Sone Valley Portland Cement Co. Vs.
The Workmen  INSC 67 (8 March 1972)
CITATION: 1972 AIR 2148 1972 SCR (3) 674 1972
SCC (3) 727
CITATOR INFO :
E 1973 SC1081 (18)
Cement Control Order 1961--Higher price paid
in respect of cement produced in excess of specified form--Whether workers
entitled to share in such extra payment.
Under the Cement Control Order, 1961 passed
by the Government of India in exercise of powers under s. 18(g) of the
Industries (Development and Regulation) Act of 1951, producers of cement were
obliged to sell all the cement produced by them to the State Trading
Corporation ,at the prices laid down in the order. Subseqently in order to
provide an incentive to the producers to increase their output it was provided
in the order that if a producer's output was in excess of a certain specified
quantity, then the payment for such excess would be made at a higher rate.
The workers of the appellant companies asked
for a share in the incentive payment on the contention that they had
contributed to the excess in production. The Industrial Tribunal in its award
held that the companies and their workmen were entitled to share the incentive
payment on a fifty-fifty basis. In appeal by special leave,
HELD : There is nothing in law which prevents
a buyer and seller from agreeing that whatever the seller can offer upto a
(certain quantity willbe paid for at a particular rate and any quantity over
and above that , figure will be for at a higher rate. The total amount which
the seller would receive can only be called price even if the contract of sale
was so 'worded as to show that the excess amount was to be treated as an
incentive payment. Therefore the argument that the workers were entitled to a
share of the extra payment de hors the question of any profit could not be
accepted. Under the Industrial Law as propounded by this Court the workers can
lay no such claim. r685F, 686D] New Maneck Chowk Spg. & Wvg. Co. Ltd. v.
Textile Labour Association, , 1 S.C.R. 1, The Mill owners Association
Bombay v. The Rashtriya Mill Mazdoor Sangh, Bombay  1 S.C.R. 107; M/S
Titaghur Paper Mills Co. Ltd. v. Its Workmen,  Suppl. 2 S.C.R. 1012; Burn
& Co. Ltd., v. Their Employees,  3 S.C.R. 423 and National Iron and
Steel Co. Ltd. v. Their Workmen,  3 S.C.R. 660, referred to.
Cement Control Order even if it offered some
inducement to the producers to step up their production, the terms thereof did
not entitle the Tribunal to treat it as and by way of incentive bonus in which
the workmen could share. It was certainly up to the producer to intimate the
workmen that under the terms of the Control Order an extra amount of money
would come to the till of the company if production was increased and the
producers could have settled what incentive should 'be offered to the workmen,
but merely because an extra amount of money which was as and by way of price
would find its way into the till of the company because the production target was
exceeded, the workmen did 675 not become entitled ipso facto to lay a claim to
the excess amount and the Industrial Tribunal was not entitled to take the view
that because an increase in production can only come about with the cooperation
of the workmen they automatically became entitled to a share thereof. An
industrial court can only award what the law allows. In the absence of
legislation on the subject and in the absence of a scheme for incentive payment
introduced by the management, in the particular facts and circumstances of the
case, the claim on the part of the workmen had to be negatived. [689DH]
CIVIL APPELLATE JURISDICTION :, Civil Appeal
No. 635 of 1967.
Appeal by special leave from the award dated
January 11, 1967 of the National Industrial Tribunal, Bombay in Reference
(NT)-1 of 1965.
S. D. Vimdalal, K. D. Mehta, D. N. Mishra and
O. C. Mathur for the appellants.
K. L. Hathi, for respondent No. 1.
M. K. Ramamurthi and Vineet Kumar, for
respondents Nos 2 and 3.
The Judgment of the Court was delivered by
Mitter, J.This is an appeal by special leave from an award of a National
Tribunal under an order of reference reading "Whether the demand of the
workmen for a share in the incentive payment allowed by Government to cement
producers is justified ? If so, what should be the basis and the quantum
payable for the year 1963 and subsequent years ?" The cement producers
involved were 14 in number set out in Schedule 1 to the said Order. Out of the
total, the Tribunal was not called upon to go into the cases of five cement
producers as they had not received any incentive payment and the demand in
respect of these five companies was dismissed. Even out of the nine left, three
of the producers entered into settlements with their workers as a result whereof
the cases of six only are left for consideration. The names of the companies
and the incentive 676 payments involved in this appeal are as under
----------------------------------------------------------Payment Payment Name
of the Company for 1963 for 1964 Rs. Rs.
2 3 ----------------------------------------------------------
1. India Cements Ltd............ 56,713-50
2. Sone Valley Portland Cement Co. Nil
3. Dalmia Dadry Cement Ltd. 1,19,76000
4. Jaipur Udyog Ltd. 5,16,661-00 Nil
5. Kalyanpur Lime & Cement Works
6. Mysore Iron and Steel Co. Ltd.
20,86,759-00 Nil -----------------------------------------------------------The
background of the dispute is as follows.
"Cement and gypsum products" became
a scheduled industry under s. 3(1) of the Industries (Development and
Regulation) Act of 1951 being an Act to provide for development and regulation
of certain industries. Under s. 2 of the Act the Union of India was empowered
to take control of the said industry. S. 1 8 (g) ( 1 ) of Chapter III-B of the
Act with the heading "Control of Supply, Distribution, Price etc. of
certain articles" enabled the Central Government to provide for regulating
the supply and distribution of any article or class of articles relatable to
any Scheduled industry and trade and commerce therein by notified order. Sub-s.
(2) of s. 18(g) illustrates the power comprehended by sub-s. (1)..
These include, inter alia, powers for
controlling the prices act which any such articles or class thereof may be
bought or sold, regulation of the distribution of such articles etc. On October
31, 1961 Government of India made an order under S. 18(g) known as the Cement
Control Order of 1961 superseding an earlier Order of 1958. The relevant
portions of the Order are set out below "Cl. 3. Producers to sell cement
to Corporation.-(1) Every producer shall sell(1) the entire quantity of cement
held in stock by him on the date of commencement of this Order; and (b) the
entire quantity of cement which may be produced by him before the date of
commencement of this Order up to the 31 st March, 1966 (inclusive) except such
quantity as may be mutually 677 agreed upon from time to time between him and
the Central Government, to the Corporation, and deliver the same to such person
or persons as may be specified by the Corporation in this behalf from time to
(2) Notwithstanding any contract to the
contrary, no producer 'Shall dispose of cement held in stock or produced by him
except in accordance with the provisions of sub clause(1) Cl. 6. Controlled
price of cement.-(1) The price at which a producer may sell cement other than(i)
water-proof (hydrophobic) cement;
(ii) rapid hardening cement; and (iii) low
shall as specified in the Schedule (2) (a)
The price at which the Corporation may sell cement other than-(i) water-proof
(ii) rapid hardening cement; and (iii) low
to any person shall be Rs. 94.00 per metric
tonne free or rail destination railway station plus the excise duty paid
Provided that the Corporation may, with the
prior approval of the Central Government, allow a rebate, discount or
commission in the price of cement sold to the Government for the Directorate
General of Supplies and Disposals ........................
There was only one Schedule to the Order
which ran The Sehedule [See clause 6(1)].
The price at which each producer may sell
cement free on rail ex-works is the price which has been determined by the
Central Government in respect of that producer having regard to the
recommendations of the Tariff Commission on the, revision of 1 prices of
cement, and to all other relevant circumstances, that is to say,(Only the
relevant portion is set out below) 15-L1031Sup.Cl/72 678 Price A Name of
Producer per Metric tonne Rs. 4. M/s. K.C.P. Ltd., Macheria..................
6. M/s. Mysore Iron & Steel Works
8. U.P. Government Cement Works Churku
9. M/s. Dahnia Dadri Cement Co.Ltd.,Dalmia
Dadri... 69.50 B 12.M/s. Jaipur Udyog Ltd., Sawai Madhopur............69.50
13.M/s. India Cements Ltd., Talaiyuthu...............72.50 16.M/s.Kalyanpur
Lime and Cement Works Ltd.,Banjari..72.50 17.M/s. Sone Valley Portland Cement
Co., Ltd. Japla..72.50 21.M/s Travancore Cements Ltd.,
Kottayam.............95.00 By the amendment of 1,96i3 the paragraphbefore
theSchedule was marked as (A) prefixed by the words "subject to the
provisions of paragraphs (B) and (C)." After the Schedule para,graph (B)
was added to read :(B) In addition to the price specified, in paragraph (A) the
producer mentioned in column 1 of the Table below may charge an extra amounit
specified in column 2 of the said Table in respect of cement produced and sold
by them in excess of the quantity specified in the corresponding entry in
column 3 thereof.
"TABLE" (only the relevant portion
is set out) -----------------------------------------------------------Extra
amount Limit of quantity Name of the Producer per (in tonnes) tonne Rs. (1) (2)
(3) 1.The U. P. Government Cement Works, churk (uttar Pradesh) 5.50 2,20,000 in
any year ending 31st, October.
2.M/s. K. C. P Ltd., Macherla 5.501,15,000 in
any year ending 31st October.
7.M/s. Mysore Iron & Steel Ltd.,
Dhadravati 5.50 81,000 in the year ending 31st December, 1963.
9.M/s. Dalmia Dadri Cement Ltd.,Dalmia Dadri
5.50 1,76,000 in the year ending 31st December, 1963 12.M/s. Jaipur Udyog Ltd.
Sawai Madhopur 5.50 7,55,000 in the year
ending 31st December, 1963.
13. M/s. India Cements Ltd., Talaiyuthu 2.50
4,52,000 in the year ending 31 st December, 1963.
16.M/s. Kalyanpar Lime & Cement Works
Ltd., Banjari 2.50 1,42,000 in the year ending 31st December 1963.
17. M/s. Sone Valley Portland Cement Co.
Ltd., Japla 2,35,000 in the year ending 31st December 1963.
679 It is to be noted that three different
prices were fixed in respect of the 21 companies mentioned in the Schedule. The
price applicable to twelve was Rs. 69.50, to eight others Rs. 72-50 and to one
alone Rs. 95/-. Paragraph (B) inserted in 1963 however provided for a. charge
by the producer of an extra amount of Rs. 5-50 in respect of twelve companies
and Rs. 2-50 in respect of five others. The curious feature of this table is
that-the limit of quantity in column 3 varies from producer to producer and the
period specified is not the same in all cases. For the first two producers the
U.P. Government Cement Works and the K.C.P. Ltd., Macherla, the Order provided
for payment of an additional amount for all subsequent years ending on the 31st
October. In the case of Mysore Iron and Steel Co." Ltd. the increase was
provided for only one year, namely, year ending 31st December 1963 the target
above which the extra amount was to be paid being 81,000 metric tonnes.
Similarly, in the case of Dalmia Dadri Cement Ltd. the extra amount was to be
payable over the target figure of Rs. 1,76,000 metric tonnes only in the year
ending 31st December 1963 : so is the case of Jaipur Udyog Ltd. the targot
being 7,55,000 tonnes; in the case of India Cements it was for the year ending
31st December 1963 as also in the case of Kalyanpur Lime and Cement Works and
Sone Valley Portland Cement Company.
It appears that Cement Control Order of 1961
was further amended from time to time. By an order dated 31st May 1963 which
was to come into force on June 1, 1963 and the Schedule below paragraph A of
the Schedule was amended increasing the price in cases where cement producers
could charge the Corporation Rs. 69-50 per ton to Rs. 72-25 per ton while
India, Cements Ltd., Kalyanpur Lime & Cement Ltd. and Sone Valley Portland
Cement Co., Ltd., were allowed to charge the Corporation Rs. 75-25. In other
words, all the above six producers besides K.C.P. Ltd. (appellant in C.A. No.
2156 of 1970) were allowed to increase their price by Rs. 2-75 per tonne
chargeable to the said Corporation.
There was also an increase in the price which
the State Trading Corporation could charge under sub-cl. 2 (a) of cl.
6. Prices were further increased by Amendment
Orders dated 30th June 1964 and 31st May, 1965. 'These however do not concern
us in these appeals.
Workmen of fourteen companies claimed, that
the extra amount under paragraph (B) of the Schedule could only be earned by
the producers as a result of extra effort on their part and as such they were
entitled to a share thereof. Different statements of claim were put in before
the Tribunal in respect of different producers. The workmen of Jaipur Udyog
Ltd. claimed that they should be paid 60% of the extra amount paid for the year
1963 and to the full amounts to be paid in the subsequent 680 year. According
to them the Government of India had introduced a scheme whereby the cement
industry was allowed payments in the nature of incentive.. at the rate of Rs.
5-50 per tonne of cement produced in 1963 and subsequent, years in excess of
the specified quantities of cement. The figures adopted for Udyog Ltd. was
7,55,000 and the extra payment at Rs. 5-50 per ton related to the production
over and above that figure. The President of the Indian National Cement
Workers' Federation submitted that "In the cement industry the workers
played a very important part in increasing the, cement production and without
their co-operation and efforts the quantity fixed in each factory could never
have been exceeded. The quantity fixed by the Government in respect of each
factory was the highest figure reached in the preceding. three years and labour
had substantially contributed to exceed the said figure and reducing the cost
of production in respect of various cement works and all workmen should be
entitled to the full payment in the incentive payment allowed by the Government
to the various cement producers in proportion to the earnings for the years
1963 and for subsequent years." In some of the statements of claim the
additional amounts received were described as incentive bonus for additional
The producers in their written statement, on
the other hand, submitted that the extra or incentive payment had formed part
of their sale proceeds and included in the profit and loss account for the
purpose of payment of annual profit bonus. The Mysore Iron and Steel Co., Ltd.
stated that their workers were paid production incentive bonus ranging from 12%
to 40% of the basic wages in accordance with certain scales of incentive fixed
for the targets of production. India Cements Ltd. submitted that the production
of cement being a continuous process and not a repetitive one the same could
not be related or linked with individual effort or increased by any individual
effort and that any increased production in an individual cement factory was
due to efficient supervision and good management of the factory rather than
increased effort on the part of the workers. It was also said that being a
capital intensive industry increased production was due to increased capital
investments and improved techniques and the final product was a sequence of
linked process in that any drawback could reduce or slow down the count of
finished product. According to this Company the sole object of the incentive
scheme as it was popularly known, Was to encourage cement producers to maximise
their production on with a view to meeting, as 681 far as possible, the growing
demand for cement in the country. The company also referred to various capital
expenditure incurred for rehabilitating its machinery.
According to the written statement of Sone
Valley Portland Cement Company it had incurred an expenditure of more than Rs.
17,50,000/for new equipment for the quarry and the, factory and rehabilitation
of kilns and bicable ropeway.
Out of the six producers involved in this
appeal reliance was placed by four on certain special features. So far as India
Cements Ltd. were concerned, reliance was placed on a settlement regarding the
payment of bonus for the, year 1964-65 in that the amount agreed to be paid for
the year 14-1964 to 31-3-1965 to the extent of 7/24th of the total basic wages
for the above year was to be taken as including the consideration of the
incentive bonus earned by the company during the calendar year 1964. As regards
Jaipur Udyog, reference was made to a settlement of February 4, 1962 which
originated in a demand for bonus amounting to 10 months' wages for the year
1960-61. This was however a long-term settlement as is apparent from the terms
recorded which were to the effect that workers "would be given bonus for
the years 1959-60 to 1963-64 according to the table set out." According to
clause 9 of the terms :
"It is agreed and clearly understood
that the workers of the Union shall not claim or be entitled to any bonus in
any form whatsoever and by whatever name , called except the bonus agreed to
hereby in respect of the years covered by this agreement." Clause 13 of
the terms shows 'that the Union assured the Management that no effort would be
spared on their part to raise and maintain production to its full installed
Dalmia Dadri Cement entered into an agreement
with its workmen to pay bonus equivalent to 14 months' basic wages for the
years 1958 to 1963. This was to include both profit and production bonus' The
workers also agreed to co-operate with the management in ensuring that there
was an increase in the productivity of the plants.
As regards Mysore Iron and Steel Co. Ltd.,
the Management stated that there was already in existence a scheme for
incentive bonus ranging from 12% to 40% of the basic wages in accordance with
the scales of incentive fixed for the targets of production as per appendix annexed
to the written statement. It was said that this was over and above the annual
profit bonus which the employees were being paid at the rate of 1/6th of their
earnings exclusive of dearness allowance and other allowances during the
accounting years 1962-63 and 1963-64.
682 Only one witness was examined on either
side before the Tribunal. One R. Natarajan, Under Secretary, Government of
India Ministry of Industry, gave evidence about the circumstances under which
Government took the decision to grant an incentive bonus to producers of
cement. According to him during the years 1962 and 1963 Government being
exercised by the critical supply position of cement in the country and being
keen to take all possible steps to increase the production of cement and to
consider ways and means to increase the production of cement, set up a panel of
leading producers and technical experts. A number of cement factories were
allowed to import balancing equipment to ensure a proper synchronisation of the
working of various departments and to remove production bottlenecks caused
mainly by difficulties of coal and rail transport. Steps were taken to remove
these difficulties by concerted action of several agencies of Government There
still remained however a considerable field of effort in which the producer had
to apply his mind and resources to the task of overcoming his specific
difficulties and to create a climate in the cement industry by using his
ingenuity of taking all possible further measures to overcome his specific
difficulties in utilising his full capacity. Government therefore decided to
allow an extra price to the cement producers in respect of the quantity of
cement produced in each factory over and above the highest level of actual
production reached during the last three years ending 1962.
The extra price was to be the differential
between Rs. 75/and the then ex-factory price per tonne applicable to the unit.
This extra price was paid on such production during 1963 and 1964. In his
cross-examination he made it clear that the decision of Government was taken
and notified in January 1963 but this had not been reached at a joint meeting
of the Government and the producers. According to witness Government did not
have any idea whether labour should or should not share in this extra payment.
The witness examined on behalf of the workmen
was the Assistant Labour Commissioner who was really called to produce certain
Before the.Tribunal various contentions were
put forward on behalf of the producers to show that the production above target
figures fixed by Government had little to do with any extra effort put in by
the workmen. One of the submission was that some of the units had incurred
considerable expenditure for the purpose of increasing, production. But as the
Tribunal rightly pointed out :
"No evidence either documentary or oral
was led by the company to show how the expenditure had contributed to increased
production and in what proportion." 683 The Tribunal recognised that
capital expenditure on equipment would certainly make a contribution towards
increased production but in the absence of evidence it was not in a position to
determine the extent of such contribution. The Tribunal examined the special
circumstances relied on by four out of the six companies but notwithstanding
the same took the view that the demand of the workmen for a share in the
incentive payment allowed by Government was justified. The Tribunal appears to
have been influenced very largely by an award in the case of Kymore Cement
Works containing the following remark:
"As by their notification, the
Government held out allurement to the industry ,for greater production the
claim of the workmen, in our opinion, must be considered on the basis on which
claim for "incentive bonus" must be considered. We are not unmindful
of the fact that the claims before us, strictly speaking, are not in all
respects at par with the claims of incentive bonus for in the case of the
incentive bonus, the norm of production and the rate for the extra production
over the norm are fixed in advance, but we have held that the claims before us
are more akin to "incentive bonus" than anything else. As this is
additional bonus which partakes of the nature of incentive bonus, its amounts
cannotany relation to profits made and must be related to the wages and
measured by the amount of work." In our view being impressed by the above
reasoning the Tribunal concluded that the basis of payment for each of the two
years should be on a fifty basis.
Before us elaborate arguments were put up on
either side, counsel on behalf of the employers contending that so far as at
least the four out of six producers were concerned, in view of the special
features workmen could not claim anything over and above the usual bonus
allowable under the Labour Appellate Tribunal formula or the Bonus Act.
As against this, it was contended on behalf
of the workmen that there could be no doubt that workers had played some part
in raising the figure of production above the maximum of the last three years
ending in 1962 and if the producers were given something' by way of incentive
there was no reason why the workers should be deprived of a share thereof. Mr.
Ramamurty frankly conceded that if it was established that substantial capital
expenditure had been incurred in the, case of any particular producer, that was
a factor to be taken into consideration in making allocation out of the extra
payment earned; but even that would not justify the total negation of the claim
of the workers to some payment. He also conceded that if the producer was free
to raise the price by reason of conditions prevailing in the market 684 labour
could not claim any share in the increased price on the ground that it was
based on the extra effort put forwardby them. He however argued that the extra
amount chargeable was not due to any such conditions in the market and was
allowed to be charged by the Government so that the producers in conjunction
with their labour could raise the level of production for the benefit of the,
community as a whole. It was also argued by Mr. Ramamurty that the case
required a special consideration of the circumstances by the Tribunal and by
this Court in appeal and the view to be adopted should be the one which is
consonant with social justice.
As against this counsel for the producers
submitted that social justice was a vague concept and except in circumstances
recognised by courts of law as justifying the adoption of a particular course
should not be allowed to influence the decision of a Tribunal administering
industrial law. It is only too well known that in most of the industries in our
country the objective of a living wage will remain a distant dream for a long
time to come and social justice certainly requires that efforts should be made
to reduce the disparity between a living wage and the actual wage but
industrial tribunals are not to consider themselves free to depart from settled
principles of industrial law by chalking out a path of their own whenever
In our view, however, it is not necessary to
examine the aspect of social justice in the matter or even the special features
with regard to the working of four out of six of the above producers. We must
first consider the nature of the extra payment which was received by the
producers from the State Trading Corporation i.e., was it by way of or towards
the price payable, or was it unconnected with the question of price e.g., a
payment by way of a tip Mr.
Ramamurty submitted that it could not be the
former in which case one would expect the extra payment to be linked with the
entire quantity produced and not limited to the production over and above the
target fixed by Government.
While it cannot be denied that the underlying
object of paragraph (B) and the Schedule to the Cement Control Order of 1963
was that the producer should adopt ways and means to increase the production
either with the help of Government reducing bottle-necks or the producer itself
finding out and adopting devices to step up production with the help of the
workmen concerned, the extra amount paid can only be treated as and by way of
price offered because of the scarcity of the commodity in the country. The,
Cement Control Order which has been set out in some detail clearly shows that
producers were not entitled to charge their own price. If they had been we have
no doubt that taking advantage of the scarcity they would have charged much
more 685 than Rs. 69-50 per ton to start with. Whatever their production each
unit could only sell to the State Trading Corporation and at the price fixed.
As a result of the Order, the Corporation was not free to offer an inducement
to the producer for producing cement in excess of the target fixed as in its
turn it was not entitled to charge the actual consumers or the dealers in the
market any amount in excess of the price fixed under the Control Order. The
transaction between a cement producer and the State Trading Corporation can
only be described as a sale and whatever was paid to the producer by the Corporation
can only be described as the, price.
Mr. Ramamurty conceded that normally a
workman could only share in the general prosperity of the undertaking andask
for a, revision of his wage, dearness allowances etc. when the production of
the employer shoots up thereby enhancing its profitmaking capacity. He also
agreed that in normal circumstances greater production leading to a greater
amount of profit would ensure to the benefit of the labour by way of production
bonus under the Labour Appellate Tribunal formula or under the Bonus Act. He
however contended that the facts in this case must be treated as justifying the
claim of workmen to something like an incentive bonus though it was not to be
treated in the way such bonus is usually claimed or awarded. In other words,
his submission was that but for the inducement of extra payment the target
figure would not have been exceeded and that as the efforts of workmen must to
some extent be held to have contributed the increase in production they must
have a share of such payment de hors the question of any profit. We find
ourselves unable to accept this proposition. There is nothing in law which
prevents a buyer and seller from agreeing that whatever the seller can offer up
to a certain quantity will be paid for at a particular rate and any quantity
over and above that figure will be paid for at a higher rate. The total amount
which the seller would receive can only be called price even if the contract of
sale was so worded as to show that the excess amount was to be treated as an
incentive payment. Between the, buyer and the seller the amount which changes
hands i.e., the consideration for the thing sold, can only be described in
legal terminology as price. III some cases in ordinary commercial transactions,
the seller allowes the buyer a certain amount of commission in case the buyer
takes delivery of a quantity over and above a particular figure fixed. This
will only mean that the buyer was allowing a reduction in price in the
particular circumstances of that case. What has taken place under the Cement
Control Order is that the terms of sale are fixed by Government under the
Order, the parties i.e., the 686 producers and the Corporation not being
allowed to discuss and settle the terms themselves.
Government recognised that unless it held out
an inducement to the producers by allowing them to charge a price over and
above that fixed under the Schedule to paragraph (A) there was little chance of
the shortage of the commodity in the market being reduced. It however realised
at the same time that a general increase of price on the whole outturn of the
produce would make it difficult for the State Trading Corporation to function
properly unless it allowed the Corporation to charge a higher price to the
consumer. It was only because Government did not want the consumer to have to
pay more that it adopted the device of the extra amount being chargeable only
in respect of this additional quantity over the figure of production up to
There is however another aspect of the
matter. Assuming that the extra payment was to be treated and described as an
incentive payment, it is difficult to see how the employees can under the
Industrial Law which this Court has so far expounded have any claim to any
share of such payment. In New Maneck Chowk Spg. & Wvg. Co. Ltd. v. Textile
Labour Association(1) this Court examined the concept of bonus as involved in
industrial law of this country by Industrial Tribunals and by the decisions of
this Court. It took the view that there are four types of bonus which had been
evolved under the industrial law, namely, (1) production bonus or incentive
wage, (2) bonus as an implied term of contract between the parties, (3)
customary bonus in connection with some festival and (4) profit bonus evolved
by the Labour Appellate Tribunal in The Mill-owners' Association Bombay v. The
Rashtriya Mill Mazdoor Sangh, Bombay.(2) An incentive bonus for increased
production partakes of the nature of a production bonus. In M/s.
Titaghur Paper Mills Co. Ltd. v. Its
Workmen(") this Court had to examine the nature of production bonus.
According to this Court (see at p. 1019) ". . . it is an incentive to
higher production and is in the nature of an incentive wage." Referring to
Labour Law by Smith, Second Edition, p. 723, where various plans prevalent in
other countries known as Incentive Wage Plans have been worked out on various
bases, the Court said "The simplest of such plans is the straight
piecerate plan where payment is made according to each piece (1)  1 S.C.R.
1 at P. 9 (2)  1 S.C.R. 107.
(3)  Suppl. 2 S.C.R. 1012.
687 produced, subject in some cases to a
guaranteed minimum wage for so many hours' work. But the straight piece-rate
system cannot work where the finished product is the result of the co-operative
effort of a large number of workers each holding a small part which contributes
to the result. In such cases, production bonus by tonnage produced, as in this
case, is given. There is a, base or standard above which extra payment is made for
extra production in addition to the basic wage. . . . But whatever may be the
nature of the plan the payment in effect is an extra emolument for extra effort
put in by workmen over the standard that may be, fixed............... The extra
payment depends not on extra profits but on extra production. . . . Therefore,
generally speaking, payment of production bonus is nothing more or less than a
payment of further emoluments depending upon production as an incentive to the
workmen to put in more than the standard performances. Production bonus in this
case also is of this nature and nothing more than additional emolument paid as
an incentive for higher production." As to the initiation of such a scheme
the argument before the Court was "Whether there should be increased
production in a particular concern is a matter to be determined entirely by the
employer and depends upon a consideration of so many complex factors, namely,
the state of the market, the demand for the product, the range of prices, and
so on. It is, therefore, entirely for the employer to introduce a production
bonus scheme or not," On the question as to whether the Industrial
Tribunal could have jurisdiction to introduce a production bonus scheme at all,
the Court left the question open but took the view that where as in the case
before the Court there was a scheme of production bonus in existence, the
Tribunal had jurisdiction under the Industrial Disputes Act to deal with it and
make suitable amendments to it. A similar view was expressed in Burn & Co.
Ltd. v. Their Employees(1) and National Iron and Steel Co. Ltd. v. Their
It would of course always be open to the
Legislature to, introduce any kind of bonus not so far recognised by industrial
law evolved either by tribunals or by this Court.
But that must rest on a solid foundation and
express words must be used to that (1)  3 S.C.R. 423. (2)  3 S.C.R.
688 effect. Although it is not necessary to
express any final view on the subject we are inclined to think that apart from
legislation an incentive bonus for increase of production, irrespective of the
question as to whether the industry was making profit or not is one that must
be introduced by the particular unit of industry. It would be for the
management to fix what incentives should be given to different departments to
step up production. An Industrial Tribunal would not be justified in holding
that merely because there had been augmentation in the production labour would
be entitled to make a claim to bonus because of such increase.
Labour would undoubtedly be entitled to
revision of wage scales, dearness allowance and other terms and conditions of
service as also profit bonus; but in the absence of legislation or a scheme of
incentive production, industrial tribunals would not be justified in laying
down a scheme themselves.
In our view the Cement Control Order even if
it offered some inducement to the producers to step. up their Production, the
terms thereof did not entitle the Tribunal to treat it as and by way of
incentive bonus in which the workmen could share, ,It was certainly upto the
producer to intimate the workmen that under the terms of the Control Order an
extra amount of money would come to the till of the company if production was
increased and the producer could have settled what incentives should be offered
to the workmen but merely because an extra amount of money which as we have
already described, was as and by way of price would find its way into the till
of the company because the production target was exceeded, the workmen did not
become entitled ipso facto. to lay a claim to, the excess amount and the
Industrial Tribunal was not entitled to take the view that because an increase
in production can only come about with the cooperation of the workmen they
automatically become entitled to a share thereof. It may be that they all had
the, benefit of the extra payment by way of profit bonus under the Labour
Appellate Tribunal formula and it would appear that the claims to incentive
bonus rested rather on a frail foundation in several of the companies earlier
mentioned. This will hardly be a case where we should lay down a principle of
such far-reaching importance viz., that workmen are entitled to an extra
payment by way of incentive bonus as soon as they can establish that production
in a particular year exceeded the highest figure of the three preceding years.
Nor can we look at the terms of the award in Kymore's case. as showing the
course industrial adjudication should take. An industrial court can only award
that which the law allows. In the absence of legislation on the subject and in
the absence of a scheme for incentive payment introduced by the management 689
in the particular facts and circumstances of the case, we would negative such a
claim on the part of the workmen.
In the result therefore we allow the appeal
but would make no order as to costs.