Case Note & Summary
The case involves cross appeals arising from a judgment of the Calcutta High Court in F.M.A. No. 1168 of 2017, concerning a dispute between the Food Corporation of India (FCI) and its contractor, Pratap Kundu, over payment for casual labour supplied under a handling and transport contract for Bikna Depot. The background includes earlier litigation where the Calcutta High Court and the Supreme Court had directed that contract casual labourers be paid wages equivalent to Class IV employees, and subsequently, the Supreme Court in its order dated 14.01.2010 directed FCI to pay wages directly to the workmen without involving any contractor. The contractor had been appointed in 2000 at a negotiated rate of 471% above schedule of rates (ASOR) for a two-year contract. The tender's Appendix VIII provided schedule rates for items 1-23 and 25, but for Item No. 24 (supply of casual labour), it stated that the relevant rate of wages would abide by the decision of the pending SLP filed by FCI. After the contract ended, the contractor claimed 471% ASOR on the wages paid to casual labourers, which FCI rejected. The contractor filed a writ petition, and the learned Single Judge allowed it, directing FCI to verify and pay. On appeal, the Division Bench directed the Chairman of FCI to determine the exact wages payable and the profit receivable by the contractor. Both parties appealed to the Supreme Court. The Supreme Court allowed FCI's appeal and dismissed the contractor's appeal, holding that the contractor's claim for 471% ASOR on wages was contrary to the contract as no schedule rate existed for Item No. 24, and the Supreme Court's order for direct payment to labourers superseded any contractual claim. The Court also held that the High Court erred in directing determination of profit as the Supreme Court had not left any issue open. The impugned judgment was set aside, and the contractor's writ petition was dismissed.
Headnote
A) Contract Law - Interpretation of Tender Conditions - Schedule of Rates - Item No. 24 of Appendix VIII of the tender for supply of casual labour did not specify any schedule rate but stated that 'Relevant rate of wages is to be paid and such rate shall abide by the decision of pending SLP as filed by FCI in the Hon'ble Supreme Court' - The contractor's claim for 471% ASOR on wages paid to casual labour was held to be contrary to the contract as no schedule rate existed for Item No. 24 - The Supreme Court's order dated 14.01.2010 directing direct payment of wages to labourers superseded any contractual claim for ASOR on wages - Held that the contractor is not entitled to additional payment on wages (Paras 2-4, 6-7). B) Contract Law - Unjust Enrichment - Claim for Additional Payment - The contractor's claim for Rs. 5,34,41,520/- as additional amount for Item No. 24 was almost three times the amount due under the contract - Allowing such claim would result in unjust enrichment to the contractor - Held that the contractor cannot claim profit on wages that were to be paid directly to labourers as per Supreme Court order (Para 4.5). C) Civil Procedure - Binding Effect of Supreme Court Orders - The Supreme Court's order dated 14.01.2010 in Civil Appeal Nos. 9472-9473 of 2003 directed FCI to pay wages directly to workmen without involving any contractor - This order was complied with and contempt petition dismissed - The High Court erred in directing the Chairman to determine profit of the contractor as the Supreme Court had not left any issue open regarding profit - Held that the High Court's direction to determine profit was without jurisdiction (Paras 3.2, 4.4, 6).
Issue of Consideration
Whether the contractor is entitled to claim 471% above schedule of rates (ASOR) on wages paid to casual labourers under Item No. 24 of the tender, given that the Supreme Court had directed direct payment of wages to labourers and the contract provided that wages would abide by the pending SLP decision.
Final Decision
The Supreme Court allowed the appeal filed by FCI (Civil Appeal No. 9127 of 2019) and dismissed the appeal filed by the contractor (Civil Appeal No. 9128 of 2019). The impugned judgment and order of the High Court dated 12.04.2019 was set aside, and the writ petition filed by the contractor (W.P. No. 7790 of 2004) was dismissed.
Law Points
- Contractual interpretation
- Schedule of rates
- ASOR
- Binding effect of Supreme Court order
- Direct payment to labourers
- Unjust enrichment
