MANAGEMENT OF FERTILIZER CORPORATION OF INDIA versus THE WORKMEN

Citation: [1969] 2 S.C.R. 706 · Decided: 15-11-1968 · Supreme Court of India · Bench: VISHISHTHA BHARGAVA · Disposal: Case Partly allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

MANAGEMENT OF ' FERTILIZER CORPORATION . OF 
A 
INDIA 
v. 
THE WORKMEN 
November 15, 1968 
(V. BHARGAVA AND C. A. VAIDIALINGAM, JJ.] 
Bonus-Ex-gratia payments made in 
the past-Production bonus 
scheme introduced_ eliminating ex-gratia payment-Option given to work~ 
nien_ to accept either previous or later-Claim for ex-gratia payment-
Strike during conciliation pro~e_edings, if justified. 
For the first year of production by a unit of the appellant Corporation 
(a Central Government Undertaking), it granted ad hoc bonus for good 
performanoe to . the unit's employees. 
For the next year, the appellant 
granted bonus as recommended by the Bonus Commission and also made 
ex-gratiti payment for good performance. The ·appellant decided to pay 
bonus for the third year, strictly in accordance with the Payment 
of 
Bonus Ordinance and the Act, which had come into force then. 
The 
Central Minister announced in the Lok Sabha that with the specific 
approval of the Central Cabinet ex-gratia payments had been allowed in 
the past by way of bonus to the employees and this was communicated 
by the Government of India by a letter. 
In the fourth year the produc-
tion did not exceed the target, and the appellant offered to pay only the 
statutory bonus under the Bonus Ordinance and Act ·and stated that a 
production scheme had been introduced, that with the introduction of the 
production bonus scheme all ex-gratia payments were eliminated and 
that this scheme was approved by the Government of India. The work-
men demanded that the bonus should be paid for the third and fourth 
years at the same rate as it had been paid in previous years and the 
appellant was bound to act according to the decision of the 
Central 
Cabinet and communicated by the letter. The workmen also stated that 
if their demands were not met within 15 days, they would be forced 
to adopt agitational approaches. Conciliation proceedings 
started. The 
appellant offered the workmen the option of either acoepting the Cabinet 
decision or the production Bonus Scheme as formulated by the manage-
ment. The workmen desired that the Cabinet's directions be made appli-
cable to them, declined the offer to opt for the production bonus, and 
prepared a draft of a letter which was intended to be sent by the work-
men to the appellant stating that the offer was also made. The workmen 
went on strike and the reference to adjudication was made. 
The Tribunal 
accepted the claim of the 
workmen, and held 
that the strike was 
justified. 
HELD : (i) The appellant failed to establish that production bonus 
scheme was introduced with the consent and approval of the 
Central 
Government and that on its introduction the ex-grati.a payment of bonus 
stood eliminated. 
The evidence established that the Cabinet's decision was made known 
B 
c 
D 
E 
F 
G 
to the workmen, who were given the option either to accept the Cabinet 
decision or the production bonus scheme as formulated by the appellant. 
H 
So long as the Cabinet decision had been communicated and option was 
given to the workmen, it did not matter at what .stage -the communica-
tion was made to the labour. The fact that the co.minuriication· of the 
. 
-.,
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r. .. 
A 
B 
c 
D 
E 
F 
G 
H 
FERTILIZER CORP. v. WORKMEN (Vaidialingam, J.) 707 
Cabinet decision after the submission of the charter of demands was of 
no con.sequence. 
The striking down of s. 34(2) of the Bonus Act by this Court has 
no bearing in considering the claim of the respondent in this case, When 
once it was established, as this case, that the Cabinet decision regarding 
ex-gratia payment of bonus had been communicated to the workmen with 
an option to accept the said decision or the production bonus scheme 
and the labour wanted the Cabinet decision to be implemented, it follow-
ed that an agreement, under s. 34(3) of the said Act h~d come 
into 
effect and it was valid. [720 E-Gl 
Therefore, the workmen were entitled to ex-gratia payment of bonus 
as in the previous years. 
(ii) The management was prepared to pay at all times the bonus as 
per the Bonus Act. 
They had also announced the introduction of the 
production bonus fcheme. They were actively taking part in the con-
ciliation proceedings. The appellant also made to the Union 
certain 
proposals at the conference which 'proposals' the representatives of the 
workmen promised to discuss with the workmen and give a reply to the 
appellant. But, at a meeting of the workmen next day, they were 

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