Delhi High Court
Mi2C Security Facilities Pvt Ltd vs North Delhi Municipal ... on 23 October, 2018
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: October 23, 2018
+ W.P.(C) 8197/2017 & CM. No. 33688/2017
MI2C SECURITY FACILITIES PVT LTD
..... Petitioner
Through: Mr. Rajesh Gogna and
Mr. Akhilesh Kumar, Advs.
versus
NORTH DELHI MUNICIPAL CORPORATION
..... Respondent
Through: Mr. Gaurang Kanth and
Ms. Biji Rajesh, Advs.
CORAM:
HON'BLE MR JUSTICE V. KAMESWAR RAO
JUDGMENT
V. KAMESWAR RAO, J
1. The present petition has been filed by the petitioner with the following
payers:
"It is, therefore, most humbly prayed that this Hon‟ble Court
may most graciously be pleased: -
a. Issue appropriate writ of mandamus or any other
appropriate writ.
b. Pass appropriate order (s) or direction (s) against the
Respondent to ensure compliance of its constitutional
/ statutory / contractual obligations to pay / release
incremental wages which includes Minimum Wages /
revised Minimum Wages, Provident Fund / revised
Provident Fund, ESI / revised ESI for more than 400
employees employed to provide security services at ADC
Headquarter, North Delhi Municipal Corporation,
situated at Dr. S.P.M. Civic Centre, New Delhi.
c. Grant any other relief which this Hon‟ble Court may
deem fit and proper in the facts and circumstances of the
case along with cost in favour of the petitioner.
It is prayed accordingly."
2. From the perusal of the prayer clause, it is noted that the petitioner is
seeking a direction against the respondent Corporation to comply with the
statutory obligation to pay / release incremental wages including minimum
wages, Provident Fund, ESI etc. to the persons provided by it to the
Corporation at Dr. S.P.M. Civic Centre, New Delhi (Centre in short) in
furtherance of a contract of security work awarded to it. It is the submission
of Mr. Rajesh Gogna, learned counsel for the petitioner that the petitioner
participated in the NIT floated by the North Delhi Municipal Corporation
('Corporation' in short) for providing security services at the Centre on May
15, 2014. Vide communication dated November 12, 2014, the petitioner was
awarded the contract by the Corporation to provide security services at the
centre and the same was accepted by the petitioner on November 12, 2014
itself. He submitted, that on November 25, 2014, a contract agreement was
executed by the parties. It is his submission that at the time of engagement of
workers by the petitioner for the security work of the respondent Corporation,
the provident fund was being deducted at 13.61% on an amount of `6,500/-
from the monthly wages but the said ceiling was changed by the Department
of Provident Fund to 13.36% on `15,000/- with effect from September 01,
2014 vide their notification dated August 28, 2014. According to him, at the
time when the petitioner was awarded the contract in the month of December,
2014, the minimum wages per person / per shift / per day was `367/- for
Security Guards and `403/- for Armed Security Guards and Security
Supervisor respectively. On March 31, 2015, the minimum wages for the
Security Guards and Security Supervisor were enhanced by the Govt. of NCT
of Delhi vide its notification dated March 31, 2015 to `385/- per day in
respect of Security Guards and `423/- per day for Armed Security Guards and
Security Supervisor respectively with effect from April 01, 2015. He also
submitted that the minimum wages of the Security Guards and Security
Supervisor were further enhanced by the Govt. of NCT of Delhi vide
notification dated October 16, 2015 to `390/- per day in respect of Security
Guards and `429/- per day for Armed Security Guards and Security
Supervisor respectively with effect from October 01, 2015. He submitted that
there was a further increase in the minimum wages vide notification dated
March 31, 2016 to `407/- per day in respect of Security Guards and `447/-
per day for Armed Security Guards and Security Supervisor respectively with
effect from March 01, 2016. He submitted that there was a further increase to
`414/- per day and `455/- per day for the same set of personnel with effect
from October 01, 2016. It is noted that there was a further increase to `565/-
and `622/- with effect from April 01, 2017 vide notification dated March 03,
2017 and further increase to `575/- and `633/- with effect from April 01,
2017 vide notification dated May 31, 2017. According to Mr. Gogna, because
of the increase in the minimum wages, the petitioner vide letter dated April
25, 2015 requested the respondent that the enhanced minimum incremental
wages as indicated above should be released / paid to the petitioner and even
the Provident Fund and the ESI be deposited with the concerned department
at the enhanced minimum wages but the respondent did not pay the revised
minimum wages or deposit the statutory benefit on revised wages. He refers
to letters dated April 25, 2015, June 16, 2015, September 15, 2015, July 30,
2017 and July 31, 2017 in this regard. He has also drawn my attention to
various letters written by the petitioner seeking various amounts.
3. According to Mr. Gogna, as per the terms and conditions of the tender /
contract, the respondent was under obligation to pay the minimum wages,
provident fund, ESI, Bonus and other statutory obligation to the security
guards deployed by the petitioner at the Centre. It is his case that the terms
and conditions of the tender and the contract also stipulated, in case the
minimum wages are revised by the Govt. of NCT of Delhi, the incremental
wages will be provided by the respondent. In this regard he draws my
attention to clause 8.3 of the NIT (page 44 of the paper book); Note-I (Page
49 of the paper book); clauses 4 and 5 of the Contract dated November 20,
2014 (page 74 of the paper book). He submitted, the total price bid was in
terms of the wages stipulated, multiplied by the number of persons employed.
As per him, the comparative chart of incremental wages, which the workers
deployed by the petitioner were entitled to between the period April 01, 2014
to April 01, 2017, is as follows:-
"24. The comparative chart of the minimum wages applicable to
the petitioners and other workers employed in the North Delhi
Municipal Corporation at the time of their engagement and on the
date of filing the present petition is as follows:-
Date and Number of Minimum Minimum wages
Notification wages for for skilled
semi-skilled workers (Armed
workers Security Guards
(Security and Security
Guard) per Supervisor) per
day / per day /per month
month in (Rs) in (Rs)
F.No.12(142)/2/MW/VII/5681 363/9438 399/10374
dated 28.03.2014
F.No.12(142)/2/MW/VII/5063 367/9542 403/10478
dated 10.11.2014
F.No.12(142)/13/MW/VII/348 385/10010 423/10998
dated 31.03.2015
F.No.12(142)/13/MW/Lab/2231 390/10140 429/11154
dated 16.10.2015
F.No.12(142)/13/MW/Lab/3998 407/10582 447/11622
dated 31.03.2016
F.No.12(142)/13/MW/Lab/8184 414/10764 445/11830
dated 30.09.2016
No.F. addl. 565/14698 622/16182
LC/Lab/MW/2016/4859
dated 03.03.2017
No.F. addl. 575/14698 633/16182
LC/Lab/MW/2016/466
dated 31.05.2017
25. That despite the raising of the ceiling by the Provident Fund
Department from Rs.6,500/- to Rs.15,000/-, the Petitioner was / is
paying the 400 workers deployed by the petitioner were being paid
the provident fund @ 13.61% of Rs.6,500/- whereas they are
entitled for payment of Provident Fund @ 13.36% of the enhanced
ceiling of the minimum wages.
26. That the workers deployed by the petitioner were entitled for
incremental wages with every increase of the minimum wages and
the percentage of ESI, Provident Fund etc. thereon. The
comparative chart of the incremental wages which the worker
deployed by the petitioner were entitled to in between the period
01.04.2014 to 01.04.2017 are as follows:
Sl. Date Category Applicable Applicable Applicable Bonus
No. Minimum Provident ESI
Wages Fund
per day/
per month
1 1.4.2014 Security 363/9438 @13.61% @4.75% 291.55
guards/ of 6500= of 9438
Armed 399/10374 @13.61% @4.75% 291.55
Security of 6500= of 10374
Guards /
Supervisor
2 1.10.2014 Security 367/9542 @13.36% @4.75% 291.55
guard/ of 9542 of 9542
Armed 403/10478 @13.36% @4.75% 291.55
Security of 10478 of 10478
Guards /
Supervisor
3 1.4.2015 Security 385/10010 @13.36% @4.75% 291.55
guards/ of 10010= of 10010
Armed 423/10998 @13.36% @4.75% 291.55
Security of 10998= of 10998
Guards /
Supervisor
4 1.10.2015 Security 390/10140 @13.36% @4.75% 291.55
guard / of 10140 of 10140
Armed 429/11154 @13.36% @4.75% 291.55
Security of 11154 of 11154
Guard /
Supervisor
5 1.4.2016 Security 407/10582 @13.36% @4.75% 291.55
guards/ of 10582 of 10582
Armed 447/11622 @13.36% @4.75% 291.55
Security of 11622 of 11622
Guards /
Supervisor
6 1.10.2016 Security 414/10764 @13.36% @4.75% 291.55
guards/ of 10764 of 10764
Armed 455/11830 @13.36% @4.75% 291.55
Security of 11830 of 11830
Guards /
Supervisor
7 1.4.2017 Security 565/14698 @13.36% @4.75% 291.55
guards/ of 14698 of 14698
Armed 622/16182 @13.36% @4.75% 291.55
Security of 16182 of 16182
Guards /
Supervisor
8 1.4.2017 Security 575/14958 @13.36% @4.75% 291.55
guards/ of 14958 of 14958
Armed 633/164478 @13.36% @4.75% 291.55
Security of 164478 of 164478
Guards /
Supervisor
4. He submitted that the respondent is liable to pay the aforesaid amount,
which it has declined to pay despite many requests and the same is in
violation of Article 23 of the Constitution of India as being a State and also a
Principal employer denying minimum wages is patently unfair. In other
words, the Corporation being a model employer, is required to ensure socio-
economic justice. That apart, Mr. Gogna, during his submissions has drawn
my attention to an affidavit filed by the petitioner on November 14, 2017 to
contend that the respondent is resorting to pick and choose policy by denying
the benefit of revised minimum wages to the petitioner as in the case of M/s
NIELIT, they have enhanced the minimum wages of the employees, provided
by the NIELIT to the Corporation. He also replied to the stand taken by the
respondent that there being an arbitration clause in the agreement / contract,
writ petition is not maintainable by contending that the arbitration clause is
not a bar for the maintainability of the writ petition. In this regard, he relied
on the judgment of the Supreme Court in the case of Union of India and Ors.
v. Tantia Construction Pvt. Ltd. 2011 (3) RAJ 424. He also distinguished the
judgment relied upon by the counsel for the respondent in the case of "The
Empire Jute Co. Ltd. & Ors. v. the Jute Corporation of India Ltd. & Anr. in
Civil Appeal NO. 4877 of 2007 decided by the Supreme Court by contending
that the judgment is contextual, was in peculiar facts and circumstances of the
case, but even in the said judgment of the Supreme Court has held that the
Court should use its discretion in favour of the arbitration when it is a pure-
question of law and lis involves public law character. He would rely upon
Paras 19 and 20 of the judgment. He had also submitted that there are no
disputed question of facts in the case in hand as alleged by the respondent.
He supports the maintainability of the petition in the manner filed in this
court. He would rely upon the following judgments:
1. Mi2c Security and Private Limited v. Government of NCT &
Ors.: 2013 SCC Online Del 3906
2. State of Jharkhand v. Harihar Yadav: 2013 (15) JT 218
3. Union of India & Anr. v. S.B. Vohra and Ors.: (2004) 2 SCC
4. Centre for Environment & Food Security v. Union of India and
Ors.: (2011) 5 SCC 676
5. Ramjee Power Construction Ltd. v. Union of India and Ors.:
2006 (86) DRJ 304
5. On the other hand, Ms. Biji Rajesh, learned counsel appearing for the
respondent corporation submitted that in view of the arbitration clause in the
agreement / contract, the remedy for the petitioner is to invoke the said clause
in terms thereof and this court would not entertain the petition. In this regard,
she submitted that the contract being a creation of the parties, who have
mutually agreed to refer their future disputes to arbitration, this court contrary
to such stipulation would not entertain the petition. That apart it is her case,
that there are disputed question of facts which need to be decided on the basis
of evidence to be produced by both the parties. That apart any interpretation
of a provision / stipulation in the contract would at best be decided through
the process of Arbitration. It is appropriate that the petitioner should be
relegated to the process of Arbitration by dismissing the present petition. She
would refer to the judgment of the Supreme Court in the case of Bareilly
Development Authority v. Ajai Pal Singh AIR 1989 SC 1076 in support of
her submission to contend that it is a settled legal proposition that matters /
disputes relating to contract cannot be agitated nor terms of the contract can
be enforced through writ jurisdiction under Article 226 of the Constitution of
India. On the same proposition she also relied upon the judgment in the case
of Rajasthan State Industrial Development and Investment Corporation and
Anr. v. Diamond and Gem Development Corporation Ltd. and Anr. 2013 5
SCC 470. Even on merits, it was her submission that contractual clauses have
to be interpreted by considering the entire contract together. According to
her, the agreement entered on November 20, 2014 between the parties
adopted the terms and conditions of the notice inviting the tender. Thus, in
order to interpret the clauses of this agreement, the same have to be read with
the terms of the agreement. It was submitted by her that under clause 8.3, it
has been clearly specified that the statutory liability of minimum wages would
have to be included in the bids and the rates quoted by the bidder. Further, in
clause 8.3.3 it is further elaborated that the rates and the quotes should be
responsive and should include the component of minimum wages. It was her
submission, the petitioner who relied upon clause 5 of the agreement had
overlooked the other clauses which clearly reveals intention of the parties. In
fact the petitioner had tried to evade its responsibility of paying its workmen,
the statutory minimum wages by misinterpreting a contractual clause and tried
to shift the burden on the respondent. Clause 5 is a mere repetition of Note-I
of the notice of tender. On a reading of both of them, it is clear that the
obligation of paying minimum wages is on the petitioner. Even as per its
own, admission, the petitioner had stated in a situation where the petitioner
failed to pay the minimum wages, the respondent had to make the payment on
their behalf and then recover the same from the bills of the petitioner. She
draws my attention to Page 13, Para 7 of the writ petition. According to her,
this leads to undeniable conclusion that the intention of the respondent as
provided in the contract that the incidence of statutory obligation of paying
minimum wages will fall on the petitioners was clear to the petitioner from
the beginning.
6. Ms. Biji Rajesh has controverted the plea of Mr. Gogna of pick and
choose policy of the respondent by stating that the said benefit was given in
the case of employees engaged by NIELIT by stating that the same was in
consonance with the terms and conditions of the Contract. In other words, the
provisions of the Contract between the Corporation and the NIELIT are
different from those of the Contract between the petitioner and Corporation.
The Contract specifically provides for different categories of IT professionals
on purely contractual basis to perform various functions. The Contract under
Sub-Section 3 Sub-Clause C specifically provides that Corporation will be
liable to provide for the minimum wages of the workers whereas in the
present case Clause 5 of the Agreement if read simultaneously with other
provisions of the Agreement including Clause 8.3 of the NIT, it is evident that
the obligation to provide for the minimum wages falls on the petitioner. She
would rely upon the following judgments in support of her contention:-
(i) The Empire Jute Co. Limited & Ors. v. The Jute Corporation of India
Ltd. & Anr. 2007 (14) SCC 680;
(ii) Harbanslal Sahnia & Anr. V. IOCL 2003 (2) SCC 107;
(iii) Whirlpool Corporation v. Registrar of Trade Mark AIR 1999 SC 22;
(iv) Bareilly Development Authority v. Ajai Pal Singh AIR 1989 SC 1076;
(v) State of U.P. v. Bridge & Roof co. (India) Ltd. AIR 1996 SC 3515;
(vi) The Rajasthan State Industrial Development and Investment
Corporation and Anr. V. Diamond and Gem Development Corporation and
Anr. 2013 (5) SCC 470.
7. Having heard the counsel for the parties, the foremost issue which
arises for consideration is whether in view of clause 57 of the contract
relatable to dispute resolution, the present petition is maintainable. The
Clause 57 reads as under:
"57. Any dispute and or difference arising out of or relating to this
contract will be resolved through joint discussion of the authorities
representatives of the concerned parties. However, if the disputes
are not resolved by joint discussions, then the matter will be referred
for adjudication to a sole Arbitrator appointed by the
Commissioner, North Delhi Municipal Corporation.
8. There is no dispute that the respondent Corporation had initially filed a
short affidavit followed by a reply to the additional affidavit filed by the
petitioner. The short affidavit was on the merit of the controversy which falls
for consideration in the writ petition. So, it follows the short affidavit to the
writ petition and reply affidavit to the additional affidavit filed by the
petitioner are the first statement on the dispute without resorting to the
provisions of Section 8 of the Arbitration and Conciliation Act. If that be so,
the respondent having submitted itself to the jurisdiction of this Court /
waived its right to invoke Arbitration, cannot contend that the parties herein
should be relegated to Arbitration in view of the existence of an Arbitration
clause.
9. This proposition of law is well settled by the Supreme Court in the case
of Rashtriya Ispat Nigam Limited vs. M/S Verma Transport Company,
(2006) 7 SCC 275 wherein it held that the expression "first statement on the
substance of the dispute" contained in Section 8(i) of the Act is different from
the expression "written statement". It held, it employs submission of the
party making the application under Section 8 of the Act, to the jurisdiction of
the Judicial Authority. What should be decided by the Court is whether the
party seeking reference to arbitration has waived its right to invoke
Arbitration. The Supreme Court also held, that if an application is filed
before actually filing the first statement on the substance of the dispute, then
the party cannot be said to have waived its right or acquiesced itself to the
jurisdiction of the Court. So, what is, therefore, material is as to whether the
petitioner has filed its first statement on the substance of the dispute or not, if
not its application under Section 8 of the 1996 Act may not be held wholly
unmaintainable. In the case in hand, even though, the affidavit has been
referred to as a short affidavit, the respondent has actually submitted the
affidavit on the merit of the dispute. Having done that despite taking a plea
with regard to arbitration clause, it must be construed that the same does
indicate that the respondent Corporation has showed its intention to submit
itself to the jurisdiction of the Court. This has also been held by the Supreme
Court in the case of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.,
(2011) 5 SCC 532 wherein in para 25, it held not only filing of the written
statement in a suit but filing of any statement, application, affidavit by a
defendant prior to the filing of the written statement will be construed as
submission of a statement on the substance of the dispute if by filing such
statement / application / affidavit the defendant shows his intention to submit
himself to the jurisdiction of the Court and waived his right to seek reference
to Arbitration.
10. It may also be stated here, the short affidavit filed by the petitioner was
surely not opposing an interim relief or any connected proceedings and but for
the writ petition. Similarly, a Coordinate Bench of this Court in the case of
M/S S.D.Buildwell Pvt.Ltd. vs. Rail Land Development Authority, 220
(2015) DLT 734, has in para 52 has held as under:
"52. On the issue raised by the respondent that there was an
Arbitration Clause, therefore, the petitioner should approach
the Arbitration Tribunal. It is relevant to note that as
per Section 8 of the Arbitration and Conciliation Act, 1966, an
application should be filed before the party files its first
statement on the substance of the dispute. However, the
respondent had filed its counter-affidavit on 08.08.2012
whereas the application under Section 8 of the Act was filed on
07.09.2012. Therefore, since the respondent chose to file its
application after filing of its first counter-affidavit, the said
application is not maintainable."
11. Even this Court in a recent pronouncement in the case of Vikram
Sharma v. Union of India W.P.(C) 10588/2016 decided on January 29, 2018
has by referring to the judgment of the Supreme Court in the case of Booz
Allen & Hamilton Inc. (supra) and this Court in S.D.Buildwell Pvt.Ltd.
(supra) rejected the plea taken by the respondent in that case on the
maintainability of the writ petition in view of the existence of an arbitration
clause by holding that the respondent having filed its statement on the dispute
by way of a counter affidavit to the writ petition is precluded from taking the
plea that there exist an arbitration agreement. In view of the above, the plea
of Ms. Biji Rajesh on the non-maintainability of the petition needs to be
rejected. Suffice to state, the issue needs to be considered on merit and I
accordingly proceed to examine the same.
12. The claim of the petitioner in this petition, is for a direction to the
respondent to make payment of enhanced minimum wages and the resultant
increase in EPF / ESI for the period April 01, 2014 till April 01, 2017. As
noted above, the initial award of the security work of the Centre to the
petitioner was vide letter dated November 12, 2014 (Annexure P-4). The
same was for a period of one year. The rate agreed to per person / per shift /
per day was `474.96 for Security Guards and `517.22/- for Armed Security
Guards and Security Supervisor respectively. The rates included the
component of ESI / EPF / weekly off wages / other charges / service tax. The
award of security work was accepted by the petitioner on November 12, 2014
on the terms and conditions mentioned in the said letter, which includes the
following:-
"1. Details of rate, designation and quantity of manpower.
S.No. Designation Number of Rate per person per
Manpower shift per day
required
1. Security Guard 393 474.96
2. Armed Security 21 517.22
Guard
3. Security Supervisor 13 517.22
2. The rates as mentioned above are inclusive of service
taxes and other taxes. Nothing shall be paid above these
rates. Also above rates are applicable for eight hours
(standard) shift.
3. Scope of this work of comprehensive security
arrangement Dr. SPM Civic Centre shall include but not
limited to round the clock watch & ward of entire point
including other / open space / basement / parking alongwith
all type of furniture fixture etc. on all days including Sunday
and Gazetted holidays.
4. The security arrangement shall be valid for one year
from the date of the contract award.
5. Payment shall be made on the basis of actual
deployment.
6. All the terms and conditions of the contract as
mentioned in tender documents shall be applicable.
7. As per clause 12.14 of the contract you are requested to
furnish a performance security within 15 days of receipt of
office letter for an amount equal to 5% of contract for one
year in the form of DD in favour of Commissioner, North
Delhi Municipal Corporation.
8. You are requested to attend this office on 14.11.2014 to
execute contract agreement on Non Judicial Stamp paper of
Rs.100/-.
9. You are requested to deploy the security personal as
mentioned as above w.e.f. 01.12.2014 morning 7:00 A.M.
positively.
If above terms and conditions are acceptable to you.
You may return a signed copy of this letter as token of
acceptance immediately.
13. The terms and conditions in the tender documents included the
Annexure-V, which reads as under:-
"3. I/We abide by the provisions of Minimum Wages Act,
Contract Labour Act and other statutory provisions like
Provident Fund Act, ESI Bonus, Leave, Relieving Charges,
Uniform and Allowance thereof and any other charges
applicable from time to time. I/We will pay the wages to the
personnel deployed as per Minimum Wages Act as amended
by the Government from time to time and shall be fully
responsible for any violation."
14. It also included Clause 8.3, which reads as under:-
8.3 BID PRICES:-
8.3.1. Bidder shall quote the rates in Indian Rupees for the
entire contract on a „single responsibility‟ basis such that the
Tender price covers contractor‟s all obligations mentioned in
or to be reasonably interred from the Tender document in
respect of the Security Services at Dr. S.P. Mukherjee Civic
Centre, J.L. Nehru Marg, New Delhi-110002. This includes
all the liabilities of the contractor such as cost of uniform
and identify cards of personnel deployed by the contractor
and all other statutory liabilities like Minimum Wages, ESI
PF contributions, service charges all kinds of taxes etc.
which should be clearly stated by the contractor.
8.3.2. The rates and quoted shall be responsive and the same
should be inclusive of all Statutory obligation such as
Minimum Wages, ESI PF contributions, wages for leave
reserve, service charges, all kinds of taxes etc. The offers of
those prospective bidders which do not meet the statutory
requirements are liable to be rejected.
8.3.3 The rates and quoted shall be responsive and the same
should be inclusive of all Statutory obligation such as
Minimum Wages, ESI, PF contributions, wages for leave
reserve, service charges, all kinds of taxes etc. The offers of
those prospective bidders which do not meet the statutory
requirements are liable to be rejected.
15. The Note-1 at page 49 of the paper book also reads as under:-
"1. The Security Guard will be considered under the Semi-
Skilled category. Contractor shall provide uniformed and
trained personnel and use its best endeavour to provide
Security services to the entire Civic Centre, its moveable as
well as immoveable properties, staff for providing safety,
monitoring and surveillance. Rages quoted will include all
statutory obligations of the contractor under minimum
Wages Act, Contract Labour (R&A) Act, weekly-off
replacement charges, cost of uniform of personnel deployed
by the contractor, all kinds of taxes, service charges, etc. If
the agency. The rate quoted will be for per shift of eight
hours per person per day. If the minimum wages is revised
by the Government of NCT of Delhi / Government of India,
the incremental wages, if applicable, will be provided."
16. Pursuant to the award of work vide letter dated November 12, 2014, the
parties herein had on November 25, 2014 executed a contract agreement of
which clause 5 stipulated as under:-
"5. The rate quoted are for per shift of eight hour per
person per day. If the minimum wages are revised by the
government of NCT of Delhi / Government of India, the
incremental wages will be provided."
17. But at the same time, the terms and conditions of the contract also
included the following:-
"2. The contractor shall abide by and comply with all the
relevant laws and statutory requirements covered under
Labour Act, Minimum Wages and (Contract Labour
(Regulation & Abolition Act 1970), EPF etc. With regard to
the Security personnel engaged by him for works. It will be
the responsibility of the contractor to provide details of
manpower deployed by him, in the Department as well as to
the Labour Department of North Delhi Municipal
Corporation."
18. What is important in this case is that, much before the security work
was awarded to the petitioner vide letter dated November 12, 2014 and also
before the contract agreement dated November 25, 2014 was executed on
August 28, 2014, the Department of Provident Fund increased the cap on
which the Provident Fund shall be paid from `6,500/- to `15,000/- with effect
from September 01, 2014 and varied the rate from 13.61% to 13.36%. In
other words, on the date when the work was awarded to the petitioner and the
contract agreement was executed between the parties, the EPF, capping
already stood enhanced. The petitioner did not sought variance in the terms
and conditions of the contract on the basis of the notification dated August 28,
2014 of the Department of the Provident Fund increasing the cap. For all
purposes, the petitioner agreed for the rate of `474.96/- for Security Guards
and `517.22/- for Armed Security Guards and Security Supervisor
respectively as the rate per person / per shift / per day. It may be stated here,
on that date i.e November 12, 2014, the minimum wages payable to a Security
Guard was `367/- per day and for Armed Security Guard / Security
Supervisor it was `403/- respectively, which were much below the rates
agreed to by the respondent Corporation, to be payable to the petitioner. It
appears, for this reason no objection was raised by the petitioner till April 25,
2015 when for the first time the petitioner sought payment of enhanced
minimum incremental wages. Suffice to state, this request of the petitioner
for enhancement of incremental wages was contrary to the rates already
accepted by the petitioner, vide its letter dated November 12, 2014, which
rates were quoted by the petitioner itself, which were accepted by the
respondent resulting in the award of work to the petitioner.
19. Even though, Mr. Gogna may be right in contending that the minimum
wages have undergone increase from time to time i.e to `385/- for Security
Guards and `423/- for Armed Security Guards and Security Supervisor
respectively with effect from April 01, 2015 and `390/- for Security Guards
and `429/- for Armed Security Guards and Security Supervisor respectively
with effect from October 01, 2015, still the minimum wage payable in terms
of the notification issued by the Appropriate Government was below the
quoted rate of `474.96/- for Security Guards and `517.22/- for Armed
Security Guards and Security Supervisor respectively. Not only this, even
after the expiry of the contract dated November 25, 2015, the petitioner had,
without any demur accepted the extension of the contract for the period
December 01, 2015 to November 30, 2016 vide letter dated September 14,
2016 on the same terms and conditions i.e rates payable per shift / per day as
`474.96/- for Security Guards and `517.22/- for Armed Security Guards and
Security Supervisor respectively. No doubt the petitioner had written letters to
the respondent, but the same were in the first year of the Contract or after
April 01, 2017. Appropriate for the petitioner should have been to decline the
extension granted by the respondent. Even as on December 01, 2015, the
rates of the minimum wage were `390/- for Security Guards and `429/- for
Armed Security Guards and Security Supervisor respectively, which were
also much below the rate agreed to by the respondent i.e `474.96/- for
Security Guards and `517.22/- for Armed Security Guards and Security
Supervisor respectively. So, it is not a case of non-payment of minimum
wages as prescribed by the Appropriate Government. Rather, it is a case
where enhancement is sought in the rate / per shift / per day because of
revised minimum wages and higher capping for computing PF. Such
enhancement would be contrary to what has been agreed to by the petitioner,
as noted above. No doubt, there is a stipulation in the contract that in the
eventuality, the minimum wages are revised by the Government of NCT of
Delhi / Government of India, the incremental wages, if applicable will be
provided. The question would be, who would provide the incremental wages,
i.e. the petitioner or the respondent. A reading of the various stipulations
noted above, it must be held that it is the obligation of the petitioner to grant
the incremental wages, if applicable. The issue can be seen from a different
perspective, inasmuch if the petitioner was not satisfied with the terms and
conditions at the time of extension of contract, the petitioner should have
withdrawn itself from the contract for extended period effective from
December 01, 2015. Having not withdrawn itself from the extended contract,
but agreed to the terms, the petitioner cannot now seek a better rate on the
pretext that the minimum wages have been increased or there is an increase in
capping for calculating the PF. Not only this, I find the petitioner had
accepted without any demur, further extension w.e.f. October 01, 2016, on the
same terms and conditions despite the minimum wages having been increased
to `407/- for Security Guards and `447/- for Armed Security Guards and
Security Supervisor respectively with effect from March 01, 2016 and `414/-
for Security Guards and `455/- for Armed Security Guards and Security
Supervisor respectively, which are still under `474.96/- for Security Guards
and `517.22/- for Armed Security Guards and Security Supervisor
respectively. It is not a case where the minimum wages prescribed by the
Appropriate Government are being denied by the respondent. Even if denied,
the same is for the petitioner to pay.
20. So, it follows despite knowing the increase in the minimum wages and
increase in the capping of PF, the petitioner had accepted at least by conduct,
the terms and conditions for three successive years. In fact, the petitioner has
not even cared to challenge the orders whereby the contract was extended
from time to time on the same terms and conditions in these proceedings. The
petitioner is precluded from seeking the relief of payment of enhancement of
the rate / per shift / per day under the garb that the minimum wages / capping
for calculating PF have been increased. In this regard, I may refer to the
judgments of the Supreme Court and this Court. In Alopi Parshad & Sons vs.
Union of India, (1960) 2 SCR 793, the Supreme Court held that the contract
is not discharged merely because it turns out to be a difficult to perform or
onerous. In that case the agent, appointed by the Government for supply of
ghee, claimed enhancement of rates on the ground that the circumstances
changed due to the war. The Supreme Court rejected the claim and held as
under:
"21. ...Performance of the contract had not become impossible
or unlawful; the contract was in fact, performed by the Agents,
and they have received remuneration expressly stipulated to be
paid therein. The Indian Contract Act does not enable a party
to a contract to ignore the express covenants thereof, and to
claim payment of consideration for performance of the
contract at rates different from the stipulated rates, on some
vague plea of equity. The parties to an executor contract are
often faced, in the course of carrying it out, with a turn of
events which they did not at all anticipate - a wholly abnormal
rise or fall in prices, a sudden depreciation of currency, an
unexpected obstacle to execution, or the like.
xxx xxx xxx
22. There is no general liberty reserved to the courts to
absolve a party from liability to perform his part of the
contract, merely because on account of an uncontemplated
turn of events, the performance of the contract may become
onerous. That is the law both in India and in England, and
there is, in our opinion, no general rule to which recourse may
be had, as contended by Mr. Chatterjee, relying upon which a
party may ignore the express covenants on account of an
uncontemplated turn of events since the date of the contract..."
(Emphasis Supplied)
21. In Panna Lal vs. State of Rajasthan, (1975) 2 SCC 633, the Supreme
Court held that a party cannot resile from the contract on the ground that the
terms of payment were onerous. The relevant portion of the judgment is as
under:
"21. The licences in the present case are contracts between the
parties. The Licensees voluntarily accepted the contracts. They
fully exploited to their advantage the contracts to the exclusion
of others. The High Court rightly said that it was not open to
the appellants to resile from the contracts on the ground that
the terms of payment were onerous. The reasons given by the
High Court were that the Licensees accepted the licence by
excluding their competitors and it would not be open to the
Licensees to challenge the terms either on the ground of
inconvenient consequence of terms or of harshness of terms."
(Emphasis supplied)
22. In State of Haryana vs. Jage Ram (1980) 3 SCC 599 the Supreme
Court held that the Licensee cannot challenge the terms of the licence on the
ground that he is finding it commercially inexpedient to conduct his business.
The Supreme Court reaffirmed the principles laid down in Har Shankar v.
Deputy Excise and Taxation Commissioner (1975) 1 SCC 737. Relevant
portion of the said judgement is reproduced hereunder:
"14. In Har Shankar [(1975) 1 SCC 737, 745-46] appellants'
bid was accepted in an auction held on March 23, 1968 for the
right to sell country liquor at two vends in Ludhiana. The
appellants paid the security deposit but were unable to meet
their obligation under the conditions of auction and fell in
arrears. When the State demanded the payment, threatened to
cancel the licences granted to the appellants and declared its
intention to resale the vends, the appellants filed writ petitions
in the High Court of Punjab and Haryana asking that the
auction be quashed and the respondents be restrained from
enforcing the obligations arising under its terms and conditions.
The High Court having dismissed the writ petitions, the
Licensees filed an appeal to this Court by certificate.
15. What is important for our purpose in this appeal is that the
State of Punjab, which was respondent to the appeal in Har
Shankar [(1975) 1 SCC 737, 745-46] raised a preliminary
objection to the maintainability of the writ petitions filed by the
appellants and that objection was upheld by this Court. The
preliminary objection was that such of the appellants who
offered their bids in the auctions did so with a full knowledge of
the terms and conditions attaching to the auctions and that they
could not be permitted to wriggle out of the contractual
obligations arising out of the acceptance of their bids. Holding
that the preliminary objection was well-founded, this Court
observed: (SCC pp. 745-746, para 16)
"Those interested in running the country liquor vends
offered their bids voluntarily in the auction held for
granting licences for the sale of country liquor. The terms
and conditions of auctions were announced before the
auctions were held and the bidders participated in the
auctions without a demur and with full knowledge of the
commitments which the bids involved. Those who contract
with open eyes must accept the burdens of the contract
along with its benefits. The powers of the Financial
Commissioner to grant liquor licences by auction and to
collect licence fees through the medium of auctions cannot
by writ petitions be questioned by those who, had their
venture succeeded, would have relied upon those very
powers to found a legal claim. Reciprocal rights and
obligations arising out of contract do not depend for their
enforceability upon whether a contracting party finds it
prudent to abide by the terms of the contract. By such a test
no contract could ever have a binding force." (p. 263)
At p. 266 (SCC p. 748) of the Report, the court further
observed that the writ jurisdiction of High Courts
under Article 226 was not intended to facilitate avoidance of
obligations voluntarily incurred.
16..........They entered into a contract with the State authorities
with the full knowledge of conditions which they had to carry
out in the conduct of their business, on which they had
willingly and voluntarily embarked. The occurrence of a
commercial difficulty, inconvenience or hardship in the
performance of those conditions, like the sale of liquor being
less in summer than in winter, can provide no justification for
not complying with the terms of the contract which they had
accepted with open eyes.
17. The judgment in Har Shankar [(1975) 1 SCC 737, 745-46]
was followed in Sham Lal v. State of Punjab [(1977) 1 SCC
336] wherein, appellants were the highest bidders in an
auction for the sale of country liquor vends at various places
in the State of Punjab. The appellants were called upon by the
State to pay the amounts which they were liable to pay under
the terms of the auction, whereupon they filed writ petitions in
the High Court to challenge the demand. Relying upon the
passage from Har Shankar [(1975) 1 SCC 737, 745-46]
extracted above, the court held that the Licensees could not be
permitted to avoid the contractual obligations voluntarily
incurred by them and that therefore the High Court was right
in refusing to exercise its jurisdiction under Article 226 of the
Constitution in their favour.
18. In view of these decisions, the preliminary objection raised
by the Solicitor General to the maintainability of the writ
petitions filed by the respondents has to be upheld. We hold
accordingly that the High Court was in error in entertaining
the writ petitions for the purpose of examining whether the
respondents could avoid their contractual liability by
challenging the Rules under which the bids offered by them
were accepted and under which they became entitled to
conduct their business. It cannot ever be that a Licensee can
work out the licence if he finds it profitable to do so; and he
can challenge the conditions under which he agreed to take
the licence, if he finds it commercially inexpedient to conduct
his business." (Emphasis supplied)
23. In New Bihar Biri Leaves Co. vs. State of Bihar (1981) 1 SCC 537,
the Supreme Court held that it is a fundamental principle of general
application that if a person of his own accord, accepts or contracts on certain
terms and works out the contract, he cannot be allowed to adhere to and abide
by some of the terms of the contract which proved advantageous to him and
repudiate the other terms of the same contract which might be
disadvantageous to him. The relevant portion of the judgment is reproduced
as under:
"48. It is a fundamental principle of general application that if
a person of his own accord, accepts a contract on certain
terms and works out the contract, he cannot be allowed to
adhere to and abide by some of the terms of the contract which
proved advantageous to him and repudiate the other terms of
the same contract which might be disadvantageous to him. The
maxim is qui approbat non reprobat (one who approbates
cannot reprobate). This principle, though originally borrowed
from Scots Law, is now firmly embodied in English Common
Law. According to it, a party to an instrument or transaction
cannot take advantage of one part of a document or
transaction and reject the rest. That is to say, no party can
accept and reject the same instrument or transaction.
49. The aforesaid inhibitory principle squarely applies to the
cases of those petitioners who had by offering highest bids at
public auctions or by tenders, accepted and worked out the
contracts in the past but are now resisting the demands or
other action, arising out of the impugned Condition (13) on the
ground that this condition is violative of Articles 19(1)(g) and
14 of the Constitution."
(Emphasis supplied)
24. In Assistant Excise Commissioner vs. Issac Peter (1994) 4 SCC 104,
the Supreme Court held that in cases of contracts entered into with open eyes,
a party cannot seek alteration of the terms expressly agreed to, on the ground
of financial hardship. The State has no responsibility to ensure profit to
everyone who contracts with it. The relevant portion of the judgment is
reproduced hereunder:
"14........The contract between the parties is governed by
statutory provisions, i.e., provisions of the Act, the Rules, the
conditions of licence and the counterpart agreement, they
constitute the terms and conditions of the contract. They are
binding both upon the Government and the Licensee. Neither of
them can depart from them. It is not open to any officer of the
Government to either modify, amend or alter the said terms and
conditions, not even to the Minister for Excise.
21......It is not a case where any essential term of contract was
kept back or kept undisclosed. The Government had placed all
their cards on the table. If the Licensees offered their bids with
their eyes open in the above circumstances they cannot blame
anyone else for the loss, if any, sustained by them, nor are they
entitled to say that license fee should be reduced proportionate to
the actual supplies made.
23. Maybe these are cases where the Licensees took a calculated
risk. Maybe they were not wise in offering their bids. But in law
there is no basis upon which they can be relieved of the
obligations undertaken by them under the contract. It is well
known that in such contracts -- which may be called executory
contracts -- there is always an element of risk. Many an
unexpected development may occur which may either cause loss
to the contractor or result in large profit. Take the very case of
arrack contractors. In one year, there may be abundance of
supplies accompanied by good crops induced by favourable
weather conditions; the contractor will make substantial profits
during the year. In another year, the conditions may be
unfavourable and supplies scarce. He may incur loss. Such
contracts do not imply a warranty -- or a guarantee -- of profit to
the contractor. It is a business for him -- profit and loss being
normal incidents of a business. There is no room for invoking the
doctrine of unjust enrichment in such a situation. The said
doctrine has never been invoked in such business transactions.
The remedy provided by Article 226, or for that matter, suits,
cannot be resorted to wriggle out of the contractual obligations
entered into by the Licensees.
26. Doctrine of fairness or the duty to act fairly and reasonably
is a doctrine developed in the administrative law field to ensure
the rule of law and to prevent failure of justice where the action
is administrative in nature. Just as principles of natural justice
ensure fair decision where the function is quasi-judicial, the
doctrine of fairness is evolved to ensure fair action where the
function is administrative. But it can certainly not be invoked to
amend, alter or vary the express terms of the contract between
the parties. It must be remembered that these contracts are
entered into pursuant to public auction, floating of tenders or by
negotiation. There is no compulsion on anyone to enter into these
contracts. It is voluntary on both sides. There can be no question
of the State power being involved in such contracts. It bears
repetition to say that the State does not guarantee profit to the
Licensees in such contracts. There is no warranty against
incurring losses. It is a business for the Licensees. Whether they
make profit or incur loss is no concern of the State. In law, it is
entitled to its money under the contract. It is not as if the
Licensees are going to pay more to the State in case they make
substantial profits. We reiterate that what we have said
hereinabove is in the context of contracts entered into between
the State and its citizens pursuant to public auction, floating of
tenders or by negotiation. It is not necessary to say more than
this for the purpose of these cases."
(Emphasis supplied)
25. In Puravankara Projects Ltd. vs. Hotel Venus International, (2007)
10 SCC 33, the Supreme Court held that the tender terms are contractual and
it is the privilege of the Government which invites its tenders and the Courts
do not have jurisdiction to judge as to how the tender terms would have to be
framed.
26. In Bharti Cellular Limited v. Union of India (2010) 10 SCC 174, the
Supreme Court held that no one can approbate and reprobate the same
document and anyone who has accepted with full knowledge or notice of
facts, benefits under a transaction which he might have rejected or contested,
cannot question the transaction or take up an inconsistent position qua the
same. Party who has unconditionally accepted the package cannot thereafter
reject the inconvenient and onerous conditions while accepting the conditions
beneficial to him. Relevant portion of the said judgment is reproduced
hereunder:-
"8. ...A party which has unconditionally accepted the package
cannot after such acceptance reject the conditions subject to
which the benefits were extended to it under the package. It
cannot reject what is inconvenient and onerous while accepting
what is beneficial to its interests...
9. Relying upon the decision of this Court in City Montessori
School v. State of U.P, New Bihar Biri Leaves Co. v. State of
Bihar and R.N. Gosain v. YashpalDhir, this Court has
in ShyamTelelink Ltd. v. Union of India held that no one can
approbate and reprobate and anyone who has accepted with full
knowledge or notice of facts, benefits under a transaction which
he might have rejected or contested, cannot question the
transaction or take up an inconsistent position qua the same. We
have said: (ShyamTelelink case, SCC p. 172, para 23)
„23. The maxim qui approbat non reprobat (one who
approbates cannot reprobate) is firmly embodied in English
common law and often applied by courts in this country. It is
akin to the doctrine of benefits and burdens which at its most
basic level provides that a person taking advantage under an
instrument which both grants a benefit and imposes a burden
cannot take the former without complying with the latter. A
person cannot approbate and reprobate or accept and reject the
same instrument."
(Emphasis added)
27. In Track Innovations India Pvt. Ltd. vs. Union Of India, 2010 (170)
DLT 424, the Division Bench of this Court held that there cannot be variation
of the terms of a commercial contract, which has been acted upon.
Government is not bound to ensure profit in every commercial contract more
so when the contract had been awarded either by public auction or by floating
tender or negotiations. The Division Bench further noted that a person cannot
approbate and reprobate or accept or reject the same instrument. Relevant
portion of the said judgment is reproduced hereunder: -
"12. ...we are of the opinion that in commercial contracts, such as
the present, where the private contractors enter into these
contracts having huge financial stakes, there is no scope for
seeking variation of the terms of the contract which have been
acted upon on the ground of alleged unreasonableness by
invoking Article 14 of the Constitution."
"14. The portions of the above judgments, underlined by us clearly
show that in commercial contracts entered into with open eyes,
there cannot be variation to the terms of the concluded contract
which has been acted upon. Commercial men take commercial
decision which sometimes results either in profit or sometimes in
loss, however, the Government is not bound to ensure profit in
every contracts which are either by public auction or by floating
tenders or negotiations. It has been clarified that there is no issue
of fairness or arbitrariness with respect to terms of the contract in
such commercial contracts."
28. I am conscious of the fact that this Court in a petition filed by the
petitioner challenging the action of the tender evaluation committee not
considering the service charges and the lower rates towards PF contribution at
the time of awarding the tender as unjustified. The Court held that the
liability to pay statutory dues is absolute, including the revised minimum
wages and the PF benefits. The challenge in the said judgment was to the
process of evaluation by the tender committee for shortlisting a party and
awarding the Contract, which was set aside. The claim of the petitioner in
this petition is for the period post the award of the Contract which clearly
stipulates the rates payable to the petitioner. The judgment is clearly
distinguishable. Insofar as the other judgments referred to by Mr. Gogna are
concerned, those are on the proposition; (i) duty of Court to ensure social and
economic justice to the weaker sections; (ii) concept of model employer and
role of State as a model employer; (iii) Court should guard the fundamental
rights of the citizens while exercising writ of mandamus; (iv) right of fair
wages is an integral part of right to life; (v) the Court should interfere when
the State is committing error of law or is abusing its powers, which have no
applicability in view of my conclusion above.
29. In view of my above discussion, I do not find any merit in the petition,
the same is dismissed.
CM. No. 33688/2017 (for interim relief)
Dismissed as infructuous.
V. KAMESWAR RAO, J
OCTOBER 23, 2018/jg/aky
