THE DAILY PRATAPversusTHE REGIONAL PROVIDENT FUND COMMISSIONER

A                             THE DAILY PRATAP
                                          v.
          THE REGIONAL PROVIDENT FUND COMMISSIONER

                               OCTOBER 29, 1998

B          [S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.]


          Employees' Provident Fund and Miscellaneous Provisions Act, 1959:

          Preamble-Held, Act is a beneficial social welfare legislation.
c         Section 2(b) Exception (ii) and Section 6-Definition of"basic wages"-
    Applicability of-Production Bonus Scheme-Extra payment made to workmen
    under Production Bonus Scheme-Employer under Exception (ii) of Section
    2(b) and hence no provident fund contribution was required to be payable on
    such extra payment-Held, extra payment under the Sr;heme made at a flat
D   rate and not on sliding scale proportionate to extra output-Such payment
    was not exempted from provident fund contribution-Thus, Exception (ii) not
    attracted-Extra payment made under the said Scheme cannot also be treated
    as an incentive allowance.

          Words and phrases-Words "wages" and "basic wages"-Meaning of-
E   In the context of Employees' Provident Funds and Miscellaneous Provisions
    Act, 1959.

          Practice and Procedure:

          Writ petition before the High Court-Advocate General appearing for
F   Provident Fund Commissioner in an earlier writ petition conceded that
    appellants were not required to contribute provident fund on payment on
    Production Bonus amount paid to the workmen-However, it was made clear
    that appellants were required to deposit provident fund on the "wages" as
    defined under the Act-Held, such concession not binding in subsequent
G   petition-More so, Advocate General had not given the concession in absolute
    term that appellants were not liable to contribute any part of the disputed
    amount towards provident fond or that it never fell within the definition of the
    word "wages"-Constitution ofIndia, Article 226-Emp/oyees' Provident Funds
    and Miscellaneous Provisions Act, 1959, Section 2(b).

          Jurisdiction-Authorities constituted under the Act-Contribution by
H                                        482
                THE DAILY PRAT AP v. THE REGIONAL P.F. COMMR.            483

appellants to provident fund on payment to Production Bonus Scheme-              A
Authorities under the Act sought to recover the contribution towards provident
fund on such payments made by the appellant-Challenged in writ petition--
Held, whether such payment fell within the ambit of definition of "wages" had
to be decided by the Authorities under the Act in a refand application filed
 before it-Administrative Law-Employees' Provident Funds and Miscellaneous       B
Provisions Act, 1959.
      Appellants, carrying on the business of printing of newspaper, were
alleged to have not remitted their contributions along with the share of their
employees to the extent of the amounts paid by them by way of Production
Bonus. On a demand being made, the same was challenged by the appellant
in a writ petition before the High Court on the ground that amounts were         C
paid to the concerned employees under the relevant Production Bonus
Scheme and thus were not liable to remit contribution for the same as per
Section 6 of Employees' Provident Fund and Miscellaneous Provisions Act.
In the said writ petition the then Advocate General conceded before the High
Court that the appellants were not required to deposit the provident fund        D
on the Production Bonus; appellants may deposit provident fund only on
"wages" as defined under the Act; and that the appellants may apply to
the respondent for refund of amount deposited in respect of Production
Bonus and the same would be decided by the authorities. After the hearing,
respondent authorities took the view that the disputed amounts for such
contributions were asked for under Section 6 of the Act from the appellants      E
and were part of "basic wages" and no such Production Bonus Scheme was
existing in the appellants' concern. Consequently the claim of applicability
of Section 6 of the Act to the appellants was rejected. This was again
challenged by appellants before the High Court in a writ petition and the
same was dismissed. It was confirmed by a Division Bench of the High Court.      F
Hence this appeal.

     It was contended by the appellants that in the earlier writ petition the
Advocate General had conceded that the appellants were not required to
contribute provident fund on Productfon Bonus, and hence the authorities
had no jurisdiction to go beyond the order of the High Court that; the           G
authorities committed a patent error of law in taking the view that the
scheme in question was not a Production Bonus Scheme and that the amount
paid by the employees for the extra work rendered by the workmen were
covered by the definition of "basic" wages" under Section 2(b) and
consequently Section 6 of the Act got attracted; those workmen employed
by the appellants who had put in more work than beyond the norms                 H
    484                       SUPREME COURT REPORTS [1998) SUPP. 2 S.C.R.

A   provided for them and for which no action could have been taken by the
    management if the workmen had not carried out the extra load of work,
    had been paid for this voluntary extra work; and that such payment for
    extra work was directly linked up with production and was a Production
    Incentive Bonus squarely covered by the excepted category of definition of
B   "basic wages" under Section 2(b) of the Act.
          It was contended by the respondent that Employees' Provident Fund
    and Miscellaneous Provisions Act was a social beneficial piece oflegislation;
    that the Act envisages a protective economic cover for the rainy day so far
    as the workmen were concerned for such a welfare legislation should be
    construed liberally and not in a restrictive manner; that High Court had
C   taken the view that the Scheme pressed in service by the appellants was not
    a genuine Production Bonus Scheme but was merely an attempt to get out
    of the provisions of Section 6 of the Act; that the earlier order of the High
    Court did not deprive the authorities of statutory jurisdiction to decide the
    real nature of the so called Production Bonus Schemes; and that the
D   concession of Advocate General had to be considered in its correct
    perspective.
          Dismissing the appeal, this Court
          HELD : I.I. The Employees' Provident Fund and Miscellaneous
    Provisions Act is a beneficial social welfare legislation meant for the
E   protection of weaker sections ofsociety, namely, workmen who had to eke
    out their livelihood from the meagre wages they receive after toiling hard
    for the same. [492-G]

        Regional Provident Fund Commissioner v. S. D. College and Ors., [1997)
    1 sec 241, relied on.
F
          Regional Provident FundCommissionerv. Naraini Udyog, [1996j 5 SCC
    522, referred to.
          1.2. In order to be a genuine Production Bonus Scheme so as to get
    covered by exception (ii) to the definition of "basic wages" as found under
G   Section 2(b) of the Act, it must be shown that the scheme in question, seeks
    to offer production bonus to the workmen concerned who put in extra output
    wherein either collectively bonus be fixed to all of them on the basis of total
    extra output on a sliding scale or may be paid individually to a given number
    of workmen who by their own efforts earn such bonus. Thus in each case
    payment of bonus cannot be of a fixed or proven nature having no nexus
H   with the quantity of extra output produced by them. Payment to be made
               THEDAILYPRATAPv. THE REGIONALP.F. COMMR.               485
to meritorious workmen who put in extra output, has to have a direct nexus    A
and linkage with the amount of extra output produced by the eligible
workmen so that the scheme works as a real incentive scheme equally to
them to make extra efforts. Such distributable bonus cannot be a static
figure. [501-D; 503-F-H]
     Bridge and Roof Co. (India) Ltd v. Union of India and Ors., [1963] 3     B
SCR 978 and Jay Engineering Works Ltd and Ors. v. Union ofIndia and Ors.,
[1963] 3 SCR 995, distinguished.
     Mis Titaghur Paper Mills Co. Ltd. v. Its Workmen, [1959] Supp. 2 SCR
1012, referred to.
       1.3. A mere look at the scheme of the company, which is styled as C
Production Bonus Scheme, shows that so far as the first category of cases
envisaged by the scheme is concerned, it contemplates a situation where at
a given point of time the required number ofstaff may not be available with
the likelihood that the production for the day might fall and in order to
ensure maintenance of the same level of production other workmen available D
in the given shift may be required to carry on the extra work than what is
normally required to be done by them. In such cases, an extra amount is
contemplated to be offered to the remaining employees who are present and
who take extra load of work which otherwise would have been discharged
by their absentee colleagues. The category of cases contemplated by the first
part of the Scheme necessarily indicates that any extra effort undertaken E
by the workmen discharging extra load of work over and above the usual
work expected of them normally is to ensure maintenance of the requisite
normal level of production. This situation is entirely different from the one
wherein more than normally expected out-turn of work is being made
available by the workmen who would get Production Bonus by way of p
incentive to yield total production beyond its normal level. Consequently,
the first category of cases contemplated by the Scheme cannot be said to be
introducing any Production Bonus Scheme in the real sense of the term. It
is in substance a Scheme of insurance against shortfall in normal production
per shift due to shortage of available staff at a given point of time.
                                                                    [496-B-E] G

     1.4. Before the situation envisaged by category 2 of the Scheme can
be said to have got attracted in a given case it must be shown that the
workmen concerned had put in extra work in a shift beyond what was
normally required of them. Unless that basic data is available, it would be
impossible to work out the extra output put up by them in a given shift on    H
    486                       SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A a particular day. There is no data available on record to show what were
    the norms of work prescribed for such workmen during the relevant period.
    It is, therefore, not possible to ascertain whether extra amounts paid to these
    workmen were in fact, paid for the extra work which had exceeded the
    normal output prescribed for the workmen working in any given shift at
B   the relevant time. As the employer did not furnish such relevant data, the
    authorities were justified in holding that the disputed amount cannot be said
    to be forming part of a genuine Production Bonus Scheme. (497-B-E]
          1.5. Moreover, the scheme of Production Bonus envisaged by Category
    2 of the scheme in substance has no nexus or connection with the extra
    production effort by the workmen. In other words, by way of Production
C   Bonus the workmen will not get any extra amount in proportion to the extra
    output put up by him beyond the norms as compared to his fellow workmen.
    The payment of Production Bonus as envisaged in category 2 cases under
    the scheme is not directly linked up with the amount of extra output
    furnished by the workmen. Consequently, the aforesaid scheme said to be
D   granting Production Bonus to the employees is in substance not a scheme
    which is directly linked up with extra production nor it is commensurate
    with the extra production workman-wise or even establishment-wise. It only
    carves out a category of more efficient workmen or more enthusiastic
    workmen for being given a flat rate of extra remuneration for discharging
    their duties more efficiently under the contract of employment. Thus
E   excepted category (ii) as envisaged by definition under Section 2(b) would
    not be available for being invoked by the employer.
                                                       (497-G-H; 498-A; D-G]
           1.6. The extra payment made under the said scheme cannot also be
    treated as an incentive allowance. In order to become an incentive allowance,
F   it has to be shown that those eligible workmen who had put in extra output
    as per para 2 of the scheme would be entitled by way of an incentive to do
    more work to get additional amount directly linked up with extra output
    given by them. No such linkage is found from Clause 2 of the scheme.
                                                                       (499-F-G]
G         2. Advocate's General concession was on a question of law as to
    whether the Scheme which was put forward by the companies as a
    Production Bonus Scheme was covered by Section 6 read with Section 2(b)
    or not. Such a concession on the question oflaw cannot bind the authorities
    for all time to come but even apart from this aspect of the matter the said
    concession has to be considered as a whole. In the same breath while
H   conceding that the appellants were not required to contribute on Production
      THEDAILYPRATAPv. THEREGIONALP.F. COMMR. [S.B. MAJMUDAR,J.]        487

Bonus amounts, the Advocate General made it clear that they have to deposit     A
provident fund on the ·wages' as defined under the Employees' Provident
Fund and Miscellaneous Provisions Act meaning thereby the question
whether the disputed amounts for which refund was to be claimed by the
companies from the authorities fell within the definition of the word "wages"
under the Act or not. It was a live issue which had to be decided by the
authorities in the proposed refund applications. The Advocate General had       B
not given an absolute concession that the companies were not liable to
contribute any part of the disputed amounts towards provident fund and
that it never fell within the definition of the word "wages". Under these
circumstances, when the companies moved the applications for refund they
were required to be decided on their own merits. The statement of the           C
Advocate General before the High Court had no adverse effect on such a
statutory jurisdiction of the authorities. The merits of refund applications
had to be decided by the authorities after hearing the companies. The entire
question whether the claim for refund was justified in law or not and the
further connected question whether the amounts deposited were towards
"basic wages" or otherwise were open for consideration of the authorities.      D
It cannot be said that such an inquiry was not open to the authorities and
was clearly shut out by the order of the High Court in earlier writ petitions
recording the concession of the Advocate General. (492-A-F)

     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1802                       E
of 1988 Etc.

     From the Judgment and Order dated 11.10.83 of the Punjab & Haryana
High Court in L.P.A. No. 710/83 in C.W.P. No. 2196 of 1977.

      Ranjit Kumar, Ms. Anu Mohla and Rajesh Pathak for the Appellant.
                                                                                F
      Harish Chander and C.V. Subbarao for the Respondent.

      The Judgment of the Court was delivered by

      S.B. MAJMUDAR, J, Both these appeals for special leave to appeal          G
under Article 136 of the Constitution of India have brought in challenge two
orders of the Division Bench of the High Court of Punjab & Haryana at
Chandigarh dismissing two Letters Patent Appeals arising out of the decision
of the learned Single Judge of the High Court who has considered identical
questions of law. Consequently, both these appeals were heard together.
Learned counsel for the respective parties were heard in support of their       H
    488                        SUPREME COURT REPORTS [1998) SUPP. 2 S.C.R.

A   cases and thereafter both these appeals are being disposed of by this common
    judgment.

           The common question which falls for consideration of this Court in
    these appeals is as to whether the appellants which are carrying on the business
    of printing and publishing newspapers in the State of Punjab at Jallandhar are
B   liable to remit contributions under Section 6 of the Employees' Provident
    Funds and Miscellaneous Provisions Act, 1952 (for short the 'Act') to the
    authorities functioning under the Act along with the matching contributions
    from their respective employees, so far as the amounts paid by the appellants
    to their employees under identical schemes of Production Bonus are concerned.
    The learned Single Judge of the High Court in his impugned Judgment has
C   taken the view that the said statutory liability is foisted on the appellants. By
    summarily dismissing the Letters Patent Appeals against the said decision of
    the learned Single Judge, the Division Bench has confirmed the said view
    and that is how the appellants are before us in these proceedings. A few
    relevant introductory facts deserve to be noted to appreciate the common
D   grievance of the appellants.

          BACKGROUND FACTS:

          The appellants were carrying on the business of printing of the
    newspapers in the city of Jallandhar in the State of Punjab and circulating the
E   same to their customers. They were alleged to have not remitted their
    contributions along with the share of their concerned employees to the extent
    of the amounts paid by them for the period from August, 1975 to March,
    1976 by way of Production Bonus. The contention of the appellants was that
    as the disputed amounts were paid to the concerned employees under the
    relevant Production Bonus Schemes they were not liable to remit contributions
F   for the same as per Section 6 of the Act. On the basis of the said contention,
    they filed writ petitions earlier against the aforesaid demand of the authorities
    before the High Court. In the said writ petitions filed in the year 1976, the
    then learned Advocate General for the State of Haryana appearing for the
    authorities, conceded before the High Court that the appellants were not
G   required to deposit the provident fund on the Production Bonus and the
    appellants may deposit provident fund only on "wages" as defined in the Act
    from August, 197 5 and with regard to the refund of the amount deposited in
    respect of Production Bonus, the appellants may apply to the respondent
    authorities, who, after giving them hearing, would decide the matter within
    three months. The said decision of the High Court in both these writ petitions
H   moved by the appellants were rendered on 19th July, 1976. Thereafter the
      THE DAILY PRAT AP v. THE REGIONAL P.F. COMMR. [S.8. MAJMUDAR, J.]     489

respondent authorities gave hearing to the appellants and ultimately took the A
view that the disputed amounts for which contributions were asked for under
Section 6 of the Act from the appellants were part of the "basic wages" and
no such Production Bonus Scheme was existing in the appellants' concerns.
Consequently, the claim of the appellants for non-application of Section 6 of
the Act of these disputed amounts was rejected. Under these circumstances,
the appellants once again carried the matters in writ petitions before the High B
Court. Those writ petitions were dismissed by the learned Single Judge by
the impugn~d order which came in their tum to be confirmed by the Division
Bench in the Letters Patent Appeals as noted earlier.

      RIVAL CONTENTIONS:                                                            c
       Shri Ranjit Kumar, learned counsel for the appellants vehemently
submitted that pursuant to the earlier order dated 19th July, 1976 of the High
Court in writ petitions the only inquiry which was to be conducted by the
authorities under the Act was about the appropriate amount of refund to be
given to the appellants. The learned Advocate General for the State of Haryana      D
had clearly conceded that the appellants were not required to deposit such
provident fund on Production Bonus and consequently, the authorities had no
jurisdiction to go behind these orders of the High Court and decide the
question on merits once again and held that the appellants were liable to
deposit the provident fund amount on Production Bonus paid by them to the           E
workmen concerned. In the alternative it was contended by the learned counsel
for the appellants that even assuming that the authorities could go into this
question despite the order of the High Court dated 19th July, 1976, the
authorities had committed a patent error of law in taking the view that the
scheme in question was not a Production Bonus Scheme and that the amounts
paid by the employees for extra work rendered by the workmen were covered           F
by the definition of "basic wages" under Section 2(b) and conseque'.1.tly Section
 6 of the Act got attracted in connection with the said disputed amounts on
which the authorities were justified in seeking transmission of contribution
by the appellants along with matching contribution by the workmen. In support
of the said contention, learned counsel for the appellants vehemently relied        G
 upon a decision of the six member Bench of this Court in Bridge & Roof Co.
 (India) Ltd. v. Union of India, [1963] 3 SCR 978 and tried to distinguish the
ratio of decision of this Court in Jay Engineering Works Ltd. and Ors. v. The
 Union of India and Ors., [1963] 3 SCR 995. It was contended that the
 scheme in question was clearly a Production Bonus Scheme. That those
workmen employed by the appellants who had put in more work than beyond             H
    490                         SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A the norms provided for them and for which no action could have been taken
  by the Management if the workmen had not carried out the extra load of
  work, had been paid for this voluntary extra work. Such payment for extra
  work was directly linked up with production and was a Production Incentive
  Bonus squarely covered by the excepted category of the definition of "basic
B wages" under Section 2(b) of the Act. He also submitted that in order to
  become a Production Bonus Scheme it was not necessary that all the workmen
  were uniformly paid bonus if they worked more than what was required of
  them by the norms. Even if amounts of bonus varied with the quantum of
  extra work rendered by workmen concerned, such bonus scheme still remained
  a genuine incentive Production Bonus Scheme.
c
        In reply, learned counsel for the respondent Shri Harish Chander,
  submitted that the Act is a beneficial piece of legislation. It is a welfare
  measure under which workmen belonging to the lower strata of society and
  suffering from economic distress and penury are enabled by the legislature
  to contribute towards a compulsory saving scheme wherein the employer
D would give matching contribution and the amount credited to the workmen's
  account maintained by the authorities under the Act would be available for
  them for being available to meet the needs of their families after their
  superannuation or even otherwise during employment. These amounts will
  also ba available to them to draw upon by taking loans on the basis of the
E amounts standing to their credit, for meeting social obligations like marriage
  or even meeting medical expenses and other pressing economic necessities.
  Thus, the Act envisages a protective economic cover for the rainy day so far
  as these workmen are concerned. Such a welfare legislation should be
  construed liberlllly and not in a restrictive manner. In support of this contention,
  reliance was placed on the decisions of this Court in Regional Provident
F Fund Commissioner v. S.D. College, Hoshiarpur and Ors., [1997] I SCC
  page 241 and in Regional Provident Fund Commissioner, Jaipur v. Naraini
  Udyog and Ors., (1996] 5 SCC 522. Reliance was also placed on the definition
  of the term "bonus" as found in Corpus Juris Secundum, Volume 11 at page
  515. Learned counsel for the respondent further submitted that the High
G Court had taken the view that the Scheme pressed in service by the appellants
  was not a genuine Production Bonus Scheme but was merely an attempt to
  get out of the provisions of Section 6 of the Act so far as the disputed
  amounts were concerned. He also submitted that earlier orders of High Court
  did not deprive the authorities of statutory jurisdiction to decide the real
  nature of the so called Production Bonus schemes. That the concession of
H learned Advocate General has to be considered in its correct perspective.
      THE DAILY PRA TAP v. THE REGIONAL P.F. COMMR. [S.B. MAJMUDAR, J.]     491
      In the light of the aforesaid rival contentions, the following points arise   A
for our determination:

      I. Whether in view of earlier decision of the High Court dated 19th
July, 1976 based on the concession of learned Advocate General, Haryana,
the authorities had jurisdiction to decide the question on merits or whether
the authorities were bound to consider the only limited question of computation     B
of appropriate refund amount to be paid to the appellants so far as the disputed
amounts which were already paid under protest by the appellant authorities
alongwith matching contributions of their employees were concerned;

      2. If yes, whether the appellants were liable to remit under Section 6        C
of the Act contributions on the amounts paid by them to the employees
concerned under the Production Bonus Scheme as promulgated by them at
the relevant time; and

       3. What final order? We shall now proceed to consider these points
seriatim.                                                                           D

      Point No. /:

      As noted earlier, it is true that when the appellants in the first instance
filed writ petitions in the High Court, it was contended by them that the           E
Production Bonus amounts paid by them to their workmen were not part of
the "basic Wages" as defined under Section 2(b) of the Act. It is also true that
they contended before the High Court in those proceedings that under some
mistake of law they had already deposited provident fund of the employees
with respect to Production Bonus also. That they were entitled to appropriate
refund of the said amount. It is equally true that when such a contention was       F
raised by them, the learned Advocate General, Haryana, who appeared at that
stage on behalf of the respondent authorities, conceded that the appellants
were not required to deposit provident fund on the Production Bonus and
they may deposit provident fund only on the "wages" as defined in the Act
from August, 1975 and that for appropriate refund they may apply to the             G
respondent who will give them hearing and decide the matter. Learned
Advocate General also assured that the appellants will have to pay refund of
the provident fund to the employees to the extent that such amounts were
 deducted from the salaries of the employees covered b¥ the Production Bonus
Scheme. The said assurance of the learned Advocate General was accepted
by the learned counsel for the appellants and that is how the appellants            H
    492                         SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A moved an application for refund before the authorities.
           However, it has to be kept in view that the Advocate General's
    concession was on a question of law as to whether the Scheme which was put
    forward by the appellants as Production Bonus Scheme was covered by Section
    6 read with Section 2(b) or not. Such a concession on the question of law
B   cannot bind the authorities for all time to come but even apart from this
    aspect of the matter the said concession has to be considered as a whole. In
    the same breath while conceding that the appellants were not required to
    contribute on Production Bonus amounts, the learned Advocate General made
    it clear that they have to deposit provident fund on the "wages" as defined
C   under the Act meaning thereby the question whether the disputed amounts
    for which refund was to be claimed by the appellants from the authorities fell
    within the definition of "wages" under the Act or not. It was a live issue
    which had to be decided by the authorities in proposed refund applications.
    Learned Advocate General had not given an absolute concession that the
    appellants were not liable to contribute any part of the disputed amount
D   towards provident fund and that it never fell within the definition of the word
    "wages''. Under these circumstances, when the applications for refund were
    moved by the appellants they were required to be decided on their own
    merits. The statement of the learned Advocate General before the High Court
    had no adverse effect on such a statutory jurisdiction of t~e authorities. The
E   merits of refund applications had to be decided by the authorities after hearing
    the appellants. The entire question whether the claim for refund was justified
    in law or not and the further connected question whether the amounts deposited
    were towards "basic wages" or otherwise were open for consideration of the
    authorities. It cannot be said that such an inquiry was not open to the authorities
    and was clearly shut out by the order of the High Court dated 19th July, 1976
F   recording the concession of the leamed Advocate General. The first point,
    therefore, is answered against the appellants and in favour of the respondent
    authorities.

          Point No. 2:

G         This takes us to the consideration of the merits of the controversy. In
    order to resolve this controversy, it is necessary to have a look at the relevant
    statutory scheme. It has to be kept in view that the Act in question, is a
    beneficial social welfare legislation meant for the protection of weaker sections
    of society, namely, workmen who had to eke out their livelihood from the
    meagre wages they receive after toiling hard for the same. We may usefully
H   refer to the observations of a two Judge Bench decision of this court in
      THE DAILY PRAT AP v. THE REGIONAL P.F. COMMR. [S.B MAJMUDAR, J.]     493
Regional Provident Fund Commissioner v. S.D. College, Hoshiarpur and               A
Ors. (supra), wherein it has been observed in para I 0 of the Report that:
       " .... The Act is a beneficial welfare legislation to ensure health and
       other benefits to the employees. The employer under the Act is under
       a statutory obligation to deduct the specified percentage of the
       contribution from the employee's salary and matching contribution,          B
       the entire amount is required to be deposited in the fund within 15
       days after the date of the collection, every month."

     Section 6 of the Act which imposes this statutory obligation on the
employers for remitting the requisite contributions reads as under:

       "6. Contributions and matters which may be provided/or in Schemes-
                                                                                   c
       The contribution which shall be paid by the employer to the Fund
       shall be (ten per cent] of the basic wages, [dearness allowance and
       retaining allowances (if any)], for the time being payable to each of
       the employees [(whether employed by him directly or by or through
       a contractor)] and the employee's contributions shall be equal to the D
       contribution payable by the employer in respect of him and may, [if
       any employee so desires, be an amount exceeding ten per cent of his
       basic wages, dearness allowance and retaining allowance (if any),
       subject to the condition that the employer shall not be under an
       obligation to pay any contribution over and above his contribution E
       payable under this section]:

        [Provided that in its application to any establishment or class of
        establishments which the Central Govt. after making such inquiry as
        it deems fit, may, by notification in the Official Gazette specify, this
        section shall be subject to the modification that for the words "ten       F
        percent", at both the places where they occur, the words twelve
        percent" shall be substituted]:

It is not in dispute between the parties that the appellants' establishments are
governed by the Act. In fact learned counsel for the appellants stated that
they are remitting requisite contributions under Section 6 so far as the amounts   G
of "basic wages" paid by them to their employees are concerned and equally
matching contributions from the employees are also deducted from their
wages and remitted to the authorities under the Act. It is obvious that these
contributions form part of the fund and the provident fund accounts of the
workmen maintained by the authorities under the scheme are credited with
these amounts from time to time. These funded amounts would be available           H
    494                        SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A   to the workmen for their requirements as withdrawals can be made from the
    workers' credit balances in the fund as envisaged by the Act. However, Shri
    Ranjit Kumar's grievance is a limited one, namely, that the appellants are not
    liable to contribute with reference to the amounts which are paid to the
    workmen which are not "basic wages". It was submitted that under Section
B   6 of the Act, only three types of contributions are required to be effected by
    the employer along with the corresponding matching contributions by the
    employees as requisite percentage of the amounts; i) basic wage, ii) dearness
    allowance and iii) retaining allowance, if any, paid to the workmen by the
    employers. It was contended that undisputably the amounts in question, were
    not paid to the workmen by way of dearness allowance and "retaining
C   allowance" as laid down by Explanation 2 to Section 6 of the Act. It means
    "an allowance payable for the time being to an employee of any factory or
    other establishment during any period in which the establishment is not
    working, for retaining his services". Therefore, according to him unless
    disputed amounts are part of "basic wages", they cannot be made subject
    matter of contributions. In order to support his aforesaid contention, learned
D   counsel for the appellants invited our attention to the definition of "basic
    wages" as found in Section 2(b) of the Act. It will be necessary, therefore,
    to have a look at the said definition. It reads as under:

          "2 Definitions -

E         xxx                              xxx                              xxx

            (b) "basic wages" means all emoluments which are earned by an
            employee while on duty or [on leave or on holidays with wages in
            either case] in accordance with the tenns of the contract of employment
            and which are paid or payable in cash to him, but does not include.
F
            (i) the cash value of any food concession:

            (ii) any dearness allowance (that is to say, all cash payments by
            whatever name called paid to an employee on account of a rise in the
            cost of living), house-rent allowance, overtime allowance, bonus,
G           commission or any other similar allowance payable to the employee
            in respect of his employment or of work done in such employment;
            (iii) any presents made by the employer;
                                                              (Emphasis supplied)

H   The first part of the definition clearly indicates that all emoluments which are
      THE DAILY PRA TAP v. THE REGIONAL P.F. COMMR. [S.B. MAJMUDAR, J.]   495
earned by an employee while on duty in accordance with the tenns of the          A
contract of employment and which are paid or payable in cash to him would
get covered by the main part of the definition. It is not in dispute between
the parties that the concerned employees were paid at the relevant time
additional emoluments which they had earned by their extra efforts and labour
and they did so while they were on duty and such extra work which they had       B
done was not dehors the tenns of the contract of employment. The said
amounts were payable in cash to the concerned employees. But the general
sweep of the aforesaid defmition gets curtailed in the present case according
to the learned counsel for the appellants. He placed reliance on the exception
category (ii) of the said definition, namely, that it was the amount paid by
way of Production Bonus and, therefore, the said amount gets excluded from       C
the general sweep of the definition "basic wages" as found in Section 2(b)
of the Act.

      Therefore, the short question is whether the disputed amounts paid to
the workmen employed by the appellants during the relevant time were paid
by way of Production Bonus or not. An incidental question will also arise,       D
namely, whether in any case the said amount can be said to be covered by
the latter part of the exception category (ii) of the definition Section 2(b)
being similar allowance payable to the employee in respect of his employment
or the work done in such employment. It was submitted that in any case this
allowance was paid for the extra work by way of incentive. The aforesaid
contention of learned counsel for the appellants will have to be examined in     E
the light of the Production Bonus Scheme in question, which has been the
sheet-anchor of the appellants' case for getting out of the sweep of Section
6 read with Section 2(b) of the Act. The said scheme which is identical in
nature for both the appellants reads as under:
        "Production Bonus is paid for the following reasons:-                    F
         I.   Less than the nonnal number of people doing the nonnal work
              of a working shift, in which case the Production Bonus is paid
              according to the deficiency in the numerical strength of the
              staff.
                                                                                 G
        2.    Extra output given by any workmen in any shift. Output of
              compositors and distributors is measured in tenns of column
              inches of type, that of machine men in tenns of the speed of the
              machines and of the process section in tenns of plates and
              negatives. Allowance is made for delays caused by factors beyond
              the control of the workmen.                                        H
    496                        SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A                    Production Bonus in I y, times the normal daily wage. It may
                  be reduced or increased on account of special reasons at the
                  discretion of the management. It is variable from month to month
                  and is apart from the basic wage of the workmen".

     Now, a mere look at the aforesaid scheme, which is styled as Production
B    Bonus Scheme, shows that so far as the first category of cases envisaged by
    the Scheme is concerned, it contemplates a situation where at a given point
     of time the required number of staff may not be available with the likelihood
    that the production for the day might fall and in order to ensure maintenance
    of the 5ame level of production other workmen available in the given shift
C   may by required to carry on the extra work than what is normally required
    to be done by them. In such cases, an extra amount is contemplated to be
    offered to the remaining employees who are present and who take extra load
    of work which otherwise would have been discharged by their absentee
    colleagues. The category of cases contemplated by the first part of the Scheme
    necessarily indicates that any extra effort undertaken by the workmen
D   discharging extra load of work over and above the usual work expected of
    them normallv is to ensure maintenance of the requisite normal level of
    production. This situation is entirely different from the one wherein more
    than normally expected out-tum of work is being made available by the
    workmen who would get Production Bonus by way of incentive to yield total
E   production beyond its normal level. Consequently, the first category of cases
    contemplated by the Scheme cannot be said to be introducting any Production
    Bonus Scheme in the real sense of the term. It in substance is a scheme of
    insurance against shortfall in normal production per shift due to shortage of
    available staff at a given point of time. While we tum to the second category
    of cases, it is true that it envisages extra payment as an incentive to any
F   workman in any shift who puts in extra output by his own efforts. How the
    extra output for the concerned~vorkman is to be ascertained for being eligible
    for the extra payment by way of an incentive is laid down by this clause. So
    far as compositors arid distributors are concerned, their output will be measured
    in terms of column inches of type, and if their output goes beyond the normal
G   output expected of them under the contract of service, then they would be
    eligible for getting the benefit of the Production Bonus Scheme envisaged by
    category 2. Similarly, for :nachine men to the extent speed of the machines
    handled by them per shift is beyond the normally expected speed of machine
    handled by machine men would show the eligibility of the machine men for
    such extra payment and so far as the workers working in the processing
H   section are concerned, their eligibility for earning extra payment would depend
     THE DAILY PRATAP v. THE REGIONAL P.F. COMMR. [S.B. MAJMUDAR, J.]        497

upon the additional work which they would be said to have put in per shift           A
in terms of the plates and negatives normally to be handled by them. It is,
therefore, obvious that the extra output given by the concerned workmen in
any shift will depend upon the basic norm fixed for the output which will
have to be given by the concerned workmen during the shift and if it is found
that any extra output is put up by them beyond the requisite norms of work-          B
load then only the same would make them eligible to get benefit of the
Production Bonus as envisaged by category 2, It becomes at once clear that
before the situation envisaged by category 2 can be said to have got attracted
in a given case it must be shown that the workmen concerned had put in extra
work in a shift beyond what was normally required by them. Unless that
basic data is available, it would be impossible to work out the extra output         C
put up by him in a given shift on a particular day. It is easy to visualise that
if the workman was paid an amount for the output given by him in a shift
which is up to the norms prescribed for his output it would obviously remain
in the realm of "basic wages". In order that the amount goes beyond the
"basic wage" it has to be shown that the workman concerned had become
eligible to get this extra amount for the work beyond the normal work which          D
he was otherwise required to put in. There is no data available on record to
show what were the norms of work prescribed for these workmen during the
relevant period. It is, therefore, not possible to ascertain whether extra amounts
paid to these workmen were in fact paid for the extra work which had exceeded
the normal output prescribed for the workmen working in any given shift at           E
the relevant time. As the appellants did not furnish such relevant data, the
authorities were justified in holding that the disputed amounts cannot be said
to be forming part of a genuine Production Bonus Scheme. But, even apart
from that, the last part of category 2 of the Scheme makes a very interesting
and curious reading. Even assuming that the workmen concerned had become
eligible under the first part of category 2 of the Scheme to get bonus for the       F
extra output, the amount of Production Bonus which was to be available to
such eligible workmen would be 1Y, times their normal "daily wage". It is
true that it may be reduced or increased on account of special reasons but the
increase or decrease for special reasons by the management would be a
uniform deduction or increase in the amount of Production Bonus available            G
in the said category of cases. It would not depend upon individual cases of
the workmen concerned to serve as a real incentive bonus. Thus the scheme
of Production Bonus envisaged by category 2 of the Scheme in substance has
no nexus or connection with the extra production effort by the workman. In
other words, by way of Production Bonus he will not get any extra amount
in proportion to the extra output put up by him beyond the norms as compared         H
    498                       SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A to his fellow workmen. The working of category 2 of the Scheme can be
  appreciated by taking an example. If there are five compositors working in
  a shift in the appellant's concern on a given day, and if each of the compositors
  has to compose 20 sheets per shift being the normal work expected of a
  compositor, then if they compose only 20 sheets in a shift they cannot be said
B to have earned the eligibility for the Production Bonus as contemplated by
  category 2 of the Scheme. But if out of those five compositors, two are more
  energetic and in a given shift on a day they compose more than 20 sheets and
  if one of them composes 25 sheets and another one composes 28 sheets both
  of them can be said to have put in extra output beyond the normal output by
  five or eight sheets, as the case may be, and still both of them who become
C eligible employees for earning Production Bonus as per category 2 of the
  Scheme will be paid a flat rate of I Yz times their normal daily wage. If the
  normal daily wage of a compositor is Rs. 50 then both of the aforesaid
  compositors will get extra amount of Rs. 75 each even though both of them
  have put in different extra outputs. The compositor who has composed five
  more sheets obviously cannot be treated on par for payment of Production
D Bonus with the other compositor who has put in extra output of eight sheets
  and still both of them will be treated equally for the grant of Production
  Bonus and will get Rs. 75 each whatever the extra output produced by each
  of them. Thus, the payment of Production Bonus as envisaged in category 2
  cases under the scheme is not directly linked up with the amount of extra
E output furnished by the workmen. Consequently, the aforesaid scheme said
  to be granting Production Bonus to the employees is in substance not a
  scheme which is directly linked up with extra production nor it is
  commensurate with the extra production workman-wise or even establishment-
  wise. It only carves out a category of more efficient workmen or more
  enthusiastic workmen for being given a flat rate of extra remuneration for
F discharging their duties more efficiently under the contract of employment.
  It offers in substance an instantaneous superior daily wage scheme for more
   efficient workmen. Consequently the definition of the term "basic wages" as
   found in first part of Section 2(b) will squarely get attracted as 1Yz times of
  normal wages which will be given to workmen under category 2 of the
G Scheme will be excess emoluments earned by them while on duty in
   accordance with the terms of the contract of employment. This amount
   uniformly paid to them having no direct nexus with the amount of the extra
   output put up by them, strictly speaking is not a Production Bonus. Thus
   excepted category (ii) as envisaged by definition Section 2(b) would not be
   available for being invoked by the appellants. We repeatedly asked learned
H counsel for the appellants to enlighten us as to what are the norms prescribed
      THE DAILY PRA TAP v. THE REGIONAL PF. COMMR. [S.B. MAJMUDAR, J.]   499

by the appellants for output of compositors, distributors, machine men and A
those working in process sections with a view to finding out as to how during
the relevant period when the disputed amounts were paid to them they had
over shot the norms prescribed over their daily dues. We also wanted to
know whether all such workmen were to be paid proportionately for the extra
output or a flat rate. His submission was that no such evidence of the norms B
 is available on the record and that the extra output has to be worked out in
terms of the column inches of types, the speed of the machine and the plates
 and negatives manufactured by them as laid down by category 2 of the said
scheme. It is difficult to appreciate how this measure for finding out the extra
output can show that the permissible & fixed norms of output for workmen
were exceeded the workmen at the relevant time in a given shift on the days C
 concerned. He also could not effectively indicate as to how the Production
Bonus at I Y, times the normal daily wage to be given to concerned eligible
 workmen was directly linked up with the extent of the extra output put up by
each of them individually when there is only a flat rate of I Y, times of the
 normal daily wage prescribed for all of such workmen. Shri Ranjit Kumar D
tried to show that Production Bonus of 1Y, times of normal daily wage was
 only a measure or mode of calculation of permissible Production Bonus. It
 is difficult to appreciate this contention. On the contrary, a mere look at
 second part of para 2 of the scheme clearly indicates that a flat rate of
 Production Bonus at I Y, times of normal daily wage will be available to all
 the workmen concerned if they are found to have given extra output beyond E
 the minimum output expected of them per shift on a given day. Consequently,
 on the wordings of the scheme on which· strong reliance was placed by
  learned counsel for the appellants it is impossible to hold that it was a genuine
 Production Bonus scheme linked with extra production given by the workmen
 concerned.
                                                                                 F
      On the aforesaid conclusion of ours, the alternative contention of the
learned counsel for the appellants to the effect that it is an incentive bonus
scheme and can at least be covered by the phrase "any other similar allowance
payable to the employee in respect of his employment or work" as per last
part of excepted category (ii) of the definition clause 2(b) also cannot be of   G
any avail. Reason is obvious. In order to become an incentive allowance, it
has to be shown that those eligible workm_en who had put in extra output as
per para 2 of the scheme would be entitled by way of an incentive to do more
work to get additional amount directly linked up with extra output given by
them. No such linkage is found from clause 2 of the scheme as noted earlier.
All those workmen who have put in extra output and who become eligible           H
    500                        SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A   to get the benefit of clause 2 of the scheme are not to be paid Production
    Bonus commensurate with the extent of the output put up by them. They will
    all be paid equally at 1Yi times the normal daily wage. If that happens the
    person who puts in lesser percentage of extra output by 5% will get the same
    amount as his colleague who puts on 20% of the extra output. Thus, there
B   will be no incentive for him to give such an amount of extra output above
    normal output so as to reach any further extra output limit as compared to his
    colleague who was also given extra output beyond the prescribed norms.
    Consequently there will be no real incentive available to the concerned eligible
    workman who has put in required percentage of extra output, to strive still
    more for reaching higher amount of extra output. He would, on the contrary,
C   rest on his own at the stage having considered the norms even to the slightest
    extent. It is, therefore, not possible to agree with learned counsel for the
    appellants that the scheme concerned, apart from being a Production Bonus
    scheme, is at least an incentive bonus scheme for the concerned employees.
           The nature of the bonus scheme envisaged by exception (ii) to Section
D   2(b) of the Act came up for consideration of this Court in two judgments. We
    may usefully refer to them at this stage. A six member Constitution Bench
    of this Court in Bridge and Roof Co. (India) Ltd. v. Union of India and Ors.
    case (supra) had to consider as to when a scheme of Production Bonus can
    be said to be covered by the term "bonus" as found in the exception (ii) to
    Section 2(b) of the Act. Wanchoo, J., (as he then was), speaking for the six
E   member Bench observed in this connection that the word "bonus" was used
    in the definition section of the Act without any qualification and that the
    legislature had in mind every kind of bonus that may be payable to an
    employee which was prevalent in the industrial field before 1952. It is not
    possible to accept the contention of the respondent that whatever is the price
F   of labour and arises out of contract is necessarily included in the definition
    of"basic wages" and, therefore, Production Bonus which is a kind of incentive
    wage would also be included, in view of the exception of all kinds of bonus
    from the definition ....." .
          It may be noted that incentive Production Bonus Scheme which was on
G the anvil of scrutiny of this Court in the aforesaid decision and which was
    held to get excluded from the sweep of the main definition part of Section
    2(b) of the Act was directly linked up with production. In fact the said
    scheme was linked up with the total output given by the entire body of
    workmen in the concerned employment. The scheme with which the Court
    was concerned in that case envisaged Production Bonus to be given to the
H   entire body of workmen after their total output reached 5,000 tons per year.
      THE DAILY PRAT AP v. THE REGIONAL P.F. COMMR. [S.B. MAJMUDAR, J.]      501
It was a comprehensive scheme enacted for the benefit of the entire class of         A
workmen to offer them incentive to work more and to get more. It was,
therefore, held to be a genuine Production Bonus Scheme. Placing reliance
on an earlier Constitution Bench decision of this court in Mis. Titaghur Paper
Mills Co. Ltd. v. Its Workmen, [1959] Supp. 2 SCR 1012, it was observed
that:
                                                                                     B
       " .... the payment of Production Bonus depends upon production and
       is in addition to wages. In effect, it is an incentive to higher production
       and is in the nature of an incentive wage". The straight piece rate
       plan where payment is made according to each piece produced is the
       simplest of incentive wage plans....."
                                                                                     c
In the light of the aforesaid observations, it was held that the scheme which
fell for consideration of the Court was a Scheme of Production Bonus wherein
beyond a base or standard up to which basic wages or time wages have to
be paid, payments were made for superior performance. This extra payment
could be called an incentive wage and also Production Bonus. The aforesaid
observations of the six member Bench clearly clinch the issue against the D
appellants. In order to become a genuine Production Bonus Scheme payment
to be made to meritorious workmen who put in extra output, has to have a
direct nexus and linkage with the amount of extra output produced by the
eligible workmen so that the scheme can work as a real incentive scheme
equally to them to make extra efforts. Such a scheme may have sliding scales E
of bonus amount based to total extra quantity of production for which all
workmen can uniformly be paid bonus on the basis of their co-operative
efforts. More the extra production more the available surplus of bonus to be
divided amongst all eligible workmen uniformly. Other type of incentive
bonus scheme may be made available to an individual meritorious workman
extra payment for extra work having direct linkage with the extra production F
out-turned by him. In neither case such distributable bonus can be a static
figure as in the present case. On the facts of the present case, as seen earlier,
unfortunately for the appellants the scheme on which they relied does not
fulfil the aforesaid legal logistic for becoming a genuine Production Bonus
scheme. It is not a scheme of sliding scale bonus having real nexus with the G
amount of extra output furnished by the concerned workmen either individually
or collectively. As seen earlier, once they crossed even slightly the norm of
work expected of them in a given shift, they all fall in the same category of
eligible workmen entitled to get on uniform basis extra amount of 1Y, times
the basic daily wage. Thus, this scheme of paying extra remuneration to more
eligible and efficient workmen is a scheme of super wage fixation and is not H
    502                       SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A   a genuine scheme of incentive bonus which has to be earned by the workmen
    by showing their capabilities for earning such extra bonus linked up with the
    quantity of extra production. In the same volume at page 995 it reported the
    case of Jay Engineering Works Ltd. and Ors. v. Union of India and Ors.
    (supra), wherein also Wanchoo, J. spoke for a four member Bench. The
B   scheme under this very Act which came for consideration in that case was a
    composite Production Bonus scheme. It laid down that if a workman gave
    out-turn beyond the minimum quantity fixed for him by way of floor quota
    he became entitled to additional remuneration even though that additional
    remuneration was for that extra out-turn of work which was below the norm
    of out-turn which he was enjoined under the contract of service to fulfil. The
C   very scheme also contemplated extra amount to be paid to the workmen who
    exceeded the norms of output and gave extra output beyond such norms.
    Analysing the said scheme Wanchoo J ., for this court held that to the extent
    to which any more remuneration was paid to the workman who had given
    out-turn more than the quantity of quota output fixed but up to limit of the
    normal output required of him, the extra remuneration part-took the character
D   of extra wage and was covered by the definition of "basic wages" but to the
    extent to which such out-turn went beyond normal requirement of amount
    fixed, then to that extent extra payment for such extra output beyond the
    norms fixed became a Production Bonus scheme. In the case before this
    Court, such extra payment was on a piece rate basis. The workman concerned
E   became entitled to be paid additional remuneration to the extent to which he
    produced goods beyond the norms prescribed for such work. It is easy to
    visualise that once a workman under any scheme of bonus is to be paid on
    piece rate basis for the extra output given by him beyond the norms prescribed
    for such work, the extra amount payable to him will have a direct linkage
    with the extra output furnished by him. More extra output more payment;
F   less extra output less payment. Such a scheme would be a genuine Production
    Bonus scheme. The scheme in question, does not fulfil the criteria laid down
    for a genuine production bonus scheme by either of the judgments of this
    Court in Bridge and Roof Co. (India) Ltd. v. Union of India, case (supra) or
    in Jay Engineering Works Ltd. and Ors. v. The Union of India and Ors., case
G   (supra).

          In this connection, we may now usefully refer to the Constitution Bench
    judgment in Mis. Titaghur Paper Mills Co. Ltd. v. Its Workmen, case (supra),
    wherein an earlier Constitution Bench speaking through Wanchoo, J., had
    occasion to consider the legal connotation of a Production Bonus scheme as
H   distinct from profit bonus scheme. The scheme which fell for consideration
              THE DAILY PRATAP v. THE REGIONAL P.F. COMMR. [S.B. MAJMUDAR, J.]     503
        of the Constitution Bench in the said case was one floated by the company          A
        wherein up to the production 36,000 tons, there was a uniform rate of bonus
        payable by the company for giving appropriate remuneration to the workmen
        for producing that much quantity of goods but the scheme did not provide for
        production bonus for production above 36,000 tons, as there was no agreement
        between the Management and the Union in this respect. The question before          B
        the Industrial Tribunal from whose decision appeal came to this Court was
        whether the workmen were entitled to be given further benefit of production
        incentive scheme if by their joint efforts production of the company went
        beyond 36,000 tons and whether it was necessary to provide for Production
        Bonus beyond this limit. The Tribunal, in that case while giving clearance to
        such a scheme, gave two reasons for increase in the rates of payment of            C
        Production Bonus (i) the intensification of the efforts of the workmen in
    '
        increasing production, and (ii) the progressive going down of the labour cost


    l
    I
        of production per ton as production increased. The rates had to be increased
        progressively with production. Consequently, for each 460 tons increase in
        production the proper rates for payment of Production Bonus would be 1.25,
         1.5, 1.75 and 2 days basic wages respectively for production between 36,000       D
        and 42,000 tons, 42,000 and 48,000 tons, 48,000 and 54,000 tons and 54,000
        and 60,000 tons. It is this additional Production Bonus scheme ordered by the
        Tribunal which was examined by this Court in the said decision. While
        upholding the said modification in the bonus scheme of the company, this
        court held that this was not a profit bonus scheme but was a genuine production    E
        incentive bonus scheme as the Production Bonus to be paid to the workmen
        was directly linked with the extra output furnished by them by their own
        efforts beyond the requisite norms of output. It was held that the scheme
        before them was nothing more or less than Production Bonus scheme on the
        basis of tonnage of production. The aforesaid decision of the Constitution
        Bench wherein Wanchoo, J., spoke for the Bench, was pressed in service by          F
        the same learned Judge speaking for the latter Constitution Bench while
        considering Section 2(b) of this very Act in Bridge and Roof Co. (India) Ltd.
        v. Union of India case, (supra) as seen earlier.

               It, therefore, becomes clear that in order to become a genuine Production   G
        Bonus scheme so as to get covered by exception (ii) to the definition of
        "basic wages" as found under Section 2(b) of the Act, it must be shown that
        the scheme in question seeks to offer production bonus to the workmen
'       concerned who put in extra output wherein either collectively bonus be fixed

~
I
        to all of them on the basis of total extra output on a sliding scale or may be
        paid individually to a given number of workmen who by their own efforts            H


I
    504                         SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A   earn such bonus. Thus in each case payment of bonus cannot be of a fixed
    or proven nature having no nexus with the quantity of extra output produced
    by them. As in the present case the scheme relied on by the appellants does
    not fulfil this legal test it does not attract the exception (ii) to Section 2(b).
    It remains in the realm of basic extra wage. The decision rendered by learned
B   Single Judge of the High Court as confinned by the Division Bench decision,
    cannot, therefore be found fault with. The submission of learned counsel for
    the appellants that in the scheme in question there was no compulsion for the
    workman to put in extra work and the management could not compel him to
    do extra work nor can it allege any misconduct on the part of such workman
    who does not want to do excess work cannot be of any av.ail to the learned
C   counsel for the appellants as even if this criteria may be common to the
    present scheme as well as the genuine Production Bonus scheme, the further
    requirement of the scheme to become a genuine Production Bonus scheme,
    namely, that the payment by way of bonus to the concerned eligible workman
    should vary in proportion to the extra output put up by him beyond the nonn
    of output prescribed for him, is conspicuously absent in the present scheme,
D   as seen earlier, and on the other hand, this requirement which is the very
    heart of a genuine Production Bonus scheme is missing in the present scheme
    and therefore, similarity on only one aspect between the genuine production
    incentive scheme and the present scheme, namely, that the workman could
    not have been compelled to carry out extra work pales into insignificance on
E   the facts of the present case. Therefore, the second question has to be answered
    against the appellants and in favour of the respondent.

          Point No. 3:

          While granting special leave to appeal in this case, by an order dated
    9th May, 1988 this court had stayed the recovery of the amounts of the
F   Employees Provident Fund contribution for the past period, subject to
    furnishing a bank guarantee for payment of that sum. But no stay of recovery
    of future contribution was granted. As the appeals fail, the bank guarantee if
    furnished by the appellants, will be available for being encashed by the
    respondents towards the liability of the appellants for the contributions for
G   the past period which had remained stayed by order of this court.

          In the result, the appeals fail and are dismissed. Interim relief vacated.
    In the facts and circumstances of the case, there will be no order as to costs.

    R.K.S.                                                       Appeals dismissed.