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2018 Supreme(Guj) 991
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
J.B. PARDIWALA, J.
Shakti Sizing Industries Limited - Appellant
Versus
Regional Director - Respondent
First Appeal No. 3817 of 2017
Decided On : 30-07-2018
Harshad K Patel, Adv., Sachin D Vasavada, Adv.
Headnote:
Employees State Insurance Act, 1948 - Section 82, 2(22), 45(A), 45(C), 45(I), and 75 - Service - Appellant filed its reply, but did not deem fit to avail the opportunity of hearing or produced any documentary evidence to justify its action of not depositing the contribution on the unpaid wages towards the office salary and service charges - It also appears that the appellant failed to remain present before the authorized officer of the corporation at the time of hearing of the proceedings - Held, In Courts view the High Court has gone completely wrong in concluding that by virtue of the award it ceases to be wages - As stated above, the Tribunal has not applied its mind as to whether or not the payments were wages - All that the Tribunal did was to give its imprimatur to a compromise between the parties. Merely because the parties in their compromise chose to term the payments as "ex gratia payments" does not mean that those payments cease to be wages if they were otherwise wages - As stated above, they were wages at the time that they were paid - They did not cease to be wages after the award merely because the terms of compromise termed them as "ex gratia payments"- Court is therefore unable to accept the reasoning of the judgments of the High Court - Having regard to the position of law, referred to above, and the findings recorded by the ESI Court, noted above, Court do not find any infirmity in the impugned order. No substantial question of law is involved in this first appeal - Appeal dismissed. (Para 8)
J.B. PARDIWALA, J.
1. This first appeal under section 82 of the Employees' State Insurance Act, 1948 is at the instance of the original applicant before the ESI Court and is directed against the judgment and order dated 29th August, 2016 passed by the ESI Court in the ESI Application No.27 of 2003 filed by the appellant herein under section 75 of the ESI Act, 1948.
2. It appears from the materials on record that in January, 2000, an officer of the respondent-corporation visited the premises of the appellant and verified the Muster Roll and Ledgers for the period between April, 1995 and March, 2000 and found that the appellant had paid wages to its workers/employees under the head of ((1)Office Salary, (2) Ex-Gratia, (3) Leave Travel Concession (LTC), and (4) Service Charges. However, the ESI contribution was not deducted and deposited though it falls within the definition of the term "wages" paid to the workers. The case of the Corporation is that although the amount paid to the employees/workers do fall within the definition of the term "wages" as defined under section 2(22) of the ESI Act, yet the appellant herein, being the employer, by misinterpreting the law, failed to deposit the contribution to the tune of Rs. 85,121/- with the Corporation.
3. On 4.12.2001, the ESI Corporation initiated proceedings under section 45(A) by issuing C-18 notice, i.e., the show-cause notice to the employer and sought an explanation with regard to failure to deposit the ESI contribution on the unpaid amount of wages towards (1) Office Salary, (2) Ex-Gratia, (3) Leave Travel Concession (LTC), and (4) Service Charges.
4. The appellant herein was given various opportunities of hearing before passing the order under section 45(A) of the Act. The appellant filed its reply dated 23rd September, 2002, but did not deem fit to avail the opportunity of hearing or produced any documentary evidence to justify its action of not depositing the contribution on the unpaid wages towards the office salary and service charges. It also appears that the appellant failed to remain present before the authorized officer of the corporation at the time of hearing of the proceedings under section 45(A) of the ESI Act.
5. In January, 2003, as the appellant failed to remain present on the dates of the hearing, the authorized officer proceeded to initiate the proceedings on the basis of the material and the reply available on record.
6. It appears that the authorized officer, having regard to the reply of the Corporation about the payment made towards Ex-Gratia and Leave Travel Concession (LTC), dropped the proceedings of recovery of contribution. However, the authorized officer of the Corporation proceeded to pass an order to recover the contribution on the amount paid towards the office salary and the service charges being the wages under section 2(22) of the ESI Act. While passing the order under section 45(A), the authority observed as under; "Employee vide his letter dated 16.09.2002 requested to grant sometime and considering his request he was allowed to produce documentary evidence in support of his contentions on 23.09.2002. Shri. K.N. Patel, Partner of the Factory visited the office on 23.09.2002 along with the letter dated 23.09.2002, but no records were produced by him. He requested to grant time for a week and considering his request the next date was fixed as 8.10.2002. But none appeared on 8.10.2002 along with documentary evidences.
It is seen that ample opportunities have been given to the employer but has failed to produce documentary evidence in support of his contest. However, on the basis of the copy of ledger regarding Ex-gratia and L.T.C the contention of the employer is upheld, & I determine that contribution is not payable on these two amount i.e, Rs. 77,321 and 43,000/-"
7. The Corporation passed three separate speaking orders under section 45(A) of the Act for the years 1995-97, 1998-99 and 1999-2000. As the appellant failed to comply with those
