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2014-OCT.PART- S.C. – CIVIL APPEAL NO. 9394 OF 2014 (ARISING OUT OF SLP (C) NO. 39122 OF 2013) |M/S. IVT (IB VALLEY TRANSPORT), | | |VLT (VIJAY LAXMI PVT. LTD.), | | |CC (COAL CARRIERS) (JV) |…..APPELLANT(S) | |VERSUS | | |CHAIRMAN-CUM-MANAGING DIRECTOR | | |MAHANADI COALFIELDS LTD. & ORS. |…..RESPONDENT(S)

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9394 OF 2014
(ARISING OUT OF SLP (C) NO. 39122 OF 2013)
|M/S. IVT (IB VALLEY TRANSPORT), | |
|VLT (VIJAY LAXMI PVT. LTD.), | |
|CC (COAL CARRIERS) (JV) |…..APPELLANT(S) |
|VERSUS | |
|CHAIRMAN-CUM-MANAGING DIRECTOR | |
|MAHANADI COALFIELDS LTD. & ORS. |…..RESPONDENT(S) |
O R D E R
A.K. SIKRI, J.
Leave granted.

In this appeal, the appellant is challenging the validity of orders dated
November 21, 2013 passed by the High Court of Orissa in Writ Petition
(Civil) No. 22022 of 2013 whereby the High Court has dismissed the writ
petition on the ground that the dispute between the parties arises out of a
commercial contract and, therefore, remedy for adjudication thereof by way
of writ petition under Article 226 of the Constitution is not available.
The High Court has, thus, observed that such a dispute has to be settled
either in a suit or in other proceedings in accordance with the contract.

The brief facts which are discernible from the record are that the
respondents floated a tender, i.e. NIT No. MCL/SBP/GM(TC)/ NIT-514
(hereinafter referred to as ‘NIT-514’) dated November 18-19, 2008 for
“transportation of surface miner coal fact to Kanika Railway Siding and
transportation of surface miner reject to face to surface miner reject dump
of Kulda OCP, Basundhara Garjanbahal Area”. The period of contract for the
said NIT was for three years and the estimated value of the work was
?63,68,45,000/- (rupees sixty three crores sixty eight lacs and forty five
thousand only). The appellant also submitted its bid and, on evaluation
thereof, emerged as the Lowest Tenderer (L-1). This resulted in the
issuance of the letter of acceptance dated March 20, 2009 which was served
upon the appellant and the first work order was issued on May 18, 2009. As
per the appellant, it is only after 22 months from the date of letter of
acceptance i.e. on June 7, 2011, the site was handed over to the appellant.
As such the appellant started execution of the contract with effect from
June 07, 2011. The contract was performed upto June 06, 2014.

A dispute arose between the parties which is about the rate at which
payment of revised wages is to be made by the appellant to all contract
workers engaged in the mining activities. It originated under the
circumstances mentioned hereinafter.

It so happened in the Work Order dated May 18, 2009, working details were
described pursuant to NIT-514. Clause 37.06 of NIT-514 contained Wage
Compensation Formula, which will be referred to by us later at the
appropriate stage. What is relevant to point out at this stage is that on
September 28, 2012, the Central Government issued another notification for
the revision of the Minimum Wages in Mines and Establishment falling under
the Government of India. It prescribed the minimum wages for workers
working above the ground for the categories of unskilled as ?186/-, semi-
skilled as ?231/-, skilled/clerical as ?279/- and highly skilled as ?324/-.
According to the appellant, it has been paying the workers wages at the
aforesaid revised rates with effect from January 01, 2013.

While the appellant was executing the said work, the first communication in
regard to the payment of revised wages was made by the respondents through
a letter dated June 21-22, 2013 directing therein that the appellant shall
pay to all contract workers engaged in the mining activities, pursuant to
NIT-514, the revised wages as per the recommendation of the High Power
Committee of Coal India Limited contained in its Circular No. CIL/C-5B/
JBCCI/HPC/566 dated February 18, 2013. In this letter, the respondents had
categorically stated that there is no provision of Wage
Escalation/Compensation Formula in the contract awarded to the appellant.
However, if the appellant had any reservation/ grievance in paying the
revised wages to the workers, the appellant ought to submit a written
representation.

In reply to the aforesaid letter, the appellant, vide letter dated June 29,
2013, intimated the respondents that it is ready and willing to accept the
rate derived considering the Wage Compensation Formula as per the clause
inserted in the contract of other NITs, the work of which is in progress in
the same project (Kulda OCP), even though there is no provision of Wages
Escalation/Compensation Formula in the contract awarded to the appellant.
The appellant started paying the revised wages to the contract workers as
per the directions of the respondents vide letter dated June 21-22, 2013.

While the things stood at that stage, the respondents issued orders dated
August 06, 2013 and called upon the appellant to pay wages at the rate of
?279/- (basic wage ?180/- plus ?99/- as variable dearness allowance) as
base rate of minimum wages. In this communication, the aforesaid basic
wage is arrived at by taking aid of the Government Notification dated
November 28, 2012 which became effective from October 01, 2012. According
to the appellant, the aforesaid mode of calculating the base rate of
minimum wage by taking into consideration rates prescribed in Government
Notification dated November 28, 2012 is per se erroneous inasmuch as the
said Notification became effective only from October 01, 2012, whereas, as
per Clause 37.06 of NIT-514, the rate of minimum wages which has to be
taken into consideration is as per Central Government’s Notification
“corresponding to the last date of submission of tender”. It is the
submission of the appellant that since the last date of submission of
tender was December 23, 2008, the Government Notification which was
applicable as on that date had to be taken into consideration to arrive at
base minimum wage and as per this, ?111/- per day was the minimum wage for
skilled category of workers in terms of Central Government Notification
dated October 27, 2008. The appellant, accordingly, made the
representation dated August 29, 2013 objecting to the basic wage as
calculated by the respondents in its letter dated August 06, 2013 and
intimating its willingness to accept the rate derived considering the Wage
Compensation Formula as per the aforesaid clause in NIT-514. Since no
reply was received, the appellant filed the aforesaid writ petition, fate
whereof has already been mentioned above.

When the special leave petition came up for hearing on January 10, 2014,
following order was passed:
“Issue notice returnable in two weeks as we want to remit the case to a
particular forum after hearing the other side. Dasti, in addition, is
permitted.”

The respondents have filed the counter affidavit wherein it is, inter alia,
pleaded that the appellant had not followed the general terms and
conditions of Clause 12, which provides for a dispute resolution mechanism.
This clause states that if any dispute takes place between the contractor
and the department, effort shall be made to settle the disputes at company
level. Further, this clause states that the contractor should make request
in writing to the Engineer Incharge for settlement of such disputes/ claim
within 30 days of arising of cause of the dispute/claim, failing which no
dispute/claim of the contractor shall be entertained by the respondents.
The respondents have also sought to justify the rates of minimum wage for
skilled workers, as derived in their communication from August 06, 2013, in
respect of which decision has been taken by the Coal India Limited, which
is the parent company of Mahanadi Coal Fields Limited (respondents herein).
However, we are not concerned with the merits of the dispute and we are
only to decide the appropriate forum where the dispute is to be decided and
hence, we are not taking note of those submissions made on the basis of
which the respondents justify the contents of their communication dated
August 06, 2013.

From the aforesaid narration of facts, it becomes clear that Clause 12 of
the General Terms and Conditions provides for a mechanism of dispute
resolution before resorting to the legal remedies. This clause
specifically states that it is incumbent upon the contractor to avoid
litigation and disputes during the course of execution. If any dispute
takes place between the contractor and the department, effort shall be made
first to settle the disputes at the company level. Further, this clause
states that the contractors should make request in writing to the Engineer
Incharge for settlement of such dispute/claim within 30 days of arising of
cause of dispute/claim. Further, as per Section 8 of NIT-514, the
contractor can avail second resolve mechanism technique, i.e. Independent
External Monitor (IEM) to resolve the dispute. It was to be resorted to in
the first instance before approaching the Court. There is no quarrel
between the parties in respect thereof. However, issues are joined on the
utilization of the said mechanism. As per the appellant, after receiving
the offending Office Order dated August 06, 2013, it had sent communication
dated August 29, 2013 requesting therein to revise the aforesaid Office
Order to the extent that the rate of minimum wages should be taken as ?101/-
per day in respect of ?279/- per day, but no response thereto was received
within the period of 30 days. The appellant argues that in this manner it
had exhausted the said channel and only thereafter approached the High
Court. The respondents maintained that writing of letter dated August 29,
2013 was not in terms of Clause 12.

We find some justification in the stand taken by the respondents. No doubt,
in its representation dated August 29, 2013 the appellant stated that the
value of Po of Wage Compensation Formula (Clause No. 37.06) has not been
incorporated in the above Office Order correctly and the rate of minimum
wages as on the last date of submission of tender was December 23, 2008.
On this basis, request is made to revise the calculations and communicate
the same to the appellant. However, it is not stated that dispute has
arisen on that account and it should be resolved in terms of Clause 12.
Clause 12 of NIT-514 reads as under:
“It is incumbent upon the contractor to avoid litigation and disputes
during the course of execution. However, if a dispute takes place between
the contractor and the department, efforts shall be made first to settle
the disputes at the company level.

The contractor should make request in writing to the Engineer I/C for
settlement of such disputes/ claims within 30 days arising of the cause of
dispute/claim failing which no dispute/claim of the contractor shall be
entertained by the company.

If differences still persists, the settlement of the disputes with Govt.
agencies shall be dealt with as per guidelines issued by Ministry of
Finance, Govt. of India in this regard. In case of parties other than
Govt. agencies, the redressal of the dispute may be sought in the Court of
Law within the jurisdiction of District Court/High Court where the work
will be executed.”

It is manifest that representation dated August 29, 2013 in no way attempts
to invoke the mechanism provided in Clause 12 for the settlement of
dispute. The respondents in the counter affidavit have categorically
stated that vide letter dated June 28, 2013, the Staff Officer (Mining) BG
had given the details of methodolgy for calculation of wage compensation
and, therefore, clarification was given.

It is clear from the above that a dispute has arisen about the methodology
for calculation of wage compensation. In such circumstance, as per Clause
12, the appellant was supposed to write to the Engineer Incharge for
resolving the dispute. Pertinently, communication dated August 29, 2013 is
addressed to the Staff Officer (Mining). Therefore, by no stretch of
imagination, it can be said that the appellant availed the departmental
remedy provided under Clause 12, before filing the writ petition.

Having regard to the aforesaid facts, we dispose of this appeal by
directing the appellant to exhaust the remedy under Clause 12 by requesting
the Engineer Incharge to resolve the dispute before taking recourse to any
suitable legal remedy.
No costs.

………………………………………J.
(J. CHELAMESWAR)

………………………………………J.
(A.K. SIKRI)
New Delhi;
October 10, 2014.

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