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SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, K.C. DAS GUPTA AND J.R. MUDHOLKAR, JJ.
M/s. National Iron and Steel Co. Ltd. Belur, Howrah, Appellant
Versus
The Workmen and another, Respondents.
Civil Appeal No. 208. of 1962.
Advocates appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate, (M/s. S.. K. Bose and Sardar Bahadur, Advocates with him), for Appellant; Mr. D. N. Mukherjee, Advocate for Respondent No. 1 Mr. Janardhan Sharma, Advocate for Mr. B. P. Maheshwari, Advocate, for Respondent No.2.
INCENTIVE BONUS - Fixation of targets - Fixation of rates - Extension of scheme to non-productive departments - Piece-rate workmen - Principles.
Fact of the Case:
The appellant company runs a steel mill at Belur. There are various departments in the mill which have been grouped under three headings: direct productive departments, indirect productive departments, and non-productive departments. The appellant had introduced a scheme for payment of incentive bonus to the workmen in the productive departments. The workmen in the indirect productive departments were paid production bonus at the rate of 75% of the average rate of production bonus earned by the respective direct productive department to which these three indirect productive departments are attached. The workmen in the non-productive departments were not covered by the scheme. The respondents, two unions representing the workmen, filed a dispute with the Government of West Bengal, which referred it for adjudication to the Third Industrial Tribunal under S. 10 of the Industrial Disputes Act 1947. The Tribunal revised the targets for the productive departments and fixed the rates of incentive bonus for the time-rate workmen as well as piece-rate workmen. It also extended the scheme to the non-productive departments.
Finding of the Court:
The Supreme Court held that the Tribunal had no material before it for reducing the targets in the steel foundry department from 25 lbs. per capita per day to 23 lbs. It also held that the Tribunal's direction that incentive bonus should be paid to the workmen in the department concerned at the existing rates even though the targets have been halved was not proper. The Court further held that the Tribunal should have considered whether the existing targets are fixed so high that for earning incentive bonus the workmen have to sweat. The Court also held that the Tribunal should have considered whether a case has been made out by the non-productive workmen for grant of incentive bonus and whether there has been a rise in their workload in consequence of rise in production. The Court also held that even with regard to piece-rate workmen there is a norm and if a piece-rate workmen produces anything beyond that norm be should be entitled to be paid for the excess at a higher rate.
Issues: 1. Whether the Tribunal had material before it for reducing the targets in the steel foundry department from 25 lbs. per capita per day to 23 lbs.? 2. Whether the Tribunal's direction that incentive bonus should be paid to the workmen in the department concerned at the existing rates even though the targets have been halved was proper? 3. Whether the Tribunal should have considered whether the existing targets are fixed so high that for earning incentive bonus the workmen have to sweat? 4. Whether the Tribunal should have considered whether a case has been made out by the non-productive workmen for grant of incentive bonus and whether there has been a rise in their workload in consequence of rise in production? 5. Whether even with regard to piece-rate workmen there is a norm and if a piece-rate workmen produces anything beyond that norm be should be entitled to be paid for the excess at a higher rate?
Ratio Decidendi: 1. The Tribunal had no material before it for reducing the targets in the steel foundry department from 25 lbs. per capita per day to 23 lbs. because it failed to give due importance to the fact that the original target of 20 lbs. was raised to 25 lbs. by the appellant after discussing the matter with the workmen concerned and with their consent. 2. The Tribunal's direction that incentive bonus should be paid to the workmen in the department concerned at the existing rates even though the targets have been halved was not proper because it would result in half or more than half of the total earnings of a workman coming to him by way of incentive bonus without the production going up. 3. The Tribunal should have considered whether the existing targets are fixed so high that for earning incentive bonus the workmen have to sweat because it is the function of the management to fix and ordinarily even to revise the targets and the Tribunal cannot do so lightly. 4. The Tribunal should have considered whether a case has been made out by the non-productive workmen for grant of incentive bonus and whether there has been a rise in their workload in consequence of rise in production because from the point of view of economics the clerical and subordinate staff in an industry, like its manual workers, contribute towards its production and there can, therefore, be no reason for excluding them wholly from the benefits of a scheme of incentive bonus. 5. Even with regard to piece-rate workmen there is a norm and if a piece-rate workmen produces anything beyond that norm be should be entitled to be paid for the excess at a higher rate because there is a norm and if a piece-rate workmen produces anything beyond that norm be should be entitled to be paid for the excess at a higher rate.
Final Decision: The Supreme Court quashed the award of the Tribunal in so far as it relates to the fixation of targets in the various departments of the appellant, fixation of rates of incentive bonus for time-rate workmen as well as piece-rate workmen and extension of the scheme to non-productive departments and remanded the dispute to the Tribunal for adjudication after appointing assessors, considering all relevant material placed before it by the parties to the dispute and make a fresh award in the light of the Court's observations. The rest of the award was affirmed.
Judgment
MUDHOLKAR, J.: The substantial question which falls for decision in this appeal by special leave against an award made by the Third Industrial Tribunal, West Bengal, centres round the question of production bonus. The appellant company runs a steel mill at Belur. There are various departments in the mill which have been grouped under three headings : direct productive departments, indirect productive departments and non-productive departments. Is the last mentioned group come the general office, accounts department, establishment department, time office, stores shipping department, drawing and design department, laboratory, progress and planning departments, civil construction department, watch and ward department, medical department and welfare department. The first group consist of the following five departments :
1. Steel foundry
2. Electric Furnaces
3. Rolling Mills
4. Bolt and nuts shop, and
5. Machine shops.
The second group consists of the following, departments:
1. Refractory attached to the electric furnaces
2. Mill General, attached to the rolling mills
3. Roll turning, attached to the rolling mills
4. Yard Mazdoors, attached to the rolling mills, and
5. Civil maintenance department, electric maintenance department and mechanical maintenance department.
It is common ground that each productive department has an individual target for the purpose of payment of production bonus over and above the wages. The existing targets were fixed (a) in 1948, in electric furnaces and rolling mills ; (b) in December, 1956, in the steel foundry and (c) in January, 1959 in the bolt and nut workshop. According to the appellant the targets were revised from time to time in consultation and with the concurrence of the representatives of the workmen of the department concerned as and when occasion arose for doing so in consequence of the adoption of better methods of production, new techniques, addition of plant and machinery etc.
2. The workmen in three indirect productive departments, namely, refractory attached to the electric furnace. mill general attached to the rolling mills and roll turning attached to the rolling mills are paid production bonus at the rate of 75% of the average rate of production bonus earned by the respective direct productive department to which these three indirect productive departments are attached.
3. The Yard Mazoors attached to the rolling mills are paid on the basis of an arbitration award which is subsisting between the workmen and the company.
4. In civil maintenance, electric maintenance and mechanical maintenance departments, the workmen are paid production bonus at the rate of 75% of the average rate calculated on the basis of production bonus paid to the workmen in the productive departments taken together.
5. In the steel foundry department, the target was 20 pounds per man per day until the end of 1956. Towards the end of 1956 the appellant had direct negotiations with the workers, representatives of the department, and in view of the additions to the plant and machinery and provision for additional facilities and working space and improvement in the technique of production which raised considerably the production capacity of the said department, it was agreed to raise the target upto 25 pounds per man per day. The value of machinery and plant added to this department alone would be about Rs. 2 lakhs. About Rs. 45 lakhs worth of electric cranes were also subsequently installed. They are working for this department and the electric furnace department. Since December, 1956 there have been further additions of machinery etc. to the extent of about Rs. 3 lakhs in this department alone.
6. According to the appellant the workmen all along worked without protest against the targets in force from time to time. But nine months after the revised targets came into operation the second respondent, which is one of the two unions to which the workmen of the company belong, protested against the raising of target in t
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