Madras High Court
Southern Railways vs M/S.Aarthi Enterprises on 20 January, 2021
WA.No.865 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 20.01.2021
CORAM :
The Hon'ble Mr.SANJIB BANERJEE, THE CHIEF JUSTICE
AND
The Hon'ble Mr.JUSTICE SENTHILKUMAR RAMAMOORTHY
W.A.No.865 of 2020
1.Southern Railways,
Rep. by the General Manager,
O/o Southern Railways,
Chennai 600 003.
2.Senior Divisional Manager,
Divisional Office, Commercial Branch,
Southern Railway, Chennai 600 003. .. Appellants
-vs-
1.M/s.Aarthi Enterprises,
Rep. by its Partner Mrs.G.Mythili.
2.Deputy Chief Labour Commissioner
(Central), No.4, Haddows Road,
Shastri Bhavan, Chennai 600 006. .. Respondents
Appeal filed under Clause 15 of the Letters Patent against the
order dated 10.03.2020 passed in W.P.No.17160 of 2019 on the file of
this Court.
Page 1 of 12
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WA.No.865 of 2020
For Appellants : Mr.Radhakrishnan, Sr. Counsel,
for Mr.M.Vijay Anand
For Respondents : Mr.P.Wilson, Sr. Counsel
for Mr.R.Neelakandan
*****
JUDGMENT
(Delivered by The Hon'ble Chief Justice)
The Southern Railway is in appeal against a portion of an order
passed on a contractor's writ petition against it. The directions are
contained in paragraph 42 of the judgment and order impugned herein
dated March 10, 2020. The appellant is not aggrieved by Clauses (a)
and (b) of the directions. It is the third clause of the directions which
is assailed.
2.Pursuant to a notice inviting tender, bids were made by
several, including the writ petitioner firm, for undertaking the work of
cleaning Chennai Park Railway Station for a period of three years.
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WA.No.865 of 2020
There were at least two other bidders. The writ petition was instituted
upon the present appellants' failure to accede to the contractor's
demand to meet the higher wage bill following the increase in
minimum wages by a Government notification of January 19, 2017.
The principal contention carried to the writ Court was that the first
appellant herein, as the principal employer, was liable to bear the
minimum wages of the employees deployed by the contractor and such
position was also envisaged in the tender documents. Copious
references are made to the schedules pertaining to the tender
documents and the bid made on the basis of the four scheduled items.
By the judgment and order impugned, the following directions were
issued:
“42. Accordingly, the Writ Petition is disposed of on the
following terms:
(a) The petitioner is directed to furnish proof of payment of
the enhanced minimum wages to the employees as per the
notification dated 19.01.2017, apart from the wages already paid as
per the amount quoted in Schedule-A, with material details and
particulars, within a period of four weeks from the date of receipt of
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WA.No.865 of 2020
a copy of this order.
(b) On receipt of such details and particulars, the Railways
shall, on being satisfied with the said payment made by the
petitioner to its employees, reimburse the said amount to the
petitioner within a period of four weeks thereafter.
(c) It is made clear that the Railway is entitled to take the
rebate offered by the petitioner namely 27% only under Schedule-B
and Schedule-C rates and not under Schedule-A or D.”
3.The appellants herein join issue as regards the third of the
directions. According to the appellants, the writ petitioner had given a
rebate of 27% on the total bid value which included both the minimum
wages component and the GST on minimum wages. The appellants
assert that if such was the bid of the writ petitioner, upon the
minimum wages being enhanced and upon the principal employer
being required to bear the enhanced GST component, the percentage
of rebate cannot be altered as the rebate amount will operate on the
enhanced minimum wages bill and the GST payable thereon.
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WA.No.865 of 2020
4.On behalf of the writ petitioner, it is contended that once it is
accepted that the principal employer has to foot the minimum wages
bill, no deduction can be sought therefrom. It is the further
submission on behalf of the respondents that a statutory charge
cannot also invite any reduction and, as such, the GST component
payable on the minimum wages would not be subject to any reduction
by way of rebate.
5.Provisions of the Minimum Wages Act are sought to be cited in
such regard. However, it does not appear that such provisions have
any relevance in the present context. It is the bid of the writ petitioner
which has to be noticed. The bid was made in respect of four
scheduled items. Schedule A pertained to the Cost of Labourers;
Schedule B pertained to the Cost of Consumables; Schedule C
pertained to the Rental for Vehicles for Garbage Removal; and
Schedule D pertained to Service Tax @ 15%. Indeed, the financial
offer of the writ petitioner may be seen in its entirety so that there
may not be any room for equivocation.
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6.In respect of Schedule A, the bid rate was at par with what
was indicated in the tender documents, implying thereby that no
reduction was offered by the contractor. Schedule B, pertaining to Cost
of Consumables, was also quoted at par. Schedule C relating to Rental
for Vehicles, was quoted at 0.05% below the price indicated in the
tender documents. Schedule D was quoted at par. Indeed, no
reduction could have been granted in respect of either Schedule A or in
respect of Schedule D since these were actuals to be paid on account
of minimum wages and the statutory impost thereon.
7.It is evident from the offer that an amount of Rs.19,43,625/-
was bid in respect of Schedule A, an amount of Rs.3,45,360/- was bid
in respect of Schedule B, an amount of Rs.8,20,389.60 was bid in
respect of Schedule C and an amount of Rs.7,53,976/- was bid in
respect of Schedule D, which included Service Tax, EPF, ESI and
Bonus.
8.The gross bid value was indicated in the bid document to be
Rs.38,63,350.60. As is arithmetically evident, the gross bid value of
Rs.38,63,350.60 was the sum of the quantum bid in respect of each of
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WA.No.865 of 2020
the Schedules. In other words, Rs.19,43,625/- on account of Schedule
A was added to Rs.3,45,360/- on account of Schedule B,
Rs.8,20,389.60 was added on account of Schedule C and
Rs.7,53,976/- was added on account of Schedule D to arrive at the
gross figure of Rs.38,63,350.60.
9.So as to obtain the job, the writ petitioning contractor offered
a rebate of 27% on the total value and arrived at a net bid value of
Rs.28,20,245.94. Again, it is arithmetically obvious that the rebate
that was offered operated on the gross bid value to arrive at the net
bid value.
10.It may be of some relevance to record that the two other
bidders, Siva Hygienic Chemicals and Archana Enterprises, did not
offer any rebate on the gross value and the respective net offered
values were Rs.32,35,694.92 and Rs.38,83,197.25. As a consequence
of the writ petitioner offering a rebate of 27% on the gross bid value,
its reduced net offered value stood at Rs.28,20,245.94 and it was
easily identified as a L1 and obtained the contract.
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WA.No.865 of 2020
11.It was not for the appellants herein to look a gift horse in the
mouth. The appellants had to identify L1 and award the contract to
L1, subject to being satisfied that L1 was capable of performing the
work. It was not the appellants' concern as to how L1 met its
expenses or costs in undertaking the work once L1 had made a
conscious bid.
12.There is no doubt that neither the contractor nor the
employer could have deducted from the minimum wages bill or from
the GST imposed on the minimum wages since minimum wages are
statutorily payable and the tax thereon is also a statutory obligation
that requires to be discharged. The net effect is that while considering
the offer of rebate that had been offered, the writ petitioner must be
seen to have offered the rebate from that part of the expenditure that
was permissible. Indeed, in respect of the individual heads pertaining
to Schedule A and Schedule D, the writ petitioner's bid did not offer
any concession. The concession, thus, could only have come from the
costs to be incurred under Schedules B and C. The rebate offered was
on the gross value of the bid and the bid, since it was accepted, has to
be honoured. By the judgment and order impugned, a distinction has
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WA.No.865 of 2020
been made in the impugned part of the judgment in Clause (c)
between the several entries in the Schedules, which was uncalled for.
The writ petitioner had offered a rebate on the gross value of the bid
and it is the enhanced value now after the increase in the wage bill
and the GST payable that will determine the rebate that has to be
offered. If that implies that it reduces the income of the writ petitioner
on account of Schedules B and C, so be it. The writ petitioner had
made a bid with its eyes wide open and the writ petitioner has to live
with it.
13.Accordingly, the impugned order in so far as it permits the
rebate offered by the writ petitioner to be confined only to Schedule B
and Schedule C rates is set aside. The total value, including the
enhanced amount on account of minimum wages and the enhanced
amount on account of Service Tax, EPF, ESI and Bonus, ought to be
taken into account and the rebate provided on the entire quantum
rather than being confined to Schedules B and C only. Only such a
course would be in tune with the bid made by the writ petitioning
contractor since it did not confine the extent of its rebate in its original
bid to Schedules B and C but allowed the bid on the total amount by
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taking into account the amounts covered by Schedules A and D, too.
14.The appeal, W.A.No.865 of 2020, is allowed to the extent
indicated. The interim application, C.M.P.No.10823 of 2020, is closed.
15.The appellants should ensure that the enhanced amounts on
the basis of actuals in terms of the order impugned as modified by the
present order are tendered to the contractor within a period of six
weeks from date or from the date of furnishing the particulars,
whichever is later; failing which the contractor will be entitled to claim
interest at the rate of 8% p.a. simple on the amount already
expended. Since it appears that this order operates harshly on the
contractor, particularly since the contractor may not have conceived of
the present situation, the appellants will do well to release the
contractor's bills in time so as to lighten the contractor's hardship.
There will be no order as to costs.
(S.B., CJ.) (S.K.R., J.)
20.01.2021
Index : Yes / No
sra
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WA.No.865 of 2020
The Hon'ble Chief Justice
and
Senthilkumar Ramamoorthy, J.
(sra)
To
1.The General Manager,
Southern Railways,
O/o Southern Railways,
Chennai 600 003.
2.The Senior Divisional Manager,
Divisional Office, Commercial Branch,
Southern Railway, Chennai 600 003.
3.The Deputy Chief Labour Commissioner
(Central), No.4, Haddows Road,
Shastri Bhavan, Chennai 600 006.
W.A.No.865 of 2020
20.01.2021
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