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2019 DIGILAW 2122 (BOM)

Mumbai Shahar Berojgar Seva Sahakari Sanstha Federation Ltd. v. Municipal Corporation of Greater Mumbai

2019-09-13

G.S.PATEL, S.C.DHARMADHIKARI

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JUDGMENT : G.S. Patel, J. Petitioner No.1 is a federation of 120 registered cooperative societies of unemployed persons. Petitioner No.2 is a member of Petitioner No.1. 2. We have heard Ms Karnik for the Petitioners and Mr Sakhare, Senior Advocate, for the Respondents. With their assistance, we have considered the material before us. In our view, it is not possible to grant the relief sought. 3. Our writ jurisdiction under Article 226 of the Constitution of India is invoked for these relief’s: This Hon'ble Court may please invoke its writ jurisdiction under Art 226 of the Constitution of India and issue a Writ of Mandamus and/or a writ, direction or order in the nature of mandamus; (a) direct the Respondent Corporation to provide for 4.75% of the wages payable under the Contract advertised by Notice dated 19/12/2018 as Employer's share of Employee State Insurance, while computing the levy of 46% put to tender and make appropriate enhancements to Contract cost (a)(i) That the circular dated 30/04/2011 be held to be illegal and bad-in-law and Quash and set aside the said Circular dated 30/04/2011 issued by Respondent no.1 Corporation in so far as the Employees Provident Fund and Employees' State Insurance Corporation contribution rates and other statutory dues which are shown contrary to the Statutory prevailing rates. (b) direct the Respondent Corporation to provide for 13.61% of the wages payable under the Contract advertised by Notice dated 19/12/2018 as Employer's share of Provident Fund Schemes and other statutory schemes under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 while computing the levy of 46% put to tender and to make appropriate enhancements to Contract cost. (c) direct the Respondent Corporation to increase the term of Contract for 180 days or more for effective enforcement of Provident Fund Schemes. (d) direct the Respondent Corporation to reintroduce the terms and conditions of employing only skilled labour having experience of the said work being employed under the Contract (e) direct the Respondent Corporation to reintroduce the condition of the Applicant Society to have a license under the Clause 5(6) two years prior to applying. (f) (i) direct the Respondent Corporation to remove the condition number 5(f) 1 and 2 of penalizing the Co-operative Society in case it's members went on strike, or morcha, agitation, etc. (f) (i) direct the Respondent Corporation to remove the condition number 5(f) 1 and 2 of penalizing the Co-operative Society in case it's members went on strike, or morcha, agitation, etc. (ii) restrain the Respondent Corporation from forcing the Petitioner's members societies into engaging labour who are not it's members. (g) direct the Respondent Corporation to provide for appropriate administrative and Miscellaneous expenses at the rate of 10% of the total cost of Contract. (h) direct the Respondent Corporation to value the price of the Tender Form at a fixed rate of Rs.1000/- only as applicable to Identical Fixed Rate Contracts. (b) Pending the hearing and final disposal of this Writ Petition this Hon'ble Court may be pleased to- (i) stay the process of inviting and granting contract for supply of manpower to the Insecticide Department of the Respondents as initiated by impugned Notice dated 19/12/2018 4. On the face of it, in our view, such relief’s cannot possibly be granted. What the Petitioners seek is nothing but the wholesale rewriting of a tender and a contract issued by the 1st Respondent, the Municipal Corporation of Greater Mumbai ("MCGM"), including the specified rates and term. 5. Petitioner No.2 was added by an amendment. A consequential paragraph 1A was added to the petition. We believe this paragraph is a telling circumstance, worth reproducing, for it encapsulates the challenge before us: 1A. Petitioner No.2 is Terna Berozgar Seva Sanstha which is a registered cooperative society of unemployed persons and are members of Petitioner No.1. That after going through the terms and conditions of the contract, Petitioner No.2 realised that the same is arbitrary and illegal as also untenable and in view of the same did not participate in the tender process and are currently out of jobs as a result thereof. That the valuation of the contract is field in a manner so as to render it unprofitable. That apart from the challenge raised by the Petitioner No.1, Petitioner No.2 submits that the vigilance fees set out in the contract is also arbitrary and illegal and the same ought to be quashed and set aside in the interests of law, justice and equity. (Emphasis added) 6. This makes it clear that the grievance is with the commercial terms of the tender. 7. Only a few facts are necessary. The contract in question is for providing manpower for spraying insecticide. (Emphasis added) 6. This makes it clear that the grievance is with the commercial terms of the tender. 7. Only a few facts are necessary. The contract in question is for providing manpower for spraying insecticide. It is a contract of the MCGM's Insecticide Department. The petitioners' members say that they are skilled labour. There is a narrative about an earlier writ petition of 2013 challenging the introduction of an e-tendering process. We are not concerned with that, except to note that the petitioners were granted some interim relief and obtained contracts. That in itself will not entitle the petitioners or any of the 1st Petitioner's constituents to obtain contracts in perpetuity. 8. On 19th December 2018, the MCGM issued a tender notice for this work. This is a fixed rate contract. This means that there are no bids invited. The contractor is chosen by an open and transparent lottery system. All contractors are bound by identical commercial terms. 9. The petitioners complaint is about the rates in this fixed rate contract. Specifically, they say that the contract provides for (i) less provident fund than mandated by statute - 12% instead of 13.61% as the employer's contribution; (ii) a lower rate of Employees State Insurance of only 4% instead of 4.75%; and (iii) too low a rate for administration and office expenses at 5%. This, according to the petitioners, makes it unviable and unprofitable for them to participate in the tender at all. 10. At the forefront, Mr Sakhare states on instructions that over 50 contractors have entered the fray and therefore it is not correct to say that the entire tender is unviable or unprofitable. 11. Exhibit "Q" to the Petition is the circular dated 30th April 2011 that is challenged by way of a fresh prayer introduced by an amendment to the memo of the petition. It references a standing committee resolution of 7th April 2010 and another MCGM resolution of 3rd September 2010. It states in terms that the MCGM is bound by statutory provisions regarding minimum wages and other facilities applicable to contract labour. It then sets out various rates, including 12% for provident fund and 4% for ESIC, but it also provides for other benefits not highlighted by the petitioners. It states in terms that the MCGM is bound by statutory provisions regarding minimum wages and other facilities applicable to contract labour. It then sets out various rates, including 12% for provident fund and 4% for ESIC, but it also provides for other benefits not highlighted by the petitioners. These include 6% leave encashment, festival leave and marginal leave encashment of 1%; ex-gratia at 8.33%, marginal expenses of .67% and administrative expenses of 5%, apart from a 4% allowance for safety gear. 12. At page 80M of the petition is a schedule showing the break up of the 46%; and this is a percentage applied over and above the item-rate contract. The challenge is, therefore, to this additional allowance. Here, we find that administrative expenses are set at 5%, but the petitioner say it should be 10%. They make a complaint about the rates of provident fund and ESIC contribution at 12% and 4% respectively, but are happy to accept all the other allowances such as ex-gratia, leave encashment etc. 13. At the broadest level, in a public law interface, we fail to appreciate how it is the province of a writ court to set a schedule of rates. If some rates are set lower than mandated by statute, then the differential can always be adjusted against other rates that are not compulsory (such as the marginal or miscellaneous expenses set at 1.67%). We do not see how we can burden the exchequer and command additional public spending, especially when other contractors do not voice any such grievance. 14. Indeed, if there is any controversy, it is fully set to rest by the Affidavit in Reply. This Reply provides a completely different perspective. There is no rejoinder to it, and we imagine there could not have been one. Paragraph 4 and its sub-paragraphs need to be quoted verbatim and in extenso: 4 Briefly stated facts of the case are as follows: (a) I say that the Municipal Commissioner by its order dt.28.08.2010 and the Corporation Resolution dt. 03.09.2010 granted sanction to regularize the payment of minimum wages to the various contract workers working in the Corporation on the basis of notifications issued from time to time under the Minimum Wages Act by the State Government. The Corporation therefore has issued a circular dt.30.04.2011 which are the guidelines for all the departments wherein the contract volunteers are employed. 03.09.2010 granted sanction to regularize the payment of minimum wages to the various contract workers working in the Corporation on the basis of notifications issued from time to time under the Minimum Wages Act by the State Government. The Corporation therefore has issued a circular dt.30.04.2011 which are the guidelines for all the departments wherein the contract volunteers are employed. (b) I say that at present as per The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 employer's contribution @ 12% of the wages and administrative charges @ 0.5% of the wages are payable by the employer. In addition to this the employer has to deposit 0.5% of the wages as per The Employees' Deposit linked Insurance Scheme, 1976. Therefore, employer has to pay @ 13% of the wages as employer's contribution and not @ 13.61% as alleged in the petition. I say that accordingly, various contractors are required to submit the receipt of payment made to the PF authority @ 13%. As per the said circular 12% of this amount is reimbursed to the sansthas and the additional 1% is covered in the 1.67% miscellaneous expenses which are paid to the sansthas along with the wage bill. (c) I say that as far as contribution of the employer towards E.S.I. is concerned, employer has to pay @ 4.75% of the wages and these Respondents will rectify the circular after following due administrative process. At present the central Government has issued a notification and called for suggestions and objections regarding amendment in respect of the following: "2. In Rule 51 of the Employees' State Insurance (Central) Rules, 1950, the following amendment shall be made: (a) In Rule 51(a) for the words, "equal to four and three fourth percent of the wages" the words "equal to four percent of the wages" shall be substituted. (b) In Rule 51(b), for the words "equal to one and three fourth percent of the wages" the words "equal to one percent of the wages" shall be substituted." Hereto annexed and marked Exhibit I is copy of the Notification. (d) I say that the circular also provides for ex-gratia benefit to the workers @ 8.33% of the wages as per the Payment of Bonus Act, 1965. (d) I say that the circular also provides for ex-gratia benefit to the workers @ 8.33% of the wages as per the Payment of Bonus Act, 1965. (e) I say that there is a provision to compensate the workers@ 6% for their leave period as well as compensation @ 1% for festival holidays etc., if he is eligible. (f) I say that there is a provision @ 4% of wages as gratuity for those workers who have completed 5 years of continuous service as per the Payment of Gratuity Act, 1972. (g) I say that there is a provision @ 1.67% of wages as miscellaneous charges and a provision @ 5% of as administrative charges in the said circular. (h) I say that there is a provision @ 4% of wages for safety equipments in the said circular. (i) I say that all these components of 46% levy are given to eligible workers and they are not deprived of any of the components. (j) I say that the miscellaneous expenses of 1.67% consists of various miscellaneous expenses incurred by the contractor including that of balance amount of Provident Fund contribution amount as a difference between 12% contribution and statutory contribution of 13%. I submit that though the said deduction of 4% is less than as provided in ESIC Act 1948, the Corporation is considering revising the said circular to be in consonance with the directives of the ESIC authority under the ESIC Act, 1948. (k) I say that as regards to the period of contracts which in the past were given to the societies for the period of 11 month & 6 months, the decision has been taken by the Corporation to reduce it to the period of 7 months and 5 months as per requirement of the volunteers for the said work. I say that, as this is an administrative decision of the Corporation, Petitioner could not have any grievance against the said decision. (l) I further say that the Petitioner society is making grievance that said contract did not cover Income Tax provision and G.S.T. I say that the income tax is deducted at source as per the income tax Act, by the Account Department on every payment made by the MCGM. (l) I further say that the Petitioner society is making grievance that said contract did not cover Income Tax provision and G.S.T. I say that the income tax is deducted at source as per the income tax Act, by the Account Department on every payment made by the MCGM. I say that for the extra expenses which the Petitioner societies have to bear for the purpose of audit, total 5% administrative charges are provided in the said contract and it is up to the individual society to cover the said expenses from the said administration charges audit or some other purpose. As regards the GST I say that as per law if it is applicable, it is the duty of the Contractor to pay the said GST to the respective department. In this instance case, the GST is not applicable to the said contract as these are pure services and any such activity under 243W schedule 12 of the constitution is exempted from tax. (m) I say that prior to issuance of the present circular these respondents were paying 8% profit to the sansthas i.e. prior to 2011 and not upto 2013 as alleged by the petitioners. Since the issuance of circular no. Ch.L.O./64 dated 30.04.2011, these respondents have always paid 5% administrative charges as per the said circular to the societies. With the steady rise in the per day wages as per the Minimum Wages Act, the compensation provided to the sansthas is manifold as compared to the compensation earned by the sansthas when the administrative charges were paid @8%. Hence, there is no merit in the contention of the Petitioners to demand for increasing the administrative charges to the tune of 10%. (n) I say that the Corporation has never inserted the condition about the engagement of experienced skilled volunteers for the work of anti larval activity which is being carried out by the Petitioner societies at building construction sites. I say that therefore, the question of engagement of skilled volunteers does not arise in such type of work. (n) I say that the Corporation has never inserted the condition about the engagement of experienced skilled volunteers for the work of anti larval activity which is being carried out by the Petitioner societies at building construction sites. I say that therefore, the question of engagement of skilled volunteers does not arise in such type of work. (o) I say that the condition No.5 (f) (1) (2) are added in the said contract to ensure that the entire quantum of man power is made available in time as a contract volunteers are responsible for control of various vector borne diseases such as such as malaria, dengue, chikun gunya etc., and their participation in strikes shall result in suffering to the citizens. Therefore, it is essential that such condition be part of the contract considering the public health at large. (p) I say that corporation has issued a circular dt.29.12.2016 for issuing tender forms for various works in Corporation and accordingly corporation is charging the said rates. I say that as per the said circular if the contract value is upto 3 lakh rupees, it is charging amount of Rs.150/-+ GST as tender price. I say that therefore the charges for the application forms have been changed as per the said circular. Hereto annexed and marked Exhibit II is the copy of the circular dt.29.12.2016. (q) I say that the said process of selection of Sansthas is completed and the corporation is going ahead with the said work in 24 wards of MCGM. I therefore, say that no interim relief as prayed in the said petition be granted otherwise grave irreparable loss, damage will be caused to the General Public at large as this department is giving essential services to the public and the transmission season for the vector borne diseases is looming large due to the approaching monsoon. (Emphasis added) 15. In our view, it is not in the public interest at all to intervene. The wider public interest must prevail over the financial and profit concerns of these petitioners. As regards the provident fund differential, this is fully addressed in the Reply. The question of the shortfall in ESIC contribution is also addressed by noting the emphasized portions of paragraphs (c) and (j) quoted above, and accepting these statements as undertakings to the Court. Of necessity, these statements will apply to the selected contractors. 16. As regards the provident fund differential, this is fully addressed in the Reply. The question of the shortfall in ESIC contribution is also addressed by noting the emphasized portions of paragraphs (c) and (j) quoted above, and accepting these statements as undertakings to the Court. Of necessity, these statements will apply to the selected contractors. 16. We find no merit in the petition, and no cause to justify our interference. 17. The petition is dismissed. There will be no order as to costs.