The main legal point established in the judgment is that the definition of 'wages' in Section 2(s) of the Payment of Gratuity Act, 1972, includes all emoluments earned by an employee and paid in cash, and excludes only specific types of allowances.

JUDGMENT :

K.A. Abdul Gafoor, J.—All these cases, except O.P. No. 5547 of 1993, are at the instance of the employer. Few are appeals and few are Original Petitions. All these cases, except O.P.Nos. 13176/1996 and 13177/1996, relate to the question of calculation of wages for the purpose of payment of gratuity to Supervisors, whereas, the said two Original petitions relate to the same issue with regard to the payment of gratuity to tappers, employed in the rubber estate.

2. Eligibility for gratuity to the employees concerned is not disputed. Both Supervisors and the tappers are entitled to gratuity, it is conceded.

3. Based on certain settlements, both the categories of employees are being paid "Over-kilo wages" as incentive for the output of work in excess of the required minimum standard. In the settlement, it has been agreed that it will be reckoned for the purpose of payment of gratuity, in the case of tappers. But there is no such corresponding clause in the settlement relating to Supervisors.

4. We will consider first the case of Supervisors. As the management did not reckon the over-kilo incentive for the purpose of calculating gratuity payable to Supervisors on their retirement, they approached the controlling authority under the Payment of Gratuity Act, 1972. The Controlling. Authority found that over-kilo incentive is a part of wages as defined u/s 2(s) of the Payment of Gratuity Act, except in one case. Aggrieved parties concerned approached the appellate authority. The appellate authority took a uniform stand except in one case which gave rise to O.P. No. 5547 of 1993, that the management was liable to pay gratuity calculating the over-kilo wages as well. But in the order challenged in O.P. No. 5547/1993, the appellate authority took a just contrary stand. It is in the above circumstances, Writ Appeals and the Original Petitions, except O.P.Nos. 13176/1996 and 13177/1996, arise. O.P. No. 5547/1993 is by the workmen, who are aggrieved by the different stand adopted by the appellate authority. So, in these cases, except that relating to the case of tappers, we have to consider whether the over-kilo incentive payable to terms of Exhibit P3 O.P. No. 11470/1993 (W.A. No. 2255/2002) can be reckoned as wages for the purpose of calculating gratuity. The relevant clause is as under:

"1. With effect from April 1, 1985, the formula will be as follows:

5. It is contended that when the settlement is so entered into, it was not specifically provided to reckon over- kilo incentive, which is an element in the emoluments, as wages for the purpose of payment of gratuity. Therefore, the authorities have erred in directing reckoning of this element as part of wages to calculate gratuity payable to the concerned employees. It is submitted that this forms part of other allowances, and therefore, excluded from the wages in terms of the definition as contained in Section 2(s) of the Act. To substantiate this contention, much reliance has been placed on the decision of the Supreme Court reported in T.I. Cycles of India, Ambattur, Chennai v. M.K. Gurumani and Ors. 2001 (II) LLM 068, which also refers to the decision of the Supreme Court in Straw Board Manufacturing Company Limited v. Its workmen 1997-I-LLJ-463, which was to the; effect that "wages will mean and include basic wages and dearness allowance and nothing else." But in T.I, Cycles, it was held by the Supreme Court that "both the High Courts and the authority have incorrectly understood the: position in law and have wrongly held that the concept of wages under the Act would include bonus and that even on facts, the scheme would attract Section 4(2) of the Act." Accordingly, the appeal by the employer was allowed. Thus, it is