1996 (11) TMI 474 - SC - Indian Laws

Summary

Issues Involved:
1. Whether overtime wages paid to an employee are "wages" within the meaning of Section 2(22) of the Employees State Insurance Act, 1948.
2. Interpretation of the term "wages" under Section 2(22) of the Act.
3. Applicability of previous High Court judgments on the definition of "wages."

Detailed Analysis:

1. Whether overtime wages paid to an employee are "wages" within the meaning of Section 2(22) of the Employees State Insurance Act, 1948:
The primary issue in these appeals is whether overtime wages constitute "wages" under Section 2(22) of the Employees State Insurance Act, 1948. The appellants argued that since there was no stipulation for payment of overtime wages in the original contract of employment, such remuneration should not be considered as "wages." They contended that overtime wages are paid for services rendered outside the contract of employment and thus should not be included within the definition of "wages."

2. Interpretation of the term "wages" under Section 2(22) of the Act:
Section 2(22) defines "wages" as all remuneration paid or payable in cash to an employee if the terms of the contract of employment, express or implied, were fulfilled. The definition includes any payment to an employee in respect of any period of authorized leave, lock-out, strike which is not illegal or lay-off, and other additional remuneration if paid at intervals not exceeding two months. However, it excludes contributions to pension or provident funds, traveling allowances, special expenses, and gratuity payable on discharge.

The Court emphasized that the term "wages" should be interpreted broadly to include all remuneration paid under the terms of the contract of employment, whether express or implied. The Court noted that the Legislature's exclusion of specific items from the definition of "wages" indicates that all other categories of remuneration, including overtime wages, fall within the inclusive definition of "wages."

3. Applicability of previous High Court judgments on the definition of "wages":
The appellants relied on judgments from the Calcutta High Court and Karnataka High Court, which had held that overtime wages do not constitute "wages" under the Act. However, the Supreme Court found these judgments to be unsustainable and illegal. The Court preferred the view expressed by the Bombay High Court, Delhi High Court, and Andhra Pradesh High Court, which had held that overtime wages are included within the definition of "wages."

The Supreme Court referred to its previous decision in Harihar Polyfibres vs. The Regional Director, ESI Corporation, where it was held that the definition of "wages" under the Act is designedly wide and includes any remuneration paid or payable to an employee under the terms of the contract of employment, express or implied. The Court reiterated that any remuneration paid for overtime work, which is an implied term of the contract, forms part of the "wages" under Section 2(22).

Conclusion:
The Supreme Court upheld the judgment of the Andhra Pradesh High Court, holding that overtime wages paid to an employee are "wages" within the meaning of Section 2(22) of the Employees State Insurance Act, 1948. The Court dismissed the appeals, stating that the view taken by the Andhra Pradesh High Court is in accordance with the law laid down by the Supreme Court. The writ petition was dismissed as withdrawn.