Important point
Amounts paid in terms of order passed by the Govt. u/s 10-B of Industrial Disputes Act are wages and contribution will have to be made to Employees State Insurance Corporation by the employer.

Headnote:Industrial Disputes Act, 1947—Sections 2(22) and 10-B—“Wages”—Dispute for increase in wages raised by employees of respondent company was referred to Tribunal—Govt. passed orders directing certain payments to be made to workmen pending dispute and amount paid was to be adjusted in award to be passed by Tribunal—Respondent paid the amounts—Compromise was reached regarding dispute and Tribunal disposed of the dispute in terms of compromise—Appellant claimed contribution on the amounts paid under the Govt. order—Whether amount paid were wages? Yes.
Held : Thus, any remuneration paid or payable in cash to an employee if the terms of the contract of employment, express or implied, are fulfilled would be a ‘wage’. The Government order clearly indicates that the payment was to be adjusted towards the ‘wages’ after the Award is passed. By virtue of the Government order it is a payment in terms of the contract of employment and therefore it would be a wage. In our view the High Court has gone completely wrong in concluding that by virtue of the Award it ceases to be wages. As stated above, the Tribunal has not applied its mind as to whether or not the payments were wages. All that the Tribunal did was to give its imprimatur to a compromise between the parties. Merely because the parties in their compromise chose to term the payments as ‘ex-gratia payments’ does not mean that those payments cease to be wages if they were otherwise wages. As stated above, they were wages at the time that they were paid. They did not cease to be wages after the Award merely because the terms of Compromise termed them as ‘ex-gratia payment’. We are therefore unable to accept the reasoning of the Judgments of the High Court. The Judgment of the Division Bench as well as that of the Single Judge accordingly stand set aside. It is held that the amounts paid are wages and contribution will have to be made on those amounts also. (Paras 6 and 7)

Order

This Appeal is against the Judgment of the Madras High Court dated 7th August, 2002. Briefly stated the facts are as follows:-

2. The Employees of Respondent Company raised a demand for increase of wages. The dispute was referred to the Special Tribunal, Madras for adjudication. By virtue of Section 10-B, Industrial Disputes Act, 1947, which had been introduced in the State of Tamil Nadu, the Government passed orders dated 15th July, 1985 and 29th July, 1985 directing certain payments to be made to the workmen pending the disputes. Both orders contained a clause that any money paid in pursuance of the order could be deducted by the employer from out of the monetary benefits to which the employee would become entitled under the Award which may be passed by the Tribunal.

3. At this stage, it would be convenient to set out Section 10-B of the Industrial Disputes Act, 1947, under which the Orders were passed. Section 10-B reads as follows:-

“10-B Power to issue order regarding terms and conditions of service pending settlement of disputes:—

(1) Where an Industrial dispute has been referred by the State Government to a Labour Court or a Tribunal under sub-section (1) of Section 10 and if, in the opinion of the State Government it is necessary or expedient so to do for securing the public safety or convenience or the maintenance of public order or supplies and services essential to the life of the community or for maintaining employment or industrial peace in the establishment concerning which such reference has been made, it may, by general or special order, make provision,-

(a) for requiring the employer or workman or both to observe such terms and conditions of employment as may be specified in the order or as may be determined in accordance with the order, including payment of money by the employer to any person who is or has been a workman;

(b) for requiring any public utility service not to close or remain closed and to work or continue to work on such terms and conditions as may be specified in the order; and

(c) for any incidental or supplementary matter which appears to it to be necessary or expedient for the purpose of the order;

Provided that no order made under this sub-section shall require any employer to observe terms and conditions of employment less favourable to the workman than those which were applicable to them at any time within three months immediately preceding the date of the order.

Explanation.—For the purpose of this sub-section, “public utility service” means-

(i) any section of an industrial establishment on the working of which the safety of the establishment or the workman employed therein depends;

(ii) any industry which supplies power, light or water to the public;

(iii) any industry which has been declared by the State Government to be a public utility service for the purpose of this Act.

(2) An order made under sub-section (1) shall cease to operate on the expiry of a period of six months from the date of the order or on the date of the award of the Labour Court or the Tribunal, as the case may be, whichever is earlier.

(3) Any money paid by an employer to any person in pursuance of an order under sub-section (1), may be deducted by that employer from cut of any monetary benefit to which such person becomes entitled under the provisions of any award passed by the Labour Court or the Tribunal as the case may be.”

4. The Respondent paid the amounts as directed by the Government. Ultimately, the Respondent Company entered into a Memo of Compromise with the employees and in terms of the Memo of Compromise an Order was taken from the Special Tribunal which reads as follows:-

“To the workmen in the textile mills falling in Group (D) the relief granted shall be in the terms contained in Annexures I and III to the memorandum of compromise, dated 21st March, 1986 (Appendix III), which have been adopted by me as my own findings and adjudication on the relevant issues and the same shall be effective from 1

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2005 Supreme(SC) 905

Important pointAmounts paid in terms of order passed by the Govt. u/s 10-B of Industrial Disputes Act are wages and contribution will have to be made to Employees State Insurance Corporation by the employer.

Important point
Amounts paid in terms of order passed by the Govt. u/s 10-B of Industrial Disputes Act are wages and contribution will have to be made to Employees State Insurance Corporation by the employer.