M/S.WHIRLPOOL OF INDIA LTD. versus EMPLOYEES' STATE INSURANCE CORPORATION

Citation: [2000] 2 S.C.R. 165 · Decided: 08-03-2000 · Supreme Court of India · Bench: S.B. MAJMUDAR · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

..... 
MIS, WHIRLPOOL OF INDIA LTD. 
A 
v. 
EMPLOYEES' STATE INSURANCE CORPORATION 
MARCH 8, 2000 
[S.B. MAJMUDAR, S.N. PHUKAN AND Y.K. SABHARWAL, JJ.] 
B 
Employees' State Insurance Act, 1948: 
Sections 2(22), 3, 26, 46 and 75. 
Wages-Scope of-Company-'Production Incentive Scheme '-Payments 
C 
made quarterly to workers towards production incentive-Held, not covered 
by the definition of 'wages' -Demand for contribution towards Employees' 
State Insurance Fund in respect of quarterly payments made towards produc-
tion incentive-Held not permissible. 
The appellant company was paying to its workers production incen-
tive, under a 'Production Incentive Scheme', in addition to normal wages. 
Treating the said payment as 'wages', the respondent-corporation issued a 
demand notice to the appellant-company for payment of contribution 
towards the Employees State Insurance Fund. The Employees Insurance 
Court held that payment made towards production incentive was not 
wages under Section 2(22) of the Employees State Insurance Act, 1948. It 
did not fall under the first part of definition of 'wages' as there was no 
agreement between the appellant and its workers for payment of produc-
tion incentive and also that it did not fall under the third part of definition 
as the actual payment was made quarterly which means at intervals ex-
ceeding two months • 
Appeal preferred by ~he respondent-corporation was allowed by a 
Single Judge of the Punjab & Haryana High Court. The Letters Patent 
Appeal preferred by the appellant was dismissed by the High Court. 
D 
E 
F 
Hence this appeal by the Company. 
G 
Allowing the appeal and setting aside the judgment of High Court, 
this Court 
HELD : 1. The payment of production incentive, on the facts of 
present case, does not fall either under the first part or last part of the 
H 
165 
166 
SUPREME COURT REPORTS 
[2000] 2 S.C.R. 
A 
definition of term 'wages' as defined in Section 2(22) of the Employees' 
State Insurance Act, 1948. (170-F] 
B 
c 
D 
E 
F 
2. Under first part of Section 2(22), all the remuneration paid or 
payable in cash to an employee, if the terms of the contract of employment, 
express or implied, were fulfilled would be 'wages'. Under this part neither 
the actual payment nor when the payment is made is of any relevance. The 
last part of Section 2(22) relates to payments of additional remuneration. 
The additional remuneration, if any, paid at intervals not exceeding two 
months and not falling in clauses (a) to (b) would alsc be wages within the 
meaning of the term as defined. Under this part of the definition, there has 
to be payment and not only payability and the payment has to be at 
intervals not exceeding two months. [168-F-G] 
3. None of the Courts below bas held that the amount in question was 
paid or was payable on fulfilment of terms of contract of employment. It 
also cannot be held that the payment in question under the scheme would 
amount to a condition of service requiring compliance of Section 9A of the 
Industrial Disputes Act for effecting any change in the conditions_ of serv-
ice. The payment thus does not fall within the first part of definition of 
'wages'. [170-C] 
4. Additional remuneration to become wages has to be ''paid" at 
intervals not exceeding two months as distinguished from 'being payable'. 
Thus, under the last part of Section 2(22) tliere has to be actual payment. 
When the word used is 'paid', the Court cannot add the word 'payment' 
or other similar expression thereto. [ 170-D-F] 
Wellman (India) Pvt. Ltd v. Employees' State Insurance Corporation, 
[1994) 1 SCC 219 and Madella Woollens Ltd v. Employees State Insurance 
Corporation andAnr., [1994) Supp. 3 SCC 580, distinguished. 
Mis. Harihar Poly.fibres v. Regional Director, ES/ Corporation, (1984) 
4 SCC 324 and Handloom House, Emakulam v. Regional Direcfor, ES/, 
G 
(1999] 4 sec 7, explained. 
5 •. The Act is a social legislation, enacted. to provide benefits to 
employees in case of sickness, maternity and employment injury and to 
make a provision for certain other matters in relation thereto. Undoubt-
edly, any provision of which two interpretations may be possible would 
H 
deserve such construction as would be beneficial to the working class but, 
~­
' 
; ,. 
WHIRLPOOL OF INDIA v. E.S.l.C. 
167 
at the same time, Court cannot give a go by to the plain language of a 
A 
provision. (168-C; E] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1983 of2000. 
From the Judgm

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