UNION OF INDIA Vs. SARASWAT TRADING AGENCY

JUDGEMENT

(1.) LEAVE granted. This appeal, at the instance of Union of India, arises from an arbitration award dated September 9, 2000 made in favour of the respondent. The appellant challenged the award before the Calcutta High Court by filing an application under section 34 of the Arbitration and Conciliation Act, 1996. A learned Single Judge of the High Court upheld the challenge substantially and by judgment and order dated November 20, 2001 passed in G.A.No.87/01, arising out of AP No.325/98, sustained the award only on one issue and set it aside on two of the three issues under reference. Against the judgment of the Single Judge the respondent preferred an internal court appeal and the Division Bench of the High Court by its judgment and order dated July 4, 2006 passed in G.A.No.87/01: APOT No.792/01 with APO No.362/01 allowed the appeal, set aside the judgment of the Single Judge and fully restored the arbitrator's award in favour of the respondent on all the three issues in dispute. Against the judgment of the Division Bench of the High Court the appellant has come in appeal to this Court.

(2.) THE facts of the case are brief and simple and may be stated thus. For the work of "handling of goods, parcels and booked luggage" at a group of six stations falling in its Nagpur Division, the South Eastern Railway, Calcutta, invited tenders that were opened on May 16, 1990. THE tender submitted by the respondent was the lowest. Hence, after some negotiations and extension of the validity of offer the respondent's tender was accepted on August 2, 1991 and it was given the work for a period of three years commencing from August 3, 1991. THE grant of the contract was formalized in an agreement executed by the parties on December 3, 1991. THE agreement was deemed to have come into force with effect from August 3, 1991 and it was to remain in force for a period of three years, till August 2, 1994 unless determined by either of the parties in terms of clause 1(1) (authorizing the appellant to determine the contract by giving three months notice) and its proviso (giving the same right to the contractor, after expiry of the period of one year of the contract). Clause 2 of the agreement dealt with the nature of the work the contractor was required to do. Clause 4 of the agreement along with a detailed schedule mentioned fixed rates for every piece of work covered by the contract. Clause 7 stated that the contractor would not be entitled to any increase in the accepted rates of remuneration or compensation due to fluctuations in the traffic (increase or decrease) due to any reason. Under clause 13 the contractor indemnified the Railway Administration against all claims that might be made under the Workmen's Compensation Act, 1923 in consequence of any accident or injury sustained by any labourer/servant or person in his employment and engaged in the performance of the contract. Clause 14 bound the contractor to pay to the labourers engaged by him not less than the fair wage. It further provided that 'fair wage' would be the wage including the allowances, notified at the time of inviting tenders for the work. Clause 15 made the contractor responsible for compliance with the provisions of the Payment of Wages Act, 1936, and the rules made thereunder in respect of the staff employed by him. Clause 16 similarly made the contractor responsible for compliance with the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and the rules made thereunder and required him to obtain the statutory license from the licensing authority. Clause 18 made the contractor responsible for compliance with the provision of the Hours of Employment Regulations in respect of the staff employed by him in the manner decided upon by the appropriate authorities. Clause 19 stipulated that no labourer would be unfairly treated or removed from work except for valid reasons and further provided that the porters engaged in the handling of goods, parcels and booked luggage under the terms of the agreement would be deemed as employees of the contractor within the meaning of the Industrial Disputes Act, 1947 or any other enactment that might be applicable. This clause further stated that the contractor would comply with all the laws, regulations and rules for the benefit of labour that were in force or might come into force and he would indemnify and keep the Railway Administration indemnified against all loss, damage, claims and costs arising in any manner whatsoever. Clause 20 reserved the right of the Railway Administration to deduct from the moneys due to the contractor or from his security deposit any sum required or estimated to be required for making good the loss suffered by the labour or labourers or any other person in his employment for the reasons of non-fulfillment of the conditions for the benefit of the labourers, non-payment of wages or deductions made from him or their wages which were unjustified or illegal. Clause 31 stipulated that no interest or damage would be paid to the contractor for delay in payment of the bill 'for any reason whatsoever'. Clause 32 with its various sub-clauses contained the provision for arbitration and provided that the General Manager of the South Eastern Railway or a person appointed by him would be the sole arbitrator in respect of any dispute as to the respective rights, duties and obligations of the parties to the agreement or as to the construction or interpretation of any of the terms and conditions of this agreement or as to its applications.

(3.) AT the time of the final settlement of the respondent's claims the Railway authorities offered to it a sum of Rs.6,848=00 as additional payment for the period January 1993 to August 1994. The respondent naturally declined to accept the paltry amount offered by the authorities and requested for a proper consideration of its claim as earlier promised. Finally, the Railway authorities appointed a high level committee to consider the respondent's claim for enhanced payment for the period January 1, 1993 to August 31, 1994. The committee fixed the respondent's claim at Rs.3, 61,058=00 but it was not acceptable to the respondent.