IMPORTANT POINTS
1. The interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition.
2. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution.

Headnote:(i) Constitution of India-Article 226-Writ petition-Maintainability of-Contract to construct dam-State Government fixing minimum wages for workmen by notification under Minimum Wages Act-Contractor claiming escalation on account of wages paid in terms of minimum wages formula-Refusal by Electricity Board (Contractor)-Writ petition-High Court directing parties to work out remedy under civil law or under Disputes Act-Government referring dispute as to entitlement of workmen to minimum wages as per notification-Award holding workmen entitled to minimum wages and giving finding that contractor paid minimum wages-Electricity Board though started paying escalated minimum wages to contractor later ordering recovery of amount already paid from work bills-Contractor filing writ petition seeking to quash order-Termination of contract during pendency of writ petition-Another writ petition challenging termination of contract-High Court holding termination of contract to be arbitrary, unjust and not in public interest and directing Electricity Board to pay contractor labour escalation amounts and pay interest at 18% on the amount-Held, interpretation and implementation of a clause in contract cannot be subject matter of writ petition-Contract not a statutory contract-High Court not correct in holding contract as statutory contract-Writ not maintainable-Dismissal of writ petition at this stage likely to result in miscarriage of justice on account of lapse of time-Remedies under contract law/arbitration Act not efficacious at present stage-On facts, contractor entitled to labour escalation on account of minimum wages fixed by Government-High Court s direction warrant s no interference except reducing interest at 9%.
       (ii) Contract-Statutory Contract-What amounts to-A contract would not become Statutory Contract simply because it is for construction of a public utility and it has been awarded by a statutory body.
       Held : The interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract? If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature. (Para 9)
       A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not of itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have been relegated to other remedies. (Para 10)
       Despite holding that the disputes in question could not be agitated in a writ petition and thus the High Court wrongly assumed jurisdiction in the facts of the case, yet we are not inclined in the exercise of our power under Article 136 of the Constitution, to dismiss the writ petition of the contractor at this stage because that is likely to result in miscarriage of justice on account of lapse of time which may now result in the foreclosure of all other remedies which could otherwise be availed of by the contractor in the ordinary course. Those remedies are not efficacious at the present stage and, therefore, in view of peculiar circumstances of the case, we have examined the second contention and the factors which weighted with the High Court in granting relief. (Para 11)
       The formula regarding labour escalation as described in the letter dated 15th June, 1981 was accepted by the Board subject to the stipulation that the minimum wages for ordinary mazdoor will not be less than Rs. 13/- per day viz. the rate as per PWD Schedule for rates 1980 applicable to the locality. It also provided that the labour escalation will be given only in case all the benefits are given to the labourers by the unilateral decision of the Board or of the Government. It was thus evident that the contractor was entitled to at the rate structure revised as per agreed formula. It was also noticed by the High Court that the Board did not take a stand before the industrial tribunal that the contractor was not paying the minimum wages. The workmen through union entered into a Memorandum of Settlement with the contractor which showed payment at the revised rate which was amount sought to be recovered by the contractor from the Board. The award mentioned that the additional wages received by the workmen as advance shall be treated as part of their wages. The Board had accepted the award. In fact, the Board was making payment of advances to the contractor presumably to be adjusted against labour escalation as and when the dispute is settled. In view of the aforesaid facts, the High Court directed the Board to discharge its obligation under the contractual provisions. Under the circumstances, declining to accept the second contention, we refrain from interfering with the directions for payment given in the impugned judgment except in respect of the rate of interest awarded by the High Court. Having considered the totality of the circumstances, we feel that it would be just and proper to award interest @ 9% per annum instead of 18%. (Paras 12, 13 and 14)

JUDGMENT

Y.K. Sabharwal, J.-Leave granted.

2. An agreement dated 16th September, 1981 was executed between the first respondent (for short the contractor ) and the Kerala State Electricity Board (for short the Board ) for construction of a dam. This was pursuant to a tender notice issued by the Board inviting tenders; tenders submitted by the contractor; correspondence exchanged between the parties and the negotiations held. A supplementary agreement was also executed; extensions for completion of work were granted and there were deviations of works as well which aspects are, however, not necessary to be narrated for the purpose of the disposal of these matters.

3. The Government of Kerala issued a notification dated 30th March, 1983, under the Minimum Wages Act, 1948 revising the minimum wages payable to the employees employed in the works stated in the notification w.e.f. 1st April, 1983. The contractor claims that he started paying revised minimum wages to the employees and applying the labour escalation formula, the Board made payments to the contractor for the work done from 1st April, 1983 till December, 1984. The Board, however, stopped making payment of labour escalation from January, 1985. By letter dated 28th April, 1986, Government of Kerala wrote to the Board that the works in question come under Item 31 of the Schedule added to the Schedule by Kerala Government by notification dated 23rd December, 1969 and the work undertaken by the contractor, though may include stone crushing as a part of their labour, but the notification dated 30th March, 1983 does not apply to the work of constructing a dam and hence the contractor s claim for escalation under notification dated 30th March, 1983 is not maintainable. Thus, the Board stopped clearing the bills for enhanced minimum wages claimed by the contractor. It is claimed by the contractor that a settlement entered with the workers regarding payment of enhanced wages as per 1983 notification, stipulated that the increased wages paid will be treated as advances to be adjusted later depending upon the decision of the dispute.

4. The validity of the letter/direction dated 28th April, 1986 of the State Government was considered by the Kerala High Court in judgment dated 25th September, 1990. By the said judgment, four writ petitions were disposed of by the High Court noticing that the Advocate General after obtaining instructions from the State Government agreed to withdraw the letters/direction dated 28th April, 1986 leaving it free to the authorities to take a decision in regard to the applicability of the notification dated 30th March, 1983 on an objective assessment of legal and factual position. In view of the withdrawal of the said letter, the Court relegated the parties to other remedies available to them to work out their respective rights. The parties were thus directed to work out their rights either before the Civil Court or before the other authorities under the Industrial Disputes Act or under the Payment of Wages or other relevant law applicable. In view of this decision, the State Government referred the dispute regarding the applicability of the notification dated 30th March, 1983 to the Industrial Tribunal. According to the contractor, he was making payment of enhanced wages to the employees as per the notification dated 30th March, 1983 despite that from January, 1985, the Board had stopped making payment of the labour escalation to the contractor. The increased payment said to have been made by the contractor to the employees was to be treated as advances to be adjusted later depending upon the decision of the dispute. By an award on 14th October, 1993 the Industrial Tribunal held that the revised minimum wages notification was applicable to the works in question and that the workmen concerned in the dispute are entitled for wage rates and other benefits fixed in the minimum wage notification issued by the State Government on 30th March, 1983 in the case of e

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