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Thursday, January 1, 2015



                        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

                 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

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

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. CHELAMESWAR)

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

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