LexTHE REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION AND ANR versus BATA SHOE COMPANY (P) LTD.
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639
'IHE REGIONAL DIRECTOll.,EllFLOIEES'.
STAIE INSURANCE CORPORATION AND ANll..
V•
llA'IA SHOE WIPANY (P) LTD.
OCTOBEll. 11, 1985
[11..S. PATHAK AND A.P. SEN, JJ.]
Employees State Insurance Act, 1948 - S. 2(22) -
'Bonus' -
Whether part of "wages".
The respondent-company has two branch factories. Various
agreements/settlements were entered into between the managements
of these factories and their employaes regarding the payment of
bonus from time to time. The appellant -
Regional Director of
Employees' State Insurance Corporation -
called upon these
factories from time to time to make requisite contribution to the
Employees' State Insurance Fund· Initially the managements of
these factories
acknowledged their liability to dei>osit the
amounts as-part of the contract of employment, but subsequently
realising that they were not liable in law to make any such
contribution under the Employees' State Insurance Act, 1948,
declined to make such payment. The managements of these factories
applied under cl. (g) of sub-s. (l) of s. 75 of the Act for a
decision by the Employees' State Insurance Court on the question
of their liability, and contended that the sum payable or paid by
way of bonus to the employees was not covered by the definition
of the term "wages" in sub-s. (22) of s. 2 of the Act and, there-
fore, the respondent was not liable to make any contribution. The
Employees' State Insurance Court accepted the contention of the
respondent.
Against that order the appellant preferred appeals under s.
82 of the Act, which were diamissed by the High Court holding
·that the Employeea' State Insurance Court was right in taki"!l the
view that the bonus in question did not form part of the wages as
defined in sub-a. (22) of s. 2 of the Act.
Dismissing the appeals of the appellant to this Court,
HEW:
l. The bonus in question, in the instant appeals,
does not fall under any category or class mentioned in the
definition of "wages" set forth in sub-a. (22) of s. 2
of the
Employeea' State Insurance Act, 1948. (645 E]
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
640
SUPRF.ME COURT REPORTS
[1985] SUPP.3 s.c.R.
In the instant case, the bonus paid by the respondent to
its employees is in the nature of ex-gratis payment or, as has
been described in 'one of the settlements, paid as a gesture of
goodwill on the part of the respondent. The bonus in question was
neither in the nature of production bonus nor incentive bonus nor
customary bonus nor any statutory bonus. It cannot be regarded as
part of the contract of employment. Although the provisions
relating to it were included in the Standing Orders "nd Rules,
they were subsequently excluded from them. Therefore, the bonus
paid or payable by the respondent to its employees under the
successive settlements and agreements made between them cannot be
regarded as remuneration paid or payable to the employees in
fulfilment of the terms of the contract of employment. [644 C-F]
2. The concept of bonus has been analysed and described by
this Court as representing the cash incentive paid in addition to
wages and given conditionally on certain standards of attendance
and efficiency being attained. When wages fall short of the
living standard or the industry makes huge profits part of which
are due to the contribution which the workmen make in increasing
production, the demand for bonus becomes an industrial claim. It
has not been shown that this Court has subsequently widened the
concept of bonus to include a payment made by the employer
ex-gratis or as an expression of goodwill towards its employees.
(644 F - H; 645 A - CJ
3, The first category of remuneration falling within the
definition of ''wages" in sub-s.(22) of s. 2 of the Act is not
satisfied by the bonus in question in the i!llltant appeals. The
second category of remuneration defined within the expression
''wages" by sub-s.{22) of s. 2 of the Act speaks of other
additional relllllleration paid at intervals not exceeding two
months. The bonus under consideration here is not paid at
intervals not exceeding two months. It is payable within "one
month after the end of each quarter", (645 C-E]
lilir Mills Co. Ud. v. Sud Mills, (1955] 1 s.c.R. 991;
ShEee lleenakshi Mills Ud ..... '.Ibeir Wort.en, (1958] s.c.R. 878;
and Stauds.rd Vacuma BefiniDg Co. of India v. Its Wos:kmen and
Anr., (1961] 3 s.c.R. 536 relied on.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 74Excerpt shown. Read the full judgment & AI analysis in Lexace.