Regional Director, E.S.i. Corporation Vs. P.P. Thomas and ors. - Court Judgment

Excerpt:
labour and industrial - wages - employees' state insurance act and sections 2 (23) of employees' state insurance (amendment) act, 1984 - method of calculation of wages in dispute - instructions contained in circulars and notifications considered - in case of piece rated but monthly paid employees their total wages in first month of contribution period be criterion for determining status - where contribution period does not start on first day of calendar month total earning during period of 30 days from beginning of contribution period will be basis for determining monthly earning. - contempt of courts act, 1971 -- sections 20 & 2(b); [j.b. koshy, a.k. basheer & k.p. balachandran, jj] civil contempt limitation under section 20 held, aggrieved party should file an application within one year of date of contempt. date of application will be considered as date on which contempt proceedings were initiated. where the application was filed within one month from the date of contempt and the court delayed posting of case for more than four years for no fault of the petitioner, the maxim actus curiae neminem gravabit applies. petition is not barred by limitation. - the learned counsel for the appellant further submitted that the corporation has given clear in-structions in annexure-b circular dated november 27, 1985 as to how the notional wages of a piece-rated worker have to be calculated .the learned counsel appearing for the respondents in both the cases submitted that the ;insurance court was perfectly justified in taking the view that since the employees concerned in these cases are monthly rated employees, their total wages in the first month of the contribution period shall be the criterion for determining their status and that if the contribution perioddoes not start on the first day of a calendarmonth, the total earning during a period of 30days from the beginning of the contribution period will be the basis for determining themonthly earning of an employee and also in issuing a direction to the appellant to examinewhether during the period in question the employees concerned can be brought under coverage or not. it is also observed that concept of calculation of notional wages has been withdrawn except in the case of category 'a'.7. in the light of the instructions contained in the various circulars mentioned above, we are of the view that the conclusion reached by the insurance court that in the case of piece rated but monthly paid employees their total wages in the first month of the contribution period shall be the criterion for determining their status and that if the contribution period does not start on the first day of a calendar month, total earning during a period of 30 days from the beginning of the contribution period will be the basis for determining the monthly earning of an employee, is perfectly justified and we do not find any reason to interfere with the said finding and the conclusion reached by the insurance court.sivarajan, j.1. both these appeals are filed by the regional director, e.s.i. corporation, trichur against the common judgment of the employees' insurance court, alleppey in i.c.nos. 66 of 1986 and 71 of 1986. the respondents -applicants in both the cases- are different. but, since in both these cases a common question is involved both these cases were heard together and disposed of by the insurance court by a common judgment. 2. respondents 1 and 2 in the appeal . m.f.a.no. 575 of 1987 who are the applicants in i.c. no. 66 of 1986 are two of the employees of the third respondent - madura coats lim- ited. koratty. the respondent in m.f.a.no. 584 of 1987 is the applicant in i.c.no. 71 of 1986 who is the employer. the issue involved in these cases is as to whether the method of calculation of notional wages of piece-rated workers in a month by dividing the total wages thus received in a particular wage period by the number of days worked and then multiplying that average daily wages by 26 devised by the employer is legal and justifiable. according to the appellant, the correct method of calculation of notional wages of a piece-rated worker for deciding coverage under section 2(9) of the employees' state insurance act which is being followed throughout india is to divide the; amount of wages paid/payable during a wage period by number of days for which wages paid/payable and multiply it by the number of days in that month. the insurance court, on a consideration of the matter, found that both; these methods are incorrect and directed that the total wages in the first month of the contribution period shall be the criterion for calculating the wages of the employees. it is against this judgment of the insurance court that the e.s.i corporation has come up in appeals before this court.3. according to the learned counsel appearing for the appellant, coverage of the worker under section 2(9) of the e.s.i. act is to be determined with reference to his wages in a month for which only the number of days in the calendar month in which the wage period falls is relevant. the learned counsel for the appellant also submitted that it is the admitted case of the employer and the employees that they are piece-rated employees and that they are paid salaries for the month calculating the sum total of daily wages, but the insurance court has stated that the employees in these cases are monthly rated employees. this, according to the appellant, has resulted in the erroneous calculation of the wages. it is further submitted by the learned counsel for the appellant that the first schedule of the e.s.i. act is applicable only for the purpose of finding out the average daily wages of time rated employees or employees employed on any other basis for the purpose of section 42 of the e.s.i. act and that it is not necessary to look into the above schedule to decide coverage under section 2(9) of the e.s.i. act. the learned counsel for the appellant further submitted that the corporation has given clear in-structions in annexure-b circular dated november 27, 1985 as to how the notional wages of a piece-rated worker have to be calculated . the learned counsel appearing for the respondents in both the cases submitted that the ; insurance court was perfectly justified in taking the view that since the employees concerned in these cases are monthly rated employees, their total wages in the first month of the contribution period shall be the criterion for determining their status and that if the contribution perioddoes not start on the first day of a calendarmonth, the total earning during a period of 30days from the beginning of the contribution period will be the basis for determining themonthly earning of an employee and also in issuing a direction to the appellant to examinewhether during the period in question the employees concerned can be brought under coverage or not.4. we have considered the matter. as already stated, the question involved here is relating to the computation of wages for the purpose of coverage of an employee under section 2(9) . of the e.s.i. act. relevant portion of section 2(9) of the e.s.i. act re ads as follows:-'section 2(9) 'employee' means any person employed for wages in or in connection with the work of a factory or establishment to which this act applies and- (i)..... (ii)..... (iii)..... and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of the factory or establishment; but does not include- (a)..... (b) any person so employed whose wages (excluding remuneration for overtime work) exceed one thousand six hundred rupees a month. provided that an employee whose wages (excluding remuneration for overtime work) exceed one thousand six hundred rupees a month at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end ofthat period'. after the amendment of the act, 1984, 'wage period' is defined. section 2(23) of the act defines 'wageperiod' as follows:-' 'wage period' in relation to an employee means the period in respect of which wages are ordinarily payable to him whether in terms of the contracts of employment, express or implied or otherwise'as per clause (2) of the first schedule of the act, the average daily wages has to be determined in the following manner: -'(2) the average daily wages shall be- (a) in respect of an employee who is employed on time-rate basis, the amount of wages which would have been payable to him for the complete wage period had he worked on all the working days in that wage period, divided by 26 if he is monthly rated, 13 if he is fortnightly rated, 6 if he is weekly rated and 1 if he is daily rated; (b) in respect of an employee employed on any other basis, the amount of wages earned during the first complete wage period in the contribution period divided by the number of days in full or part for which he worked for wages in that wage period; provided that where an employee receives wages without working on any day during such wage period, he shall be deemed to have worked for 26, 13,6 or 1 days or day if the wage period be a month, a fortnight, week or a day respectively.' 5. as per the definition of 'employees,' once the wages paid to an employee exceeds rs. 1,600/- during the first wage period of a , contribution period, he will go out of the coverage. the insurance court has found that admittedly in these cases the employees concerned are monthly paid employees although they are piece-rated employees and therefore, their first wage period is the first month of the contribution period. the definition further provides that even if an employee is drawing more than rs. 1,600/-in a wage period subsequent to the first wage period, that does not change his status and he continues to be a covered employee till the end of that contribution period. as per clause 2 of the first schedule providing guidelines regarding the manner in which average daily wage of a monthly paid employee is to be determined and also regarding the time-rated employee, it is provided that average daily wage . shall be the total wages earned during the wage period divided by 26 if he is monthly rated, divided by 13 if he is fortnightly rated and divided by 6 if he is weekly rated. in the case of employees employed other than on time -rated basis, the average daily wages will be the amount of wages earned during the first complete wage period of the contribution period divided by number of days in full or part for which he worked for wages in that wage period. according to the said clause, calculation of average daily wages in so far as the piece rated employee is simply by way of arithmetical calculation. that is, total wages earned in the first wage period (in the case of monthly paid employee) divided by the total number of days he worked in the wage period. in all these cases, it is seen that the actual wages earned during a wage period is relevant and not any assumed wages. if the total earnings in the first wage period in so far as the monthly rated employee exceed more than rs. 1,600/-such employee goes out of coverage and it is unnecessary to divide the total earnings during the first wage period with the number of days he worked and then multiply it by 30 or 31. the insurance court has also referred to the definition of wages given in section 2(22) of the act as per which all kinds of remunerations paid or payable will come under the definition of wages except those items which are covered in sub-clauses (a) to(d) thereof. the insurance court thereafter observed that since the employees concerned in these cases are monthly rated employees, their total wages in the first month of the contribution period shall be the criterion for determining their status and that if the contribution period does not start on the first day of a calendar month, total earning during a period of 30 days from the beginning of the contribution period will be the basis for determining the monthly earning of an employee and further observed that any figure got by multiplication of average daily wages with 30 will only be an imaginary figure.6. the learned counsel appearing for the appellant has placed before the court the circular no. p. 11/14/12/88-ins.iv dated august 23, 1985 (instruction no. 11/85) issued by the corporation regarding the computation of wage for purposes of coverage under section 2(9) of the e.s.i.act. circular np.54.p. 11/14/84-inspn. dated march 27, 1991 issued by the ker-ala circle of the corporation forwarding a copy of the headquarter's letter dated march 14, 1991 and also copy of communication dated january 14/17, 1991, memorandum dated march 10, 1992 and also the latest circular dated january 1, 1997 containing instruction no. 1/97. in the memorandum dated august 23, 1985 it is provided that in the case of time rated employees where an employee is monthly rated the amount of wages (excluding remuneration for over-time) fixed by the employer may be reckoned as the wages for a month for the purpose of coverage under the e.s.i.act. in the memorandum no. p. 11/14/41/3/90-ins. iv dated august 2, 1991 it is stated that the issue with regard to computation of wages in respect of other categories of time-rated (daily rated but monthly paid) workers has been re-examined and it has been decided that the coverage of such categories of workers who are daily rated but monthly paid may be decided by taking the total wages paid at the end of the month. it is further made clear that this decision would not be applicable to the workers who are monthly rated and paid monthly also. this clarification is seen issued with reference to the office memorandum dated august 23, 1985 and clarifications dated october 23, 1990 and march 14, 1991. the corporation has issued instruction no. 1/97 dated january 1, 1997 wherein it is stated that inspite of the issuance of clear instruction in the memorandum dated august 2, 1991 still doubts were entertained regarding the application of the said instruction in the right spirit and the corporation reiterated in the said instruction that in respect of monthly rated employees the amount of wages (excluding remuneration for overtime) fixed by the employer as monthly rate be reckoned as the wages for a month and that in the case of other category of time rated and piece rated employees (including badli workers engaged against category (a) above) the amount of total wages paid/payable (excluding overtime) at the end of the month may be reckoned as wages for a month. it is also observed that concept of calculation of notional wages has been withdrawn except in the case of category 'a'.7. in the light of the instructions contained in the various circulars mentioned above, we are of the view that the conclusion reached by the insurance court that in the case of piece rated but monthly paid employees their total wages in the first month of the contribution period shall be the criterion for determining their status and that if the contribution period does not start on the first day of a calendar month, total earning during a period of 30 days from the beginning of the contribution period will be the basis for determining the monthly earning of an employee, is perfectly justified and we do not find any reason to interfere with the said finding and the conclusion reached by the insurance court.there is no merit in the appeals. the appeals are accordingly dismissed. in the circumstances of the case, there will be no order as to costs.