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PETITIONER: SONE VALLEY PORTLAND CEMENT CO.

       Vs.

RESPONDENT: THE WORKMEN

DATE OF JUDGMENT08/03/1972

BENCH: MITTER, G.K. BENCH: MITTER, G.K. VAIDYIALINGAM, C.A. DUA, I.D.

CITATION:  1972 AIR 2148            1972 SCR  (3) 674  1972 SCC  (3) 727  CITATOR INFO :  E          1973 SC1081  (18)

ACT: Cement  Control Order 1961--Higher price paid in respect  of cement produced in excess of specified form--Whether workers entitled to share in such extra payment.

HEADNOTE: Under   the  Cement  Control  Order,  1961  passed  by   the Government of India in exercise of powers under s. 18(g)  of the  Industries  (Development and Regulation) Act  of  1951, producers  of  cement were obliged to sell  all  the  cement produced  by them to the State Trading Corporation  ,at  the prices  laid  down in the order.  Subseqently  in  order  to provide  an  incentive to the producers  to  increase  their output  it  was provided in the order that if  a  producer’s output  was in excess of a certain specified quantity,  then the payment for such excess would be made at a higher  rate. The workers of the appellant companies asked for a share  in the  incentive  payment  on the  contention  that  they  had contributed  to  the excess in production.   The  Industrial Tribunal  in  its award held that the  companies  and  their workmen  were entitled to share the incentive payment  on  a fifty-fifty basis.  In appeal by special leave, HELD  : There is nothing in law which prevents a  buyer  and seller fromagreeing  that whatever the seller can  offer upto a (certain quantity willbe  paid for at  a  particular rate and any quantity over and     above that , figure  will be for at a higher rate.The   total amount which the  seller would receive can only be called price even if the  contract of sale was so ’worded as to show that the excess amount was to  be  treated  as an  incentive  payment.   Therefore  the argument  that the workers were entitled to a share  of  the extra  payment de hors the question of any profit could  not be accepted.  Under the Industrial Law as propounded by this Court the workers can lay no such claim. r685F, 686D] New  Maneck  Chowk Spg. & Wvg.  Co. Ltd. v.  Textile  Labour Association, [1961], 1 S.C.R. 1, The Mill owners Association Bombay v. The Rashtriya Mill Mazdoor Sangh, Bombay [1960]  1 S.C.R.  107;  M/S  Titaghur  Paper Mills  Co.  Ltd.  v.  Its Workmen,  [1959] Suppl. 2 S.C.R. 1012; Burn & Co.  Ltd.,  v.

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Their  Employees, [1960] 3 S.C.R. 423 and National Iron  and Steel  Co.  Ltd.  v. Their Workmen,  [1963]  3  S.C.R.  660, referred to. Cement  Control Order even if it offered some inducement  to the producers to step up their production, the terms thereof did  not entitle the Tribunal to treat it as and by  way  of incentive  bonus in which the workmen could share.   It  was certainly  up to the producer to intimate the  workmen  that under  the  terms of the Control Order an  extra  amount  of money  would come to the till of the company  if  production was  increased  and the producers could  have  settled  what incentive  should  ’be offered to the  workmen,  but  merely because an extra amount of money which was as and by way  of price  would  find  its way into the  till  of  the  company because the production target was exceeded, the workmen did 675 not become entitled ipso facto to lay a claim to the  excess amount and the Industrial Tribunal was not entitled to  take the  view  that because an increase in production  can  only come  about  with  the  cooperation  of  the  workmen   they automatically  became  entitled  to  a  share  thereof.   An industrial court can only award what the law allows.  In the absence of legislation on the subject and in the absence  of a scheme for incentive payment introduced by the management, in  the particular facts and circumstances of the case,  the claim on the part of the workmen had to be negatived. [689D- H]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION :, Civil Appeal  No.  635  of 1967. Appeal  by  special leave from the award dated  January  11, 1967   of  the  National  Industrial  Tribunal,  Bombay   in Reference (NT)-1 of 1965. S.  D. Vimdalal, K. D. Mehta, D. N. Mishra and O. C.  Mathur for the appellants. K.  L. Hathi, for respondent No. 1. M.   K. Ramamurthi and Vineet Kumar, for respondents  Nos  2 and 3. The Judgment of the Court was delivered by Mitter,  J.This is an appeal by special leave from an  award of a National Tribunal under an order of reference reading               "Whether the demand of the workmen for a share               in the incentive payment allowed by Government               to cement producers is justified ? If so, what               should  be the basis and the  quantum  payable               for the year 1963 and subsequent years ?" The  cement producers involved were 14 in number set out  in Schedule  1  to  the  said Order.  Out  of  the  total,  the Tribunal  was not called upon to go into the cases  of  five cement  producers  as they had not  received  any  incentive payment  and the demand in respect of these  five  companies was  dismissed.   Even out of the nine left,  three  of  the producers  entered into settlements with their workers as  a result   whereof  the  cases  of  six  only  are  left   for consideration.  The names of the companies and the incentive 676 payments involved in this appeal are as under -----------------------------------------------------------                                        Payment    Payment       Name of the Company              for 1963  for 1964                                           Rs.       Rs. -----------------------------------------------------------

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             1                      2               3 ----------------------------------------------------------- 1.   India Cements Ltd............ 56,713-50     22,265-0O 2.   Sone Valley Portland Cement Co.  Nil        22,000-00 3.   Dalmia Dadry Cement Ltd.     1,19,76000   1,22,496-00 4.   Jaipur Udyog Ltd.            5,16,661-00      Nil 5.   Kalyanpur Lime & Cement Works Ltd.17,923-00  20,305-00 6. Mysore Iron and Steel Co. Ltd.      20,86,759-00  Nil ------------------------------------------------------------ The background of the dispute is as follows. "Cement  and  gypsum products" became a  scheduled  industry under s. 3(1) of the Industries (Development and Regulation) Act  of  1951 being an Act to provide  for  development  and regulation  of  certain industries.  Under s. 2 of  the  Act the Union of India was empowered to take control of the said industry.  S. 1 8 (g) ( 1 ) of Chapter III-B of the Act with the heading "Control of Supply, Distribution, Price etc.  of certain articles" enabled the Central Government to  provide for regulating the supply and distribution of any article or class  of articles relatable to any Scheduled  industry  and trade and commerce therein by notified order.  Sub-s. (2) of s. 18(g) illustrates the power comprehended by sub-s.  (1).. These include, inter alia, powers for controlling the prices act  which any such articles or class thereof may be  bought or  sold,  regulation of the distribution of  such  articles etc.  On October 31, 1961 Government of India made an  order under  S.  18(g) known as the Cement Control Order  of  1961 superseding an earlier Order of 1958.  The relevant portions of the Order are set out below "Cl.  3. Producers to sell cement to Corporation.-(1)  Every producer shall sell- (1)  the entire quantity of cement held in stock by  him  on the date of    commencement of this Order; and (b) the entire quantity of cement which may be produced by him before the date of commencement of this Order up to  the 31 st March, 1966 (inclusive) except such quantity as may be mutually 677 agreed  upon from time to time between him and  the  Central Government, to the Corporation, and deliver the same to such person or persons as may be specified by the Corporation  in this behalf from time to time. (2)  Notwithstanding any contract to the contrary,  no  pro- ducer ’Shall dispose of cement held in stock or produced  by him  except  in  accordance  with  the  provisions  of  sub- clause(1) Cl. 6. Controlled price of cement.-(1) The price at which  a producer may sell cement other than-               (i)   water-proof (hydrophobic) cement;               (ii)  rapid hardening cement; and               (iii) low heat cement;               shall as specified in the Schedule (2) (a) The price at which the Corporation may sell cement other than--               (i)   water-proof (hydrophobic) cement;               (ii)  rapid hardening cement; and               (iii) low heat cement; to  any person shall be Rs. 94.00 per metric tonne  free  or rail  destination railway station plus the excise duty  paid thereon : Provided  that the Corporation may, with the prior  approval of  the  Central Government, allow a  rebate,  discount  or commission in the price of cement sold to the Government for the Directorate General of Supplies and Disposals                 ........................

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    There was only one Schedule to the Order which ran                          The Sehedule                      [See clause 6(1)]. The  price  at which each producer may sell cement  free  on rail ex-works is the price which has been determined by  the Central Government in respect of that producer having regard to  the  recommendations of the Tariff  Commission  on  the, revision  of 1 prices of cement, and to all  other  relevant circumstances, that is to say,- (Only the relevant portion is set out below) 15-L1031Sup.Cl/72 678                                                   Price   A      Name of Producer                             per                                                   Metric                                                   tonne                                                     Rs. 4. M/s. K.C.P. Ltd., Macheria..................      69.50 6. M/s. Mysore Iron & Steel Works Bhadravati......   69.50 8. U.P. Government Cement Works Churku (U.P.).....   69.50 9. M/s. Dahnia Dadri Cement Co.Ltd.,Dalmia Dadri... 69.50  B 12.M/s. Jaipur Udyog Ltd., Sawai Madhopur............69.50 13.M/s. India Cements Ltd., Talaiyuthu...............72.50 16.M/s.Kalyanpur Lime and Cement Works Ltd.,Banjari..72.50 17.M/s. Sone Valley Portland Cement Co., Ltd. Japla..72.50 21.M/s Travancore Cements Ltd., Kottayam.............95.00      By the amendment of 1,96i3 the paragraphbefore theSche- dule was marked as (A) prefixed by the words "subject to the provisions  of paragraphs (B) and (C)." After  the  Schedule para,graph (B) was added to read :- (B)  In  addition to the price specified, in  paragraph  (A) the  producer mentioned in column 1 of the Table  below  may charge  an extra amounit specified in column 2 of  the  said Table  in  respect of cement produced and sold  by  them  in excess of the quantity specified in the corresponding  entry in column 3 thereof.                           "TABLE"            (only the relevant portion is set out) ------------------------------------------------------------                               Extra                               amount      Limit of quantity Name of the Producer          per         (in tonnes)                               tonne                               Rs.      (1)                      (2)                  (3) 1.The U. P. Government Cement Works, churk (uttar Pradesh)  5.50 2,20,000   in any year                                               ending                                               31st, October. 2.M/s. K. C. P Ltd., Macherla 5.501,15,000   in any year                                                ending                                                31st October. 7.M/s.  Mysore Iron & Steel Ltd., Dhadravati                   5.50    81,000    in the year                                                 ending                                              31st December,                                                 1963. 9.M/s.  Dalmia Dadri Cement Ltd.,Dalmia Dadri            5.50   1,76,000    in the year                                                 ending                                              31st December,                                                 1963 12.M/s.  Jaipur Udyog Ltd. Sawai Madhopur             5.50   7,55,000   in the year                                                  ending

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                                            31st December,                                                 1963. 13. M/s.  India Cements   Ltd., Talaiyuthu                   2.50  4,52,000    in the year                                                   ending                                              31 st December,                                                 1963. 16.M/s.  Kalyanpar Lime & Cement Works Ltd., Banjari    2.50  1,42,000   in the year                                                    ending                                               31st December                                                  1963. 17. M/s.  Sone Valley Port- land Cement Co. Ltd., Japla    2,35,000     in the year                                                    ending                                               31st December                                                   1963. 679 It is to be noted that three different prices were fixed  in respect of the 21 companies mentioned in the Schedule.   The price  applicable to twelve was Rs. 69.50, to  eight  others Rs. 72-50 and to one alone Rs. 95/-.  Paragraph (B) inserted in 1963 however provided for a. charge by the producer of an extra amount of Rs. 5-50 in respect of twelve companies  and Rs. 2-50 in respect of five others.  The curious feature  of this table is that-the limit of quantity in column 3  varies from  producer to producer and the period specified  is  not the same in all cases.  For the first two producers the U.P. Government  Cement Works and the K.C.P. Ltd., Macherla,  the Order  provided for payment of an additional amount for  all subsequent years ending on the 31st October.  In the case of Mysore  Iron and Steel Co." Ltd. the increase  was  provided for  only one year, namely, year ending 31st  December  1963 the  target above which the extra amount was  to  be  paid being  81,000  metric  tonnes.  Similarly, in  the  case  of Dalmia Dadri Cement Ltd. the extra amount was to be  payable over the target figure of Rs. 1,76,000 metric tonnes only in the  year  ending  31st December 1963 : so is  the  case  of Jaipur  Udyog Ltd. the targot being 7,55,000 tonnes; in  the case of India Cements it was.for the year ending 31st Decem- ber  1963 as also in the case of Kalyanpur Lime  and  Cement Works and Sone Valley Portland Cement Company. It  appears  that Cement Control Order of 1961  was  further amended from time to time.  By an order dated 31st May  1963 which  was  to  come  into force on June  1,  1963  and  the Schedule  below  paragraph  A of the  Schedule  was  amended increasing  the price in cases where cement producers  could charge  the Corporation Rs. 69-50 per ton to Rs.  72-25  per ton while India, Cements Ltd., Kalyanpur Lime & Cement  Ltd. and  Sone Valley Portland Cement Co., Ltd., were allowed  to charge  the Corporation Rs. 75-25.  In other words, all  the above  six producers besides K.C.P. Ltd. (appellant in  C.A. No.  2156 of 1970) were allowed to increase their  price  by Rs.  2-75  per  tonne chargeable to  the  said  Corporation. There  was  also an increase in the price  which  the  State Trading Corporation could charge under sub-cl. 2 (a) of  cl. 6.  Prices were further increased by Amendment Orders  dated 30th  June 1964 and 31st May, 1965.  ’These however  do  not concern us in these appeals. Workmen of fourteen companies claimed, that the extra amount under paragraph (B) of the Schedule could only be earned  by the producers as a result of extra effort on their part  and as  such they were entitled to a share  thereof.   Different statements  of  claim  were put in before  the  Tribunal  in respect of different producers.  The workmen of Jaipur Udyog

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Ltd.  claimed  that  they should be paid 60%  of  the  extra amount paid for the year 1963 and to the full amounts to  be paid in the subsequent 680 year.  According to them the Government of India had  intro- duced a scheme whereby the cement industry was allowed  pay- ments  in the nature of incentive.. at the rate of Rs.  5-50 per  tonne of cement produced in 1963 and subsequent,  years in  excess  of  the specified  quantities  of  cement.   The figures  adopted for Udyog Ltd. was 7,55,000 and  the  extra payment  at Rs. 5-50 per ton related to the production  over and above that figure.  The President of the Indian National Cement Workers’ Federation submitted that               "In  the cement industry the workers played  a               very important part in increasing the,  cement               production and without their co-operation  and               efforts  the  quantity fixed in  each  factory               could  never have been exceeded. The  quantity               fixed  by  the Government in respect  of  each               factory was the highest figure reached in  the               preceding.   three   years  and   labour   had               substantially  contributed to exceed the  said               figure and reducing the cost of production  in               respect of various cement works and all  work-               men should be entitled to the full payment  in               the   incentive   payment   allowed   by   the               Government to the various cement producers  in               proportion to the earnings for the years  1963               and for subsequent years." In  some of the statements of claim the  additional  amounts received  were described as incentive bonus  for  additional production. The producers in their written statement, on the other hand, submitted  that  the extra or incentive payment  had  formed part  of their sale proceeds and included in the profit  and loss  account  for the purpose of payment of  annual  profit bonus.   The  Mysore Iron and Steel Co.,  Ltd.  stated  that their  workers were paid production incentive bonus  ranging from  12%  to  40% of the basic  wages  in  accordance  with certain  scales  of  incentive  fixed  for  the  targets  of production.    India   Cements  Ltd.  submitted   that   the production  of cement being a continuous process and  not  a repetitive one the same could not be related or linked  with individual effort or increased by any individual effort  and that  any  increased  production  in  an  individual  cement factory was due to efficient supervision and good management of  the factory rather than increased effort on the part  of the  workers.   It  was  also  said  that  being  a  capital intensive industry increased production was due to increased capital  investments and improved techniques and  the  final product  was  a  sequence  of linked  process  in  that  any drawback  could  reduce or slow down the count  of  finished product.   According to this Company the sole object of  the incentive scheme as it was popularly known, Was to encourage cement  producers  to maximise their production  on  with  a view to meeting, as 681 far  as  possible,  the growing demand  for  cement  in  the country.   The  company  also referred  to  various  capital expenditure  incurred  for  rehabilitating  its   machinery. According  to the written statement of Sone Valley  Portland Cement  Company it had incurred an expenditure of more  than Rs.  17,50,000/- for new equipment for the quarry  and  the, factory and rehabilitation of kilns and bicable ropeway. Out  of the six producers involved in this  appeal  reliance

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was  placed by four on certain special features.  So far  as India Cements Ltd. were concerned, reliance was placed on  a settlement  regarding  the payment of bonus  for  the,  year 1964-65 in that the amount agreed to be paid for the year 1- 4-1964  to  31-3-1965 to the extent of 7/24th of  the  total basic wages for the above year was to be taken as  including the  consideration  of  the incentive bonus  earned  by  the company  during the calendar year 1964.  As  regards  Jaipur Udyog,  reference  was made to a settlement of  February  4, 1962 which originated in a demand for bonus amounting to  10 months’  wages  for the year 1960-61.  This  was  however  a long-term settlement as is apparent from the terms  recorded which were to the effect that workers "would  be  given  bonus for the years  1959-60  to  1963-64 according to the table set out." According to clause 9 of the terms :               "It is agreed and clearly understood that  the               workers  of  the Union shall not claim  or  be               entitled  to any bonus in any form  whatsoever               and by whatever name , called except the bonus               agreed  to  hereby  in respect  of  the  years               covered by this agreement." Clause  13  of the terms shows ’that the Union  assured  the Management  that no effort would be spared on their part  to raise   and  maintain  production  to  its  full   installed capacity. Dalmia  Dadri  Cement  entered into an  agreement  with  its workmen  to pay bonus equivalent to 14 months’  basic  wages for the years 1958 to 1963.  This was to include both profit and production bonus’ The workers also agreed to  co-operate with  the management in ensuring that there was an  increase in the productivity of the plants. As  regards Mysore Iron and Steel Co. Ltd.,  the  Management stated  that  there was already in existence  a  scheme  for incentive  bonus ranging from 12% to 40% of the basic  wages in  accordance  with the scales of incentive fixed  for  the targets of production as per appendix annexed to the written statement.   It  was said that this was over and  above  the annual  profit bonus which the employees were being paid  at the  rate of 1/6th of their earnings exclusive  of  dearness allowance and other allowances during the accounting  years 1962-63 and 1963-64. 682 Only one witness was examined on either side before the Tri- bunal.   One  R. Natarajan, Under Secretary,  Government  of India   Ministry  of  Industry,  gave  evidence  about   the circumstances  under which Government took the  decision  to grant an incentive bonus to producers of cement.   According to  him  during  the years 1962 and  1963  Government  being exercised  by the critical supply position of cement in  the country  and  being  keen  to take  all  possible  steps  to increase  the production of cement and to consider ways  and means  to increase the production of cement, set up a  panel of  leading  producers and technical experts.  A  number  of cement factories were allowed to import balancing  equipment to ensure a proper synchronisation of the working of various departments  and  to remove  production  bottlenecks  caused mainly  by difficulties of coal and rail  transport.   Steps were taken to remove these difficulties by concerted  action of  several  agencies  of Government  There  still  remained however a considerable field of effort in which the producer had  to  apply  his  mind  and  resources  to  the  task  of overcoming his specific difficulties and to create a climate in the cement industry by using his ingenuity of taking  all possible  further measures to overcome his  specific  diffi-

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culties   in  utilising  his  full   capacity.    Government therefore  decided  to allow an extra price  to  the  cement producers  in respect of the quantity of cement produced  in each  factory  over and above the highest  level  of  actual production reached during the last three years ending  1962. The extra price was to be the differential between Rs.  75/- and  the then ex-factory price per tonne applicable to  the unit.   This extra price was paid on such production  during 1963  and 1964.  In his cross-examination he made  it  clear that  the decision of Government was taken and  notified  in January  1963  but  this had not been  reached  at  a  joint meeting  of the Government and the producers.  According  to witness  Government  did not have any  idea  whether  labour should or should not share in this extra payment. The  witness  examined  on behalf of  the  workmen  was  the Assistant  Labour  Commissioner  who was  really  called  to produce certain documents. Before  the.- Tribunal various contentions were put  forward on behalf of the producers to show that the production above target figures fixed by Government had little to do with any extra  effort put in by the workmen.  One of the  submission was  that  some  of  the  units  had  incurred  considerable expenditure for the purpose of increasing, production.   But as the Tribunal rightly pointed out :               "No  evidence either documentary or  oral  was               led by the company to show how the expenditure               had contributed to increased production and in               what proportion." 683 The   Tribunal  recognised  that  capital   expenditure   on equipment  would  certainly  make  a  contribution   towards increased  production but in the absence of evidence it  was not   in  a  position  to  determine  the  extent  of   such contribution.     The   Tribunal   examined   the    special circumstances relied on by four out of the six companies but notwithstanding  the same took the view that the  demand  of the workmen for a share in the incentive payment allowed  by Government was justified.  The Tribunal appears to have been influenced  very largely by an award in the case  of  Kymore Cement Works containing the following remark:               "As by their notification, the Government held               out  allurement to the industry  ,for  greater               production  the claim of the workmen,  in  our               opinion,  must be considered on the  basis  on               which  claim  for "incentive  bonus"  must  be               considered.  We are not unmindful of the  fact                             that  the claims before us, strictly speaking,               are not in all respects at par with the claims               of  incentive  bonus for in the  case  of  the               incentive  bonus, the norm of  production  and               the  rate  for the extra production  over  the               norm  are fixed in advance, but we  have  held               that  the  claims before us are more  akin  to               "incentive bonus" than anything else. As  this               is additional bonus which partakes ofthe               nature of incentive bonus, its amounts cannotany               relation  to profits made and must be  related               to  the  wages and measured by the  amount  of               work." In  our  view  being impressed by the  above  reasoning  the Tribunal concluded that the basis of payment for each of the two years should be on a fifty fifty basis. Before  us elaborate arguments were put up on  either  side, counsel on behalf of the employers contending that so far as

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at  least the four out of six producers were  concerned,  in view  of  the  special  features  workmen  could  not  claim anything over and above the usual bonus allowable under  the Labour Appellate Tribunal formula or the Bonus Act. As  against this, it was contended on behalf of the  workmen that  there could be no doubt that workers had  played  some part  in raising the figure of production above the  maximum of the last three years ending in 1962 and if the  producers were  given  something’  by way of incentive  there  was  no reason  why  the  workers  should be  deprived  of  a  share thereof.   Mr.  Ramamurty frankly conceded that  if  it  was established  that substantial capital expenditure  had  been incurred in the, case of any particular producer, that was a factor to be taken into consideration in making allocation out  of  the extra payment earned; but even that  would  not justify  the total negation of the claim of the  workers  to some  payment.   He also conceded that if the  producer  was free  to raise the price by reason of conditions  prevailing in the market 684 labour  could not claim any share in the increased price  on the  ground  that  it  was based on  the  extra  effort  put forward-  by them.  He however argued that the extra  amount chargeable was not due to any such conditions in the  market and was allowed to be charged by the Government so that  the producers  in conjunction with their labour could raise  the level  of production for the benefit of the, community as  a whole.   It was also argued by Mr. Ramamurty that  the  case required a special consideration of the circumstances by the Tribunal  and  by this Court in appeal and the  view  to  be adopted  should  be the one which is consonant  with  social justice. As  against  this counsel for the producers  submitted  that social   justice   was  a  vague  concept  and   except   in circumstances recognised by courts of law as justifying  the adoption  of  a particular course should not be  allowed  to influence   the   decision  of  a   Tribunal   administering industrial  law.  It is only too well known that in most  of the industries in our country the objective of a living wage will  remain  a distant dream for a long time  to  come  and social  justice  certainly requires that efforts  should  be made  to reduce the disparity between a living wage and  the actual  wage  but industrial tribunals are not  to  consider themselves  free  to  depart  from  settled  principles   of industrial law by chalking out a path of their own  whenever opportunity occurs. In  our  view, however, it is not necessary to  examine  the aspect  of social justice in the matter or even the  special features  with regard to the working of four out of  six  of the  above producers.  We must first consider the nature  of the  extra payment which was received by the producers  from the  State  Trading Corporation i.e., was it by  way  of  or towards  the price payable, or was it unconnected  with  the question  of  price  e.g., a payment by way  of  a  tip  Mr. Ramamurty submitted that it could not be the former in which case  one would expect the extra payment to be  linked  with the  entire  quantity  produced  and  not  limited  to   the production  over and above the target fixed  by  Government. While  it  cannot be denied that the  underlying  object  of paragraph  (B) and the Schedule to the Cement Control  Order of 1963 was that the producer should adopt ways and means to increase  the production either with the help of  Government reducing bottle-necks or the producer itself finding out and adopting devices to step up production with the help of  the workmen concerned, the extra amount paid can only be treated

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as  and by way of price offered because of the  scarcity  of the  commodity  in the country. The,  Cement  Control  Order which  has  been set out in some detail clearly  shows  that producers  were not entitled to charge their own price.   If they had been we have no doubt that taking advantage of  the scarcity they would have charged much more 685 than  Rs.  69-50  per ton to  start  with.   Whatever  their production  each unit could only sell to the  State  Trading Corporation  and  at the price fixed.  As a  result  of  the Order,  the Corporation was not free to offer an  inducement to the producer for producing cement in excess of the target fixed  as  in  its turn it was not entitled  to  charge  the actual consumers or the dealers in the market any amount  in excess  of  the price fixed under the  Control  Order.   The transaction between a cement producer and the State  Trading Corporation can only be described as a sale and whatever was paid  to  the  producer  by  the  Corporation  can  only  be described as the, price. Mr.  Ramamurty conceded that normally a workman  could  only share in the general prosperity of the undertaking and-  ask for  a, revision of his wage, dearness allowances etc.  when the  production of the employer shoots up thereby  enhancing its  profitmaking capacity.  He also agreed that  in  normal circumstances greater production leading to a greater amount of  profit would ensure to the benefit of the labour by  way of  production  bonus under the  Labour  Appellate  Tribunal formula  or under the Bonus Act.  He however contended  that the  facts  in this case must be treated as  justifying  the claim of workmen to something like an incentive bonus though it  was not to be treated in the way such bonus  is  usually claimed or awarded.  In other words, his submission was that but  for the inducement of extra payment the  target  figure would  not  have been exceeded and that as  the  efforts  of workmen must to some extent be held to have contributed  the increase  in  production  they must have  a  share  of  such payment  de  hors  the  question of  any  profit.   We  find ourselves  unable  to  accept this  proposition.   There  is nothing  in  law  which prevents a  buyer  and  seller  from agreeing that whatever the seller can offer up to a  certain quantity  will  be  paid for at a particular  rate  and  any quantity  over and above that figure will be paid for  at  a higher  rate.   The  total amount  which  the  seller  would receive  can  only be called price even if the  contract  of sale was so worded as to show that the excess amount was  to be treated as an incentive payment.  Between the, buyer  and the  seller  the  amount  which  changes  hands  i.e.,   the consideration  for the thing sold, can only be described  in legal  terminology  as price.  III some  cases  in  ordinary commercial  transactions,  the seller allowes  the  buyer  a certain  amount  of  commission  in  case  the  buyer  takes delivery  of a quantity over and above a  particular  figure fixed.   This will only mean that the buyer was  allowing  a reduction  in price in the particular circumstances of  that case.   What has taken place under the Cement Control  Order is that the terms of sale are fixed by Government under  the Order, the parties i.e., the 686 producers  and the Corporation not being allowed to  discuss and settle the terms themselves. Government recognised that unless it held out an  inducement to the producers by allowing them to charge a price over and above  that fixed under the Schedule to paragraph (A)  there was  little chance of the shortage of the commodity  in  the market being reduced.  It however realised at the same  time

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that a general increase of price on the whole outturn of the produce  would  make  it difficult  for  the  State  Trading Corporation  to  function  properly unless  it  allowed  the Corporation  to charge a higher price to the  consumer.   It was  only  because Government did not want the  consumer  to have  to  pay more that it adopted the device of  the  extra amount  being chargeable only in respect of this  additional quantity over the figure of production up to 1962. There  is  however another aspect of the  matter.   Assuming that the extra payment was to be treated and described as an incentive payment, it is difficult to see how the  employees can  under  the Industrial Law which this Court has  so  far expounded  have any claim to any share of such payment.   In New  Maneck  Chowk Spg. & Wvg.  Co. Ltd. v.  Textile  Labour Association(1)  this Court examined the concept of bonus  as involved  in  industrial law of this country  by  Industrial Tribunals  and by the decisions of this Court.  It took  the view  that  there  are four types of bonus  which  had  been evolved  under  the industrial law, namely,  (1)  production bonus  or  incentive wage, (2) bonus as an implied  term  of contract  between the parties, (3) customary bonus  in  con- nection  with some festival and (4) profit bonus evolved  by the   Labour   Appellate  Tribunal   in   The   Mill-owners’ Association  Bombay  v. The Rashtriya  Mill  Mazdoor  Sangh, Bombay.(2)  An  incentive  bonus  for  increased  production partakes  of  the  nature of a production  bonus.   In  M/s. Titaghur  Paper Mills Co. Ltd. v. Its Workmen(") this  Court had to examine the nature of production bonus.  According to this Court (see at p. 1019)               ". . . it is an incentive to higher production               and is in the nature of an incentive wage." Referring  to Labour Law by Smith, Second Edition,  p.  723, where  various plans prevalent in other countries  known  as Incentive Wage Plans have been worked out on various  bases, the Court said               "The  simplest of such plans is  the  straight               piecerate plan where payment is made according               to each piece (1) [1961] 1 S.C.R. 1 at P. 9   (2) [1960] 1 S.C.R. 107. (3) [1959] Suppl. 2 S.C.R. 1012. 687               produced,   subject   in  some  cases   to   a               guaranteed  minimum  wage for so  many  hours’               work.   But  the  straight  piece-rate  system               cannot work where the finished product is  the               result  of the co-operative effort of a  large               number  of workers each holding a  small  part               which  contributes  to the  result.   In  such               cases,  production bonus by tonnage  produced,               as  in this case, is given.  There is a,  base               or standard above which extra payment is  made               for extra production in addition to the  basic               wage. . . . But whatever may be the nature  of               the  plan  the payment in effect is  an  extra               emolument  for extra effort put in by  workmen               over    the    standard   that      may    be,               fixed............... The extra payment depends               not   on   extra   profits   but   on    extra               production.   .  .  .   Therefore,   generally               speaking,  payment  of  production  bonus   is               nothing more or less than a payment of further               emoluments  depending  upon production  as  an               incentive  to the workmen to put in more  than               the  standard performances.  Production  bonus               in  this  case  also is  of  this  nature  and

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             nothing more than additional emolument paid as               an incentive for higher production." As  to the initiation of such a scheme the  argument  before the Court was               "Whether there should be increased  production               in  a  particular concern is a  matter  to  be               determined   entirely  by  the  employer   and               depends  upon  a  consideration  of  so   many               complex  factors,  namely, the  state  of  the               market,- the demand for the product, the range               of  prices,  and  so on.   It  is,  therefore,               entirely  for  the  employer  to  introduce  a               production bonus scheme or not," On the question as to whether the Industrial Tribunal  could have jurisdiction to introduce a production bonus scheme  at all, the Court left the question open but took the view that where as in the case before the Court there was a scheme  of production bonus in existence, the Tribunal had jurisdiction under  the Industrial Disputes Act to deal with it and  make suitable amendments to it.  A similar view was expressed  in Burn & Co. Ltd. v. Their Employees(1) and National Iron  and Steel Co. Ltd. v. Their Workmen. (2). It  would  of course always be open to the  Legislature  to, introduce  any  kind  of  bonus not  so  far  recognised  by industrial law evolved either by tribunals or by this Court. But  that must rest on a solid foundation and express  words must be used to that (1) [1960] 3 S.C.R. 423.   (2) [1963] 3 S.C.R. 660. 688 effect.   Although it is not necessary to express any  final view on the subject we are inclined to think that apart from legislation  an incentive bonus for increase of  production, irrespective of the question as to whether the industry was making  profit or not is one that must be introduced by  the particular unit of industry.  It would be for the management to  fix  what  incentives  should  be  given  to   different departments  to step up production.  An Industrial  Tribunal would not be justified in holding that merely because  there had  been  augmentation in the production  labour  would  be entitled to make a claim to bonus because of such  increase. Labour  would  undoubtedly be entitled to revision  of  wage scales, dearness allowance and other terms and conditions of service  as  also  profit  bonus;  but  in  the  absence  of legislation or a scheme of incentive production,  industrial tribunals  would  not be justified in laying down  a  scheme themselves. In our view the Cement Control Order even if it offered some inducement  to the producers to step. up  their  Production, the  terms thereof did not entitle the Tribunal to treat  it as and by way of incentive bonus in which the workmen  could share,  ,It was certainly upto the producer to intimate  the workmen  that under the terms of the Control Order an  extra amount  of  money would come to the till of the  company  if production was increased and the producer could have settled what incentives should be offered to the workmen but  merely because  an extra amount of money which as we  have  already described,  was  as and by way of price would find  its  way into  the till of the company because the production  target was  exceeded,  the  workmen did not  become  entitled  ipso facto.  to  lay  a  claim to,  the  excess  amount  and  the Industrial  Tribunal was not entitled to take the view  that because  an increase in production can only come about  with the  cooperation  of the workmen they  automatically  become entitled  to a share thereof.  It may be that they  all  had the,  benefit  of the extra payment by way of  profit  bonus

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under  the  Labour Appellate Tribunal formula and  it  would appear that the claims to incentive bonus rested rather on a frail  foundation  in  several  of  the  companies   earlier mentioned.   This will hardly be a case where we should  lay down a principle of such far-reaching importance viz.,  that workmen are entitled to an extra payment by way of incentive bonus  as  soon as they can establish that production  in  a particular  year  exceeded the highest figure of  the  three preceding years.  Nor can we look at the terms of the  award in   Kymore’s  case.  as  showing  the   course   industrial adjudication  should  take.  An industrial  court  can  only award  that  which  the  law  allows. In  the  absence  of legislation  on the subject and in the absence of  a  scheme for incentive payment introduced by the management 689 in  the particular facts and circumstances of the  case,  we would negative such a claim on the part of the workmen. In  the result therefore we allow the appeal but would  make no order as to costs. B G.C.                      Appeal allowed- 690