Case Note & Summary
The dispute arose between National Thermal Power Corporation Limited (NTPC) and Bhasin Construction Private Ltd. regarding the payment of escalated wages due to an increase in minimum wages during the execution of a construction contract. NTPC had awarded a contract for construction work related to the Singrauli Super Thermal Power Project, which included work in both Madhya Pradesh and Uttar Pradesh. The Construction Company claimed additional payments due to a rise in minimum wages from Rs.2.00 to Rs.4.00 per day, which was acknowledged by the government through a notification. The matter was referred to arbitration, where the Arbitrator awarded a sum of Rs.5,10,850/- to the Construction Company. However, the Single Judge of the High Court modified this amount, concluding that the Construction Company was entitled to only Rs.95,394.10/-. The Construction Company appealed against this decision, leading to the Division Bench allowing the appeal and directing NTPC to pay the escalated wages based on the minimum wage increase. The Supreme Court, upon reviewing the case, determined that the correct calculation should be based on the difference between the fair wages paid by the Construction Company and the increased minimum wages, ultimately setting aside the Division Bench's order in part and affirming the Single Judge's conclusion regarding the amount payable.
Headnote
A) Arbitration - Enforcement of Award - Modification of Award - Arbitration and Conciliation Act, 1940, Section 30, 33 - The Division Bench modified the Single Judge's order and directed NTPC to pay escalated wages based on minimum wages rather than fair wages, which was contested by NTPC. The court held that the calculation should be based on the difference between fair wages and increased minimum wages, leading to a partial allowance of the appeal (Paras 30-30).
Issue of Consideration
Whether NTPC is required to pay escalated labour charges based on statutory minimum wages or fair wages quoted in the tender.
Final Decision
The Supreme Court partially allowed the appeal, setting aside the Division Bench's order and affirming the Single Judge's conclusion regarding the payment of Rs.95,394.10, with interest at 9% per annum from the date of the award until payment.
Law Points
- Arbitration
- Minimum Wages
- Contractual Obligations
- Reimbursement
- Fair Wages
