Special Leave Petition Civil No 9795 of 1983
From the Judgment and Order dated the 20th April 1983 of the Karnataka High Court in Misc
First Appeal No 639 of 1983
KR Nagaraj Naresh Kaushik RS Hegde and B Krishna Prasad Miss CS Lalitha for the Petitioners
The following Orders were delivered CHINNAPPA REDDY J
The question for consideration in this petition for special leave to appeal under Article 136 of the Constitution of India is whether the expression wages  defined by s222 of the  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 an employer to his employees
Section 222 defines wages  as meaning all remuneration paid or payable in cash to an employee if the terms of the contract of employment 714 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 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
 The is a welfare legislation and the definition of wages  is designedly wide
Any ambiguous expression is or course bound to receive a beneficent construction at our hands too
Now under the definition first whatever remuneration is paid or payable to an employee under the terms of the contract of the employment express or implied is wages thus if remuneration is paid in terms of the original contract of employment or in terms of a settlement arrived at between the employer and the employees which by necessary implication becomes part of the contract of employment it is wages second whatever payment is made to an employee in respect of any period of authorised leave lock out strike which is not illegal or lay off is wages and third other additional remuneration if any paid at intervals not exceeding two months is also wages this is unqualified by any requirement that it should be pursuant to any term of the contract of employment express or implied
However wages  does not include any contribution paid by the employer to any pension fund or provident fund or under the Act any travelling allowance or the value of any travelling concession any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment and any gratuity payable on discharge
Therefore wages as defined 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 not exceeding two months though outside the terms of employment
Thus remuneration paid under the terms of the contract of the employment lexpress or implied or otherwise if paid at intervals not exceeding two months is wages
The interposition of the clause 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  between the 715 first clause all remuneration paid or payable in cash to an employee if the terms of the contract of employment express of 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  under 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 appears to our mind no reason to exclude House Rent Allowance  Night Shift Allowance  Incentive Allowance  and Heat Gas and Dust Allowance  from the definition of wages 
A Full Bench of the Karnataka High Court in NGEF Ltd vs Deputy Regional Director ESIC Bangalore considering the question at some length held that the amount paid by way of incentive under the scheme of settlement entered into between the Management and its workman was wages  within the meaning of section 222 of 
It was observed by the Full Bench of the Karnataka High Court as follows It is true that the word remuneration  is found both in the first and second parts of the definition
But the condition attached to such payment in the first part cannot legitimately be extended to the second part
The other additional remuneration  referred to in the second part of the definition is only qualified by the condition attached thereto that is paid at intervals not exceeding two months
That was also the view taken by a Full Bench of the Andhra Pradesh High Court in Employees State Insurance Corpn
Hyderabad vs Andhra Pradesh Paper Mills Ltd and also the Bombay High Court in Ms Mahalaxmi Glass Works Pvt Ltd vs Employees  State Insurance Corpn
But this aspect of the matter has been completely overlooked by this Court in Kirloskar s case
 In Employees State Insurance Corporation Hyderabad vs Andhra Pradesh Paper Mills Ltd Rajahumundry a Full Bench Divan CJ Raghuvir and Gangadhara Rao J of the Andhra Pradesh 716 High court held that incentive bonus paid to an employee which the Court on the facts of the case found was not remuneration in terms of the contract of employment express or implied fell within the third part of the definition of wages  that is additional remuneration  if any paid at intervals not exceeding two months 
The Full Bench said The word other  appearing at commencement of the third part of the definition of wages under s222 indicates that it must be remuneration or additional remuneration other than the remuneration which is referred to in the earlier part of the definition viz all remuneration paid or payable in cash to an employee if the terms of the contract of employment express or implied were fulfilled and incentive bonus in the present scheme is certainly additional remuneration
It must be emphasized at this stage that under the third part of the definition of wages  it is actual factum of payment which counts because the word used is paid  as distinguished from paid  or payable
The moment you get any additional remuneration other than the remuneration payable under the contract of employment and if this additional remuneration is paid at intervals not exceeding two months it becomes wages by virtue of the third part of the definition of wages 
 The learned judges of the Full Bench referred to the judgment of a learned Single judge of the Calcutta High Court in Bengal Potteries Ltd vs Regional Director W Bengal Region Employees State Insurance Corporation and others where the learned Judges had held that the additional remuneration sought to be included by the expression  and includes other additional remuneration  must be remuneration which though no part of the wages could be paid as part of the terms of contract of employment The Full Bench did not agree with the view expressed by the learned Single Judge and said We are unable to agree with this part of his reasoning and for the reason which we have set out hereinabove we disagree with this part of his judgment in para 3
717 We express our respectful agreement with what has been said by the Full Bench of the Andhra Pradesh High Court in the above extracted passage and their dissent from the view expressed by the learned Single Judge of the Calcutta High Court
The Full Bench further held that House Rent Allowance  paid by an employer to his workmen would constitute wages within the meaning of the section 222 of the Act
Our attention was also invited to the case of Braithwaite  Co India Ltd vs The Employees  State Insurance Corporation V Bhargava and CA Vaidialingam JJ
The case arose prior to the amendment of the in 1966 when the explanation to section 41 was bodily lifted from section 41 into the definition of wages  in s222
The case related to the payment of an ex gratia reward styled as an Inam  a bounty which was admittedly not claimed to be additional remuneration if any paid at intervals not exceeding two months  but claimed to be remuneration paid or payable to in cash to an employee if the terms of the contract of employment express or implied was fulfilled  which the Court found it was not
The case has been sufficiently explained by the Full Bench of the Andhra Pradesh High Court in ESI Corpn Hyderabad vs AP Paper Mills Ltd supra and by the Full Bench of the Karnataka High Court in NGEF Bangalore vs Deputy Regional Director ESIC Bangalore
We do not think that it is necessary to say anything further in this matter
In this view the special leave petition is dismissed
AMARENDRA NATH SENJ
I have read the judgment of my learned brother O Chinnappa Reddy J I entirely agree that on true interpretation of the word wages  defined in S222 of the  wages  must necessarily include House Rent Allowance Night Shift Allowance Heat Gas and Dust Allowance and Incentive Allowance 
The definition of wages  has been set out in the judgment of my learned brother
The inclusive part and the exclusive portion in the definition clearly indicate to my mind that the expression wages  has been given a very wide meaning
The inclusive part of 718 the definition read with exclusive part in the definition clearly shows to my mind that the inclusive portion is not intended to be limited only to the items mentioned therein
Taking into consideration the excluding part in the definition and reading the definition as a whole the inclusive part to my mind is only illustrative and tends to express the wide meaning and import of the word wages  used in the 
The is a piece of social welfare legislation enacted for the benefit of the employees
The Act has to be necessarily so construed as will serve its purpose and objects
I entirely agree with my learned brother that on a proper interpretation of the term wages  the legislative intent is made manifestly clear that the term wages  as used in the Act will include House Rent Allowance Night Shift Allowance Heat Gas and Dust Allowance and Incentive Allowance
The definition to my mind on its plain reading is clear and unambiguous
Even if any ambiguity could have been suggested the expression must be given a liberal interpretation beneficial to the interests of the employees for whose benefit the has been passed
All other aspects including the various decisions of the High Courts on this question have been considered by my learned brother in his judgment
I entirely agree with the views of my learned brother and I have nothing more to add
With these observations I agree with my learned brother that this Special Leave Petition has to be dismissed
NVK Petition dismissed


Summary:
The question was whether the expression wages  as defined in section 2 22 of the includes House  Rent Allowance  Night Shift Allowance  Heat Gas and Dust Allowance  and Incentive Allowance  paid by an employer to his employees  HELD By the Court 1
is a piece of social welfare legislation
The definition of wages  is designedly wide
The definition on its plain reading is clear and unambiguous
Even if there is any ambiguity the expression has to be given a liberal interpretation and receive beneficent construction714C 2
Wages  as defined in section 2 22 of the must necessarily include House Rent Allowance  Night Shift Allowance  Heat Gas and Dust Allowance  and Incentive Allowance 
715C Braithwaite  Co India Ltd vs The Employees  State Insurance Corporation 19681 SCR 771 referred to NGEF Ltd vs Deputy Regional Director ESIC Bangalore and Employees  State Insurance Corporation Hyderabad vs Andhra Pradesh Paper Mills Ltd Rajahamundry  approved
Bengal Potteries Ltd vs Regional Director W Bengal Region Employees 713 State Insurance Corporation and others 1973 LAB
IC 1328 V  over ruled
Per Chinnappa Reddy J Wages as defined in section 2 22 of the Act includes not only 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 not exceeding two months though outside the terms of employment
714G Remuneration  under the first clause has to be under a contract of employment express or implied while remuneration  under the third clause need not be under the contract of employment but may be any additional remuneration  outside the contract of employment 715B Per Amarendra Nath Sen J
The inclusive part and the exclusive portion in the definition of wages  in section 2 22 clearly indicate that the expression wages  has been given a very wide meaning
The inclusive part of the definition read with the exclusive part in the definition clearly shows that the inclusive portion is not intended to be limited only to the items mentioned therein
Taking into consideration the excluding part in the definition and reading the definition as a whole the inclusive part is only illustrative and tends to express the wide meaning and import of the word wages 
717H 718A B