# SUPREME COURT REPORTS (1963) NATIONAL IRON AND STEEL CO. LTD v. THEIR WORKMEN

- **Citation:** [1963] 3 S.C.R. 660
- **Court:** Supreme Court of India
- **Decided:** 1960-08-19
- **Bench:** I". B. Gajendragadkar, K. C. DAs GUPTA, J. R. Mudholkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/supreme-court-reports-1963-national-iron-and-steel-co-ltd-v-their-workmen-2657
- **Pages:** 19

## Headnote

\.
Inrluatrial Diapu~Inctnlivo bonu•-Sch.,•o-Tribunal'•
juri•diction to mrg-Piect-f"ate workmen-Rate.
The appellant runs a steel mill and there arc various
departments in the mill which arc grouped under three
headings. By agreement between the management. and the
workmen different production targets and different incentive
bonus schemes for different departments have been in force
for some time. The respondent No. 2 on behalf of the workmen claimed that incentive bonus scheme at present in force
should be revised so as to cover those catagories of workmen
who arc at present out of it. It was further claimed that the
present targets of production should be refixed and brought
to the 1948 level. On the failure of the parties to come to
a settlement the Government referred the matter to the Industrial Tribunal for adjudication.
.
.
The Tribunal by its award directed the revision of
production targets in certain departments. With regard to
the claim for extension of the scheme to the clerical and Watch
and Ward Staff and the workmen in the shopping department the Tribunal awarded the exlension at certain specified
rates. The claim for revision of the rates of bonus in the
indirect productive department was rejected. Tho Tribunal
also rejected the claim of the workmen that the rate• of
'production bonus to all catagories of workmen should be made
uniform.
The appellants thereupon appealed to this Court by way
of special leave. The main question raised in the appeal was
whether the Tribunal had jurisdiction to refix the production
targets as well as the rates of incentive bonus. A further
question raised .was whether piece-rate workmen are entitled
to incen.tive bonus. The appellants made a grievance of the
fact that their request to appoint assessors for giving opinion
on technical matters was rejected by the Tribunal. They
also alleged that the Tribunal had no adequate data before
it to determine the proper production targets.
\
)
3 S.C.R.
SUPREME COURT REPORTS
661
Hela;, that the Tribunal ought to have borne in mind ·
the fact that for the determination of technical matten it is
alway& desiral:ile to have the assistimce of persons who are
familiar with the subject and it should not deny to itself the
opportunity of obtaining the, appropriate material. While
it is the function of the management whe.ther or not to intro.
duce a scheme of incentive bonus, once such a scheme is
introduced the Industrial Tribunal has jurisdiction to vary
the scheme including the rates of bonus. But the scheme
should not be interfered with lightly. The Tribunal is entitled
to consider whether the scheme is
erroneou~, unrealistic or
unreasonable. Where after consideration or relevant materials
the Tribunal finds the targets are too high it can refix them.
But it should also see that the targets fixed are not too low.
Hela;, also, that piece·rate workmen are entitled to be
paid at a higher rate . for the excen they have produced
beyond a norm. But in fixing the higher rate care should be
taken to avoid glaring disparity between the total earnings of
an average piece-rate worker and of a time-rate workman
working over the same period.
Crvn. APPELLATE JuRISDIOTION: Civil Appeal
No. 208 of 1962.
Appeal by special leave from the award dated
·"
August 19, 1960, of the Third Industrial Tribunal,
West Bengal, in Case No. VIII-119 of 1958.
A. V. Viswanatha Sastri, S. K. Bose and Sardar
Bahadur, for the appellant.
D. N. Mukherjee, for respondent No. I.
.._;
Janardan Sharma and B. P. Mahe.ahwari, for
respondent No. 2.
· 1962. August 21. The following Judgment
of the Court was delivered by.
MuDHOLKAR, J.-The substantial question
, which falls for decision in this appeal by special
-, leave a~ainst an award made by the Third Industrial Tribunal. West Bengal, centres round the
1912
Nalional Iron and
Steel C1. Lit/.
v.
The,ir w,,kme •
Mudholkar J.
196B
National Iron and
Steel Co Ltd •
..
Tf.eir IVorkmen
M udholkar J.
662
SUPREME COURT OOPORTS (1963]
question of prod

## Text

1962
;
660
SUPREME COURT REPORTS (1963)
NATIONAL IRON AND STEEL CO. LTD.
v.
THEIR WORKMEN
(I". B. GAJENDRAGADKAR, K. C. DAs GUPTA and
.
J. R. MUDHOLKAR, JJ.)
\.
Inrluatrial Diapu~Inctnlivo bonu•-Sch.,•o-Tribunal'•
juri•diction to mrg-Piect-f"ate workmen-Rate.
The appellant runs a steel mill and there arc various
departments in the mill which arc grouped under three
headings. By agreement between the management. and the
workmen different production targets and different incentive
bonus schemes for different departments have been in force
for some time. The respondent No. 2 on behalf of the workmen claimed that incentive bonus scheme at present in force
should be revised so as to cover those catagories of workmen
who arc at present out of it. It was further claimed that the
present targets of production should be refixed and brought
to the 1948 level. On the failure of the parties to come to
a settlement the Government referred the matter to the Industrial Tribunal for adjudication.
.
.
The Tribunal by its award directed the revision of
production targets in certain departments. With regard to
the claim for extension of the scheme to the clerical and Watch
and Ward Staff and the workmen in the shopping department the Tribunal awarded the exlension at certain specified
rates. The claim for revision of the rates of bonus in the
indirect productive department was rejected. Tho Tribunal
also rejected the claim of the workmen that the rate• of
'production bonus to all catagories of workmen should be made
uniform.
The appellants thereupon appealed to this Court by way
of special leave. The main question raised in the appeal was
whether the Tribunal had jurisdiction to refix the production
targets as well as the rates of incentive bonus. A further
question raised .was whether piece-rate workmen are entitled
to incen.tive bonus. The appellants made a grievance of the
fact that their request to appoint assessors for giving opinion
on technical matters was rejected by the Tribunal. They
also alleged that the Tribunal had no adequate data before
it to determine the proper production targets.
\
)
3 S.C.R.
SUPREME COURT REPORTS
661
Hela;, that the Tribunal ought to have borne in mind ·
the fact that for the determination of technical matten it is
alway& desiral:ile to have the assistimce of persons who are
familiar with the subject and it should not deny to itself the
opportunity of obtaining the, appropriate material. While
it is the function of the management whe.ther or not to intro.
duce a scheme of incentive bonus, once such a scheme is
introduced the Industrial Tribunal has jurisdiction to vary
the scheme including the rates of bonus. But the scheme
should not be interfered with lightly. The Tribunal is entitled
to consider whether the scheme is
erroneou~, unrealistic or
unreasonable. Where after consideration or relevant materials
the Tribunal finds the targets are too high it can refix them.
But it should also see that the targets fixed are not too low.
Hela;, also, that piece·rate workmen are entitled to be
paid at a higher rate . for the excen they have produced
beyond a norm. But in fixing the higher rate care should be
taken to avoid glaring disparity between the total earnings of
an average piece-rate worker and of a time-rate workman
working over the same period.
Crvn. APPELLATE JuRISDIOTION: Civil Appeal
No. 208 of 1962.
Appeal by special leave from the award dated
·"
August 19, 1960, of the Third Industrial Tribunal,
West Bengal, in Case No. VIII-119 of 1958.
A. V. Viswanatha Sastri, S. K. Bose and Sardar
Bahadur, for the appellant.
D. N. Mukherjee, for respondent No. I.
.._;
Janardan Sharma and B. P. Mahe.ahwari, for
respondent No. 2.
· 1962. August 21. The following Judgment
of the Court was delivered by.
MuDHOLKAR, J.-The substantial question
, which falls for decision in this appeal by special
-, leave a~ainst an award made by the Third Industrial Tribunal. West Bengal, centres round the
1912
Nalional Iron and
Steel C1. Lit/.
v.
The,ir w,,kme •
Mudholkar J.
196B
National Iron and
Steel Co Ltd •
..
Tf.eir IVorkmen
M udholkar J.
662
SUPREME COURT OOPORTS (1963]
question of production bonus. The appel11tnt company Tuns a steel mill at Belur. There a.re various
departments in the mill which have been grouped
under three headings: direct productive departments, indirect productive · departments and nonproductive departments. In the last mentioned
group come the general office, accounts department,
establishment department, time
office, stores,
shipping deμartment, drawing and design departm·
ent, laboratory, progress and planning department,
civil· construction department, watch and ward
department, medical department and
welfare
department. The first group consists 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 the following d11part-
\
m~~
=
~
1. Refractory attached to the electric
furnaces
2.
Mill G\lneral, attached to the rolling
mills
3. Roll turning, attached to the rollin~
mills
\../
4.
Yard Mazdoors, attached to the rolling
mills and
Ii. Civil maintenance department, electri0
maintenance department and mechanical maintenance department.
It is
common ground that each productive
~·
department has an intlividual tar~et for the puqiose
._ -
)
--.
3 S.C.R.
SUPREME COURT REPORTS
663of 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
Dece'Jlber, 1956, in the steel foundry and (c) in
January, 1959, in the bolt and nut workshop.
According to the appellant the t:i.rgets were revised
from time to time in consultatiion and with the
concurrence of the representatives of the workmen
of the depar.tment concerned as and when occasion
arose for doing so in consequence of the adoption
of better methods of production, new techniques,
additio11 of plant and machinery etc.
The workmen in three indirect productive depn.rtments. namely, refractory attached to the electric
furnace, 'mill general' attached to the rolling mills
and roll turning attached t,o the rolling mills are
paid production bonus at the rate of 75% of the
average rate of production bonus earned by the'
respJctivA direct productive department to which
these three indirect -productive departments are
attached.
The Yard Mazdoors attached to the rolling mills
are paid on the basis of an arbitration award which
is subsisting between the workmen and the
company.
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.
In the steel foundry department, the target was
2i) pounds per man per dav until the end of 1956.
Towards the end of 1956 tbe Appellant had direct
nrigotiations with the workers' represenhtives of
~he department, and in view of the a~ditions to the
J9ill
Nattonol /rqn and -
Steel Co. LU. -
..
Their Workmen
Mudb-.,/karJ.
-
1962
National Iron and
.S1a1 .. o •. L•i.
.
v.
f"h•ir Workmen
M udholkar J.
-
664
SUPREME COURT REPORTS [1963]
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 tile said department, it w&s 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. 4.5 lakhs worth of electric
cranes were also subsequently installed .. T)iey are
working for this department and the electric
furnace department. Since December, l!J56 there
have been further additions of machinery etc .• to the
extent of about Rs. 3 lakhs in this department
alone.
·
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 targets in the
steel foundry department form 20 to 25 pounds.
According to the appellant company, different
schemes for payment of incentive bonus have been
adopted in the different departments because incentive bonus is directly linked up with production tar·
gets. These ta~gets, according to the appellant, have
been fixed by direct negotiations with the workman's representatives in the respective departments
as for instance the increase of the targets in the
steel foundry from 20 pounds to 25 pounds per head
per day at the end of the year 1956. The respondent No, 1 which is the other union did not make
any protest in this matter and indeed even in the
proceedings before the Tribunal it did not join
hands with the second respondent.
The Governme.nt of West
Beniral, having
come to the conclusion that an industrial dispute
had arisen between the appellant ·and its workmen
3 S.d.R.
SUPREME COURT REPORTS
~1
with respect to the payment of incentive bonus,
is12
referred it for adjudication to the Third Ind~strial
~ Narion.l Iron and
Tribunftl under s. 10 of the Industrial Disputes Act,
Steel co. Ltd
1947. Both the unions filed their written statemets
"·
Their Workmtn
before the Tribunal. Subsequently disputes on the
,....___
same question with three associate companies were
Mudholkar J.
also referred for adjudication to the same Tribunal.
We are, however, not concerned with the disputes
other than the one in which tbe appellant, the
National Iron & Steel Co. Ltd., is concerned.
_,
The substance ofthe claims made on behalf
. -.
)
of the worktnen by the 'respondent No. 2 may be
briefly summarised thus:
The incentive bonus scheme at present in
force should be revised so as to cover those categories of workmen who are at
present out of it
and to remove all anomalies in the existing scheme
as weII·as to remove such differences as are found
to exist. It is further claimed that the present
targets of production should be refixed and brought
to the 1948 level.
The first respondent did riot attack the target.3
on the standard
of performance or production
existing in the different departments of National
Iron & Steel Co. Ltd. The main thing it wan ts is
that
the scheme of incentive bonus should be
extended to all productive departments at the same
rate withoutt making any distinction between alleged direct productive workmen and alleged indirect
productive workmen.
' ._,,
lt wants .that workmen in the indirect productive departments should be paid incentive bonus
at the same rate at which workmen of the productive department to which the particular indirect
productive department is attached are paid. It
also wants that a workman employed in the maintenance department, civil .maintenanc.e department
\
J96S --
NaUonal Iron out
sr,.1 Co. Lti,
v.
Their Workmen
Mudholkar J.
666
SUPREME COURT REPORTS [i963j
and siding maintenance department of the appe"
Hant should be paid one half of the total rate
arrived at by adding the rates at which all the
productive departments of the appellant as also
the workmen of the associate companies are paid.
As regards the workmen employed in the non-productive departments it wants them to be paid bonus
at one-fourth of the total rate arri'l'ed at by adding
the rates at which the workmen in the productive
departments are paid. It wants also that four
employees in the shipping department should be
paid at the rate at which the workmen of the
rolling mills department are paid and the three
chemists in the laboratory should be paid the same
·rate as workmen in electric furance department.
Finally it
wants
incentive
bonus to
be
assessed on the basis
of basic
wages
and
dearness allowance earned by the workmen and
also on the basis of the total earnings including the
earnings for the days described .as non-productive
days.
.
We may mention here that the appellant has
·denied that there were any anomalies in respect of
the incentive sch1imes in the various departments.
The stand that it takes is that the introduction of
such schemes being entirely the function · of the
management the company is under no legal or moral
obligation to extend it to all categories of workmen.
The claim of the respondent No. 1 for the revision
of targets and removal of anomalies and differences
in the existing bonuses is thus said to be wholly
unfounded. The appellant has further justified the
classification of departments into direct productive,
indirect productive and non-productive . on the
ground that it is in conformity with the existing
practice in the industry. The employees in the productive departments are paid incentive bonus at the
..,.,
full rate which is normally payable for them for the
-
r
.'
a s.o.h.
SUPREME COURT REPORTS
667
work they do and that there is no practice of employing direct produc.tive workers in the indirect
productive departments and that the workmen employed in ~he maintence department are paid at 75%
of the average bonus. Production bonus, according
to it, is paid to such workmen as are directly engaged in production work and maintenance and that
non-productive workmen are not covered by the
existing scheme. It also disputes the claim made
by the first respondent on behalf of four clerks in
the shipping department and the three chemists in
the Ja.~oratory.
After the statements were filed by all the
parties i~ was urged on behalf of the appellant that
issues should be framed. But the Tribunal did not
accede to the request. Ultimately. by an order
made by it, the Tribunal said that it would adjudi·
cate only on those points which were raised in sub·
paragraphs "l, 2(b) and (c) of paragraph 18 of the
written statement filed by the NISCO Karmachari
Sangha (respondent No. I) and also on the points
raised in the prayer portion in paragraph 25 of the
written statement of Belur Iron & Steel Workers'
Union (respondent No. 2)".
The Tribunal first considered the question of
the revision of tragets. According to it the target
in the steel foundry department which was raised in
~ December, 1956 from 20 lbs. to 25 lbs. should be
reduced to 23 lbs. In regard to the electric furnace
department, rolling mills, bolt and nut shop and
maohine shop the Tribunal held that the target
should be 50% of the productive capacity or effici·
ency of the workmen of the department. It negativ·
ed the ola.im of the workmen for removal of the
\
' alleged anomalies in ·the existing bonus scheme,
WN1 regard to the workmen's claim for the exten•
1061
Notion•l. Iron anll
8 teil Co. Ltd.
v.
Their Workmtn
Mudhollur J.
1962
N·ltiona! . .lrori aryd
Stl"f'i Co. Ltd.
v.
The·, Workman
lltudho_lkar J •
. '
668
SUPREME COURT REPORTS [rn63j
sion of the scheme to the clerical and watch and
. ward staff the Tribunal held as follows:
"This incentive production bonus shall be paid
to workmen of the non-productive depart•
ments at ~he rate of 12-1 /2% of the total rate
to be arrived at by adding the rates at which
all the productive departments may be paid.
This rate is allowed in considera.tion of the
fact that the workmen of the non-productive
departments are not directly connected with production bht only remotely.
The calculation of this bonus will be made
with reference to basic pay only excluding
D.A."
The Taibunal further held that this would also apply
to the four workmen in the shipping department and
three chemists in the laboratory, In so far as the
workmen employed "in . the indirect productive
department were concerned the Tribunal held that
there was no case for making any change because
the present rate of 75% of the bonus pa,id to the
workmen of the productive departments was fair
and reasonable. The Tribunal rejected the claim of
the workmen that rates of production bonus to all
categories of workmen whether employed in direct
productive or indirect produqtive dep:i.rtments have
to be uniform.
One of the points urged on behalf of the
appellant before the Tribunal and taken in the
statement of the case is that the introduction of
incentive bonus, fixation of targets and .fixation of
production hours is a function of the management
and the Tribunal has no right to interfere. It has
been held by this Court in Titaghur Paper Mills Go.
Ltd. v. Its Workmen (1) that while it is the function
·-
\
of the managemtmt whether or not to introduce . a. Y
scheme of incentive bonus, once such a scheme is • //
(I) [1959] Supp. 2 s.c.R. l 012.
!
3 S.C.R .. :suPREME COURT REPORTS
669
~ 't introduced the right to claim such bonus become~ a
condition of service of workmen and, therefore, the
Industri11 Tribunal has jurisdiction to vary the
scheme enforced by the employer including the rates
of bonus.
This Co:urt has pointed out in that case
that the payment of incentive bonus is payment
of further emoluments to the workmen depending
not upon extra profits but upon extra production,
as an incentive to them to put in more than
the standard
performance.
Where, therefore,
the . management has introduced a scheme for·
the grant of such bonus it is open to the Tribunal
to vary the terms of the scheme if tho circumstan.
ces of the case justify its d9ing so. In view of the
decision in that case Mr. Vishwanatha Sastri fail'ly
conceded that the tribunal .had jurisdiction to refix
the targets as well as to refix the rates of the incentive bonus provided it found that the targets were
too high or the rates wholly incommensurate to the
additional performance put in by the workmen.
·His main grievance on this score, however, was
that the Tribunal had no material before it for
-
reducing the targets in the steel foundry depart·
ment from 25 lbs. per capita per day to 23 lbs. He
further contended that the view of the Tribunal
that the targets for the other direct productive
depa.rtmcnts should be 50% of the capacity of the
unit or· the efficiency of workmen would lead to
startling results. He also drew our attention to an
.< application made by the appellant during the ·course
of the proceedings before the Tribunal for the
appointment of aswssors for the purpose of giving
opinion on various technical matters which have to
be borne in mind for the preparation of a scheme
for incentive bonus payable to workmen engaged in
different departments of the appellant.· No order
-~as passed on this application by the Tribμnal even
though on. being reminded of its omission to do so
the Tribunal promised to make an order later. So
here we are faced with a situation where t4erc;i
.!if
••
'
. .
1962
N ationa/ Iron an {
Steel Co. L11:
v.
Their ltVmk;nen"
.1Judho/kar J.
•
1901
National /rQn <Jnd
Sllel Co. Ltd,
v.
!l'IIeW Werkmen
670
SUPREME COURT REFOR'fS [1963]
I
is no adequate data for judging what would be
reasanable and proper targets from the point of
view of both the employeres and the employees and
what would be the reasonable. rates of incentive
bonus. The Tribunal would have_ done well to bear
in mind the fact that for the determination of
technical m>.1tters'it is always desirable to have the
assistance of persons who are familiar with the
subject. No doubt the ultimate decision would
rest with Tribunal but since the decision has to be
liased on proper material it should not have denied
to itself the opportunity of obtaining the appropriate material. On this one ground alone the award
of the Tribunal with respect to the fixation of
targets and the rates of incentive bonus in the various departments will have to be quashed.
For revising the target of 25 lbs. per capita
per day in the steel foundry department the Tribu·
nal had hardly any material before it. 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. The Tribunal
would do well to remember that though it has
power to vary an existing scheme and, therefore,
also the targets provided therein, it canno~ do so
lightly. Primarily it is the function of the management to fix and ordinarily even to revise the targets. No doubt, in exercise of this function the
,__
management must consult the workmen concerned.
But where all that has been done and the revised
targets are the result of agreement between the
management and the workmen there must be good
reasons for revising the targets.
What the Tribunal has done with respect to ,,.
the targets in the other productive department is
still more unjustified. As already stated it has fixed
•
t4e targets in these departments at 50% of the total
.
.
' (
3 S.C.R.
SUPREME COURT REPORTS
671
productive capacity per month in these mills or
50% of the effi.ceinoy of the workmen employed. It
has directed that incentive bonus should be calculated at the present· rate on the quantum of production in excess of those revised targets. On the
face of it, it would appear to have fixed the targets
at very low levels and the . result of doing this
would be that half or more than half of the total
earnings of a workman would come to him by way
of incentive bonus without the production going
up. Its scheme, rather than proving as an incentive to production, would virtually be a disincentive.
Speaking about premium systems Florence
Peterson in her "Survey of Labour Economices",
revised edition, has observed at p. 329 :
"No matter what name they go by, all
premium· systems have one distinct characteristic, namely, a guaranteed rate with premium payments for production beyond an
established standard. The standard may be
in terms of units of output or units of time,
that is, minutes or hours ....
The essential distinction in the various
incentive systems have to do with (I) the
point or level of production
at which
premiums begin, and (2) ~he formula used for
determining premium rates.
In all premium systems the crucial factor
is where the 'task' or 'standard' is set. The
policy adopted can tend towards either of two
directions, namely, a strict standard which is
difficult to accomplish, with high premiums for
better than standard, or a lenient standard
with relatively small permiums. If a very
strict standard is set which can be exceeded
19(11
Nalional Iron and
Sf11l Co. Lid.
"'
TA1ir Workmen
< Mudho/kar J.
1962
National Iron and
Steel Co; Lid.
y,
lh1ir Workmen
.A1udholkar .J.
672
SUPREME COURT REPORTS [1963]
only through the best efforts of the most competent wor·kers, the guaranteed rate tends to
become the actual earnings rate for most of
the workers.
If, on the other hand, ll, relatively easy standard is fixed, the, major portion of the total earnings of most employees
on the job will consist of premium wages .
...
The second fundamental distinction in
incentive plans has to do with the formula for
the division of gains when above-standard
production is .attained, regardless of whether
or not the established standard is high or
low ....
Increasing the ratio of returns to the
worker is obviously done for the purpose of
encouraging ever higher production. Plans
providing for a decreasing ratio of returns, or
a declining wage curve, are based upon the
principle that increased output not only is a
result of the workers efforts but is also due to
improvement in working conditions for which
management is responsible, and that management should therefore 'share' in the gains .... "
Bearing in mind these observations and the
fact that ordinarily the rate of incentive bonus is
correlated to the target it would follow that if the
target originally fixed by the employee is very
high then the existing incentive bonus payable
may well be regarded as having been fixed high.
Whether
that
is
in fact so or not would,
however, be a question' to be decided by the·
Tribunal. In this
case the Tribunal without
considering this point has directed that · incentive bonus should be paid to the workmen in the
qepart~eqt coqcer.qed at the existin~ rates eye.q
•
..
~
'r
t
3 S.C.R,
SUPREME COURT REPORTS
673
though the targets have been halved. That direction is not proper. On behalf of the workmen
Mr, Sharma alleged that the exis_ting targets are .
fixed so high that for earning· incen-L:ve bonus the
workmen have to sweet.
This
contention also
needs to be examined by .. th·e .~ Tdbunal. -Now,
since the scheme of incentive bonus already prevails in most of the departments of the company
the Tribunal will have the jurisdiction to consider ·
whether the existing scheme is onerous, unrealistic, ·
unreasonable or otherwise.
We would, however,
reiterate that the scheme should not be interfered
·with by the· Tribunal unless it comes to the definite
conclusion that the targets fixed are so high that an
average working with ordinary efficiency can earn·
only the daily wage but nothing more. It would
render the task of the Tribunal easy if it tries to
elicit the requisite information from assessors as well
as from others conversant with the operations in each
department. Where, after considering the relevant
.material the Tribunal finds that targets are too
high or not reasonably attainable, it will undoubtedly be within its competence to refix them. But
while refixing them it should take care to see that
the targets are not so low that the major portion of
the total earnings of most employees will comiist of
incentive bonus. Thus in revising the scheme
prepared by the management the Tribunal has on
the one hand to guard the interest of the workmen
and prevent what may fairly be called sweating
and on the other it has to see to it that the revised
targets do not encourage laziness or reduce production to low or uneconomic levels. The Tribunal
should further bear in mind that where the targets
have been agreed to between the employer and the
employees and even though a scheme of incentive
bonus has been in operation for some time and the
workmen have had exprience of it no complaint
has been made by them that the scheme is onerous.
This would be a relevant circumstance to be taken
t •
,
,
.
' .
~
196! .
. . ~
,,,
'Ndtion~l J.r~n.tllld·:,,
Stet! Co. Ltd!:i .'. .
v •...
Their Wo1kmm .. ,
Mudholka~ '.h .. ,
1111
/l ~~lmml ltOJI a,id
'~~Ca.Ltd.
'
..
Theil Werkmca
I M.Ull"°''jk.; J.
674
SUPREME COURT REPORTS (1963]
into consideration when a demand is made long
after the scheme has been in force for revision of
targets.
Again it must bear in mind the effect on
production aseribable to improved techniques or
to the installation of improved machinery. Here
the Tribunal has adverted to none of the matters.
To put it mildly, the manner in which the Tribunal
has dealt with the question is wholly unsatisfac.
tory.
We do not underestimate the difficulty presen·
ted by the question of fixing of targets. Perhaps .
the Tribunal's task in this regard would be rendered
less difficult if,, for instance, it can obtain material from which it could ascertain what the average
production in each department was before the
introduction of the original scheme and before
improved techniques ware introduced and better
machinery installed. In the light of the material
. before it, the Tribunal should consider whether the
old production could safely be accepted as the
targets, We realise that here it is the appellant's
case that the adoption of better techniques and
installation of new machinery has made it possible
for the workmen to produce more in the same time.
This (lOntiintion of the appellant needs to be exami
ned. Here again, expert opinion will be valuable.
If the Tribunal finds that the increase in production
is solely ascribable to the innovations made and the
workload of the workmen has not been increased,
there would be a case for the upward revision of the
old targets correspondingly. A complication will
undoubtedly arise where the workload of workmen
has increased. When such is th., case the Tribunal
will have to bear in mind the fact that workmen
are after all human beings and not machines, that
they are apt to feel tired if they have to work at a
a higher tempo than in the past, that performing
mechanical operations over a long period produces
not only boredom but also a great strain on the
' '
3S.C.R.
SUPREME COURT REPORTS
675
muscular powers of workmen with the result that it
produced inore fatigu, physical as well as psycho·
logical. In such a case the revised target must,
therefore, be reasoriably below the level at which
results of these kinds are apt to ensue. What we have
said is not exhaustive of the factors to be borne in
mind and it would be open to the Tribunal to bear
in mind such other factors as would be relevant in
this connection.
The next question which has to be co:1sidered is
the extension of the scheme for payment of incentive
bonus to the clerical and watch and ward staff. In
Burn &: Oo., Ltd. v. Their workmen (1) this Court
1
held that 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 <:an, therefore, be no reason for
excluding them wholly from the benefits of a scheme
of incentive bonus. It was urged before this Court
on the authority of decision in Titagkur Paper
Mills case (2) that the introduction of incentive
bonus is the function of the management and the .
Tribunal should not impose a scheme for payment
of such bonus on the management. Dealing with
this contention this Court observed :
"In the present case, however, the incen·
tive bonus scheme has already been introduced
by the company for the major part of its
workmen and all that is now asked for is that
the benefit of the scheme should be extended
to the remainder of the workmen."
Mr. Viswanatha Sastri has not challenged the
correctness of the view taken by this Court in Burn
&J Oo' s case. (1). His main grievance with regard to
, -.,,
the direction in the award extending incentive
bonus scheme
to clerical and · watch and
(I) (1960) 3 s.c.R. 323, 426.
(2) ('959) Supp. 2 S.C.R. 1012:
,.
--·
N atianal b tn aml
Sterl Co. Ltd.
v.
Tlleir W 9rkmtn
Mufhafkar l~
1962
Nationbl J;o;; a,;d
St.~tl_CQ. Ltd.
I
~.
1jh1ir Wo~'·.r:ne~.
I-"'.""'."
Af":'dhol~~r J,
676
SOPREME COURT REPORTS (1963)
ward depariments is that if implemented it would
entitle these workmen to get in effect !00%
bonus or perhaps even more. There are, as already
stated, five productive departments and five indireot productive departments.
Now, if we take
100 as the rate in each productive department the
rate for the five indirect productive departments
would be 7 5 and the total for all the departments
would come to 875 and 12-1/2% of that would come
to nearly I IO ! It is posssble, as Mr. Sharma suggests
that this is not what the Tribunal intended to do
and that what it intended was to take the average
rate for all the productive and indirect productive
departments and give 12 of the average rate as
bonus to the workmen of the non-productive departments. It may be that that was the intention of
the Tribuna,J but the way in which it has expressed
itself leads to the absurd result that the workmen
employed in the non-productive departments will
actually get more incentive bonus than workmen
emyloyed in the productive departments :
Before, however, coming to the conclusion that
the scheme of incentive bonus should be extended
to these workmen the Tribunal would do well to
ascertain whether a case has been made out by
them for grant of incentive bonus. Indeed one of
the grounds which persuaded this Court in Burn &
Co's case (1) to extend the scheme of incentive
bonus to the clerical staff was that there was
increase in their work in consequence of rise in
· production. The Tribunal would do well to ascertain
whether in view of the increased production there
has been a rise in the workload, if we may use
that expression,
with regard to non ·pndtictive
workmen.
If it finds that the workload
has
increased they could be held entitled to incentive
bonus.
(1) (1960) 3 S.C.R. 423, 42f).
-·
3 s.c.:R.
SUPREME COURT REPORTS
677
We may further point qut that in Burn & Go's
case (1~ the Tribunal did not proceed to Jay down
the ·rate of incentive bonus to th~ clerical and
subordinate staff but merely directed the company
to extend the scheme to them and ·Jay dr>wn the
rates and conditions for those classes of workmen
to be entitled to get the incentive bonus. This Court
has impliedly approved this direction. Indeed,
bearing in mind the principle that initially the whole
question of incentive bonus involving the fixation
of targets, prrscribing rates and laying down other
conditions is the function of the man3.gement, we
have no doubt that the course taken by the Tribunal in Burn & Co's case C) was the proper one.
One more question remains to be considered and
that is the contenation of Mr. Viswanatha Sastri
that no question arises for payment of incentive
. bonus to piece-rate workmen. B;is argument is that
if a piece-rat3 workman produces more he earns
monJ and,· therefore, there is nothing more that he
is entitled to. We do riot agree. Even with regard
to piece-rate workmen _there is a norm andlif a
piece-rate workman produces
anything beyond
that norm he should be entitl,ed to be paid for the
e-xcess at a higher rate. That is what is being <;lone
in Enghnd and other industrialised countries like
the United States and there appears to be no reason
why it should not be required to- be done in our
country. Wha.t the enhanced rate should be would
necnssarily be· a
matter to be determined· with
the assistance of assessors as well as of the com·
pany and the workmen. We would, however,
admininister a caution. Th,_ .result of prescribing a
. higher rate for production above the norm should
not lead to a glaring disparity between the total
actual earnings of an average piece-rate workman
and of a time-rate workman working over the same
period of time. For, a wide disp~rity may lead to
(I) ( 1960) 3 S.C.R. 423, 426.
1962
-~
·hNationa/.lron ·th
St•el Oo •. Ltd
...
·Thiir· :Workmen
.Mudholk.a J.
1962 --
1'·aliOnal lion dJ
' SIL_n Co.Lid •
••
Th4ir Workmm
' Mudhcliar J.
1982
6,8
SUPREME COURT REPORTS'[1963j
discontent, which is
something which must be
avoided in the interest of the industry as well as
the workmen.
For the reasons stated above we quash the
award ill so far as it relates to the fixation of
targets in the various departments of the appellent,
fixation of rate of incentive bonus for time-rate
workmen as well as piece·mte workmen and
extension of the scheme to non-productive departments and remand 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 our observations. The rest of the award is
affirmed.
There will be no order as to costs in this appeal.
Appeal allowed case nmanded in part.
NARAIN SINGH
v.
STATE OF PUNJAI:
(JAFAR IMAM, J.C. S:Q:AH and J,R. MUDHOl.1Ll.R, JJ.)
Criminal Trial-Murder-Prosecution evidence discardea-Convictwn on statement of accusea....:.statement pertly
exculpatory and partly inculpatory-lf must. be used as a
whole-,--Code of Criminal Procedure, 1898(Act V of 1898),
•• 342.
The appellant and three others were charged with
the murder of B. The prosecution case was that there
was a dispute between B and the accused over diverting
the flow of water in the fields, that the appellant armed
with a stick and the others with spear, kaholi and salang
assaulted B and B died of the injuries infliced. In his state·
ment under s. 342 Code of Criminal Procedure the appelant stated that B had thrown him on the i:round and had -
"'""-.