Case: M/S. Titaghur Paper Mills Co. Ltd Vs. Its Workmen


Decision reasoning: 1[ds]Therefore generally speaking, payment of production bonus is nothing more nor less than a payment of further emoluments depending upon production as an incentive to the workmen to Put in more than the standard performance. Production bonus in this case also is of this nature and is nothing more than additional emolument paid as an incentive for higher productionWe are, however, not called upon to decide in this case whether a demand for the introduction, of a production bonus scheme where there was none before can be made a subject-matter of industrial dispute as defined in S. 2 (k) of the Act or whether a scheme of production bonus can for the first time be imposed on the employer by a tribunal under the Act. The problem that is before us is whether the tribunal under the Act will have jurisdiction to deal with a production bonus scheme in a concern where it has been introduced. The answer to this question depends upon the terms of the Act and not on the consideration whether the scheme can be initiated only by the employer in the first instance.In order that the tribunal may have jurisdiction all that is necessary is that an industrial dispute within the meaning of S. 2 (k) of the Act should exist or be apprehended and there should be a reference of such dispute by the appropriate government to the tribunal under S. 10.Now  industrial dispute has been defined in very wide terms in S. 2 (k) and for our purpose it means any dispute or difference between the employers and workmen which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person.We have already held that the production bonus scheme in this case is an incentive wage plan and what is paid under the scheme over and above the basic wage is supplementary emoluments depending upon annual production. A dispute arising about such an emolument clearly comes within the words "terms of employment". As soon therefore as an employer introduces a production bonus scheme and the same is put in operation and the workmen accept it, it becomes a term of employment of the workmen working under him and any dispute with respect to such a term of employment is an industrial dispute and if it is referred to a tribunal under S. 10, as has been done in this case, it has jurisdiction under S. 15 to deal with it.The argument therefore on this head, must be rejected and it must be held that the tribunal had jurisdiction under the Act to deal with the scheme of production bonus which had been introduced in this company and was in force at all material timesTherefore, once it is conceded, as is the case here, that the tribunal has jurisdiction to entertain such an industrial dispute which comes within the terms of S. 2 (k), we see no reason why the power of the tribunal to take into consideration an incentive wage plan like a production bonus scheme already introduced should be limited merely to the consideration of the question whether the employers action is mala fide, etc. Where a production bonus scheme is in force and has become a term of employment, there is no reason why the tribunal should not have the power to vary its terms it circumstances justify it. Nor can the power of revision be denied to the tribunal in respect of a scheme actually introduced on the ground that the introduction of such a scheme was an exclusive management function and therefore it should be immune from being touched at all. Therefore, even assuming that the initiation of a production bonus scheme is an exclusive management function and the final decision with respect to its introduction rests initially with the management, the right of the tribunal to take into consideration such an initiated scheme (which has become a term of employment) and to revise it cannot for a moment be doubted under the Act. It is true that the tribunal will not lightly interfere with a scheme introduced by the management and accepted by the union. It is also true that the tribunal would only make a change in the rates for good and sufficient reasons. There can be no doubt; however, that the tribunal has jurisdiction under the Act to take into consideration a production bonus scheme which has been introduced and is in operation and in proper cases to revise it, and if necessary to change the rates and other conditions on which such bonus is payable.On a parity of reasoning, the Industrial Tribunal has the power under the Act to revise the production bonus scheme once it has been initiated. It will do so only for good and cogent reasons, such as a material change in method, product, tools, material, design, or production conditions, or a saving in labour cost and the like maintaining as far as possible the established relationship between earnings and effort and avoiding rates which will give results out of all proportion to the basic wage. We are therefore of opinion that the argument under this head must also be rejectedIt is not clear to us what exactly the Appellate Tribunal had in mind when it talked of the increase of income as a reason for increase in the rate. The question of increase in the rate has to be considered in two stages, namely, (i) the increase between 30,000 and 36,000 tons and (ii) the increase when production goes beyond 36,000 tons. It appears from what Mr. Banerji said in his award of 1949 that the basic principle of the scheme, as it was put forward before him, was accepted by the union as satisfactory, meaning thereby that the union considered that 13 days basic wage for a minimum production of 30,000 tons and one days basic wage for every 460 tons beyond that up to 36,000 was fair to labour. It has been urged that there was no agreement between the workmen and the company in connection with this scheme. It does appear that all the terms which were incorporated in the scheme communicated to labour in July 1950, were not initially evolved with the agreement of the union; but so far as the rate of bonus was concerned that was accepted by the union as satisfactory. In the companys appeals, we are concerned only with the rate. The question therefore is whether the Appellate Tribunal was justified in changing this rate which was agreed to as satisfactory by the union up to a production of 36,000 tons. We are of opinion that in view of the agreement between the parties up to a production of 36,000 tons there was no such material before the Appellate .Tribunal as would justify interference with the agreed rate. The intensification of labour must have been taken into account when the union agreed to the rate up to 36,000 tons, and there is nothing to show that since then there has been any change in the conditions to call for a change in the rate. The order of the Appellate Tribunal so far as it relates to production up to 36,000 tons cannot be sustained, as no material was placed before it to warrant a change in that agreed rateThis, in our opinion, makes out a clear ease, where one is dealing with tonnage production bonus, for a progressive increase in the bonus. We know that in this case there has been an increase, but of a small order, in the labour force during the period of increased production; we also know that a new papermaking machine has been put in place of an old one and new bamboo-crushers and digesters have been added; and we know that during the period from 1-4-1948 to 1-4-1959, there has been a total outlay on machinery and plant, worth 223.94 lacs including the above. There is no doubt, therefore that when production is expected to reach the figure of 54,000 tons in 1958-59, this outlay on machinery and plant must also have contributed to it. The increase in labour force, if any, after 1-4-1952, may also have made its contribution. But it appears to us that it is still valid to say that there is saving in labour cost which increases progressively as production goes up and labour can therefore legitimately claim a progressively higher rate. Therefore, though the Appellate Tribunals second reason does not appear to have been clearly expressed, something like what we have said above must have been at the back of its mind when it decided to change the rate above 36,000 tons. There can be no doubt that the consideration we have set out above, will be valid to support the view taken by the Appellate Tribunal that there should be a change in the rate, though it may not necessarily support the actual change ordered by it. We must not forget that there was no collective bargaining resulting in an agreement between the union and the company so far as production above 36,000 tons is concerned as was the case so far as production up to 36,000 tons went. A case has, therefore, been made out for a change in the rate when production goes above 36,000 tons.It is clear therefore that this bonus scheme is not the same as the profit bonus worked out under the Full Bench formula and it cannot be called a profit bonus scheme even otherwise. This is nothing more nor less than a pure production bonus scheme based on tonnage, depending on certain conditions one of which is related to profits also. The nature of this bonus, therefore, in our opinion, is entirely different from the nature of profit bonus under the Full Bench formula and we do not see why if there is an available surplus of profits according to the Full Bench formula, the workmen should not get profit bonus in accordance with that formula. The two things, in our opinion, are different. Under the scheme what the workers get is a supplementary, emolument worked out on certain bases. Under the Full Bench formula, what they get is something out of the profits, if there is an available surplus on the ground that both capital and labour contribute to the accrual of profits and it is only fair that labour should get a part of itBut that does not mean that the scheme itself provided for profit sharing or profit bonus. It is one thing to cancel or modify a scheme because the legislature steps in to provide for extra payment for workmen. But the nature of the provision of law, which was then expected, cannot be imposed on this scheme, which must be judged on its own terms; these leave no doubt that it is not a profit bonus scheme but an incentive wage plan depending upon production in the main. The contention therefore that the bonus under the scheme is a profit bonus and therefore the workmen are not entitled to the profit bonus under the Full Bench formula must failBoth the Tribunals have rejected the claim for raising the basic wage on the principle of "Industry-cum-Region Rate of Basic Wages". The workmen relied on the wages paid in the Bengal Paper Mills Ltd. at Raniganj, which is also a paper-making concern. The minimum basic wage there is Rs. 38-3-0, dearness allowance Rs. 35 and the incentive wage is said to work out to Rs. 7-5-6 per mensem, making the total Rs. 80-8-6. In the present company, minimum basic wage is Rs. 30; dearness allowance is Rs. ,35; house allowance is Rs. 2; attendance bonus works out to Rs. 8 and production bonus is about Rs. 3, making a total of Rs. 78. It will thus be seen that the difference is not great. Further, if the production bonus and incentive wage are not taken into account, the present company pays Rs. 75 per mensem while the Raniganj company pays Rs. 73-3-0,In the circumstances, we see no reason for interfering with the concurrent order of the two TribunalsThe Tribunals rejected the claim for extending the attendance bonus scheme to clerical staff, budli workers and temporary workers. They were of the view that these workmen stand on a different footing. For the clerical staff the reason given was that they enjoyed the advantage of the incremental scales which were till then denied to other categories of mill hands for whose benefit the attendance bonus scheme was introduced. As for the budli and temporary workers the Tribunals said that the scheme could not be applied to them on account of uncertainty of the tenure of their service. So far as the budli and temporary workers are concerned, the reason given by the Tribunals for treating them differently appears to us to justify their being excluded. As to clerical staff, it appears from the correspondence which ensued between the union and the company on the introduction of attendance bonus scheme that the scheme was introduced primarily in connection with the installation of a time keeping office.The clerks are obviously in a different category from the workmen engaged in actual production. In the circumstances, apart from the considerations which were considered by the two Tribunals, there is, in our opinion, justification for treating clerks in a different way from other workmen. The company also told the union that so far as they knew no scheme of attendance bonus had ever been applied to clerks, probably because absenteeism among clerks is not so great as among other workmen. We see no reason, therefore, to disturb the concurrent finding of the two Tribunals in this matterWe have already worked out above the available surplus of profits, from which profit bonus can be given. The amount of available surplus comes to 6.85 lacs and one months basic wages, which have been allowed as profit bonus, come to about 3 lacs. The percentage therefore is already sufficiently high and if profit bonus is lowed at the rate of two months basic wages it will come to about 6 lacs and would be more or less equal to the entire available surplus.It is well settled that the available surplus has to be divided in a fair manner between the industry the share-holders and the workmen. We cannot forget that the workmen have also got production bonus for this year.In the circumstances, there is no scope for grant of any further profit bonus beyond that allowed by the Appellate Tribunalfor cl. (18), it provides that if during the currency of three years for which the scheme was to remain in force in the first instance, the government enforced by legislation any scheme or provision for bonus or profit sharing, the company may decide to cancel or modify the scheme in its entirety. It is urged that this shows that the scheme was one for profit sharing or profit bonus, because it was likely to be cancelled or modified if legislation was introduced with respect to these. It may be that the scheme might have been cancelled or modified if such, legislation was. But thatdoes not mean that the scheme itself provided for profit sharing or profit bonus. It is one thing to cancel or modify a scheme because the legislature steps in to provide for extra payment for workmen. But the nature of the provision of law, which was then expected, cannot be imposed on this scheme, which must be judged on its own terms; these leave no doubt that it is not a profit bonus scheme but an incentive wage plan depending upon production in the main. The contention therefore that the bonus under the scheme is a profit bonus and therefore the workmen are not entitled to the profit bonus under the Full Bench formula must