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TMI Blog1994 (2) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... period 7.8.79 to 31.8.1984 on account of difference in wages. 3. The reference was made on an application made by the appellant under Section 20(1) of the Act. That application was based on the terms of the agreement entered into by the appellant with the State of Madhya Pradesh relating to construction of Bargi Masonry Dam. One of the terms of the agreement as incorporated in Clause 4.3.29 (2) provided for settlement of dispute arising out of contract by arbitration. The appellant's averment was that after the contract was entered into, minimum wages were raised by the State and the appellant was required to pay wages accordingly. The rates quoted by the appellant, however, related to wages as were prevalent at the time when the tender was invited. The revision of the wages upset all the calculations as extra amount had to be paid on this count. The Superintending Engineer rejected the claim of reimbursement on the ground of no escalation clause in the contract, whereupon the appellant called upon the Superintending Engineer to appoint an arbitrator on behalf of the State. This not having been done and the appellant having appointed one Brigadier D.R. Kathuria as arbitrator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter was taken up again by the arbitrators, the State brought to their notice that as per the aforesaid remand order they were required to decide the question whether the State was liable to pay escalation amount in the light of the agreement. This is what finds place in paragraph 3 of the submissions made before the arbitrators, a copy of which is at page 226 of Volume II. In the remand proceedings the appellant brought further materials on record and also examined some witnesses. By a speaking order the arbitrators required the State to pay to the claimant a sum of ₹ 236 lacs with simple interest @12 per cent. Though the actual wages paid by the appellant on account of the increased rates came to ₹ 245 lacs, but as the earlier award was for ₹ 236 lacs this was the amount which came to be awarded by the arbitrators. 7. The State again approached the District Judge to set aside the award by its application dated 31.10.87/2.11.87. What is stated in paragraph 6 of the this application is material which reads as below: The learned Arbitrators erred in fixing the liability to reimburse the escalated wages in the face of clear condition in the agreement of contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form a part of the agreement to be executed by the contractor... ). Let us therefore note the relevant conditions of tender notice. These are as below: (1) 2.2 The percentage of tender above or below schedule of rate, item rate, lumpsum (as the case may be) should be expressed both in words and figures and all over writing should be neatly scored out and rewritten and corrections should be duly attested prior to the submission of the tender. (2) 2.19 The contractor shall pay not less that fair wages to labourers engaged by him on the work (Copy of rules enclosed vide Annexure-B) (3) Para 10 of Annexure-A The contractor shall observe all labour laws enacted by Govt. of Madhya Pradesh or Govt. of India as amended from time to time, without having any claim on Irrigation Department. (Emphasis supplied) (4) Para 1 of Annexure-B The contractor shall pay not less than FAIR WAGE to labourers engaged by him on the work. Explanation: 'Fair wage' means wage whether for time or piece work notified at the time of inviting tenders for the work and where such wages have not been so notified the wages prescribed by the P.W.D. (Irrigation Department) for the divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e District Judge on 12.4.85, if interpreted in the background in which it was made, would show that the State had accepted its liability and the reference was really on the question of quantification of the liability. This is sought to be brought home by drawing our attention, inter alia, to the fact that the appellant had approached the District Judge under Section 20 of the Act after the Superintending Engineer had rejected the claim on account of increase of wages, by taking a stand that there was no escalation clause under the contract agreement, as would appear from the minutes of the meeting held on 7.4.84, a copy of which is at page 125 of the additional documents filed on behalf of the appellant to be referred as Volume II. Learned counsel then refers to the statement of claim as made before the arbitrators in paragraph 16 of which it had been stated that in case of M/s. SEW Construction Private Limited, who too was given contract for construction of a part of the dam in question, the Superintendent Engineer despite finding that the claim on account of escalation of wages was justified had not paid the same, whereupon a sole arbitrator was appointed and the arbitrator gave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at annexure shows that it deals with matters like 'Sanitary facilities, 'Latrines', Drinking water', 'Bathing facilities'. We have noted that it is really Annexure-B which is relatable to fair wages. 16. Shri Nariman buttresses his submissions by contending that the aforesaid was the reading of the relevant clauses of agreement by the State itself as it would appear from the stand taken by its counsel before the District Judge when he examined the matter in the first instance, as, the main contention then advanced was on the subject of calculation of the amount of reimbursement, as it would appear from paragraph S of the District Judge order dated 6.5.87. It is apparent that if jurisdiction of the arbitrators would have been the main plank of State's case, that would have been the main contention. It is because of this the matter was remitted to the arbitrator under Clause (c) of Section 16(1) of the Act and not under Clause (a); the latter of which comes into play when a point is left undetermined by an arbitrator. It is stated that in the first award, as in the second, the arbitrators had not dealt specifically with the question of liability of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of arbitrators in having gone into the question of reimbursement The best that could be said is that the terms of the agreement being what they are, the arbitrators had no jurisdiction to entertain the claim, and so, the present was a case of latent lack of jurisdiction. In such a case acquiescence of the parties may be relevant. 20. We do not, however, propose to decide the question relating to jurisdiction on the narrow or technical ground of acquiescence seized as we are with an award which is in the neighbourhood of 2.5 crores; instead, we would address whether the terms and conditions of the agreement at hand did permit entertaining of the claim of the appellant on the score of escalation of wage rates. Despite this approach to be adopted, it would be appropriate to say that the State did seem to take a stand at the relevant time that the arbitrators had jurisdiction to entertain the claim. We have said so because in the very first round of litigation before the District Judge the main contention advanced was relating to the calculation of the contract. It is apparent that if the State would have been of the view that the arbitrators had no jurisdiction to entertain th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company's case 1984 2 SCC 610 where it was held that: If the agreed fact situation, on the basis of which the agreement was entered into, ceases to exist, the agreement to that extent will become otiose. If rates initially quoted by the contractor become irrelevant due to subsequent price escalation...contractors' claim for compensation for the excess expenditure incurred due to price rise could not be turned down on ground of absence of price escalation clause in that regard in the contract. Agreement as a whole has to be read. 23. Shri Nariman urges, on the strength of the aforesaid two decisions, that the absence of escalation clause in the present case would not, therefore, be conclusive to deny the relief to the appellant. As to the judgment of this Court in M/s. Associated Engineering Co. v. Govt. of Andhra Pradesh [1991] 2 SCR 924 which has been relied on by Shri Sanghi to urge that in the absence of escalation clause award could not have been made, Shri Nariman contends that in that case there was a specific term in the contract requiring the contractor to carry out any other haul roads , despite which the arbitrator had awarded some amount for maintenance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otifications issued in exercise of power under Clause (b) of Subsection 1(i) of Section 5 of the Minimum Wages Act, 1948 (copies of some of which notifications are at pages 62-67 and 95-96 of Volume II) or to increase in rates of wages by the Wage Committee of the concerned Division of the PWD (some of which determinations are at pages 72-79 and 86-93) it has to be seen whether there was an implied contract to reimburse the increased cost on account of rise' of rates or wages on both the counts. Payment of wages as per the rates fixed under the Minimum Wages Act being statutory obligation and the terms of the contract being silent about payment of minimum wages, as the relevant term (Para 1 of Annexure-B) speaks of fall wages , which concept is different from minimum wages, as would appear from what was stated by this Court in Hindustan Times Ltd. v. Their Workmen (1963) I LL J 108 SC , which decision was cited with approval in Hindustan Antibiotics Ltd. v. Their Workmen (1967) I LL J 114 SC, Workmen of Gujarat Electricity Board v. Gujarat Electricity Board 1962 2 LL J 791, we hold that insofar as increased payment on account of rise in the rates of minimum wages is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Carpets cases (supra). The error in the present case cannot be regarded as one within jurisdiction; the same is really an error of jurisdiction insofar as that para of award concerned which is relatable to increase in minimum wages. Needless to say that if an arbitrator acts beyond jurisdiction, the same would amount to misconduct (see para 10 of Hindustan Constructions Co. Ltd. v. State of J K AIR 1992 SC 2192 ), because of which the award would become amenable of being set aside by a court. 28A. We need not also enter into the controversy whether the present was the case where the arbitrators rejected the plea of non-liability sub-silentio and for this reason the award cannot be regarded as incomplete-the same having not been made de premises , that is, concerning all the matters referred to. (This inference may, however, be permissible here because of what has been opined in Santa Sila Devi v. Dhirendra Nath [1964] 3 SCR 410 ; and N. Chellappan Secretary, Kerala State Electricity Board [1975]2SCR811 ). We would state the same as regards the argument of Shri Nariman that if the view taken by the arbitrators be also possible, interference by the Court is not permissible, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of ₹ 1,67, 521.23 as payment made to piece workers in August 1979; and (2) inclusion of ₹ 16,222.30 as labour charges, whereas the same was incurred towards transport charges. This shows thoroughness of verification. Not only this, the appellant had even produced vouchers of payment made to piece workers for verification as stated in the foresaid communication of the Labour Welfare Officer. The minutes as recorded on 29.11.86 (a copy of which is at pages 245-246) would bear this statement. The appellant had also made known to the arbitrators the percentage of increase and amount of increase of amount paid to labour through piece workers for different period by filing a tabular statement, a copy of which is at page 189 of Volume II. 32. From the above, it would appear that all that was possible on the part of the appellant to prove actual payment was done. It is a different matter that because of lapse of time many of the piece workers were not available and despite notices issued to them only four replied of whom two were examined, as noted in para 3 of the award. A litigant cannot be asked to do what is not possible on his part to do or get done. He cannot be m ..... 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