Judgment:
ORDER
1. This batch of writ appeals have been respectively preferred against the order of the learned single Judge in Writ Petition Nos. 12580, 18542, 19307 of 1990, 13292 of 1991 and 11443 of 1992.
2. In this batch of writ petitions, a common contention has been advanced by the appellants who challenge the orders of the learned single Judge dated November 23, 1998. The point that arises for consideration is:
'Whether certain payments made to the employees by the appellant-employers for the period from January 1, 1998 to September 30, 1998 pursuant to a concluded settlement entered between employers and various unions represent the basic wages within the meaning and for the purpose of Employees Provident Funds and Miscellaneous Provisions Act, 1952.'
3. In other words, the payment agreed to be made, and made in terms of the concluded settlement for the period January 1, 1988 to September 30, 1989 forms part of the wages as defined in Section 2(b) of the Employees' Provident Fund and Miscellaneous Provisions Act, 1953, hereinafter referred to as the EPF Act, and what is the interpretation to be placed on Clause 14 of the settlement concluded on September 28, 1989. There is no controversy with respect to the factual matrix and it is not necessary to set out the factual aspects leading to the present appeal. Further, the learned Judge had set out the facts succintly in his order dated November 23, 1998 passed in the batch of writ petitions and it is not necessary to repeat.
4. Before considering the point, it is essential to set out the material clause in the concluded settlement, which requires consideration vis-a-vis. Section 2(b) of the EPF Act.
'In the interest of maintaining industrial peace and harmony the Commissioner of Labour gave his suggestions which were accepted by both the parties. Accordingly the following terms of settlement have been arrived at in conciliation of September 28, 1989.
Terms of Settlement: (1) It is agreed by the parties to implement the wage scales including Fixed Allowance as recommended by the III Wage Board for Sugar Industry as per Annexure A to this Settlement.
(2) It is agreed that confirmed workmen on rolls as on January 1, 1989 will be granted an increase in wages per month as below:
Group I: Workmen in the categories of Unskilled and Semiskilled - Rs. 115 p.m.
Group II: Workmen in the categories of Skilled A, Skilled B, Clerical III and Clerical IV - Rs. 120 p.m.
Group III: Workmen in the Categories of Highly skilled, Supervisory-C and Clerical I and Clerical II - Rs. 125 p.m.
and
Group IV. Workmen in the categories of Supervisory A and B - Rs. 130 p.m.
The increase so granted under this clause shall be added to the total wages of the workmen as on October 1, 1989 and fitted in the revised scales of wages.
The total wages drawn by the workmen as on October 1, 1989 including Basic, G.D.C., V.D.A., upto 744 points of CPI, Special Allowance, Interim Relief together with the increase in wages granted under this term will be fixed at the appropriate stage of the revised scales of pay of the corresponding grades, after deducting Fixed Allowance, if any, as per the scales agreed to under Clause I above. Illustrations as given in Annexure B. The revised scales of wages agreed to be implemented under this settlement would stand equated to the neutralised at 744 points of the All India Consumer Price Index (1960).
In fixing the workmen in the revised wage scales, the categorisation as recommended by the III Wage Board for Sugar Industry will be adopted. However, in case, any individual or category of workmen are already in a higher grade wages, such workmen will be fitted in the revised scales corresponding to such scales.
(3) It is agreed that the existing rate of V.D.A. of 1.65 per point over and above 744 points of the All India Consumer Price Index will be continued upto September 30, 1989 (818 points of CPI). This rate of V.D.A. shall be increased to Rs. 1.85 per point, over and above the 818 points of All India Consumer Price Index prevailing as on October 1, 1989.
(4) It is agreed that the benefit of increase in wages as agreed under Clause 2 of this settlement for the period from January 1, 1988 to September 30, 1989 will be calculated and paid as a lump sum in full to the regular/permanent workmen.
Example Unskilled Rs. 2,425.00 Supervisory Rs. 2,730.00
In case of unauthorised absence on loss of wages extending beyond one month, the amount will be paid proportionately. In case of seasonal workers the amount for the period from January 1, 1988 to September 30, 1989 will be arrived at after taking into account the actual season or off-season. This will be paid on or before November 15, 1989.'
5. Mr. A.L. Somayaji, learned senior counsel appearing for the appellants with ingenuity and attractively raised the contention that the said payment made in terms of the above stipulations set out in the concluded contract is a one-time and lump-sum payment and it will neither fall under the purview of basis wages nor it will partake the character. Hence, the appellants are not liable to contribute under Section 6 of the Employees' Provident Funds and Miscellaneous Provisions Act. Therefore, no contributions are liable to be paid under Section 6 of the Act. The learned single Judge had considered this contention elaborately and rejected the same. Hence, the present appeal.
6. It is but relevant to refer to the definition of the expression 'basic wages' as defined in Section 2(b) of the Employees Provident Funds and Miscellaneous Provisions Act. Section 2(b) reads thus:
'(b) 'basic wages' means all emoluments which are earned by an employee while on duty or (on leave or on holidays with wages in either case) in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include (i) the cash value of any food concessions; (ii) any dearness allowance (that is to say, all cash payments whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, over-time allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment.
(iii) any presents made by the employer.'
7. The expression 'basic wages' as defined in Employees' Provident Funds and Miscellaneous Provisions Act is identical to the definition of the term 'wages' as defined under Section 2(22) of the Employees' State Insurance Act, 1948. Though Mr. Somayaji submitted that there is a difference between the two definition clauses, but it was subsequently accepted on the instructions of the learned senior counsel, by Mr. Ravindran, that there is no difference. In other words, the interpretation placed on the expression 'wages' or 'basic wages' as defined under the two enactments will have the same meaning, purport or purview or object and the pronouncement of the Apex Court considering the expression 'wages' as appearing in E.S.I. Act could be relied upon for the purpose of the present case.
8. The Employees' Provident Funds and Miscellaneous Provisions Act is a beneficial piece of legislation and it could be described as a social security statute. The object of the enactment being to ensure the employees better future on his retirement and for his dependants on his death. The provisions of the Act being beneficial to ensure health and other benefits enumerated under the Act of the employees, the expression basic wages has to receive an interpretation which would achieve the object of the enactment. The enactment being a beneficial piece of legislation, intended to provide benefits to employees, and provisions of such beneficial legislation has to be considered in its proper perspective and context so as to fructify the legislative intentions underlying the enactment. Even if two views are possible, in such measure, that view which furthers the legislative intention should be preferred to the one which would frustrate it.
9. In Buckingham and Carnatic Co. v. Venkatiah, : GAJENDRAGADKAR, J. speaking for a three Judges Bench of the Apex Court, while considering the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act and accepting the contention of late Mr. Dolia, held thus:
'It is a piece of social legislation intended to confer specified benefits on workmen to whom it applies, and so, it would be inappropriate to attempt to construe the relevant provisions in a technical or a narrow sense. This position cannot be disputed. But in dealing with the plea raised by Mr. Dolia that the Section should be liberally construed. We cannot overlook the fact that liberal construction must ultimately flow from the words used in the Section. If the words used in the Section are capable of two constructions one of which is shown patently to assist the achievement of the object of the Act, Courts would be justified in preferring that construction to the other which may not be able to further the object of the Act'
10. The expression wages as defined in the Employees State Insurance Act was the subject matter of consideration before a three Judges Bench of the Apex Court in Whirlpool of India Ltd. v. Employees' State Insurance Corporation : SABHARWAL, J., speaking for the Bench, held thus at p. 1103 of LLJ.
'6. Under the first part of Section 2(22), all the remuneration paid or payable in cash to an employee, if the terms of the contract of employment express or implied, were fulfilled would be 'wages'. Under this part neither the actual payment nor when the payment is made is of any relevance. The last part of Section 2(22) relates to payment of additional remuneration. The additional remuneration, if any, paid at intervals not exceeding two months and not falling in (a) to (d) would also be wages within the meaning of the term as defined. Under this part of the definition, there has to be payment and not only payability and the payment has to be at intervals not exceeding two months.'
11. In Wellman (India) Pvt. Ltd. v. Employees' State Insurance Corporation : which has been followed by the later three Judges Bench in Whirlpool of India Ltd. v. Employees' State Insurance Corporation (supra) after referring to Bridge & Roof Co. India, Ltd. v. Union of India, : which case arose out of the Employees' Provident Funds and Miscellaneous Provisions Act, while considering the issue whether attendance bonus payable to the employees under the terms of a settlement will fall within the definition of expression Wages, held thus at p.550 of LLJ :
'15. 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 contract of employment, express or implied, were fulfilled. It is, therefore, really not necessary for us to consider whether it will be 'other additional remuneration' and if so whether further it will be excluded from the definition of 'wages' because it is not payable within a period of two months from the date it is due. However, if it is necessary to express our view on the point, according to us, the expression 'other additional remuneration, if any paid..' implies that the said remuneration is not payable under any contract of employment, express or implied. This is so because while the first part of the definition refers to remuneration under the contract of employment, the second part does not refer to remuneration under any such contract. Secondly, the definition is inclusive and includes only such payments outside the contract as are mentioned in its second part and none other. Thirdly, the expression 'if any, paid after the words 'other additional remuneration' will be inconsistent if the remuneration is payable under the contract of employment since such payment is not dependent on the will of the employer but on the fulfilment of the terms of the contract. Lastly, the second part of the definition includes only such contractual payments as are specifically mentioned therein and the exclusionary part does not include the attendance bonus like the present which is payable as stated above under a contract. Hence, the expression 'other additional remuneration, if any, paid' not only does not refer to remuneration payable under any contract but refers to such remuneration which is payable at the will of the employer. Every remuneration that is payable under the contract would therefore, fall under the first part of the definition.'
12. While considering the explanation to Section 2(b)(ii) of the Employees' Provident Funds and Miscellaneous Provisions Act, the Apex Court in Daily Partap v. Regional Provident Fund Commissioner, : held that in order to be excluded from Basic Wages, the payment under the Scheme must have direct nexus linkage with the amount of extra output. In the said case, the Apex Court examined the question whether the employers were liable to remit under Section 6 of the Employees' Provident Funds and Miscellaneous Provisions Act, contribution on the amounts paid by them to the employees concerned under the production bonus scheme. In that context, it was held that where the scheme of production bonus is in nexus or against the extra production offered by the workmen, and that the scheme in substance not strictly linked up with extra production nor it is commensurate with the extra production workmen wise, or even establishment wise, it was held that the term basic wages as found under Section 2(b) of Employees' Provident Funds and Miscellaneous Provisions Act, will squarely get attracted and the excepted category (ii) as envisaged by the definition Section 2(b) would not be available for being invoked by the appellants.
13. An identical issue which arose in the present batch, was the subject matter of consideration before the Apex Court in Prantiya Vidyut Mandal Mazdoor Federation v. Rajasthan State Electricity Board : Their Lordships of the Apex Court held thus at pp. 225:
'When the original emoluments earned by an employee were basic wages under the Fund Act, the 'substituted emoluments as a result of the award are also to regarded as basic wages. When an award gives revised pay scales the employees become entitled to the revised emoluments and where the said revision is with retrospective effect, the arrears paid to the employees, as a consequence, are the emoluments earned by them while on duty.
The expression 'basic wages' for the time being payable to each of the employees under Section 6 of the Act means the 'basic wages' at the relevant time. When theexisting pay scales are revised with effectfrom back date then the revised wagesposterior to that date are the 'basic wagesfor the time being payable'. The workmenhave inherent right to collective bargainingunder the Act. The demands raised by theworkmen through their unions are decidedby conciliation, settlement or adjudicationunder the Act. These are time- consumingproceedings. When ultimately the dispute issettled/decided in workers favour theaccrued benefit may be made available tothem from back date. This is what hashappened in the present case. The referenceto the arbitration, the acceptance of theaward by the parties and the resultant wageincrease with retrospective effect, are thedirect consequences of the settlementbetween the workmen and the Board.Revision of wage structure, as a result of anaward under the Act, has to be taken as apart of the contract of employment in thecontext of the Fund Act. Under thecircumstances it would be in conformitywith the object of the Fund Act, which is asocial welfare legislation, to hold that therevised pay scales have become part of thecontract of employment with effect fromApril 1, 1980.'
14. In the light of the above pronouncements, the contention advanced in these appeals is to be considered. It is admitted and there is no dispute that the settlement was duly implemented and the employees covered under the agreement were given the revised scale of wages with effect from October 1, 1989. It is also admitted that the benefit of increase in wages as agreed under Clause 2 of the settlement for the period from January 1, 1988 to September 30, 1989 will be calculated and paid as a lump sum in full to the regular/ permanent workers. It is also further admitted that the increase as granted under the settlement shall be added to the total wages of the workmen as on October 1, 1989 and fitted in the revised scales of wages for the next placement of grade or annual increment. The further clause concluded being the total wages drawn by the workmen as on October 1, 1989 including Basic, G.D.A., V.D.A. upto 744 points of CPI, Special Allowance, Interim Relief together with increase in wages granted under this term will be fixed at the proper stage of the revised scales of pay to the corresponding credits after deducting fixed allowance, if any, as per the scales agreed as per Clause I above.
15. In terms of Clause 5, the increase in wages will be calculated and paid as a lump sum and such payment shall be made on or before November 15, 1989. A conjoint reading of the above stipulations would show that whatever that is being paid is impressed with the character of basic wages as defined under Section 2(b) of the Employees' Provident Funds and Miscellaneous Provisions Act. The sum agreed to be paid in terms of the concluded settlement, we have no hesitation to hold that it is part of the emoluments which constitute basic wages.
16. Mr. Somayaji, learned senior counsel pointed out that persons who have already retired and are not in employment on the date of conclusion of the settlement were not eligible to get the relief and this aspect would give a clue that what is being paid is not emoluments or basic wages but an one time payment which cannot be reckoned for the purpose of contribution under Section 6. This contention, though attractive, overlooks many material aspects not only the stipulations in the agreement, but also the definition of the expression basic wages as defined under the Act and as held by the Apex Court, in the above cited judgments. The view taken by the learned single Judge and reasons assigned deserves to be sustained.
17. Further, on facts, the terms of the concluded settlement in this case, makes it explicitly clear that it is part of the emoluments or basic wages which is payable to every workmen irrespective of and without reference to production or other criteria warranting a special payment as is done in various factories. By merely excluding the persons who are not in service on the crucial date, the parties to the agreement have merely classified themselves as one class so that they will get the benefits of the concluded settlement, others not being parties will not be entitled to the benefit of the concluded settlement. If others initiate action they will be entitled to claim the benefit of said revision or benefit and on the principle of equal pay for equal work they will get the same quantum. Hence, we cannot appreciate this as a distinction of any substance whatever.
18. Whatever paid under Clause 14 of the concluded settlement definitely retains the character of basic wages in the hands of the recipient workmen who received the wages. When once the quantum is agreed and stipulated, the fashion or manner of payment recedes to the back-ground.
19. We hold that it cannot be stated that what is being paid is a lump sum or ad hoc one time payment. As pointed out above, it is quite plain, it was never intended and never envisaged and never laid down so. In order to test the contention, it is necessary to consider what the position would have been if this contention is to be upheld, it will defeat the statutory provision and result in denial of social security measure. In this statute there is no such circumstances to cut down the meaning of the words 'basic wages' so as to exclude the payment in question from being assessed for contribution.
20. We agree with the view taken by the learned single Judge on a detailed consideration hold that the employees who have put in their capital by way of human capital and earned their wages during the particular period and therefore the said payment is not only relevant but also it forms part of the basic wages. In that view of the matter, the learned single Judge had affirmed the action taken by the respondent authorities. We think that the learned judge came to the right conclusion.
21. There is no other controversy about the other portion of the payments made under the settlement and therefore it is unnecessary to go into that aspect of the matter.
22. In the light of the above pronouncement of the Apex Court in Prantiya Vidhyut Mandal Mazdoor Federation v. Rajasthan State Electricity Board, (supra) as well as the pronouncement of the Apex Court rendered with reference to the ESI Act, it is not necessary to refer to any other judgments of the Apex Court or other High Courts.
23. In the light of the above discussions, while accepting and affirming the reasons assigned by the learned single Judge and following the judgment of the Apex Court in Prantiya Vidhyut Mandalal Mazdoor Federation v. Rajashan State Electricity Board, (supra), we hold that there are no merits in these writ appeals. We affirm the conclusions of the learned single Judge that what is agreed to be paid and actually received in terms of the settlement is basic wages and it attracts contribution under Section 6 of the Act.
24. In the result, the above writ appeals fail and the same are dismissed. Consequently, connected C.M.Ps. are also dismissed. The parties shall bear their respective costs throughout.