BRIDGE & ROOF CO.· (INDIA) LTD. versus UNION OF INDIA

978 SOPREME COURT REPORTS [1963] •

where these preparations are manufactured, though · it appears that the petitioners in. the present case are mostly from Calcutta and the maimfacture in these case~ must be going on Calcutta.

.4J1Jak•hs A-fathur Ba.bu' s Sakti Ousha.dhal •Y rJ Due. ( P) Lid • . v. Union of India W•ncllooJ • . -

We therefore allow the petitions and direct that these three medicinal preparations should not . be taxed under. the various Excise Acts in force in various States and can only be taxed in accordance with the provisions of the Medicinal and Toilet. preparations (Excise Duties) Act. \Ve pass no order as. to the .claim for . refund for that is matter which the ·petitioners can take up with the State . Governments concerned according to law. ·The petitioners will get their costs from the respon· dents-one set of hearing fee: .

· Petitions allowed.

BRIDGE & ROOF CO.· (INDIA) LTD.

Stpkmbtr JJ.

UNION.· OF INDIA

(B. P. i'rNHA, C. J., fl. J. IMAM, K. SunnA _RAo, ! K. N. WANCHOO, J. C. SrrAH and N. RAJAGOPALA AYYANGAR, JJ.)

Emplovees Provident Fund-Bonus-Whether excepted · .. from definition of •Bade Wages'-Contribution-Tl'htlh•r to be paid an bonus-Bonu•, whether drnotes, only Profi! Bonus--Otntral Goi·ernment Order Validit.11-Employees Provident Fund Act, 1952 (19 of 1952), ss. 2(b), 5, 6, 19A.

The petitioner No. I i~ p_ublic limited compa~~ eng-- aged in manufacture of cng1necr1ng goods. In add1uon to basic wages and dearness allowance p~yable by pet1 ti oner . No. I it has introduced two Production bonu! ·schemes. Certain difficulties and doubts having arisen on the question- whether production bonus could be taken into cc:>nsi<Jera\iop in calculatin.g the contributi.on under s. 6 of the

Employees Provident Fund Act, 1952, the Central Govern-ment passed an order by which it was directed that the produc· tion bonus payable as part·of contract of employment either at flat rate or at rate linked to the quantum of work turned out satisfied the definition of. "basic wages" under s. 2(b) of the Act. The petitioner No. l was further direct· ed to effect the recovery of provident fund and contribution and to make deposit of arrears of contribution in 'accordance with the first direction contained in the order. Thereupon the present petition was filed under Art. · 32 of the Consti· tution.

The main contention of petitioner Ne. l was that 'bonus' without any qualification had been excepted from the terms "basic wages" in the definition in s. 2(b) of the Act and therefore all kinds of bonus were excluded from "Basic wages". Since the section which provides for contribution only refers to basic wages, dearness allowance and retaining allowance no contribution need be paid on bonus. Consequ· ently the order of the Central Government directing th:i.t production bonus should be included in basic wages for the purpose of contribution under the section was invalid.

Held, that when the word "bonus" was ~sed without any qualification the legislature had in mind every kind of bonus that may be payable to an employee which was preva-lent in the indu$trial field before 1952. It is not possible to accept the contention of the respondent that whatever is the price of labour and arises out of contract is necessar-ily included in the definition of "basic wages" and tht>refore . production bonus which is kind of incentive wage would also be included, in view of the exc.eption of all kinds of bonus from the definition. Therefore the order of the Central Government, which was presumably under s. l9A of the Act, was incorrect.

M/s. Tita.ghur Papei· Mills Oo. Ltd. v. Its Workmen, [1959] Supp. 2 S.C.R. 1012, Mfs. hpahani Ltd. Calcutta v. Ispahni Employees Union, [1960] I S.C.R. 24, 'l'he Graham Trading Oo. Ltd. v. Its Workmen, [1960] l S.C,R. 107 and Millowners Association. v. The Rashtriya Mill Mazdoor Sangh, Bombay, (1960) L.L.J. 1247, referred to.

OmGINAL JURISDICTION: Petition No. 62 of 1962. '

Petition under Art. 32 of the Constitution 9f Jndj11i for iiqforoement of ¥ri.ndi+J:B.ent11il ~i§llts, .

. 19/JB

• Bridg~ ch ,Roof. Co. (India) Lti. . ,.. . Union of India

B1id1e "' Ro•f Ce .. (lnJio) Lti, •• Union 1f lndiu

980 SUPJtEMl!J COURT REPORTS [1963]

G. B. Pai, J. B. Dadachanji, 0. G. Mathur 11.nd Ravinder Nartdn for the petitioners.

Veda Vyasa and R.H. Dhebar, for respond1mts Nos. 1 and 2.

M. S. K. Sastri and M. S. Narasimhan, for respondent No. 4.

1962. September 11. Court was delivered by

The Judgment of the

WANCHOo, J.-The short question raised in this writ petition under Art. 32 of the Constitution is whether production bonus is included within the term "basic wages" as defined in s. 2(b) of the Employees' Provident· Funds Act, No. 19 of 1952, (hereinafter referred to as the Act) Writ Petition 64 ot" 1962 (The Jay Eugineerin;, Works Limited v. The Union of India) was heard along with this petition. In that writ petition further question arose as to the nature of the production bonus scheme in force in that company and parties have been given time to file additional affidavits in that connection. What we say therefore in the present case as to roduction bonus generally may not be taken necessarily to apply to the particular scheme in the case of writ petition No. 64 of 1962.

The brief facts necessary for present purposes are these. Petitioner No. l (hereinafter referred to as the Company) is public limited company engaged in the manifacture of engineering goods, structural fabrication and rolling stock, and the Act applies to the Company. The Company has produc-tion bonus scheme in force which provides for pay· ment of production bonus over and above wages fixed by the major engineering award of 1958, published in the Calcutta gazet.te dated November 5, 1958, which governs 74 major engineering concerns in

3 S.C.R. SUPREME COURT REPORTS

that region including the Company. That a.ward is still in force and has fixed basic wages and dearness allowance on time rate basis for the entire· major engineering industry. In addition to basic wages and dearness allowance payable under the · award, the Company has two production bonus schemes one for the hourly rated workers and the .other for the rest. It is unnecessary to go into the details of the two schemes; but the main feature of the two schemes is that p.roduction bonus · begins to be paid on certain rates specified in the two schemes when the output· reaches 5,000 tons per year and that no production bonus is paid when the output is less than 5,000 tons per year. It may' be added that the scheme relating to the hourly rated workers has been revised from January 1, 1962 and the main feature of this revision is that the scheme is now applicable to these workers on quarterly basis. According to this revised scheme, production bouns begins . when the output for the quarter reaches 1300 tons, and there is no· production bonus if the output is below 1300 tons. In the case of other eta.ff, the old scheme is still in force, though it is stated for the Company that negotiations are going on for revising the old scheme, presumably to bring it into line with the new scheme introduced for hourly rated workers since January 1, 1962. .

We may now briefly refer to the relevant

provisions of the Act which require consideration. The Act provides by s. 5 for the introduction of Employees' Provident Fund Scheme for certain industries included in Schedule I to ·the Act. In consequence Provident Fund Scheme was framed in September 1952 known as the Employees Provident, Funds Scheme, 1952, and it is applicable to the company. Section 6 of the Act provides for contribution by the · employer . and the

B'idge & Roaf Co. (India) £td. v. Union of India 'iF anchoo J.

1962 Bridge"' Roof Oo. (lndia) J.td. v. Unfon of India Wanchao J,

employee to the provident fund and this contri-bution is 6-1/4 per centum of the basic wages, dearness allowance and retaining allowance (if any) for the time being payable in the case of both. Section 6 further provides for certain increased contribution; but we are not concerned with that in the present case. '"Basic wages" have been defined in s. 2(b) of the Act thus :

" •Basic wages' means all emoluments which are earned by an employee while on duty · or on leave with wages in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-

( 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 rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or any other similar allow-ance payable to the employee in respect of his employment or of work done, in such employment;

(iii) any presents made by the employer;"

Further, s. l9A of the Act provides for the removal of difficulties and lays down that if any difficulty arises in giving effect to the provisions of the Act, and in particular, if any doubt arises as to certain matters including "whether the total quantum of benefits to which an employee is entitled has been reduced by the employer", the Central Government may by order, make such provision or give such direction, not inconeistent with the provisions of the Act, as appears to it to be peoessar,Y or e~peqient for tqe rell'.).oval of tqe

3 s.C,R. SUPREME COURT REPORTS

doubt or difficulty, and the order of the Central Government in such cases shall be final.

It appears tha.t difficulties and doubts arose on the question whether production bonus could be taken into account in calculating- the contri-bution of 6-1/4 per centum uncle~ s. 6 ~of the Act, and the Cerrtral Government directed about the March 7, 1962 that the question whether produc-tion bonus should be liable to provident fund deduct.on under the Act had been re-examined by it and it had been decided that production bonus, . payable a.s _part of contract of employment either at flat rate or at rate linked to tl;ie quantum of work turned out satisfied the definition of "basic wages" under s .. 2 (b) of the Act. The Company was further directed to effect recovery of provident fund contributions on production bonus without any further delay and arrear contribution in this respect payable with effect from Janua.ry 1, 1960, was also to be deposited in the statutory fund immediately. The present petition was thereafter fi,led in April 196~ and is directed against the decision of the Central Government which was duly communicated to the Company in March 1962.The main contention of the Company is that bonus without any qualification has been expectP,d from the term ·"basic wages" in the definition in s. 2 (b) ·of the Act. Therefore, all kinds of bonus whether it be profit bonus or pro-ducti•)n bonus or attendance bonus or festival bonus either as an implied condition of service or as custom.iry payment, are excluded from "basic w,1.ges". Further, s.6 which provides for contribution on 1y refers to basic wagPs, dearness allowance and retaining allowance (if any) and contributions have to be made at the appropriate rate on these three payments and not on bonus which is not included in s. 6. It is ur~ed tq(l.t wben the ,A,<Jt was pa.seed

Bridge db R?of Co. (India) Ltd. v. Unt'on of India Wa~choo .1.

Bridg~ <4' Roof <Jo. !India) ltd. Union:of India Wanchoo J.

in 1952 the legislature was aware of the various kinds of bonus which were being paid by various concerns in various industries and when it deeided to exclude bonus without any qualification from the term "basic wages" as defined in s. 2( b), it was not open to the Central Government to direct that produc-tion bonus should be included in basic wages for the purposes of contribution under s. 6. Besides this contention based on the interpretation of the word "bonus" in s. 2(b), ·it is further contended that if the word "bonus" therein excludes produc-tion bonus the provision would be unconstitutional as it would be hit by Art. 14 of the Constitution inasmuch as production bonus is not general feature of all industrial concerns but has been introduced only in some. The result of including production bonus within basic wages would be that some concerns where production bonus prevails would be contributing to the provident fund at much higher rate than others where no production · bonus prevails~

The petition has been opposed on behalf of the Union of India and also on behalf of the two trade unions, which are existing in the Company. It is contended for the respondents that wages are the price for labour and arise out of contract, and the use of the term "basic wages" merely indicates that certain part of the total ·wages is being separated for certain purposes only. Therefore production bonus being in the nature of incentive wage must be included in the definition of the term "basic wages" in s. 2(b), as basic wages there defined are "all emoluments which are earned by an employee while on duty or on leave with wages in accordance with the terms of the contract of employment and which are paid or payable in cash to him ...... ". Therefore, production bonus being in the nature of an incentive wage is included

. 3S.C.R. SUPR.EME COURT REPORTS

in the terma "a.11 emoluments" in the definition of "ha.sic wages", for production bonus is earned by an employee while on duty in accordance with the terms of the contract of employment.. It is further submitted that when the word "bonus" was used in cl. (ii) of the exceptions to s. 2(b), it only referred to profit bonus, as it was well estab-lished before 1952 that the use of the word "bonus" without any qualification referred to profit bonus only in industrial adjudications. Therefore, when cl. (ii) of the exceptions to s. 2(b) excepted "bonus" without any qualification it ·referred only to profit bonus and not to any other kind of bonus.·The main question therefore that falls for decision is as to which of these two rival conten-tions is in consonance with s. 2 (b). There is no doubt that "basic wages" as defined therein means a.11 emoluments whioh are earned by an employee while on . duty or on leave with wages in accor-dance with the terms of the contract of employment and which are paid or payable in cash. If there were no exceptions to this definition, there would have been no difficulty in holding that production bonus whatever be its nature would be included within these terms. The difficulty, however, arises because the definition a.lso provides that certain things will not be included in the term "basic wages'', and these are contained in three clauses. The first clau_se mentions the cash value of any food concession while the third clause mentions any presents made by the employer. The fa.ct that the exceptions contain even presents made by the employer shows that thougµ the definition mentions all emoluments which are earned in accordance with the terms of the contract of emp· loyment, care was taken to exclude presents which would ordinarily not be earned in accordance with the terms of the contract of employment.

Bri41e &I Boof . Oo. 'lndi11) Ltd. v. Union .of India Wanchoo J.

B•<dge ch Roof Co. (India) Ltd. v. Union of India War.choo J.

986 SlJPREME COURT REPORTS

Similarly, though the definition includes "all emolu· ments" which are paid or payable in cash, the exception excludes the cash value of any food concession, which in any case was not payable in cash. The exceptions therefore do not seem to follow any logical pattern which would be in conso-nance -:vith the main definition.

Then we come to cl. (ii). It excludes dearness allowance, house-rent allowance, overtime allow-ance, bonus, commission or any other similar allowance payable to the employeA in respect of his· employment or of work done in such employment. This exception suggests that even though the main part of the definition includes all emoluments which are earned in accordance with the terms of the contract of employment, certain payments which are in fact the price of labour and earned in accordance with the terms of the contract of employment are excluded from the main part of the definition of "basic wages". It is undeniable that the e"ceptions contained in cl. (ii) refer to payments which are earned by an employee in accordance with the terms of his oont1•act of employment. It was admitted by counsel on both sides before us that it was difficult to find any one basis for the exceptions contained in the three clauses. It is clear however from cl. (ii) that from the definition of the word "basic wages" certain earnings were excluded, though they must be earned by employees in accordance with the terms of the contract of employment. H" ving excluded "dearness allowance" from the defiinition of "basic wages", s. 6 then provides for inclusion of dearness allowance for purposes of contribution. But that is clearly the result of the specific provision in s,6 which lays down that contribution shall be 6-1/4 per centum of the basic wages, dearness allowance and. retaining allowance (if any). We must there-fore try to disoover some basis for the exolusion

3 s.c.it. SUPREME COURT RElPORTS

in cl. (ii) as also the inclusion of dearness allow· ance and retaining allowance (for any) in s. 6. It seems that the basis of inclusion in s. 6 and exclusion in cl. (ii) is that what· ever is payable in all · conceroa and is earned by all permanent employees is included for the purpose, of contribution under s. 6, but whatever is not payable by all concerns or may not be earned by all employees of concern is excluded for the purpose of contribution. Dearness allowance (for examples is payable in all concerns either as an addition to basic wages or as part of consolidated wages where concern does not have separate dearness allowance and basic wages. Similarly, retaining allowance is payable to all permanent employees in all seasonal factories like sugar factories and is therefore included in s. 6; but house·rent allowance is not paid in many concerns and sometimes in the same concern it is paid to some employees but not to others, for the theory is that house-rent is included i:µ th{) payment of hasio wages plus dearness allowance or consoli· dated wages. Therefore, house-rent allowance which may not be payable to all employees· of concern and whieh is certainly not paid by all concern is taken out of the definition of "basic wages", even though the basis of payment of house-rent allowance where it is paid is the oontract of employment. Similarly, overtime allowance though it is generally in force in all concerns is not earned by all employees of concern. It is . also earned in accordance with the terms of the con tr.act of employment; but because it may not be earned by all employees of concern it is excluded from "basic wages". Similarly, commission or any other similar allowance is excluded from the definition of "basic wages" for commission and other allow· ances are not necessarily to be found in all · concerns; nor are they necessarily earned 'by all

Bridge ch Roof Co (India) Liii. v. Union of India Wan&hoo J.

19112 Bri'6~ dr Roof Co. (India) Ltd. v. Union of India Wanclroo J.

employees of the same concern, though where they exist they are earned in accordance with the terms of ,the contract of employment. It seems therefore that the basis for the <jxdusion in cl. (ii) of the exceptions in s. 2 (b) is that all that is not earned in all concerns or by all employees of concern is excluded from basic wages. To this the exclusion of dearness allowance in cl. (ii) is an exception. But that exception !las been corrected by including dearness allowance in s. 6 for the purpose of contribution. Dearness allow-ance which is an exception in the definition of "ha.sic wages", is included for the purpose of contribution by s. 6 and the real exceptions there-fore in cl. (ii) &re the other exceptions beside dearness allowance, which has been inoluded through 11. 6.

This brings us to the consideration of tlie

question of bonus, which is also an exception in cl. (ii). Now the word "bonus" has been used in this clause without any qualification. Therefore, it. would not be improper to infor that when the word "bonus" was used without any qualification in the clause, the legislature had in mind every kind of bonus that may be payable to an employee. It is not disputed on behalf of the respondents that bonuses other than profit bonus were in force and well'known before the Act came to be passed in 1952. For example, the Coal Mines Provident Fund_ and Bonus Schemes Act, No. 46 of 1948, provided for payment of bonus depending on attendance of employees during any period. Besides the attendance- · bonus, four other kinds of bonus had been evolved under industrial law even before 1952 and were in force in various concerns in various industries. There was first production bonus, which was in force in some concerns long before 1952 (see

3 S.C.R. SUPREME COURT REPORTS

Limited v. Its

Messrs. Titaghur Paper Mills Co. Limited v. Its Workmen). (1) Then there was festival or puja bonus which was in force as an implied term of employ-ment long before 1952 (see Messrs. lspahani Limited Calcutta v. lspahani Employees' Union) ([2]). Then there was customarv bonus in connection with some festival (see The Graham Trading Go. ( Tndia) Limited v. Its Workmen). ('). And lastly, there was profit bonus the principles underlying which and the determination of whose quantum were evolved by the Labour App11llate Tribunal in the MiUowners' Association v. The Rashtriya MiU Mazdoor Sangh, BomfJay. ([4]) The ~egislaturA therefore could not have been unaware that these different kinds of bonus were being paid by different concerns in different industries, when it passed the Act in 1952. Therefore, unless the contention on behalf of the respondents that bonus when it was used without qualification can only mean profit bonus is sound, it must be held that when the legislature used the term ''bonus" without any qualification in cl. (ii) of the exception in s. 2 (b), it must be referring to every kind of bonus which was prevalent in the industrial field before 1952. The contention therefore of the respondents that when the term "bonus" was used in industrial law before 1952 without any qualifying term it meant only profit bonus and nothing else, requires careful consideration." W11 do not think however that this contention is well founded. It is true, as will appear from the terms of reference in various cases of profit bonus that the wqrd "profit" was not used as qualifyin2 word before the word "bonus" in such cases. It may also be that in many cases where particular type of bonus was in dispute, say, attendance or "puja bonus, the qualifying word ''attendancA'' or •'puja" was us<" in references. But it appears that where reference

1. [1959] Supp. 2 s.c.R. 1012.

2. ( 19nO] I S.C.R. 24.

4. [1950) L.L.J. 1247.

3. [IS60) I S.C.R. 107. ,

Bridf!O & Roof Co. 1 India) Ltd.

Union of India Wanchoo J.

Bridie &:1 Roof Oo. ~lndia) Ltd. v. Union of India

H'anchoo J.

was in connection with profit bonus, the usual practice was to make the reference after qualifying the word '~bonus" by the year for which the profit bonus was claimed. For example, we may refer to the case of M illowners' Association Bombay v. The Rashtriya Mill Mazdoor Sangh. (') Therein para 16 at p. 1252, we find the term of reference in Ref11rence No. 1 of 1948 (Mil/owners' Association Bombay v. The Empwyees in the. Cotton Textile Mills Bombay) in these terms-

"Re : Bonus for the year 194 7"

It seems therefore that when reference was with respect to profit bonus, the term "bonus" though not qualified by the word "profit" had always been limited by specifying the year for which the bonus was being claimed. Though, therefore, it may be true that literally speaking, t.he word "profit" was not used to qualify the word "bonus" when references were made with respect to profit bonus, the matter was put beyond controversy that the use of the word "bonus" without any qualification was with reference to profit bonus by adding the year for which the bonus was being claimed. It would therefore be not right to say that in industrial adjudications before 1952, bonus without any qualifying word meant profit bonu~ and nothing else. Further though the word "profit" w&s not uBed to qualify the word "bonus", the intention was made quite clear when profit bonus was meant by using the words "for the year so and so" after the word "bonus". We are therefore not prepared to accept that where the word "bonus" is used without any qualification it only means profit bonus and nothing else. On the other hand, it seems to us that the use of the word "bonus" without any qualifying word before it or without any limitation

\, (1950) L.L.J. 1247.

3 S.C.R. SUPREME COURT REPORTS

as to year after it must refer to bonus of all kinds known to industrial law and industrial adjudication before 1952. The reason for the exclusion of all kinds of bonus is also in our opinion the same which led to the exclusion of house-rent allowance, overtime allowance, commission and any other similar allowance, namely, that payment of bonus may not occur in all industrial concerns or it may not be made to all employees of an industrial concern (as, for example, attendance bunus) and that is why bonus of all kinds was also excluded from the definition of the term "basic wages". The Act is an All-India Act applicable to all industries mentioned in Sch. I and to all concerns engaged in those industries; and the intention behind the exclusion seems to be to make the incidence of provident fund the same in all industrial concerns, which are covered by the Act so tba t it was necessary to exclude from the wide definition of [11]basic wages" given in the opening part, all such payments which would not be common to all industries or to all employees in the same concern. We have already pointed out that to this principle, only dearness allowance in cl. (ii) is an exception; but that exception bas been corrected by the inclusion of dearness allowance in s.6. We are the~efore of opinion that there is no reason why when the- word "bonus" is used in cl. (ii) without any quali(ving word, it should not be interpreted to include all kinds of bonus which were known to industrial adjudication before 1952 and which must therefore be deemed to be within the knowledge of the legislature.

1 This brings us to the consideration of the contention raised on behalf of the respondents that wages are the price for labour and arise out of contract,_ anr1 that whatever is the price for labour and arises out of contract, was intended to be included in the definition of "basic wages"

1968 Brid!l• ch Roof Co, (India) Lttd. \'. Union of India Wanchoo J.

1962 BriJge &, Roof Co. (India) Ltd. v. Union of India Wano/loo J,

992 SUPREME COURT. REPORTS [1963]

in s.2(b), and that only those thingr were excluded which were reward for labour not arieing out of the contract of employment but depending on various other considerations like profit or attendance. It may be, as we have pointed out ·earlier, that if thern were no exceptions to the main part of the definition in s.2(b), whatever waA payable in cash as price for labour and arose out of contract would be included in the •erm ••basic wages", and that reward for labour which did not arise out of contract might not be included in the definition. But ·the main part of the definition is subject to ex.ceptions in cl. (ii), and those exceptions clearly show that they include even the price for labour. It is therefore not possible to accept the contention on behalf of the respondents · that whatever is price for labour and arises out •)f contract is included in the definition of "basic wages" and therefore production bonus which is kind of incentive wage would be included.

This court had occasion to consider produ·ction bonus in Messrs. Titaghur Paper Mills Co. Ltd. v. Its Workmen, (') It was pointed out that "the payment of production bonus depends upon pro-duction and is in addition to wages. In effect, it i~ an incenti~e to higher production and is in the nature of an incentive wage''. The straight piece-rate plan where payment is made according to each piecf1 produced is the simplest of incentive wage plans. In straight piece rate plan, payment is made according to each piece produced and there is no minimum and the worker is free to produce as much or as little as he likes, his payment, depend-ing upon the number of pieces produced. But in such case payment for all th at is prod need would be basic wage as defined in s. 2(b) of the Act, even though the worker is working under an incentive (I) [1959] Supp 2 S C.R. 1012.

3 S.O.R. SUPREME COURT REPORTS

wage plan. The difficulty arises where the straight piece rate system cannot work aR when the finished product is the result of the co-operative effort of a. Jarge number of workers each doing small part which contributes to the result. In such case the system of production bonus by tonnage or by any other standard is introduced. The core of such plan is that there is base or standard above which extra payment is earned for extra. production in addition to the basic wages which is the pay-meut for work upto the base or standard. Such plan typically guarantees time wage upto the time represented by standard performance and gives workers share in savings repre-sented by superior performanct>. The scheme in force in the Company is typical scheme of production bonus of this kind with base or standard upto which basic wages as time wages are paid and thereafter extra payments are made for superior performance. This extra payment may be called incentive wage and is also called produc-tion bonus. In all such cases however the workers are not bound to produce anything beyond the base or standard that is set out. The performance may even fall below the base or standard but the minimum basic wages will have to be paid whether the base or standard is reached or not. When however the workers· produce beyond the base or standard what they earn is not b<tsio wages but production bonus or incentive wage. It is this production bonus which is outside the definition of "basic wages" ins. 2 (b), for reasons which we have already given above. The production bonus in the present case is typical production bonus scheme of this kind anu whatever therefore is earned as production bonus is payable beyond a.base or standard and it cannot form pii.rt of the definition of "basic wages" in s. 2 (b) because of the exception of all kinds of bonus from that definition . We are therefore of opi.gion that

1962 Btidge ch Roof . Co. (India) Ltd. v. Union of India Wanchoo J,

1961 Bridg6 &:: Roof Co. (India) Lid. v. . U1uon of Indict It' anchco .1.

production bonus of this type i11 excluded from the definition of "basic wa!!es" in P. 2 (b) and therefore the decision of the Central Government, which was presumably under s. 19A of tbe Act to remov.e the difficulty arising out of giving effect to the provisions of the Act, by which such bonus has been included in the definition of "basic wages" is incorrect. In view of this decision, it is unnecessary to consider the effect of Art. 14 in the prt1sent case.

We therefore allow the petition and hold that production bonus of the typical kind in force in the Company is excepted from the term "basic wages" and therefore the decision of the Central Govern-ment communicated to the Company on March 7, l 962, that provident fund contributions must also be made on the production bonus earned by the employees in this Company, must be set aeide. As this petition was heard along with petition No.64 of 1962 and the main arguments were in that petition, we order parties to bear their own costs.

Petition allowed.