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PUNJAB & HARYANA HIGH COURT
D.Falshaw and S.B.Capoor JJ.
Birla Cotton Spinning And Weaving Mills, Delhi
Versus
Sumer Chand
Letter Patent Appeal No. 97 of 1960,
Decided On : MAY 16, 1962
EMPLOYEES STATE INSURANCE ACT, 1948 - SECTION 39(3), 40(1), 40(2), 42(1), 42(2), 42(3), 42(4), 42(5) - INTERPRETATION OF PERIOD IN PROVISO TO SUB-SECTION (2) OF SECTION 40 - EMPLOYER NOT ENTITLED TO RECOVER EMPLOYEE'S CONTRIBUTION FROM WAGES PAID FOR WORK DONE IN WEEKS OTHER THAN THOSE DURING WHICH EMPLOYEE WAS ON LEAVE.
Fact of the Case:
An employee, Banke Lal, was on authorized leave without pay for certain periods. The employer, Birla Cotton Spinning and Weaving Mills, paid both the employer's and employee's contributions to the Employees' State Insurance Fund and then proceeded to recover Banke Lal's share for the months of November and December out of wages paid to him for the parts of those months during which he actually worked. The trade union to which Banke Lal belonged challenged the legality of the deduction.
Finding of the Court:
The court held that the employer was not entitled to recover the employee's contribution from wages paid for work done in weeks other than those during which the employee was on leave. The court interpreted the word "period" in the proviso to Sub-section (2) of Section 40 to mean a week, and since no contribution is payable in respect of any week in which no services are rendered by an employee and no wages are paid to him (Section 42(4)), the employer could not deduct the employee's contribution from wages paid for work done in weeks other than those during which the employee was on leave.
Issues: Whether the employer was entitled to recover the employee's contribution from wages paid for work done in weeks other than those during which the employee was on leave.
Ratio Decidendi: The court interpreted the word "period" in the proviso to Sub-section (2) of Section 40 to mean a week, and since no contribution is payable in respect of any week in which no services are rendered by an employee and no wages are paid to him (Section 42(4)), the employer could not deduct the employee's contribution from wages paid for work done in weeks other than those during which the employee was on leave.
Final Decision: The court dismissed the appeal filed by the employer.
D.Falshaw, J.
1. This is an appeal under Clause (10) of the Letters Patent against the order of Shamsher Bahadur, J. dismissing an appeal filed by the Birla Cotton Spinning and Weaving Mills, Delhi, against the order of the Senior Subordinate Judge, Delhi, acting as Judge of the Employees State Insurance Court under the provisions of the Employees State Insurance Act of 1948.
2. The matter is rather an old one since it arises from the fact that an employee of the appellant company named Banke Lal was on authorised leave without pay for the periods (i) from the 17th to the 30th of November 1952, (ii) from the 1st to the 14th of December 1952 and (iii) from the 22nd to the 28th of December 1952. The Act provides for the payment by the employer in the first instance of both employers and employees contributions to the fund at the rates specified in the schedule to the Act, but authorises with certain limitations the recovery by the employer from the employee of the latters contribution. In the present case the company duly paid over its own dues in respect of Banke Lal and also the dues of Banke Lal, and then proceeded to recover Banke Lals share for the months of November and December out of wages paid to him for the parts of those months during which he actually worked.
3. It appears that the trade union to which Banke Lal belongs took up his case and challenged the legality of the deduction from Banke Lals wages of his contribution for the periods during which he was on authorised leave without pay. The deduction in respect of these periods was held to be illegal by the Employees State Insurance Court as long ago as January 1954, but it appeals that the appeal which was filed by the employer under the provisions of the Act in this Court was not decided until the 18th of August 1960. This is said to be at least partly due to the fact that the learned counsel who originally filed the appeal in 1954 later became a Judge of this Court as also did the learned counsel to whom brief was entrusted after his appointment. Be that as it may, the learned Single Judge upheld the decision of the Employees State Insurance Court.
4. Chapter IV of the Act deals with contributions and Sub-sections (1) and (2) of Section 39 provide that the contribution in respect of an employee is to consist partly of the contribution paid by the employee and partly of the contribution paid by the employer and that the contributions shall be calculated according to the rates specified in the first schedule. Sub-section (3) reads:
"A week shall be the unit in respect of which all contributions shall be payable under this Act."
The relevant portions of Section 40 read:
"(1) The principal employer shall pay in respect of every employee, whether directly employed by him or by or through an immediate employer, both the employers contribution and the employees contribution.
(2) Notwithstanding anything contained in any other enactment but subject to the provisions of this Act and the regulation, if any, made thereunder, the principal employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employees contribution by deduction from his wages and not otherwise: Provided that no such deduction shall be made from any wages other than such as relate to the period or part of the period in respect of which the contribution is payable, or in excess of fee sum representing the employees contribution for the period."
Section 42 deals with general provisions as to payment of contributions and reads:
"(1) No employees contribution shall be pay-able by or on behalf of an employee whose average daily wages are below Re. 1/-.
EXPLANATION: The average daily wages of an employee shall be calculated in the manner specified in the first schedule.
(2) Contribution (both the employers contribution and the employees contribution) shall be payable by the principal employer for each week during
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