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1960 Supreme(SC) 112
SUPREME COURT OF INDIA
7th April, 1960
P.B. GAJENDRAGADKAR, K.N. WANCHOO AND K.C. DAS GUPTA, JJ.
M/s. Muir Mills Co., Kanpur, Appellants
Versus
Their Workmen and another, Respondents.
Civil Appeal No. 305 of 1959.
Advocates Appeared
M/s G. S. Pathak and S. P. Sinha Senior Advocates (Mr. K. K. Sinha, Advocate for Mr. G. N. Diskshit, Advocate, with them), for Appellants; Mr. Maqbool Ahmed Khan, General Secretary of Union, for Respondent 1; Mr. J. P. Goyal, Advocate, for Responden
Important Points
Subject
Labour Law - Wages and Bonuses
Act Referred
Headnote
(B) Interpretation of "consolidated wages" - Where "basic wage" is being defined, the term "consolidated wages" does not include emoluments that are essentially different and distinct from the ordinary concept of basic wage, such as production or incentive bonuses (Para 14).
(C) Policy considerations - A government scheme intended to improve wage structures would not knowingly remove incentives to production, as such a result would harm labour, capital, and national productivity (Para 16).
Facts of the case:
Piece-rate workers were receiving basic wages along with production and incentive bonuses. Following a government order fixing minimum basic wages and dearness allowance, the employer discontinued the payment of these bonuses and instead increased the fixed piece rates. The workers contended that this constituted a wrongful reduction of wages. The employer argued that the bonuses had been taken into account while arriving at the revised piece rates and that the government order authorized such inclusion in the calculation of basic wages.
Findings of Court:
The government order did not require or authorize the employer to include production and incentive bonuses in the calculation of the rates of basic wages. Consequently, the employer was not absolved from the duty of continuing to pay these bonuses to the workmen.
Issues: Whether the government order required or authorized the employer to include incentive and production bonuses in the calculation of the rates of basic wages for the purpose of compliance with the order.
Ratio Decidendi: The court held that "basic wage" refers to the standard remuneration payable to all employees regardless of special claims. Production bonuses are variable and based on individual performance, making them distinct from the nature of basic wages. Therefore, "consolidated wages" used within the definition of "basic wage" cannot be interpreted to include incentive wages, as this would contradict the fundamental concept of a basic wage and remove essential production incentives.
Result: Appeal dismissed.
G.N.DIKSHIT, G.S.PATHAK, J.P.GOYAL, K.K.SINHA, MAQBUL AHMAD KHAN, S.P.SINHA
DAS GUPTA, J.: This appeal by the employer the Muir Mills Co. Ltd., Kanpur is against the decision of the Labour Appellant Tribunal of India, Bombay modifying an award of the Adjudicator Kanpur in a reference made by the Government of U. P. under the provisions of Ss. 3, 4 and 8 of the Industrial Disputes Act, 1947. The matter in dispute referred was originally set out in these terms:
"Whether the employers have wrongfully and/or unjustifiably reduced the wages of their workmen of carding department, given in the annexure? If so to what relief are the workmen entitled and from what date?"
2. By an order dated April 25, 1955, the Government amended this issue by substituting therefore the following:
"Whether the employer have wrongfully and/or unjustifiably reduced the wages of their workmen of Carding Department, given in the annexure, by discontinuing the payment of production and/or special bonus if so, to what relief are the workmen entitled and from what date?"
3. It will be noticed that the issue as re-framed by the amendment indicated the manner in which the reduction in the wages of these workmen had been alleged to be made, viz., "discontinuing the payment of production and/of special bonus". To understand how the question of such a reduction arose and also the considerations which arise in deciding the question whether the reduction, if any, was wrongful and/or unjustifiable a few facts need to be mentioned: The appellant company is a textile mill employing in its Carding Department workmen known as Inter Tenters. Roving Tenters, Draw Frame Teneters and Slubbers. All these workmen are paid wages on piece rate basis. Before 1948 the rates in force per hank were -2/3/- for the Inter Tenters, -/2/3/- for the Slubbers and Draw Frame Tenters and -/2/5/- for the Roving Tenters. In addition to this these workmen were entitled to receive further emoluments if there production exceeded a certain norm. The rates for these further emoluments then in force were two annas per rupee of basic earnings of Rs. 15 to Rs. 25 per month and three annas per rupee for basic earnings above Rs. 25 per month. Apart from these emoluments payment was also made at 9 pies per hank if the production on any day was 7 hanks or more. Though both these additional emoluments were related to production the Tribunals below have described the first kind as production bonus and it will be convenient to adhere to that description here.
4. These two kinds of additional payments which the workmen would receive only if there production would reach and surpass certain standards had the result of increasing the total emoluments received by some of the workmen much above what they would be getting under the fixed rate per hank. The right to receive these additional emoluments had become a part of the terms of service of these workmen. With effect from 1-12-1948, however the appellant-company stopped the system of paying such additional employments but instead raised the fixed rate per hank to -/3/9/- for Inter Tenters, -/3/6/- for Slubbers and Draw Frame Tenters and -/4/9/-for Roving Tenters. This was done immediately after an order had been made by the Government under the provisions of S. 3 of the U. P. Industrial Disputes Act, 1947, laying down the standards of basic wages and dearness allowance for different industries in the Province.. Clause 2 of this order fixed the minimum basic wage for cotton and woolen textile industries in Kanpur and certain other areas at Rs. 30 per month. Clause 3 provided for payment of dear food allowance. Clause 5 provided that persons who are already employed on 30-11-1948, in any industrial textile concern shall receive wages at the increased rates mentioned therein. Clause 7 provided that "every employee of an industrial concern or undertaking to which this order applies, shall be paid wages including dear food allowance in accordance with the provisions of cls. (2), (3), (5) and (6)." There is a proviso to the clause which
