Voluntary payments by the employer, which can be withdrawn or varied at will, do not constitute 'wages' as defined under the Employees' State Insurance Act, 1948.

( 1 ) THIS is an apeal under S. 82 (2) of the Employees' State Insurance Act, 1948 (hereinafter called 'the Act') by the Regional Director, Employeeg state Insurance Corporation, Bangalore, against the order of the Employees state Insurance Court, Harihar at Bangalore dt. 19-2-1973 made in esia-3 of 72, allowing the application of the Mysore Kirloskar Ltd. Respondent (hereinafter called 'the-Company') and declaring that the incentive payments made by the Company to its employees under the incentive scheme are not 'wages' as defined under the Act and that ESI contributions are not to be levied on such payments.

( 2 ) ESI Scheme was applied to the different units of the Company in different years. The Company has been collecting the contributions from its employees on the wages payable under the terms of employment and crediting the same to the ESI Corporation together with the employer's contribution. Disputes arose between the Corporation and the Company on the Company making contributions on the incentive payment also, the the incentive bonus paid to its employees with effect from 1-11-1971. Since the appellant over-ruled the objections of the Company and insisted on the Company making contributions on the incentive payment also, the company filed an application before the Employees' Insurance Court at harihar, for a declaration to the effect that 'payments made as incentive payments by the applicant Company on its own voluntary scheme cannot be considered as wages and that no ESI contribution is payable either by the employer or by the employees'.

( 3 ) THE appellant contested the said application and contended that the incentive payments coma within the definition of the word 'wages' contained in section 2 (22) of the Act. The learned Presiding Judge of the ESI Court relying on conditions 8 and 9 of the Incentive Scheme (copy of which is marked as Ext. A-19) came to the conclusion that the employees would be entitled to the incentive payment if their production goes up above a minimum target and the employer has a right to withdraw the Scheme or revise its conditions. Therefore the learned Judge held that the incentive payment paid by the employer was not in pursuance of the terms of employment, express or implied, and consequently the said payment cannot be termed as 'wages' under the Act.

( 4 ) SRI Eanganna learned Counsel for the appellant conceded before us that the incentive payments made by the Company in the instant case is in no way different from the payments made under the Liana Scheme by m/s. Braithwaite and Co. (India) Ltd. which came up for decision before the Supreme Court in Braithwaite and Co. v. ESI Corpn. , AIR. 1968 SC. 413. But the learned counsel argued that what the Supreme Court decided in Braithwaite's case (1) was that payments under the Inams Scheme did not fall within the first part of the definition of the word 'wages' in S. 2 (22) of the Act and that the Supreme Court has expressly stated that they have confined their decision to the interpretation of the first part of the definition of the term 'wages'. While conceding that the incentive payments under the incenlive Scheme in the instance case does not fall within the first part of the definition of the term 'wages', the learned Counsel urged that the payments fall within the second part of the definition, viz. , 'other additional remuneration, if any, paid at intervals not exceeding two months'. The term 'wages' has been defined thus in Section 2 (22) of the Act :" '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 months, but does not include- (The second part of the definition relied on by the learned Counsel for the