LexM/S. TITAGHUR PAPER MILLS CO. LTD. versus ITS WORKMEN
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I959 May 5. • 1012 SUPREME COURT REPORTS [1959) Supp. M/S. TITAGHUR PAPER MILLS CO. LTD. v. ITS WORKMEN (S. R. DAS, c. J., N. H. BHAGWATI, s. K. DAS, P. B. G.AJENDRAGADKAR and K. N. WANCHOO, JJ.) Industrial Dispute-Production Bonus, nature of-Jurisdic- tion of Tribunal to revise production bonus scheme introduced by employer-Profit Bonus-If can be awarded in addition to prodi;c- tion bonus-Available surplus-Deduction for rehabilitation, how calculated. In 1949 the appellant framed a scheme called" Tonnage Pro- duction Bonus Scheme" whereunder the workmen were to get 13 days' basic wages by way of bonus on a production of 30,000 tons and thereafter an additional one day's basic wage for every 460 tons produced upto a maximum of 36,000. The scheme was accepted by the workmen. In 1953 the workmen raised indus- trial disputes claiming profit bonus for the years 1950-51 and 1951-52 in addition to the production bonus and asked for revi- ·sion of the production bonus scheme. The Industrial Tribunal, to which the disputes were referred, rejected both the claims. On appeal, the Appellate Tribunal awarded profit bonus equal to one month's basic wage for 1951-52 but dismissed the claim for 1950-51 as having been made too late. It revised the production bonus scheme by providing for rt day's basic wage for each increase of 460 tons over 30,000 tons upto 36,000 tons and for 2 days• basic wage for each increase of 460 tons in excess of 36,000 tons. The appellant contended (i) that the Tribunal had no jurisdiction to vary the production bonus scheme; (ii) that such a scheme could only be varied by agreement ; (iii) that no proper grounds had been made out for varying the scheme; (iv) that prolit bonus could not be awarded in addition to production bonus; (v) that the production bonus in this case was really pro- fit bonus; and (vi) that there was no available surplus out of which profit bonus could be paid. Held, that the Tribunal had jurisdiction to revise the pro- duction bonus scheme. Payment of production bonus was payment of further emoluments depending not upon extra profits, but, upon extra production, as an incentive to the workmen to put in more than the standard performance. Though it was discretionary with the appellants to intro- 1' duce the scheme, once the scheme was introduced and put into operation, it became a term of employment of the workmen and any dispute with respect to such term of employment was an industrial dispute which could properly be referred to a Tribunal. The power of the Tribunal in considering the scheme (2) S.C.R. SUPREME COURT REPORTS 1013 was not confined to the question of mala fides etc. of the emplo- yer's action but it had power to vary the terms of the scheme if circumstances justified it. There was no justification for interfering with the scheme up- to a production of 36,000 tons in view of the agreement between the parties. But the scheme did not provide for production above 36,000 tons and as such there was no agreement with res- pect to this, and as the production bad gone up beyond 36,000 tons it was necessary to provide for production bonus beyond this quantity. There were two reasons for increase in the rates of payment of production bonus, viz., (i) the intensification of the efforts of the workmen in increasing production, and (ii) the progressive going down of the labour cost of production per ton as production increased. The rates had to be increased progres- sively with production. Consequently, for each 460 tons increase • in production the proper rates for payment of production bonus would be ri, I~, If and 2 days' basic wages respectJvely for pro- duction between 36,000 and 42,000 tons, 42,000 and 48,000 tons, 48,000 and 54,000 tons and 54,000 and 60,000 tons. The "Tonnage Production Bonus Scheme" introduced by the appellant was in fact also a production bonus scheme and not a profit bonus scheme. The fact that one of the terms of the scheme empowered the directors to cancel or reduce the payment of production bonus in case the gross profit was not sufficient to meet fixed dividends, interest, depreciation charges, taxation and 10% dividend to ordinary shareholders did not make it a profit bonus scheme as the circumstances mel)tioned are not the same that have to be taken into account in arriving at the avail- able surplus according to the Full Bench formula. Nor was the position altered by the clause i
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