JAY ENGINEERING WORKS LTD. AND OTHERS versus THE UNION OF INDIA AND OTHERS

Citation: [1963] 3 S.C.R. 995 · Decided: 12-12-1962 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Case Partly allowed
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)ti 
3 S.C.R. 
SUPREME COURT REPORTS 
JAY ENGINEERING WORKS LTD. 
ANDOTH..li)RS 
v. 
THE UNION OF INDIA AND OTHERS 
(P. B. GAJENDRAGADKAR, K. N. w 
ANCHOO, 
K. C. DAS GUPTA and J. C. SHAH JJ.) 
995 
Industrial Dispute-Provident Fund-Production Bonus 
-BaBic Wages-Whether the former is excluaed from the latter 
-Provident Fund &heme-Quota-Proportion of production-
Oorresponding to-Minimum basic wages and dearness allowance 
-Norm--Higher than quota--Worker failing to produce norm-
Guilty of misconduct-Production above quota or above ru,rms 
-Which should be talcen far computation nf provident fund-
Oonstitution of India, Art. 32-Employees Provident Funds, 
Act, 1952(I9 of 1952), s. 2(b). 
Following the major !lwards in the engineering industries 
in 1948, 1950 and 1958 the petitioner company and its 
workmen entered into an agreement in 1958. 
By this 
agreement a scheme was established. Under this scheme 
a certain proportion of the production was taken to correspond 
to the minimum basic wages and dearness allowance fixed 
by the awards and this was termed as 'quota'. The produc· 
tion above the quota wa.s paid at piece rates. But there was 
a 'norm' also fixed which was much higher than quota. 
Every 
workman who failed to produce the 'norm' would be consider-
ed guilty of miscouduct and would be liable to be dismissed. 
The petitioner's contention was that the entire payment 
for production above the quota was payment of production 
bonus and therefore could not be taken into account for the 
purposes of provident fund in view of the decision of this 
1 Gour~ in Bridge and Roof Go. Ltd. v. Union of India. It was 
further contended that even if the payment for production 
between quota and norm was not production bonus which 
can be taken out of the definition of basic wages in the 
Act it should be treated as payment in the nature of 'other 
similar allowances' appearing in s.2(b)(ll) of the Employees 
Provident Fund Act, 1952. The workmen contended that 
the scheme in force in the petitioner company was a peculiar 
one which did not correspond to any standard scheme of 
production bonus in as much as it had two bases. It was 
their contention that in the scheme in question production 
19114 
1962 
Jav Enginetring 
Wov.ts Ltd. 
v. 
z:._· nion of India 
996 
.:lUPREME COURT REPORTS 
[1963) 
bonus •.tarted after the norm and 
that the payment for 
production between the quota and the norm '"as nothing 
more than basic wages as defined in Employees Provident 
fund Act, 1952. 
!f eld, that straight piece rate plan was the sirnplest of 
the 
Incentive wage 
plans. 
In such a case all payment 
would be basic wage as defined in s.2(b) of the Employees 
Provident Fund Act, 1952. 
· 
M/s. TitaghurPaper JJiflls Co. Ltd. v. Its Workmen, (1959) 
Supp.~ S.C.R. 1012 and Bridge and Roof Co. Ltd. v. Union 
of India (1962) 2 L.L.J. 490, referred to. 
In the scheme of the petitioner Company1 however the 
worker ca~not stop at the quota he must produce upto the 
nor1n on pain of being charged with misconduct. 
Therefore 
the real base or standard which is the core of a] typical pro-
duction bonus scheme i~, in the case of the petitioner company 
the norm. Any payment above the norm would be real 
production bonus 
under the present scheme and any pay-
1nent upto the nornf whether made in one firm or the.other, 
is basic wage for the purpose of the Act: 
Mr. 
Zia/ch v. Fire1Jtone Pyre and 
l/ub/Jer 
Co. 
ltd. 
(1954)1 L.L.J. 281, distinguished. 
The payment for production between the quota and the 
norm having nothing of the nature of ._an aJlowancc and it 
being a straight payment for the daily work must be included 
in the words defining basic wage. The portion of the pay-
ment which is'made by the petitioner for production above 
the 'norm' would be production bonus and would be COV'."red 
by the judgment of this Court in Bridge & Roof Company. 
ORIGINAL J.uRISDICTION : Petition No, 64 of 
1962. 
Petition under Art. 32 of the Constitution of 
India for enforcement of fundamental rights. 
G. B. Pai, J. B. Dadachanji, 0. 0. Mathur and 
Ravinder Narain, for the petitioners. 
M. S. K. Sastri, R.H. Dhebar and P. D. Menon, 
for respondents Nos. 1 and 2. 
j 
-
r 
3 ~.C.R. SUPREME COIJRT REPORTS 
997 
A. S. R. Chari, R. K. Garg, S. O. Agarwala, 
M. K. Ramamurthi and D.P. Singh, for respondent 
No. 3. 
1962. December 12. 
The Judgment of the 
Court was delivered by · 
W ANCHOO, J.-This writ petition was heard 
along with writ petition No.
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