HOCHTIEF GAMMON Vs. STATE OF ORISSA

JUDGEMENT

(1.) The question of bonus for 16,000 workmen for the years 1958-59 and 1959-60 is still being fought out on preliminary points and this is the second time the matter has come to this Court The earlier decision is reported in (1964) 7 SCR 596 (Hochtief Gammon v. Industrial Tribunal, Bhubaneshwar, Orissa).

(2.) In August 1957 the Hindustan Steel Ltd., the 4th respondent in the appeal, hereinafter called the company, and the appellant, a partnership of a West German Company and an Indian Company, hereinafter called the contractor, entered into a contract for execution of the foundation and civil engineering work of the Hot and Cold Rolling Mills at Rourkela, including the purification and other civil engineering work connected with the water supply to the Rolling Mills. The contract was a cost contract with a target sum plus fixed overheads and fee, that is, the company was to pay to the contractor all costs of construction and in addition pay fixed overhead for the head office general expenses of the contractor plus a fixed fee. The target sum for the work was Rs. 6,62,94,000. The overheads were D.M. 28,00,000/ plus Rs. 21,20,000/- and the fee of Rs. 62,00,000/-. The work was to be carried out as detailed in the drawings, bills of quantities, specifications and other written orders issued or to be issued by the Company. All payments in respect of wages and salaries and connected payments made to persons engaged upon the work as may be approved by the company, comprising wages of all operatives as well as all other payments connected with wages were to be paid by the company. Any increase beyond the initial rates specified in Enclosure III to the contract was to be subject to the approval of the company and such approval was to be taken in respect of categories and not individuals. Emoluments of site supervisory staff as well as all other payments connected therewith were also to be paid by the company. Payments made to statutory schemes in connection with sickness or accident or provident fund or pension or other like schemes to the above categories, payments of overtime and additional remuneration for Sunday, holiday or night work etc. and payments for leave and travelling cost were all to be made by the company. It was also provided that the cost of any other expenditure was to be admitted only on satisfactory proof being given by the contractor that such expenditure was necessary in connection with the preparation and execution of the work The company was to open an imprest amount of Rs. 30,00,404/- and the contractor was to draw on the account to cover his day-to-day requirements for the work. The imprest was to be increased or decreased from time to time depending on the amount required by the contractor to do the work. The contractor was to submit fortnightly cash account covering the expenditure incurred from the imprest account and the company was to recoup the amounts covered by such account within seven working days. Once in three months the contractor was to be paid a part of the fixed amount of over heads pro rata to the target cost of work done during the preceding three months. Once in six months he was to be paid three -fourths of the fee proportionate to the target cost of the work done in the preceding half year. Enclosure III also set out the rate of wages for unskilled labourers, khalasi, mason, fitter or carpenter. If the contractor completed the work prior to the 30th September, 1960 he was to be paid, exclusive of such sums as may be due to, or from him a bonus equivalent to Rupees 8,00,000/- for every complete month by which the actual completion of the work precedes the 30th September, 1960. The terms of the contract have been set out at some length as they have a relevance to the question of bonus payable to the workers because the question now agitated before this Court is that the Industrial Tribunal should be asked to decide who is to pay the bonus, if bonus is payable to the workmen, the contractor or the company.

(3.) It would be noticed from the provisions of the contract set out above that all payments to labour were to be made by the company. The contract contemplates payment of travelling allowance, payment in respect of sickness, accident, provident fund, pension, overtime, additional remuneration for Sunday, holiday or night work etc. It has even mentioned the rate of wages and is thus fairly comprehensive. There is, of course, ' no mention about bonus. Now if the contractor has to pay a higher rate of wages than that found in Enclosure III because of the conditions in the labour market naturally the contractor cannot be expected to pay it from out of his funds or the payments he was to receive in pursuance of the contract. This being a contract in which the company is to pay for labour as well as for materials any increase in the cost of those items cannot be borne by the contractor, who was to be paid only a fixed sum towards its remuneration. As the question of bonus is not mentioned in the contract the question arises as to who is to pay the bonus in case bonus is found payable to the workmen. We express no opinion on that point. But it appears to us that the company is adopting an ostrich like policy in trying to avoid being made a party to the reference before the Industrial Tribunal. If it should ultimately be held that bonus is payable and the company is liable to pay it, it should do its best even from this stage to fight the question of liability to pay, bonus as well as the quantum.