Central Bihar Construction Co. vs Central Warehousing Corporation
2001 Latest Caselaw 1756 Del

JUDGMENT

V.S. Aggarwal, J.

1. Objector, M/s Central Warehousing Corporation, is a statutory body incorporated under Section 3 of the Warehousing Corporation Act, 1962. It had invited tenders on 7.11.1990 for construction of 5000 MT capacity godowns Phase II at Central Warehouse, Jeypore (Orissa). The petitioner, M/s Central Bihar Construction Co., submitted the tender and the same had been accepted. The work was awarded on 6th March, 1991. As per the agreement between the parties the constructions as to commence on 16th March, 1991 and conclude on 15th March, 1992. The total cost of construction was Rs. 32,71,648.04. The work commenced by the petitioner on 22nd April, 1991. It could not be completed by 15th March, 1992. In fact it was completed on 25th May, 1992.

2. The petitioner had alleged that during the contractual period the price of material and labour wages registered a substantial increase and therefore he was entitled to the payment of excess cost under clause 10CC of the agreement. Since the excess cost/payment under clause 10CC was not released by the objector/respondent, applicant/petitioner had sought appointment of the arbitrator. In terms of clause 25 of the Conditions of Contract the arbitrator was appointed. Before the arbitrator the petitioner had claimed Rs. 10,68,500/- inclusive of excess amount under clause 10CC besides interest, expenditure on staff and arbitration cost. The objector conceded that escalation charges on account of rise in the cost of material was Rs.2,33,492/-. This was acceptable to the petitioner. It was however alleged by the objector/respondent that labour rates had actually come down during that period therefore a sum of Rs. 1,18,000/- was liable to be deducted from the net amount payable to the petitioner.

3. The arbitrator vide the award of 5th August. 1996 held that deduction of Rs. 1,18,875/- by the respondent/ corporation on account of drop in the wages of labour was not valid and on the contrary the applicant was entitled to further sum of Rs. 65,172/- as increase in labour cost and thus the objector respondent was liable to pay Rs. 2,33,492+ Rs. 65,172/- .

4. The award as such has been filed and objections have been preferred by the respondent/objector in this regard. It has been asserted that under clause 10CC of the contract the minium wage of male unskilled mazdoor was to be higher of the two figures, namely those notified by the Government of India, Ministry of Labour and those notified by the local administration. The base date for working out such escalation shall be the last date on which tenders were stipulated to be received. On 7th November, 1990 the prevalent rates in the State of Orissa was Rs. 25/- for unskilled male mazdoor as per the notification of 30th June, 1990 issued by the State Government. The said rates are alleged to have never increased but they had come down. Therefore, this escalation was not permitted. The arbitrator is alleged to have failed to appreciate that issue was not of recovery of wages paid prior to the quashing of the notification of State of Orissa dated 30th June, 1990 by the Orissa High Court but the wages payable subsequent to this date up to 25th May, 1992. Since thee notification of the Orissa Government dated 30th June, 1990 had been quashed the result was that the old notification whereby wages was Rs.11/- per day for male mazdoor had come up to being and the wages could only be paid as per the Central Government notification. Thus it is claimed that the arbitrator's award cannot be sustained.

5. In the reply filed by the petitioner the substance of the main objection has been controverter. It is insisted that the wager per mazdoor was Rs. 35/- for unskilled male mazdoor as per notification of 30th June, 1990. It is denied that petitioner was only liable to pay Rs.17.17 from October 1991 to December, 1991 onward. Reliance was placed on the letter of the District Labour Officer dated 27th April, 1996 in this regard that wages of the mazdoor have not been reduced.

6. It is apparent from the nature of the controversy on basis of the objections and their reply filed is as to whether the petitioner was liable to pay to the mazdoor at the rate of Rs.17.17 or at the rate of Rs.25/- per day. This was the sole controversy before this court.

7. The arbitrator has gone into controversy and had noted that so far as escalation of cost of the material were concerned there was no dispute that has been raised. This amount was acceptable to this petitioner. Therefore, the arbitrator proceeded to get back to the main controversy because according to the petitioner he was entitled to the wages that he had paid at Rs.25/- per unskilled labour per day. Reliance on behalf of the objector/respondent was placed on the decision of the Orissa High Court whereby notification of the State Government enhancing the daily wage rates to Rs. 25/- per day of the unskilled workers had been set aside. The findings of the arbitrator in this regard reads:-

"The learned counsel for the claimants, however, contended that in its order, the High Court clearly observed that the wages already paid to the unskilled employees shall not be recoverable by the employers. Further, he pointed out that the claimants were bout in terms of the contract agreement to pay the wages at the rates as notified by the State Government and that already they have actually done the same. At this stage, he invited my attention to the State Governments' Notification dated 30.6.1990 prescribing the minium rates of wages as Rs.25/- per day payable to unskilled category. He added that District Labour Officer, Korapur (Jeypore), vide his letter no. 2616/DLC dated 27.4.1996, certified that no further revision of this rate has been made. I see no reason to doubt the genuineness of this Notification as well as the District Labour Officer's confirmation thereof. So I do substance in this plea of the learned counsel for the claimants. Accordingly, I am inclined to hold that the deduction of Rs. 1,18,875/- as per calculations in the detailed statement, will not be valid. However, as per the statement submitted from the claimants' side, they are entitled to increased labour cost amounting to Rs.65,172/-. The net amount thus payable should work out to Rs.2,98,664/- (Rs.2,33,492/0 + Rs. 65,172/-). As regard interest, the learned counsel for the claimants has not pressed for it. Therefore, the question of conceding it does not arise.

8. It is a common case of the parties that it had been agreed between the parties to the effect that the petitioner would be entitled to the wages at the rates which are higher as notified to the wages at the rates which are higher as notified by the State Government or the Ministry of Labour. Reliance on behalf of the petitioner is being placed on the notification of the State of Orissa whereby rates fixed at Rs.25/- for unskilled male mazdoor per day. However, it is not in controversy that this notification of the Orissa State Government had been challenged in this case of Utkal Chamber of Commerce & Industry v. State of Orissa & Ors. 73(1992) CLT 882). The said notification of the State of Orissa had since been quashed. The net result of the aforesaid would be that with the setting aside of the said notification earlier rates would become prevalent.

9. The learned arbitrator relied upon the letter of the District Labour Officer, Korapur (Jeypore) dated 27th April, 1996 stating that no further revision of this rate has been made. Indeed once the letter goes contrary to the decision of the Orissa High Court one has not the least hesitation that question of stating that the rates have not come down will not arise. The attention of this court has not been drawn to any subsequent notification having retrospective effect whereby in a legal manner the rate was fixed at Rs.25/- for unskilled male mazdoor. The only logical conclusion therefore would be that the said rate could not be taken to be Rs. 25/- for unskilled male mazdoor.

10. Learned counsel for the thee petitioner in that even had relied upon the decision of the Supreme Court in the case of State of Rajasthan v. Puri Construction Co. Ltd. reported as 1995 Vol 22 Arb L. R. page 1. The reliance was placed on the principle that the arbitrator is the final arbiter of the dispute between the parties and the award cannot be set aside on the ground that the arbitrator has come to his own conclusion and failed to appreciate the facts. So far as this particular contention is concerned, indeed it is without merit. As noticed above the award of the arbitrator is totally erroneous because the decision of the Orissa High Court has totally been ignored. Therefore, the decision in the case of State of Rajasthan v. Puri Construction Company (supra) will not come to the rescue of the petitioner. To that extent thus the award of the arbitrator indeed cannot be sustained because the decision of the Orissa High Court referred to above in the case of Utkal Chamber of Commerce (supra) is dated 12th November, 1991 and payment, if any, made before that date would be saved but not over the period thereafter. The work in the present case commenced on 16th March, 1991 and completed on 25th May, 1992. Therefore, payment made before the date of the decision of the Orissa High Court only would be saved. To that extent the award of the arbitrator indeed has to be modified.

11. For these reasons recorded above, the objections are allowed in part. The matter is remitted to the arbitrator to re-calculate the amount that could be due to the applicant in face of the findings recorded above. In case the arbitrator is not available a new arbitrator as such may well be appointed.