Madras High Court
Coimbatore Pioneer Mills Ltd. vs Regional Director, Regional Office ... on 29 October, 1998
Equivalent citations: [1999(81)FLR416], (1999)IIILLJ1236MAD
Author: Shivraj Patil
Bench: Shivraj Patil
ORDER Shivraj Patil, J.
1. Heard the learned counsel for the parties.
2. Briefly stated, the facts leading to the filing of the writ petition are the following: The petitioner-Company has got two mills, one at Peelamedu and another at Perianaickenpalayam, engaged in the manufacture of yarn; most of the employees employed in the mills at Peelamedu are covered by the Employees' State Insurance Act (for short 'ESI Act') and the scheme framed thereunder; the petitioner has been deducting statutory contribution from the wages payable to the employees and remitting the contribution in accordance with the provisions of the E.S.I. Act; the respondent issued two notices to the petitioner dated May 5, 1987 and February 14, 1989 to show within fifteen days why contribution as per statements enclosed with them should not be recovered; the principal employer, i.e., the petitioner, replied to the said show cause notices and the petitioner was given personal hearing on May 28, 1987 and March 8, 1989; thereafter, order was passed under Section 45-A of the E.S.I., Act as amended in No. TN/INS-IX/51-5945-11, dated June 8, 1989; the said order relates to contributions towards items 1 to 6; but the dispute and challenge in this writ petition is confined to only item No. 1 of C-18, dated February 14, 1989, in regard to the contribution to be made for the interim payments made to the employees pursuanttoG.O.Ms.No. 1399, dated July 15, 1985 issued by the State Government and the award passed by the Special Industrial Tribunal in M.P.No. 20 of 1986.
3. An industrial dispute had been raised for revision of wages and other related matters by the Textile Trade Unions in Tamil Nadu against more than 600 textile Managements. On failure of conciliation, the State Government referred the dispute for adjudication to a Special Industrial Tribunal, Madras and at the same time issued G.O.Ms.No. 399, dated July 15, 1985, exercising power under Section 10-B of the Industrial Disputes Act (as amended by the Tamil Nadu Act 36 of 1982), directing the Managements to make an interim lump sum payment of Rs. 500 and a monthly payment of Rs. 75 for six months from -July/August, 1985. The petitioner, in order to avoid penal consequences paid the said amount as was done by other mills. But, certain managements questioned the said order of the Government before this Court. The writ petitions were admitted; but interim orders were refused. According to the petitioner, only a handful of Mills were picked up by the respondent for payment of contribution and threatened prosecution on their failure to comply with the order. Any money paid by the employer to the workmen in pursuance of the aforementioned Government order could be deducted by the employer from out of the monetary benefit to which such workmen would become entitled under the provisions of the Award that may be passed by the Special Industrial Tribunal. Since the dispute was not over by December, 1985, the Special Industrial Tribunal recorded an 'accord' between the parties to extend the interim payment till April, 1986, pending adjudication of the dispute between the petitioner and 81 other textile mills and their employees. Ultimately, the dispute was concluded on March 21, 1986 by the settlement entered into between the parties. Under Clause 3(c) of the said settlement, it was specifically agreed that the interim payment made for the period from July, 1985 to April, 1986 were to be treated as ex-gratia. On the basis of the said settlement filed before the Special Industrial Tribunal, an award was passed, after an elaborate enquiry. Under Clause 66(f) of the Award, the Tribunal had held that the payments made in compliance with the Government Order issued under Section 10-B of the Industrial Disputes Act and as per the 'accord' recorded by the Tribunal in M.P.No. 20 of 1986, need not be recovered from the workmen or adjusted against the increase given under the said award and in fact, they shall stand written-off as ex-gratia payments.
4. The respondent took the view that payments made pursuant to the aforementioned Government order under Section 10-B of the Industrial Disputes Act did not give any discretion to the employer and as such, it must be treated as payment made under a contract between the employer and the workmen and such a contract should be read into the said Government order. Hence, the payments so made fell within the definition of 'wages' under Section 2(22) of the E.S.I. Act; the employer has made payment regularly each month, even pursuant to the Government order; therefore, such payment fell within the definition of 'wages'; the fact that subsequently that amount was treated as ex-gratia was only to regularise the payment already made and to ward off recovery or adjustment; as such, the respondent passed the impugned order holding that the petitioner was liable for contribution of Rs. 34,565.15 in respect of the interim payment made. Hence, the writ petition is filed by the petitioner to quash the impugned order dated June 8, 1989, so far as it related to item 1 of C-18 dated February 14, 1989, relating to contribution in respect of interim payment made, contending that the petitioner is not at all liable to pay, contributions in respect of interim payments made pursuant to the Government order passed under Section 10-B of the Industrial Disputes Act and in terms of the settlement and the award passed by the Special Industrial Tribunal, because such payments could not be included in 'wages' and which were ultimately treated as ex-gratia and they were written-off also, as is evident from the Award passed by the Tribunal; the respondent manifestly erred in ignoring the valid award made by the competent authority, viz., the Special Industrial Tribunal; that the respondent could not read in the Government Order any contract between the parties.
5. The learned counsel for the petitioner in his arguments reiterated the contentions raised in the writ petition, referring to a Division Bench Judgment of this Court in E.S.I. Corporation v. E.LD. Parry (India) Ltd., 1984 1 L.L.N. 159 and the judgment of the Apex Court in Regional Director, Employees' State Insurance Corporation v. Bata Shoe Co. (P) Ltd., . He also relied on the judgment of this Court passed in W.P.No. 5353 of 1989 on April 16, 1998, in an identical case on the similar set of facts, where the learned single Judge allowed the writ petition accepting the contention of another mill, which was also covered by the said Government Order viz., G.O.Ms.No. 1399, dated July 15, 1985.
6. The learned counsel for the respondent made submissions supporting and justifying the order passed by the respondent, for the reasons stated in the order impugned.
7. I have considered the submissions made by the learned counsel for the parties. The facts that are not in dispute are; An interim lump sum payment of Rs. 500 and a payment of Rs. 75 for six months from July/August, 1985 were made pursuant to G.O.Ms.No. 1399. dated July 15, 1985 and at the same rate further payments were made till April, 1986 on the basis of the accord reached before the Special Industrial Tribunal, pending adjudication of the Tribunal, the parties arrived at a settlement, which was placed before the Special Industrial Tribunal, which finally passed an award after elaborate enquiry; Para 66(f) of the award of the Special Industrial Tribunal reads that "the payments made already in compliance with Section 10-B order of the Government as also the accord before this Tribunal in M.P.No. 20 of 1986, shall not be recovered from the workmen or adjusted against the increase given under this award and in effect, they shall stand written-off as ex-gratia payment.
8. The learned single Judge in paragraph 8 of his order in W.P.No. 5653 of 1989, dated April 16, 1998, has elaborately dealt with an identical question raised for consideration and referring to the decisions of the Apex Court, rejected the contentions of the respondent and agreed with the contentions raised by the petitioner therein. I have no good reason to differ from the said conclusion based on the reasons given and in view of the decisions of the Apex Court cited.
9. In E.S.L Corporation v. E.LD. Parry (India) Ltd. (supra) referring to Braithwate and Company (India) Ltd. v. Employees' State Insurance Corporation, (1968-I-LLJ-550) (SC), it is stated that it was perfectly legitimate for the employees, while settling their dispute, to come to a settlement, that such payment shall not be reckoned for purpose of provident fund, bonus, gratuity, Employees' State Insurance Contributions, etc. Paragraph 66(f) of the award passed by the Special Industrial Tribunal, the relevant portion of which is already extracted above in clear terms has stated that the interim payment made pursuant to the Government order and the accord reached before the Tribunal, shall not be recovered from the workmen or adjusted against the increase given under the award. Further such payments are written-off as ex-gratia payments. There was no valid or good reason for the respondent to ignore or for not accepting the same, when such an award was passed on the basis of the settlement arrived at by the parties. I am also unable to agree with the contention raised on behalf of the respondent that an implied contract must be read in the Government order G.O.Ms.No. 1399, dated July 15, 1985, merely because no discretion was left to the petitioner in making payment pursuant to the said order and having regard to the settlement arrived at between the parties, the terms of which settlement were ultimately accepted by the Special Industrial Tribunal and became part of the award, the validity of which was not assailed. Looking to the undisputed facts, mentioned above and to paragraph 66(f) of the Award passed by the Special Industrial Tribunal dated February 23. 1987. it cannot be held that the interim payments made to the employees could be brought within the definition of "wages" as per Section 2(22) of the E.S.I. Act.
10. In the result, for the reasons stated, the following order is passed:
(i) the writ petition is allowed;
(ii) the impugned order No. TN/INS-IX/51-5945-11, dated June 8, 1989, so far it relates to item No. 1 of C-18 dated February 14, 1989, relating to the interim payment made pursuant to the Government Order G.O.Ms.No. 1399. dated July 15, 1985 under Section 10-B of the Industrial Disputes Act and made on the basis of the accord reached before the Special Industrial Tribunal, is quashed;
(iii)There will be no order as to costs.
11. W.M.P.No. 13796 of 1989 is closed.