Full Judgment Text
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PETITIONER:
KERALA STATE ELECTRICITY BOARD & ANR.
Vs.
RESPONDENT:
KURIEN E.KALATHIL & ORS.
DATE OF JUDGMENT: 19/07/2000
BENCH:
Y.K.Sabharwal, S.R.Babu
JUDGMENT:
Y.K.SABHARWAL J.
Leave granted.
An agreement dated 16th September, 1981 was executed
between the first respondent (for short ‘the contractor’)
and the Kerala State Electricity Board (for short ‘the
Board’) for construction of a dam. This was pursuant to a
tender notice issued by the Board inviting tenders; tenders
submitted by the contractor; correspondence exchanged
between the parties and the negotiations held. A
supplementary agreement was also executed; extensions for
completion of work were granted and there were deviations of
works as well which aspects are, however, not necessary to
be narrated for the purpose of the disposal of these
matters.
The Government of Kerala issued a notification dated
30th March, 1983, under the Minimum Wages Act, 1948 revising
the minimum wages payable to the employees employed in the
works stated in the notification w.e.f. 1st April, 1983.
The contractor claims that he started paying revised minimum
wages to the employees and applying the labour escalation
formula, the Board made payments to the contractor for the
work done from 1st April, 1983 till December, 1984. The
Board, however, stopped making payment of labour escalation
from January, 1985. By letter dated 28th April, 1986,
Government of Kerala wrote to the Board that the works in
question come under Item 31 of the Schedule added to the
Schedule by Kerala Government by notification dated 23rd
December, 1969 and the work undertaken by the contractor,
though may include stone crushing as a part of their labour,
but the notification dated 30th March, 1983 does not apply
to the work of constructing a dam and hence the contractor’s
claim for escalation under notification dated 30th March,
1983 is not maintainable. Thus, the Board stopped clearing
the bills for enhanced minimum wages claimed by the
contractor. It is claimed by the contractor that a
settlement entered with the workers regarding payment of
enhanced wages as per 1983 notification, stipulated that the
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increased wages paid will be treated as advances to be
adjusted later depending upon the decision of the dispute.
The validity of the letter/direction dated 28th April,
1986 of the State Government was considered by the Kerala
High Court in judgment dated 25th September, 1990. By the
said judgment, four writ petitions were disposed of by the
High Court noticing that the Advocate General after
obtaining instructions from the State Government agreed to
withdraw the letters/direction dated 28th April, 1986
leaving it free to the authorities to take a decision in
regard to the applicability of the notification dated 30th
March, 1983 on an objective assessment of legal and factual
position. In view of the withdrawal of the said letter, the
Court relegated the parties to other remedies available to
them to work out their respective rights. The parties were
thus directed to work out their rights either before the
Civil Court or before the other authorities under the
Industrial Disputes Act or under the Payment of Wages or
other relevant law applicable. In view of this decision,
the State Government referred the dispute regarding the
applicability of the notification dated 30th March, 1983 to
the Industrial Tribunal. According to the contractor, he
was making payment of enhanced wages to the employees as per
the notification dated 30th March, 1983 despite that from
January, 1985, the Board had stopped making payment of the
labour escalation to the contractor. The increased payment
said to have been made by the contractor to the employees
was to be treated as advances to be adjusted later depending
upon the decision of the dispute. By an award on 14th
October, 1993 the Industrial Tribunal held that the revised
minimum wages notification was applicable to the works in
question and that the workmen concerned in the dispute are
entitled for wage rates and other benefits fixed in the
minimum wage notification issued by the State Government on
30th March, 1983 in the case of employees coming under
Clauses 7 and 8 of Part I of the Schedule of Minimum Wages
Act till a separate minimum wage notification is issued in
relation to Item 31 of the First Schedule. The Tribunal
further held that the additional wages received by the
workmen shall be treated as part of the wages. It is not in
dispute that the award has become final.
There is no dispute that the workmen are entitled to
enhanced wages in terms of the notification dated 30th
March, 1983. The Board does not dispute its liability to
reimburse the contractor if in fact the payment of enhanced
wages has been made by the contractor to the workmen in
terms of notification. The Board, however, claims that the
contractor has failed to prove the payment of enhanced wages
to the workmen.
According to the contractor, he made payment of a sum
of Rs.9,93,93,868/- towards the escalated minimum wages to
the workmen for the period commencing from 1st January, 1985
to 31st March, 1993 and he is entitled to be reimbursed for
the said amount. The contractor is said to have entered
into a memorandum dated 4th July, 1994 with the workmen
through their union giving effect to the award of the
industrial tribunal and the said settlement has also been
endorsed by the Labour Officer and it shows payment of
aforesaid sum having been made by the contractor. The Board
accepted the award but at the same time, constituted a
committee to go into the matter of making payment by the
contractor in implementation of the award of the tribunal.
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The Committee gave its report which was filed alongwith the
counter affidavit of the Board in the High Court. The
report inter alia notices that muster roll produced by the
contractor indicates payment of minimum wages but states
that the committee cannot certify the authenticity of
payment in the absence of other documents like wages pay
slips/returns. It seems, in the meanwhile, the Board was
making payments of various amounts as advances to the
contractor under the various heads to enable the work to
proceed. However, on 23rd December, 1994, the Board ordered
recovery of these advances amounting to Rs.3.65 crores with
interest from the works bill of the contractor from January,
1995 onwards. This led to the contractor filing a writ
petition (O.P. 283 of 1995) in the High Court seeking
quashing of the letter dated 23rd December, 1994 as also
praying for issue of directions to the Board for paying to
the contractor the amounts of labour escalation with
interest. During the pendency of the writ petition, under
interim orders, a sum of Rs.4 crores in instalments was paid
to the contractor. These directions, it seems, were issued
considering the public interest involved in the early
construction of the dam. While the writ petition (OP No.
283 of 1995) was pending, the Board passed an order on 26th
February, 1997 terminating the contract. This led to filing
of another writ petition (OP No. 10759 of 1997). Both
these writ petitions were disposed of by the common impugned
judgment. The High Court has held the termination of the
contract to be arbitrary, unjust and not in public interest
and has directed the Board to pay to the contractor the
labour escalation amounts. It has been further directed
that the Board shall pay to the contractor interest @ 18% on
the amounts shown in the statement Exhibit P20.
Mr. Rawal, learned Additional Solicitor General has
put forth two contentions. The first contention is about
the maintainability of the writ petition ( O.P. 283 of 1995
) wherein directions as aforesaid for payment were issued by
the High Court. Learned counsel submits that the writ
petition is not the proper and appropriate remedy. The
second contention is that the contractor, in absence of
proof of actual payments of enhanced wages to the workmen,
is not entitled to get reimbursement of any amount from the
Board. Learned counsel submits that in case the contractor
proves payment to the workmen as per the notification dated
30th March, 1983, the Board will have no difficulty for
reimbursement.
Elaborating the first submission, learned counsel for
the appellant submits that the dispute relating to
interpretation of a clause in a contract and implementation
of such clause cannot be made subject matter of a writ
petition and remedy of the aggrieved person lies in
approaching the Civil Court or some other appropriate forum.
It was further contended that all contracts entered into by
a body whose existence may be governed by the provisions of
a statute are not statutory contracts.
On the other hand, it was contended for the contractor
that the obligation of the Board arises as soon as the wages
payable to the workmen get enhanced on account of Government
notification revising minimum wages and it does not
contemplate any investigation into the question whether
enhanced payments were in fact made or not. The contention
further is that under the Minimum Wages Act and under the
industrial law, the authorities do oversee the payments and
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make sure that the workmen are not denied such benefits. It
was further contended that the Board did not contend in the
earlier writ petition before the High Court or even before
the industrial tribunal that the payment as per the
notification was not made by the contractor and, in fact,
the award of the industrial tribunal which has become final
records the factum of payment at the enhanced revised rate
to the workmen and further that the memorandum between the
union and the contractor witnessed by the Deputy Labour
Officer also notices the factum of such payment. It was
stressed that, in fact, the contractor had sought issue of
Writ of Mandamus directing the Board to discharge its
obligation under the notification issued under the Minimum
Wages Act, the directions contained in the judgment dated
25th September, 1990 and the award dated 14th October, 1993
and to further issue a Writ of Mandamus to the Board
directing it to pay to the petitioner the amount shown in
the settlement between the contractor and the workmen
through its union alongwith the interest.
We find that there is a merit in the first contention
of Mr. Rawal. Learned Counsel has rightly questioned the
maintainability of the writ petition. The interpretation
and implementation of a clause in a contract cannot be the
subject matter of a writ petition. Whether the contract
envisages actual payment or not is a question of
construction of contract? If a term of a contract is
violated, ordinarily the remedy is not the writ petition
under Article 226. We are also unable to agree with the
observations of the High Court that the contractor was
seeking enforcement of a statutory contract. A contract
would not become statutory simply because it is for
construction of a public utility and it has been awarded by
a statutory body. We are also unable to agree with the
observation of the High Court that since the obligations
imposed by the contract on the contracting parties come
within the purview of the Contract Act, that would not make
the contract statutory. Clearly, the High Court fell into
an error in coming to the conclusion that the contract in
question was statutory in nature.
A statute may expressly or impliedly confer power on a
statutory body to enter into contracts in order to enable it
to discharge its functions. Dispute arising out of the
terms of such contracts or alleged breaches have to be
settled by the ordinary principles of law of contract. The
fact that one of the parties to the agreement is a statutory
or public body will not of itself affect the principles to
be applied. The disputes about the meaning of a covenant in
a contract or its enforceability have to be determined
according to the usual principles of the Contract Act.
Every act of a statutory body need not necessarily involve
an exercise of statutory power. Statutory bodies, like
private parties, have power to contract or deal with
property. Such activities may not raise any issue of public
law. In the present case, it has not been shown how the
contract is statutory. The contract between the parties is
in the realm of private law. It is not a statutory
contract. The disputes relating to interpretation of the
terms and conditions of such a contract could not have been
agitated in a petition under Article 226 of the Constitution
of India. That is a matter for adjudication by a civil
court or in arbitration if provided for in the contract.
Whether any amount is due and if so, how much and refusal of
the appellant to pay it is justified or not, are not the
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matters which could have been agitated and decided in a writ
petition. The contractor should have been relegated to
other remedies.
Ordinarily, in view of aforesaid conclusions on the
first contention, we would have allowed the appeal and
directed dismissal of the writ petition (O.P.283 OF 1995)
without examining the second contention. However, despite
holding that the disputes in question could not be agitated
in a writ petition and thus the High Court wrongly assumed
jurisdiction in the facts of the case, yet we are not
inclined in the exercise of our power under Article 136 of
the Constitution, to dismiss the writ petition of the
contractor at this stage because that is likely to result in
miscarriage of justice on account of lapse of time which may
now result in the foreclosure of all other remedies which
could otherwise be availed of by the contractor in the
ordinary course. Those remedies are not efficacious at the
present stage and, therefore, in view of peculiar
circumstances of the case, we have examined the second
contention and the factors which weighted with the High
Court in granting relief.
The contract was awarded in 1981. It was for
construction of a dam. The expeditious construction of the
dam was necessary for generation of hydro electric power in
the State. The construction was at final stage and it is in
public interest that the construction is completed without
any further delay. The notification for minimum wages was
issued in 1983 and admittedly it was applicable to the
construction in question. The High Court considering the
peculiar facts of the case and the inordinate delay which
had already taken place in completion of the work and
bearing in mind the fact that work of the dam was one of
national importance and admittedly the labour escalation
formula had been accepted, directed the payment of the
amount worked out as per the formula to the contractor and
further issued directions fixing time frame for the
completion of the work. The formula regarding labour
escalation payment was incorporated in the correspondence
exchanged between the parties prior to entering into formal
contract on 16th September, 1981. The facts broadly taken
into consideration by the High Court were that the
contractor initially in his letter dated 18th March, 1981
submitted along with the tender had suggested the additional
financial liability to be borne as a consequence of increase
in wages or other benefits to labour to be reimbursed with
reference to actuals. During the negotiations, the Board
expressed its unwillingness to accept such proposals of
reimbursement of increased wages paid, after quantification
of the actual disbursement of such increased wages and was
willing to provide for revision in the rate structure on the
basis of an agreed formula to take into account the increase
in the minimum wages statutorily notified. In this view,
the contractor suggested formula for revising the rate
structure. The formula initially suggested by the
contractor in his letters dated 21st May, 1981 and 5th June,
1981 was not accepted by the Board and the Chief Engineer in
his letter dated 11th June, 1981 asked the contractor to
modify the conditions in such a way that the terms and
formula are acceptable to the Board. Thereupon, the
contractor submitted the revised formula in his letter dated
15th June, 1981. This was accepted by the Board when it
communicated to the contractor by letter dated 1st July,
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1981 that the contract has been awarded to the contractor.
The formula regarding labour escalation as described in the
letter dated 15th June, 1981 was accepted by the Board
subject to the stipulation that the minimum wages for
ordinary ‘mazdoor’ will not be less than Rs.13/- per day
viz. the rate as per PWD Schedule for rates 1980 applicable
to the locality. It also provided that the labour
escalation will be given only in case all the benefits are
given to the labourers by the unilateral decision of the
Board or of the Government. It was thus evident that the
contractor was entitled to at the rate structure revised as
per agreed formula. It was also noticed by the High Court
that the Board did not take a stand before the industrial
tribunal that the contractor was not paying the minimum
wages. The workmen through union entered into a Memorandum
of Settlement with the contractor which showed payment at
the revised rate which was amount sought to be recovered by
the contractor from the Board. The award mentioned that the
additional wages received by the workmen as advance shall be
treated as part of their wages. The Board had accepted the
award. In fact, the Board was making payment of advances to
the contractor presumably to be adjusted against labour
escalation as and when the dispute is settled.
In view of the aforesaid facts, the High Court
directed the Board to discharge its obligation under the
contractual provisions. It was noticed that earlier the
Board had made payment to the contractor for enhanced wages
from 1st April, 1983 to 31st December, 1984. Under the
circumstances, declining to accept the second contention, we
refrain from interfering with the directions for payment
given in the impugned judgment except in respect of the rate
of interest awarded by the High Court.
The High Court has directed the Board to pay to the
contractor the amounts shown in the Statement EX.P-20
alongwith interest @ 18% per annum. Having considered the
totality of the circumstances, we feel that it would be just
and proper to award interest @ 9% per annum instead of 18%.
In the statement EX.P-20, the contractor has calculated
interest @ 18% per annum. The interest amount would now be
calculated at 9% instead of 18% per annum. The impugned
judgment of the High Court is modified accordingly.
The appeals are thus partly allowed as above leaving
the parties to bear their own costs.