The main legal point established in the judgment is the interpretation of the term 'wages' under the Employees' State Insurance Act, specifically in relation to conveyance allowance, and the determination of contribution for labour charges for construction of buildings.

JUDGMENT :

S. Sardar Zackria Hussain, J.—These appeals have been filed by the Employees' State Insurance Corporation against the common Order, dated December 24, 1992 made in E.S.I.O.P. Nos. 77, 78 and 97 of 1987 on the file of the First Additional Judge, City Civil Court, Madras.

2. Civil Miscellaneous Appeal No. 1606 of 7995: The respondent Sundaram Clayton, Limited (Moppet Division) filed E.S.I.O.P.No. 77 of 1987 with the following averments: Employees' State Insurance Corporation caused notice, dated July 14, 1986/August 5, 1986, claiming Rs. 3,34,091.80 as contribution under the Employees' State Insurance Act (hereinafter referred to as the Act) for the period from 6/84 to 12/85 under various heads. In spite of the objections of the respondent herein, the order dated June 5, 1987, was made u/s 45-A of the Act demanding a sum of Rs. 2,23,400.25. As per chalan, dated August 7, 1987, the respondent paid Rs. 26,060.10 in respect of items (4) and (5) as claimed. The respondent has disputed the claim made by E.S.I. Corporation also in respect of fixed conveyance allowance and contribution toward labour charges for construction of the buildings. In respect of fixed conveyance allowance according to the respondent, it is only reimbursement of the expenses incurred by the employee and the amount is not an allowance and it is payable under an agreement entered into with the employees union and it cannot be "wages". The respondent has undertaken construction of building through outside contractors on rate contract basis. While doing so, the contract was entrusted for different items like excavation work, laying foundation, plinth work, brick work, flooring, terracing, woodwork, etc., and fixing the contract rates accordingly. The amount paid is inclusive of huge amounts towards purchase of materials like iron and cement. As such, construction works will not form part of the existing manufacturing activities. The respondent also produced receipts for Rs. 8,22,091 paid to Ideal Builders for the work done by them before June 24, 1984 and also the bill, dated May 31, 1985, of Harita Engineering. The order of the E.S.I. Corporation without considering the documents produced by the respondent that 25 per cent of the total amount of these works is to be treated as wages, is erroneous since in building maintenance work the same is carried out by employees of the company already covered by E.S.I. and since the respondent entered into contract with contractors on rate contract basis and whose labourers are not under the supervision or control of the respondent. Contribution to E.S.I. should be worked out on the basis of the guidelines of the P.W.D. which works out to 13 per cent to 16 per cent of the total value of the bill. Therefore, the respondent filed petition u/s 75 of the Act to set aside the order of the appellant, dated June 5, 1987, u/s 45-A of the Act and to declare that the respondent- company is not liable to pay any amount towards contribution in respect of the said items.

3. The E.S.I. Corporation opposed the petition in E.S.I.O.P. No. 77 of 1987 that the statutory inspector, who verified the records of the respondent-company on January 28, 1986, January 29, 1986 and February 10, 1986 found that the respondent-company failed to take into account certain categories of employees for the purpose of calculating the contributions towards fixed conveyance allowance and wages paid to civil works, repair and maintenance of buildings under construction. The claim of the respondent-company that overtime allowance is to be excluded from the definition of wages is incorrect. The fixed conveyance allowance is wages as defined under the Act and so, the amount paid is to be included for the purpose of calculation of contribution. Further the petition was opposed in the written statement that the employees engaged in construction work is also covered under the Act and so the same is to be taken into account for the purpose of calculation of contr