Case Note & Summary
The appellant, Khadi Gramodyog Emporium, Nagpur, was assessed by the respondent, Deputy Regional Director, ESIC, for contribution under the ESI Act in respect of honorarium paid to two elected secretaries, Shankarrao Padhye and R.M. Aswale, and daily wages paid to a chowkidar. The appellant contended that the secretaries were not employees but members of the society rendering honorary service. The ESI Court dismissed the appellant's application under Section 75(1) of the ESI Act. On appeal, the High Court framed two substantial questions of law: (i) whether Mazdoori Khata paid for work during lunch hours is wages under Section 2(22), and (ii) whether honorarium paid to elected secretaries is wages under Section 2(22). The court held that the honorarium paid to elected secretaries is not wages as there is no employer-employee relationship; the secretaries are members of the society and not employees. However, the Mazdoori Khata paid to staff for working during lunch hours is wages as it is remuneration for work done. The court allowed the appeal in part, setting aside the order of the ESI Court and the ESIC order to the extent of the honorarium, but upheld the demand for contribution on the Mazdoori Khata amount.
Headnote
A) ESI Act - Wages - Definition - Section 2(22) - Honorarium paid to elected secretaries of a society is not wages as there is no employer-employee relationship - The court held that the elected secretaries are members of the society rendering honorary service, not employees, and thus the honorarium does not fall within the definition of wages under Section 2(22) of the ESI Act (Paras 4-6). B) ESI Act - Wages - Definition - Section 2(22) - Mazdoori Khata paid to staff for working during lunch hours is wages - The court held that such payment is remuneration for work done during lunch hours and constitutes wages under Section 2(22) of the ESI Act (Paras 4-6).
Issue of Consideration
Whether honorarium paid to elected secretaries and Mazdoori Khata paid for work during lunch hours constitute wages under Section 2(22) of the Employees' State Insurance Act, 1948
Final Decision
Appeal allowed in part. The order of the ESI Court and the ESIC order under Section 45A are set aside to the extent of the demand for contribution on honorarium paid to elected secretaries. The demand for contribution on Mazdoori Khata paid for work during lunch hours is upheld.
Law Points
- Honorarium paid to elected secretaries of a society is not wages under Section 2(22) of the ESI Act
- Mazdoori Khata paid for work during lunch hours is wages under Section 2(22) of the ESI Act
