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2022 Supreme(AP) 296
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
D.V.S.S. SOMAYAJULU, J.
M/s. Sri Sai Investigation & Security Services Rep., by its Managing Partner – Appellant
Versus
Secretary, Ministry of Railways, Government of India, New Delhi and 2 others - Respondents
W.P.No. 13597 of 2018
Decided on : 19-04-2022
Advocate Appeared:
For the Appellant : Sri C.V.Ram Mohan Reddy
For the Respondents: Smt. Sasikala, adv
Headnote:
Constitution of India,1950 - Railways to enhance the wages or to foreclose the contract - Termination of two contracts - Petitioner is a contractor, who was participated in two tenders cleaning of coaches, cleaning of depot premises, garbage etc., which was floated by the respondent-Railways. Date of the tender - Tenders were finalized and letters of acceptance were issued for both works. Formal contracts for both works were executed - Learned counsel for petitioner points out that basing on the minimum wages that were prevalent at time of filing of the tender, petitioner had quoted rates - Learned counsel submits that the minimum wages payable to workers increased per day with retrospective effect - Learned counsel submits that this upset the entire planning and the financial basis of contract - Learned counsel submits that despite the phenomenal increase in rates due to the increase in the minimum wages, the petitioner did his level best to absorb the loss and also to carry on the work - He points out that after executing the work for sometime – Held, Interpretation of contract to give business efficacy needs to be answered - Learned counsel relied upon the Division Bench judgment also clearly states that terms of contract are always final - It was held in para 26 that business efficacy test can only be applied in cases where the term that is sought to be read as a term intended by the parties - Bombay High Court found that Railways in that case also followed the same principle and granted price variation to the contractor till and thereafter Railways refused to give the benefit to the contractor when the wages were escalated - There was also a price variation clause - Relevant clauses in letters of acceptance and the general conditions are extracted earlier. By a process of interpretation, this Court cannot make out a new contract for the parties - Once the terms of the agreed contract are clear, and the contract does not suffer from any infirmity or ambiguity, this Court cannot rely on the “business efficacy” test to bring in an implied term would amount to doing violence to the clear written terms of contract - Primary responsibility rests with the petitioner. He failed to discharge his statutory obligation opinion of this Court - Writ petition dismissed.
ORDER :
1. This writ petition is filed by the petitioner questioning the termination of two contracts by the respondent-Railways.
2. This Court has heard Sri C.V.Ram Mohan Reddy, learned counsel for the petitioner and Smt. Sasikala, learned standing counsel for the Railways.
3. Petitioner: Sri C.V.Ram Mohan Reddy, learned counsel for the petitioner took great pains to argue the matter at length. The petitioner is a contractor, who was participated in two tenders for Kakinada and Narsapur for the mechanised cleaning of coaches, cleaning of depot premises, garbage etc., which was floated by the respondent-Railways. The date of the tender is 04.07.2016. Tenders were finalized and letters of acceptance dated 27.12.2016 were issued for both the works. Formal contracts for both the works were executed in March 2017. The value of the Kakinada contract was Rs.3,65,87,811/- and the value of Narsapur contract was Rs.2,40,19,790/-. Learned counsel for the petitioner points out that basing on the minimum wages that were prevalent at the time of the filing of the tender, the petitioner had quoted the rates. However, on 28.04.2017, the minimum wages were revised by 42% with effect from 19.01.2017. Learned counsel submits that the minimum wages payable to the workers increased from Rs.250/- to Rs.359/- per day with retrospective effect from 19.01.2017. Learned counsel submits that this upset the entire planning and the financial basis of the contract. Learned counsel submits that despite the phenomenal increase in the rates due to the increase in the minimum wages, the petitioner did his level best to absorb the loss and also to carry on the work. He points out that on 09.10.2017, after executing the work for sometime, the petitioner requested the respondent-Railways to foreclose the work and also relies upon a letter addressed by the Deputy Chief Labour Commissioner, Visakhapatnam, who advised the Railways to enhance the wages or to foreclose the contract since the wage hike is very high. Learned counsel points out that in reply to this, the Railways also addressed a letter stating that the foreclosure of the contract is under process. Learned counsel submits that despite this assertion, Railways went ahead and terminated the contract. Questioning the same, the writ petition is filed.
4. Among other grounds, learned counsel for the petitioner argues that the responsibility to pay the minimum wages is with the Railways as the principal employer and that both on grounds of justice and equity, the contractor should be indemnified and reimbursed for this extraordinary raise in the wages. He also raises an issue that the contract was not terminated in accordance with the terms of the contract. He relies upon a compilation of judgments in support of his argument which are as follows:
(1) Division Bench judgment of the Bombay High Court in WP.No.1996 of 2017 in A2Z Infraservices Limited v. Union of India, Ministry of Railways, (2018) III LLJ 362 Bom.
(2) Judgment of the High Court of Bombay in M/s. S.K.Enterprises, Through its Proprietor v. The Union of India, Ministry of Railways, W.P.No.2702 of 2018.
(3) Judgment of Supreme Court of India in Government of Maharashtra v. M/s. Deokar’s Distillery, AIR 2003 SC 1216.
(4) M/s. Aarthi Enterprises, Rep., by its Partner G.Mythili v. Southern Railways, rep., by General manager, Senior Divisional Manager, Divisional Office, Commercial Branch, southern Railways, Deputy Chief Labour Commissioner (Central), 2020 II LLJ 235 Mad.
And also
(5) The order of the Regional Labour Commissioner (Central() and Authority under Minimum Wages Act, 1948, Hyderabad in Application No.46/27/2018-E
5. Learned counsel submits that most of these cases cited relate to the Railways only. Relying upon the first judgment of the Division Bench of the Bombay High Court, learned counsel argues that the Railways are duty bound to neutralize the cost of labour and that the principle of business efficacy should be pressed into service to interpret
