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Madras High Court · body

2015 DIGILAW 3026 (MAD)

R. F. L. Wilson v. General Manager, Southern Railway, Chennai

2015-09-09

R.SUBBIAH

body2015
ORDER 1. The writ petition has been filed by the petitioner praying to quash the impugned proceedings dated 27.03.2015 in No. U/MD.52/CCC/TN passed by the 2nd respondent, rescinding the contract given to the petitioner as per the terms of Clause 55, 55A & 62(1)(vi)(vii) of Standard General Conditions of Contract and Clause 15 of Contract Agreement. 2. The case of the petitioner, in brief, is as follows:- 2.1 The petitioner had participated in the tender for cleaning Tuticorin Railway Station in 2012 and he was the successful bidder and he was awarded with the said contract for two years upto 29.07.2014. During the said period, he was given award for keeping the Railway Junction Clean by the southern Railway. Thereafter also, for the second term, the petitioner was awarded with the said contract for the period running from 30.07.2014 to 28.07.2016 and accordingly an agreement vide No. U/MD.52/CCC/TN, dated 29.12.2014, was entered into between the petitioner and the 2nd respondent herein. As per the agreement dated 29.12.2014, a sum of Rs. 1,77,553/- shall be the rate of contract per month and total value of agreement was fixed at Rs. 47,87,965/- i.e. for 730 days. The petitioner has also submitted two bank guarantees for Rs. 46,000/- and Rs. 1,96,910/- valid up to 11.12.2016 and 30.12.2016 respectively and the petitioner has deposited a sum of Rs. 1,07,818/- towards security deposit. As agreed, the petitioner has been performing his work as per the contract and the work was started on 30.07.2014. From July 2014, the petitioner submitted his bills, till February 2015 i.e. for 8 months. The petitioner has spent nearly Rs. 8 lakhs towards the salary and materials. But, till date, the bills submitted by the petitioner have not been cleared by the respondents. Because of the non-payment of bills raised by the petitioner, he was not in a position to make payment of wages properly to his labourers, for the month February 2015. Raising the same as an issue, a seven days notice was issued by the 2nd respondent in No. U/MD.52/CCC/TN, dated 16.03.2015, calling upon the petitioner to pay the wages in seven days, failing which further action to terminate his contract would be taken. The petitioner has sent a representation dated 21.03.2015 through his representative to the 2nd respondent expressing his inability to make payment because of non-payment of bills by the Railways. The petitioner has sent a representation dated 21.03.2015 through his representative to the 2nd respondent expressing his inability to make payment because of non-payment of bills by the Railways. There was no consideration of the said explanation and there was no reply from the respondents. Once again on 23.03.2015, another notice was served on the petitioner giving 48 hours notice. The petitioner has given reply dated 25.03.2015 stating that he requires time till 10.04.2015 to pay the wages to the contractors. However, the petitioner was served with impugned order dated 27.03.2015 in No. U/MD.52/CCC/TN, rescinding the contract and forfeiting the security deposit and threatening to encash the Bank Guarantee. 2.2 It is further case of the petitioner that in fact, by proceedings dated 16.03.2015 already the Divisional Office, Medical Branch, Madurai had imposed a penalty on the petitioner under various heads, which includes the non-payment of wages to labourers. Thus, the petitioner is doubly jeopardized. Hence, the petitioner has filed the present writ petition seeking to quash the impugned order. 3. The respondents have filed a common counter affidavit, inter alia, stating that the petitioner was issued with Letter of Acceptance vide proceedings No. U/MD52/CCC/TN dated 16.07.2014 for starting the work of Comprehensive Cleaning Contract of Tuticorin Railway Station. Within fifteen days from the date of issuance of LOA, the contractor shall remit performance guarantee being Rs. 2,39,399/- (5% of the total value of contract) within 60 days from issuance of Letter of Acceptance. The petitioner remitted only a part amount of Rs. 46,000/- in the form of Bank Guarantee Bond No. 82711PEBG140010, dated 12.09.2014 instead of full payment and the petitioner did not remit the full payment even after lapse of sixty days. The petitioner was given fifteen days for remittance of the balance amount and the petitioner remitted an amount of Rs. 1,96,910/- only on 30.09.2014 in the form of Bank Guarantee Bond No. 82711PEBG140011 dated 30.09.2014. On receipt of two Bank Guarantee Bonds and after confirming the genuineness, an agreement was entered with the petitioner on 29.12.2014. But, the petitioner has been deficient in supplying materials, machineries and man power throughout the period from 30.07.2014 to 20.03.2015. 1,96,910/- only on 30.09.2014 in the form of Bank Guarantee Bond No. 82711PEBG140011 dated 30.09.2014. On receipt of two Bank Guarantee Bonds and after confirming the genuineness, an agreement was entered with the petitioner on 29.12.2014. But, the petitioner has been deficient in supplying materials, machineries and man power throughout the period from 30.07.2014 to 20.03.2015. The petitioner submitted his bills only on 14.03.2015 for the period from 30.07.2014 to 30.11.2014 and the bills for the remaining period of contract from December 2014 to February 2015 are yet to be received from the petitioner by the Railways. The petitioner is a regular defaulter in paying the wages to the contract labourers/supervisors. The petitioner was advised several times for arranging immediate payment of wages to the contract labourers/ supervisors but, the petitioner neither arranged payment of wages to the labourers nor intimated railways regarding arranging immediate payment. Subsequently, the petitioner abruptly stopped the cleaning work from 21.03.2015 onwards without intimating to the Railways. Hence, the Railways was forced to issue seven days notice on 16.03.2015 as per the General Conditions of Contract and even after the completion of seven days period, the petitioner did not take any initiative in paying wages to the labourers and starting the cleaning work. Hence, the Railways issued 48 hours notice on 23.03.2015 as per the General Conditions of Contract. After keeping silent for more than ten days from the date of issuance of notice dated 16.03.2015, despite stopping the work from 21.03.2015, the petitioner replied only on 25.03.2015 stating that he was admitted in hospital from 19.03.2015 to 23.03.2015 which cannot be a valid reason as cleaning of Railway Station is an essential service for public welfare. Even after completion of 48 hours notice, the petitioner neither responded nor arranged for wages nor started the work. Further, penalties have also been imposed on the petitioner for the lapses committed by him. Since the petitioner kept silent, all corrective measures were initiated by the Railways and the contract with the petitioner was terminated on 27.03.2015 as per the procedures. Since the matter is relating to contract, the writ petition is not maintainable. Thus, the respondents sought for dismissal of the writ petition. 4. Since the petitioner kept silent, all corrective measures were initiated by the Railways and the contract with the petitioner was terminated on 27.03.2015 as per the procedures. Since the matter is relating to contract, the writ petition is not maintainable. Thus, the respondents sought for dismissal of the writ petition. 4. The learned counsel for the petitioner submitted that before issuing the impugned order, a show cause notice was issued to the petitioner by the 2nd respondent on 16.03.2015 stating as if the petitioner has violated the provisions under Sections 21(2) & 21(4) of Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as the Act) and also clause 13 of the Contract Agreement entered into between the petitioner and the respondents. In this regard, the learned counsel for the petitioner, by inviting the attention of this Court to Section 21(2) submitted that as per Section 21(2) of the Act, every principal employer shall nominate a representative duly authorized by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner as may be prescribed. In the instant case, the railways ought to have nominated a representative duly authorized by it to be present at the time of disbursement of wages by the contractor. But, no such representative was nominated by the Railways. When that being so, the question of violation of Sections 21(2) & 21(4) of the Act on the part of the petitioner does not arise in this case. 5. The learned counsel for the petitioner would further submit that on the very same day i.e. on the date of issuance of seven days notice, the respondents have also imposed a penalty on the petitioner without awaiting for the reply from the petitioner. However, the petitioner had sent a reply on 21.03.2015 to the show cause notice dated 16.03.2015 sent by the respondents. But, without considering the reply given by the petitioner, again the respondents sent 48 hours notice on 23.03.2015 and the petitioner has also sent a reply to the said notice on 25.03.2015 requesting the petitioner to permit him to pay the wages on or before 10.04.2015. But, in spite of the same, the impugned order came to be passed by the 2nd respondent on 27.03.2015. But, in spite of the same, the impugned order came to be passed by the 2nd respondent on 27.03.2015. In this regard, the learned counsel appearing for the petitioner would submit that in the impugned order dated 27.03.2015, the respondents have also stated that as if the petitioner has not carried out the cleaning work from 21.03.2015 onwards. But, though in the impugned order dated 27.03.2015 it has been stated that the petitioner has not carried out the cleaning work from 21.03.2015, the said allegation did not find a place in the show cause notice dated 23.03.2015; therefore, the petitioner was not in a position to give his explanation with regard to the same in his reply dated 25.03.2015. 6. It is the further submission of the learned counsel for the petitioner that without giving personal hearing to the petitioner and by giving a go-by to all the principles of natural justice, the impugned order has been passed by the 2nd respondent rescinding the contract of the petitioner. Thus, he prayed for quashing the impugned order. 7. By way of reply, the learned standing counsel appearing for the Railways submitted that as per Clause 13 of Contract Agreement, every month the petitioner has to send his bills to the concerned office of the Railways to enable the officials to arrange for payment in time. But, in the instant case, the petitioner did not send the bills as per Clause 13 of the Contract Agreement. As per Clause 13 of the Contract Agreement, the contractor/ petitioner has to open the Bank Account for all the contract labourers and supervisors engaged in this contract and their monthly wages should be made through EFT mode and statement for the payment should be enclosed along with the monthly bill. But, in the instant case, the petitioner has not complied with the same; therefore, the legal obligation under the Contract Agreement was violated by the petitioner. 8. Further more, it is submitted by the learned standing counsel for the Railways that the question of granting personal hearing does not arise in this case, since public interest is involved; therefore, considering the reply given by the contractor/petitioner itself would suffice. Hence, there is no need for giving personal hearing to the petitioner. 8. Further more, it is submitted by the learned standing counsel for the Railways that the question of granting personal hearing does not arise in this case, since public interest is involved; therefore, considering the reply given by the contractor/petitioner itself would suffice. Hence, there is no need for giving personal hearing to the petitioner. In this regard, the learned Standing Counsel for the Railways relied upon the decision of the Hon'ble Supreme Court reported in Patel Engineering Limited vs. Union of India & Another, 2012 (3) CTC 757. 9. The learned standing counsel for the Railways would further contend that as per Clauses 55 and 55(A) of the Standard General Conditions of Contract, the petitioner has to comply with all the provisions of the contract. When the petitioner has not chosen to send the bills as required under Clause 13 of the Contract Agreement, now he cannot turnaround and say that the principal/employer has violated the principles of natural justice. In this regard, the learned counsel for the petitioner has also invited the attention of this Court to Clauses 55 & 55(A) of the Standard General Conditions of Contract, which read as follows:- “55. Provisions of Payments of Wages Act:- The Contractor shall comply with the provisions of the Payment of Wages Act, 1936 and the rules made thereunder in respect of all employees employed by him either directly or through petty contractors or subcontractors in the works. If in compliance with the terms of the contract, the Contractor directly or through petty contractors or sub-contractors shall supply any labour to be used wholly or partly under the direct orders and control of the Engineer whether in connection with the works to be executed hereunder or otherwise for the purpose of the Engineer, such labour shall never the less be deemed to comprise persons employed by the contractor and any moneys which may be ordered to be paid by the Engineer shall be deemed to be moneys payable by the Engineer on behalf of the Contractor and the Engineer may on failure of the Contractor to repay such money to the Railways deduct the same from any moneys due to the Contractor in terms of the contract. The Railway shall be entitled to deduct from any moneys due to the contractor (whether under this contract or any other contract) all moneys paid or payable by the Railway by way of compensation of aforesaid or for costs of expenses in connection with any claim thereto and the decision of the Engineer upon any question arising out of the effect or force of this Clause shall be final and binding upon the Contractor. 55. A. Provisions of Contract Labour (Regulation And Abolition) Act, 1970: 55-A(1) The Contractor shall comply with the provision of the Contract Labour (Regulation and Abolition) Act, 1970 and the Contract Labour (Regulation and Abolition) Central Rules 1971 as modified from time to time, wherever applicable and shall also indemnify the Railway from and against any claims under the aforesaid Act and the Rules. 55-A(2) The Contractor shall obtain a valid license under the aforesaid Act as modified from time to time before the commencement of the work and continue to have a valid license until the completion of the work. Any failure to fulfill the requirement shall attract the penal provision of the Contract arising out of the resultant non-execution of the work. 55-A(3) The Contractor shall pay to the labour employed by him directly or through sub-contractors the wages as per provision of the aforesaid Act and the Rules wherever applicable. The Contractor shall notwithstanding the provisions of the contract to the contrary, cause to be paid the wages to labour indirectly engaged on the works including any engaged by sub-contractors in connection with the said work, as if the labour had been immediately employed by him. 55-A(4) In respect of all labour directly or indirectly employed in the work for performance of the contractor's part of the contract, the Contractor shall comply with or cause to be complied with the provisions of the aforesaid Act and Rules wherever applicable. 55-A(4) In respect of all labour directly or indirectly employed in the work for performance of the contractor's part of the contract, the Contractor shall comply with or cause to be complied with the provisions of the aforesaid Act and Rules wherever applicable. 55-A(5) In every case in which, by virtue of the provisions of the aforesaid Act or the Rules, the Railway is obliged to pay any amount of wages to a workman employed by the Contractor or his sub-contractor in execution of the work or to incur any expenditure on account of the Contingent, liability of the Railway due to the contractor's failure to fulfill his statutory obligations under the aforesaid Act or the rules, the Railway will recover from the Contractor, the amount of wages so paid or the amount of expenditure so incurred and without prejudice to the rights of the Railway under Section 20, Sub-Section (2) and Section 2, Sub-Section (4) of the aforesaid Act, the Railway shall be at liberty to recover such amount or part thereof by deducting it from the Security Deposit and/or from any sum due by the Railway to the contractor whether under the contract or otherwise. The Railway shall not be bound to contest any claim made against it under Sub-Section (1) of Section 20 and Sub-Section (4) of Section 21 of the aforesaid Act except on the written request of the Contractor and upon his giving to the Railway full security for all costs for which the Railway might become liable in contesting such claim. The decision of the Railway regarding the amount actually recoverable from the contractor as stated above shall be final and binding on the Contractor. Thus, the learned standing counsel for the Railways submitted that since there is violation on the part of the petitioner, the impugned order has been passed by the 2nd respondent rescinding the contract of the petitioner. Further, as per Clause 63 of the General Clauses of Contract, the petitioner can invoke the arbitration proceedings and as such, the writ petition is not maintainable. Thus, the learned Standing Counsel for the Railways sought for dismissal of the writ petition. 10. Keeping the submissions made on either side, I have carefully gone through the materials available on record. 11. The matter has arisen out purely on contractual obligation. Thus, the learned Standing Counsel for the Railways sought for dismissal of the writ petition. 10. Keeping the submissions made on either side, I have carefully gone through the materials available on record. 11. The matter has arisen out purely on contractual obligation. According to the learned counsel appearing for the petitioner, the impugned order was passed without affording proper opportunity to him and the principles of natural justice has been violated by the respondents in passing the impugned order. But, as contended by the learned standing counsel for the Railways, when public interest is involved, mere considering the reply to the show cause notice itself is sufficient and there is no need to give any personal hearing. In this regard, a reference could be placed in the decision of the Hon'ble Supreme Court reported in Patel Engineering Limited vs. Union of India & Another, 2012 (3) CTC 757, wherein it has been held as follows:- “26. Coming to the submission that R-2 ought to have given an oral hearing before the impugned order was taken, we agree with the conclusion of the High Court that there is no inviolable rule that a personal hearing of the affected party must precede every decision of the State. This Court in Union of India and Another vs. Jesus Sales Corporation, 1996 (4) SCC 69 , held so even in the context of a quasi-judicial decision. We cannot, therefore, take a different opinion in the context of a commercial decision of State. The Petitioner was given a reasonable opportunity to explain its case before the impugned decision was taken.” The dictum laid down in the above said decision is squarely applicable to the present facts of the case. Even in this case, reasonable opportunity was given to the petitioner by the respondent/Railways by issuing a show cause notice calling for explanations from the petitioner. Therefore, I am not inclined to accept the submission made by the learned counsel for the petitioner that there is a violation of principles of natural justice on the part of the 2nd respondent in passing the impugned order. 12. A perusal of the records produced on the side of the respondents would show that the petitioner has not submitted the bills in time, to enable the Officials of the Railways to make arrangements for the payment in time. 12. A perusal of the records produced on the side of the respondents would show that the petitioner has not submitted the bills in time, to enable the Officials of the Railways to make arrangements for the payment in time. Therefore, I do not find any infirmity in the impugned order passed by the 2nd respondent. Further, with regard to the disputes arising out of the contract agreement, the petitioner is having alternative remedy under Clause 64(1)(i) of the Standard General Conditions of Contract. Clause 64(1)(i) reads as follows:- “64(1)(i) In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the excepted matters referred to in Clause 63 of these Conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters shall demand in writing that the dispute or difference be referred to arbitration.” In the instant case, since the impugned order for the termination of contract was passed by the 2nd respondent under Clauses 55 & 55A & 62(1)(vi)(vii) of Standard General Conditions of Contract and Clause No. 15 of Contract Agreement, the petitioner can seek his remedy under Clause 64(1) of the General Conditions of Contract. Therefore, the writ petition is not maintainable and the same is liable to be dismissed. For the foregoing reasons, the writ petition is dismissed. Consequently, connected Miscellaneous Petitions are closed. No costs.