The main legal point established in the judgment is that the incentives paid to the employees fell within the definition of basic wages as defined under Section 2(b)(ii) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, making the petitioner liable to contribute its share towards provident fund.

ORDER :

D. Murugesan, J.—Petitioner is Poompuhar Shipping Corporation Ltd. (a Government of Tamil Nadu Enterprise). The writ petition has been filed questioning the order of the Assistant Provident Fund Commissioner, Employees' Provident Fund, Madurai, dated January 19, 1996, and the order of the Regional Provident Fund Commissioner, Madurai, dated April 17, 1996. By those orders, the petitioner Corporation was directed to reckon the incentives paid to the employees for provident fund and remit the dues.

2. Following are the few facts that are relevant for the disposal of this writ petition:

The petitioner-Corporation is engaged in transportation of coal by sea and unloading the coal in Tuticorin for the Tamil Nadu Electricity Board to generate power for the supply of electricity. The Corporation comes under the purview of "transport for carriage of goods by water" under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter called the Act).

3. The applicability of the provisions of the Act to the petitioner-Corporation is not in dispute. The dispute relates to contribution of the provident fund by the petitioner on the incentives paid to its employees. According to the petitioner, the employees are initially appointed as "trainees" on stipendary basis and on completion of such training, they are appointed in appropriate scales of pay. In order to motivate them to discharge more quantum of coal exceeding the ceiling fixed, a scheme of incentive based on the production activity of coal discharged was introduced. As per the incentive scheme, if a workman fulfils their requirement and carries out the work load fixed for him and exceeds the same, he would be paid in accordance with the scheme. The quantum of amount so paid as incentive varies over from person to person. Such incentive will not fall within the definition of Section 2(b)(ii) of the Act, as the incentive so paid is otherwise a productive bonus, which is specifically excluded from the applicability of the said provision.

4. Based on a complaint of the General Secretary, Poompuhar Shipping Corporation Employees' Union, an enquiry u/s 7-A of the Act was conducted. In spite of the specific stand taken by the petitioner that the incentive paid to the employees will not fall within the definition of Section 2(b)(ii) of the Act, by the impugned orders holding that the incentives are also basic wages as defined u/s 2(b)(ii) of the Act, the petitioner has been directed to pay the dues towards the provident fund on the incentives paid to the employees.

5. Sri S. Jayaraman, learned counsel for the petitioner, placing reliance on various judgments of the Apex Court, would contend that the incentives will not fall within the provisions of the Act making the petitioner liable to contribute its share.

6. I have heard Sri. Vibhishanan, learned counsel for the Provident Fund Commissioner and Sri Hariparanthaman, learned counsel for the union.

7. In view of the rival submissions, the following only question arises for consideration:

"Whether the incentives paid to the employees belonging to the third respondent-union could be construed as basic wages as defined under Section 2(b)(ii) of the Act and consequently, whether the petitioner is liable to contribute its share towards provident fund ?"

8. Before considering the factual aspects in this writ petition, it would be proper to consider the relevant provisions of the Act and judgments relied upon by the respective counsel.

9. Section 2(b)(ii) of the Act reads as under:

"Basic wages means all emoluments which are earned by an employee while on duty or (on leave or on holidays with wages in either case) in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonu