Summary
The Supreme Court held that conveyance allowance compensating employees for travel to work fell within the travelling allowance exclusion from wages under the ESI Act. Its nature and purpose mattered, rather than monthly payment, a fixed amount or inclusion in the employment contract. There was no allegation or finding that the employees incurred no conveyance expense. The Court sustained deletion of the disputed contribution demand and dismissed the Corporation’s special leave petition.
Issues
- Whether conveyance allowance paid regularly under employment terms formed part of wages for ESI contributions.
Provisions considered
- Section 2(22), particularly clause (b), Employees’ State Insurance Act, 1948Conveyance payments compensating travel expenses were within the express exclusion for any travelling allowance. (¶ 12-29)
Held
- Travelling allowance includes conveyance for commuting as well as longer journeys. The statute did not limit the exclusion to occasional outstation duty travel. (¶¶ 14-22, 26-28)
- A fixed or regular contractual payment does not cease to be travelling allowance merely because it accompanies wages. Its nature and purpose, rather than payment frequency or nomenclature alone, determine treatment. (¶ 18-23)
- The Court preserved the qualification that an allowance unrelated to any needed conveyance expense might be wages. No such absence of travel expense was alleged or found here. (¶ 25)
- The Court approved the relevant Madras and Kerala decisions and rejected the contrary Karnataka view distinguishing monthly conveyance from travelling allowance on that basis. Decisions on other remunerative allowances did not control the express travel exclusion. (¶¶ 16-21, 28-30)
Result
Special leave petition dismissed; exclusion of the disputed conveyance allowance contribution sustained.