The main legal point established in the judgment is that the levy of damages for delayed payment of contribution must be justified and not excessive, and that certain allowances may constitute 'wages' under the Employees' State Insurance Act while others may not.

( 1 ) IN these two appeals, presented under sub-section (2) of Section 82 of the Employees' State Insurance Act, 1948 ('the act' for short), the following substantial questions of law arise for consideration : (1) "whether on the facts and circumstances of the case, the respondent- e. S. I. Corporation, was jutified in imposing damages of fifty per cent, sixty per cent and hundred per cent of the amount of contribution required to be remitted by the appellant to the Corporation, in respect of which there was some delay by the appellant in remitting the same to the Corporation ?" (2) ' "whether the first respondent - e. S. I. Corporation was justified in treating Special Allowance, Mid-day meal allowance and overtime wages as part of 'wages' for the purpose of computing the contribution payable under the provisions of the Act and the scheme framed thereunder?"

( 2 ) THE facts of the case, in brief, are as follow : By an order dated 12-9-1979, the Corporation levied damages on the appellant for delayed payment of contribution. According to the appellant, the delay in the payment of contribution was small and did not merit the levy of damages and a valid explanation for the small delay had been furnished in reply to the show-cause notice issued by the Corporation, but rejecting the explanation, the Corporation proceeded to levy damages upto an extent cf 50 per cent and 60 per cent respectively for two periods and to the maximum extent of hundred per cent for two subsequent periods. Aggrieved by the order, the appellant presented an application under section 75 of the Act before the Employees' Insurance Court, which was numbered as E. S. I. Application No. 12 of 1979. In another proceedings initiated against the appellant, the question for consideration was, whether contribution was payable in respect of ex-gratia payment or special allowance, mid-day meal allowance and over-time wages, paid by the appellant to its workmen. The explanation of the appellant was that these payments did not constitute 'wages' as defined under Section 2 (22) of the Act and therefore could not be taken into account for computing the contribution payable under the Act and the scheme framed thereunder. This contention of the appellant was also negatived by an order dated 15-9-1979. The appellant presented an Application under Section 75 of the Act before the Employees' insurance Court. It was numbered as E. S I. Application No. 16 of 1979. Both the applications were disposed of by a common order dated 11-12-1981. Aggrieved by the same, the appellant has preferred these two appeals.

( 3 ) WITH reference to the first question regarding the levy of damages arising out of E. S. I. Application No. 12 of 1979, the extent of delay on four occasions and the quantum of damages levied are as specified below:

SI. No.

Period

Extent of delay

Quantum of damages

Amount of damages levied Rs.

1.

7-1 78 to 3-2-78

27 days

50%

698-77

2.

8-7-78 to 7-9-78

61 days

60%

748-38

3.

11-11-78 to 27-1-79

77 days

100%

975-00

4.

6-1-79 to 27-1-79

21 days

100%

1372-00

( 4 ) THE learned counsel submitted that the explanation furnished by the appellant was that the delay was bona fide in that, there was no trained employee who had to prepare the contribution card intime and that was the reason for the delay in remitting the contribution, and this explanation was brushed aside and heavy damages were levied.

( 5 ) SECTION 85-B of the Act, which confer on the Corporation the power to recover damages reads :"85-B. POWER TO RECOVER DAMAGES: (1) Where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act, the Corporation may recover from the employer such damages not exceeding the amount of arrears as it may think fit to impose : provided that before recovering such damages, the employer shall be given a reasonable opportunity of being heard. (2) Any damages recoverable under sub-section (1) may be recovered as an arrear of