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TMI Blog1967 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... fter referred to as "the Company") filed an application before the Employees' Insurance Court for a declaration that 'Inam' paid or to be paid to its workmen under the Inam Scheme initiated on 28th December, 1955 is not "wages " as defined in the Employees' State Insurance Act, 1948 (No.-34 of 1948) (hereinafter referred to as "the Act"), and that no contribution, either as employer's special contribution or employees' contribution, is payable by the Company in respect thereof. The opposite party in this application was the present respondent, the Employees' State Insurance Corporation, and there was. also a prayer for perpetual injunction restraining the respondent from realising any contribution in respect of past or future payments of Inam under that Scheme. A further prayer was for a decree for ₹ 32,761 against the respondent, being the amount which the respondent had already realised from the appellant claiming that the Inam was " wages", and for costs. The case was contested by the respondent, but the Employees' Insurance Court allowed the application of the appellant, passed a decree with costs, ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine our decision to the interpretation of the first part of the definition of "wages". The facts, which are relevant for deciding this question, are that conditions for the award of Inam were laid down in a Work Notice issued by the appellant on 28th December, 1955, and with this Work Notice were issued two separate Notices laying down the remaining conditions for payment of Inam which were required to be laid down by the Scheme contained in the first Work Notice which only stipulated the general terms. One of these Notices issued on the same date covered the workmen employed in Structural and Tank Shop, while the other covered workmen employed in Wagon Shop. The terms of the general scheme which are important for interpretation are those contained in paras. 4 to 10 of the Work Notice, and it was on the basis of the interpretation of these terms that the Employees' Insurance Court accepted the plea of the appellant that Inam was not covered by the definition of " wages". The High Court, on interpretation of the same terms, took a contrary view. Both Courts concurrently held that the Inam paid under the Scheme was covered by the word "remuneration" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put appropriately applicable to him. But. though primarily the right to receive the Inam depended on the efficient working of the employee, there was another clause which laid down that, if the targets were not achieved due to lack of orders, lack of materials, break-down of machinery, lack of labour, strikes, lock-outs, go-slow or any other reason whatsoever, no Inam was to be awarded. This condition is clearly inconsistent with the payment of Inam having become an implied term of the contract of employment, because Inam became nonpayable even if the production target was not achieved for reasons for which the employees were not at all to blame. If the employer did not receive sufficient orders for sale of its output, or there was lack of raw-materials, or there was breakdown of machinery and as a result, during the period for which the Inam was notified, it became impossible for the employee to achieve the minimum target fixed, there was no liability_on the appellant to pay the Inam. Such exemption from payment of the Inam on grounds for which the employees could not be blamed and possibly for which the appellant itself might be responsible clearly shows that the payment of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause 1. It is quite obvious that it created a legal fiction. Legal fictions are created only for some definite purpose". Applying the same principle, we have to hold that the Explanation to s. 41 is not to be utilised fox interpreting the general definition of "wages" given in s. 2(22) of the Act and is to be taken into count only when the word "wages" requires interpretation for purposes of sections 40 and 41 of the Act. It cannot, therefore be held that remuneration payable under a scheme is to be covered by the word "wages", if the terms of contract of em- ployment are taken to have been fulfilled. What is really required by the definition is that the terms of the contract of employment must actually be fulfilled. It is, therefore, not correct to hold that because payments made to an employee for no service rendered during the period of lock- out, or during the period of legal strike, would be wages, Inam paid under that scheme must also be deemed to be wages. The second reason which led the High Court to hold against the appellant was that, according to that Court, the Scheme contained an offer by the employer for payments to the employees fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feature of the Scheme which was not relied upon by the High Court to hold that this Inam was wages. That term is contained in the last paragraph of the Scheme where, after stating that the Company reserved the right to withdraw the Scheme altogether without assigning any reason or revise targets and any condition of the Scheme at its sole discretion, went on to add that the Company also reserved the right to discontinue the scheme at the end of any period, if the scheme is found to be in any respect unworkable or to be a source of labour discontent or for any other reason. It was urged that the fact that the Scheme could only be discontinued at the end of a prescribed period and not in the midst of a period showed that the Inam was payable as one of the conditions of contract of employment of the employees, We do not think that there is any force in this submission. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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