Employee ployees State Insurance Corporatio nkar oration, Chandigarh v. Onkar Nath Gupt Gupta
Case Details
FAO-2152-2000 2000 (O&M) 1 [215] IN THE HIGH COURT OF PU AT CHANDIGAR IGARH OF PUNJAB AND HARYANA FAO-2152 Date of De 2152-2000 (O&M) of Decision : 08.12.2025 Employees Panchdeep tion, loyees State Insurance Corporation, abad hdeep Bhawan, Sector 16, Faridabad …Appellant versus M/s Metlex Metlex (India) Private Limited, Gurgao Gurgaon ….Respondent Coram : HON’BLE MR. JUSTICE PA PANKAJ JAIN Present: Mr. Anil Shukla, Advocate for ate for the appellant. **** PANKAJ J KAJ JAIN, J. (ORAL) [1] The present appeal is directed .2020 rected against Order dated 05.02.2020 passed by t d by the ESI Court, Gurgaon. [2] The dispute between the Corp essee e Corporation as well as the assessee involves ar lves around the issue:- ‘Whether the overtime allowan yer owance being paid by the employer to its employees would be in hus, e included in the wages and thus, would the employer be requi the equired to pay contribution to the Corporation on the same as we as well? [3] ESI Court relied upon ratio of
Legal Reasoning
urt in atio of law laid down by this Court in ‘Employee ployees State Insurance Corporatio nkar oration, Chandigarh versus Onkar Nath Gupt Gupta’, 1975 PLR 79 and observe a erve as under:- “ Under the definition of wa f wages in section 2(22) of the Act, the , there must be a contract between the pa e parties so as to constitute them employ ployer and employees. Every casual work orker for what ever purpose engaged do d does not become an employee of anoth nother. In the case in hand S.K. Puri a ri and RAJNEESH SHARMA 2025.12.11 17:01 I attest to the accuracy and integrity of this document Company, Seema Enterprises and and M/s Jali Enterprises were engaged f ed for FAO-2152-2000 2000 (O&M) 2 installation of Chilly plot and they they were paid for repairs and maintenan enance of the Chilly plot. There is no evide evidence that there is intention that both t oth the parties intending to bring abou about the relationship of employer a r and employee between them hence, it is , it is not possible to hold that these pers person who were engaged for repair and and maintenance were the employees of t of the petitioner in respect of whom the c he contribution is payable under the Act. Act. In this regard the reliance can be pl e placed upon Employees State Insuran urance Corporation Chandigarh Vs. Onka nkar Nath Gupta 1975 PLR 79. Further t her the limit for coverage of employee und under the ESI Act was Rs.3000/-. This fa is fact is not denied by the corporation th on therefore, on wages of over time paid paid to the work men, the petitioner is no is not entitled to provide ESI contributio bution. Over-time work is not done und under the contract of service and is n is not continuity of work therefore, als also the petitioner is not liable to p to pay contribution towards the amount unt of over time. The respondent failed iled to give the details How and on which hich basis this amount has been demand nded by the corporation. Hence the dem demand raised by the respondent vide E ide Ex. Pl is illegal. So far as the amount o unt of repair and maintenance is concern cerned accordingly it is held that the p e petitioner is not liable to pay the E he ESI contribution towards the amount o nt of over time, repair and maintenance nce as detailed in Ex. Pl. Accordingly t ly this issue is decided in favour of t of the petitioner and against the responde ondent. ” [4] Learned counsel for the app e appellant has relied upon ‘India ‘Indian Drugs & s & Pharmaceuticals Limited ited etc. versus Employees Sta State Insurance rance Corporation etc.’, reported as rted as AIR Online 1996 SC 755, , to submit that it that the issue would be covered in fa ed in favour of the Corporation. [5] Having heard counsel for the efully for the appellant and after carefully perusing th sing the record(s) of the case, this ue is , this Court finds that the issue is squarely co rely covered by the following observ reme observations made by the Supreme Court in ‘I ‘Indian Drugs & Pharmaceutica euticals Limited etc.’ (supra):- “ Herein, we have to consider sider whether overtime wages would be pa be part of the wages. It is settled legal po l position that the word 'include' would uld be given wide interpretation so as to s to bring within its ambit exhaustively ely all entries akin to or analogous to the the main part of wage, except to the exte extent RAJNEESH SHARMA 2025.12.11 17:01 I attest to the accuracy and integrity of this document the enumerated entities except thos those expressly excluded by the legislati slation FAO-2152-2000 2000 (O&M) 3 would be within its sweep. In oth other words, by employing the inclusi clusive definition, the Legislature intended nded to bring in, by legal fiction, somethi ething within the accepted connotation t ion though not strictly included within hin its ambit. It is seen that the Legislatu lature has expressly excluded items A to A to D from the purview of the definition " ion "wages". In other words, the Legislatu slature suggested that all other categories ries which are not excluded, fall within t hin the inclusive wider definition of "w f "wages'. The Legislature by defini efining 'employee', having had the knowled wledge of the payment of the remunerati eration for overtime work done by the emp employee and having excluded it in Secti ection 2(9), the omission thereof in the de e definition of Section 2(22) excluding item g items A to D, would be eloquent and me d meaningful. Whatever remuneration, pa n, paid or payable for overtime work, form forms wages under an implied term of t of the contract. The object thereby is cle s clear that the overtime work done by t by the employee is an implied contract to ct to do overtime and the remuneration pa n paid therefore does form part of the wag wages under Section 2(22). Concomitant itantly, the employer is enjoined to pay the y the contribution under the Act and shou should be required to be complied with. T th. This Court in Harihar Polyfibres vs. The regional Director, ESI Corporatio ation [(1985), 1 SCR 712] was to consid nsider whether HRA, Night Shift Allowa lowance, Heat, Gas and Dust allowanc wance, incentive allowance paid by the the employer to his employee are wag wages within the meaning of Section 2(2 n 2(22) of the Act. This Court consider idered elaborately and had held that the t the Act is a welfare legislation. and t nd the definition of wages is designedly dly wide. Any ambiguous expression is, is, of course, bound to receive a benefi eneficent construction at the hands of t of the Court. Under the definition, whate hatever remuneration is paid or payable able to an employee under the terms of the f the contract of the employment, express ress or implied, is wages, Thus, if remune uneration is paid to the employee in term terms of the original contract of employm loyment or in terms of a settlement which hich by necessary implication becomes pa s part of the contract of employment, it t, it is wages. It was also further held t eld that this inclusive part as against t nst the exclusionary part in the definition ition clearly indicates that the expressi ression wages has been given a very wid wide meaning. The inclusive part of t of the definition read along with the excl exclusionary part in the definition, clear clearly shows that the inclusive part is not not intended to be limited only to the item e items mentioned therein. Taking into con consideration the exclusionary part in t in the definition and reading the definitio nition as a whole, the inclusive part is on is only illustrative and tends to express the s the wide meaning and import of the wo e word 'wages' used in the Act. It was was held therein that HRA, Night, Sh , Shift Allowance, Heat, Gas and Dust all t allowance, incentive allowance are wag wages RAJNEESH SHARMA 2025.12.11 17:01 I attest to the accuracy and integrity of this document within the meaning of Section 2( n 2(22) of the Act. The facts in this ca is case FAO-2152-2000 2000 (O&M) 4 squarely fall within the above ratio ratio laid by this Court. When the admitt mitted position is that an employee has do s done the overtime work and received or d or is due to receive remuneration towa towards the work done for his renderi dering service, necessarily, it is a wage p ge paid or payable by virtue of the impli mplied contract. The contract of employm loyment is entered into only at the init initial entry into the service. In the cours ourse of the employment, as and when t en the employer finds the need to have wo e work done expeditiously, in addition to t to the normal work during the course of e of the working hours, the employer offe offers to the employee to do overtime w e work after the working hours. When hen an employee does overtime work, it am amounts to acceptance of the same. The . There emerges concluded implied contra ntract between separately on the letter tter of appointment. It becomes integral ral part of original or revised contract ract of employment from time to time. Th . The employer is obligated to pay wag wages when the employee does work. Thi . This will be, in addition to payment of t of the wages he receives for normal work ork. In other words, both the remunerati eration received during the working hour hours and overtime constitute a compos posite wages and thereby it is a wage wit e within the meaning of Section 2(22) of t of the Act. The Calcutta High Court and t and the Karnataka High Court have appli pplied technical rules of construction, nam , namely, the Legislature does not express pressly say so and, therefore, remuneration ation paid for overtime work is not a wag wage. We think that the approach ado adopted by these High Courts is clear clearly unsustainable and illegal. On the the other hand, the view expressed by t by the Bombay High Court in Shivraj Fin j Fine Art Litho Works, Nagpur v. Directo rector, Regional Office Maharashtra, Bom Bombay & Ors. [1974 Lab. IC 328) (V ) (V 7 C72), by Delhi High Court in E.S.I .S.I.C. New Delhi v. Birla Cotton, Spinni inning & Weaving Mills Ltd., Delhi [19 i [1977 II LLJ 420] and by the Andh ndhra Pradesh High Court in M/s. The H he Hyderabad Allwyn Metal Works Ltd. Ltd. v. Employees State Insurance Corp orporation [1981 Lab. IC 457] and t nd the earlier decision referred to are cor e correct in law. The ratio in Braithwaite aite & Co. (India) Ltd. vs. ESI (1968) 1 S 1 SCR 771], is no longer applicable, sin , since it was prior to the amendment of t of the definition. As a result, it no long longer
Decision
operates as a ratio. Thus, we hold t old that the view taken by the High Court ourt of Andhra Pradesh is in accordance w ce with law laid down by this Court. We We do not find any ground warranting inte interference. ” [6] Accordingly, the present appe g that t appeal is disposed off, holding that the employ mployer is required to pay contribut on on ntribution to the ESI Corporation on wages inclu s including overtime allowance paid paid to the employees. RAJNEESH SHARMA 2025.12.11 17:01 I attest to the accuracy and integrity of this document 5 FAO-2152-2000 2000 (O&M) [7] [8] No other point has been argued argued. All pending miscellaneous a tands eous application(s), if any, stands disposed of ed off. .2025 08.12.2025 ‘R. Sharma' (PANKAJ JAIN) JUDGE Whether speaking/ reasoned Whether reportable : : Yes/No Yes/No RAJNEESH SHARMA 2025.12.11 17:01 I attest to the accuracy and integrity of this document