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IN THE HIGH COURT OF BOMBAY
B.R. GAVAI, BHARATI H. DANGRE, JJ.
A2Z Infraservices Limited - Appellant
Versus
Union of India, Through Chairman Railway Board and Exofficio Principal Secretary, Government of India - Respondent
W.P. No. 1996 of 2017
Decided On : 25-04-2018
Constitution of India, 1950 – Article 12 – Minimum Wages Act – Payment of increased wages – Petitioner, a Company registered under the Companies Act and engaged in the business of providing facility of Management services including the mechanized house keeping and technical services, has invoked the writ jurisdiction of this Court being aggrieved by the inaction on the part of the respondent authorities to revise the reimbursement to the petitioner in light of the increase in the rates of minimum wages and to neutralize the petitioner for the increase in cost of labour in terms of the agreement executed between the petitioner and respondent railway. – The grievance of the petitioner revolves around the nature of his contract, which is labour intensive and the cause of action of the petitioner is the refusal to neutralize the petitioner for the significant increase in the minimum wages by the respondent no.3 Ministry of Labour and Employment, Government of India by issuing a notification under the Minimum Wages Act. – Held, Court is conscious of the observations made by the Honble Apex Court in para 74. – The business efficacy test, therefore, should be applied only in cases where the term that is sought to be read as implied is such which should have been clearly intended by the parties at the time of making of the agreement. – However, it is not to be applied as a routine test to read something into the contract on a disguise that the parties intended it to be so. – However, perusal of the contract agreement in the present case, it is amply clear that the railway itself intended to benefit the contractor by including the PVC, with the avowed object to provide a buffer, to deal with the hike in price variation in labour and material charges. – The Railway abided by this clause till 18/1/2017 and the contractor continued to receive the benefits of the PVC in terms of the difference in the wages. However, the petitioner contractor felt the heat only when the minimum wages was escalated by 40%, and then the railway authorities concluded that the PVC clause related itself to CPI and would not cover enhancement in the minimum wages. – By applying the principle of "business efficacy" as laid down by the Honble Apex Court, the irresistible conclusion that can be drawn is that the PVC cannot be restricted only to the formula prescribed in clause (12) of the agreement, but it also must cover within its ambit the escalated minimum rate of wages. – Clause 14 of the agreement mandates the contractor to abide by the statute like the Minimum Wages Act, Workmen Compensation Act etc which are instances of beneficial legislation in the larger interest of the labour class and it is rather a bounden duty of the Railway in ensuring that such statutory mandates are strictly adhered to. – Court is of the considered view that the respondent railways though are at liberty to put an end of the existing contract of the petitioner by following the prescribed mode, but as along as the said contract continues, the petitioner company cannot be deprived of the neutralization for the increase in the cost of labour owing to the extraordinary notification, revising the minimum wages applicable to the industry of mechanized sweeping and cleaning with effect from the date of coming into its force. – Writ Petition Allowed.
Bharati H. Dangre, J.
The petitioner, a Company registered under the Companies Act and engaged in the business of providing facility of Management services including the mechanized house keeping and technical services, has invoked the writ jurisdiction of this Court being aggrieved by the inaction on the part of the respondent authorities to revise the reimbursement to the petitioner in light of the increase in the rates of minimum wages and to neutralize the petitioner for the increase in cost of labour in terms of the agreement executed between the petitioner and respondent railway. The grievance of the petitioner revolves around the nature of his contract, which is labour intensive and the cause of action of the petitioner is the refusal to neutralize the petitioner for the significant increase in the minimum wages by the respondent no.3 Ministry of Labour and Employment, Government of India by issuing a notification under the Minimum Wages Act.
It is the specific case of the petitioner that in the absence of such an action on the part of the respondents, the petitioner is required to make payment of increased wages which incurs him a huge financial liability, almost causing closure of his business, and he fears a worse situation where the trade union would refuse to continue with the work, thereby affecting the working of the railways.
2. In order to deal with the relief sought by the petitioner, it would be necessary to refer to a brief sequence of facts and events.
The petitioner is a Private Limited Company and is engaged in the business of providing cleaning and housekeeping services. In the past, the petitioner has been providing different services to the railways including (a) mechanized cleaning of empty railway passenger coaches and various yards/depots (b) mechanized cleaning of coaches at railway station and (c) mechanized cleaning of coaches in moving trains (On Board Housekeeping Services). The respondent no.1 floated a tender for work of mechanized cleaning of coaches, watering of rakes, including cleaning of depot premises and provision of On Board Housekeeping Services (OBHS) in the trains of Chatrapati Shivaji Maharaj Terminus (CSMT), Mazgaon (MZN) and Dadar Terminus (DR) coaching depots of Mumbai Division. The tender was allotted in favour of the petitioner for a contract amount of Rs.19,76,69,647/- (Rupees Nineteen crore Seventy Six lakhs Sixty nine thousand six hundred and forty seven) for a period of three years commencing from 11th February 2016. On completion of the competitive bidding process, three contracts were executed between the petitioner and the railways on 11/2/2016, 22/3/2016 and 6/6/2016 for offering cleaning services at three separate locations, all in Mumbai.
It is the case of the petitioner that based on the said contract agreement signed by the petitioner, he was diligently carrying out the work allotted to him since 2016, and there are no complaints about the quality of work executed by the petitioner. As per the petitioner, it has employed a total of 1350 employees, who, together service over 2500 coaches everyday. As per the petitioner, the petitioner received consideration for increase in cost of the services in terms of the Price Variation Clause contained in the contract. The Price Variation Clause (for short 'PVC') ensures that in the case of increase of Consumer Price Index (for short "CPI"), the reimbursement payable to the petitioner is suitably increased so that the petitioner is not put under financial distress from inflation etc. If the CPI decreases, the reimbursement due to the petitioner is accordingly reduced to ensure that the Railways do not pay excess amount to the petitioner. The controversy involved in the present petition revolves around the PVC as contained in the agreement and as to the construction/interpretation of the said clause, and whether it would insulate the petitioner on account of increase in the minimum wages, since the minimum wage fixation or
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