SHAFIUR RAHMAN, J.--Leave to appeal was granted in three matters arising out of a consolidated judgment of the Sindh High Court dated 14-6-1982, to examine whether the 'production bonus' falls within the meaning of 'bonus' as defined in sub-clause (d) of clause (30) of section 2 of the Employees' Social Security Ordinance, 1965 (hereinafter referred to as the Ordinance).
2. Brooke Bond Pakistan Limited, the appellant in Civil Appeal No, 85-K of 1982 was paying but the other two appellants were not paying contribution in respect of 'production bonus' which was for the purposes of computation of contribution assimilated to the 'wages'. It was, however, not assimilating with the wages, the house rent allowance which was being paid to the employees. A controversy eventually arose whether 'production bonus' as admissible to the employees on the basis of a settlement could be assimilated to the wages for the purpose of working out the contribution due. The Law Department of the Sindh Government advised that as it was 'bonus' it was exempt from being treated as part of the 'wages'. The matter was ultimately taken to the Commissioner, Social Security, who in all the three cases held that it was part of the Wages and therefore, liable to be taken into account for working out the contribution to the Social Security Institution. Appeals were preferred in all the three cases to the Social Security Court which reversed this finding and upheld the exemption earlier enjoyed by the appellants in respect of 'production bouns'. The matter ultimately came to the High Court in Miscellaneous statutory appeals. By a consolidated judgment the High Court held that in order to qualify as 'bonus' so as to be excluded from the definition of 'wages' as contained in clause (30) section 2, it must have the following characteristics:-- "(i) it is irregular in its character,
(ii) it does not bear direct nexus with the actual performance of the work,
(iii) it is in the nature of reward, gift or a gratuitous payment, and
(iv) the person receiving it has no right to claim it."
' Applying the test to the 'production bonus' the High Court found it deficient to qualify for exemption or exclusion and upheld the view taken by the Commissioner Social Security. The appellants, therefore, became liable to pay contribution even in respect of 'production bonus' which was treated as part of the 'wages'.
3. Mr. Fateh W. Vellani, Advocate, the learned counsel for the appellants has taken us extensively through the dictionary meaning of the word 'bonus' and also the meaning it has come to acquire in industrial practice and law and has contended that 'production bonus' is also related to profit because its purpose is to create or to generate profit while bonus, in its primary sense, becomes due on earning of the profit. There is, according to the learned counsel, no difference so far as its connection with profitability is concerned. The learned counsel has, however, conceded that the giving of the name 'bonus' by itself would not earn the exclusion. What is called 'production bonus' is also called 'Incentive allowance' and on that account the real character of the benefit has to be examined and determined for assimilating it or not with the wages as defined in clause (30) of section 2 of the Ordinance. The learned counsel has in this connection relied on the decisions of this Court in Pak Cigarette Labour Union v. Pakistan Tobacco Co. Ltd., Karachi and another (PLD 1981 SC 495) and Zeal Pak Cement Factory Ltd. v. The Cement Labour Association (PLD 1960 SC 14) apart from others in the Indian jurisdiction.
4. Mr. S.A. Sarwana, Advocate, the learned counsel for the respondents, has in the first place contended that as the Ordinance is a welfare legislation, beneficial and remedial in nature, it required liberal construction. He has relied in this connection on the decisions of this Court in the cases of Mst. Sakina Bibi v. Crescent Textile Mills Limited and others PLD 1984 SC 160, Kohinoor Chemical Co. Ltd. And another v. Sindh Employees' Social Security Institution and another (PLD 1977 SC 197), Divisional Superintendent, P.W.R., Karachi v. Bashir Ahmad (PLD 1973 SC 589) and Marker Employees' Union v. Marker Alkaloids Ltd. And others (1976 SCMR 82). He has referred also to the varied concept of 'bonus' in industrial law and practice to demonstrate that what is termed as 'production bonus' is in fact an 'incentive allowance' in the nature of `wages' having fixity and permanence unlike 'bonus' dependent or contingent on profitability of the enterprise as a whole and not on the level of production achieved by each individual worker. It is not at all linked with the profitability. According to the learned counsel, bonus in its primary sense is linked with profitability and is dependent on it. Bonus in its primary sense is not linked with the individual performance of each worker. According to him, the test applied by the learned Judge in the High Court was the most appropriate and 'production bonus' was covered by the term "wages" and not excluded by the definition provided in the Ordinance.
5. The definition of 'Wages' contained in the Ordinance is as hereunder:-- "'Wages' means remuneration for service paid or payable in cash or in kind to a secured person, not being less than remuneration based on the minimum rates of wages declared under the Minimum Wages Ordinance, 1961 (XXXIX of 1961), without taking account of deductions for any purpose, under a contract of service or apprenticeship, expressed or implied, and shall be deemed to include any dearness allowance or other addition in respect of the cost of living and any payment by the employer to a secured person in respect of any period of authorised leave, illegal lock-out or legal strike; but does not include--
(a) any payment for overtime; or
(b) any sum paid to the person employed to defray special expenses entailed by the nature of his employment; or
(c) any gratuity payable on discharge; or
(d) any sum paid as bonus by the employer."
6. The use of the word and expression "means" and "deemed to include" make it a comprehensive or an exhaustive definition. The exclusion clause enumerates certain items and one such item is "any sum paid as bonus by the employer". The word 'bonus' is not defined in the Ordinance and when a word is not defined, its ordinary popular meaning is ordinarily to be taken into consideration. The word 'bonus' has a primary meaning according to the definition given in the New English Dictionary in the following words: "A boon or gift over and above what is nominally due as remuneration to the receiver and which is therefore something wholly to the good."
' Corpus Juris Secundum, gives the following meaning to the word `bonus':-- "An allowance in addition to what is usual current or stipulated a sum given or paid beyond what is legally required to be paid to the recipient something given in addition to what is ordinarily received by or strictly due to the recipient." and adds: "It has been said to carry the idea of something uncertain and indefinite, something which may or may not be paid depending on varying circumstances and under particular conditions has been said to imply a benefit accruing to him who offers it and an inducement to the offeree."
' The secondary meaning which it has come to acquire is of a method of payment of wages. It is in this context that it has been given the colour of 'production bonus' or 'incentive allowance'. The dictionaries give both these meanings to the word 'bonus'. For example, Webster's Third New International Dictionary gives its meaning as hereunder:-- (i)"money or an equivalent given in addition to the usual compensation (surplus profits distributed among the workers as a bonus); the payment made by the employer under a bonus system."
(ii) "bonus system also bonus plan wage payment whereby a worker is paid an additional amount for accomplishing more than a specified measure of work."
' Black's Law Dictionary defines it as hereunder:-- "An addition to salary or wages normally paid for extraordinary work. An inducement to employees to procure efficient and faithful service."
' Webster's New World Dictionary of the American Language defines it as hereunder:--
(i) "extra payment over and above salary given to an employee as an incentive or reward."
(ii) "bonus refers to anything given over and above the regular wages, salary, remuneration, etc. (a Christmas bonus, a soldier's bonus)."
' The Shorter Oxford English Dictionary defines it in the following words:- "A premium for services rendered or expected."
7. In the case of Muir Mills Col. Ltd. v. Suti Mills Mazdoor Union (AIR 1955 SC 170) a distinction between two types of bonus, one which is ex gratia and the other which is related to or connected with any contract of employment of any worker, was made. In that case the dispute related to the first category and not at all to the second category of the bonus, and after examining the various definitions, the court held as follows:-- "It is, therefore, clear that the claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits. If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus. Bonus is not a deferred wage. Because if it were so it would necessarily rank for precedence before dividends. The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees. If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could be employees claim the distribution of bonus during that year."
' In the case of Mathuradas Kanji and others (AIR 1958 SC 899), the exact question was "whether the workmen are entitled to claim incentive bonus de hors the agreements?" This was disposed of by observing as hereunder:-- "Bonus schemes vary with the conditions obtaining in different industries. Though bonus is a cash payment made to the workmen in addition to the wages, it is no longer considered as an ex gratia payment. The claim, if raised, becomes and Industrial Dispute and the award made thereon is binding on the employer as well the employee. One of the categories of bonus is described as 'incentive bonus'. The name indicates that it is given as a cash incentive to greater effort on the part of the labour. But the essential condition for the payment of incentive bonus just like any other kind of bonus is that the industry concerned must earn profits part of which is due to the contribution which the workmen made in increasing production."
' In the case of M/s. Titaghur Paper Mills Co. Ltd. (AIR 1959 SC 1095), the 'production bonus' or the 'incentive bonus' came up directly for consideration and its nature was described in the following words:- "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. That is the reason why all these plans are known as Incentive Wage Plans and generally speaking have little to do with profits. The extra payment depends not on extra profits but on extra production. This extra payment calculated on the basis of extra production is in a ease like the present where the payment is made, after the annual production is known, in the nature of emoluments paid at the end of the year. Therefore generally speaking, payment of production bonus is nothing more nor less than a payment of further emoluments depending upon production an incentive to the workmen to put in more than the standard performance. Production bonus in this case also is of this nature and is nothing more than additional emolument paid as an incentive for higher production."
' In this case it was not a 'production bonus' simpliciter but even that was linked with profitability as would appear from the following observations made in the judgment:- "Accordingly the clause prescribes that the directors may at their sole discretion either cancel altogether or reduce in scale of monetary payments the bonus in any one or more financial years in which the gross profit earned by the company over the whole financial year is not sufficient to meet fixed dividends and interest, depreciation charges and taxation and thereafter pay for the whole year dividend not less than 10 per cent. To the ordinary share-holders of the company."
' The Court after considering all aspects of the case held as hereunder:-- "It is clear therefore that his bonus scheme is not the same as the profit bonus worked out under the Full Bench formula and it cannot be called a profit bonus scheme even otherwise. This is nothing more nor less than a pure production bonus scheme based on tonnage, depending on certain conditions one of which is related to profits also. The nature of this bonus, therefore, in our opinion, is entirely different from the nature of profit bonus under the Full Bench formula and we do not see why if there is an available surplus of profits according to the Full Bench formula, the workmen should not get profit bonus in accordance with that formula. The two things, in our opinion, are different. Under the scheme what the workers get is a supplementary emolument worked out on certain bases. Under the Full Bench formula, what they get is something out of the profits, if there is an available surplus on the ground that both capital and labour contribute to the accrual of profits and it is only fair that labour should get a part of it."
' In Zeal Pak Cement Factory Ltd. v. The Cement Labour Association, there was a claim made for bonus in addition to the 'production bonus' which was being already availed of. The Court linked that claim to the profitability and while distinguishing the two, denied it in the words as hereunder:- - "..It is entirely unreasonable and indicative of cupidity, for the workers to demand that out of this miserably small sum they should be provided with gratification in addition to the legal remuneration which they had already enjoyed. It was admitted before us that the workers throughout had been gaining production bonus from the very commencement of the working of the factory. We consider that the demand for bonus should on the face of it have been rejected withoout any hesitation."
' In the case of the New Manech Chowk Spg. And Wvg. Co. Ltd. Ahmedabad and others (AIR 1961 SC 867) the following types of bonuses were identified:-- "In order to determine this question, we have to look at the concept of bonus as evolved in the industrial law of this country by industrial tribunals and now by the decision of this Court. So far as we can see, there are four types of bonuses which have been evolved under the industrial law as laid down by this Court. Firstly, there is what is called a production bonus or incentive wage (see Titaghur Paper Mills v. Its Workmen (AIR 1959 SC 1095); the second is bonus as an implied term of contract between the parties. (see Ispahani Ltd. v. Ispahani Exployees' Union, (1960) 1 SCR 24: (AIR 1959 SC 1147); the third is customary bonus in connection with some festival (see Grahams Trading Co. v. Its Workmen (1960) 1 SCR 107: (AIR 1959 SC 1151) and the fourth is profit bonus which was evolved by the Labour Appellate Tribunal in 1950-2 Lab. LT 1247 and which has been considered by this Court fully in two cases."
8. The dictionary meaning, the industrial practice and the judicial precedent, all clearly establish the existence of two categories of bonus, the one dependent on the profitability of the enterprise as such and the other related to the work,the individual or group effort and related to the wages of the workmen. It is true that the latter is also as its object, the profitability and solvency of the enterprise, but the earning of this bonus is not dependent on it in any manner. The requisite efforts made or target achieved creates the entitlement irrespective of the profitability. The bonus of the first category for that reason has those characteristics which have been culled out from its nature and content i,e. It is irregular character, that it does not bear direct nexus with the actual performance of the worker that it is in the nature of reward, gift or a gratuitous payment and the person receiving it has no right to claim it unless profitability requirement is established and justifies it. It is this type of bonus which has been excluded from the definition of wages and not what bears a direct nexus with the performance of the workmen which is certain and definite and is earned by putting in the requisite effort or on achieving the target irrespective of the fact whether the enterprise makes a profit or does not.
' In the circumstances and for the reasons given, we find no error of law or fact in not excluding the 'production bonus' from the definition of 'wages' as contained in the Ordinance. These appeals have no merit and are dismissed leaving the parties to bear their own costs.