UMON OF INDIA AND ANOTHER

GAJENDRA SINGH, ETC., ETC.

March 1, 1972

[K. S. HEGDE AND K. K. MATHEW, JJ.]

('onstitution oJ India-Arts. 14, 16 and 311(2)-whether version amounted to reduction in rank to attract Art. 311(2)-J/ retention of

junior in officiating capacity was violative of Arts. 14 and 16 of the ('onstitution of India.

The facts of the apP'.als are similar -and the facts of C.A. No. 314 al c as follows : ·

The respondent was a permanent Kanungo who was promoted to offi. ciate as Naib Tehsildar under paragraph 37(ii) of the S!:lnding Order No. 12, passed by the second appellant. He was reverted from the officiating post for the ra:on that he did not pass the departmental examin'J. .. lion o! Naib Tehsildar within the period prescribed by the Standing Order.

The respondent contended in the writ petition that he was entitled to continue in the post of Naib Tehsildar until a qualified person became

av-ailable, that since he was promoted under para 37(ii) of the Standing Order, passing of departmental examination was not necessary to officiite in the post of Naib Tehsildar. that junior Kanungos were retained in the posts of Naib Tehsildar by which respondent had lost his seniority ih the subst'3ntive rank of Kanunt, v and hence the reversion amounted to a reduction in rank within the meaning of Art. 311(2) of the Constitution and retention of juniors h the post of Naib Tehsildaf' was violative of Arts. 14 and 16 of the Constitution.

The Judicial COmmhsioner, decided the case ln favour of the 1espondent and held that the reversion of the respondent was attended with penal consequences and since he was not given a reasonable opPortunity of making representation agaist the order, the order W1lS bad and the order was accordingly quashed.

Allowing the appeal,

HELD : (i) Appointment t., a post on an officiating basis, is, ftom the nature of employment, its.elf of a transitory character and in the absence of any contract or spe6ific rule regarding the cc>ndition of service to the contrary, the implied term of such an appointment is that it is terminable at any time. 'fhe Government servant so appointed acquires no right to the post. But if the order entails or provides folr forfeiture of his pay or allowance etc. or stoppage or postponement of his future chances of promotion, then that circumstance would indicate that in form the Government had purported to exercise its undoubted right to terminate 'the employment, but in , truth and reaUty, the termination was by way of penalty. f,863Dl

Parshotam fol Dhingra v. Union of India, [1958] S.C.R. 828, referred to.

Further, by the mere fact that some Of the juniors w.ire allowed to continue in the post. of N aib Tehsildar on an officiating basis, it could

UNION v. GAJENDRA SINGH (Mathew, ].) 661

A ' not be said that the respondent lost his seniority in his substantive l'3.D.t of Kanungo. [863 HJ

(ii) Articles 14 and 16 of the Constitution are also not violated in the present case because the junior persons were retained in their ciating capacities either because they had passed the departmental. ex~· nation or because they had been exempted from passing that exanunatlon.

B In any case, the respondent was not similarly situated with his juniors and therefore, there was no discrimination to attract the Articles. t864-C]

CIVIL APPELLATE JURISDICTION : C.A. No. 314 to 320 of 1967.

Appeals by special leave from the judgment and order dated c July 23, 1966 of the Judicial Commissioner's Court at Simla in Writ-Petitions Nos. 18, 19, 20, 21, 23, 24 and 25 oi 1965.

R. N. Sachthey, for the appellants (in all the appeals).

Rameshwar Nath, for the respondents (in C.As. Nos. 314, 315 and 318 of 1967).

The Judgment of the court was delivered by

Mathew, J. These appeals, by special leave, by the Union of India and the Financial Commissioner of Himachal Pradesh, are from a judgment of the Judicial Commissioner, Himachal Pradesh, E allowing Civil Writ petitions Nos. 18, 19,-20, 21, 23, 44 and 25 of 1965, filed by the respondents and quashing the orders passed by the financial Commissioner 2nd appellant reverting the respo.n.d'ents to the posts of Kanungos. As the facts in all the appeals are similar, we will deal with Civil Appeal No. 314.

The respondent was a permanent Kanungo in the Revenue F Department. He was promoted on March 26, 1962; to offici11_te as Naib Tehsildar und.er para 37(ii) of Standing Order No. 12, passed by the 2nd appellant. He was reverted from the officiating post to his substantive post on June 1, 1965, for the reason that he did not pass the departmental examination of Naib Tehsildar within the period prescribed in para 34 of the Standing Order.· 9 The respondent contended in the writ petition that he was en titled to continue in the post of Naib Tehsildar until a qualified person became available, that no qualified person was available when he was reverted, that since he was promoted! under para 37(ii) of the Standing Order, he could not have reverted for the reason that he did not pass the departmental examination as the H passing of the departmental examination was not necessary in the case. of Kanungos promoted under para 3 ?(ii) 11f the Standing Order to officiate in the post of Naib Tehsildar. He further con tended that Kanungos junior to him who were promoted to offi. 14-LIOJ!Sup.CI/72 -

662 SUPllBMB COURT REPORTS

(1972] 3 S.C.R.

ciate in the post of N aib Tehsildar were retained in the posts of A

Naib Tehsildar and that has resulted in the loss of his seniority in the substantive rank of Kanungo and hence the reversion amounted to a reduction in rank within the meaning of Article 311 ( 2) of the Constitution.

So, according to the respondent, he should have been given a reasonable opportunity of making a representation against the reversion and since such an opportunity was not given, B the order of reversion was bad. The respondent also contended that the retention of his .iuniors in the post of Naib Tehsildar was violative of his fundamental right under Articles 1.4 and 16 of the Constitution. ·

The learned Judicial Commissioner, by his order held that para 37(ii) of the Standing Order did not confer any rjght on the C respondent to continue to officiate in the post of Naib- Tehsildar until a qualified person became. available as that para only con~ mrred a power on the appropriate authority to. allow him to continue to officiate in thepost till a qualified'hahd Jiecame available.

The learned Judicial Comrtlissioner •then held that since the re&. pondent was promoted under i)ara 37 (ii) of the Standing Order, D he could not have been reverted on the score that he did_not pass the departmental examination, that since the juniors of the-respondent who were also prooted on an officiating basis, were allowed to continue in the post o.f Naib Tehsildar, the reversion had result;; eel in the loss of his seniority in his substantive rank. He, therefore, came to the conclusion that the order of reversion wu attended 1 with penal consequen~ and that the respondent should hi!ve been given a reasonable oppgrtunity of making representation against the order, and quashed it.

Paragraphs 34 and 37 of the Standing Order passed by the Financial Commissioner read as under :..,-

"34(i) Ordinari_ly an A class candidate should pl!Ss F the Naib Tehsildar.'s examination within two years after. completing his revenue training as prescribed in paragraphs 25 and 27 and a B Class candidate should pass the Naib Tehsildar's examination within two y~ 'of his first selection. The Commissioner may extend this period for an.other year for special reason to be recorded in G writing .

. (ii) The Financial Commissioners may further ex tend the period in which a candidate must pass the - examination or exempt any candidate from passing the examination. in exceptional cases on the recommenda- . , tion of the Commissioner." H "37(i) Officiating appoiritments of Naib Tehsil~' are made by Commissioners in Divisions.

Preference .

UNION v. GAJBNDRA SINGH (Mathew, 1.) 66 3

should be given to direct tehsildar candidates who have .undergone revenue training for one year under paragraph 4(j) but not completed the requisite period of service as Nl!, ib Tehsildar under paragraph 4(i)(b).

(ii) If no such Tehsildar candidate and no qualified Naib Tehsildar candidate of his list is available for a vacant post of Naib Tehsildar, the Commissioner may appoint a Tehsildar candidate who has completed his two years service \f unemployed or an unqualified Naib Tehsildar candidate or a Kanungo to fill the vacancy until a qualified person becomes available."

We do not think that the Judicial Commissioner was justified in quashing the order of. reversion for the reason that in passing the order the 2nd appellant contravened the provisions of Article 311,(2).

Appointment to .a post on an officiating basis is, from the nature of employment,' itself of a transitory character and in the absence of any eontrai)t. or specific rule regulating the conditiQns of service to the contrary, the implied term of such an appointmeilt is that it is terminable at any time. The Government servant so appointed acquires no right to the post. But if the order entliila or provides for forfeiture of his pay or allowance or the loss of his seniority in the substantjve rank or the stoppage or potponement of hl!i future chances of promotion, then that circumstance .may jndicate that thoujh, . in form, the Government had purport¢ to exercise its undoubted right to terminate the employment, in truth and reality, the termination was by way of penalty (see Parshotam Lal Dhingra v. Union of India(').

We do not understand how the respondent lost his-Seniority in his substantive rank of Kanungo by the mere fact that some of his juniors were allowed to continue in the post of Naib Tehsifdar on an officiating basis. His juniors were not promoted on a regular basis. Like the respondent th.ey were also promoted to officiate in the post of Naib Tehsildar under para 37(ii). We do not see how .. their retention in the posts on an officiating basis would entail loss of seniority of the respodent in his substantive rank. No provision in the Standing Order or any other rule has been brought to our

nolice to show that by allowing the juniors of the respondent to continue to officiate in the posts of :N aib Tehsildar the respondent lost his seniority in his substantive. rank. We do not, therefore, think that the order of .r1<version w~ .attended with any penal consequences so as to attract the prov1s1ons of Article 311 (2).

(I) [1958] S.C.R. 828.

SUPREME COURT REPORTS [1972] 3 s.c.tt.

The respondent, no doubt, was appointed to officiate in the A post of Naib Tehsildar in pursuance of para 37(ii) of the Standing Order and that did not provide that he could be reverted for his not passing the departmental examination within any specified time but that would notin any way vitiate the order of reversion as the respondent had no right to hold the post and the 2nd appellant had the undoubted power to revert him.

The fact that the 8 2nd .appellant give a _wrong reason for reverting the respondent would not in any way affect the power which he undoubtedly possessed to revert him.

The contention of the respondent that the retention of his juniors to officiate in the post of Naib Tehsildar violated his fundamental right under Articles 14 and 16 of the Constitution has no C substance for his juniors were retained either because they had passed the deparl!mental examination or because they had been exempted from passing that examination. The respondent was not, therefore, similarly situate with his juniors and, therefore, there was no discrimination to attract the Articles.

We, therefore, set aside the order of the Judicial Commissioner and allow the appeal b11t, in the circumstances, we make no order as to costs. s.c.

I Appeals allowed.

UMON OF INDIA AND ANOTHER

GAJENDRA SINGH, ETC., ETC

March 1, 1972

K. S. HEGDE

K. K. MATHEW, JJ.

Arts. 14, 16 and 311(2)

Art. 311(2)

Arts. 14 and 16

Art. 311(2)

Arts. 14 and 16

Articles 14 and 16

R. N. Sachthey

Rameshwar Nath

Mathew

Union of India

June 1, 1965

Kanungos

N aib Tehsildar

Kanungo

Article 311

Articles 1

Article 311

Naib Tehsifdar

Article 311

Articles 14 and 16


C. BUCIDVENKATA RAO

UNION OF INDIA & ORS.

March 8, 1972

IA. N. GROVER AND M. H. BEG, JJ.]

Mineral Concession Rules, 1949, rr. 27 and 32r-Application not accomp•nied by map and containing defects re : area-If should be rejected.

Practice-If legal representative can continue application for mining lease-Eauities.

The application of one B for a mining lease was rejected on the , ground

tht another applicant V had a prior claim. B's writ application was dismiss¢ by the High Court and while bis appeal in this Court was pending he died and his sons were allowed to be impleaded as legal rreoen tatives subject to any objection that may be taken tb th, eir nght to continoo the appeal.

Pn the question whether V's application was defective because it was not in accordance with r. 27 of the Mineral Concession Rules and because of want of a map and some details regarding .r,,., and therefore, whether B's application should ha"" been granted,

HELD : ( 1) The details mentioned in r. 27 are intended for the correct identification of the individual to whom the lease is to be granted, the minerals which are to be mined the area in respect of which the lease was to be granted and the qualifitions of till' applicant Rules 32(2), introduced in 1955, before the grant of V's application, shows that individual qualifications of the applicants including their special kriowledge, their capacity to engage technically efficient staff, their financial soundness and stability, had to be taken into account in determining the question of priority. There is no prohibition against the grant of an application on the ground that the application is oofioctive or not ccornpanied by a map. There is also no provision in the Act showing that defects in an application could not be .subsequently removed. The form of the application is subordinate to the essential facts to be taken into account before grnnting a lease. The information given in the application is intended for the satisfaction of the authorities granting the lease, so that, after coosidering the merits and making a grant, proper details are em bodied in the le""" a<', tually granted. The supply of neces931Y details is directory and not mandatory. It was not the case here that as a result of the defects in V's application the lease itself could nDI be executed.

Therefore, the mere want of a map or of details describing the area for which the lease was applied for, would not Illllke the application itself void or of no effect If it did not produce a defect which afiected the validity of the leue, and the details supplied in the application colT~ ponded with the contents of the lease af!U the Glle&ed lacuna had bQoll removed the grant of the lease to V was valid. t669F-H; 670BFJ

( 2) In order to ble a le pl repreae.ntative fu conliauo a legal proceejing, the right to sue or pursue a remedy must survive the death of his predecessor, Under the rules, right of an applicant on the st=ath of a superior claim cannot be separated !from his personal quali&atiOltl. r6110-HJ

Moreover, there is no provision in the Rules for impie:lding an heir A to continue the application for a mining lease. The scb<lme under the Rules is that if an applicant dies, a fresh application has to be presented by the heirs or legal representatives if they desire to apply for the grant of a lease. It may be that they may obtain priority owr an earlier appli cant if they are continuing the busmess or industry of the d.ecj:ased, but It would be on a fresh application setting out their qualifications. Therefore, the heifs had no right to continue the appeal in this Court, [672A-Cl B

Dhani Devi v. Sant Bihari & Ors., [1969] 2 S.C.R. 507, distinguished.

( 3) The acceptance of V's claim by the Government on the strength of which he had made his investment, clothes his claim with an equity which could not be defuat, ed without clear proof of some overriding legal right or interest of another claimant, and, there is no such right in the heirs , of B. [672GHl C

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2580 of 1969.

Appeal from the judgment a:nd order dated August 6, 1969 of the Andhra Pradesh High Court in Writ Petition No. 3124 of 1967.

A. Subba Rao, for the appellants.

S. P. Nayar, for respondent No. I.

P. Ram Reddy and A. V. V. Nair, for respondents Nos.-Z1Uld,3;

P. P. Rao and T. V. S. Narasimhachari, for respondent No. 4.

The Judgment of the Court was delivered by

Beg, J. This appeal, from a Judgment and order of the Andhra Pradesh High Court dj_smissing the appeallant's Writ Petition, comes up before us by a Certificate under Article I 33(1)(a) of the Constitution, in the following circumstances : F

One Buchivenkata Rao had fild application on 1-9-1959 and 1-8-1960 under Mineral Concession Rules, (hereinafter referred to as 'the Rules') before-the Collector of. Nellore, for the giant of a mining lease to him of an area mentioned in his applications.

He alleged that his applications complied with the rules framed

G . under the Mines and Minerals (Regulation and Development) Act of 1957. The State Government rejected the application of 1-8-1960 on 7-12-1960, but granted the application made on 4th October, 1950, by the Respondent Kumara Rajah of Venkatagiri (hereinafter referred to as Venkatagiri). The ground on which the application of the appellant Rao. was rejected was that Venkatagiri H had a prior claim. The appellant Rao had then preferred a Revision application to the Central Government under the Mineral Concession Rules which came into force on 11th November, 1960.

C. B. RAO V. UNION (Beg, J.) 667 ' A The Central Government had rtjected the revision application on the ground that it was not filed within the prescribed time. Upon a Writ Petition filed in the High Court of Andhra Pradesh, the order vf rejection of the revision application by the Central Government was quashed. The Central Government was directed to consider Rao's application on merits. The Central Government had, after B giving due opportunity to be d to the appellant Rao, dismissed his application on 18th October, 1967, holding that Venkatagiri had priority over his cfaim. Rao then filed a second Writ Petition which was dismissed on 26th September, 1969.

The judgment and, order of dismissal are now under appeal before us.

c The judgment of the High Court shows that the appellant Rao had relied on the following three grounds only at the time of agruments on his Writ Pe_tition :-firstly, that the application of Venkatagiri was not maqe in accordance with Rule 27 and 32 of the said Rules of 1949; secondly, that the application of Venkata-

,,:; D

giri was not for a fresh lease but for the continuation of a previous lease so that it did not fall within the purview of the rules; and, thirdly: that the Central Government had not considered in detail the various comments offered by the State Govt. with regard to each ground of revision. •

A contention noticed by the High Court, as a separate ground of attack, was that the _Central Govt. had relied upon a ruling of

E a Single Judge of the Punjab High Court.in J. A. Trivadi Brothers

V. Union of lndia( 1), holding that Rules 27 to 29 did not make defective applications void, biut this view had been reversed by a Division Bench of that Court.

This was not/ really a separate ground but a contention relating to the effect of failure to comply strictly with Rules 27 to 29 of the Rules of 1949.

The main

F contention of Rao was that the application of Venkatagiri had to be disregarded as it failed to comply with the rules, and, therefore, was not an application in the eye of law, so that, out of several competing applications, Rao's application ought to have been granted. The High Court, made it clear that other grounds were taken in Rao's petition, but were not argued there. In this Court, a freSh ground, neither taken nor argued before the High Court, G is sought to be urged in addition to the ol!her grounds before the High .Court which were repeated before us. We will take up the grounds advanced in the High Court and again in this Court before considering the entertainability of l!he fresh ground.

At this stage, before dealing with the first ground, we may set out the , elevant rules 27 and 32 of 1949 which run as follows :- H "27.

Application for mining; lease-An application for . a iQining lease shall, in case of land in which the mine-

(I) .A.I.R. 1959 Purtjab 589.

rals belong to Govjlrnment, be made to the State Government concerned through such officer or authority as it may appoint in this behalf and shall contain the following particulars :-

(a)(i) If the_ applicant is an individual; his name, nationality, profession, and residence, and

(ii) if the applicant is a partnership firm, a company or an association or body of individuals, whether ini:orporated or not; its name, nature and place of business, place of registratio11 of incorporation and except in the case of a company which is not a private company as defined in the Indian Companies Act, 1913 (VU of

1913) the names and addresses of the individuals constituting such partnership firm, company, association or body.

(b) The number and date of the notification of the grant or renewal of certificate of approval of the applicant;

(c) A descript!on, illustrated by a map or plan, showing as accurately as possible the situaoll, boundaries and area of the land in respect of which the lease is required; · ·

( d) The mineral or minerals which the applicant intends to mine;

(e) The areas and minerals within the jurisdiction of the State Qovernment for which the applicant or any person .ioint in interesLwith him already holds a .mining lease;

(f) If the applicant holds a prospecting !icellse for the area applied for, the number and date of such license;

(g) The period for which the lease is required; and

( h) The industry, if any, which the applicant proposes to develop and the location of such industry.

Explanation :-The map or plan referred to in item ( c) should give sufficient information to enable identification of the area in respect of which the lease is required".

"3 2. Prioritiy-{ 1) If more than one application' fe$8i'ding.

the same land is received,· pmerence shiill be given t.o the application received first, unless the State Govern~

ment, for any special reason, and with the prior approval of the Central Government decides to the contrary.

Provided that where more than one application in respect of the same land is received on the same day, the State GovernmentJ afier taking into. consideration the matters specified in sub-rule (2) an<I after obtaining the prior approval of the Central Government, may grant the mining lease to such one of the applicants whom it considers to be t:he most suitable.

Provided further that no application shall be deemed to be incomplete for the purposes of this rule on account ,1f the omission or misdescription of the number and date of the prospecting licence and of the profession or residence or nationality in the case of an individual or of the place of business in the aase of a partnership firm, a company pr an association or body of individuals, whether incorporated or not, if such omission or misdescription is corrected within a period specified by the State Government or an officer appointed by thl!-t Goverument in' this behalf.

(2) The matters referred to in the proviso to subrule (1) shall be the following namely:-

(i) experience of the applicants in mining;

(ii) financial soundness and stability of the applicants;

(iii) special knowledge of geology or mining and the technical staff already employed or to be employed for the work.

It is clear to us that the details mentioned in Rule 27 are intended for the correct identification of the individual to whom the lease is to be granted, the minerals which are to be mined, the area in respect of which the lease was to be granted, and e qualifications of the. applicant. Considerable emphasis was placed on the word 'shall' in Rule 32 with regard to the priority to be given G between different applicants. This rule dbes illo't directly affect the question whether an application for a lease could be considered a proper application or not by the authorities concerned.

The se<iond .proviso to this rule, however, pro'llides for the manner in which :ertain defects may be cured. Rule 32, sub-rule (2), introduced Ill 1955 )'ef?r_e !lie gra!!t of .the application of Venkatagiri, H sho_l"s tha! the md1v1dual qu:ilificatio!1s .of the applicants including their special knowledge, their capacrty to engage technically efficient staff, their financial SOWl.dness and stability, had to be taken into account in determining the question of priority. Again Rule

610 SUPll.BMB COURT 11.BPOll.TS [1972] 3 S.C.ll.

26, imposing certain restrictions, prohibits the grant of the lease -' to any person who doe~ !IOI hold a certificate of approval from the State Government or who has not produced an Income tax clear ance certificate, It does not prohibit anY grant on the ground that t:he application for it is defective or not accompanied by a map.

The form of the application seems to be subordinate to the essen tial facts to be taken into account before granting a lease.

There is no provision in the Act showing. that the defects in an application which is accompanied by the fee prescribed in Rule 28 cannot be subsequently removed. The information given in the application is intended for the satisfaction of the authorities grant ing the lease so that, after considering merits' and making a grant, proper details are embodied in the lease actually granted. It was not urged anywhere that, as a result of any defects in the applica ti on. of V enkatagiri, the lease itself could not be uted. This indicates that the omission to file a1 proper map in?tially was cured.

The High Court had relied on a decision of this Court in Banarsi Das v. Cane Commissioner, U.P.( 1), where .conditions similar to those laid down by Rule 27 were held to be directory.

It had also held that, even assuniing that some of the requirements in the. rules may be mandatory, it could not be held that the mere want of a map or of details, describing the area for which the lease was applied for, would make the application itself void or of no effect.

We are, therefore, unable to find any error in the view adopted by the High Court that the supply of necessary details was directory and not mandatory. If_ it did not produce a defect which affected the validity of the lease, and the details supplied in the application corresponded with the contents of the lease after the alleged lacuna had been filed up, the grant of the lease to Venkatagiri: was valid.

As regards •the second ground that the application of Venkatagiri had to be interpreted_ as an application for the continuation of an already existing lease and not for the grant of a fresh lease, we find that the High Court had rejected this contention by pointing out that the application was on a form which complied with Rule

27 so that. it could be treated as a fresh application. We find G nothing wrong with the 'High Court's interpretation of the application made by Venkatagiri.

The High Court had' also found; as a fact, that the order of the Central Government disclOsed that it was based on relevant considerations and could not be said to have omitted consideration of an:Ything material sil!lplv because the details of matters consi- II dered 'were not fully s.et out. We concur with this view and are

.(1)-A.I.R. 1963 S.C. 1947 ..

A unable to hold that the order of the Central Government was vitiated on the third ground urged on behalf of Rao.

We may now refer to the fresh question which was sought to be raised on behalf of the appellant by means of an application before us.

This was, that this Court had pointed out in Nookala B Satharamaiah v. Kotaiah Naidu & Ors. (I), that, on 15th Sep tember, 1956, the Mineral Concession Rules were amended and a new sub-rule 28(1-A) was introduced which provided that every applicationunder.Rule.27, shall be disposed of within nine months from tihe date of its receipt, and had held that the effect of the amended Rule 57, which was further amended on 14-9-1956, was that an application r!lffiaining undisposed of within the period C prescribed will be deemed to be rejected. It was urged that we should allow this point to be ar£ued for the first time in this Court although it was neither raised nor argued in the High Court. It was submitted that this was a pure question of law on which no investigation of facts afresh was required.

D On the other hand, it has been contended, on behalf of the contesting respondent, that a new point should not be allowed to be urged at this stage for which reliance was placed on Bhagwati Saran & Anr. v. State of Uttar Pradesh('), S. L. Aggarwal v.

General Manager, Hindustan Steel Ltd.('), Chitra Ghosh & Anr.

v. Union of India d: Ors.('). , E Even if we had been disposed to consider this new ground on the plea that exceptional circumstances justified our going into it, we must here point out a.nother fact which affects the very maintainability of the appeal before us now.

The appellant B. Rao died on 18-2-1970. His sons filed an application in this Court on 20 7·1970 for impll)llding them as the heirs and legal repre- F sentatives of the deceased. This application was tentatively allowed, on 3-11-1970, under the orders of the Registrar of this Court, subject to such objections to the rights of the substituted appellants to be heard and to continue this appeal on behalf of the decea<ed as may be taken before us at the hearing of the appeal.

It .has to be remembered that, in order to enable a legal repre- G sentative to continue a legal proceeding, the right to sue or to purue a remedy must survive the death of his predecessor. In the ms!31Jt case, e have set out provisions showing that the rights which an appltcant may have had for the grant of a mining lease, on the .strength of ah alleged superior claim, cannot be separated from his personal qualifications.

No provision 4as been pointed H out to us_ in the rules for impleading an heir who could continue the application for a mining lease. The scheme under the rules

(I) [1971] (I) S.C.R. 153.

(2) [1961] (3) S.C.R. 563 at 568.

(3) [1970] (3) S.C.R. 363 at 365.

(4) [1970] (1) S.C.R. 413 at 420.

672 SUPREMi COURT lll!fOllTI . [1972] 3 s.c.~.

seems to be that, .if an applicant dies, a fresh application bas to be A presented by his heirs or legal representatives if they themselves desire to apply for the grant of a lease. It may be that the heirs and 1egal representat!_ves, if lj!J.ey are continuing the business or industry of the dee~ and have the required qualifications, obtain priority over an earlier applicant on account of speciltl. reasons for this preference. But, in each case, they have to apply afresh and JS set out their own qualifical!ions. Ithas not been shown to us that any of the legal reprentatives have applied afresh. . The legal representatives only claim to be entitled to sucCeed the deceased Buchivenkata Rao under a will. The assumption 1111derlying the application is that, whatever right the deceased may have had to -0btain a lease survived and vested in the heirs after his death. We are unable to accept the correclness of this assumption.

In support of. the contention on behalf of the heirs of Buchivenkata Rao, our attention was drawn to the case of Dhani Devi

v. Sant Bihari & Ors.( 1), which related to a right to obtain transfer of a permit for a Motor vehicle under Section 61, sub. s.

(2) of the Motor Vehicle Act It was.held there that, iµ the case -0f 1he death of an applicant, for the grant of a permit in respect of his motor vehicle, the Regional Transport Authority had the power to substitute the person suc, ceeding: to the possession of the vehicle in place of the deceased applicant: It was pointed out there that the right to the permit was relate4 to tile possession of the vehicle. Moreover, there was a rule enabling the Transport E Authorities to substitute the heir or Jegiil representatives of the deceased. No such rule applicable to the case of .the heirs of the

dece.!ised Buchivenkata Rao bas been pointed out. tp vs. Therefore, we are unable to hold that the heirs, who have been heard, had any right to continue !he appeal before us. This feature of. the case is decisive not only on die right 'to be heard on the fresh l1 ground but also on the right to advance any l\l'gumellt in support of the appeal of the deceased .

. We may mention that it was also urged that the matter was so old that any reversal ?f the grant of the mining lease to Venkata G girl, as Jong ago as 1960, would involve considerable dislocation and injury to respondent Venkatagiri without any fault on his part.

The respondent V enkatagiri must have invested considerable amount of money in mining operations. The acceptance of the claim of Venkatagiri by the Government on the strength of whicli Venkatagiri made his investment clothes Venkatagiri's claim with an equity which could not be defeated without clear proof of. liOlllC II 'Over-riding legal right or interest of another claimant. We are

(I) [1969] (2) S, C.R. SfTI.

A unable to see any such right in the heirs of the deceased

Buchivenkata Rao.

Consequently this appeal is dismissed but we make no orders as to costs in this Court.

B V.P.S.

Appeal dismissed ..

RAO

UNION OF INDIA & ORS

March 8, 1972

IA. N. GROVER

M. H. BEG, JJ.

Mineral Concession Rules, 1949

[1969] 2 S.C.R. 507

Andhra Pradesh High Court

A. Subba Rao

S. P. Nayar

P. Ram Reddy

A. V. V. Nair

P. P. Rao

T. V. S. Narasimhachari

Beg

Buchivenkata Rao

Mineral Concession Rules

Kumara Rajah

Venkatagiri

Rao

Venkatagiri

Central Government

11th November, 1960

High Court of Andhra Pradesh

Rao

18th October, 1967

September, 1969

Venkata-

giri

Punjab High Court.in

Indian Companies Act, 1913

15th Sep tember, 1956

B. Rao

Section 61

Venkata G

Venkatagiri

V enkatagiri


SONE VALLEY PORTLAND CEMENT CO.

THE WORKMEN

March 8, 1972

[C. A. VAJDJALJNGAM, I. D. DUA AND G. K. MITTER, JJ.]

Cement"Control Order 1961-Higher price paid in respect of cm1ent produced in excess of specified form-Whether workers entitkd to share .in such extra payment.

Under the Cement Control Order, 1961 passed by the Government of India in exercise of powers under s. 18(g) of the Industries (DeveloP- C ment and Regulation) Act of 1951, producers of cement wete obliged to sell all the cement produced by them to the State Trading Corporation 111 the prices laid down in th.e order. Sub&equently in order to provide an incentive to the producers to incresse their output it was Jl<Ovided :in the order that if a producer's output was in excess of a certain speci- .fied quantity, then the payment for such excess would be made at a

higher rate. The workers of the appellant companies asked for a share . in the incentive payment on the contention that they had contributed to D the excess in production. The IndllStrial Tribunal in its award held that the companies and th, eir workmen were entitled to share the incentive payment on a fifty-fifty bssis. In appeal by special leave,

HELD: There it nothing in law which prevents a buyer and seller ; from agreeln1 that whatever the aeller can offer upto a tjirtain quantity will he paid for at a particular rate and any quantity over E and allove that figure will be for at a higher rate.

The total amount which the seller would receive can only . be -called price even if the contract of sale. was so worded as to show that the excesa amount was to be treated as an incentive payment.

Therefore the argument that the workers wore entitled to a share of the extra payment de hors the question of any profit could not be accepted.

Under the Industriol Law as prop<>Ullded by this Court the. worken can lay no such claim. [685F, 6860] F

New Maneck Chowk Spg •. & Wvg. Co. Lid. v. Textile Labour Association, [1961] 1 S.C.R. 1, Th. Mill owner&' Association Bombay v. The Rashtriya Mill Mar.door Sangh, Bombay, U960] 1 .S.C.R. 101; M/s Tltaghur Paper Mills Co. Ltd. ,-, Its Workmen, [19591 Suppl. 2 S.C.R. 1012; Bum & Co. Ltd., v. Their Empfoivees, ;~1960] 3 S.C.R. 423 and National Iron and Steel Co. Ltd.' v. Their Workmen, :H963] 3 S.C.R. 660, referred • G Cement Control Order even if it offered some inducement' -. ihe producers to step up their production, the rms thereof did not entitle the Tribunal to treat it as and by way of intive bonus. In which the workmen could share. It was certainly up to the producer to intlriiate the workmen that under the 1'0rm• of the Control Order an extra amount of money would comb to the till of the COIDJl'!DY if production wat In• sed and the producers could have sett.led what incentive '&hould be H olfered to the workmen, but merely because an extra amount of money which was as and by way of price would llnd its way into the till df the -company because the production target waa exceeded, the workmen did

A not become entitied ipso faclO to lay a claim .to too excess amount and the Industrial Tribunal was not entitled to take the view that because an increase in production can only come about with the cooperation of the workmen they automatically became entitled to a share thereof. An industrial court C'ln only award what the law allows. In the absence of legislation on the subject and in the absence of a scheme for incentive l'. payment introduced by the manag, ment, in the particular facts and B circumstances of the case, the claim on the part of the workmen had to be negatived. f689D-H]

CML APPELLATE JURISDICTION : Civil Appeal No. 635 of . 1967.

C Appeal by special leave from the award dated January 11, 1967 of the National Industrial Tribunal, Bombay in Referenee (NT)-1 of 1965.

S, D. Vimdalal, K. D. Mehta, D. N. Mishra and 0. C. Mathur D for the appellants.

K. L. Hathi, for re8pondent No. 1.

M. K. Ramamurthi and Vineet Kumar, for respondents Nos. 2 and 3.

The Judgment of the Court was delivered by

Mitter, J.-This is an ap~ by special leave from an award of a National Tribunal under an order of reference reading :

"Whether the demand of the workmen for a share in the incentive payment allowed by Government to cement producers is justified? If so, what should be the baJ1is and the quantum payable for the year 1963 and subsequent years ?"

The cement producers involved were 14, in number set out in Schedule I to the said Order. Out of the total, the Tribunal was not called upon to go into the cases of five cement producers as they had not received any incentive payment and the demand in respect of these five companies was dismissed. Even out of the nine left, three of the producers entered into settlements with their workers as a result whereof the cases of six only are left for consideration. The names of the companies and the incentive

payments involved in this appeal are as under :-

Name of the Company

Payment for 1963 Rs.

I. India Cements Ltd. 56,713-50

2. Sone Valley Portland Cement Co.

Nil

3. Dalmia Dadry Cement Ltd. 1,19,7qo........oo

4. Jaipur. Udyog Ltd. 5,16,661-00

Kalyanpur Lime & Cement Works Ltd. 17,923-00

6. Mysore Iron and Steel Co. Ltd. 20,86,759-00

The background of the dispute is as follows.

Payment for 1964 Rs.

22,265-00

22,000-00

1,22,496-00

Nil

20,305-00

Nil

"Cement and gypsum products" became a scheduled industry under s. 3 (1) of the indutries (Development and Regulation)

Act of 1951 being an Act to provide for development and regulation of _certajn industries. Under s. 2 of the Act the Union of India was empowered to take control of 1the said industry. S.

E 18 (g) ( 1) of Chapter III-B of the Act with the heading "Control of Supply, Distribution, Price etc. of certain articles" enabled •the Central Government to provide for regulating the supply and distribution of any article or class of articles relatable to any Scheduled iJ1S!ustry and trade and commerce therein by notified order.

Sub-s. (2) of s. 18(g) illustrates the powers compre- F bended by sub-s. (1). These include, inter alia, powers for controlling the prices', at which any such articles or class thereof may be bought or sold, regulation of the distribution of such articles etc. On October 31, 1961 Government of India made an order under s. 18/(g.) known as the Cement Control Order of 1961 superseding an earlier Order of 1958. The relevant por- G lion's of the Order are set out below :-

"Cl. 3. Producers to sell cement to Corporation.-(!) Every producer shall sell- ( 1) the entire quantity of cement held in stock by him on the date of commencement of this Order; and

(b) the entire quantity of cement which may be produoed by H him before the date of commencement of this Order up to the 31st March, 1966 (inclusive) except such quantity as may be mutually

agreed upon from time to time between him and the Central Government, to the Corporation, and dliver the same to such person or persons as may be .specified by the Corporation in this . behalf from time to time.

(2) No!Withstanding any contraot to the contrary, no pro- B ducer shall dispose of cement held in stock or produced by him except in accordance with the provisions of sub-clause (1).

Cl. 6. Controlled price of cement.-( 1) The price at which a producer may sell cement other than- ·

(i) water-proof (hydrophobic) cement;

(ii) rapid hardening cement; and

(iii) low beat cement;

shall be as specified in the Schedule :

( 2) (a) The price at which the Corporation may sell' cement other than-

(i) water-proof (hydrophobic) cement;

(ii) rapid hardening cement; and

(iii) low bea~ cement;

to any person shall be Rs. 94.00 per metric tonne free or rail destination railway st.11tion plus the excise duty paid thereon :

Provided that the Corporation may, with the prior approval• of the Central Government, allow a rebate, discount or commission F in the price of cement sold to the Government for the Directorate

General of SupPlies and Disposals : .

There was only one Schedule to the Order which l!l\n: :

The Schedule

[See clause 6 ( !) J.

1'1ie price at which each produci:r may sell cement fiee on rail ex-w0rks is the price which has been determined by the Central Government in respect of that producer baviilg: regard. to the recinllmt!!!dations of tt:be Tariff Commission on the revision of H prices 'Of cement, and to all other relevant circumstances, that i' to say,-

(Ohly th.e. relevant portion is set out below) IS-L1031Sup.CIJ72

Price Name of Producer per Metric tonne Rs.

4. M/s. K.C.P. Ltd., Mac her la . . . 69 50

6. M/s. Mysore Iron & Steel Works Bhadravati 69 50

8. U.P. Government Cement Works Churku (U.P.) . 69 50

9. M/s. Dalmia Dadri Cement Co .. Ltd., Dalmia Dadri 69 50

12. M/s. Jaipur Udyog Ltd., Sawai Madhopur . 69 50 [13. M/s. India Cements Ltd., Talaiyuthu . . . 72 50

J 16. M/s. Kalyanpur Lime and Cement Works Ltd., BaDJari 72 50

117. M/s. Sone Valley Portland Cement Co., Ltd. Japla 72 50

21. M/s Travancore Cements Ltd., Kotteyam , .

9S 00 By the amendment of 1963 the paragraph before the Schedule was marked as (A) prefixed by the words "subject to the provisions of paragraphs (B) and (C)." After the Schedule paragraph (B) was added to read :- (B) In addition to the price specified in paragraph (;\) the producer mentioned in column 1 of the Table below may charge an extra amount specified in column 2 of the said Table in res pect of cement produced and sold by them in excess of the quan

tity specified in the corresponding entry in column 3 thereof.

"TABLE" (only the relevant portion is set out)

Name of the Producer

(I)

I. The U. P. Government Cement

Works, churk (Ilttar Pradesh)

M/s. K. C. P Ltd., Macherla .

7. M/s. Mysore Iron & Steel Ltd., . Bhadravati

M/s. Dalmia Dadri Cement Ltd., Dalmia Dadri .

12. M/s. Jaipur Udyog Ltd. Sawai

Madhopur

13. M/s. India Cements Ltd., Ta-

.~ laiyuthu .

16.

M/s. Kalyanpur Lime & Cement Works Ltd., Baqjari • ,

17. M/s, Sone Valley Portland Cement Co. Ltd., Japla . .

Extra amount

per tonne Rs. (2)

Limit of quantity (in tonnes)

(3)

5 '50 2,20,000 in any year ending

31st, October.

5 SO 1,15,000

5·50 81,000

5 50

1,76,00CJ

5·50

1, SS, OOQ

2·50 4,52,000

2•50 1,42,000

2,35,000

in any year ending 31st October.

in the year ending 31st December, 1963.

in the year ending 31st December, 1963

in the year endina

31st December, 1963.

in the year enclina

31st December, 1963.

in the year enclina

31st December 1963.

in the year enclina

31st Docen\hli' 1963.

SONli VALLEY CEMENT v. WORKMEN (Mitter, J.) 679

.A It .is to be noted that three different prices were fixed in respect of the 21 companies mentioned in the Schedule. The price applicable to twelve was Rs. 69•50, to eight others Rs. 72-50

and to one alone Rs. 95/-. Paragraph (B) inserted in 1963 however pro.vided for a charge by the producer of an extra amount of Rs. 5-50 in respect of twelve companies and u Rs. 2-50 in respect of five others. The cui; i.ous feature of this table is thaL the limit of quantity in column 3 varies from producer to producer and the period specified is not the same in all cas.es. For _th~ first two producers the U.P. Government Cement Wor~ and the K.C.P. Ltd., Macherla, the Order provided for payment of an additional amount for all subsequent years ending on rthe 31st October. In the case of Mysore Iron and Steel Co., <:: Ltd. the increase was provided for only one year, namely, year ending 31st December 1963 the target above which the extra amount was to be paid being 81,000 metric tonnes.

Similarly, in the case of .Dalnila Dadri Cement lJlli. the exira amount was to be payable over the target figure of Rs. 1,76,000 metric tonnes only in the year ending 31st December 1963 : so is. the

 D case of Jaipur Udyog Ltd. the target being 7,55,000 tonnes; in the case of I!!d.ia Cements it was for the year ending 31st Decem

ber 1963 as also in the case of Kalyanpur Lime and Cement Works and Sone Valley Portland Cement Company.

It appears that Cement Control Order of 1961 was further amended from time to time. By an order dated 31st May 1963 E which was to come into force on June 1, 1963 and the Schedule below paragraph A of the Schedule was amended increasing the price in cases where cement producers could charge the Corporation Rs. 6~50 per ton to Rs. 72-25 per ton while India Cements Ltd., Kalyanpur Lime & Cement Ltd. and Sone Valley Portland Cement Co., Ltd., were allowed to charge the Corpora- F tion Rs. 75-25. In other words, all the above six producers besides K.C.P, Ltd. (appellant in C.A. No. 2156 of 1970) were allowed to increase their price by Rs. 2-7 5 per tonne chargeable to the said Corporation. There was also an increase in the price which the State Tradinit Corporation could charge under sub-cl. 2 (a) of cl. 6. Prices were further increased by Amendment Orders G dated 30th June 1964 and 31st May, 1965. These however do

not concern us in these appeals.

Workmen of fourteen companies claimed, that the extra amount under pragraph (B) of the Schedule could only be earned by .the producers as a result of extra effort on their part and as such they were entitled to a share thereof. Different state.

JI ments of cla4n were put in before the Tribunal in respect of different producers. The workmen of faipur Udyog Ltd. claimed that they should be paid 60% of the extra amount paid for the year 1963 and to the full amounts to be paid in the subsequent

year.

According to them the Government of India had intro- A duced a scheme whereby the cement industry was allowed payments in the nature of inctllltive. at the rate of Rs. 5-50 per tonne oi. cement produced in 1963 and subsequent years in excess of the specified quantities of cement. The figures adopted for Udyog Ltd. was 7,55,000 and the extra payment at Rs. 5-50 per ton related to the production over and above that figure.

The President of the Indian National Cement Workers' B Federation submitted that :

"In the cement industry tlJ.e workers played a very important part in increasing the cement production and without their co-operation and efforts the quantity fixed in each factory could never have been exceeded ..... .

The quantity fixed by the Government in respect of each factory was the highest figure reached in the preceding three years and labour had substantially contributed to exoeed , tl; te said figure and reducing the cost of production in _respect of. various cement works and all workmen should be entitled 1to the full payment in the incentive payment allowed by the Government to the various cement producers in proportion to the earnings for the years 1963 and for subsequent years." In some of the statements of claim rthe additional amounts received were described as incentive bonus for additional production.

The producers in their written statement, on the other hand, submitted that the extra or incentive payment had formed part of their sale proceeds and included in the profit and loss account for

the purpose of payment of annual profit bonus. The Mysore Iron and Steel Co., l.Jtd. stated that their workers were paid production iricentive bonus ranging from 12% to 40% of the basic wages in F accordance with certain scales of incentive fixed for the targets of production. India Cements Ltd. submitted that the production of cement being a continuous process and not a repetitive one the same could not be related or linked with individual effort or increased by any individual effort and that any increased produc- , tion in an individual cement factory was due to efficient supervi- G sion and good management of the factory rather than increased effort on the part of the workers. It was also said that being a capital intensive industry increased production was due to increased capital investments and improved techniques and the final product was a seauence of linked pro.:ess in that any drawback could reduce or slow down the amount of finished product.

According to. this Company the sole object of the incentive H scheme as rt was popularly known, was to encourage cement producers to maximiSe their. production: with a view to meeting, as

far as possible, the growing demand for cement in the country.

The company also referred to various capital expenditure incurred for rehabilitating its machinery. According to the written statement of Sone Valley Portland Cement Company it had incurred an expenditure of more than Rs. 17,50,000/- for new equipment for the quarry and the factory and rehabilitation of kilns and bicable ropeway.

Out of the six producers involved in this appeal reliance was placed by four on certain special features. So far as ladia Cements Ltd. ; vere concerned, reliance was placed on a settlement regarding the payment of bonus for the year 1964-65 in that the amount !!greed to be paid for the year 1-4-1964 to 31-3-1965 to the extent of 7 /24th of the total basic wages for the above year was to be taken as including the consideration of -the incentive bonus earned by the company during the calendar year 1964. As regards Jllipur Udyog, reference was made to a settlement of February 4, 1962 which originated in a demand for bonus amounting to 10 months' wages for the year 1960-61. This was

:'I however a long-term settlement as is apparent from the terms recorded which were to the effect that the workers

"would be given bonus for the years 1959-60 to 1963-64 according to the table set out" According to clause 9 of the terms :

"It is agreed and clearly understood that the workers of the Union shall not claim or be entitled to any bonus in any form whatsoever and by whatever name. called except the bonus agreed to hereby in respect of the years

coverecj_ by this agreement." Clause 13 of the terms shows that the Union assured the Mana.gement that no effort would be spared 'ln their part to raise and maintain production to its full installed capacity.

Dalmia Dadri Cement entered into an agreement with its . workmen to pay bonus equivalent 'to 14 months' basic wages for the years 195~ to 1963. This was to include. both profit and production bonus. The workers also agreed to co-operate with the management in ensuring that there was an increase in the productivity of the plants.

As regards Mysore Iron and Steel Co. Ltd., the Management stated that there was already in existence a scheme for incell'tiw bonus ranging from 12 % to 40% of the basic wages in accordance with the scales of incentive fixed for the targets of production as per appendix annexed to the written statement. It was said that this was over and above the annual profit bonus which H the employees were bein~ paid at the rate of 1/6th of their earn-.

ings exclusive of dearness allowance and other allowances during the accounting years 1962-63 and 1963-64.

5UPR.BMB COURT R.BPOR.TS

Only one witness was examined on either side before the Tri A. bunal. One R. Natarajan, Under Secretary, Government of India, Ministry of Industry, gave evidence about the circumstances under which Government took the decision to grant an incentive bonus to producers of cement. According to him during the years 1962 and 1963 Government being exercised by the critical supply positio~ of cement in the country and being keen to take all B possible steps to increase the production of cement and to consider ways and means to increase the production of cement, set up a panel of wading producers and technical expem. A number of cement factories were allowed to import balancing equipment to ensure a proper synchronisation of the working of various departments and to remove production bottlenecks caused mainly C by d@culties of coal and rail transport. Steps were taken to remove these difficulties by concerted action of several agencies of Government.. There still remained however a considerable field .of effort in which the producer had to apply his mind and resources to the task of overcoming his specific difficulties and to create a clima!le in the cement industry by using his ingenuity of taking all possible further measures to overcome his specific difli- () cul ties in u_!ili$ing his full capacity.

Government therefore de cided to allow an extra price to the cement producers in respect . of the quantity of cement produced in each factory over and above the highest level of actual production reached during the last three years ending 1962. The extra price was to be the differential between Rs. 75/- and the then ex-factory price per tonne E applicable to the unit This extra price was paid on such production during 1963 and 1964. In his cross-examination he made it clear that the decision of Government was taken and notified in January 1963 but this had not been reached at a joint meeting of the Government and the producers. According. to witness Government did not have any idea whher labour should F or should nQt hare in this extra payment.

The witness exa, mined on behalf of the workmen was the Assistant Labour Commissioner who was really called to produce certain documents.

Before the Tribunal various contentions were pUt forward on behalf o(the producers to show that the production above tarQet figures fixed by Government had little to do with any extra effort put in by the workmen.

One of the submission was that some of the units had incurred considerablexpenditure for the puroose of increasinK production.

But as the Tribunal rightly pointed out:

"No evidence either documentary or oral was led by the company to show how the expenditure had contributed to increased production and in what proportionc"

SONE VALLEY CEMENT v. WC)RKMEN (Mitter, J,) 683

A. The Tribunal recognised that capital expenditure on equipment would certainly make a contribution towards increased produc .. tion but in the absence of evidence it was not in a positioin to detennine the extent of such contribution. The Tribunal exai¢11ed the special circumstances relied on by four out of the six companies but notwithstanding the same took the view that the demand B of the workmen for a share in the incentive payment allowed by Government was justified.

The Tribunal appears to have been influenced very largely by a.n award in the case of Kymore Cement Works containing the following remark: .

"As by their notification, the Government held out allurement to <the industry for greater production the claim of the workmen, in our opinion, must be considered on the basis on which claim for "incentive bonus"

must be considered. We are not unmindful ofthe fact that the claims before us, strictly speaking, are not in all respects at par with the claims of incentive bonus for in the case of the incentive bonus, the nonn of production and the rate for the extra production over the norm are fixed in advance, but we have held that the claims before us are more akin to "incentive bonus" than anything else. As this is additional bonus which partakes of the nature of incentive bonus, its amounts cannot have any relation to profits made and must be related to the wages and measured by the amount of work." In our view being impressed by the above reasoning the Tribunal concluded that <the basis of payment for each of the two years should be on a fifty fifty basis.

Before us elaborate arguments were put up on either side, counsel on behalf of the employers contending that so far as at least the four out of six producers were concerned, in view of the special features workmen could not claim anything over and above the usual bonus allowable under the Labour Appellate Tribunal formula or the Bonus Act.

As against this, it was contended on behalf of the workmen that there could be no doubt that workers had played some part in raising the figure of production above the maximum of the G last three vars ending in 1962 and if the pr<lducers were given something by way of incentive there was no reason why the workers should be deprived of a share thereof. Mr. Ramamurty frankly conceded that if it was established that substantial capital expenditure had been incurred in the case of any particular producer, that was a factor to be taken into consideration in making H allocation out of .t)le extra payment earned; but even that would not justify the total negation of the claim of the workers to some Pa, Yment. e also conceded that .. if the pr~ucei: was free Jo raise the pnce by reason of conditions prevwlmg m the market

labour could not claim any share in the increa>cd price on the A ground that it \Y_as based on the extra efforts put forward by them.

He however argued that the extra amount chargeable was not due to any such conditions in the market and was allowed to be charged by the Government so that the producers in conjunction with their labour could raise the level of production lior the benefit of the commun.ity as a whole. It was also argued by B Mr. Ramamurty that the case required a special consideration of the circumstances by the Tribunal and by this Court in appeal and the view to be adopted should be the one which is consonant with social justiee.

As against this counsel for the producers submitted that social justice was a vague concept and except in circumstances recognised by courts of law as justifying the adoption of a particular course should not be allowed to influence the decision of a Tribunal administering industrial law. It is only too well known that in most of the industries in our country the objective of a living wage will remain a distant dream for a long time to come and soelal justice certainly requires that efforts schould be made to·

reduce the disparity between a living wage and the actual wage but industrial tribunals are not to consider themselves free to depart from settled principles of industrial law by chalking out a path of their own whenever opportunity occurs.

E In our view, however, it is not necessary to examine the aspect of social justice in the matter or even the special features with regard to the working of four out of six of the abov~ producers.

We must first consider the nature of the extra payment which was received by the producers from the State Trading Corporation i.e., was it by way of or towards the price payable, or was it unconnected with the question of price e.g.~ a payment by way of a tip ? Mr. Ramamurty submitted that it could not be the F former in which case one would expect the extra payment to be

Iink!!d with the entire quantity produced and not limited to te production over and above the target fixed by Government. While it cannot be denied that the underlying object of paragraph (B) and the Schedule to the Cement Control Order of 1963 was that the producer should adopt ways and means to increase the pro- G ductlon either with the help of Government reducing bottle-necks or the producer itself finding out and adopting devices to step up production with the help of the workmen concerned! the extra amount paid can onl_y be treated. as an~ by. way of pnce offered because of the scarcity of the commodity m the country.

Th~ Cement Control Order which has beeri set' out in some de:rul ff clearly shows that producers were not entitled to charge teir own price. If they had been we have no doubt that takmg advantage of the scarcity they would have charged much more

JI·.

than Rs. 69-50 per ton to start with. Whatever their production each unit could only sell to the State Trading Corporation and at the price fixed.

As a result of the Order, the Corporation was not free to offer an inducement to the producer for producing cement in excess of the target fixed as in its turn it Was not entitled to charge the actual consumers or the dealers in the market any amount in excess of the priee fixed under the Control Order. The transaction between a cement producer and the State Trading Corporation can only be described as a sale and whatever was paid to the producer by the Corporation can only be described as the price.

Mr. Ramamurty conceded that normally a workman could only share in the. general prosperity of the undertaking and ask for a rvision of his wage, dearness allowances etc. when the prod.uct10n of he employer shdots up thereby enhancing its profitmaking capacity.

He also agreed that in normal circumstances greater production leading to a greater amount ot profit would ensure to the benefit of t)le labour by way of production bonus under the Labour Appellate Tribunal formula or under the Bonus Act.

He however contended that the facts in this case must be treated as justifying the claim of workmen to something like an incentive bonus though it was not to be treated in the way such bonus is usually claimed or awarded. In other words, his submission was that but for the inducement of extra payment the target figure would not have been exceeded and that as the efforts of workmen must to some extent be held to have contributed the increase in production they must have a share of such payment de hors the question of any profit.

We find ourselves unable to accept this proposition. There is nothing in law which prevents a buyer and seller from agreeing that whatever the seller can offer up to a certain quantity will be paid for at a particular rate and any quantity over and above that figure will be paid for at a higher rate.

The total amount which the seller would receive can only be called price even if the contract of sale was so worded as to show that the excess amount was to be treated as an incentive payment. Between the buyer and the seller the amount which changes hands i.e., the consideration for the thing sold, can only be described in legal terminology as price.

In some cases in ordinary commercial transactions, the seller allowes the buyer a certain amount of commission in case the buyer takes delivery of a quantity over and above a parti.cular figure. fixe~.

This will only mean that the buyer was a!lowmg a reduction m price in the particular circumstances of that case.

What has taken place under the Cement Control Order is that the terms of sale are fixed by Government under the Order, the parties i.e., the

producers and the Corporation not being allowed to discuss and A settle. the tenns themselves.

Government recognised that unless it held out an inducement to the producers by allowing them to sharge a price over and above that fixed under the Schedule to paragraph (A) there was little chance of the shortage of the commodity in the market B being reduc¢. It however realised at the same time that a gene-· ral increase of price on the whole outtum of the produce would make it difficult for the State Trading Corporation. to function properly unless it aliowed the Corporation to charge a higher price to the consumer. It was only because Government did not want the consumer to have to pay more that it adopted the device of the extra amount being chargeable only in respect of this addition_al quantity over the figure of production up to 1962. c

There is howeve.r another aspect of the matter.

Assuming that the extra payment was to be treated and described as an incentive payment, it is difficult to see how the employees can under the Industrial Law which this Court has so far expounded D have any claim to any share of such payment. In New Maneck Chowk Spg. & Wvg. Co. Ltd, v. Textile Labour Assoclation(1 ) this Court examined the concept of bonus as involved in industrial law of this country by Industrial Tribunals and by the decisions of this Court. It took the view that there are four types of bonus which had been evolved under the industrial law, namely, E ( 1 ) production bonus or incentive wage, ( 2) bonus as an implied term of Contract between the parties, (3) customary bonus in connection with some festival and ( 4) profit bonus evolved by the LabolJr Appellate Tribunal in The Mill-owners' Association Bombay v. The Rashtriya Mill Mazdoor Sangh, Bombay.(') An incentive bonus for increased production partakes of the nature f of a production bonus. In M/s. Titaghur Paper Mills Co. Ltd. v. lts Workmen(•) this Court had to examine the nature of production bonus. According to this Court (see at p. 1019) :

". . . it is an incentive to higher production and is in the nature of an incentive wage."

Referring to Labour Law by Smith, Second Edition, p. 723, where various plans prevalent in other countries known as Incentive Wage Plans have been worked out on various bases, the Court said :

''The simplest of such plans is the straight piecerate plan where payment is made according to each piece

(1) [1961] I S.C.R. I at p. 9

(2) [1960] I S.C.R. 107.

(3) [1959] Suppl. 2 S.C.R. 1012.

. produced, subject in some cases to a guaranteed minimum wage for so many hours' work. But the straight piece-rate system cannot work where the finished product is the result of the co-operative effort of a large number of workers ch holding a small part which contributes to the esult.

In such cases, production bonus by tonnage produced, as in this case, is given.

There is a ]>ase or standard above which extra payment is made for extra production in addition to the basic wage. . . . But whatever may be the nature of the plan the payment in effect is an extra emolument for extra effort put in by workmen over the standard that may be fixed. . . . . . . .

The extra payment depends not on extra profits but on extra production. . . . Therefore, generally speaking, payment of production bonus is nothing more or Jess than a payment of further emoluments depending. upon production as an incentive to the workmen to put in more than the standard performances. Production bonus in this case also is of tiiis nature and nothing more than additional emolument paid as an incentive for higher production."

As to the initiation of such a scheme \]le argument before the Court was:

"Whether there should be increased production in a particular concern is a matter to be determined entirely by the employer and depends upon a consideration of so many complex factors, namely, the state of the market, the demand for the product, the range of prices, and so on. It is, therefore, entirely for the employer to introduce a production bonus scheme or not." .

I On the question as to whether the Industrial Tribunal could have jurisdiction to introduce a production bonus scheme at all, the Court left the question open but took the view that where as in the case before the Court there was a scheme of production bonus in existence, the Tribunal had jurisdiction under the Industrial Disputes Act to deal with it and make suitable amendments to it.

A similar view was expressed in Burn & Co. ltd. v. Their Employees(') and National Iron and Steel Co. Ltd. v. Their Workmen.(2).

It would of course always be open to the Legislature to introduce any kind of bonus not so far recognised' by industrial Jaw evolved either by tribunals or by this Court. But that must rest on a solid foundation and express words must be used to that

(2) [1963r 3 SC.R. 660.

effect.

Although it is not necessary to express any final view on the subject we are inclined to think that apart from legislation an incentive bonus for increase of production, irrespective of the question as to whether the industry was making profit or not is one that must be introduced by the particular unit of industry.

It would be for the management to fix what incentives should be given to different departments to step up production.

An Industrial Tribunal would not be justified in holding that merely because there had 6een augmentation in the production labour would be entitled to make a claim to bonus because of such increase.

Labour would undoubtedly be entitled to revision of wage scales, dearness allowance and other terms and conditions of service as also profit bonus; but in the absence of legislation or a scheme of incentive production, industrial. tribunals would not be justified in laying down a scheme themselves.

In. our view the Cement Co.ntrol Order even if it offered some rnducement tc:> the prucers to sep up their production, the terms thereof did not entitle the Tnbunal to treat it as and by way of incentiv_e bonus in which the workmen could share.

It was certainly up to the producer to intimate the workmen that under the terms of the Control Order an extra amount of money would come to the till of the company if production was increased and the producer could have settled what incentives should' be

- offered to the workmen but merely because an extra amount of money which as we have already described, was as and by way of price would find its way into_ the till of the company bec; ause the production target was exceeded, the workmen did not become entitled ipso facto to lay a claim to the excess amount and the Industrial Tribunal was not entitled to tak.e the view that because an increase in production can 011ly come about with the cooperation of the workmen they automatically become entitled to a share thereof.

It may be that they all had the benefit' of the extra payment by way of profit bonus under the Labour. Appellate Tribunal formula and it would appear that the claims to incen• tive bonus rested rather on a frail foundation in era! of the companies earlier mentioned. This will hardly be a case where we should lay down a principle of such far-reaching importance viz., that workmen are entitled to an extra payment by way of incentive bonus as soon as they can establish that production in a particular year exceeded the highest figure of the three preceding years.

Nor can we look at the terms of the award in Kymore's case as showing the course industrial adjudication should take.

An industrial court can only award that which the law allows.

In the absence of legislation on the subject and in the absence of a scheme for incentive payment introduced by the management

in the particular facts and circumstances of the case, we would' negative such a claim on !Jie pan of the workmen. \ In tpe ult thetefore we. allow the appeal but would make no order as to costs. ·

G.C.

Appeal allowed: .

SONE VALLEY PORTLAND CEMENT CO

THE WORKMEN

March 8, 1972

I. D. DUA

G. K. MITTER, JJ.

Government of India

s. 18(g)

DeveloP- C ment and Regulation

[1961] 1 S.C.R. 1

Tltaghur Paper Mills Co. Ltd.

1960] 3 S.C.R. 423

CML APPELLATE JURISDICTION

National Industrial Tribunal, Bombay

D. Vimdalal

K. D. Mehta

D. N. Mishra

0. C. Mathur

K. L. Hathi

M. K. Ramamurthi

Vineet Kumar

Mitter

Schedule I

Sone Valley Portland Cement Co.

Sone Valley Portland Cement Co.

Nil

3.

Dalmia Dadry Cement Ltd.

Jaipur. Udyog Ltd.

Mysore Iron and Steel Co. Ltd.

s. 3

s. 2

Union of India

Chapter III-B of the Act

Central Government

s. 18(g)

October 31, 1961

s. 18

Cl. 3

31st March, 1966

Cl. 6

clause 6

K.C.P. Ltd.

Mysore Iron & Steel Works Bhadravati

U.P. Government Cement Works Churku

Dalmia Dadri Cement Co .. Ltd.

Jaipur Udyog Ltd.

India Cements Ltd.

Kalyanpur Lime and Cement Works Ltd.

Travancore Cements Ltd.

K. C. P Ltd.

Mysore Iron & Steel Ltd.

Jaipur Udyog Ltd. Sawai

Madhopur

U.P. Government Cement Wor~

Mysore Iron and Steel Co., <:: Ltd.

.Dalnila Dadri Cement lJlli

Jaipur Udyog Ltd.

I!!d.ia Cements

Kalyanpur Lime and Cement Works

Sone Valley Portland Cement Company

31st May 1963

June 1, 1963

India Cements Ltd.

Kalyanpur Lime & Cement Ltd.

Sone Valley Portland Cement Co., Ltd.

K.C.P, Ltd.

State Tradinit Corporation

cl. 2

cl. 6

30th June 1964

31st May, 1965

faipur Udyog Ltd.

Udyog Ltd.

Mysore Iron and Steel Co.

ladia Cements Ltd.

Jllipur Udyog

February 4, 1962

clause 9

Clause 13

Dalmia Dadri Cement

5UPR.BMB COURT R.BPOR.TS

R. Natarajan

Kymore Cement Works

Ramamurty

LabolJr Appellate Tribunal

Smith

Industrial Disputes Act

Kymore