This appeal challenged a mandatory contribution notice issued under Section 45A of the ESI Act. The High Court upheld the ESI Court's finding that the applicant's explanation for expenses was false based on account inspection.
The appeal was dismissed and the order of the Employees Insurance Court was upheld.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE P.D.RAJAN
SATURDAY, THE 16TH DAY OF SEPTEMBER 2017/25TH BHADRA, 1939
Ins.APP.No. 77 of 2011 ( ) ---------------------------
AGAINST THE JUDGMENT IN IC 101/2009 of EMPLOYEES INSURANCE COURT, ALAPPUZHA DATED 29-04-2011
APPELLANT(S)/APPELLANT:
UNO SECURITY SERVICE, 39/4024-C, PENMGALTU BUILDING, SREEKANDATH ROAD, RAVIPURAM, KOCHI-682 016, REPRESENTED BY ITS, PROPRIETOR, LT.CO.(RETD.) JOHN ABRAHAM.
BY ADVS.SRI.A.V.XAVIER SRI.K.JOLLY JOHN
RESPONDENT(S):
EMPLOYEES STATE INSURANCE CORPORATION, PANCHADEEP BHAVAN, TRICHUR-680 020,, REPRESENTED BY ITS REGIONAL DIRECTOR.
R, BY ADV. SMT.T.D.RAJALAKSHMY, SC, ESI CORPN. R1 BY ADV. SRI.K.SANDESH RAJA
THIS INSURANCE APPEAL HAVING BEEN FINALLY HEARD ON 16-092017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
P.D.RAJAN, J
...................................... INS.APPEAL No.77 of 2011 ..................................... Dated 16th September, 2017
JUDGMENT
This appeal is preferred against the judgment in
I.C.No.101 of 2009 of Employees Insurance Court (for short
'E.I Court') Alappuzha by the Proprietor of UNO Security Services, who is the applicant in the above case. The above application was filed under Section 75 r/w 77 of the Employees State Insurance Act, 1948 (for short, 'ESI Act') for declaration that the notice issued under Section 45A of the SSI Act directing the applicant to pay Rs.62,100/- as contribution is arbitrary and illegal. The above notice was issued on the head ' other allowances' in the books of account of the applicant. Even after submitting proper explanation, respondent issued the above notice. The expenses for uniform, travelling expenses of guards, supervisors and head guards for the smooth functioning of the security service and for purchase of rain coat, umbrella, stricks, torch lights, batteries and gun boots during rainy season are the expenses under other allowances. Respondent, without accepting the explanation of the applicant, demanded contribution of Rs.9,55,379.35 and demanded Rs.62,100/- as contribution.
Ins.Appeal No.77/2011 2
The Inspector of the respondent verified the records of the applicant and reported that other allowances stated by the applicant was spent towards “meals and leave”. Therefore the statement that they spent the above amount for uniform expenses, travelling expenses and other equipments is a false one and they filed false declaration. Hence the entire amount stated by the applicant will come within Section 2(22) of the ESI Act. To substantiate the above contention, the applicatnt was examined as PW1 and his documents were marked as Exts.P1 to P8. Respondent examined DW1 and marked Exts.D1 and D2. After hearing both parties, learned Judge, ESI Court dismissed the application. Being aggrieved by that, the applicant preferred this appeal.
“2. Definitions -
(1) to (21)xxxxxxxxxxxxxxx
(22) “wages” means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes (any payment to an employee in respect of any period of authorised leave, lock out, strike which is not illegal or lay off and ) other
Ins.Appeal No.77/2011
3
additional remuneration, if any, ( paid at intervals not exceeding two months), but does not include -
c) any sum paid to the person emplyed to defray special expenses entitled on him by the nature of his employment; or
(d) any gratuity payable on discharge;”
M/s. Harihar Polyfibres V. The Regional Director, E.S.I
Corporation (AIR 1984 SC 1680) which held as follows:-
“Wages as defined under Section 2(22) includes remuneration paid or payable under the terms of the contract of employment, express or implied but further extends to other additional remuneration, if any, paid at intervals and exceeding two months, though outside the terms of employment. Thus remuneration paid under the terms of the contract of the employment (express or implied) or otherwise if paid at intervals not exceeding two months is wages. The interpretation of the clause and
Ins.Appeal No.77/2011
4
includes any payment to the employee in respect of any period of authorised leave, lockout, strike which is not illegal or lay-off between the first clause, all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, was fulfilled and the third clause, other additional remuneration, if any, paid at intervals not exceeding two months, makes it abundantly clear that while 'remuneration' undre the first clause has to be under a contract of employment, express or implied, 'remuneration' under the third clause need not be under the contract of employment, but may be any 'additional remuneration' outside the contract of employment. So, there is no reason to exclude “House Rent Allowance”, “Night Shift Allowance, “Incentive Allowance” and “Heat, Gas and Dust Allowance” from the definition of 'wages'”.
Ins.Appeal No.77/2011
5
amount of Rs.62,100/- as contribution. I find no illegality in
the above order of the ESI Court. There is no merit in this appeal and it is accordingly dismissed.
P.D.RAJAN, JUDGE
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1 issue framed by the court
Whether contributions demanded under Section 45A of the ESI Act on amounts claimed towards uniform and travelling expenses were arbitrary and illegal given the discrepancy found during account inspect
Colour shows how this judgement treated each authority
M/s. Harihar Polyfibres V. The Regional Director, E.S.I CorporationExplained¶3
M/s. Harihar Polyfibres V. The Regional Director, E.S.I Corporation (AIR 1984 SC 1680) · Who else cites this
3 provisions across 2 enactments
UNO Security Service
Employees State Insurance Corporation
P.D. Rajan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
