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S.S. Sandhu and ors. Vs. Fertilizer Corporation of India Ltd. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtSupreme Court of India
Decided On
Case NumberCivil Appeal Nos. 2758-3541 of 1972
Judge
Reported inAIR1974SC1967; [1974(29)FLR83]; 1974LabIC1290; (1974)IILLJ373SC; (1974)4SCC384
AppellantS.S. Sandhu and ors.
RespondentFertilizer Corporation of India Ltd.
Cases ReferredFertilizer Corporation of India v. Workmen
Excerpt:
labour and industrial - minimum bonus - labour law - workmen union demanded payment of bonus in accordance with directives issued by central cabinet - industrial tribunal made award in favour of workmen - union not entitled to claim production bonus in addition - labour court right in computation of bonus payable according to cabinet decision - union not entitled to claim two types of bonus simultaneously - appeal dismissed. - labour & services regularisation of service: [s.b.sinha & cyriac joseph,jj] claim by respondents-initial recruitment of respondents being wholly illegal and contrary to constitutional scheme of the country held, direction by high court to authorities to consider cases of respondents for regularisation is illegal. - the nangal unit of the corporation went into.....p.n. bhagwati, j.1. these appeals by special leave, are directed against a judgment of the labour court, ludhiana in various applications preferred by the appellants under section 33-c(2) of the industrial disputes act, 1947. in order to appreciate the controversy which arises for determination in these appeals, it-is necessary to notice the facts in some detail.2. the appellants were at all material times workmen employed in nangal unit of the fertilizer corporation of india ltd., which is the respondent in these appeals. the fertilizer corporation of india ltd., (hereinafter referred to as the corporation) is a limited company incorporated under the companies act, 1956 and it is a government company as defined in section 617 of that act. it has two units for manufacture of fertilizers,.....
Judgment:

P.N. Bhagwati, J.

1. These appeals by special leave, are directed against a judgment of the Labour Court, Ludhiana in various applications preferred by the appellants under Section 33-C(2) of the Industrial Disputes Act, 1947. In order to appreciate the controversy which arises for determination in these appeals, it-is necessary to notice the facts in some detail.

2. The appellants were at all material times workmen employed in Nangal Unit of the Fertilizer Corporation of India Ltd., which is the respondent in these appeals. The Fertilizer Corporation of India Ltd., (hereinafter referred to as the Corporation) is a limited company incorporated under the Companies Act, 1956 and it is a Government company as defined in Section 617 of that Act. It has two units for manufacture of Fertilizers, one at Nangal and the other at Sindri. The Nangal unit of the Corporation went into production for the first time during the year 1962-63 and though it was the first year of production, it did well and as against a target of 2,80,000 tons, it produced 2,84,322 tons. The management, therefore, decided to pay ad hoc bonus to the employees of the Nangal Unit for good performance and a circular dated 29th October, 1963 was accordingly issued by the General Manager stating that ad hoc bonus will be paid to all employees whose basic salary on 31st March, 1963 did not exceed Rs. 500/- per month and the amount of bonus would be one month's basic salary plus dearness allowance subject to the condition that no employee would get less than Rs.100/-or more than Rs. 300/-. The employees of the Nangal Unit were accordingly paid ad hoc bonus to the extent of one month's basic salary plus dearness allowance for the year 1962-63. So far as the year 1963-64 was concerned, the recommendations of the Bonus Commission had already been made by the time the management came to consider the question of payment of bonus for that year, Since according to the recommendations of the Bonus Commission minimum bonus equivalent to 4 % of the total basic wage and dearness allowance was payable to the employees of the Nangal Unit, the management decided to sanction payment of such bonus to employees-whose total basic wage and dearness allowance did not exceed Rs. 1,600/- per month. No further amount was payable to the employees by way of bonus under the recommendations of the Bonus Commission, but even so, in view of the fact that the Nangal Unit had produced 3,74,000 tons as against the target of 3,70,000 tons, the management decided to give to the employees additional ex gratia payment for good performance so that the 'compulsory bonus plus the ex gratia payment worked out to a month's wages' including dearness allowance. In implementation of this decision, the General Manager issued a circular dated 17th December, 1964, stating that bonus equivalent to 4 % of the total basic wage and dearness allowance would be paid according to the recommendations of the Bonus Commission and additionally, ex gratia payment would be made to the extent that such payment together with the bonus would be equivalent to one month's basic wage plus dearness allowance. Here also there was a condition that the total payment in case of employees drawing basic wage up to Rs. 500, per month would be subject to a minimum of Rs.100/- and a maximum of Rs. 300/-. This condition was, however, subsequently varied by a circular dated 30th December, 1964, issued on behalf of the Corporation which provided that the minimum limit of Rupees 100/- in respect of bonus and ex gratia payment shall be raised to Rs. 110/-. The amount of bonus and ex gratia payment aggregating to one month's basic wage and dearness allowance was accordingly paid to the workmen for the year 1963-64.

3. The question then arose in regard to payment of bonus for the year 1964-65. By that time the Payment of Bonus Ordinance, 1965 (hereinafter referred to as the Bonus Ordinance) was already enacted on 29th May, 1965, and according to the provisions of that Ordinance, the workmen were entitled to bonus equivalent to 4 % of the basic wage plus dearness allowance. The General Manager of the Corporation, therefore, issued a circular dated 27th September, 1965, stating that it had been decided to pay bonus for the year 1964-65, as provided in the Bonus Ordinance and according to the provisions of the Bonus Ordinance the amount of bonus that was payable was the minimum bonus equivalent to 4 % of the total basic wage and. dearness allowance or Rs. 40/- whichever may be higher. It may be pointed out that by the time this circular was issued, the Payment of Bonus Act, 1965 (hereinafter referred to as the Bonus Act) had already come into force on 25th September 1965. But nothing turns upon it, because the provisions of the Bonus Act were in material respects identical as the provisions of the Bonus Ordinance. The workmen were paid the amount of this bonus at 4 % of the total basic wage plus dearness allowance on 1st October, 1965, as stated in the circular.

4. Now, during the year 1964-65, the production of the Nangal Unit reached 3,74,241 tons, as exceeding the target of 3,70,000 tons. The amount of bonus paid to the workmen for the year 1964-65 in accordance with the provisions- of the Bonus Ordinance, however, represented only 14.6 days' basic wage plus dearness allowance. That was very much less than the amount of bonus paid to the workmen for the years 1962-63 and 1963-64 which was 30 days basic wage plus dearness allowance. The management, therefore, decided to make ex gratia payment to the workmen equal to half month's basic wage plus dearness allowance by way of performance reward in addition to the statutory bonus of 4 %, and a circular dated 28th December, 1965, was accordingly issued by the General Manager stating that 'in recognition of the good performance during the year 1964-65, the management has decided to pay performance reward to the workers of the Nangal Unit and the amount of the said reward will be equal to half month's wages including dearness allowance as drawn by the workers for the month of March, 1965. It was common ground between the parties that the amount of this performance reward was paid to the workmen shortly after the date of issue of this circular. The result was that the workmen received in the aggregate 29.6 days' basic wage plus dearness allowance by way of a statutory bonus and performance reward for the year 1964-65.

5. Meanwhile, however, on 2nd December 1965, the Central Cabinet in regard to bonus took a decision payable to workmen in public sector undertakings. The Government of India to the Chairman and Managing Director of the Corporation communicated this decision by a letter dated 21st December, 1965. The substance of the Cabinet decision as communicated in the letter dated 21st December, 1965, was that competitive public sector undertakings, which had made ex gratia payments to their workmen in the past, should continue to make ex gratia, payments on the following basis:

(i) All non-competing public sector undertakings should pay ex gratia to their employees amounts which they would be liable to pay as bonus if they were to fall within the purview of the Payment of Bonus Act.

(ii) Where such an undertaking has made ex gratia payment in the past, the amount of such payment should be treated as absorbed in the amount determined as in (i) above. In other words any claim of employees to payment determined on the lines of the Bonus Law, as an addition to payment on the scale of ex gratia payments in the past should not be accepted. If the past ex gratia payment had been higher than the amount as worked out as in (i) above, the level of, past ex gratia payment should be maintained.

It does not appear from the record as to when the letter dated 21st December, 1965 was received by the Corporation, but as soon as it was received, a note was made by the Chairman and Managing Director of the Corporation in the margin of that letter to the following effect:

Please issue instruction for payment of performance reward as Nangal has also been approved by the Board.

This note, as the contents indicate, was obviously made before the amount of performance reward was ,paid by the Corporation to the workmen.

6. It appears that the Corporation, received advice from its Labour Law Officer that the Corporation should avoid making ex gratia payments to its workmen 'as these were beset with difficulties' and the management, therefore, decided to introduce with effect from 1st April, 1965, a Production Bonus Scheme in lieu of ex gratia payments. The workmen were entitled under this scheme to production bonus at a, rate varying from 3 % to 8.5% of the annual wages and the minimum production required to lie attained for the purpose of earning production bonus at the lowest rate of 3 % of the annual wages was 95% of 'attainable production'. The intention of the management in introducing the Production Bonus Scheme was that in any year of good performance the workmen should be able to earn 'a bonus varying from 25 1/2 days' wages to 1 1/2 months' wages.'

7. The statutory bonus payable according to the provisions of the Bonus Act for the year 1965-66 was 4% of the annual wages including dearness allowance and that came to 14.6 days' basic wage plus dearness allowance. So far as production bonus was concerned, it was necessary, in order to be eligible for earning minimum production bonus, that the production should be 95% or above of the attainable production. But unfortunately on account of extensive overhauling of Electrolyses during the year 1965-66, the production for the year 1965-66 reached only 3,37,952 tons as against 3,65,000 tons which represented 95% of the attainable production. No production bonus was, therefore, strictly payable to the workmen under the Production Bonus Scheme, but even so, the management, with a view to preserving industrial harmony and peace decided, as a special case, to pay minimum 3% production bonus on the assumed basis that 3,37,952 tons turned out by the workmen represented the minimum eligibility for production bonus. But 3 % of the annual wage came to only 11 days' basic wage plus dearness allowance and coupled with the statutory bonus of 4%, they aggregated to 25.6 days' basic wage plus dearness allowance. Even then the total payment fell short of the amount representing 30 days' basic wage plus dearness allowance paid by the Corporation to the workmen for the years 1962-63 and 1963-64. The management, therefore, decided to give additional 4 days' basic wage plus dearness allowance as advance production bonus 'to be adjusted as and when the total bonus payable to the workers exceeds 30 days' wages in future'. We have already noticed that the amount of bonus and performance reward paid to the workmen for the year 1964-65 represented 29.6 days' basic wages plus dearness allowance and since that too was short, of 30 days' basic wages plus dearness allowance paid to the workmen for the years 1962-63 and 1963-64, the management decided to give 0.4 day's basic wage plus dearness allowance so as to make up 30 days' basic wages plus dearness allowance for the year 1964-65. This composite decision was communicated by the management to the workmen by a circular dated 9th September, 1966 and payment was made to the workmen according to this circular.

8. The net effect was that for the year 1964-65 the workmen were paid statutory bonus representing 14.6 days' basic wages plus dearness allowance under the circular dated 27th September, 1965, 15 days' basic wages plus dearness allowance under the Circular dated 28th December, 1965 and 0.4 day's basic wage plus dearness allowance under the circular dated 9th September, 1966 making up in aggregate 30 days' basic wages plus dearness allowance, and for the year 1965-66 they received statutory bonus of 14.6 days' basic wages plus dearness allowance, 11 days' basic wages plus dearness allowance, as production bonus and 4 days' basic wages plus dearness allowance as advance production bonus making up in the aggregate 29.6 days' basic wages plus dearness allowance under the circular dated 9th September, 1966.

9. The Nangal Fertilizer Workers Union, which was a union of workmen of tile Nangal Unit of the Corporation; claimed in a charter of demands submitted on 19th August, 1966 that the Corporation wan bound to act according to the decision of the Central Cabinet communicated by the letter dated 21st December, 1965 and bonus was, therefore, payable to the workmen for the years 1964-.65 and 1965-66 at the same rate as it had been paid ex gratia in the previous years, i.e., 'the minimum bonus payable should be at the least Rupees 110/- and at the highest Rupees 360/- per workman. The Union also disputed the right of the management to adjust 4 days' advance bonus paid for the year 1965-66 against the bonus payable in future years. There were also certain other demands made by the Union in the charter of demands but it is not necessary to refer to them. The management did not comply with the demand of the Union regarding payment of bonus and conciliation having failed the Government of India by an order dated 31st October, 1966, referred inter alia the following, two issues for adjudication to the Industrial Tribunal under Section 10(1)(d) of the Industrial Disputes Act, 1947:

1. Whether the workmen are justified in demanding the minimum bonus payable for the years 1964-65, 1965-66 and future years being fixed @ Rs.110/- and maximum @ Rs. 360/- per worker? If so, with what details?

2. Whether the action of the management in treating 4 days' advance bonus paid for the year 1965-66 as deductible from bonus payable in future years is justified? If so, are any conditions or stipulations necessary and if so with what details?

The workmen contended before the Industrial Tribunal that the Cabinet decision was binding on the Corporation as a directive issued by the President and the workmen were entitled to enforce the right conferred on them by the Cabinet decision and to claim that, in addition to the statutory bonus, they should have ex gratia payment of bonus so as to make up total payment of 30 days' basic wages plus dearness allowance for the years 1964-65 and 1965-66 subject to the condition that the minimum bonus payable should be Rs. 110/- at the lowest and RS.360/- at the highest. So far as the production Bonus Scheme was concerned, the argument of the workmen was that the introduction of this scheme did not detract from the ex gratia payment of bonus which the workmen were entitled to receive according to the Cabinet decision. The claim of the workmen thus amounted in substance to saying that they should receive ex gratia payment of bonus in addition to statutory bonus, making up in the aggregate 30. days' basic wages plus dearness allowance, unaffected by the Production Bonus Scheme. The Corporation resisted the claim of the Union on two broad, grounds. One ground was that, the Cabinet decision could not be equated with a directive issued by the President and it was, therefore, not binding on the Corporation and in any event even if it could be regarded as a directive issued by the President to the Corporation, the workmen, who are third parties, could not seek to enforce any right based upon such directive. The corporation contended that in the circumstances the workmen were not entitled to claim any thing beyond the statutory bonus and no legal claim could be made by them on the basis of ex gratia payments of bonus in the previous years. There was also an alternative plea taken by the Corporation that in any event the rate of bonus mentioned in the Cabinet decision would become payable only if the level of performance or production was properly maintained and this condition was not satisfied in the case of the Nangal Unit. The other ground urged on behalf of the Corporation was that the Production Bonus Scheme was introduced by the Corporation with effect from 1st April, 1965, in consultation with and after obtaining the approval of the Central Government and this scheme replaced the previous system of ex gratia payments made on an ad hoc basis for the earlier two years. The production bonus was payable in addition to the statutory bonus and since the Central Government had approved the scheme of payment of statutory bonus and production bonus in lieu of the past system of making ex gratia and ad hoc payments, the Cabinet decision stood modified to that extent and the workmen were not entitled to statutory bonus plus ex gratia payment on the basis of the Cabinet decision. So for as the claim of the workmen in regard to 4 days' advance bonus was concerned, (the Corporation pointed out that the amount of this advance bonus was deductible only where total bonus payable to the workmen in future years exceeds 30 days' basic Wages plus dearness allowance so that the minimum payment of 30 days' basic wages plus dearness allowance inclusive of statutory bonus Would not be reduced by such adjustment.

10. The Industrial Tribunal made an award D/-2-12-1967, deciding both issues 1 and 2 in favour of the workmen. The Industrial Tribunal held that the Cabinet decision embodied in the letter dated 21st December, 1965, was binding on the Corporation as a directive, issued by the President and the workmen were entitled to claim that so long as it stood, it should be' given effect to by the Corporation, it was found by the Industrial Tribunal that the condition which required that, the level of performance or production should be properly maintained was satisfied and the claim of the workmen for ex gratia payment in addition to statutory bonus 'in accordance with the level of past ex gratia payments', i.e., 30 days' basic wages plus dearness allowance was accordingly justified on the basis of the Cabinet decision. The Industrial Tribunal rejected the claim of the Corporation that the Production Bonus Scheme was introduced in consultation and with the approval of the Central Government and held that the introduction of that scheme was not in lieu of ex gratia payments made on an ad hoc basis in the previous years and the Cabinet decision could not, therefore, be said to have been modified as contended by the Corporation and the Corporation was bound to implement the Cabinet decision. The Industrial Tribunal thus accepted the claim of the workmen for payment of minimum bonus for the years 1964-65 and 1965-66 being fixed at Rs.110/- and regarding the maximum the Industrial Tribunal held that that was a matter of calculation having regard to the wages of an employee; but it restricted its direction in this regard to the years 1964-65 and 1965-66 and declined to express any opinion regarding future years. The Industrial Tribunal also, negatived the claim of the Corporation to treat 4 days' advance bonus paid for the year 1965-66 as deductible from the bonus payable in future years.

11. The Corporation, being aggrieved by the Award of the Industrial Tribunal, preferred an appeal to this Court by special leave. The appeal was heard by a Division Bench of this Court consisting of Bhargava and Vaidialingam, JJ. The Division Bench did not consider it necessary to decide the wider question whether the Cabinet decision communicated to the Corporation by the letter dated 21st December, 1965 constituted a directive of the President binding on the Corporation, or whether, without anything more, the workmen would be entitled to make any claim against the Corporation on the basis of the Cabinet decision. The Division Bench took the view that the Corporation gave an option to the workmen either to accept the Cabinet decision or the Production Bonus Scheme, and the workmen opted in favour of the Cabinet decision and hence the Corporation was bound to comply with the Cabinet decision and the workmen were entitled to be paid on the basis of the Cabinet decision. The Division Bench rejected the alternative contention of the Corporation based on the Production Bonus Scheme and held that there was no evidence to show that the Production Bonus Scheme was introduced by the Corporation with the consent and approval of the Central Government in lieu of ex gratia payments of bonus and it could not therefore, be said that 'on the introduction of the Production Bonus Scheme all payments of ex gratia bonus ceased' and there was accordingly no modification of the Cabinet decision as contended on behalf of the Corporation. The Division Bench pointed out that 'once it is established, as in this case, that the Cabinet decision regarding ex gratia payment of bonus has been communicated to the workmen with an option to accept the said decision or the Production Bonus Scheme and the labour wanted the Cabinet decision to be implemented, it follows that an agreement under Section 34(3) of the said .Act', i.e., the Bonus Act, 'has come into effect and it is valid'. The conclusion reached by the Division Bench on this line of reasoning was that the Corporation was bound to implement the Cabinet decision and make ex gratia payment of bonus as claimed by the workmen for the years 1964-65 and 1965-66 and was not entitled 'to deduct the advance wages of 4 days paid for the year 1965-66'. This decision was given by the Division Bench on 15th November, 1968 and it is reported in Fertilizer Corporation of India v. Workmen : (1970)IILLJ25SC .

12. The General Manager of the Corporation with a view to complying with this decision issued a circular dated 10th December, 1968, stating that 'those workmen who have been paid less than Rs.110/- as minimum towards statutory bonus plus ex gratia for the year 1964-65 and statutory bonus plus production bonus for the year 1965-66 will be paid arrears to make a month's wage subject to a minimum of Rs.110/- and a maximum of Rs.300/- for each of these two years', and 'interest at 6% for the period 8th March, 1968 (the date on which the Tribunal's Award came into effect) to 13th December, 1968, will also be paid along with this amount.' While computing whether any arrears were payable to the workmen according to the decision of this Court, and if so, what was the quantum of such arrears, the Corporation adjusted the statutory bonus of 14.6 days' wages and 0.4 days' wage as also performance reward of 15 days' wages for the year 1964-65 and statutory bonus of 14.6 days' wages and 'advance production bonus' of 4 days' wages for the year 1965-66 and paid only the balance together with interest to such of the workmen as were found entitled to the same.

13. The workmen claimed that in computing the amount of bonus payable to them according to the Cabinet decision as held in the decision of this Court, the Corporation was not entitled to deduct performance reward of 15 days' wages for the year 1964-65 and production bonus of 11 days' wages for the year 1965-66 as it had done while making payment under the circular doted 10th December, 1968. The workmen accordingly preferred applications to the Labour Court, Ludhiana under Section 33-C(2) of the Industrial Disputes Act, 1947 for computing the benefits awarded to them under the decision of this Court and payment of amounts equivalent to performance reward of 15 days' wages for the year 1964-65 and production bonus of 11 days' wages for the year 1965-66 which had been wrongfully withheld. The Labour Court by a common judgment dated 31st July, 1970, rejected these applications on the ground that performance reward of 15 days' wages paid to the workmen for 1964-65 as also production bonus of 11 days' wages paid to the workmen for 1965-66 represented ex gratia payments which the Corporation was under no legal obligation to make to the workmen and these payments were, therefore, liable to be taken into account in determining whether any, and if so, what arrears remained due and payable by the Corporation to the workmen according to the decision of this Court. There were in all over 1400 applications disposed of by this judgment of the Labour Court, but out of them only 784 felt aggrieved by the judgment and they preferred applications for special leave to appeal against the judgment to this Court.

14. Whilst the applications for special leave were pending, a settlement was arrived at between the Union and the Corporation in certain conciliation proceedings which were initiated as a result of a demand D/-28-9-1970 made by the Union regarding payment of bonus for 1969-70. This settlement brought about an overall compromise of all pending disputes between the parties and one of the terms of the settlement was that 'for all the years up to and inclusive of the year 1969-70, all claims of the workmen under the Payment of Bonus Act and under the Production Bonus Scheme stand settled finally and irrevocably with the payment of eighty three days' bonus' as provided in Clause (1) and 'no claims of bonus of any type, statutory or otherwise, for any of the years up to and inclusive of 1969-70 would be raised by the workmen'. The Corporation in view of this settlement opposed the applications for special leave preferred by the workmen on the ground that no claims for bonus of any type for the years 1964-65 and 1965-66 survived after the settlement. But it appears that in the meanwhile a writ petition was preferred by five workmen in the High Court of Punjab and Haryana challenging the legality of the settlement on various grounds. Prem Chand Jain, J., who heard the writ petition, took the view that the impugned settlement was collusive and in any event not properly entered into by the Union and was not binding on the workmen. The Corporation assailed the correctness of this judgment on a Letters Patent appeal preferred before a Division Bench of the High Court. The Division Bench disagreed with the view taken by Prem Chand Jain, J., and held that the workmen who had filed the writ petition having received benefits under the impugned settlement must be held to have waived their right to claim bonus on any other formula than that set out in the settlement and the settlement was accordingly not liable to be quashed at their instance. The Division Bench observed that in any view of the matter, the settlement could not be regarded as collusive and there was nothing to show that it was not fair and just to the workmen. The Division Bench accordingly upheld the settlement as valid and binding on the workmen. But before this decision was given by the Division Bench on 9th May, 1973, the applications for special leave came up for hearing on 19th December, 1972 and since at that date, the decision of Prem Chand Jain, J., holding the impugned settlement to be invalid-and not binding on the workmen stood unreversed, this Court untrammelled by the settlement, granted special leave to the workmen. Hence the present appeals.

15. When the appeals reached hearing before us, a preliminary objection was raised on behalf of the Corporation that, in view of the settlement dated 8th October, 1970, arrived at between the Union and the Corporation which settlement was, by virtue of the provisions of Section 18, Sub-section (3) of the Industrial Disputes Act, 1947, binding on all the workmen the appealing workmen were not entitled to claim any amount from the Corporation by way of bonus for the years 1964-65 and 1985-66 and the appeals must, therefore, be dismissed without going into the merits of the question whether the Labour Court was right in taking the view that the workmen had received the entire amount payable to them by way of bonus under the decision of this Court and nothing further remained to be paid to them. The appealing workmen disputed the legality and binding character of the settlement despite the decision of the Division Bench of the High Court of Punjab and Haryana which held the settlement to be fair and just and hence binding on the workmen. It may be pointed out that this decision was sought to be taken in appeal before this Court by an application for special leave but this Court refused to grant special leave and hence this decision became final between the parties. But the question would still remain as to how far this decision would stand in the way of the appealing workmen challenging the validity and binding character of the settlement. Even if it does not debar them from impugning the settlement the question would still have to be considered whether the settlement was fair and just and properly entered into by the Union and binding on the workmen. But for the purpose of deciding the present appeals, it is not necessary to go into these questions the determination of which may affect prejudicially various other proceedings pending between the workmen and the Corporation, as we are of the view that the Labour Court was right in holding that the amounts payable by way of bonus for the years 1964-65 and 1965-66 according to the decision of this Court were fully paid to the workmen and their claim for payment of any further amounts was unjustified. Our reasons for saying so are as follows:

We will first take up for consideration the claim of the appealing workmen for bonus for the year 1964-65. It was common ground between the parties that according to the decision of this Court the workmen were entitled to receive by way of bonus for the year 1964-65, 30 days' basic wages plus dearness allowance as provided in the Cabinet decision. The statutory bonus payable to the workmen for the year 1964-65 was admittedly the minimum statutory bonus of 4% of the annual wages, i.e., 14.6 days' basic wages plus dearness allowance. That left ex gratia payment of bonus to the extent of 15.4 days' basic wages plus dearness allowance to be made by the Corporation to the workmen so as to make up total payment of 30 days' basic wages plus dearness allowance. This ex gratia payment of bonus was made by the Corporation to the workmen in two instalments. One instalment was the payment of 15 days' basic wages plus dearness allowance by way of performance reward and the other was the payment of 0.4 day's basic wage plus dearness allowance under the circular dated 9th september, 1966. The appealing workmen did not object to 0.4 day's basic wage plus dearness allowance being taken into account in computing 30 days' basic wages plus dearness allowance receivable by them under the decision of this Court, but they contented that 15 days' basic wages plus dearness allowance by way of performance reward could not be legitimately taken into account for this purpose. We are unable to appreciate this contention. It is wholly fallacious in that it fails to take into account the true character of the payment of performance reward. It can hardly be disputed that the performance reward was paid by the Corporation to the workmen ex gratia without there being any legal obligation to do so and this payment was made solely in recognition of the good performance given by the workmen. It was really in the nature of ex gratia payment of bonus which was made because the statutory bonus was only 14.6 days' basic wages plus dearness allowance and that fell short of 30 days' basic wages plus dearness allowance which had been paid to the workmen' ex gratia in the earlier two years. This is evident from the note made by the Chairman and Managing Director of the Corporation in the margin of the letter dated 21st December, 1965. The Cabinet decision embodied in this letter required' the Corporation to pay to the workmen bonus equivalent to 30 days' basic wages plus dearness allowance and since payment of performance reward of 15 days' basic wages plus dearness allowance in addition to the statutory bonus of 14.6 days' basic wages plus dearness allowance would be in compliance with the Cabinet decision, the Chairman and Managing Director stated in the note that instructions may be issued 'for payment of performance reward at Nangal as already approved by the Board'. There can, therefore, be no doubt, that the ex gratia payment of performance reward of 15 days' basic wages plus dearness allowance was in implementation of the Cabinet decision. This conclusion is further strengthened by the fact that an additional payment of 0.4 days' basic wage and dearness allowance was made to the workmen under the circular dated 9th September, 1966, so as to make up total payment of 30 days' basic wages plus dearness allowance as directed by the Cabinet decision. We are, therefore, of the view that the Labour Court was right in treating the amount of performance reward as part of bonus payable on the basis of the Cabinet decision and on that footing, rejecting the claim of the appealing workmen.

16. That takes us to consideration of the question in regard to claim for bonus for the year 1965-66. Here the dispute was in regard to production bonus of 11 days' basic wages plus dearness allowance paid by the Corporation to the workmen. The appealing workmen contended that this amount of production bonus was not liable to be taken into account in determining whether any amount remained to be paid to the workmen by way of bonus on the basis of the Cabinet decision as determined by this Court, while the Corporation urged to the contrary, saying that the amount of production bonus was in the nature of ex gratia payment and, in any event, the workmen having opted in favour of the Cabinet decision as against the formula of statutory bonus plus production bonus suggested by the Corporation, the appealing workmen were not entitled to claim payment of bonus according to the Cabinet decision without taking into account the amount of production bonus already received by them and the same was liable to be adjusted against the bonus payable on the basis of the Cabinet decision. We ore of the view that both the limbs of contention urged on behalf of the Corporation are well founded and the argument of the appealing workmen to have payment of the amount of production bonus over again in the shape of ex gratia bonus cannot be accepted.

17. In the first place, it is clear from the note in regard to 'bonus payments' attached to the circular dated 9th September, 1966, that 95% of the attainable production was not reached in the year. 1965-66 and no production, bonus was, therefore, strictly speaking, payable the workmen on the terms of the Production Bonus Scheme. It is true that 95% of the attainable production which was the minimum required for earning production bonus under the scheme could not be achieved because of the programme of extensive overhauling of electrolyses which was undertaken during this year, but whatever be the reason, there is no doubt that the minimum-production of 95% was not reached and the workmen could not in law make a claim to production bonus. The payment of production bonus of 11 days' basic wages plus dearness allowance was, therefore, clearly ex gratia payment and if that be so, it was rightly included as part of bonus payable on the basis of the Cabinet decision. Secondly, it is evident from the decision of this Court, which, being a decision in Appeal, completely replaced the Award of the Industrial Tribunal, that the workmen were held entitled to bonus on the basis of the Cabinet decision, not on the ground that the Cabinet decision was a directive issued by the President which would be binding on the Corporation as a matter of law, but on the ground that the Corporation had made an offer to the workmen to opt between the Cabinet decision and statutory bonus plus production bonus according to the scheme formulated by the Corporation and the workmen opted in favour of the Cabinet decision and hence the Cabinet decision was binding on the Corporation. The following passages from the judgment of this Court leave no room for doubt on this point:.it is clear that the Central Cabinet's decision was made known to the workmen who were given the option either to accept the Cabinet decision as conveyed to the appellant by the Circular letter of December 21, 1965, or the production bonus scheme as formulated by the appellant Corporation ....His (i.e., Shri Vadhera's) evidence clearly shows that the management has communicated to the workmen the Cabinet decision, as conveyed by the Circular letter of the Government dated December 21, 1965. This evidence further makes it clear that the workmen declined to opt for the production bonus scheme, but, on the other hand, insisted that bonus must be paid to them according to the Cabinet's decision....So long as the Cabinet decision has been communicated and option was given to the workmen, it does not in our opinion matter at what stage the communication was made to the labour....When once it is established, as in this cage, that the Cabinet decision regarding ex gratia payment of bonus has been communicated to the workmen with an option to accept the said decision or the production bonus scheme and the labour wanted the Cabinet decision to be implemented, it follows that an agreement, under Section 34(3) of the said Act has come into effect and it is valid.

The workmen were given a choice between bonus payable according to the Cabinet decision and statutory bonus plus production bonus according to the scheme formulated by the Corporation and since the workmen opted in favour of the former as against the latter, they were entitled to bonus according to the Cabinet decision, but then they could not claim production bonus as well. The amount of production bonus paid to them was accordingly liable to be taken into account in computing bonus payable to them under the Cabinet decision. The appealing workmen, however, strongly relied on the fact that this Court had definitely held in the appeal from the Award of the Industrial Tribunal that it was not established by the Corporation that the 'production bonus scheme was introduced with the consent and approval of the Central Government and that on its introduction the ex gratia payment of bonus stood eliminated', and contended that in view of this conclusion, it was clear that production bonus was not in substitution or but in addition to ex gratia bonus payable under the Cabinet decision.' We do not think this contention is well founded. To appreciate the true meaning and effect of what was held by this Court when it pronounced the above conclusion, it is necessary to bear in mind the argument advanced on behalf of the Corporation which was repelled by this conclusion. The contention of the Corporation was that by reason of the introduction of the Production Bonus Scheme with the consent and approval of the Central Government, the Cabinet decision no longer held the field and the workmen were not entitled to claim bonus on the basis of the Cabinet decision. It was a contention put forward in order to repel the claim of the workmen founded on the basis of the Cabinet decision. The production bonus, according to the scheme formulated by the Corporation, together with statutory bonus for the year 1965-66 was less than 30 days' basic wages plus dearness allowance and the Cabinet decision was, therefore, more favourable to the workmen than the formula of statutory bonus plus production bonus. The Corporation sought to displace the Cabinet decision and thereby defeat the claim of the workmen by saying that the Cabinet decision was substituted by the formula of statutory bonus plus production bonus. It was this contention which was negatived by the Court when it observed that 'the appellant has not established that on the introduction of the production bonus scheme, all payments of ex gratia bonus ceased'. What this Court meant to say was that the Production Bonus Scheme did not replace the ex gratia bonus payable under the Cabinet decision so as to disentitle the workmen to make any claim on the basis of the Cabinet decision. The Cabinet decision stood unaffected-unreplaced and unmodified-and the workmen having opted in favour of the Cabinet decision were entitled to be paid bonus on the basis of the Cabinet decision. This was all that was held by this Court. This Court did not say that the workmen were entitled to production bonus in addition to bonus payable under the Cabinet decision. That was not the controversy before this Court, and therefore this Court took care to point out that the opinion expressed by the Industrial Tribunal that the Production Bonus Scheme was in addition to ex gratia payment of bonus under the Cabinet decision 'was, uncalled for and outside the scope of the reference'. We are clearly of the view that the workmen having opted in favour of bonus payable according to the Cabinet decision, were not entitled to claim production bonus1 in addition. It may be pointed out that in fact the Corporation paid the amount of production bonus to the workmen together with 4 days' advance payment of bonus with a view to making up total payment of 30 days' basic Wages plus dearness allowance as contemplated by the Cabinet decision. The Labour Court was, therefore, right in taking the view that production bonus of 11 days' basic wages plus dearness allowance was properly taken into account in computing bonus payable to the workmen according to the Cabinet decision and in the circumstances, nothing further remained to be paid by the Corporation to the appealing workmen.

18. In the result, the appeals stand dismissed with no order as to costs all throughout.


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