Tirath S. Thakur, J.
1. These two appeals arise out of two different orders passed by the Employees State Insurance Court in Bangalore whereby the said Court has held Efficiency Incentive/Bonus paid to the employees of the appellants-companies to be wages within the meaning of Section 2(22) of the ESI Act and consequently upheld the demand raised by the Corporation for payment of contribution. Since the question that falls for consideration is common to both the cases, the same have been heard and shall stand disposed of by this common Order.
2. In terms of an Order passed by the Deputy Regional Director of the ESI Corporation, contributions were demanded from the appellant - Escorts Ltd., on several items of expenditure like amounts spent on building maintenance, incentive payments, machinery repairs and wages paid to the employees of the transport contractors. By another Order, similar contributions were levied on the amounts spent by the appellants managements towards subsistence allowance and Efficiency Incentive/Bonus. The correctness of these orders and the demand raised against the appellants was questioned by it in ESI No. 150/1989 and ESI No. 79/1991 before the ESI Court at Bangalore. At the hearing of the said two applications, however, it was stated on behalf of the appellant - companies that disputes relating to the claim of contributions on the amounts spent under all other heads except the claim for contribution on the incentive payments made to the employees of the company had been settled. Based on the said statement, the ESI Court framed three issues in ESI No. 150/1989 and ESI No. 79/ 1991 which reads as under
'Issues in ESI -150/89:
1. Whether the applicant proves that it is not liable to pay the contribution of Rs. 9,71,704-57 ps on the various items as alleged under order dated 1.6.89 passed under Section 45-A for the reasons as stated in the main application?
2. Whether the applicant further proves that the impugned order is therefore liable to be set aside?
3. To what order?'
'Issues in ESI - 79/91 :
1. Whether the applicant proves that it is not liable to pay the contribution of Rs. 5,75,525 for the period July 86 to December 89, for the various reasons as stated in the main application?
2. Whether the applicant further proves that order dated 3.6.91 passed under Section 45-A is therefore liable to be set aside?
3. To what order?'
3. Almost identical issues were framed in the connected petition filed by the appellant - M/s. Goetze (India) Ltd. in ESI Application No. 160/1988.
4. The ESI Court has by its Orders dated 11.8.1998 and 12.11.1998 dismissed the petitions filed by the appellants and upheld the demand of contributions raised against them by the Corporation. While doing so, the Court below has come to the conclusion that the payments made by the appellant - companies towards Efficiency Incentive/Bonus were wages within the meaning of Section 2(22) of the ESI Act. The demand raised by the Corporation for payment of contributions against the companies was therefore held to be justified. The present appeals call in question the correctness of the said Orders.
5. Appearing for the appellants Mr. B.C. Prabhakar argued that even when the Efficiency Incentive/Bonus was paid to the employees pursuant to settlements arrived at between the Management and the Workmen in conciliation proceedings, the payments so made did not constitute wages as the incentive payments were made beyond the interval of two months. It was alternatively argued that even if the payments in question were treated to be a part of the wages, the fact that the Managements could at their discretion withdraw the Efficiency Incentive/Bonus Scheme at any stage and stop or deny such payments sufficiently showed that the same did not constitute a part of the wage payable to the employees. Reliance in support of that contention was placed by learned Counsel upon the decision of the Supreme Court in 'WHIRLPOOL OF INDIA LIMITED v. E.S.I.C. It was submitted that the decision in Whirlpool's case must be deemed to have overruled the law as laid down in the earlier decisions of the Supreme Court in 'WELLMAN (INDIA) PVT. LTD. v. EMPLOYEE'S STATE INSURANCE CORPORATION and 'MODELLA WOOLLENS LIMITED v. EMPLOYEES' STATE INSURANCE CORPORATION AND ANR.
6. Ms. Geetha Devi, Counsel appearing for the respondent -Corporation on the other hand contended that the payments towards Efficiency Incentive/Bonus were made to the employees in terms of settlements arrived at between the Management and the Workmen. Such payments had therefore become a part of the contract of employment of the workmen thereby constituting wages within the meaning of Section 2(22) of the Act. She urged that the decision in Whirlpool's case supra did not relate to payments made in terms of a settlement and that the decisions of the Apex Court in Wellman (India) Pvt. Ltd. and Modella Woollens Ltd referred to above continues to state the true legal position. She urged that on a true construction of the terms of the Incentive scheme the Management did not have an unbridled discretion to withdraw or modify the scheme as argued on their behalf.
7. It is common ground that the payments towards Efficiency Incentive/Bonus were made by the appellant Managements in pursuance of settlements arrived at between the Workmen on the one hand and the Managements on the other. The question whether payments made pursuant to such settlements would constitute wages under Section 2(22) of the ESI Act is no longer res integra, the same having been answered in the affirmative by the decision of the Supreme Court in 'WELLMAN (INDIA) PVT. LTD. v. EMPLOYEES' STATE INSURANCE CORPORATION . In that case the Management had introduced what was known as a bonus scheme as a part of the settlement between the employer and the Union of the Workmen. The scheme envisaged payments of bonus if a worker remained present for all the working days during a quarter. The ESI Corporation appears to have made a demand from the Management for payment of contribution on such bonus paid under the scheme. The question that therefore fell for consideration was whether such payments could be treated to be wages within the meaning of Section 2(22) of the Act. Answering the same in the affirmative, their Lordships held that the settlement pursuant to which the payments were made and the scheme under the same had become an 'express contract' of employment ever since the date of the settlement. The payments made under the said scheme were therefore declared to be wages for purposes of the ESI Act. The Court observed:
'As pointed out above, the attendance bonus payable to the employees is under the terms of the settlement which has become a part of the contract of employment. Hence, the said bonus will fall within the first part of the definition of 'wages' under Section 2(22) of the Act which covers all remuneration paid or payable in cash to an employee if the terms of the contract of employment, express or implied, were fulfilled.'
8. To the same effect is the decision of the Supreme Court in 'MODELLA WOOLLENS LIMITED v. EMPLOYEES' STATE INSURANCE CORPORATION AND ANR. In that cases also the demand for payment of contribution related to production bonus paid to the employees by the Management. The said payment was also in terms of an agreement arrived at between the employees on the one hand and the Management on the other. The Court held that since the payment was related to production and had been made in terms of an agreement, the same would constitute wages within the meaning of the Act. The following paragraph is in the regard apposite:
'It cannot be disputed that the production bonus is nothing but remuneration for the additional production which the employees have contributed. Under the agreement the bonus in question is to be paid at the end of each quarter. There is also a provision in the agreement that the employees can claim advance against such bonus and the finding recorded by the Insurance Court shows that every employee has received such advance. The mere term in the agreement that the payment of bonus would be made at the end of the quarter, therefore, does not make the bonus, a payment other than remuneration for the labour put in during the said quarter. Hence the stipulation in the agreement that the payment of the bonus would be made at the end of the quarter is not material for deciding the question whether the payments would be covered by the First part of the definition or not. What the Court has to look into is the nature of the payment. The term production bonus itself shows that it is a payment connected with or relatable to the production over a period. Hence it cannot be a payment other than 'wages' within the meaning of the said definition.'
9. We may at this stage also refer to the decision of the Supreme Court in 'WHIRLPOOL OF INDIA LIMITED v. E.S.I.C. relied upon by Counsel for the appellants. The Supreme Court was in that case examining whether the payments made pursuant to production incentive scheme over and above the normal wages would also constitute wages for purposes of Section 2(22) of the ESI Act. The Corporation had treating the said payment to be wages, raised a demand which was disallowed by the ESI Court holding that since the payment was made quarterly, the same could not constitute wages for purposes of the Act. The Court also held that the payment made by the Management did not fall under the first part of the definition of 'wages' as there was no agreement between the Management and its workers for payment of any such incentive. The payment could not according to the ESI Court be treated to be wages under the third part of the definition as the same was made quarterly ie., at intervals exceeding two months. The Corporation appealed against the said Judgment before the High Court where a learned Single Judge found favour with the points urged by the Corporation and set aside the Order of the ESI Court holding that the production incentive was calculated on the basis of extra work done by the workers in each month and that the actual making of payments was postponed only to avoid contribution under the Act. An appeal filed against the said Judgment also failed forcing the Management to approach the Supreme Court. The Supreme Court while allowing the appeal and setting aside the order passed by the High Court observed that the ESI Act was a social legislation enacted to provide benefits to the employees and had to be construed liberally. It noticed the earlier two decisions rendered by their Lordships in Wellman (Indian) Pvt. Ltd. and Modella Woollens Ltd., cases supra and held that those cases had no application to the case at hand as the said cases related to payments made by the Management pursuant to settlement arrived at between the Management and the workmen. The argument advanced on behalf of the Corporation that payments made by the Management would fall within the first part of the definition of 'wages' as there was an implied contract for payment of the said amount was turned down with the observation that none of the Courts had held the amount paid to the workmen as the amount that was paid or was payable on fulfillment of the terms of the contract of employment. It was also conceded before their Lordships that payments made under the scheme could not be termed as payment made under a settlement as contemplated by Section 2(p) of the Industrial Disputes Act. It was in that background that their Lordships were of the view that the payments made towards production incentive was an additional - remuneration and since the same was paid at intervals exceeding two months, such payments could not constitute 'wages' under the Act.
10. The decision in Whirlpool's case supra does not in our considered opinion overrule the view taken by the Supreme Court in its earlier judgments delivered in Wellman's and Modella's cases supra. The said decision is indubitably inapplicable to cases where payments are made pursuant to settlements or agreements arrived at between the Management on the one hand and the Workmen on the other. Our attention was drawn by Mr. Prabhakar to a Single Bench decision of this Court in ESI CORPORATION v. LAMINA SUSPENSION PRODUCTS PVT. LTD. Where N.S. Veerabhadraiah, J., has taken the view that in the light of the decision of the Supreme Court in Whirlpool's case, payments made even pursuant to settlement arrived at between the Management and the Workmen would not constitute wages. The learned Single Judge appears to have held that the Full Bench decision of this Court in N.G.E.F. LTD. v. DEPUTY REGIONAL DIRECTOR, ESIC, BANGALORE and the decision of the Supreme Court in HARIHAR POLYFIBRES v. THE REGIONAL DIRECTOR, ESI CORPORATION is no longer good law, in the face of the pronouncement of the Supreme Court in Whirlpool's case. We do not however think so. The Full Bench decision of the Court in NGEF's case supra stood approved by the Supreme Court in Modella Woollens Ltd., and in Wellman (India) Pvt. Ltd. cases. The said two decisions as noticed above continue to hold the field and govern cases in which payments are made pursuant to a scheme that is evolved under settlements between the Management and the Workmen. With respect, we wish to say that we have found it difficult to subscribe to the view that the legal position as stated in the earlier decisions of the Supreme Court referred to above and the Full Bench decision of this Court stands reversed by the decision of the Apex Court in Whirlpool's case. The decision in M/s. Lamina Suspension Products Pvt.. Ltd.'s case supra is not in our opinion correctly decided and is accordingly overruled.
11. That beings us to the alternative submission made by Mr. Prabhakar touching upon the interpretation of the terms of the scheme itself. The contention advanced can be better appreciated in the context of Clause -9 of the efficiency scheme formulated under the settlement which reads as under:
'9. It is agreed that the efficiency scheme is based on the existing machinery and the wages (basic + DA) paid as on 1st January 1983. The scheme is liable to be withdrawn and/or modified at the discretion of Management whenever there is any change in machinery or method of production. The management reserves the right to revise the scheme in any manner it deems proper.'
12. It was argued by Mr. Prabhakar that the Management had the absolute discretion to withdraw the scheme at any stage. He urged that the words 'whenever there is any change in machinery or method of production' appearing in Clause -9 qualified the word modified so that it was only for modification of the scheme that a change in machinery or method of production was essential. For a withdrawal of the scheme in toto, the Management had absolute discretion irrespective of whether there was or was no change in machinery or the method of production. We are unable to accept the interpretation suggested by Mr. Prabhakar. The correct and perhaps the only interpretation that can be placed upon the clause extracted above is that the scheme may be withdrawn and/or modified whenever there is any change in machinery or method of production. There is no indication in the language employed in Clause 9 supra to support the view that while the total withdrawal may be permissible at the discretion of the Management even without there being any change in machinery or method or production, for a modification it is essential that there should be such a change. As a matter of fact, the interpretation suggested by Mr. Prabhakar would lead to anomalous results. That is because while for withdrawal which implies the exercise of larger power, no preconditions like change in machinery or method of manufacture may be necessary, for the exercise of a lesser power namely for the modification of the scheme the existence of pre-conditions like change in machinery or method of production is made essential. It is difficult to appreciate how a larger which includes the lesser power also can be available unconditionally but the exercise of a lesser power of modification made subject to the fulfillment of conditions like change in machinery or method of production. We have therefore no hesitation in rejecting the argument that the Efficiency Incentive/Bonus scheme can at the discretion of the Management be withdrawn at any stage. There is no such power in our view reserved for the Management in the instant case. The corollary which Mr. Prabhakar wants this Court to draw from the interpretation suggested by him therefore does not follow.
13. It was lastly contended by Mr. Prabhakar that the matter could be remanded back to the ESI Court to determine the amount of submitted that the amount determined and demanded by the Corporation was not correctly determined and that many of the employees qua whom contributions have been demanded do actually fall outside the prescribed wage limit. We have given our anxious consideration to that submission but find no merit in the same. We say so for two reasons. Firstly, because the appellants have not in the petitions filed by them before the ESI Court disputed the correctness of the demands raised against them on the ground that the same includes contributions qua workmen who fall beyond the prescribed wage limit. If the appellants wished to agitate any such plea, the proper course was to raise the same and invite a finding from the Insurance Court. Secondly because even in the appeal filed before us, no fault is found with the amount of contribution demanded by the Corporation, There is indeed no factual basis even now available for the argument that the amount demanded by the Corporation is for the reason urged by Mr. Prabhakar not illegally recoverable. We do not therefore see any justification to prolong these proceedings by remanding the matter to the Insurance Court thereby prolonging indefinitely the payment of the amounts recoverable from the appellants. In the result, these appeals fail and are hereby dismissed but in the circumstances without any orders as to costs.