B.N. Banerjee, J.
1. This rule is directed against an industrial award, made by the first industrial tribunal, directing the Indian Standard Wagon Co., Ltd., the petitioner-company, to pay to its workmen interim bonus for each of the years 1959-60 and 1960-61 at the rate of 57 days' basic wages. The workmen of the petitioner-company are represented by the Asansol iron and steel workers' union and the United iron and steel workers' union (respondents 3 and 4).
2. It is necessary for me to recount in brief the circumstances under which the dispute as to bonus came to arise. Under an award made in the year 1947, under Rule 81A of the Defence of India Rules, 1939 (hereinafter referred to as the McSharpe award), the workmen of the petitioner-company became entitled to a profit-sharing bonus at the rate of two days' basic wages for each percentage of dividend declared to the ordinary shareholders of the company. The aforesaid award was said to have been made on the basis of an agreement. Although the said award came to an end by efflux of time, the terms thereof were continued under another award known as Sen-Sarkar-Mukherjee award of 1948 and were ultimately embodied in the standing orders of the petitioner-company.
3. From the year 1960, however, the workmen of the petitioner-company no longer wanted to be bound by the terms of the McSharpe award, which they considered to be Inadequate in the changed circumstances caused by passage of time. They contended, as the tribunal found,--
that ever since 1947 under the McSharpe award of 1947, baaed on a bipartite agreement, and the Sen-Sarkar-Mukherjee award of 1948, bonus has been paid by this company to its workmen as a condition of service linked up with dividend at the rate of two days' pay for each percentage of dividend declared. These awards and the bipartite agreement on which the first award is based applied not merely to the Indian Standard Wagon Co., Ltd., but also to the Indian Iron and Steel Company, Limited, and while the Indian Iron and Steel Company, Limited, increased the said rates...and while each shareholder of 1947 of the Indian Standard Wagon Co., Ltd., has got three additional free bonus shares for one share held by them since then and has thus come to have dividend for four shares as against one of 1947, irrespective of the rate of dividend, in the case of the workmen the rate of bonus was not increased at all and the claim of the union la that it should be increased four times, i.e., eight days for one per cent of dividend.
4. This attitude on the part of the workmen raised an industrial dispute and the State Government, in exercise of its powers under Section 10 of the Industrial Disputes Act, referred the following issue for adjudication before the first industrial tribunal, viz., 'Additional bonus for 1957-58 and 1958-59 and bonus for 1959-60 and 1960-61.'
5. The petitioner-company and the workmen of the company have filed their respective written statements before the tribunal but the tribunal has not as yet taken up the hearing of the issue.
6. During the pendency of the reference before the tribunal, an application was made by the workmen for an interim award as to bonus, on the allegation that the petitioner-company wag withholding even the declared bonus on plea of the pendency of the dispute. On the aforesaid application, the tribunal made an interim award, as hereinbefore indicated.
7. The propriety of the award is being disputed in this rule.
8. Sri P. Ginwalla, learned Advocate for the petitioner, contended that the tribunal should not have made any Interim award as to bonus, firstly, because the workmen had repudiated the agreement on the basis of which bonuses were being declared, viz., the terms of the McSharpe award, as continued, and had also given up their claim to get bonus according to the Pull Bench formula evolved by the Labour Appellate Tribunal in Millowners' Association, Bombay v. Rashtriya Mill Mazdoor Sangh 1950--II L.L.J. 1247, which formula was approved by the 'Supreme Court in Associated Cement Factory case 1950--I L.L.J, 491, and in other Judgments of that Court. In elaboration of his argument he contended that the workmen were entitled to get bonus either on the basis of the agreement with the employer or on the basis of law governing declaration of bonuses, as enunciated in the Full Bench formula. If the workmen repudiate the agreement and also renounce their claim to have the dispute as to bonus resolved according the Full Bench formula, there cannot be a third basis on which the dispute can be resolved. The consequence must be, he contended, that the dispute as to bonuses should be taken to have been checkmated by reason of the attitude of the workmen themselves and in that background no interim bonus should have been awarded, there being no basis left for such an award.
9. The argument advanced by Sri Ginwalla goes to the root of the dispute. I would not have allowed him to canvass this point in a rule against an interim award but for the reason that the tribunal itself made certain inappropriate observations against the petitioner-company and also caused the recording of, certain concessions, made by the workmen, in coming to its decision what interim bonus should be declared. In order to appreciate his argument, it is necessary for me to set out, at this stage, the relevant extracts from the award:
When the matter was being argued, it was made clear on behalf of both the unions that they would ask for an enhanced bonus only on one principal ground, namely, modification of the formula laid down in the McSharpe award of 1947 in the light of the changed circumstances, such as the issue of three free bonus shares to the holder of one share in 1947. Both the unions have filed applications to that effect. One of their applications says that in view of its anxiety to facilitate the proceedings of the tribunal in respect of the prayer for interim award,' it has decided not to press its case in the final proceedings on the Full Bench formula and shall essentially confine its case on the McSharpe award and its modification because of the issue of bonus shares and other connected matters among others. That necessarily narrows down the controversy as regards the principle on which bonus is to be computed for the years in question. The main issue, therefore, now becomes whether the bonus is to be awarded strictly on the basis of the McSharpe award as it stands, as the company contends, or on the basis of certain modifications of the McSharpe award in the light of certain changes that have taken place since the McSharpe award, as both the unions claim. This provides a clue to the greatest common measure of agreement between the company on the one hand and the union on the other. It is this that what is payable strictly according to the McSharpe award must be paid to the workmen as bonus so that an interim bonus at least to that extent may be directed to be paid and if at the final hearing on a consideration of the materials to be produced by the parties, the tribunal comes to hold that there can be no further modification of the McSharpe award, his interim award will be the final award, and on the other hand, if it holds that the McSharpe award should in fairness be modified in the light of the changed circumstances, then the final award may modify the interim award according to the modification of the McSharpe formula which the tribunal may consider Just and fair.
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On a strict application of the McSharpe award, as it stands, which as I have already said now represents the greatest common measure of agreement between the company on the one hand and the two unions on the other, profit-sharing bonus would be payable at the rate of 57 days' basic wages and not at the rate at which it was offered by the company for the two years. I think, therefore, the interim award should be based strictly on the McSharpe award, as it stands at present, i.e., at the rate of 57 days' basic wages to every workman who is eligible to this bonus under the rules of the company and not at the rate at which it was offered. This interim bonus should be paid by 15 October 1961 at the latest.
10. Sri Glnwalla contended that the tribunal fell into an error in assuming that the McSharpe award represented the greatest common measure of agreement between the disputants. He stated that the attitute taken by the petitioner-company was that the workmen might have stuck to the terms of the McSharpe award, without aspiring to have it modified. In that event, the company might have considered itself bound thereby, because it had, in the past, consented to abide thereby even though the award had expired by lapse of time. But since the workmen were trying to use the McSharpe award only as a spring-board in the matter of bargaining for large amount for bonus, there was no longer any agreement between the disputants as to the binding effect of the said award. He further contended that if the workmen aspired to rely on any other basis for declaration of profit-sharing bonus, the only basis on which they might have relied was the basis of the Full Bench formula. Since the workers would not even have that, the tribunal had no power to declare interim bonus on the basis of the repudiated McSharpe award.
11. In trying to repel the contentions of Sri Ginwalla, Sri Ajit Mukberji, learned Advocate for respondent 2, contended that the terms of the McSharpe award as to bonus, by reason of their incorporation in the standing orders of the petitioner-company, became the conditions of service of the workmen and it was always open to the workmen to raise an industrial dispute for the betterment of working conditions and such a dispute need not necessarily be resolved by application of the Full Bench formula.
12. This argument, in my opinion, is not very well conceived. The terms of the McSharpe award no doubt stand physically incorporated in the standing orders of the petitioner-company. But because it is so, the terms do not become statutory, standing orders of the petitioner-company. Standing order is defined in Section 2 (fir) of the Industrial Employment (Standing Orders) Act, 1946, as follows:
'Standing orders' rules relating to matters set out in the schedule.
Sections 3 and 4 of the said Act are to be the following effect:
Section 3: Submission of draft standing orders.--(1) Within six months from the date on which this Act becomes applicable to an industrial establishment, the employer shall submit to the certifying officer five copies of the draft standing orders proposed by him for adoption in his industrial establishment.
(2) Provision shall be made in such draft for every matter set out in the schedule which may be applicable to the industrial establishment and where model standing orders have been prescribed, shall be so far as is practicable, in conformity with such model.
(3) The draft standing orders submitted under this section shall be accompanied by a statement giving prescribed particulars of the workmen employed in the industrial establishment including the name of the trade union, if any, to which they belong.
(4) Subject to such conditions as may be prescribed, a group of employers in similar Industrial establishments may submit a joint draft of standing orders under this section.
Section 4: Conditions for certification of standing orders.--Standing orders shall be certifiable under this Act, if--
(a) provision is made therein for every matter set oat in the schedule which is applicable to the industrial establishment; and
(b) the standing orders are otherwise in conformity with the provisions of this Act;
and it shall be the function of the certifying officer or appellate authority to adjudicate upon the fairness or reasonableness of the provisions of any standing order.
13. The schedule to the Act. dealing with matters to be provided in the standing order, does not include a matter relating to provisions for profit-sharing bonus or for the matter of that for any kind of bonus at all. Therefore, the physical inclusion of the terms of the McSharpe award, as to bonus, in the standing order, may have the effect of showing that the petitioner-company agreed to abide by the terms of the award, although time-expired, but the value of such agreement would be no more than that of a contractual agreement. If that contractual agreement be repudiated by the workmen and the questions as to payment of profit-sharing bonus is sought to be adjudicated by an industrial tribunal, then the workmen repudiating the contract cannot both approbate and reprobate, that is to say, repudiate it and, at the same time, aspire to get interim advantage on the basis of it.
14. In the instant case, the tribunal was wrong in assuming that even though the dispute as to bonus had been referred to a tribunal, under the Industrial Disputes Act, the McSharpe award formed the basis of the greatest common measure of agreement. The workers wanted to have the terms of the McSharpe award modified and aspired to have much more than what the award had provided for. On the other hand, the company took up the position that if the terms of the McSharpe award had become anachronistic and if the agreement was not binding, the workers would get what the Full Bench formula provides. In these circumstances, to hold that the McSharpe award formed the greatest measure of agreement was really tantamount to making a final award into the matter, because after having found the greatest measure of agreement as to the dispute, there was no point in deciding the dispute on any other measure. The other measure to resolve the dispute would have been the Full Bench formula but the workers did not want to have the dispute resolved on that basis. What that dispute out of the picture and the terms of the McSharpe award repudiated, the tribunal should not have invoked the repudiated terms as the basis of the interim award.
15. In the case of New Maneck Chowk Spinning and Weaving Co., Ltd., Ahmedabad v. Textile Labour Association, Ahmedabad 1961--I L.L.J. 621, the Supreme Court, in its majority judgment, held that it was no doubt open to an industrial court, in an appropriate case, to impose new obligations on the parties before it or to modify contracts in the interests of industrial peace or to give awards which may have the effect of extending existing agreement or making a new one. This, however, does not mean that an industrial court can do anything and everything when dealing with an industrial dispute. This power is conditioned by the subject-matter with which it is dealing and also by the existing industrial law and it is not open to a tribunal, while dealing with a particular matter before it, to overlook the industrial law relating to that matter, as laid down by the legislature or by the Supreme Court. The Supreme Court further observed that the essential concept of profit-bonus was that there would be an available surplus determined according to the Fall Bench formula as approved by the Supreme Court. It would not be open to an industrial court or tribunal to ignore this law as to bonus and to extend an agreement for payment of bonus, which was against the basic concept of bonus. The Supreme Court also observed that it was the duty of the industrial courts, when dealing with the question of profit-bonus, to apply the Full Bench formula as approved by the Supreme Court and then arrive at the. quantum of bonus to be awarded in the case of each concern. If any agreement as to bonus between the employer and the employed departed from the Full Bench formula, as approved by the Supreme Court, in certain vital aspects, it must not be extended by the industrial court in the matter of payment of bonus for subsequent years.
16. The terms of the McSharpe award as to bonus were no doubt binding between the disputants, as, later on, by agreement continued. It was also capable of being modified or substituted by new terms in the interest of industrial peace in an industrial adjudication. But the power of the tribunal to modify or substitute it was conditioned by the industrial law on the point, viz., the Full Bench formula. If the terms of the McSharpe award were contrary to the Full Bench formula, it could not be enforced by an award, interim or otherwise. The agreement as to the terms of the McSharpe award having been repudiated, by reason of the dispute raised, the tribunal should not have used that as the basis of the industrial award unless it came to the conclusion that there was nothing contained in that award which went against the Full Bench formula.
17. The workers have made an unwise choice by giving up their legal rights under the Full Bench formula. Consequences thereof they will have to face and the tribunal shall have to decide that at the final adjudication of the dispute.
18. Be that as it may, the bonus under the interim award has already been paid to the workers under orders of this Court. I do not, therefore, desire to interfere with the interim award, which has now been executed. I, however, direct that at the time of making the final award, overpayment of bonus under the interim award, if any at all, must be directed to be deducted from the bonus or bonuses to be declared by the company in future.
19. Save as to the modifications hereby made, this rule is discharged. There will be no order as to costs.
20. I hope the tribunal will now expedite the hearing of the adjudication.