(1) Whether 'stipend' being disbursed by a Trainer to the Trainee can be categorised as 'wages' within the meaning of Section 2(22) of the Employees' State Insurance Act ('ESI Act' for short)?

(2) Whether amounts being disbursed as 'Performance Allowance' to the employees can be categorised as 'wages' within the meaning of Section 2(22) of the ESI Act?

These are the questions of law coming up for consideration in this appeal.

2. The appellant, M/s Bharath Hotel, D.H. Road, Ernakulam, have been conducting a Training Centre for imparting training for persons to become hotel employees in the field of catering, house keeping, working at the reception etc. They use to give stipend to such trainees. The Employees' State Insurance Corporation ('ESI Corporation' for short) has passed Ext.P5 order under Section 45A of the ESI Act, by which the appellant was directed to pay contribution to the ESI Corporation on the total amount disbursed by way of stipend to such trainees. Further, through Ext.P5 order, they were also directed to pay contribution on the amount being paid as 'performance allowance' also. Initially, the appellant challenged Ext.P5 order before the court below through I.C.No.32/2002. The court below allowed the I.C. by holding that Ext.P5 is unsustainable. Aggrieved by the same, the ESI Corporation has preferred an appeal as Ins. Appeal 37 of 2007 before this Court. This Court found that the ESI Act being a beneficial legislation to the employees, representative of the employees should also have been heard in the matter after impleading them. For such a proper hearing and disposal, the matter was remitted to the court below, after setting aside the order passed by the court below. The matter was renumbered as I.C. No.8/2011 before the court below. The court below, through the impugned judgment, dismissed the I.C. The applicant before the court below has come up in appeal.

3. Heard the learned Senior Counsel Sri.U.K.Ramakrishnan for the appellant and the learned Standing Counsel for the ESI Corporation Sri.T.VAjayakumar.

4. Admittedly, Ext.P5 order is one passed under Section 45A of the ESI Act. The learned Senior Counsel has invited the attention of this Court to Section 2(9) of the ESI Act, which deals with 'employees'. The said provision as it then stood till 20.10.1989, did not contain the inclusive portion 'or any person engaged as apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961). The aforesaid terms were included as an amendment with effect from 20.10.1989 in the said provision. Presently, Section 2(9) of the ESI Act reads:-

"S.2(9). "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and -

(i) who is directly employed by the principal employer, on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or

(ii) who is employed by or through an immediate employer, on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or

(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service;

and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment of any person engaged as apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961)"