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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.