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1967 (10) TMI 64 - SC - Indian LawsInam paid or to be paid to its workmen under the Inam Scheme initiated on 28th December 1955 - whether is not wages as defined in the Employees State Insurance Act 1948 (No.-34 of 1948) and that no contribution either as employer s special contribution or employees contribution is payable by the Company in respect thereof? Held that - It was again a one-sided promise on behalf of the appellant not to deny this payment of Inam during a period for which the Inam Scheme had already been notified by the appellant but such an assurance on behalf of the appellant does not indicate that the employees could claim that a right to receive the Inam had accrued to them as an implied condition of contract of employment. The decision given by the High Court has therefore to be set aside.The appeal is thus allowed.
Issues Involved:
1. Whether 'Inam' paid under the Inam Scheme is considered "wages" under the Employees' State Insurance Act, 1948. 2. Whether the appellant is liable to pay contributions based on 'Inam' payments. 3. Whether the High Court erred in interpreting the definition of "wages" under the Act. 4. Whether the Employees' Insurance Court's decision should be reinstated. Issue-wise Detailed Analysis: 1. Whether 'Inam' paid under the Inam Scheme is considered "wages" under the Employees' State Insurance Act, 1948: The primary question in this appeal is whether 'Inam' paid by the appellant under the Scheme dated 28th December 1955 falls under the definition of "wages" as per Section 2(22) of the Employees' State Insurance Act, 1948. The definition of "wages" includes "all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled." Both the Employees' Insurance Court and the High Court concurred that 'Inam' qualifies as "remuneration." However, the Employees' Insurance Court ruled that 'Inam' was not linked to the terms of employment, while the High Court concluded that it became an implied term of the contract of employment. 2. Whether the appellant is liable to pay contributions based on 'Inam' payments: The appellant argued that 'Inam' should not be considered "wages," and thus, no contributions (employer's special contribution or employees' contribution) should be payable in respect of 'Inam.' The Employees' Insurance Court supported this view, but the High Court disagreed, holding that 'Inam' was indeed "wages" and contributions were payable. 3. Whether the High Court erred in interpreting the definition of "wages" under the Act: The High Court held that the payment of 'Inam' had become an implied term of the contract of employment, thereby qualifying as "wages." The Supreme Court found this interpretation erroneous, noting that the Scheme's terms clearly indicated that 'Inam' was not part of the original employment contract. The Scheme allowed the employer to withdraw or revise 'Inam' payments unilaterally, which would not be possible if it were an implied term of employment. Additionally, 'Inam' was contingent upon factors beyond the employees' control, such as lack of orders or materials, further indicating it was not an enforceable term of employment. 4. Whether the Employees' Insurance Court's decision should be reinstated: The Supreme Court concluded that the High Court incorrectly applied the legal fiction in Section 41 of the Act to the general definition of "wages" in Section 2(22). The Court emphasized that legal fictions are limited to their specific purposes and should not be extended beyond their intended scope. The Supreme Court also rejected the High Court's reasoning that the Scheme's terms implied a contractual obligation, reaffirming that the Scheme explicitly excluded 'Inam' from being part of the employment contract. Consequently, the Supreme Court set aside the High Court's decision and reinstated the Employees' Insurance Court's ruling that 'Inam' was not "wages" and no contributions were payable. Conclusion: The Supreme Court allowed the appeal, set aside the High Court's order, and restored the decision of the Employees' Insurance Court, concluding that 'Inam' paid under the Scheme did not constitute "wages" under the Employees' State Insurance Act, 1948.
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