THE REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION versus M/S POPULAR AUTOMOBILES ETC.

Citation: [1997] SUPP. 4 S.C.R. 346 · Decided: 29-09-1997 · Supreme Court of India · Bench: S.B. MAJMUDAR · Disposal: Appeal(s) allowed

cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
THE REGIONAL DIRECTOR, EMPLOYEES 
STATE INSURANCE CORPORATION 
v. 
MIS POPULAR AUTOMOBILES ETC. 
SEPTEMBER 29, 1997 
[S.B. MAJMUDAR ANDS. SAGHIR AHMAD, JJ.] 
Labour law: 
Employees' State Insurance Act, 1948: Sections 39, 40-Remiffence of 
contriblllion under--Liability of suspended employee and employer-
Suspended employee covered by beneficial provision of the Act-Plea, that 
suspended employee and employer not liable because the subsistence 
allowance is not covered under the definition of 'wages' as the suspended 
D employee does not fulfil the terms of contract of employment-Held, suspended 
employee and the employer are liable to contribute their respective shares. 
on the amount of subsistence allowance paid to the suspended employee-
Susbsistence allowance forms part of the definition of 'wages '-Suspended 
employee cannot be said to have not fulfilled his part of terms of contract 
of employment as he is willing .to offer his services-Kera/a payment of 
E subsistence allowance Act. 1972. 
Section 2 (22)- 'Wages '-Definition of-Subsistence allowance-
Whether covered under the definition-Held, yes. 
The question for determination in this case is whether suspended 
F employees and its employer are liable to remit under Employee State Insurance 
Act, (hereinafter called the Act) the contributions in connection with 
subsistence allowance amounts received by suspended employee during 
domestic enquiry. 
The High Court held that there was no liability on the part of the 
G suspended employee or his employer to remit contributions in connection with 
subsistence allowance amounts under the Act, because the subsistence 
allowance paid to an employee during suspension, pending domestic enquiry 
could not be covered by· the definition of the term 'wages' as found in sub-
section (22) of Section 2 of the Act, as a suspended employee does not fulfil 
H the terms of contract of employment as he is not actually rendering any service 
346 
THE REGIONAL DIRECTOR E.S.l. "·POPULAR AUTOMOBILES 
347 
during the period of suspension. 
A 
In appeal to this court the appellant contended that the Act being a 
beneficial piece of legislation, offers statutory insurance against employment 
injuries suffered by insured workman while in service. For earning the 
statutory coverage, employee as well as the employer are liable to contribute 
and remit under the Act, in order to enable the corporation/appellant to B 
discharge its statutory obligations and that during suspension period 
employer-employee relationship does not get snapped; and that during 
suspension the employee cannot be said to have refused to fulfil his part of 
contract as he is willing to work but it is the employer who does not want him 
to work and pays him reduced amount of wages; and that the subsistence C 
allowance which is reduced scale of wage payable to the suspended employee 
can also form part and parcel of the term 'wages'. 
The respondent cont~nded that on the analogy of the payment made 
during the period of lay off and lockout, subsistence allowance would also not 
be covered by the first part of the definition of wages and as the inclusive part D 
does not mention subsistence allowance, it should be treated to be outside the 
sweep of section 2 sub section (22). 
Allowing the appeals, this Court 
HELD: 1.1. Subsistence allowance forms part of wages as per sub-
E 
section (22) of Section 2 of Employee S~ate Insurance Act and consequently 
on the said amount the employee will be liable to contribute under section 39 
by way of employees contributions and equally the employer would be liable to 
contribute his share by way of employer's contribution on the amount of 
subsistence allowance paid to the suspended employee. 1361-A-B) 
1.2. It is not possible to appreciate as to how it can be said that on the 
amount of subsistence allowance received by him permanently, he is not bound 
to contribute any amount to the Corporation and equally the employer ofsuch 
a suspended employee is also not bound to make his parallel contribution as 
F 
per the rates provided under the Act especially when all the benefits of G 
statutory insurance coverage are made available by the Corporation to such 
a suspended employee. All the employees are entitled to get the statut_ory 
coverage of the benefits being insured employees and any person employed 
for wages is to be treated as an employee for the purpose of the Act Under 
these circumstances an employee who is 

Excerpt shown. Read the full judgment & AI analysis in Lexace.