Case Note & Summary
The dispute arose before the National Industrial Tribunal, Bombay, upon a reference asking whether the workmen of cement producers were entitled to a share in the incentive payment allowed by the Government to cement producers under the Cement Control Order, 1961. The order, made under Section 18(g) of the Industries (Development and Regulation) Act, 1951, required producers to sell their entire cement output to the State Trading Corporation at controlled prices. To encourage higher production, the order was amended in 1963 by inserting Paragraph (B) in the Schedule, allowing producers to charge an extra amount per tonne for cement produced and sold in excess of specified quantities. The workmen of fourteen cement companies claimed that this extra amount was earned due to their extra effort and sought a share, with varying percentages demanded. Five companies had received no incentive payment and their claims were dismissed; three companies settled with their workers, leaving six companies' cases to be adjudicated. The Industrial Tribunal, by award dated January 11, 1967, held that the companies and their workmen were entitled to share the incentive payment on a fifty-fifty basis. The cement producers appealed by special leave to the Supreme Court. The Supreme Court examined the nature of the extra payment under the Cement Control Order and the principles of industrial law. It held that there was nothing in law preventing a buyer and seller from agreeing to pay a higher rate for quantities beyond a threshold, and the total amount received by the seller was price, even if termed incentive payment. Therefore, the workmen could not claim a share in the extra payment de hors the question of profit. The Court reiterated that under industrial law, workers cannot claim a share in price realisation as of right. The Cement Control Order, while offering inducement to producers, did not convert the extra amount into an incentive bonus for workmen. The Court further stated that the Industrial Tribunal could only award what the law allows, and in the absence of legislation or a scheme for incentive payment introduced by the management, the workmen's claim had to be negatived. The Court distinguished the cited precedents, which dealt with bonus payable out of profits, and held that the extra amount was not profit but part of the price fixed by the Government. Accordingly, the Supreme Court allowed the appeal, set aside the Tribunal's award, and rejected the workmen's demand for a share in the incentive payment.
Headnote
A) Industrial Dispute - Incentive Payment - Workers' Claim for Share in Extra Price - Cement Control Order, 1961, Paragraph (B) of Schedule - The extra amount payable under Paragraph (B) for cement produced in excess of specified quantity was part of the price paid by the State Trading Corporation, not an incentive bonus in which workmen could share - The Court held that despite the description as incentive payment, the total amount received by the producer was price, and workers could not claim a share de hors profit - Held that the workers' demand was not maintainable. B) Industrial Law - Wages and Bonus - De hors Profit Claim - Industries (Development and Regulation) Act, 1951, Sections 18(g), 3(1), 2 - Workmen claimed a share in the extra payment on the ground that they contributed to excess production, but the Court ruled that under established industrial law, workers cannot lay claim to price realisation or extra payment unless it forms part of profit or is provided by a scheme - The Tribunal's reliance on cooperation of workmen was rejected as not a legal basis for automatic entitlement - Held that the Industrial Tribunal cannot award beyond what the law allows. C) Industrial Tribunal - Powers and Limitations - Award of Incentive Bonus - Cement Control Order, 1961, Clause 3, Clause 6 - In the absence of legislation or a management-introduced incentive scheme, the Tribunal had no authority to treat the extra amount as incentive bonus and divide it between employer and workmen - The Court held that the Cement Control Order did not entitle the Tribunal to treat the extra payment as shareable incentive bonus, and the workmen's claim was negatived - Held that the appeal was allowed and the Tribunal's fifty-fifty sharing award was set aside.
Issue of Consideration
Whether the demand of the workmen for a share in the incentive payment allowed by Government to cement producers under the Cement Control Order, 1961 is justified, and if so, the basis and quantum payable for the year 1963 and subsequent years
Final Decision
Supreme Court allowed the appeal, set aside the Industrial Tribunal's award of fifty-fifty sharing, and held that the workmen were not entitled to any share in the extra amount paid under paragraph (B) of the Cement Control Order, 1961, as it constituted price and not incentive bonus; the claim was rejected.
Law Points
- Extra amount paid for excess production is part of price
- not incentive bonus
- workers cannot claim share in price realisation de hors profit
- industrial tribunal can only award what law allows
- in absence of legislation or scheme for incentive payment by management
- workers' claim fails
- incentive payment under Cement Control Order is not a shareable surplus
