“Conveyance Allowance” should not fall under the definition of “Wages” under Section 2(22) of the Employees’ State Insurance Act, 1948.
In a Special Leave Petition (C.) No. 811/2021 filed in the Hon’ble Supreme Court of India, Civil Jurisdiction in the case between the ESIC, as the Petitioner and M/s Texmo Industries, the Respondent, the Apex Court has given another Landmark Judgment on the contention between parties to the case in SLP that “Conveyance Allowance” should not fall under the definition of “Wages” under Section 2(22) of the Employees’ State Insurance Act, 1948.
Brief Fact of the Case:
On or about 23/01/2015, ESIC authority from SRO Coimbatore inspected the establishment of the Respondent Company and had issued a Demand Notice to M/s Texmo Industries, charging escaped contribution amount on omitted wages totaling of Rs.21,52,829/- for the period from December 2010 to December 2014 out of which Rs.9,48,517 was towards the Conveyance Allowance which was part of the monthly wage component of employees in the establishment.
The disputed matter led to file the SLP in question by ESIC before the Hon’ble SC of India and the Apex Court dismissed the SLP contending the fact and maintaining the order of Employee Insurance Court as well as the Hon’ble Supreme Court where the Learned Advocate of the Apex Court opined and passed the order that Conveyance Allowance shall not form part of the wages of the employees and the judgment clutches good with effect from 08/03/2021.
Basis of the judgment as given both the E.I. Court and the Hon’ble Supreme Court of India substantiate the excluded part of the Wages defined in Section 2(22) in which Travelling Allowance or value of Travelling Concession has been categorically and specifically have been kept out of the purview of definition of wages.
Observation of ESI Court in Clause 15 of SLP:
The ESI Court held, and in our view rightly, that Conveyance Allowance is in the nature of travelling allowance, the object of which is to enable the employee to reach his place of work and defray costs incurred on travel from his place of residence to his place of work. Observations of ESI Court, in view of the Hon’ble Apex Court was very much correct of the fact in defining that Conveyance Allowance is purely in the nature of travelling allowance, the reason of which is to enable the employee to reach his place of work and to defray expenses incurred on travel from his place of residence to his place of work.
The Hon’ble Supreme Court went ahead to simplify the Travelling Allowance supported with reason that Conveyance Allowance cannot be excluded from the definition of “wages” as it is paid every month to every employee, like House Rent Allowance, in terms of the contract of employment, so as to meet to and from conveyance expenses, is based on “erroneous construction” of Section 2(22) of the said Act.
In the judgment it has been elucidated the fact of implication on terms of employment, the Conveyance Allowance may or may not be payable to every employee in the establishment and in reference and comparison to it, other components such as House Rent Allowance does not necessitate to be paid to all employees in the establishment. It is inconsequential whether an allowance is paid consistently or sporadically depending on exigencies. It is the nature and purpose of the allowance which is relevant.
Considering all material evidence place before the Hon’ble Supreme Court, it is specifically narrated by the Court that there is no infirmity at all in the concurrent findings of the High Court and the ESI Court which calls for interference under Article 136 of the Constitution of India. Accordingly, the Special Leave Petition is dismissed by the Hon’ble Supreme Court of India.
*(Opinion expressed is without any prejudices of all and whatsoever in nature explicit to institutions, persona or personae in any and all forms and in nature.)