Punjab-Haryana High Court
M/S Escort Ltd vs Employees State Insurance Corporation on 3 July, 2024
Author: Meenakshi I. Mehta
Bench: Meenakshi I. Mehta
Neutral Citation No:=2024:PHHC:082145
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
FAO No.1375 of 1991
Date of Decision: 03.07.2024
M/s Escorts Limited
.....Appellant.
Versus
Employees State Insurance Corporation
.....Respondent.
CORAM: HON'BLE MRS. JUSTICE MEENAKSHI I. MEHTA
*****
Argued by:- Mr. Manu K. Bhandari, Advocate and
Mr. Manu Gaur, Advocate
for the appellant.
Mr. H.S. Bhatia, Advocate
for the respondent.
MEENAKSHI I. MEHTA, J. (Oral)
Feeling aggrieved by the judgment handed down by learned Judge, the Employees State Insurance Court (for short 'the ESI Court') Faridabad on 16.10.1991, whereby the petition, as moved by the appellant- petitioner (here-in-after to be referred as 'the petitioner') against the respondent-Corporation (here-in-after to be referred as 'the respondent') under Section 75 of the Employees' State Insurance Act 1948 (for short 'the Act'), has been dismissed, the petitioner has chosen to prefer the instant appeal to lay challenge to the same.
2. As per the brief factual-matrix, emanating from the perusal of the file and culminating in the filing of the present appeal, the petitioner had filed the above-referred petition, while averring that it (petitioner) had been 1 of 6 ::: Downloaded on - 21-07-2024 08:52:18 ::: Neutral Citation No:=2024:PHHC:082145 FAO No.1375 of 1991 -2- paying the conveyance-allowance to its employees, at the fixed rate, for the purpose of commuting between the respective places of their residence to their work place and had been depositing the amount of its own share as well as of the share of its employees towards the ESI contributions by treating the afore-mentioned allowance as the part of their wages whereas, in fact, this allowance could not be so construed and no contribution, under the Act, was payable in respect thereof and it (petitioner) sought the adjudication of the dispute as to whether the above-said allowance was to be included in their (employees') wages as the part thereof or not and further prayed that in case, the afore-referred allowance was not to be so included, then the respondent be directed to refund the sum of Rs.2 (two) lac approximately, as already paid by it on the above-said score for the period from 1985 to 1987 and it also sought declaration to the effect that the demand of Rs.1,06,198.20Ps, as raised by the respondent from it on the count of ESI contributions for the period from April 1985 to September 1987, was illegal.
3. The respondent filed its written-statement and contested the claim of the petitioner therein on various grounds. Then, the parties were put to the trial by framing the issues and after appreciating and evaluating the evidence led by them on the record and hearing their counsel, the ESI Court dismissed the petition, while holding that the conveyance/cycle-allowance, paid by the petitioner to its employees, did not form the part of their wages but the petitioner would have to file a separate Suit for seeking refund of the amount, paid by it as ESI contributions on the afore-mentioned allowance and that the claim, raised by the respondent towards the ESI contributions for the period from April, 1985 to September, 1987 was also valid.
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4. I have heard learned counsel for the appellant-petitioner as well as learned counsel for the respondent-Corporation in the instant appeal and have also gone through the file carefully.
5. Learned counsel for the petitioner have contended that despite observing that the fixed conveyance/cycle-allowance, paid by the petitioner to its employees, was not a part of their wages, the ESI Court gravely erred in declining the relief of refund of the amount, paid by it (petitioner) as the ESI contributions by considering the above-referred allowance to be the part of the wages of its employees and in rejecting the claim of interest thereon and moreover, the demand of the afore-said sum of Rs.1,06,198.20 Ps, raised by the respondent from the petitioner towards the ESI contributions for the period from April 1985 to September 1987 was also illegal as the same could not be claimed retrospectively. To buttress their contentions, they have placed reliance upon the verdicts rendered by the Apex Court in Popatrao Vyankatrao Patil Vs. State of Maharashtra and others, (2020) 19 SCC 241 and the Gujarat High Court in Employees State Insurance Corporation Vs. Arvind Mills Ltd, 2009 SCC OnLine Guj 1040.
6. Per contra, learned counsel for the respondent has argued that there is no provision in the Act for the refund of the amount, even if paid in excess of the amount actually due towards the ESI contributions and at the most, the same can be adjusted in the future liability of the petitioner to pay such contributions and rather, on excluding the amount of the conveyance/ cycle allowance from the wages of its (petitioner's) employees, many more employees would fall in the category of the employees to be covered under the ESI Scheme, in view of the statutory limit of maximum wages provided 3 of 6 ::: Downloaded on - 21-07-2024 08:52:19 ::: Neutral Citation No:=2024:PHHC:082145 FAO No.1375 of 1991 -4- for this purpose and therefore, the above-mentioned amount has correctly been claimed by the respondent from the petitioner on the afore-said score and thus, the impugned judgment is perfectly legal and logical.
7. It has recently been observed by Hon'ble the Supreme Court in Talema Electronic India Private Limited Vs. Regional Director, ESI Corporation and another, 2022 LiveLaw (SC) 422 that "the conveyance allowance is equivalent to the travelling allowance and therefore, any conveyance allowance/travelling allowance is excluded from the definition of wages" and in the light of these observations, it becomes explicit that the ESI Court has rightly held that the conveyance/cycle-allowance paid by the petitioner to its employees could not form the part of the 'wages' as defined under Section 2(22) of the Act.
8. However, as regards the claim of the petitioner for the refund of the amount already paid by it as ESI contributions while considering the above-referred allowance as the part of the wages of its employees and also for payment of interest thereon, a perusal of the impugned judgment reveals that in its paras No.6 and 7, the ESI Court has specifically mentioned that during his cross-examination, PW1 P.C. Aggarwal had deposed that the conveyance or cycle allowance was being paid to 3000 employees and if this allowance was not treated as wages, then, 2500 workers would be covered under the ESI Scheme. From the afore-discussed depositions, it becomes clear that in the eventuality of exclusion of the above-said allowance from the wages of the employees of the petitioner, 2500 more workers would become eligible to be covered under the ESI Scheme, as per the statutory cap of the maximum wages provided for this purpose and the petitioner would 4 of 6 ::: Downloaded on - 21-07-2024 08:52:19 ::: Neutral Citation No:=2024:PHHC:082145 FAO No.1375 of 1991 -5- become liable to pay ESI contributions qua them and since it (petitioner) has sought the refund of excess amount of ESI contributions as paid by it in the previous years, hence, there is no cogent and valid reason to hold that such contributions for the afore-said additional employees, covered under the ESI Scheme, could not be claimed retrospectively and therefore, the demand of the respondent for the amount of Rs.1,06,198.20 Ps. cannot be held to be illegal and it being so, the above-raised claim of the petitioner for the grant of interest, also stands rejected. However, this Court is of the considered opinion that it would be in the fitness of the things and the ends of justice will also be best served if the respondent is directed to adjust the amount of ESI contributions, as would be found to have been paid by the petitioner, in excess, by construing the conveyance allowance as a part of the wages of its (petitioner's) employees, against its afore-observed corresponding liability for the period from April, 1985 to September, 1987 and if there need be, then for the further period as well, by taking the relevant record regarding the payment/receipt of these contributions, into consideration and affording it an opportunity of being heard, before taking the final call in this regard.
9. The observations, made in Popatrao Vyankatrao Patil (supra) and Employees State Insurance Corporation (supra), are of no avail to the petitioner because the facts and circumstances of the instant case are quite distinguishable from those of the cited above. In Popatrao Vyankatrao Patil (supra), the appellant was the highest bidder for the sand block and he had deposited the amount for the same but the possession of the sand block could not be given to him for the reasons not attributable to him and therefore, the refund of the amount, as paid by him, was ordered and in Employees State 5 of 6 ::: Downloaded on - 21-07-2024 08:52:19 ::: Neutral Citation No:=2024:PHHC:082145 FAO No.1375 of 1991 -6- Insurance Corporation (supra), the dispute pertained to the refund of the sum paid as ESI contributions on the amount paid to the apprentices engaged by the respondent and the interest thereon but in the present case, along-with the claim of the petitioner for the refund of the amount of Rs.(02) two lac, as stated to have been paid by it in excess of the ESI contributions actually due from it, the afore-described corresponding claim of the respondent for the sum of Rs.1,06,198.20Ps, had also accrued due to the coverage of its more employees under the ESI Scheme, as discussed earlier.
10. As a sequel to the fore-going discussion, it follows that so far as the judgment under challenge pertains to the exclusion of conveyance/cycle allowance from the definition of 'wages' and the validity of the demand of the amount in dispute, as raised by the respondent towards ESI contributions for the period from April 1985 to September, 1987, the same does not suffer from any illegality, infirmity, irregularity or perversity so as to warrant any interference by this Court, and resultantly, the same is upheld and this appeal stands partly dismissed accordingly but as regards the claim of the petitioner regarding the refund of the amount, already paid by it as ESI contributions while treating the above-referred allowance as the part of the wages of its employees, the appeal in hand stands disposed of with the direction qua the adjustment thereof in terms of the observations made in the concluding part (in italics) of para No.8 in this judgment.
(MEENAKSHI I. MEHTA)
rd
July 03 , 2024 JUDGE
Yag Dutt
Whether speaking/reasoned: Yes
Whether Reportable: Yes
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