1984 (9) TMI 273 - SC - Indian Laws

Whether the expression wages defined by s.2(22) of the Employees State Insurance Act includes House Rent Allowance Night Shift Allowance paid to those employees who are obliged to work in the night shift and the Heat Gas and Dust Allowance and Incentive Allowance paid by an employer to his employees? Held that - On a proper interpretation of the term wages the legislative intent is made manifestly clear that the term wages as used in the Act will include House Rent Allowance Night Shift Allowance Heat Gas and Dust Allowance and Incentive Allowance. The definition on its plain reading is clear and unambiguous. Even if any ambiguity could have been suggested the expression must be given a liberal interpretation beneficial to the interests of the employees for whose benefit the Employees State Insurance Act has been passed. Appeal dismissed.

Summary

Issues:
Interpretation of the term 'wages' under the Employees State Insurance Act, specifically whether it includes 'House Rent Allowance', 'Night Shift Allowance', 'Heat, Gas and Dust Allowance', and 'Incentive Allowance'.

Analysis:
The Supreme Court considered the definition of 'wages' under Section 2(22) of the Employees State Insurance Act to determine whether it encompasses various allowances paid to employees. The definition of 'wages' is broad and includes all remuneration paid or payable in cash to an employee under the terms of the employment contract, as well as additional remuneration paid at intervals not exceeding two months. The Court emphasized that the Act is a welfare legislation, and any ambiguous expression should be construed in favor of the employees. The Court highlighted that 'wages' cover remuneration paid under the contract of employment or otherwise at intervals not exceeding two months. The judgment referred to decisions by the Karnataka High Court and the Andhra Pradesh High Court, which held that incentive bonuses and additional remuneration fall within the definition of 'wages'.

The Court discussed the interpretation of 'wages' in various High Court judgments, emphasizing that any additional remuneration paid at intervals not exceeding two months constitutes 'wages'. The Court disagreed with a previous judgment that suggested additional remuneration must not be part of the contract of employment to be considered 'wages'. The Court supported the view that 'House Rent Allowance' paid by an employer to employees qualifies as 'wages' under the Act. The Court also referred to a previous case involving an ex-gratia reward, emphasizing that any additional remuneration paid at intervals not exceeding two months falls within the definition of 'wages'.

Justice Amarendra Nath Sen concurred with the interpretation of 'wages' provided by Justice O. Chinnappa Reddy. Justice Sen highlighted that the definition of 'wages' in the Act is broad and inclusive, intended to benefit employees. The Act being a social welfare legislation must be interpreted liberally to serve its purpose. Justice Sen agreed that 'House Rent Allowance', 'Night Shift Allowance', 'Heat, Gas and Dust Allowance', and 'Incentive Allowance' are encompassed within the definition of 'wages'. He supported the comprehensive analysis provided by Justice Reddy and agreed that the Special Leave Petition should be dismissed.

In conclusion, the Supreme Court dismissed the Special Leave Petition, affirming that 'House Rent Allowance', 'Night Shift Allowance', 'Heat, Gas and Dust Allowance', and 'Incentive Allowance' are included in the definition of 'wages' under the Employees State Insurance Act. The judgment emphasized the broad and beneficial interpretation of 'wages' in favor of employees, in line with the welfare objectives of the Act.