aside.