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2019 Supreme(Mad) 1858
IN THE HIGH COURT OF JUDICATURE AT MADRAS
C. Saravanan, J.
The Employees’ State Insurance Corporation, Having its Sub-Regional Office (Coimbatore), Rep by its Deputy Regional Director, Coimbatore - Appellant
Versus
Datafield India Private Ltd, Rep. by its Managing Director, M.K. Kannan - Respondent
C.M.A. No. 2799 of 2011
Decided On : 18-10-2019
For the Appellant : M/s. G. Narmadha, Adv.
For the Respondent: I. Haroon-A-Rasheed for M/s. T.S. Gopalan & Co., Advs.
It is not expected for large business organisations to restrict the travel allowance to actual as it would not only involve unnecessary paperwork but also waste of time and men and man hours. Therefore, employers are perfectly within their right to work out a equalised method for allowing travel allowance to their employees.
Headnote:
The Employee’s State Insurance Act, 1948- Section 45A- Section 2 (22) -The authorities acting under the Act have to consider legitimate business consideration and expediency of the men of commerce in allowing such expenses particularly in the light of the exclusions contained in the definition in Section 2 (22) of the Act.
Statement of facts:
By the impugned order, the Labour Court had allowed the petition filed by the respondent under Section 75 of the ESI Act, 1948. In the said petition the respondent had challenged the order dated 28.06.2004 passed by the appellant under Section 45A of the Employee’s State Insurance Act, 1948 directing the respondent to pay a sum of Rs.49,886/-as contribution
Finding of the court:
Merely because these amounts are paid at the time of disbursal of salary/wages to the employees/workers, it cannot ipso facto be construed that it has to be included as part of the “wages” in violence to the expression in exclusion in the definition-There the payments were made either under the contract of employment or in terms of a settlement arrived between the management on the one hand and the employees on the other hand.
Result: Dismissed. No cost.
JUDGMENT :
Prayer: Civil Miscellaneous Appeal filed under Section 82 of the Employees Insurance Act, 1948, to set aside the order of the Labour Court, Coimbatore (Employees State Insurance Court constituted under ESI Act) dated 31.03.2010 made in ESIOP No. 55 of 2004.
1. The present Civil Miscellaneous Appeal has been filed under Section 82 of the Employees Insurance Act, 1948, against the order of the Labour Court, Coimbatore (Employees State Insurance Court constituted under ESI Act) dated 31.03.2010 and made in E.S.I.O.P.No.55 of 2004.
2. By the impugned order, the Labour Court had allowed the petition filed by the respondent under Section 75 of the ESI Act, 1948. In the said petition the respondent had challenged the order dated 28.06.2004 passed by the appellant under Section 45A of the Employee’s State Insurance Act, 1948 directing the respondent to pay a sum of Rs.49,886/-as contribution.
3. Earlier, the respondent was issued with a show cause notice dated 01.03.2004 to show cause as to why a sum of Rs.49,886/-should not be levied as contribution on the amount of Rs.7,67,462.58/- paid by the respondent to its employees/workers towards travelling allowance during the period between 01.04.2001 and 31.03.2003. The respondent submitted its reply and attended a personal hearing before the appellant herein.
4. Thereafter, the appellant herein passed an order dated 28.06.2004 under Section 45A of the Employee’s State Insurance Act, 1948. In the said order, the appellant confirmed the proposal made in the above mentioned show cause notice and directed the respondent to pay the aforesaid amount within 15 days from the date of receipt of the order. The appellant also initiated recovery proceedings vide letter dated 11.10.2004.
5. The operative portion of the said order reads as under:-
From the wages slips for 3/04 and 4/04 I have found that the travelling allowances were paid proportionately on the basis of wages and as per the rank and designation status of the workers and staff and not as per the distance or actual expenditures involved for the performance of journey from their home and work place. The allowances were paid along with and form part of the wages/salary every month, depending upon the number days present. The amounts are paid as part of the wages/salary. Hence, I determine that the amounts of allowances constitutes wages under the Act and paid to the employees and contributions are payable.
6. Aggrieved by the same, the respondent filed a petition under Section 75 of the ESI Act, 1948 before the Labour Court. The Labour Court vide the impugned order dated 31.03.2010 in E.S.I.O.P.No.55 of 2004 allowed the petition filed by the respondent under Section 75 of the ESI Act, 1948 and thus set aside order dated 28.06.2004 passed by the appellant which had directed the respondent to a sum of Rs.49,886/- as contribution under the ESI Act.
7. The Labour Court relied on the decisions of this court rendered in the following cases:
i. Management of Oriental Hotel Ltd vs. ESIC Chennai, 2002 (1) LLJ 14;
ii. Regional Director, ESI Corporation vs. Sundaram Clayton Ltd., 2004 (1) LLN 630.
8. In paragraph 8 of Management of Oriental Hotel Ltd vs. ESIC Chennai, 2002 (1) LLJ 14 the court observed as under:-
“8. Insofar as the conveyance is concerned, even though it forms part of the wages being the amount payable in terms of the contract of employment, having regard to the settlement and even de horse the settlement, the payment of the amount would fall within the ambit of “additional remuneration”. Nevertheless, that amount will have to be excluded having regard to the specific exclusion provided in the definition itself for travelling allowance of the value of any travelling concession. The conveyance allowance paid is in the nature of travelling allowances as the object of that payment is to enable the employee to reach his place of work a
