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NON-REPORTABLE

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

A.K. SIKRI, J.

Leave granted.

2) 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  Civil Appeal No.           of 2014 Page 1 of 10 (arising out of SLP (C) No. 39122 of 2013)

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either  in  a suit  or  in other proceedings in  accordance with the  

contract.

3) 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.   

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4) 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.

5) 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.

6) 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  

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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 representation.

7) 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.

8) While  the  things  stood  at  that  stage,  the  respondents  issued  

orders dated August 06, 2013 and called upon the appellant to  

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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,  

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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.

9) 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 permitted.”

10) 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  

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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.

11) 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.  

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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.

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  

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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.”

13) 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.

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14) 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.

15) 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. (J. CHELAMESWAR)

.............................................J. (A.K. SIKRI)

New Delhi; October 10, 2014.

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