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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Ashutosh Shastri, Divyesh A. Joshi, JJ.
Gujarat State Electricity Corporation Limited. & others – Appellants
Versus
Makol of Femw Works And Registered Partnership Firm As Constituted And Its Partner & others – Defendants
R/First Appeal No. 630 of 2002
Decided On : 09-08-2023
Gujarat Electricity Corporation Limited (GECL) floated a tender for maintenance of coal mill and coal plant at their thermal power station at Ukai Dam, Surat. Makol FEMW Works, a registered partnership firm, was awarded the tender from 1984 to 1993. The firm completed the work and obtained a license under the Labour Laws. The agreement between the parties stated that the minimum wage rates were subject to labour escalation as explained in Schedule B and all conditions of the contract enumerated in the booklet, tender, and contract for the work shall apply for carrying out the work. The firm claimed a difference of Rs.67,97,426.29 ps. from GECL towards the difference in daily wages payable to labourers of each class like civil and technical under the Minimum Wages Act, 1948, as per the Notifications issued by the Government of Gujarat from time to time. GECL paid Rs.79,052-50 ps. and Rs.1,18,962.74 ps. to the firm but refused to pay the remaining amount. The firm filed a suit before the Civil Judge, Senior Division, Surat, Camp at Bardoli, being Special Civil Suit No.17 of 1996 for recovery of the said amount with running interest at the rate of 10% from the date of filing till its realisation. The suit was allowed by the learned Joint Senior Civil Judge, Surat, Camp at Bardoli, by judgment and decree dated 29.03.2001. GECL filed an appeal challenging the judgment and order. The firm contended that they had engaged skilled labourers and employees to run and maintain the Coal Mill and Cola Plant and had obtained a license as per the provision of Labour Laws to run and maintain the same. They also claimed that they had paid the salary to workers who came in the definition of technical workman but GECL paid additional amount by stating that they were civil unskilled workers. The firm relied on the Notifications issued by the Government of Gujarat for the period from 1.4.1985 to 31.3.1986 and from 1.10.1992 to 31.3.1994 to support their claim for the difference in daily wages. GECL, on the other hand, argued that the firm had breached the condition of Arbitration and the suit was barred by the Provision of Arbitration Act. They also contended that the suit was barred by Limitation and that the Court did not have jurisdiction to try the suit. The Court, after considering the evidence and arguments of both parties, held that the labour escalation clause was applicable only to unskilled labourers, as per the terms and conditions mentioned in the contract and, more particularly, the calculation method provided in “Schedule-B”. The Court found that the firm was not entitled to get additional wage rate for the skilled labourers on the basis of Notifications issued by the Government of Gujarat, after execution of contract. The Court also held that the suit was barred by Limitation as it was filed beyond the period of three years from the date of cause of action. The Court allowed the appeal, quashed and set aside the impugned judgment and order dated 29.3.2001 passed by the learned 3rd Joint Civil Judge, (SD), Surat, Camp at Bardoli, in Special Civil Suit No.17 of 1996 and sent the record and proceedings back to the concerned trial Court.
Fact of the Case:
Gujarat Electricity Corporation Limited (GECL) floated a tender for maintenance of coal mill and coal plant at their thermal power station at Ukai Dam, Surat. Makol FEMW Works, a registered partnership firm, was awarded the tender from 1984 to 1993. The firm completed the work and obtained a license under the Labour Laws. The agreement between the parties stated that the minimum wage rates were subject to labour escalation as explained in Schedule B and all conditions of the contract enumerated in the booklet, tender, and contract for the work shall apply for carrying out the work. The firm claimed a difference of Rs.67,97,426.29 ps. from GECL towards the difference in daily wages payable to labourers of each class like civil and technical under the Minimum Wages Act, 1948, as per the Notifications issued by the Government of Gujarat from time to time. GECL paid Rs.79,052-50 ps. and Rs.1,18,962.74 ps. to the firm but refused to pay the remaining amount. The firm filed a suit before the Civil Judge, Senior Division, Surat, Camp at Bardoli, being Special Civil Suit No.17 of 1996 for recovery of the said amount with running interest at the rate of 10% from the date of filing till its realisation. The suit was allowed by the learned Joint Senior Civil Judge, Surat, Camp at Bardoli, by judgment and decree dated 29.03.2001. GECL filed an appeal challenging the judgment and order.
Finding of the Court:
The Court held that the labour escalation clause was applicable only to unskilled labourers, as per the terms and conditions mentioned in the contract and, more particularly, the calculation method provided in “Schedule-B”. The Court found that the firm was not entitled to get additional wage rate for the skilled labourers on the basis of Notifications issued by the Government of Gujarat, after execution of contract. The Court also held that the suit was barred by Limitation as it was filed beyond the period of three years from the date of cause of action.
Issues: 1. Whether the labour escalation clause was applicable only to unskilled labourers? 2. Whether the firm was entitled to get additional wage rate for the skilled labourers on the basis of Notifications issued by the Government of Gujarat, after execution of contract? 3. Whether the suit was barred by Limitation?
Ratio Decidendi: The Court held that the labour escalation clause was applicable only to unskilled labourers, as per the terms and conditions mentioned in the contract and, more particularly, the calculation method provided in “Schedule-B”. The Court found that the firm was not entitled to get additional wage rate for the skilled labourers on the basis of Notifications issued by the Government of Gujarat, after execution of contract. The Court also held that the suit was barred by Limitation as it was filed beyond the period of three years from the date of cause of action.
Final Decision: The Court allowed the appeal, quashed and set aside the impugned judgment and order dated 29.3.2001 passed by the learned 3rd Joint Civil Judge, (SD), Surat, Camp at Bardoli, in Special Civil Suit No.17 of 1996 and sent the record and proceedings back to the concerned trial Court.
JUDGMENT :
Divyesh A. Joshi, J.
1. The appellant Gujarat electricity Corporation Limited is the original defendant and the respondent, Makol FEMW Works, a registered partnership firm is the original plaintiff in the main proceedings and for the sake of brevity and convenience they shall hereinafter be referred to as original defendants and plaintiffs.
2. The plaintiff firm has filed suit before the Court of learned Civil Judge, Senior Division, Surat, Camp at Bardoli, being Special Civil Suit No.17 of 1996 for recovery of Rs.67,97,426.29 ps. with running interest at the rate of 10% from the date of filing till its realisation with cost against the defendants. The said suit was allowed by the learned Joint Senior Civil Judge, Surat, Camp at Bardoli by judgement and degree dated 29.03.2001. Being aggrieved by and dissatisfied with the said judgement and order, present First Appeal is filed by the defendants by raising manifold grounds.
3. The facts leading to filing of present appeal can be summarised as under :-
3.1 The plaintiff is a registered firm having its office at Surat and doing business of contractor of power plant maintenance, breakdown maintenance and job work. In the year 1984 tender was floated by the defendants for the purpose of Coal Mill maintenance and Coal Plant maintenance at their thermal power station at Ukai Dam, Surat, and the tender was awarded to the plaintiff firm. From 1984 to 1993, the plaintiff had worked on the side power plant of the defendants. As per the terms and conditions of the contract, the plaintiff has accepted the liability of the work of Coal Mill and Coal Plant Maintenance. The work assigned to the plaintiff has been completed and carried out by engaging skilled workers and labourers. The plaintiff firm has also obtained licence under the Labour Laws, as per the terms and conditions of the tender since 28.2.1984. It is agreed upon by both the parties that daily wage payable to the labourers of each class like civil and technical under the Minimum Wages Act, 1948 shall be paid as per the Notifications issued by the Government of Gujarat from time to time and the plaintiff has also agreed upon to pay the increase in the daily wages payable under the prevailing Laws, Rules and Notifications. In the operative part of the agreement of the contract, it is specifically stated that the minimum wage rates are subject to labour escalation as explained in schedule B and all the conditions of the contract enumerated in the booklet, tender and contract for the work shall apply for caring out the work. It is also agreed by both the parties that the Labour Laws in existence and as modified from time to time shall be binding to the contractor. At the time of execution of the contract the plaintiff has paid daily wages to the labourer at the existing rates and such daily wages were revised and increased from 1.4.1985 to 30.9.1986 for civil skilled workers to be Rs.16.05 ps. and for technically skilled rate was Rs.22/- and the revised increased daily wages rate from the period from 1.10.1993 to 31.9.1994 was Rs.34/- for civil unskilled workers and Rs.43 for technically skilled persons. The plaintiffs have already prepared and submitted running cost bill which was allowed and approved by the defendants, but on the basis of aforesaid difference of amount, the plaintiff is entitled to Rs.67,97,426.29 ps. which was partly accepted by the defendants by issuing cheque of Rs.79,052-50 ps on 7.3.1994 and Rs.1,18,962.74 ps. Dated 29.9.1994 by way of cheque and rest of the outstanding difference of amount has not been paid by the defendant despite the fact that time and again notices were issued to them. Therefore, the plaintiffs were constrained to file the suit to recover the aforesaid amount from the defendants. The plaintiffs have repeatedly intimated to the defendant to pay the amount of difference but they d
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The court affirmed that an arbitral award can be set aside if it contravenes the terms of the contract or exceeds the jurisdiction of the arbitrator, emphasizing the importance of notified claims.
The court established that the starting point for limitation under the Limitation Act depends on when the right to sue accrues, not merely on the date of breach or completion of work.
The court upheld the binding nature of the contract, ruling that the Plaintiff's claims were untenable due to failure to exercise contractual options and were barred by limitation.
it is difficult to extend minimum time scale to the petitioners as they were not engaged by respondent Nos. 4 to 11 either on contract basis or outsourcing basis.
Escalation of contract rates is permissible when delays are not due to the contractor's fault, allowing for additional payment for work done after significant delays.
The court clarified that arbitrators must adhere to contract terms and jurisdictions, emphasizing contractual intentions while affirming the non-speaking nature of specific awards.
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