( 1 ) THE scope and ambit of the definition of wages as defined in Section 2 (22) of the Employees' State Insurance Act, 1948 ('the act' for short) arises for our consideration in this appeal.

( 2 ) THE facts giving rise to this appeal, briefly stated, are as under: the 1st respondent is a Private Limited Company registered under the Companies Act of 1956. It is a small scale industry situated at Industrial Estate, Shimoga. This company is covered by the provisions of the Employees' State Insurance Act. The management has been paying production incentive to its employees since 1982. It has paid a total production incentive of rs. 3,21,691-25.

( 3 ) ON 22-12-1987, one M. P. Coutiaccounts Officer, Employees' State Insurance Corporation, visited the respondent-factory and conducted a test inspection. He noticed that the Management has paid a sum of Rs. 3,21,691-25 as production incentive to its employees. Hence, he prepared a report as per Ex. Rl and submitted the same to the Corporation. The Corporation issued a show cause notice dated 13-6-1988 to respondent No. 1. The respondent wrote a letter dated 22-8-1988 stating that the so called incentive payments were paid