JUDGMENT 1. THIS appeal seeks to challenge a judgment and order, dated 16/2/1973, reported in 1975-II l. L. N. 175 passed by the Court of first instance making the rule nisi absolute and directing the issue of a writ in the nature of mandamus prohibiting the appellants before us from demanding any contribution from the respondent in respect of payment made under the quality incentive scheme mentioned in the petition. 2. IN the Court of first instance the respondent in the appeal-Bengal Potteries, ltd., was the petitioner. The respondent in the appeal was at all material times and still is an existing company and carries on business in the manufacture and sale of different kinds of pottery. For the said purpose, it has its factory at No. 45, Tangra Road in Calcutta and employs workmen in the said business. A settlement was arrived at on 1/8/1966. before a Conciliation Officer between the respondent-company and its workmen represented by the Bengal Potteries employees' Union and the Bengal Potteries mazdoor Union. Clause (7) of the said settlement is relevant for the purpose of this appeal. The said settlement is annexure A to the petition and appears at pages 13 to 19 of the Paper Book. Clause (7) of the said settlement appearing at page 16 of the Paper book reads as follows : " Discussions to negotiate and finalize a quality incentive scheme covering all sections of workers and staff shall be started immediately after one month from the date of resumption of usual (average) production in both factories. " 3. IN pursuance of the above-mentioned ci. (7) a scheme for quality incentive bonus on production efficiency was framed and introduced by the respondent-company during november 1966 to January 1969, in consultation with the representatives of its workmen. The said scheme appears at pages 20 to 29 of the Paper Book. We shall advert to the said scheme and some of the material provisions thereof, the construction whereof is really the subject-matter of this appeal. 4. THE Employees' Stare Insurance act, 1948. applies to the respondent-company's business. The respondent-company did not make any deduction in respect of contributions towards Employees' Stale Insurance from payments made under the said schemes on the ground that the said payments did not amount to "wages" as defined under the said Act. 4. THE Employees' Stare Insurance act, 1948. applies to the respondent-company's business. The respondent-company did not make any deduction in respect of contributions towards Employees' Stale Insurance from payments made under the said schemes on the ground that the said payments did not amount to "wages" as defined under the said Act. The respondent-company, however, by mistake of law in its contributions towards Employees' state Insurance on wages paid by it to its employees for the period December 1967 to december 1968, included a sum of rs. 16,550. 54 as employer's special contribution on payment made under the said scheme during that period. On or about 28/4/1968, appellant I enquired of the respondent-company as to why no employees' contribution had been paid on the payments made under the said scheme. 5. THEREAFTER correspondence passed between the appellants and the respondent-company and by orders, dated 6 and 31 August 8, 13 September 1968, 1 March 1969 and 6 July 1970, appellant I asserted that the amounts paid under the said scheme were "wages" within the meaning of the Employees' state Insurance Act, 1948, and demanded payment of contribution thereon. 6. PARTICULAR of the scheme were submitted to the appellants by the respondent. The respondent denied that the said amounts were "wages" within the meaning of the said Act and demanded the refund of the said sum of rs. 16,550. 54 Thereupon, certificate cases were commenced against the respondent-company by appellant 1 for the amounts adjusted from payments for the quarter ended March 1968, and for amounts a leged to be due by the respondent-company as contributions or payments made under the said scheme. The said certificate cases were ultimately withdrawn. 7. NOTWITHSTANDING objections made by the respondent-company appellant 1 continued to make demands for payment of employer's special contribution and employees' contribution on incentive bonus since the inception of the said schemes. The respondent-company came to this Court and made the application for quashing, inter alia, the said demands and orders. Sabyasachi Mukharji, J., who heard the application was pleased to hold that the bonus paid under the above-mentioned schemes was not 'wages" as defined in the employees' State Insurance Act and made the rule absolute. 8. THIS appeal has been preferred by the appellants who were respondents in the petition from the said judgment and order as mentioned hereinabove and seeks to have the said judgment and order set aside. 8. THIS appeal has been preferred by the appellants who were respondents in the petition from the said judgment and order as mentioned hereinabove and seeks to have the said judgment and order set aside. Sri Arun Dutt (senior), the learned advocate for the appellant submitted, inter alia : (1) Payments of incentive bonus as per quality incentive bonus scheme set out in annexure B at page 20 of the Paper Book is really a part of the "wages" payable to the workmen in cash if the terms of the contract of employment are fulfilled, that is to say, incentive bonus payable in the said scheme is remuneration within the meaning of the first limb or part of the definition of the term "wages" in S. 2 (22) of the said Act. (2) That the said payment of the bonus is a term of the contract of employment is evident from the scheme itself and CI. (7)of the tripartite agreement being annexure A appearing at page 13 of the Paper Book. (3) That in any event if the incentive bonus was not considered to be "wages" within the meaning of the first limb or part of the said expression as defined in the Act, it is an "additional remuneration" within the meaning of the third part or limb of the definition or of the said expression "wages" in the Act. 9. LASTLY, Sri Dutt submitted that the learned Judge of the Court of first instance committed an error of not considering the facts of the case and did not advert to the nature of the said incentive bonus scheme or the terms thereof in arriving at his conclusion. 10. IN support of his contention Sri Dutt relied on the judgment of a Full bench of the High Court of Andhra Pradesh in Employees' State Insurance Corporation, hyderabad v/s. Andhra Pradesh Paper Mills, Ltd. and others [1977-11 L. L. N. 582], In order to appreciate the contentions of Sri Dutt it is necessary for us at this stage to set out the material portions of the scheme being annexure B in the Paper Book. The said scheme appears as stated hereinbefore at pages 20 to 29 of the Paper Book. "bengal Potteries, Ltd. Quality Incentive Bonus on production Efficiency part I: General. (1. 2) Incentive not part of the wages'. The said scheme appears as stated hereinbefore at pages 20 to 29 of the Paper Book. "bengal Potteries, Ltd. Quality Incentive Bonus on production Efficiency part I: General. (1. 2) Incentive not part of the wages'. Incentive bonus under this scheme is not payable as a part of the terms of employment of any of the workmen or supervisory personnel concerned, but by virtue of a separate and independent contract the terms of which are contained in this scheme under which the company undertakes to pay the incentive bonus outlined in the scheme upon fulfilling the conditions of the scheme. Accordingly, for the purpose of computing other benefits, like provident fund, gratuity, statutory leave, Employees' State insurance benefits, profit-sharing bonus, etc., the incentive bonus paid under the scheme shall not be considered as part of the wages. (1. 5) Conditions of eligibility fur workmen: (A) (i) All temporary and permanent workmen engaged in the departments and sections covered by the scheme shall be eligible to the incentive bonus subject to the conditions laid down hereinafter. (ii) The amount of incentive bonus payable to an eligible workman will be proportionate to the number of days of actual attendance in a calendar month. No incentive bonus will, however, be paid for attendance of less than six days in a calendar month. (iii) For earning the incentive bonus the prevalent targets in respect of quantum of production set from time to time as agreed upon in the various departments and sections, must be achieved in full. (iv) For earning the incentive bonus the kilns must be loaded in full as at present according to targets set from time to time. (v) If the minimum stipulated yield or efficiency is not achieved, the workmen shall have no claim and the company shall have no obligation to pay incentive under this scheme. (vi) If any employee, individually or collectively indulges in wilful loss in production, damage to company's property or adopt undesirable means to inflate the level of efficiency by hiding rejections or interference with sorting, he/they shall be liable to forfeit his/their claim to the incentive bonus payable under this scheme. Conditions of eligibility of supervisory staff: * * * (ii) The amount of the incentive bonus payable in an eligible staff member will be proportionate to the number of days of actual attendance in a calendar month. Conditions of eligibility of supervisory staff: * * * (ii) The amount of the incentive bonus payable in an eligible staff member will be proportionate to the number of days of actual attendance in a calendar month. No incentive bonus will, however, be paid for attendance of less than six days in a calendar month. (iii) For earning the incentive bonus, the members of the staff shall have to ensure that the prevalent targets of production set, from time to time, for their respective sections, are achieved in full. (iv) For earning the incentive bonus, the members of the staff attached to the kilns, shall have to ensure that the kilns are loaded in full, according to targets set, from time to time. * * * (vi) If the minimum stipulated yield or efficiency is not achieved, the staff member concerned, shall have no claim and the company shall have no liability to pay incentive bonus under this scheme. (vii) If any member of the staff is found guilty of malpractice, negligence of duty, the incentive bonus payable to him will be liable to be forfeited. (1. 6) Validity: this scheme has been based on existing methods of manufacturing, loading, viz., sogger loading, handling, etc., and shall be valid only as long as the process is not changed. In the event of introduction of automatic machines, conveyors, slab loading or implementation of any modern methods, the norms for the levels of efficiency shall change, and company shall have the right to withdraw this scheme fully or partially as may be found necessary against an alternative scheme which will incorporate the consequential changes as norms of efficiency indicates. (1. 7) Category -cum - groupwise share of the incentive bonus: (2. 2) Minimum loading targets, (a) The earnings of incentive bonus would be conditional upon fulfilment of the minimum average loading targets per day as at present subject to an allowance of minus 3 per cent. These targets will be displayed from time to time at notice-boards of the respective kilns and manufacturing department under the signatures of the works manager. Those targets are always subject to changes according 11 production programme. These targets will be displayed from time to time at notice-boards of the respective kilns and manufacturing department under the signatures of the works manager. Those targets are always subject to changes according 11 production programme. (b) The days on which there is shutdown in kilns or gas plant or both fully or partially, the production of such days shall not be included in working out average production in pieces and also in average per cent yield. The workmen shall not get any incentive payment for such days. In case of breakdown, shutdown of gas plant, kilns or both for a continuous period of ten days in any calendar month or a loss in production caused due to such breakdown is to the extent of 30 per cent of the average production; whichever is higher, worker shall not be eligible to any incentive bonus for such calendar month. (2. 4) Norms: for the purpose of setting 'norms' the figures of production in terms of yield over the period January 1961 to December 1965, i. e., sixty months were analyzed. The average yield over the period was about 76 per cent. In order to provide substantial financial benefits at the normal level, the minimum level of efficiency at which the workmen would start earning the incentive bonus, has been agreed at 76 per cent yield over a calendar month. (2. 5) Incentive bonus tariff rates : Rs . Np. 76 0. 15 77 0. 20 78 0. 25 79 0. 30 80 0. 40 81 0. 45 82 0 . 50 83 0. 55 84 0. 60 85 0. 70 86 0. 76 87 0. 82 88 0. 88 89 0. 94 90 1. 00 In support of his contention Sri Dutt submitted that bonus became payable under the original contract by virtue of the fact that it was the creature of the statutory settlement arrived at by the tripartite agreement between the employer-employee and the Conciliation officer under the Industrial Disputes Act. The real test, according to Sri Dutt, is that the employer could not withdraw the bonus scheme unilaterally and thus it was included in wages. Sri Dutt relied on the case of braithwaite and Company (India), Ltd. v. Employees' State Insurance Corporation [a. I. R. 1968 S. C. 413], and on the Full Bench decision of the Andhra Pradesh High Court. Sri Dutt relied on the case of braithwaite and Company (India), Ltd. v. Employees' State Insurance Corporation [a. I. R. 1968 S. C. 413], and on the Full Bench decision of the Andhra Pradesh High Court. In fact, all the relevant cases including the judgment and order under appeal were considered by the said Full Bench. 11. SRI Arijit Chowdhury appearing on behalf of the respondent-company submitted that- (1) The bonus under the scheme was given for additional work and could not come within the meaning "wages" as defined in the Act. (2) In certain cases the worker will not get bonus for no fault on his part. Clause (7), according to Sri Chowdhury, is merely a pious hope expressed by the parties to the settlement. The agreement itself does not include the scheme and the scheme cannot be taken to be a part of the settlement. 12. THE crux of the submission of sri Chowdhury was that the scheme really provided for the extra money in respect of additional or extra work done by the employee. If the employee did not do additional or extra work he was not entitled to this additional or extra money called "incentive bonus. " Thus, that is the substantial reason that the bonus is not included either in the first part or in the third part of limb of the definition of wages under the Act. The Full Bench of the Andhra High court considered Braithwaite and Company case [a. I. R. 1968 S. C. 413] (vide supra), decided by the Supreme Court and Vazir Sultan tobacco Company case [1972-11 L. L. J. 602], decided by a Division Bench of that Court. The said Full Bench also considered case of employees' State Insurance Corporation v. Hyderabad Asbestos Cement Products, Ltd., hyderabad [1976-11 L. L. N. 440], as well as the case of Carborundum Universal, Ltd. v. Employees' State Insurance Corporation, Trichur [1975-11 L. L. N. 449]. The said Full Bench also considered the case of Mahalaxmi Glass works (Private), Ltd. v. Employees' State insurance Corporation [1976-I L. L. N. 401], as well as the case of Employees' State Insurance corporation (by Regional Director, Bangalore)v. Mysore Kirloskar, Ltd. (1974-II L. L. N. 474] and Employees' State Insurance Corporation, Patna v. Bata Shoe Company, Ltd., and another [1976ii L. L. N. 79]. After considering the facts and the ratios of the above mentioned cases the Full Bench of the Andhra high Court come to the following conclusion (in Para. 37 at page 594) : "the result of the above discussion is that in order to fit into the definition of 'wages' so far as incentive bonus or productivity bonus scheme is concerned, the terms of the scheme must be examined and it must be ascertained whether the bonus paid under the scheme is part of the terms of the contract of employment, as was the case in Hyderabad Asbestos Cement Products, Ltd. case (vide supra), before Chinnappa Reddy and pannayya, JJ., and before the Kerala High court in Carborundum Universal, Ltd. case (vide supra), and as is not the case before us or, whether it is an additional remuneration within the meaning of the third part of s. 2 (22) of the Act. If it does not fall either in the category of Part I or Part III, then only it can be said not to be wages and hence only then contribution will not be payable on the amount of bonus paid by the employer to the employees in such a scheme. If as happened in Braithwaite and Company case (vide supra) or in Vazir Sultan Tobacco company case (vide supra), the bonus is paid at the discretion of the employer and can be withdrawn at any time without implementing it, then it would not be wages within S. 2 (22. " 13. IN differing from the judgment under appeal the Full Bench quoted the observation of Sabyasachi Mukherji, J. "it seems to me that the additional remuneration which is sought to be included by the expression and includes other additional remuneration must be remuneration which though no part of the wages, which could be paid as part of the terms of contract of employment. It is true that the payments under the incentive bonus scheme are remuneration but these are remunerations for doing additional work. These are not additional remuneration for doing work under the terms of employment. It is true that the payments under the incentive bonus scheme are remuneration but these are remunerations for doing additional work. These are not additional remuneration for doing work under the terms of employment. If one construes the expression 'and includes other additional remuneration' in the context of the preceding expression, i. e., payment to an employee in respect of any period of authorized leave, lockout, strike which is not illegal or lay-off, one is apt to lead to conclusion that this expression 'and includes' was intended to include only those remunerations which by their natural or in general meaning can form part of wages. " Although the Full Bench differed from the judgment of Sabyasachi Mukharji, J., under appeal they did not give any reason for dissenting from it. 14. AT this stage reference may briefly be made to Braithwaite and Company [a. I. R. 1968 s. C. 413] (vide supra. The facts of that case were that in December 1955, the company introduced the inam scheme. This payment of inam was not amongst the original terms of contract of employment of the employees of the company. In those terms, there was no offer of any reward or prize to be paid for any work done by the employee. The employees were expected to work for certain periods at agreed rates of wages. The only offer under the scheme was to make incentive payments if certain specified conditions were fulfilled by the employees. The company, however, reserved the right to withdraw the scheme altogether without assigning any reason or to revise its conditions at its sole discretion. The payment of the inam was dependent upon the employees exceeding the target of output appropriately applicable to them. But though primarily the right to receive inam depended on the efficient working of the employee, there was another clause which laid down that, if the targets were not achieved due to lack of orders, lack of materials, breakdown of machinary, lack of labour, strikes, lockouts, go-slow or any other reason whatsoever, no inam was to be awarded. The company had also laid down that if any deterioration of workmanship was noticed on the part of the employees in order to achieve the targets prescribed for earning the inam the scheme could be abandoned forthwith. The company had also laid down that if any deterioration of workmanship was noticed on the part of the employees in order to achieve the targets prescribed for earning the inam the scheme could be abandoned forthwith. It was also made clear to the workmen in the scheme that the payment of reward was in no way connected with or part of wages. On these facts it was held by the Supreme Court that the payment of inam though remuneration, could not be said to have become a term of the contract of employment within the meaning of the definition of "wages" as given in sec. 2 (22) of the Employees' State Insurance act. The Supreme Court observed as follows : "even though this offer of incentive payment was made, the appellant, in clear words, reserved the right to withdraw the scheme altogether without assigning any reason or to revise its conditions at its sole discretion. Clearly, if the right to be inam had become an implied condition of the contract of employment, the employer could not withdraw that right at its discretion without assigning any reason, nor could the employer vary its conditions without agreement from the employees concerned. * * * the mere fact that a reward for good work offered by the employer is accepted by the employee after he has successfully satisfied the requirement laid down by the employer for earning reward cannot mean that this payment becomes a part of the contract of the employment. In fact, in this case, there was no question of offer by the appellant and acceptance by the employees as a condition of their services. The employees were already working in accordance with the terms of their contract of employment when the employer decided to make this extra payment if the employees did successfully what they were already expected to do under that contract. It cannot, therefore, be held that this payment of inam even became an implied term of the contract of employment of the employees of the appellant. It cannot, therefore, be held that this payment of inam even became an implied term of the contract of employment of the employees of the appellant. Having regard to the nature of the scheme and particularly having regard to the fact that incentives are earned on extra work done as and by way of reward as is evident from the table set out hereinbefore inasmuch as no worker or employee doing less than 76 per cent of the work-load will be entitled to the said bonus it cannot be said in our opinion that the incentive bonus is included in the expression "wages" as defined in the act. Section 2 (22) of the Act defines "wages" to be : " 2. (22) 'wages' means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied were fulfilled and includes any payment to an employee in respect of any period of authorized leave, lockout, strike which is not legal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two months but does not include. " 15. A worker who does not do 76 per cent of the normal work-load will not be entitled to any bonus under the scheme. Therefore, workmen doing 76 per cent or more of the normal work-load will be entitled to the bonus in the scale set out hereinabove in the judgment. Thus, it is clear that the incentive bonus was payable only if the worker did certain minimum quantity of work. On the contrary, wages is purely a matter of contract between the employer and employee and is payable notwithstanding the fact that the worker does any percentage of the normal work-load. Contractual wages are only subject " to variation by- (1) where the Minimum Wages Act applies; and (2) an Industrial Tribunal fixes pursuant to a reference made under the Industrial disputes Act. The first limb or part of the definition of wages really concerns the contractual relationship between the parties and the third limb cannot be wages in our considered opinion. 16. WITH the utmost respect to the learned Judges of the Andhra Pradesh High Court it is to be noted that their Lordships constituting the Full Bench failed to notice the term "additional" before the expression "remuneration" and the definition of "wages" in the Act. 16. WITH the utmost respect to the learned Judges of the Andhra Pradesh High Court it is to be noted that their Lordships constituting the Full Bench failed to notice the term "additional" before the expression "remuneration" and the definition of "wages" in the Act. Therefore, the additional remuneration must be for additional. work and not for normal or usual work. The scheme, it should be noted, is not a part of the statutory settlement, but although in consequence thereof has not the character of statute. It must be noted that an incentive bonus scheme may be withdrawn or modified in the events mentioned in the scheme itself. Is may be withdrawn totally or modified at the option of the employer. The supreme Court in Braithwaite and Company case [a. I. R. 1968 S. C. 413] (vide supra), laid down that the first part of the term "wages" included remuneration paid under the terms of the contract of employment express or implied but not voluntary payment by the employer which can be withdrawn or varied at the option of the employer. The second part of the definition merely speaks of additional remuneration of the same nature as remuneration mentioned in the first part of the term. "wages" under the Payment of wages Act means all remuneration whether by way of salary, allowances or otherwise expressed in terms of money or capable of being so expressed which would, if the terms of employment express or implied were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment and includes: " (a) Any remuneration payable under act, award or settlement between the parties or order of a Court; (b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; and (c) any additional remuneration payable under the terms of employment whether called a bonus or by any other name. The payment of incentive bouns which depends on the doing of a certain minimum quantity of normal work cannot, in our view, be included in the term either in the first part or the third part of the definition "wages " under the Act. An employee has a right to his wages, but an employee under the incentive scheme under our consideration is not entitled as a matter of right to an incentive bonus. An employee has a right to his wages, but an employee under the incentive scheme under our consideration is not entitled as a matter of right to an incentive bonus. The right depends on the performance of a minimum percentage of normal work load and gradual increase of such performances of work. For all the reasons stated hereinbefore we are of the view that the judgment of Sabyasachi Mukharji, J., must be sustained and this appeal, therefore, in our opinion, has no merit and is dismissed. 17. THERE shall, however, be no order as to costs.