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PETITIONER: THE DAILY PARTAP

       Vs.

RESPONDENT: THE REGIONAL PROVIDENT FUND COMMISSIONER, PUNJAB, HARYANA,HI

DATE OF JUDGMENT:       29/10/1998

BENCH: S.B.MAJMUDAR, M.JAGANNADHA RAO

ACT:

HEADNOTE:

JUDGMENT:  JUDGMENT S.B.Majmudar, J. Both these appeals for special leave to appeal under Article 136 of the Constitution of  India  have  brought  in challenge two orders of the Division Bench of the High Court of  Punjab  &  Haryana  at Chandigarh dismissing two Letters Patent Appeals arising out of the decision  of  the  learned Single  Judge of the High Court who has considered identical questions of law.  Consequently,  both  these  appeals  were heard together.   Learned counsel for the respective parties were heard in support of their  cases  and  thereafter  both these appeals are being disposed of by this common judgment. The common question which falls for consideration of this Court in these appeals is as to whether the  appellants which   are   carrying  on  the  business  of  printing  and publishing newspapers in the State of Punjab  at  Jallandhar are  liable  to  remit  contributions under Section 6 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (for short the ’Act’) to  the  authorities  functioning under  the  Act  along  with the matching contributions from their respective employees, so far as the  amounts  paid  by the appellants to their employees under identical schemes of Production Bonus are concerned.  The learned Single Judge of the  High  Court in his impugned Judgment has taken the view that  the  said  statutory  liability  is  foisted  on   the appellants.   By  summarily  dismissing  the  Letters Patent Appeals against the said  decision  of  the  learned  Single Judge,  the  Division  Bench has confirmed the said view and that  is  how  the  appellants  are  before  us   in   these proceedings.   A  few relevant introductory facts deserve to be  noted  to  appreciate  the  common  grievance   of   the appellants.

BACKGROUND FACTS: The  appellants  were  carrying  on  the business of printing of the newspapers in the city of Jallandhar in  the State of Punjab and circulating the same to their customers. They  were  alleged to have not remitted their contributions along with the share of their  concerned  employees  to  the extent  of  the  amounts  paid  by  them for the period from

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August, 1975 to March, 1976 by way of Production Bonus.  The contention of  the  appellants  was  that  as  the  disputed amounts  were  paid  to  the  concerned  employees under the relevant Production Bonus Schemes they were  not  liable  to remit  contributions  for  the  same as per Section 6 of the Act.  On the basis of the said contention, they  filed  writ petitions  earlier  against  the  aforesaid  demand  of  the authorities before  the  High  Court.    In  the  said  writ petitions  filed in the year 1976, the then learned Advocate Genera  for  the  State  of  Haryana   appearing   for   the authorities,   conceded  before  the  High  Court  that  the appellants were not required to deposit the  provident  fund on  the  Production  Bonus  and  the  appellants may deposit provident fund only on "wages" as defined in  the  Act  from August,  1975  and  with  regard to the refund of the amount deposited in respect of Production Bonus, the appellants may apply to the respondent authorities, who, after giving  them hearing, would  decide  the matter within three months.  The said decision of the High Court in both these writ petitions moved by the appellants were rendered on  19th  July,  1976. Thereafter  the  respondent  authorities gave hearing to the appellants and ultimately took the view  that  the  disputed amounts for which contributions were asked for under Section 6  of  the  Act  from the appellants were part of the "basic Wages" and no such Production Bonus Scheme was  existing  in the appellants’  concerns.    Consequently, the claim of the appellants for non-application of Section 6 of  the  Act  of these disputed   amounts   was   rejected.      Under  these circumstances, the appellants once again carried the matters in writ  petitions  before  the  High  Court.    Those  writ petitions  were dismissed by the learned Single Judge by the impugned order which came in their turn to be  confirmed  by the  Division  Bench  in the Letters Patent Appeals as noted earlier. RIVAL CONTENTION: Shri  Ranjit  Kumar,   learned   counsel   for   the appellants vehemently submitted that pursuant to the earlier order  dated  19th  July,  1976  of  the  High Court in writ petitions the only inquiry which was to be conducted by  the authorities  under  the Act was about the appropriate amount of refund  to  be  given  to  the  appellants.  The  learned Advocate  General  for  the  State  of  Haryana  had clearly conceded that the appellants were not  required  to  deposit such  provident  fund  on Production Bonus and consequently, the  authorities had no  jurisdiction  to  go  behind  these orders  of  the High Court and decide the question on merits once again and held  that  the  appellants  were  liable  to deposit  the  provident fund amount on Production Bonus paid by them to the workmen concerned. In the  alternative it was contended by the learned counsel  for  the  appellants  that even  assuming  that  the  authorities  could  go  into this question despite the order of  the  High  Court  dated  19th July,  1976, the authorities had committed a patent error of law in taking the view that the scheme in question was not a Production Bonus Scheme and that the  amounts  paid  by  the employees  for  extra  work  rendered  by  the  workmen were covered by the definition of  "basic  wages"  under  Section 2(b)  and consequently Section 6 of the Act got attracted in connection with the  said  disputed  amounts  on  which  the authorities   were  justified  in  seeking  transmission  of contribution  by  the   appellants   along   with   matching contribution   by  the  workmen.  In  support  of  the  said contention, learned counsel for  the  appellants  vehemently relied upon a decision of the six member Bench of this Court in  Bridge & Roof Co. (India) Ltd. vs. Union of India, (1963

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(3) SCR 978) and tried to distinguish the ratio of  decision of  this  Court in Jay Engineering Works Ltd. & Ors. vs. The Unior of Indian & Ors. (1963 (3) SCR 995). It was  contended that  the  scheme in question was clearly a Production Bonus Scheme. That those workmen employed by  the  appellants  who had put in more work than beyond the norms provided for them and  for  which  no  action  could  have  been  taken by the Management if the workmen had not carried out the extra load of work, had been paid for this voluntary extra  work.  Such payment   for   extra  work  was  directly  linked  up  with production and was  a Production  Incentive  Bonus  squarely covered by the excepted category of the definition of "basic wages" under Section 2(b) of the Act. He also submitted that in  order  to  become  a  Production Bonus Scheme it was not necessary that all the workmen were uniformly paid bonus  if they  worked  more  than  what  was  required of them by the norms. Even if amounts of bonus varied with the  quantum  of extra  work rendered by workmen concerned, such bonus scheme still remained a genuine incentive Production Bonus Scheme. In  reply,  learned  counsel for the respondent Shri Harish Chander, submitted that the Act is a beneficial piece of legislation.  It is welfare measure under  which  workmen belonging  to the lower strata of society and suffering from economic distress and penury are enabled by the  legislature to contribute towards a compulsory saving scheme wherein the employer  would  give  matching  contribution and the amount credited  to  the  workment’s  account  maintained  by   the authorities  under  the  Act would be available for them for being available to meet the needs of  their  families  after their  superannuation  or  even otherwise during employment. These amounts will also be available to them to draw upon by taking loans on the basis of the amounts standing  to  their credit, for meeting social obligations like marriage or even meeting   medical   expenses  and  other  pressing  economic necessities.  Thus, the Act envisages a protective  economic cover  for  the  rainy  day  so  far  as  these  workmen are concerned.  Such a welfare legislation should  be  construed liberally and  not  in  a restrictive manner.  In support of this contention, reliance was placed  on  the  decisions  of this  Court  in  Regional  Provident  Fund  Commissioner vs. S.D.College, Hoshiarpur & Ors.  (1996(5) SCC 522).  Reliance was also placed on the definition of  the  term  "bonus"  as found  in  Corpus  Juris  Secundum,  Volume  11 at page 515. Learned counsel for the respondent  further  submitted  that the High Court had taken the view that the Scheme pressed in service by the appellants was not a genuine Production Bonus Scheme  but  was  merely  an  attempt  to  get  out  of  the provisions of Section 6 of the Act so far  as  the  disputed amounts were  concerned.    He  also  submitted that earlier orders of High Court did  not  deprive  the  authorities  of statutory  jurisdiction  to decide the real nature of the so called Production Bonus schemes.   That  the  concession  of learned Advocate General has to be considered in its correct perspective. In the light of the aforesaid rival contentions, the following points arise for out determination: 1.Whether  in  view  of  earlier  decision of the High Court dated 19th July,  1976  based  on  the  concession  of learned  Advocate  General,  Haryana,  the  authorities  had jurisdiction to decide the question on merits or whether the authorities were bound to consider the only limited question of computation of appropriate refund amount to  be  paid  to the  appellants  so  far  as the disputed amounts which were already paid under  protest  by  the  appellant  authorities along  with  matching  contributions of their employees were

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concerned; 2.If yes, whether the appellants were liable to  remit under Section 6 of the Act contributions on the amounts paid by  them  to  the  employees  concerned under the Production Bonus Scheme as promulgated by them at  the  relevant  time; and 3.What final order? We  shall  now  proceed  to  consider  these  points seriatim. Point No. 1: As   noted   earlier,  it  is  true  that  when  the appellants in the first instance filed writ petitions in the High Court, it was contended by  them  that  the  Production Bonus amounts paid by them to their workmen were not part of the  "basic Wages" as defined under Section 2(b) of the Act. It is also true that they contended before the High Court in those proceedings that under some mistake of  law  they  had already  deposited  provident  fund  of  the  employees with respect to Production Bonus also.  That they  were  entitled to appropriate  refund  of  the  said amount.  It is equally true that when such a contention was  raised  by  them,  the learned  Advocate  General,  Haryana,  who  appeared at that stage on behalf of the respondent authorities, conceded that the appellants were not required to deposit  provident  fund on  the Production Bonus and they may deposit provident fund only on the "wages" as defined in the Act from August,  1975 and  that  for  appropriate  refund  they  may  apply to the respondent who will give them hearing and decide the matter. Learned Advocate General also assured  that  the  appellants will  have  to  pay  refund  of  the  provident  fund to the employees to the extent that such amounts were deducted from the salaries of the  employees  covered  by  the  Production Bonus scheme.    The  said assurance of the learned Advocate General  was  accepted  by  the  learned  counsel  for   the appellants   and   that  is  how  the  appellants  moved  an application for refund before the authorities. However, it has to be kept in view that the Advocate General’s concession was on a question of law as to  whether the  Scheme  which  was  put  forward  by  the appellants as Production Bonus Scheme was covered by Section 6  read  with Section 2(b)  or  not.  Such a concession on the question of law cannot bind the authorities for all  time  to  come  but even   apart  from  this  aspect  of  the  matter  the  said concession has to be considered as a whole.    In  the  same breath while conceding that the appellants were not required to  contribute  on  Production  Bonus  amounts,  the learned Advocate General made it clear that  they  have  to  deposit provident  fund  on  the  "wages"  as  defined under the Act meaning thereby the question whether  the  disputed  amounts for  which  refund  was to be claimed by the appellants form the authorities fell within the definition of "wages"  under the Act or not.  It was a live issue which had to be decided by the authorities in proposed refund applications.  Learned Advocate  General  had not given an absolute concession that the appellants were not liable to contribute any part of the disputed amount towards provident fund  and  that  it  never fell within the definition of the word "wages".  Under these circumstances,  when  the applications for refund were moved by the appellants they were required to be decided on  their won merits.    The statement of the learned Advocate General before the High Court  had  no  adverse  effect  on  such  a statutory jurisdiction  of  the  authorities.  The merits of refund applications had to be  decided  by  the  authorities after hearing  the  appellants.  The entire question whether the claim for refund was justified in law  or  not  and  the

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further  connected  question  whether  the amounts deposited were towards  "basic  wages"  or  otherwise  were  open  for consideration of  the  authorities.   It cannot be said that such an inquiry was not open  to  the  authorities  and  was clearly  shut  out by the order of the High Court dated 19th July, 1976 recording the concession of the learned  Advocate General.   The  first  point, therefore, is answered against the appellants and in favour of the respondent authorities. Point No. 2: This takes us to the consideration of the merits  of the controversy.    In order to resolve this controversy, it is necessary to  have  a  look  at  the  relevant  statutory scheme.   It has to be kept in view that the Act in question is a beneficial social welfare  legislation  meant  for  the protection of weaker sections of society namely, workmen who had  to  eke out their livelihood from the meagre wages they receive after toiling hard for the same.   We  may  usefully refer  to  the observations of a two Judge Bench decision of this court in Regional Provident Fund Commissioner vs.  S.D. College, Hoshiarpur & Ors.  (supra),  wherein  it  has  been observed in para 10 of the Report that:             "....The Act is a beneficial welfare legislation             to ensure  health  and  other  benefits  to  the             employees.   The employer under the Act is under             a statutory obligation to deduct  the  specified             percentage   of   the   contribution   from  the             employee’s salary and matching contribution, the             entire amount is required to be deposited in the             fund within  15  days  after  the  date  of  the             collection, even month." Section 6 of the Act which imposes this statutory obligation on  the  employers for remitting the requisite contributions reads as under:             "6.   Contributions  and  matters  which  may be             provided for in Schemes The  contribution  which             shall  be paid by the employer to the Fund shall             be [ten per cent] of the basic wages,  [dearness             allowance  and  retaining  allowances (if any)],             for the  time  being  payable  to  each  of  the             employees  [(whether employed by him directly or             by or through a contractor)] and the  employee’s             contributions shall be equal to the contribution             payable  by  the  employer in respect of him and             may, [if any employee so desires, be  an  amount             exceeding  ten  per  cent  of  his  basic wages,             dearness allowance and retaining  allowance  (if             any), subject to the condition that the employer             shall  not  be  under  an  obligation to pay any             contribution over  and  above  his  contribution             payable under this section]:             [Provided   that   in  its  application  to  may             establishment or class of  establishments  which             the  Central  Govt. after making such inquiry as             it  deems  fit,  may,  by  notification  in  the             Official  Gazette specify, this section shall be             subject to the modification that for  the  words             ten  percent",  at  both  the  places where they             occurr,  the  words  twelve  percent"  hall   be             substituted]: It  is  not  in  dispute  between  the  parties   that   the appellants’ establishments are governed by the Act.  In fact learned  counsel  for  the  appellants  stated that they are remitting requisite contributions under Section 6 so far  as the amounts of "basic wages" paid by them to their employees are  concerned  and  equally matching contributions from the

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employees are also deducted from their wages and remitted to the authorities under the Act.  It  is  obvious  that  these contributions  from  part of the fund and the provident fund accounts of the workmen maintained by the authorities  under the  scheme  are  credited  with  these amounts from time to time.  These  funded  amounts  would  be  available  to  the workmen for the requirements as withdrawals can be made from the workers’ credit balances in the fund as envisaged by the Act.   However,  Shri  Ranjit Kumar’s grievance is a limited one,  namely,  that  the  appellants  are  not   liable   to contribute  with  reference to the amounts which are paid to the workmen which are not "basic wages".  It  was  submitted that  under  Section  6  of  the  Act,  only  three types of contributions are required to be effected  by  the  employer along  with  the corresponding matching contributions by the employees as requisite percentage of the amounts;  i)  basic wage,  ii)  dearness allowance and iii) retaining allowance, if any, paid to the  workmen  by  the  employers.    It  was contended that undisputably the amounts in question were not paid  to  the  workmen  by  way  of  dearness  allowance and "retaining allowance" as  laid  down  by  Explanation  2  to Section 6  of  the  Act.  It means "an allowance payable for the time being to  an  employee  of  any  factory  or  other establishment  during  any period in which the establishment is not working, for retaining  his  services".    Therefore, according  to him unless disputed amounts are part of "basic wages" they cannot be made subject matter of  contributions. In  order  to  support  his  aforesaid  contention,  learned counsel for the appellants  invited  our  attention  to  the definition  of "basic wages" as found in Section 2(b) of the Act.  It will be necessary therefore, to have a look at  the said definition.  It reads as under:             "2 Definitions -             (b) "basic wages"means all emoluments which  are             earned by an employee while on duty or [on leave             or  on  holidays  with  Wages in either case] in             accordance with the terms  of  the  contract  of             employment and which are paid or payable in cash             to him, but does not include.             (i)   the cash value of any food concession:             (ii)  any dearness allowance (that  is  to  say,             all  cash  payments by whatever name called paid             to an employee on account of a rise in the  cost             of   living),   house-rent  allowance,  overtime             allowance,  bonus,  commission  or   any   other             similar  allowance  payable  to  the employee in             respect of his employment or  of  work  done  in             such employment;             (iii) any present made by the employer             (Emphasis supplied) The  first  part of the definition clearly indicates that all emoluments which are earned by an employee while on  duty  in accordance  with  the terms of the contract of employment and which are paid or payable in cash to him would get covered by the main part of the  definition.    It  is  not  in  dispute between the parties that the concerned employees were paid at the relevant time additional emoluments which they had earned by  their  extra efforts and labor and they did so while they were on duty and such extra work which they had done was  not dehors the  therms  of  the contract of employment.  The said amounts were payable in cash to the concerned employees.  But the general sweep of the aforesaid definition gets  curtailed in  the present case according to the learned counsel for the appellants.  He placed reliance  on  the  exception  category (ii)  of  the said definition, namely, that it was the amount

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paid by way of Production  Bonus  and,  therefore,  the  said amount gets excluded from the general sweep of the definition "basic wages" as found in Section 2(b) of the Act. Therefore, the short question is whether the disputed amounts paid to the workmen employed by the appellants during the  relevant  time  were  paid by way of Production Bonus or not.  An incidental question will also arise namely,  whether in  any case the said amount can be said to be covered by the latter part of the exception category (ii) of the  definition Section  2(b) being similar allowance payable to the employee in respect of  his  employment  or  the  work  done  in  such employment.  It was submitted that in any case this allowance was paid  for  the  extra  work  by  way  of  incentive.  The aforesaid contention of learned counsel  for  the  appellants will have to be examined in the light of the Production Bonus Scheme  in  question which has been the sheet - anchor of the appellants’ case for getting out of the sweep  of  Section  6 read with  Section 2(b) of the Act.  The said scheme which is identical in nature for both the appellants reads as under:            "Production  Bonus  is  paid  for  the   following            reasons:-            1.    Less  than the normal number of people doing            the normal work of a working shift, in which  case            the  Production  Bonus  is  paid  according to the            deficiency in the numerical strength of the staff.            2.  Extra output  given  by  any  workmen  in  any            shift.   Output of compositors and distributors is            measured in terms of column inches of  type,  that            of  machine  men  in  terms  of  the  speed of the            machines and of the process section  in  terms  of            plates and  negatives.    Allowance  is  made  for            delays caused by factors beyond the control of the            workmen.            Production Bonus in 1.5  times  the  normal  daily            wage.   It  may be reduced or increased on account            of  special  reasons  at  the  discretion  of  the            management.   It  is  variable from month to month            and is apart from the basic wage of the workmen". Now,  a mere look at the aforesaid scheme, which is styled as Production Bonus Scheme, shows  that  so  far  as  the  first category  of  cases  envisaged by the Scheme is concerned, it contemplates a situation where at a given point of  time  the required  number  of  staff  may  not  be  available with the likelihood that the production for the day might fall and  in order  to  ensure maintenance of the same level of production other workmen available in the given shift may by required to carry on the extra work than what is normally required to  be done by them.  In such cases, an extra amount is contemplated to  be offered to the remaining employees who are present and who take extra load of work which otherwise would  have  been discharged by  their  absentee  colleagues.   The category of cases  contemplated  by  the  first  part   of   the   Scheme necessarily indicates that any extra effort undertaken by the workmen  discharging  extra  load  of work over and above the usual work expected of them normally is to ensure maintenance of the requisite normal level of production.  This  situation is entirely different from the one wherein more than normally expected  out-turn  of  work  is  being made available by the workmen who would get Production Bonus by way of incentive to valid   total   production   beyond   its    normal    level. Consequently, the first category of cases contemplated by the Scheme cannot be said to be introduction any Production Bonus scheme in  the  real sense of the term.  It in substance is a scheme of insurance against shortfall  in  normal  production per shift due to shortage of available staff at a given point

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of time.    While we turn to the second category of cases, it is true that it envisages extra payment as  an  incentive  to any  workman in any shift who puts in extra output by his own effects.  How the extra output for the concerned  workman  is to be ascertained for being eligible for the extra payment by way of  an  incentive is laid down by this clause.  So far as compositors and distributors are concerned, their output will be measured in terms of column inches of type, and  if  their output  goes  beyond the normal output expected of them under the contract of service, then  they  would  be  eligible  for getting  the benefit of the Production Bonus Scheme envisaged by category 2.  Similarly, for  machine  men to the extent speed of the machines handled by them per shift is beyond the normally expected speed of machine  handled  by machine men would show the eligibility of the machine men for such  extra  payment and so far as the workers working in the processing  section  are  concerned  their  eligibility   for earning  extra  payment would depend upon the additional work which they would be said to have put in per shift in items of the plates and negatives normally to be handled by them.   It is,  therefore,  obvious  that  the extra output given by the concerned workmen in any shift will  depend  upon  the  basic norm  fixed for the output which will have to be given by the concerned workmen during the shift and if it  is  found  that any extra output is put up by them beyond the requisite norms of  work-load  then only the same would make them eligible to get benefit of the Production Bonus as envisaged by  category 2.   It  becomes  at  once  clear  that  before the situation envisaged by category 2 can be said to have got attracted  in a  given case it must be shown that the workmen concerned had put in extra  work  in  a  shift  beyond  what  was  normally required by  them.    Unless that basic data is available, it would be impossible to work out the extra output  put  up  by him in  a  given  shift  on  a particular day.  It is easy to visualise that if the workman was  paid  an  amount  for  the output  given  by  him  in  a  shift which is up to the norms prescribed for his output it would obviously  remain  in  the realm or "basic wages".  In order that the amount goes beyond the  "basic  wage"  it  has  to  be  shown  that  the workman concerned had become eligible to get this  extra  amount  for the  work  beyond  the  normal  work  which  he was otherwise required to put in.  There is no date available on record  to show what were the norms of work prescribed for these workmen during the  relevant  period.  It is, therefore, not possible to ascertain whether extra amounts paid to these workmen were in fact paid for the extra work which had exceeded the normal output prescribed for the workmen working in any given  shift at the relevant time.  As the appellants did not furnish such relevant data, the authorities were justified in holding that the  disputed  amounts cannot be said to be forming part of a genuine Production Bonus Scheme.  But, even apart from  that, the  last  part  of  category  2  of  the Scheme makes a very interesting and curious reading.    Even  assuming  that  the workmen concerned had become eligible under the first part of category  2  of the scheme to get bonus for the extra output, the amount of Production Bonus which was to be  available  to such  eligible workmen would be 1.5 times their normal "daily wage".  It is true that it may be  reduced  or  increased  on account  of  special reasons but the increase or decrease for special  reasons  by  the  management  would  be  a   uniform deduction  or  increase  in  the  amount  of Production Bonus available in the said category of cases.  It would not depend upon individual cases of the workmen concerned to serve as  a real incentive  bonus.    Thus the scheme of Production Bonus envisaged by category 2 of the scheme  in  substance  has  no

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nexus  or  connection with the extra production effort by the workman.  In other words, by way of Production Bonus he  will not  get  any  extra amount in proportion to the extra output put up by him beyond the norms as  compared  to  this  fellow workmen.   The  working  of  category  2 of the scheme can be appreciated by  taking  an  example.    If  there  are   five compositors  working in a shift in the appellant’s concern on a given day and if each of the compositors has to compose  20 sheets  per  shift  being  the  normal  work  expected  of  a compositor, then if they compose only 20 sheets  in  a  shift they  cannot  be  said to have earned the eligibility for the Production Bonus as contemplated by category 2 of the scheme. But if out of those five compositors, two are more  energetic and  in  a  given  shift  on  a day they compose more than 20 sheets and if one of them composes 25 sheets and another  one composes 28 sheets both of of them can be said to have put in extra  output  beyond  the  normal  output  by  five or eight sheets, as the case may be and still both of them who  become eligible  employees  for  earning  Production  Bonus  as  per category 2 of the scheme will be paid  a  flat  rate  of  1.5 times their normal daily wage.  If the normal daily wage of a compositor is   Rs.      50/-  then  both  of  the  aforesaid compositors will get extra amount of Rs.  75/each even though both of them have  put  in  different  extra  outputs.    The compositor who has composed five more sheets obviously cannot be  treated  on  par for payment of Production Bonus with the other compositor who has put in extra output of eight  sheets and  still both of them will be treated equally for the grant of Production Bonus and will get Rs.  75/- each whatever  the extra output  produced by each of them.  Thus, the payment of Production Bonus as envisaged in category 2 cases  under  the scheme is not directly linked up with the amount  of   extra   output   furnished   by   the   workmen. Consequently,  the  aforesaid  scheme  said  to  be  granting Production Bonus to the  employees  is  in  substance  not  a scheme  which is directly linked up with extra production nor it is commensurate with the extra production workman-wise  or even establishment-wise.    It  only carves out a category of more efficient workmen or more enthusiastic workmen for being given a flat rate of extra remuneration for discharging their duties more efficiently under the contract of employment.  It offers in substance  an  instantaneous  superior  daily  wage scheme for   more   efficient   workmen.    Consequently  the definition of the term "basic wages" as found in  first  part of  Section  2(b) will squarely get attracted as 1.5 times of normal wages which will be given to workmen under category  2 of  the scheme will be excess emoluments earned by them while on duty in accordance with  the  terms  of  the  contract  of employment.   This  amount  uniformly  paid to them having on direct nexus with the amount of the extra output  put  up  by them, strictly  speaking  is  not  a  Production Bonus.  Thus excepted category (ii) as  envisaged  by  definition  Section 2(b)  would  not  be  available  for  being  invoked  by  the appellants.  We repeatedly  asked  learned  counsel  for  the appellants   to  enlighten  us  as  to  what  are  the  norms prescribed by  the  appellants  for  output  of  compositors, distributors,  machine  men  and  those  working  in  process sections with a view to finding out  as  to  how  during  the relevant  period  when the disputed amounts were paid to them they had over shot the  norms  prescribed  over  their  daily dues.   We  also wanted to know whether all such workmen were to be paid proportionately for the extra  output  has  to  be worked  out in terms of the column inches of types, the speed of the machine and the plates and negatives  manufactured  by them as  laid  down  by category 2 of the said scheme.  It is

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difficult to appreciate how this measure for finding out  the extra  output  can show that the permissible & fixed norms of output for workmen were exceeded the workmen at the  relevant time in  a  given shift on the days concerned.  He also could not effectively indicate as to how the  Production  Bonus  at 1.5  times  the  normal  daily  wage to be given to concerned eligible workmen was directly linked up with  the  extent  of the  extra  output  put  up by each of them individually when there is only a flat rate of 1.5 times of  the  normal  daily wage prescribed  for  all of such workmen.  Shri Ranjit Kumar tried to show that Production Bonus of 1.5  times  of  normal daily  wage  was  only  a  measure  or mode of calculation of permissible Production Bonus.  It is difficult to  appreciate this contention.  On the contrary, a mere look at second part of para 2 of the scheme clearly indicates that a flat rate of Production  Bonus  at  1.5 times of normal daily wage will be available to all the workmen concerned if they are  found  to have given extra output beyond the minimum output expected of them per shift on a given day.  Consequently, on the wordings of  the scheme on which strong reliance was placed by learned counsel for the appellants it is impossible to hold  that  it was  a  genuine  Production  Bonus  scheme  linked with extra production given by the workmen concerned. On the aforesaid conclusion of ours, the  alternative contention  of  the learned counsel for the appellants to the effect that it is an incentive bonus scheme and can at  least be covered by the phrase "any other similar allowance payable to  the employee in respect of his employment or work" as per last part of excepted category (ii) of the definition  clause 2(b) also cannot  be  of  any  avail.  Reason is obvious.  In order to become an incentive allowance, it has  to  be  shown that  those  eligible  workmen who had put in extra output as per para 2 of the scheme would  be  entitled  by  way  of  an incentive  to  do more work to get additional amount directly linked up with extra output given by them.  No  such  linkage is found  from  clause 2 of the scheme as noted earlier.  All those workmen who have put in extra  output  and  who  become eligible to get the benefit of clause 2 of the scheme are not to  be  paid Production Bonus commensurate with the extent of the output put up by them.  They will all be paid equally  at 1.5 times  the normal daily wage.  If that happens the person who puts in lesser percentage of extra output by 5% will  get the same amount as his colleague who puts on 20% of the extra output.   Thus,  there  will  be no incentive for him to give such an amount of extra output above normal output so  as  to reach  any  further  extra  output  limit  as compared to his colleague  who  was  also  given  extra  output  beyond   the prescribed norms.     Consequently  there  will  be  no  real incentive available to the concerned eligible workman who has put in required percentage of extra output, to  strive  still more for  reaching  higher amount of extra output.  He would, on the  contrary,  rest  on  his  own  at  the  stage  having considered the  norms  even  to the slightest extent.  It is, therefore, not possible to agree with learned counsel for the appellants that the scheme  concerned,  apart  from  being  a Production  Bonus  scheme,  is  at  least  an incentive bonus scheme for the concerned employees. The nature of the bonus scheme envisaged by exception (ii)  to Section 2(b) of the Act came up for consideration of this Court in two judgments.  We may usefully refer  to  them at this stage.  A six member Constitution Bench of this Court in Bridge & Roof Co.  (India)Ltd.  Vs.  Union of India & Ors. case  (supra)  had  to  consider  as  to  when  a  scheme  of Production Bonus can be  said  to  be  covered  by  the  term "bonus" as found in the exception (ii) to Section 2(b) of the

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Act.   Wanchoo,  j.,  (as  he then was), speaking for the six member Bench observed  in  this  connection  that  "the  word "bonus" was used in the definition section of the Act without any  qualification and that the legislature had in mind every kind of bonus that may be payable to an  employee  which  was prevalent in  the  industrial  field  before 1952.  It is not possible to accept the  contention  of  the  respondent  that whatever is the price of labour and arises out of contract is necessarily  included  in the definition of "basic wages" and therefore Production Bonus which is a kind of incentive  wage would also be included, in view of the exception of all kinds of bonus form the definition....." .         It  may  be  noted  that  incentive  Production Bonus scheme which was on the anvil of scrutiny of  this  court  in the  aforesaid  decision  and  which was held to get excluded form the sweep of the main definition part of Section 2(b) of the Act was directly linked up with production. In  fact  the said  scheme was linked up with the total output given by the entire body of  workmen  in  the  concerned  employment.  The scheme  with  which  the  court  was  concerned  in that case envisaged Production Bonus to be given to the entire body  of workmen after their total output reached 5,000 tons per year. It  was a comprehensive scheme enacted for the benefit of the entire class of workmen to offer them incentive to work  more and  to  get  more.  It  was, therefore, held to be a genuine Production Bonus  Scheme.  Placing  reliance  on  an  earlier Constitution  Bench  decision  of this court in M/s. Titaghur Paper Mills Co. Ltd.  Vs.  Its  Workmen  (1959  Supp.(2)  SCR 1012), it was observed that :            "....the  payment of Production Bonus depends upon            production and  is  in  addition  to  wages.    In            effect,  it  is  an incentive to higher production            and is in the nature of an incentive wage".    The            straight   piece   produced  is  the  simplest  of            incentive wage plans....." In  the light of the aforesaid observations, it was held that the scheme which fell for consideration of the  Court  was  a scheme  of Production Bonus wherein beyond a base or standard up to which basic wages  or  time  wages  have  to  be  paid, payment were  made  for  superior  performance.    This extra payment could be called an incentive wage and also Production Bonus.  The aforesaid observations of the  six  member  Bench clearly clinch the issue against the appellants.  In order to become  a  genuine Production Bonus scheme payment to be made to meritorious workmen who put in extra output, has to have a direct nexus and linkage with  the  amount  of  extra  output produced  by the eligible workmen so that the scheme can work as a real incentive scheme equally  to  them  to  make  extra efforts.   Such  a  scheme  may  have sliding scales of bonus amount based to total extra quantity of production for  which all workmen can uniformly be paid bonus on the basis of their co-operative efforts.    More  the  extra production more the available surplus of bonus to be divided amongst all eligible workmen uniformly.  Other type of incentive bonus scheme  may be  made available to an individual meritorious workman extra payment for extra work having direct linkage with  the  extra production out-turned   by   him.     In  neither  case  such distributable bonus can be a static figure as in the  present case.   On  the  facts  of the present case, as seen earlier, unfortunately for the appellants the  scheme  on  which  they relied  does  not  fulfil  the  aforesaid  legal logistic for becoming a genuine Production Bonus scheme.    It  is  not  a scheme  of  sliding  scale  bonus  having real nexus with the amount of extra output furnished  by  the  concerned  workmen either individually  or  collectively.  As seen earlier, once

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they crossed even slightly the norm of work expected of  them in  a  given  shift,  they  all  fall in the same category of eligible workmen entitled  to  get  on  uniform  basis  extra amount of  1.5 times the basic daily wage.  Thus, this scheme of paying extra remuneration to more eligible  and  efficient workmen  is  a  scheme  of  super  wage fixation and is not a genuine scheme of incentive bonus which has to be  earned  by the  workmen  by  showing their capabilities for earning such extra bonus linked up with the quantity of extra  production. In  the  same  volume at page 995 it reported the case of Jay Engineering Works Ltd.  & Ors.  vs.  Union of  India  &  Ors. (supra),  wherein  also  Wanchoo,J.,  spoke for a four member Bench.  The  scheme  under  this  very  Act  which  came  for consideration  in  that case was a composite Production Bonus scheme.  It laid down that if a workman gave  outturn  beyond the  minimum quantity fixed for him by waly of floor quota he became entitled to additional remuneration even  though  that additional  remuneration  was for that extra out-turn of work which was below the norm of out-turn which  he  was  enjoined under the  contract  of  service  to fulfil.  The very scheme also contemplated extra amount to be paid to the workmen  who exceeded  the  norms  of  output and gave extra output beyond such norms.  Analysing the said scheme Wanchool j., for  this court  held that to the extent to which any more remuneration was paid to the workman who had given outturn more  than  the quantity  of quota output fixed but up to limit of the normal output required of him, the extra remuneration part-took  the character  of extra wage and was covered by the definition of "basic wages" but to the extent to which such  out-turn  went beyond  normal  requirement  of  amount  fixed,  then to that extent extra payment for such extra output beyond  the  norms fixed became  a  Production Bonus scheme.  In the case before this Court, such extra payment was on  a  piece  rate  basis. The  workman  concerned become entitled to be paid additional remuneration to the extent to which he produced goods  beyond the norms  prescribed for such work.  It is easy to visualise that once a workman under any scheme of bonus is to  be  paid on  piece rate basis for the extra output given by him beyond the norms prescribed for such work, the extra amount  payable to  him  will  have  a  direct  linkage with the extra output furnished by him.  More extra output more payment; less extra output less payment.   Such  a  scheme  would  be  a  genuine Production Bonus  scheme.    The  scheme in question does not fulfil the criteria laid down for a genuine production  bonus scheme  by  either of the judgments of this Court in Bridge & Roof Co.  (India) Ltd.  vs.  Union of India case  (supra)  or in Jay Engineering  Works Ltd.  Y Ors.  vs The Union of India & Ors.  case (supra). In this connection, we may now usefully refer to  the Constitution Bench judgment in M/s.  Titaghur Paper Mills Co. Ltd.  vs.    Its  Workmen  case  (supra),  wherein an earlier Constitution Bench speaking through Wanchoo,j., had  occasion to  consider  the  legal  connotation  of  a Production Bonus scheme as distinct from profit  bonus  scheme.    The  scheme which fell for consideration of the Constitution Bench in the said  case  was  one floated by the company wherein up to the production 36,000 tons, there was a  uniform  rate  of  bonus payable by the company for giving appropriate remuneration to the workmen for producing that much quantity of goods but the scheme  did  not  provide for production bonus for production above 36,000 tons, as there  was  on  agreement  between  the Management and  the  Union  in  this  respect.   The question before the Industrial tribunal  from  whose  decision  appeal came  to  this court was whether the workmen were entitled to be given further benefit of production incentive scheme if by

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their joint efforts production of  the  company  went  beyond 36,000  tons  and  whether  it  was  necessary to provide for Production Bonus beyond this limit.  The  tribunal,  in  that case  while  giving  clearance  to  such  a  scheme, gave two reasons for increase in the rates of  payment  of  Production Bonus  (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 progressively with production.  Consequently, for  each  460  tons  increase  in production  the  proper rates for payment of Priduction Bonus would be 1.5, 1.5, 1.75 and 2 days basic  wages  respectively for  production  between  36,000  and 42,000 tons, 42,000 and 48,000 tons, 48,000 and 54,000tons and 54,000 and 60,000tons. It is this additional Production Bonus scheme ordered by  the Tribunal  which  was  examined  by  this  Court  in  the said decision.  While upholding the said modification in the bonus scheme of the company, this court held that this  was  not  a profit  bonus  scheme  but was a genuine production incentive bonus scheme as the  Production  Bonus  to  be  paid  to  the workmen  was  directly linked with the extra output furnished by them by their own efforts earn such nouns.  Thus  in  each case  payment  of bonus cannot be of a fixed or proven nature having on nexus with the quantity of extra output produced by them.  As in the present case the scheme  relied  on  by  the appellants  does  not  fulfil  this  legal  test  it does not attract the exception (ii) to Section 2(b).   It  remains  in the realm  of  basic  extra  wage.   The decision rendered by learned Single Judge of the High Court as  confirmed  by  the Division  Bench  decision,  cannot,  therefore be found fault with.  The submission of learned counsel for  the  appellants that  in  the  scheme in question there was no compulsion for the workman to put in extra work and the management could not compel him to do extra work not can it allege any  misconduct on  the  part  of such workman who does not want to do excess work cannot be of any avail to the learned  counsel  for  the appellants  as  even  if  this  criteria may be common to the present scheme  as  well  as  the  genuine  Production  Bonus scheme,  the  further  requirement  of the scheme to become a genuine Production Bonus scheme, namely, that the payment  by way of bonus to the concerned eligible workman should very in proportion  to the extra output put up by him beyond the norm of output prescribed for him, is conspicuously absent in  the present  scheme, as seen earlier, and on the other hand, this requirement which is the very heart of a  genuine  Production Bonus  scheme is missing in the present scheme and therefore, similarity on only one aspect between the genuine  production incentive  scheme  and  the  present scheme, namely, that the workman could not have been compelled to carry out extra work pales into insignificance on the facts of the  present  case. Therefore, the second question has to be answered against the appellants and in favour of the respondent. Point No.3 : While granting special leave to appeal in this  case, by  an  order  dated  9th May, 1958 this court had stayed the recovery of the  amounts  of  the  Employees  Provident  Fund contribution  for  the  past  period, subject to furnishing a bank guarantee for payment of that  sum.    But  no  stay  of recovery of  future contribution was granted.  As the appeals fail, the bank guarantee if furnished by the appellants, will be available for being encashed by  the  respondents  towards the liability of the appellants for the contributions for the past period which had remained stayed by order of this court. In  the  result,  the appeals fail and are dismissed. Interim relief vacated. In the facts and circumstances of the

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case, there will be on order as to costs.