Even if additional remuneration is paid by the employer to the employee at the will of the employer without any agreement or contractual obligation, it will partake the character of wages under S.2(22) of the ESI Act.

K.A. Mohammed Shafi, J.

The appellant in both these appeals is the same partnership firm. They challenge the

separate orders dated 29.7.1996 passed by the Employees' Insurance Court, Palakkad in I.C. Nos. 74/94 and 77/94 in these appeals. M.F.A. No. 1517/96 is filed challenging the order passed in I.C. No. 74/94 and M.F.A. No. 1537/96 is filed challenging the order passed in I.C. No. 77/94. Since the issues involved in both these appeals are identical, they are heard and disposed of by this common judgment.

2. The respondent - ESI Corporation demanded from the appellant for ESI contribution of Rs. 2607/- on the amount of Rs. 35,947/- which was booked in the account books of the appellant under the head 'productivity incentive' for the period 4/ 90 to 3/92. The appellant challenged that order before the E.I. Court, Alappuzha in I.C. No. 92/93.

3. The respondent ESI Corporation also demanded for ESI contribution of Rs. 3,198 on the amount of Rs. 57.900/-which was booked in the account books under the head 'production incentive bonus' for the period from 4/92 to 12/92. -The appellant challenged that order before the E.I. Court Alappuzha in I.C. No. 34/93.

4. On account of the subsequent redefinition of the territorial jurisdiction of the E.I Courts in the State, those cases were transferred to the E.I. Court, Palakkad and I.C. No. 92/93 was renumbered as I.C. No. 74/94 and I.C. No. 34/93 was renumbered as I.C. No. 77/94 before the E.I. Court, Palakkad.

5. Negative the contention of the appellant that the payments involved in these cases were only presentation or gifts not coming within the definition of 'wages' under the ESI Act and holding that those payments will come within the latter part of the definition of 'wages' in S.2(22) of the E.S.I. Act, the E.I. Court dismissed the application by separate orders of even date. Those orders are under challenge in these appeals.

6. The fact that the appellant is engaged in the business of engine re-building and re-conditioning is not disputed. According to the appellant, the amounts paid by them to all its employees including the Manager involved in these cases are only by way of presentation or gift, though wrongly described as production incentive bonus and productivity incentive in the account books. They also contended that those payments are voluntary payments made by the appellant on the increase in the monthly turn over and it is not on the basis of any settlement or contract of service entered into between the appellant and the employees. They have also contended that this voluntary payment can be withdrawn at any time and does not amount to remuneration or wages within the meaning of S.2(22) of the ESI Act. The respondent contended that the payments involved in these cases cannot be considered as presentation or gift, but they are payments towards production incentive bonus which comes within the ambit of S.2(22) of the ESI Act.

7. The appellant has contended that during the months in which the monthly turnover exceeded Rs.1.25 lakhs every employee including the Manager was paid at the rate of Rs. 100/- each as presentation or gift and no such payment will be made during the months in which the turnover is less than Rs. 1.25 lakhs. They have also contended that a target was fixed on the basis of the income of the previous year in every month and after deducting the total expenses from the monthly turnover and by dividing that figure by the total man days, the resultant figure is multiplied by 26 and if the figure exceeded the target amount 2% will be given as gift to all the employees including the Manager. According to them, the rate may vary from month to month depending upon the turnover and the amount thus paid to all the employees will be the same in a particular month.

8. It is the definite case of the appellant that these payments are only a gesture of goodwill and the same can be withdrawn act any time and there is absolutely no contract or agreement between the ap