The main legal point established in the judgment is that a one-time ex gratia payment made by the employer to its employees pursuant to a settlement would not be considered 'wages' under the Employees' State Insurance Act, 1948, based on the specific clause in the settlement and the requirement for additional remuneration to be paid at intervals.

JUDGMENT- D.K. DESHMUKH, J.:---By this appeal, the Employees' State Insurance Corporation challenges the order dated July 30, 1982 passed by the Employees' Insurance Court, Bombay in Application (E.S.I.) No. 17 of 1976. That application was taken out by the respondents. By the order impugned, the trial Court has declared that the respondent company is not liable to pay contribution on the amount of Rs. 12,95,832.20 paid by them as ex gratia and the appellant Corporation is restrained from recovering contributions on the said amount. The above referred amount was required to be paid by the respondent to its employees pursuant to the memorandum of settlement arrived at between the respondent and the representatives of its employees. There are various terms of this settlement. One of the terms of the settlement is for making payment of some amount ex gratia at one time by the respondent employer to the employees. The trial Court has held that this payment does not amount to wages within the meaning of the Employees' State Insurance Act, 1948, hereinafter referred to as the said Act.

2. The learned Counsel appearing for the appellant Corporation submits that one time ex gratia payment made by the respondents to its employees is covered by the definition of 'wages' as defined in the Act. The learned Counsel submits that one time ex gratia payment made is a remuneration paid in cash to the employees by the respondents in terms of the contract of employment. The learned Counsel submits that the settlement arrived at between the respondents and the representatives of its employees is a contract of employment and as the payment is being made pursuant to that contract, it amounts to payment of wages within the meaning of the Act. The learned Counsel, in support of this submission, relies on a judgment of the Supreme Court in the case of (Harihar Polyfibres v. Regional Director, E.S.I. Corporation)1, A.I.R. 1984 S.C. 1680. The learned Counsel submits that in any case, one time ex-gratia payment made by the respondents to its employees under the settlement could be other additional remuneration paid by the respondents to its employees and therefore, it would amount to wages within the meaning of the Act. The learned Counsel submits that the payment has been made at one time and has not been made at intervals and therefore, would not take it out of the definition of the term 'wages' found in section 2(22) of the Act. The learned Counsel submits that while considering the provisions of section 2(22) of the Act, the Court has to take into consideration that in the first part of the definition, the legislature has used the words 'payment or payments' whereas in the third part, it has used the word payment.

3. The learned Counsel appearing for the respondents, on the other hand, submits that the one time ex gratia payment made pursuant to the settlement made by the respondents will be covered by the first part of the definition 'wages' because there is a clear term incorporated in the settlement that this ex gratia payment shall not form part of wages under any law. The learned Counsel submits that as by contract between the parties, the parties have themselves decided that this ex gratia payment would not amount to wages for the purpose of any law, does not cover by the first part of the definition 'wages'. The learned Counsel further submits that so far as one time ex gratia payment is concerned, it would have been covered by third part of the definition of the term 'wages' if payment had to be made at intervals. If the payment is made at one time and not at intervals, does not cover by the third part of the definition 'wages'.

4. Now, if in the light of these rival submissions the record of the case is perused, it is revealed that the ex gratia payment was made by the respondents to its employees pursuant to settlement arrived at between the respondents and the representatives of its employees. That payment was made at one time by the re

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