K. Harilal, J.
1. The Regional Director, Employees State Insurance Corporation, the respondent in I.C.No.54/2007 on the files of the Employees Insurance Court, Alappuzha has preferred this appeal challenging the legality and correctness of the findings of the Insurance Court that the amount paid to the security guards/supervisory officers by the respondents herein as uniform wash/maintenance cost, inspection expenses and special equipment cost, does not form a part of wages defined under Sec.2(22) of the Employees State Insurance Act, 1948 ('ESI Act' for short) as the same excluded under Clause (c) of the said Section. The parties are referred to as in the Insurance Case.
2. According to the Appellants/respondents, the respondent/applicant had omitted to pay contribution in respect of 36,70,362.58 during the year Rs. 2004-2005 and 2005- 2006, paid to the security guards/supervisory officers, under the heads uniform wash/maintenance cost, inspection expenses and special equipment cost and an amount of Rs. 2,38,576 is due towards ESI contribution in this regard. Consequently, the respondent issued Ext A4 C-18 notice proposing to assess contribution for the said amount. The applicant entered appearance before the respondent and submitted Ext D2 reply stating that the amount paid as uniform wash/maintenance cost, inspection expenses and special equipment cost does not form a part of wages or remuneration and the said amount was being paid, considering as a sum paid to the person employed, to defray a special expenses entailed on him by nature of his employment and therefore the said amount is not included in the definition of wages contemplated under Sec.2(22) of the ESI Act, 1948. The respondent considered the said reply and rejected it by passing Ext A6 order assessing and demanding Rs. 2,38,576 as contribution in this regard.
3. Feeling aggrieved, the applicant filed the above Insurance Case before the Insurance Court under Sec.75 read with Sec.77 of the ESI Act, 1948 seeking a declaration that Ext A6 order of the respondent passed under Sec.45 of the said Act assessing and demanding an amount of Rs. 2,38,576 towards ESI contribution is illegal and unsustainable under law. The respondent challenged the said application contending that omitted amount would fall under 'wages' contemplated under Sec.2(22) of the ESI Act and thereby the applicant was liable to pay contribution in this regard. After considering the rival contentions, the Insurance Court allowed the application and declared that Ext A6 order of the respondent passed under Sec.45 A of the ESI Act is illegal and unsustainable under law.
4. Heard the learned counsel for the appellant and the learned counsel for the respondent.
5. In view of the contentions raised in this appeal the question to be considered is whether the amount paid to the security guards as uniform wash/maintenance cost, inspection expenses and special equipment would form a part of 'wages' defined under Sec.2(22) of the ESI Act and be liable to be assessed for computing the contribution to ESI Corporation.
6. The case of the applicant is that the security guards have to wear uniform to perform their duty, and for washing and maintenance of uniform, payment is made to security guards and it cannot be treated as wages as it is a payment made to defray the expenses in this regard. The security guards employed in connection with security duties at petroleum insulations, airport, BSNL and such other similar places are doing their duty with rain coat, gumboots, lathy, whistle, armlet, torch etc and for the purpose of meeting such expenses they are paid special equipment allowances and it cannot be treated as wages. Similarly, the supervisory and controlling officers have to carry out regular visits in the work sites with a view to inspect security guards employed there. The expenses incurred on account of inspection of security guards and establishments are booked under the head inspection expenses. It is actual expenses incurred for such inspection and hence it cannot be treated as wages. Thus, the amount paid to them under the aforesaid three heads are paid to defray special expenses considering the special nature of their employment. Therefore the assessment of contribution in this regard is arbitrary and unsustainable in view of clause (c) of Sec.2(22) of the ESI Act.
7. On the other hand, the case of the respondent is that uniform wash/maintenance cost, inspection expenses and special equipment cost are disbursed on the basis of fixed percentage of the basic pay and it is being paid in every month. With regard to the inspection expense the supervisory officers are paid in lump sum to carry out the inspection. Therefore, above payment cannot be treated as payments made to defray special expenses and it has to be treated as remuneration paid in every month and thereby falls under wages, as per Sec.2(22) of the ESI Act. Therefore, the respondent has rightly assessed and demanded contribution as per the impugned order.
8. Sec.2(22) of the ESI Act reads as follows:
(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 additional remuneration, if any, (paid at intervals not exceeding two months), but does not include-
(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) any travelling allowance or the value of any travelling concession; (c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(d) any gratuity payable on discharge;
9. On a close analysis of Sec.2(22) of the ESI Act, it is seen that a wide meaning is given to 'wages' in the first limb of the said Section, encomapssing all remunerations including 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 additional remuneration, if any, paid at intervals not exceeding two months. But, the second limb of the said provision excludes the amount paid to the employee under clauses (a) to (d). Thus, the second limb is an exception to the first limb. When we interpret a provision, it is the fundamental principle that the provision as a whole must be taken and interpreted. Thus, when we take together both limbs of the said provision as a whole, wages means all remuneration and other additional remuneration except the amount to be paid under clauses (a) to (d) of section 2(22) of the Act. The learned counsel for the respondent emphasised the expression 'all remuneration' seen in the first limb of the said section. If such a piece-meal interpretation is given to the said section, what is contemplated and intended under clauses (a) to (d) would be redundant and rendered meaningless. 'All remunerations' in the first limb is subject to the exclusions in the second limb. The above interpretation is supported by the principles of beneficial interpretation. It is also well settled by the decision in AIR 2015 SC 2434 (Sashikala Devi vs Central Bank of India) that while interpreting a statue the Court ought to keep the legislative intent in mind and eschew an interpretation which tends to restrict, narrow down, or defeat its beneficial provisions.
10. The learned counsel for the appellant/respondent cited M/s.Harihar Polyfibres v. Regional Director, E.S.I. Corporation [AIR 1984 SC 1680] and contended that 'all remuneration' encompasses additional remuneration also and thereby the amount as uniform wash/maintenance cost, inspection expenses and special equipment cost also would fall under additional remuneration.
11. We have meticulously gone through the above decision and in the said decision the question for consideration was whether the expression 'wages', defined in section 2(22) of the ESI Act, includes 'House Rent Allowance', 'Night Shift Allowance' paid to those employees who are obliged to work in the night shift and the 'Heat, Gas and Dust Allowance' and 'Incentive Allowance' paid by the employer to his employees. The aforesaid amount was not paid to meet any kind of special recurring expenses to be incurred while doing their duty. There was no occasion to defray special recurring expenses and it was paid as additional remuneration, for the risky duty. But, in the instant case, the disputed amount was paid as wages considering the nature of their employment which requires recurring expenses for performance of duty and the said amount was paid to defray that special expenses. That apart, in the aforesaid decision, the Apex Court had no opportunity to consider the amount falling under clauses (a) to (d) of the definition of 'wages', as the question to be considered in that case was one falling under the first limb of the said definition only. In other words, the Apex Court has not considered the question whether any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment would fall under 'all remuneration' contemplated under the first limb of the said provision. In the above analysis, we find that the facts involved in the instant case are distinguishable from the facts involved in the above decision and the said decision cannot be applied to the instant case.
12. In the case of security guards, wearing a uniform to perform his duty is indispensable and that is a mandatory requirement entailed on him by the nature of his employment as a guard. By the nature of their employment as security guards they are required to maintain and keep their special identity so as to identify them easily. It is the duty of the employer to make them in such a pattern to give a special identity in appearance.
13. Similarly, security guards are required to work round the clock to carryout surveillance, patrolling and reconnaissance. They are liable to do such duties through the year, rain or shine, night or day. Therefore, it is the duty of the employer to afford them safety and protection, in the performance of their duty by making them well equipped suitably so as to meet any contingency and they are not expected to spend money for the same from their pocket. Thus, equipment allowance is given to meet such recurring expenses incurred owing to the nature of their employment.
14. The learned counsel for the appellant specifically pointed out that the inspection expenses would not fall under clause (c) of section 22. But, it is the case of the applicant that the supervisory and controlling officers have to carry out regular visits to the work sites with a view to inspect the security guards employed there. The expenses incurred for travelling to the work sites/establishments where security guards are deployed, are booked under the head inspection expenses. It is the actual expenses incurred for discharging duty and, hence, it cannot be treated as wages. The nature of expense incurred for visiting the work sites to inspect the security guards deployed there, is not disputed by the respondent. So we are of the view that so long as such inspection forms a part of their official duty, it is incumbent on the employer to meet such expenses and if the employee is paid for meeting such expenses, it can never be treated as wages or salary of the employee, more so because an employee is not expected to do his duty spending money from his pocket. Therefore, we are of the view that the amount spent to carry out regular visits to work sites with a view to inspect security guards employed there would not fall under the expression 'wages'; but the same would fall under clause (c) as the amount paid considering the nature of employment. Therefore we reject the argument advanced by the learned counsel for the appellant.
15. The contention of the
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respondent is that the said amount is paid as 10% of the basic pay. We find that the mode of payment is insignificant. But the nature of payment and the reason for such payment are relevant and decisive. Merely on the reason that 10% of the basic pay is paid to defray special expenses incur for discharging duty, it cannot be held that it forms a part of remuneration. It is intended for the purpose of quantification of the amount only. 16. We are of the view that the amount paid as uniform wash/maintenance cost, inspection expenses and special equipment cost are the amount paid considering the nature of their employment to defray special expenses incur for discharging their duty and such amounts are excluded under clause (c) of section 2(22) of the Act. 17. We further found that the above interpretation is justified by the decision cited by the learned counsel for the respondent which reads as follows: 'The Employees State Insurance Act is a welfare legislation and the definition of 'wages' is designedly wide. Any ambiguous expression is, of course, bound to receive a beneficent construction at our hands too.' In the above view, we do not find any illegality or impropriety in the findings of the Insurance Court. Hence this appeal is devoid of merits and dismissed accordingly.