Case: Mathurdas Kanji &amp; Others Vs. Labour Appellate Tribunal &amp; Others

to pass on the bonus to the workmen. Exhibit U 10 was a letter, dated 14-2-1952, written by the Conciliation Officer (Central) to the appellants, wherein it was pointed out that the Ministry of Food and Agriculture, Government of India, had informed the Conciliation Officer that the contractors were required to pay he amount of bonus of annas 4 to the labour and that the agreement should be taken to be subject to the above condition. If the payment of the bonus of annas 4 to the workmen was not a term in the agreement, the mere fact that, subsequent to the agreement, the Government thought that the bonus of annas 4 per ton mentioned in the agreement should go to the workmen would not conceivably make it a term of the contract, unless the other parties to the contract agreed to the additional term. Admittedly the appellants did not agree to any such new term. In the circumstances, on the construction of the express terms of the contract, we have no hesitation to hold that the bonus of annas 4 mentioned in Note 2 of the agreement was part of an integrated scheme of additional remuneration vouch-safed to the appellants in case they complied with the conditions laid down in the agreement and the workmen employed by the appellants had no right to the same. As we have already pointed out, the other two agreements entered into by the Central Government with the second and the third appellants were similar in terms and what we have stated about the first agreement would equally apply to the construction of the terms of the said two agreements. If so, it follows that the workmen were not entitled either to the bonus under Note 2 to the agreement or to any share therein.3. The next question is whether the workmen are entitled to claim incentive bonus de hors the agreements. The Appellate Tribunal gave to the workmen a share of the bonus earned by the appellants under the terms of the agreement on the ground that social justice required that the employees, who were all piece rate workers, and had no steady and continuous flow of income and not entitled to gratuity, provident fund and other benefits, should get a share in the incentive bonus. The learned Attorney-General contended that the respondents claimed bonus only under the terms of the agreement entered into between the Central Government and the appellants and therefore the Tribunal was not justified in giving relief to them on a different basis. He further argued that the workmen were not entitled to bonus, whether incentive or otherwise, unless the appellants business made profits, and in this case there was neither an allegation much less proof that the appellants made profits during the years in question.4. The concept of the word bonus has been succinctly defined and the circumstance under which it is to be paid to the workmen has been clearly laid down by this Court in Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur (1955) 1 SCR 991 : ( (S) AIR 1955 SC 170 ) (A). Various definitions of the word bonus were culled out from authoritative text-books and quoted in the judgment with approval.They accepted the definition of bonus as cash payment made in addition to wages as a stimulus to extra work and efficiency by the labour. But to enable the labour to earn the bonus the following conditions are laid down at page 998 of the case cited above:(1) "when wages fall short of the living standard and(2)the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production".In the words of Bhagwati J., "The demand for bonus becomes and industrial claim when either or both these conditions are satisfied."5. Bonus schemes vary with the conditions obtaining in different industries. Though bonus is a cash payment made to the workmen in addition to the wages, it is no longer considered as an extra gratia payment. The claim, if raised, becomes an Industrial Dispute and the award made thereon is binding on the employer as well the employee. One of the categories of bonus is described as incentive bonus. The name indicates that it is given as a cash incentive to greater effort on the part of the labour. But the essential condition for the payment of incentive bonus just like any other kind of bonus, is that the industry concerned must earn profits part of which is due to the contribution which the workmen made in increasing production.6. The first question is whether in the case of workmen engaged on piece rate basis, there is any scope for awarding incentive bonus.If the wages of the workmen were fixed and paid on piece rate basis, they would earn more if they worked more and therefore, the argument proceeded, that it was neither just nor equitable to award payment of any further incentive bonus to workmen.7. Though the incentive to work may be implicit in the system of piece rate work, it may be contended that other devices or adventitious aids may be conceived and implemented to speed up the pace and to induce the labour to put up extra effort. We do not propose to express our opinion in this case on the said question, as, even if payment of incentive bonus was legally permissible in the case of piece rate work, the workmen would be entitled to it only if the appellants made profits in the business. But in this case the contesting respondents did not claim incentive bonus linking it with profits. There was no allegation at any stage of the proceeding that the appellants made profits due to the contribution which the workmen made in increasing the production. There was also no evidence placed before the Tribunals or before us to prove that the appellants earned profits. In the circumstances, the workmen were not entitled to incentive bonus claimed by them.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In the circumstances, on the construction of the express terms of the contract, we have no hesitation to hold that the bonus of annas 4 mentioned in Note 2 of the agreement was part of an integrated scheme of additional remunerationto the appellants in case they complied with the conditions laid down in the agreement and the workmen employed by the appellants had no right to the same. As we have already pointed out, the other two agreements entered into by the Central Government with the second and the third appellants were similar in terms and what we have stated about the first agreement would equally apply to the construction of the terms of the said two agreements. If so, it follows that the workmen were not entitled either to the bonus under Note 2 to the agreement or to any share therein.The first question is whether in the case of workmen engaged on piece rate basis, there is any scope for awarding incentivethe wages of the workmen were fixed and paid on piece rate basis, they would earn more if they worked more and therefore, the argument proceeded, that it was neither just nor equitable to award payment of any further incentive bonus to workmen.7. Though the incentive to work may be implicit in the system of piece rate work, it may be contended that other devices or adventitious aids may be conceived and implemented to speed up the pace and to induce the labour to put up extra effort. We do not propose to express our opinion in this case on the said question, as, even if payment of incentive bonus was legally permissible in the case of piece rate work, the workmen would be entitled to it only if the appellants made profits in the business. But in this case the contesting respondents did not claim incentive bonus linking it with profits. There was no allegation at any stage of the proceeding that the appellants made profits due to the contribution which the workmen made in increasing the production. There was also no evidence placed before the Tribunals or before us to prove that the appellants earned profits. In the circumstances, the workmen were not entitled to incentive bonus claimed by them.