M/S. QUALITY INN SOUTHERN STAR vs REGIONAL DIRECTOR, E.S.I.

The Supreme Court upheld the Karnataka High Court's dismissal of the appeal under Section 82(2) of the Employees’ State Insurance Act, 1948, affirming the ESI Court's ruling that service charges collected by a hotel management from customers constituted 'wages' under Section 2(22) of the Act. The Court clarified that these charges, being part of the total bill and distributed to employees, do not qualify as 'tips' but as 'additional reimbursement'. The Court distinguished the case from The Rambagh Palace Hotel case, emphasizing the nature of service charges and their mandatory inclusion in bills.