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2007 DIGILAW 56 (ORI)

Niranjan Das v. Union of India

2007-01-18

A.S.NAIDU

body2007
JUDGMENT A. S. NAIDU, J. : This is an appeal under Section 39, of the Arbitration Act, 1940. The appellant-Contractor inter alia chal¬lenges the order dated 05.12.2000 passed in Misc. Case No.249 of 1999 arising out of T.S. No.225 of 1999 by the learned Civil Judge (Senior Division), Bhubaneswar. 2. The appellant entered into a contract with the respon¬dent-Railways on 28.3.1990 for supply of 12000-cum, of hard broken stone ballest of 50 mm size and to spread the same on the railway track in between Gorakha Nath-Rahama Station of Cuttack-Paradeep Section. It is submitted that soon after execution of the agreement the appellant-Contractor commenced the work. He made necessary arrangements for collection and supply of hard broken ballest of the required size. It is alleged that though the Contractor was always ready and willing to execute the work but due to non-cooperation of the concerned Engineer of the Railways he could not proceed with the work, nor could complete the same within the time stipulated in the agreement. While matter stood thus, the agreement was cancelled on 12.9.1991. Due to such cancellation disputes cropped up between the parties and the matter was referred to arbitration. It is pertinent to men¬tion here that in consonance with the terms of agreement two high ranking officers of Railway Department were appointed as Arbitrators to decide the dispute. After receiving notice the appellant filed his claim petition and respondent-railway submit¬ted their objection. The Arbitrators by a reasoned order dated 23.12.1998 awarded a sum of Rs.8,33,070/- in favour of the appel¬lant apart from granting other ancillary reliefs. After the award was pronounced a petition was filed by the appellant before the learned Civil Judge (Senior Division), Bhubaneswar for making the award rule of the Court. The said petition was registered as T.S. No.225 of 1999. In the said case a petition was filed by the respondent challenging the award, which was registered as Misc.Case No.249 of 1999. The main ground on which the award was challenged by the respondent was that, in the absence of any escalation clause the arbitrators acted illegally and with mate¬rial irregularity in awarding a sum of Rs.8,33,070/- in favour of the appellant towards escalation of minimum wages for the labour¬ers. The main ground on which the award was challenged by the respondent was that, in the absence of any escalation clause the arbitrators acted illegally and with mate¬rial irregularity in awarding a sum of Rs.8,33,070/- in favour of the appellant towards escalation of minimum wages for the labour¬ers. This petition was resisted by the appellant but then the Court below relying upon the ratio of the decision of the Supreme Court in the case of State of Orissa v. Sudhakar Das (dead) reported in 90 (2000) C.L.T. 198 (S.C.) held that in the absence of any escalation clause in arbitration agreement an arbitrator can not assume any jurisdiction to award any amount towards escalation and as such the portion of the award granting escala¬tion towards wages is clearly not sustainable and there was a patent error. On the basis of such conclusion the award was made rule of the Court to the extent of Rs.1,87,230/-, in other words a sum of Rs.6,45,840/- awarded by the arbitrators was set aside. 3. Being aggrieved the appellant-contractor has approached this Court. Learned counsel for appellant humbly submits that the Court below has not properly appreciated the facts, and the reasons assigned are contrary to law. It is further submitted that an award can be set aside only on the ground as specified under Sections 30 and 33 of the Arbitration Act, 1940. According to the appellant as the award was a reasoned one and it did not suffer from any perversity apparent on the face of the record, the Court below acted illegally in setting aside a portion of the award. Relying upon the decision of the Supreme Court in the case of Food Corporation of India v. A.M. Ahmed & Co. & another re¬ported in 2006(4) Arb. LR 155 (SC) learned counsel for the appel¬lant submits that bereft of an escalation clause in the agree¬ment, if the arbitrators were satisfied that there was in fact escalation of wages of the labourers and the contractor had paid any extra amount, the same should be awarded in favour of the Contractor. In short, according to learned counsel for the appel¬lant the decision of the Supreme Court in Sudhakar Das case (supra) has been varied by a later decision and, as such, the reasonings given by the Court below were not justified. 4. These submissions are strongly repudiated by learned counsel for the respondent. In short, according to learned counsel for the appel¬lant the decision of the Supreme Court in Sudhakar Das case (supra) has been varied by a later decision and, as such, the reasonings given by the Court below were not justified. 4. These submissions are strongly repudiated by learned counsel for the respondent. It is submitted that even according to the latest Supreme Court decision the conditions for awarding payment to the contractor on account of escalation of wages are (i) there should be specific clause to that effect; and the delay or laches on the part of the contractor in completion of the work if any should be explained. It is submitted that having not been satisfied, the Contractor was not entitled any amount on that head, and the Court below was justified in setting aside the award so far as claim on that account. In support of such submission learned counsel for the re¬spondent relies upon Clauses 54 and 55 of the agreement. 5. After hearing the learned counsel for the parties at length and perusing the material available, this Court finds that admittedly a notification was issued by the State Government on 15.4.1991 enhancing the price of minimum wages w.e.f. 01.7.1990. Clause 54 of the agreement referred to by learned counsel for the respondent clearly reveals that responsibility was cast upon to the contractor to pay enhanced wages and ensure compliance with the provisions of the Minimum Wages Act, 1948. The said clause further stipulated that if the contractor failed to do so, the enhanced wages on account of any direction of the concerned au¬thority under the aforesaid Act the said should be recovered from the contractor. 6. This fact has been elaborately dealt with by the arbi¬trators in paragraph 21(a) of the award under the heading “price escalation due to increase in minimum wages of Labour”. After taking note of the submissions made and perusing the terms and conditions of the agreement the two arbitrators who happened to be high ranking officers of the railways held as follows :- “The General conditions of the contract enjoin upon the contractor to comply with the provisions of Payment of Wages Act. After taking note of the submissions made and perusing the terms and conditions of the agreement the two arbitrators who happened to be high ranking officers of the railways held as follows :- “The General conditions of the contract enjoin upon the contractor to comply with the provisions of Payment of Wages Act. Further, the Railway is the principle employer in any contractual work and it is also the Railway’s responsibility to see that the wages are paid to the contractor’s labour as per the minimum wages fixed by the State Government from time to time. The con¬tractor has also been advised by the Railway regarding minimum wages to be paid. Therefore, referring to 43.(1) and stating that the contractor’s claim is not tenable on account of his not giving the monthly statement of claims amounts to Railways dis¬owning the responsibility of ensuring the minimum wages to the contractor’s labour and using a minor technical condition of the GCC to absolve itself in the mater of its statutory duty for seeing that the minimum wages are indeed paid. From the wages register, it would appear prima facie that the contractor has paid these wages. The statutes of the land take precedence over legal quibbling. Hence claim admitted (Rs.6,45,840/-)” 7. In the case at hand, it further appears that the Sub-Divisional Engineer, South Eastern Railway, Khurda by his letter dated 15.4.1991 called upon the appellant-contractor and so also other contractors to pay the labourers engaged by them for execu¬tion of railway contract works according to the enhanced wages as stipulated under the revision of Minimum Wages Act. According to learned counsel for the appellant in consonance with the said letter in fact all the labourers engaged in the work were paid wages according to enhanced rate prescribed under the Minimum Wages Act. He also submitted that in view of the fact that the enhanced wages had been paid in consonance with the provisions of law, reimbursement of extra amount paid by the employer to the labour on account of the enhancement of minimum wages and as such amounts had actually been paid, the contractor should not suffer as has been held by the Supreme Court in the case of Tarapore & Co. v. State of M.P. reported in (1994)3 Supreme Court Cases 521. v. State of M.P. reported in (1994)3 Supreme Court Cases 521. In the case of Food Corporation of India (supra) the Supreme Court has observed as follows : “Escalation, in our view, is normal and routine incident arising out of gap of time in this inflationary age in performing any contract of any type. In this case, the arbitrator has found that there was escalation by way of statutory wage revision and, therefore, he came to the conclusion that it was reasonable to allow escalation under the claim. Once it was found that the arbitrator had jurisdiction to find that there was delay in execution of the contract due to the conduct of the FCI, the Corporation was liable for the consequences of the delay, namely, increase in statutory wages. Therefore the arbitrator, in our opinion, had jurisdiction to go into this question. He has gone into that question and has awarded as he did. The arbitrator by awarding wage revision has not misconducted himself. The award was, therefore, made rule of the High Court, rightly so in our opinion.” That apart it appears that the agreement was executed on 21.3.1990 and the escalation of wages was given effect to on 01.7.1990. Thus question of any delay in execution of the work does not arise in the present case. 8. In view of the discussions made above after going through the materials available, this Court finds that the arbi¬trators were justified in awarding a sum of Rs.6,45,840/- in favour of the contractor towards minimum wages of labourers at escalated rates. Such payment was also permissible inconsonance with the decision of the Supreme Court in the case of Food Corpo¬ration of India (supra). The reasonings given by the Arbitrators are reasonable and do not suffer from and absolutely an error apparent. Thus this Court has no hesitation to set aside the impugned order passed by the learned Civil Judge (Senior Division), Bhubaneswar setting aside a portion of the award of Rs.6,45,840/- and direct that the entire award of the Arbitrators be made a Rule of the Court, and I direct accordingly. The M.A. is accordingly disposed of. Parties to bear their own cost. M.A. disposed of.