Production bonus is an incentive wage plan that becomes a term of employment once introduced, granting industrial tribunals jurisdiction to revise it. It is distinct from a profit bonus, which is a share of available surplus profits calculated via specific formulas.

Judgement

K. N. WANCHOO J. : These are three appeals by special leave from the same decision of the Labour Appellate Tribunal of India and will be dealt with together. The first two appeals (Nos. 450 and 451) are by Messrs. Titaghur Paper Mills Co, Ltd. and the third (No. 514) by its workmen.

2. Titaghur Paper Mills Co. Ltd. (hereinafter called the company) own two paper mills one at Titaghur (hereinafter called Mill No. 1) and the other at Kankinarah (hereinafter called Mill No. 2). It appears that there had been a dispute between the company and its workmen in 1948, which was referred to the adjudication of a tribunal. That was disposed of by the tribunal on 5-11-1949. Among the matters then referred was the question of profits bonus for the years 1945-46 and 1946-47. When that matter was under the consideration of the tribunal, the company put forward a scheme of production bonus on the basis of a minimum production of 30,000 tons of paper in a year in the two mills together. The basis of the scheme was that the workmen would get 13 days basic wage (this being equivalent to half of one month s basic wage) by way of bonus on a production of 30,000 tons for both mills. Thereafter the workmen were to get an additional one day s basic wage for every 460 tons produced up to a maximum of 36,000 tons when the production bonus would come up to 26 days basic wage (which would be equivalent to one month s basic wage including weekly holidays). The company in putting forward the scheme said that "as an admittedly rough basis for such a scheme something on the following lines might, we think, be equitable". It then gave the scheme mentioned above. The tribunal dealing with the question of profit bonus for the years 1945-46 and 1946-47 observed that the scheme of production bonus put forward by the company had been accepted by the union as satisfactory and for the purpose of that proceeding it accepted the scheme as a measure for awarding profit bonus for the years 1945-46 and 1946-47. The actual bonus worked out to 17 days basic wage for 1945-46 and 19 days basic wage for 1946-47; (see award of Sri M. C. Banerji, in the publication of Government of West Bengal, Labour Department, "Awards made by the Tribunals for the quarter ending December 1949", pp. 130-150). It further appears that the detailed scheme was later communicated to the union in July 1950 and as the principle had already been accepted by the union before Sri Banerji the scheme was put in operation from 1-4-1949, and production bonus has all along been paid in accordance with it after that date.

3. Disputes, however, arose between the company and its workmen in 1953. The workmen of Mill No. 2 were the first to raise a dispute in August 1953, in which inter alia they demanded profit bonus for the years 1950-51 and 1951-52 and also prayed for certain changes in the production bonus scheme. The workmen of Mill No. 1 also raised a dispute and presented a charter of demands to the company in October 1953. They also demanded profit bonus for the two years mentioned above and revision of the production bonus scheme. These disputes were referred by the Government of West Bengal to the Fifth Industrial Tribunal, West Bengal. There were two references, one relating to each mill. They were heard separately by the Industrial Tribunal which gave two separate awards rejecting all the demands made by the workmen. Consequently, two appeals were preferred by the workmen before the Labour Appellate Tribunal. There the two appeals were heard together at the request of the parties and disposed of by the Tribunal by the same judgment on July 31, 1956.

4. The Fifth Industrial Tribunal rejected the claim of the workmen for revision of the production bonus scheme and for grant of profit bonus for the years 1950-51 and 1951-52. It was of opinion that the claim for profit bonus for the two years was not maintainable as the workmen had been given production bonus and that met the profit onus claim o