A2Z Infraservices Ltd. v. Regional Labour Commissioner (Central) & Ors.

Central Railway Contract Labour Sangh, Sangh Sadan, Dadar, Mumbai – 400 028... Respondents. 3 of 49 wp.972.19 with group.doc....................  Mr. Ravish Mishra, Advocate for Petitioner in all Writ Petitions.  Mr. T.J. Pandian a/w. Mr. T.C. Subramanian and Ms. Tanisha, Advocates for Respondent No.3 in all Writ Petitions.  Mr. Dhananjay B. Deshmukh a/w. Mr. Joe D’Souza, Advocates for Respondent Nos.[2] and 4.................... CORAM: MILIND N. JADHAV, J. Reserved On: OCTOBER 26, 2023. Pronounced on: OCTOBER 31, 2023. JUDGMENT:

1. Heard. By consent of parties all 5 Writ Petitions are heard finally.

2. This is a group of 5 Writ Petitions filed by the Petitioner – Contractor challenging five separate orders, all dated 30.10.2018 passed by the Regional Labour Commissioner (Central) in proceedings under Sub-section 2 of Section 20 of the Minimum Wages Act, 1948 (for short “the said Act”).

3. In Writ Petition No.972 of 2019, claim Application dated 30.01.2018 under Section 20(2) of the said Act was originally filed by Respondent No.2 – Union on behalf of 280 workers for seeking minimum wages on the ground that Petitioner failed to make payment of wages as per notified wages by the Central Government for the period 19.01.2017 to 31.03.2017 and subsequently from 01.04.2017 to 30.09.2017. Thereafter by corrigendum, the number of workers was corrected to 312 workers. By order dated 30.10.2018 the Competent Authority, inter alia, directed the Petitioner to deposit the 4 of 49 wp.972.19 with group.doc amount of claim i.e. the difference in minimum wages in respect of the 312 workers totalling to Rs.95,78,632/- alongwith one time compensation of an equal amount with the Competent Authority or in the alternative in the name of the respective worker as per entitlement as stated in the annexures to the order. In this Writ Petition the Union is Respondent No.2, whereas the Principal Employer i.e. the Railway is Respondent No.3, who are the principal contesting parties.

3.1. In Writ Petition No.973 of 2019, challenge is maintained to the impugned order dated 30.10.2018 passed by the Competent Authority under Section 20(2) of the said Act. On 06.03.2018, Claim Application was filed before Competent Authority by the Labour Enforcement Officer (Central) – III, Mumbai under Section 20(2) of the said Act in respect of claim of difference in minimum wages and overtime pertaining to 36 workers. By the impugned order, Competent Authority directed Petitioner to deposit the claim amount being the difference of minimum wages in respect of 36 workers totalling to Rs.12,05,612/- alongwith one time compensation of equivalent amount and deposit further amount of Rs.1,27,687/- in respect of 36 workers pertaining to differential payment of overtime with the Competent Authority or in the alternative in the name of the respective worker as per entitlement as stated in the annexure to the order. 5 of 49 wp.972.19 with group.doc

3.2. In Writ Petition No.974 of 2019, challenge is maintained to the impugned order dated 30.10.2018 passed by the Competent Authority under Section 20(2) of the said Act. On 20.02.2018, Claim Application was filed before the Competent Authority by the Labour Enforcement Officer (Central) – III, Mumbai under Section 20(2) of the said Act in respect of claim of difference in minimum wages and overtime pertaining to 182 workers. By the impugned order, Competent Authority directed Petitioner to deposit the claim amount being the difference of minimum wages in respect of 182 workers totalling to Rs.65,40,372/- alongwith one time compensation of equivalent amount and deposit further amount of Rs.11,43,710/- in respect of 166 workers pertaining to differential payment of overtime with the Competent Authority or in the alternative in the name of the respective worker as per entitlement as stated in the annexure to the order.

3.3. In Writ Petition No.975 of 2019, challenge is maintained to the impugned order dated 30.10.2018 passed by the Competent Application was filed before the Competent Authority by the Labour Enforcement Officer (Central) – III, Mumbai under Section 20(2) of the said Act in respect of claim of difference in minimum wages and overtime pertaining to 67 workers. By the impugned order, Competent Authority directed Petitioner to deposit the claim amount being the 6 of 49 wp.972.19 with group.doc difference of minimum wages in respect of 67 workers totalling to Rs.22,57,574/- alongwith one time compensation of equivalent amount and deposit further amount of Rs.97,871/- in respect of 47 workers pertaining to differential payment of overtime with the Competent Authority or in the alternative in the name of the respective worker as per entitlement as stated in the annexure to the order.

3.4. In Writ Petition No.976 of 2019, challenge is maintained to the impugned order dated 30.10.2018 passed by the Competent Application was filed before the Competent Authority by Labour Enforcement Officer (Central) – III, Mumbai under Section 20(2) of the said Act in respect of claim of difference in minimum wages and overtime pertaining to 126 workers. By the impugned order, Competent Authority directed Petitioner to deposit the claim amount being the difference in minimum wages in respect of 126 workers totalling to Rs.44,91,293/- alongwith one time compensation of equivalent amount and deposit further amount of Rs.6,58,525/- in respect of 111 workers pertaining to differential payment of overtime with the Competent Authority or in the alternative in the name of the respective worker as per entitlement as stated in the annexure to the order. 7 of 49 wp.972.19 with group.doc

4. These Petitions thus cover 723 workers with respect to their claim for differential amount of minimum wages and one time compensation and 357 workers out of these 723 workers with respect to their claim for difference in overtime wages.

5. When these Writ Petitions were heard on 28.08.2023, after hearing the parties this Court passed the following order:- “1. Heard Mr. Mishra, learned Advocate for Petitioner in all Writ Petitions, Mr. Deshumukh, learned Advocate for Respondent No.2 in Writ Petition No.972 of 2019 and Respondent No.4 in Writ Petition No.973 of 2019, Writ Petition No.974 of 2019, Writ Petition No.975 of 2019 and Writ Petition No.976 of 2019 and Mr. Pandian, learned Advocate for Respondent No.3 in all the Writ Petitions.

2. This matter was heard by me substantially on Monday i.e. 21.08.2023. Pursuant to hearing the parties, it was orally directed to Respondent - Railways that they will have to clearly define the amount that they have withheld in respect of the works completed by the Petitioner in respect of works which are the subject matter of five Petitions before me.

3. This was in view of the fact that in so far as worker’s liability is concerned, it has been made clear that the same shall be secured which was noted by this Court which is approximately Rs.2.51 Crores as per the impugned order. It was pointed out to the Respondent - Railways that any amount held by it in addition to the liability of the workers as per impugned order will be clarified in the Affidavit-in-Reply that will be filed today. Today, Affidavit-in-Reply is filed by Respondent - Railways dated 28.08.2023. In paragraph No.6, instead of clarifying the differential amount which is the amount held over and above the liability of the workers held by them, different figures in respect of pending Application are stated therein.

4. Mr. Pandian is directed to take specific instructions regarding the figure of Rs.3.51 Crores as stated in the letter dated 06.01.2021 and as to whether it subsists even in August, 2023 and inform the Court accordingly.

5. Petitioner has furnished details of the account of his running bills which are regular bills, as also security deposits which has been deposited and held by the Railways according to Petitioner which is Rs.5.41 Crores as on date. Mr. Pandian shall take instructions and inform the Court accordingly.

6. Stand over to 30th August, 2023 at 02.30 p.m.” 8 of 49 wp.972.19 with group.doc

5.1. In compliance of the above order, on 30.08.2023 the Writ Petitions were heard and Railway was directed to hand over the amount of Rs.2,65,38,321/- to the Petitioner, which direction stands complied with.

5.2. Parties have since completed their pleadings and Petitions are heard finally by their consent.

6. Union i.e. Central Railway Contract Labour Sangh is represented by Mr. Deshmukh.

7. It is seen that Railway has withheld release of the amount of Rs.3.15 crores to the Petitioner on the ground that under the impugned orders, liability to pay the various amounts as directed is that of the Petitioner. Parties have confirmed that Railway has paid the difference of minimum wages in all 5 Writ Petitions to the 723 workers through the Petitioner – Contractor. The one time compensation awarded however is not paid till date so also the overtime differential wages of 357 workers. Mr. Deshmukh would submit that the amount withheld by Railway is infact withheld for the very purpose so as to satisfy the award of one time compensation and differential overtime wages given under the impugned orders. He would therefore submit that if the impugned orders are set aside fully, it would lead to an anomaly and an admitted loss to the workers. He would submit that there is substantial delay in payment of one time 9 of 49 wp.972.19 with group.doc compensation and overtime differential wages to the workers which is not paid till date. He would submit that irrespective of the outcome of the present Petitions with respect to challenge maintained to the impugned orders, in the lis for adjudication of rival claims between the Railway and Petitioner – Contractor, the workers should not suffer. He would therefore submit that the impugned orders cannot be set aside fully in any event as workers’ legitimate claim is still not satisfied. I agree with the submissions advanced by Mr. Deshmukh.

8. Admittedly, facts governing the present set of Writ Petitions concerning 280 workers in Writ Petition No.972 of 2019, 36 workers in Writ Petition No.973 of 2019, 182 workers in Writ Petition No.974 of 2019, 67 workers in Writ Petition No.975 of 2019 and 126 workers in Writ Petition No.976 of 2019 are absolutely identical. All 5 impugned orders having been passed (though separately) on 30.10.2018 are also identical. Hence these Writ Petitions are decided by this common judgment.

9. Briefly stated, Petitioner is a Company registered under the Companies Act, 1956 providing facility management services including mechanized housekeeping and technical services etc. Petitioner has been regularly providing various services to the Railway including (a) mechanized cleaning of empty railway passenger coaches and various yards/depots (b) mechanized cleaning of coaches at railway stations 10 of 49 wp.972.19 with group.doc and (c) mechanized cleaning of coaches in moving trains (On Board Housekeeping Services). In 2016, Railway floated a tender for work of mechanized cleaning of coaches, watering of rakes, including cleaning of depot premises and provision of On Board Housekeeping Services (OBHS) in trains originating from of Chatrapati Shivaji Maharaj Terminus (CSMT), Mazgaon (MZN) and Dadar Terminus (DR) coaching depots of Mumbai Division. Petitioner being the successful bidder was awarded the tender for a period of three years commencing from 11.02.2016 for the sum of Rs.19,76,69,647/-. On completion of the competitive bidding process, 3 separate contracts were executed between Petitioner and Railway on 11.02.2016, 22.03.2016 and 06.06.2016 for offering cleaning services at three separate locations, all in Mumbai.

10. Petitioner employed a total of 1350 workers to service over 2500 Railway coaches everyday. After one year into the contract period, on 19.01.2017 there was an amendment to the Minimum Wages Act due to issuance of Extraordinary Notification No.S.O.190 (E) by the Chief Labour Commissioner, whereby minimum wages payable to any employee engaged as workmen were increased by 40%. In the present case daily wage of the worker employed by Petitioner stood increased from Rs.374/- to Rs.523/- per day. 11 of 49 wp.972.19 with group.doc

11. Though Petitioner and Railway were governed by a Price Variation Clause (for short “PVC”) in the contract, according to Petitioner under the said clause Petitioner ought to have been reimbursed by Railway suitably in the event of increase of minimum wages so that Petitioner was not put under financial distress from inflation. This was so because under the PVC correspondingly, if there was a reduction in the Consumer Price Index (for short “CPI”), then accordingly the minimum wages would stand reduced so as to ensure that Railway did not pay any excess amount to the Petitioner. In view of the aforementioned Government Notification dated 19.01.2017, Petitioner incurred an additional expenditure of Rs.9,79,57,254/- for the period commencing from January 2017 to May 2017 being the differential amount payable towards minimum wages. Petitioner raised a grievance with Railway on account of PVC in its contracts. To consider the grievance of Petitioner, Railway constituted a Four Member Committee to recommend a suitable alternative for compensation due to increase in the minimum wages, considering that contracts entered into with Petitioner were labour intensive. The Committee constituted by Railway arrived at an option by which it recommended that the labour component of the existing price variation at the then time be frozen as on 19.01.2017 and be kept at a base price and the subsequent increase in minimum wages be adopted on actual basis as per the Extraordinary Notification dated 19.01.2017. 12 of 49 wp.972.19 with group.doc Despite this recommendation, Railway informed Petitioner that its application / proposal was rejected, resultantly leading to Petitioner filing Writ Petition No.1996 of 2017 in this Court. Railway contested the Writ Petition and by a reasoned judgment while interpreting the PVC clause, this Court held that Railway was liable to reimburse the Petitioner the entire differential minimum wages as it was the liability of the Railway. Paragraph Nos.26 and 27 of the judgment dated 25.04.2019 passed by the Division Bench of this Court are relevant in this regard and read thus:-

11.1. From the above, it is seen that this Court clearly held that though Railway was given liberty to put an end to the existing contracts with Petitioner at the then time by following the prescribed mode, but as along as the contracts continued, Petitioner could not be deprived of the neutralization for increase in the cost of labour owing 14 of 49 wp.972.19 with group.doc to the Extraordinary Notification dated 19.01.2017 revising the minimum wages applicable to the workmen employed in the industry of mechanized sweeping and cleaning w.e.f. the date of its coming into force and in that view of the matter Railway was duty bound to neutralize the said cost of labour to the Petitioner under clause (12) of the PVC contract by applying the principles of “business efficacy test” and by including the stipulation of payment of wages as per the Minimum Wages Act on implied stipulation in the PVC. It was further held that Railway was liable to continue to compensate the Petitioner for increase in the cost of labour in terms of Notification dated 19.01.2017 as long as the contracts subsisted. (emphasis supplied)

11.2. Thus this Court clearly held that Petitioner would be entitled to the payment of difference in minimum wages between Rs.374/- and Rs.523/- being the differential of minimum wages in pursuance of the Notification issued under the Minimum Wages Act dated 07.08.2016 read with the Notification dated 30.09.2016 and Notification dated 19.01.2017 which now required payment of Rs.523/- per day as the basic minimum wage to the worker.

12. Railway challenged the above judgment before the Supreme Court in Special Leave Petition (Civil) Diary No(s).38582 of 2018. On 22.11.2018, the Special Leave Petition was dismissed, thereby confirming the judgment passed by this Court. 15 of 49 wp.972.19 with group.doc

13. In the above backdrop, the following timeline now becomes relevant. It is seen that one Application (in Writ Petition No.973 of

2019) was filed by the Union on 06.03.2018 whereas the remaining four Applications were filed by the Labour Enforcement Officer (Central) - III on 20.02.2018 and they were kept pending. Judgment of the High Court was delivered on 25.04.2018. Petition was allowed and the operative order was passed. Reasons were uploaded on 10.05.2018. However, on 26.04.2018, the Competent Authority commenced hearing in the 5 Applications and passed the impugned orders on 30.10.2018. SLP was dismissed on 22.11.2018. Despite being informed and aware of the High Court judgment dated 25.04.2018, the Competent Authority did not take cognizance and proceeded to pass the impugned orders contrary to the High Court judgment and directed Petitioner to pay the differential wages, one time compensation and overtime differential wages and completely exonerated the Railway.

14. Record clearly shows that between 22.05.2018 and 23.10.2018, six specific letters were addressed by Petitioner to Railway, inter alia, informing Railway about the judgment of the High Court dated 25.04.2018. Railway was a party to the High Court proceedings. These letters are appended at page Nos.97 to 108 (In Writ Petition No.973 of 2019) and I have perused the same. Another 16 of 49 wp.972.19 with group.doc letter dated 29.10.2018 is at page No.97 (In Writ Petition No.973 of

2019) addressed to the Regional Labour Commissioner intimating the High Court judgment passed by the Division Bench, despite which no cognizance was taken either by the Railway or the Competent Authority and the impugned orders were passed.

15. After dismissal of the Special Leave Petition and expiry of the tenure of the 3 contracts in February 2019, Petitioner approached Railway for clearing its pending final bill and sought refund of the Security Deposits. However, Railway refused to clear the final bill and Security Deposit, initially to the extent of approximately Rs.5.80 crores, despite the liability under all 5 impugned orders being Rs.3.25 crores towards differential minimum wages, one time compensation and overtime wages. Out of this the one time compensation and differential overtime wages remain unpaid till date. Hence by order dated 28.08.2023, this Court had to step in and direct Railway to immediately refund / return the surplus amount of Rs.2.51 crores which it had withheld for no reason whatsoever and without any authority in law.

16. Mr. Mishra, learned Advocate appearing on behalf of Petitioner has taken me through the pleadings stated above and the judgment dated 25.04.2018 passed by the Division Bench of this Court. He would submit that in the said judgment, clear finding is 17 of 49 wp.972.19 with group.doc recorded in paragraph No.26 that the entire liability is that of the Railway and the judgment has been confirmed by the Supreme Court. Hence liability of payment of differential minimum wages, the corresponding overtime differential wages and one time compensation awarded (towards delay/interest) cannot be foisted on the Petitioner and payment of final bill and Security Deposit amounts towards the said liability cannot be withheld. Such an act by the Railway is illegal and malafide and this Court should set aside / modify the impugned orders so as to ensure that Petitioner’s legitimate dues are returned / refunded by Railway. He would submit that the impugned orders are passed contrary to the judgment passed by the Division Bench and are not sustainable against the Petitioner. Hence he seeks release of amounts withheld by Railway allegedly against the aforementioned liability which is due to Petitioner.

17. PER CONTRA, Mr. Pandian, learned Advocate appearing for Railway has drawn my attention to the Affidavit-in-Reply and additional Affidavit-in-Reply filed in the 5 Writ Petitions and would submit that Railway does not dispute the dictum of the judgment of Division Bench dated 25.04.2018 which has held that the difference in minimum wages as per the Extraordinary Notification dated 19.01.2017 will have to be paid by Railway. Still he would submit that under the 3 contracts it was the statutory liability of Petitioner to 18 of 49 wp.972.19 with group.doc discharge the same first within the stipulated time and therefore Petitioner ought to have first disbursed the statutory wages to the workers and then claimed reimbursement of the differential minimum wages, overtime differential wages from Railway by raising appropriate invoice / bill with precise details. He would submit that Petitioner failed to discharge its statutory duty resulting into passing of the impugned orders imposing penalty / one time compensation under Section 20(3)(1) of the said Act and the same cannot be foisted on the Railway on account of Petitioner’s failure.

17.1. He would further submit that Petitioner had agreed in the special conditions of the 3 contracts with Railway to indemnify Railway and to make good any claim against it while agreeing to strictly adhere to the provisions of the Contract Labour (Regulation and Abolition) Act, 1970. He would submit that Petitioner is placing reliance on Form V declaration issued by Railway being the principal employer for obtaining the labour licence and the principal employer would be liable only if the Petitioner - Contractor fails to disburse wages to the contract workers. He would submit that provisions of the General Conditions of Contract as contained in clause Nos.15, 54 and 55 are relevant in this regard and he has taken me through those conditions. For reference, the said clause Nos.15, 54 and 55 are reproduced below:- 19 of 49 wp.972.19 with group.doc “15. Indemnity By Contractors: The Contractor shall indemnify and save harmless the Railway from and against all actions, suit proceedings losses, costs, damages, charges, claims and demands of every nature and description brought or recovered against the Railways by reason of any act or omission of the Contractor, his agents or employees, in the execution of the works or in his guarding of the same. All sums payable by way of compensation under any of these conditions shall be considered as reasonable compensation to be applied to the actual loss or damage sustained, and whether or not any damage shall have been sustained.

54. Wages To Labour: The Contractor shall be responsible to ensure compliance with the provision of the Minimum Wages Act, 1948 (hereinafter referred to as the “said Act” and the Rules made thereunder in respect of any employees directly or through petty contractors or sub-contractors employed by him on road construction or in building operations or in stone breaking or stone crushing for the purpose of carrying out this contract. If, in compliance with the terms of the contract, the Contractor supplied any labour to be used wholly or partly under the direct orders and control of the Railways whether in connection with any work being executed by the Contractor or otherwise for the purpose of the Railway such labour shall, for the purpose of this Clause, still be deemed to be persons employed by the Contractor. If any moneys shall, as a result of any claim or application made under the said Act be directed to be paid by the Railway, such money shall be deemed to be moneys payable to the Railway by the Contractor and on failure by the Contractor to repay the Railway any moneys paid by it as aforesaid within seven days after the same shall have been demanded, the Railways shall be entitled to recover the same from any moneys due or accruing to the contractor under this or any other Contract with the Railways.

55. Provisions Of Payments Of Wages Act: The Contractor shall comply with the provisions of the Payment of Wages Act, 1936 and the rules made thereunder in respect of all employees employed by him either directly or through petty contractors or sub-contractors in the works. If in compliance with the terms of the contract, the Contractor directly or through petty contractors or sub-contractors shall supply any labour to be used wholly or partly under the direct orders and control of the Engineer whether in connection with the works to be executed hereunder or otherwise for the purpose of the Engineer, such labour shall never the less be deemed to comprise persons employed by the contractor and any moneys which may be ordered to be paid by the Engineer shall be deemed to be moneys payable by the Engineer on behalf of the Contractor and the Engineer may on failure of the Contractor to repay such money to the Railways deduct the same from any moneys due to the Contractor in terms of the contract. The Railway shall be entitled to deduct from any moneys due to the contractor (whether under this contract or any other contract) all moneys 20 of 49 wp.972.19 with group.doc paid or payable by the Railway by way of compensation of aforesaid or for costs of expenses in connection with any claim thereto and the decision of the Engineer upon any question arising out of the effect or force of this Clause shall be final and binding upon the Contractor.”

17.2. Mr. Pandian has next drawn my attention to clause 4 and 5 of the Special Conditions of the Contract / Part-II which were specifically agreed between the Petitioner and Railway in respect of compliance of Labour Law provisions and read the same. Clause Nos.[4] and 5 are reproduced below for reference:- “4. Provisions of payment of Wages Act: The Contractor shall comply with the provisions of the Payment of Wages Act, 1936 and the rules made thereunder in respect of all employees directly or through petty contractors or subcontractors under the direct order and control of the Engineer whether in connection with the works to be executed hereunder or otherwise for the purpose of the Engineer. Such labour shall nevertheless be deemed to comprise persons employed by the contractor and any moneys which may be ordered to be paid by the Engineer shall be deemed to be moneys payable by the Engineer on behalf of the Contractor and the Engineer may on failure of the Contractor or repay such money to the Railways deduct the same from any moneys due to the Contractor in terms of the contract. The Railway shall be entitled to deduct from any moneys due to the contractor (whether under this contract or any other contract) all moneys paid or payable by the Railway by way of compensation of aforesaid or for costs of expenses in connection with any claim thereto and the decision of the Engineer upon any question arising out of the effect or force of this Clause shall be final and binding upon the Contractor.

5. Provisions of Contract Labour (Regulation And Abolition) Act, 1970: 5.[1] The Contractor shall comply with the provision of the contract labour (Regulation and Abolition) Act, 1970 and the Contract labour (Regulation and Abolition) Central Rules 1971 as modified from time to time, wherever applicable and shall also indemnify the Railway from and against any claims under the aforesaid Act and the Rules. 5.[2] The Contractor shall obtain a valid license under the aforesaid Act as modified from time to time before the 21 of 49 wp.972.19 with group.doc commencement of the work and continue to have a valid license until the completion of the work. Any failure to fulfill the requirement shall strict the panel provision of the Contract arising out of the resultant non-execution of the work. 5.[3] The Contractor shall pay to labour employed by him directly or through subcontractors the wages as per provision of the aforesaid Act and the Rules wherever applicable. The Contractor shall notwithstanding the provisions of the contract to the contrary, cause to be paid the wages to labour indirectly engaged on the works including any engaged by his subcontractors in connection with the said work, as if the labour had been immediately employed by him. 5.[4] In respect of all labour directly or indirectly employed in the work for performance of the contractor's part of the contract, the Contractor shall comply with or cause to be complied with the provisions of the aforesaid Act and Rules wherever applicable. 5.[5] In every case in which, by virtue of the provisions of the aforesaid Act or the Rules, the Railway is obliged to pay any amount of wages to a workman employed by the Contractor or his sub-contractor in execution of the work or to incur any expenditure in providing welfare and health amenities required to be provided under the aforesaid Act and the Rules or to incur any expenditure on account of the contingency liability of the Railway due to the contractor's failure to fulfill his statutory obligations under the aforesaid Act or the rules, the Railway will recover from the Contractor the amount of wages so paid or the amount of expenditure so incurred and without prejudice to the rights of the Railway under the Section 20, sub-section (2) and Section 21 sub-section (4) of the aforesaid Act the Railway shall be at liberty to recover such amount or part thereof by deducting it from the Security Deposit and/or from any sum due by the Railway to the contractor whether under the contract or otherwise. The Railway shall not be bound to contest any claim made against it under sub-section (1) of section 20 and sub-section (4) of section 21 of the aforesaid Act except on the written request of the Contractor and upon his giving to the Railway full security for all costs for which the Railway might become liable in contesting such claim. The decision of the Railway regarding the amount actually recoverable from the contractor as stated above shall be final and binding on the Contractor. 5.[6] As per the terms and conditions of the contract agreement, it is obligatory on the part of Contractor having labour more than 20 to obtain the labour license from the licensing officer under provision of Contract Labour (Regulation and Abolition) Act, 1970 read with Contract Labour (Regulation and Abolition) Central Rules, 1970. The Contractors are advised to ensure that they should obtain a proper and valid labour license for the connected work from the concerned Assistant 22 of 49 wp.972.19 with group.doc Labour Commissioner or Licensing Officer of the area. A photo copy of such license should be submitted before the commencement of work.”

17.3. Applying the aforementioned 5 clauses to the facts in the present case, he would submit that the subject contract was a “turnkey” contract i.e. the offer quoted by Petitioner for providing services was composite including for deployment of required number of workers and the same was accepted by Railway and accordingly bills raised by Petitioner were duly paid as per the agreed terms of contract. He would submit that Railway withheld the amount payable under Petitioner's final bill and Security Deposit anticipating claims from workers apart from liability under the impugned order contemplating adjustment and recovery subject to the outcome of the present Petitions and the said act of Railway was well within the ambit of the agreed terms of the contract. Lastly he would submit that impugned orders passed by the Competent Authority being well reasoned and speaking orders, the Writ Petitions should be dismissed.

18. Mr. Deshmukh, learned Advocate appearing for Respondent – Union in all Writ Petitions would submit that both / either Petitioner and Respondent - Railway are responsible to ensure that minimum wages are paid to the workers as held by the Competent Authority in the impugned order. He would submit that Petitioner’s challenge to the impugned orders on the ground of non-payment of differential 23 of 49 wp.972.19 with group.doc wages to workers is solely due to default on the part of Railway. He would submit that the impugned orders are crystal clear and direct both, Petitioner and Respondent - Railway to make payment of differential minimum wages, one time compensation and overtime differential wages.

18.1. In support of his submission and contention that contract workers are entitled to compensation in addition to payment of differential wages due to the delay caused either by the direct employer and/or principal employer, he has relied upon the following decisions of the Supreme Court and various High Courts:-

(i) Union of India and Anr. Vs. Avtar Chand and Ors.1;

(ii) Prerna Sahygo Vs. Authority Under Minimum Wages and Ors.2,

(ii) Manager, Umashankar Agarwal Vs. Regional Labour

(iii) The Engineer in Chief (Maintenance) and Anr. Vs.

(iv) Assistant Executive Engineer Vs. Senior Labour

(v) The Chief Administrative Officer cum Secretary Vs. The

19. I have heard Mr. Mishra, learned Advocate appearing for Petitioner who was the original Opponent No.1 before the Competent

6 Decided on 25.01.2021 in WP No.7099/2020 – High Court of Karnataka 24 of 49 wp.972.19 with group.doc Authority; Mr. Pandian, learned Advocate appearing for Respondent - Railway and Mr. Deshmukh, learned Advocate appearing for Respondent - Union and with their able assistance perused the pleadings and record of the case. Submissions made by learned Advocates appearing for respective parties have received due consideration of the Court.

20. In the present case, it is seen that Petitioner has approached this Court on the principal premise that liability to pay minimum wages as notified from time to time under the provisions of the said Act and in this case by the extant Extraordinary Notification dated 19.01.2017 issued by the Ministry of Labour is that of the Railway. It is argued that Railway is statutorily and contractually liable to compensate the Petitioner for the minimum wages paid to workers. Admitted position is that the differential minimum wages are already paid to the workers by Railway through Petitioner. Hence in so far as workers are concerned, their balance claim is for one time compensation and overtime differential wages which remain unpaid as on date. Whereas Petitioner’s claim is with respect to the amount wrongfully withheld by Railway. In this context, it is pertinent to refer to the judgment and order dated 25.04.2018 passed by the Division Bench in Writ Petition No.1996 of 2017 which was filed by Petitioner to determine the liability of payment of minimum wages pursuant to 25 of 49 wp.972.19 with group.doc the significant increase in the minimum wages by 40% during subsistence of Petitioner’s 3 contracts with Railway in view of the Extraordinary Notification dated 19.01.2017. In these Writ Petitions it was Petitioner’s specific case that Petitioner was required to make payment of increased wages as Railway refused to pay the increased wages and Petitioner immediately pursuant to the issuance of the Extraordinary Notification prescribing minimum wages had paid the minimum wages i.e. increased wages and approached this Court. It is pertinent to note that the 3 contracts between Petitioner and Railway had a tenure of three years from 2016 to 2019. Petition filed by the Petitioner and decided by judgment dated 25.04.2018 is directly relevant for determination of lis in the present Writ Petitions. In that Writ Petition, it was contention of Railway that Petitioner was disentitled to demand revised / increased minimum wages in view of the statutory contract between parties even though the Railway Board i.e. the Ministry of Railways had clarified that payment of revised minimum rates of wages to be paid by contractors to contract labourers was a statutory obligation. In that Writ Petition, Railway had flatly refused to reimburse and neutralize the full compensation for increased minimum wages claimed by Petitioner. After hearing Petitioner and Railway at length and considering their respective submissions and most importantly considering the Extraordinary Notification dated 19.01.2017 issued by the Ministry of Labour 26 of 49 wp.972.19 with group.doc revising minimum rate of wages in area ‘A’ to Rs.523/- per day on the basis of average CPI for industrial workers (Base 2001-100) and in view of the PVC in the statutory contract, the Court held that despite the fact that under the terms of the contract Petitioner - Contractor was bound to adhere to the Payment of Wages Act, 1936, Workmen Compensation Act, 1923, Contract Labour (Regulation and Abolition) Act, 1970 and the Rules made thereunder and as modified from time to time and was duty bound to indemnify the Railway from and against any claim under the aforesaid Act and Rules, however considering the said Act and other labour legislations and various statutory provisions benefiting the workers, the object of PVC was to ensure benefit to the Contractor in the light of any change that would take place against various components involved therein namely labour or material and simultaneously also to protect the Railways in case of fall in the CPI so as to insulate Railway from payment of excess amount of minimum wages to the Petitioner.

21. Despite the above categorical finding having been upheld by the Supreme Court, Mr. Pandian, learned Advocate has once again reiterated and argued that contractual obligation between the parties will still be the determinative basis and it would not be permissible for this Court to rewrite the contract and hold otherwise since terms of the contract were explicitly clear and could not be interpreted in a 27 of 49 wp.972.19 with group.doc different manner so as to foist the liability on the Railway. He would therefore submit that withholding of the amount of Rs.3.15 crores by Railway from out of the final bill and the security / statutory deposits due and refundable to Petitioner have been correctly withheld to satisfy the aforesaid liability which is of the Petitioner - Contractor. However, in the light of the findings returned by the Division Bench, taking such a stand would be preposterous and impermissible for the Railway.

22. It is pertinent to note that despite the aforementioned stand taken by Railway, no action was taken by them to terminate the 3 contracts with the Petitioner after the Division Bench judgment and they subsisted till the end of their tenure.

23. The Division Bench of this Court held that Railway was not justified in denying the benefit of increased / revised minimum wages to Petitioner - Contractor giving elaborate reasons therefor. It was observed that services of Petitioner were not terminated by Railway because of its own peculiar difficulty and hence action of Railway in denying Petitioner the difference in minimum wages for the workers was an arbitrary action which was unsustainable. It clearly held in unequivocal terms that though Railway was at liberty to put an end to the existing contracts with Petitioner by following the prescribed mode under the contracts, but it did not do so and therefore as long as the 28 of 49 wp.972.19 with group.doc contracts subsisted, Petitioner - Contractor cannot be deprived of the neutralization for increase in the cost of labour owing to issuance of the Extraordinary Notification dated 19.01.2017 revising the minimum wages applicable to the worker employed in the industry of mechanized sweeping and cleaning with effect from the said date. It held that Railway was duty bound to neutralize the said cost of labour to Petitioner - Contractor under Clause (12) of the PVC contract by applying the principles of “business efficacy test” and by including the stipulation of payment of wages as per the said Act as an implied stipulation in the PVC. It categorically held that Railway was liable to continue to compensate the Petitioner - Contractor for increase in cost of labour in terms of Extraordinary Notification dated 19.01.2017 as long as the contracts subsisted. Findings returned in paragraph Nos.26 and 27 of the judgment dated 25.04.2018 of the Division Bench have been reproduced herein above for reference.

24. It is next seen that judgment dated 25.04.2018 passed by the Division Bench of this Court was challenged by Railway (Union of India) in Special Leave Petition (Civil) Diary No(s).39582 of 2018. The Petition was dismissed. In effect the judgment and order passed by the Division Bench of this Court as alluded to herein above was confirmed by the Supreme Court. There is another important aspect which needs to be stated and considered. It needs to be stated that 29 of 49 wp.972.19 with group.doc only operative part of the order of the Division Bench was passed and upload on 25.04.2018. The operative part of the order dated 25.04.2018 is reproduced below:- “ For the reasons recorded separately, Petition is partly allowed in the following terms: (1) It is held that, if Respondent Nos. 1 and 2 desire to terminate the contract of the Petitioner, they are at liberty to do so. (2) However, we hold and declare that for a period between 19/01/2017 till contract dated 11/02/2016 is in existence, Petitioner would be entitled to payment of difference between Rs 374/- which was required to be paid by the Petitioner in pursuance to the Notification issued under the Minimum Wages Act dated 07/08/2008 read with the Notification dated 30/09/2016 and Rs 523/- which is required to be paid under Notification dated 19/01/2017. (3) Rule is made absolute accordingly with no order as to costs.”

24.1. The detailed reasons were uploaded on 10.05.2018. However, Railway did not terminate the 3 contracts and allowed its subsistence and continuation for its entire term.

24.2. It is seen that on 22.05.2018, Petitioner addressed letter to Railway drawing its attention to the detailed reasoned order dated 25.04.2018 passed by the Division Bench and sought release of the differential minimum wages. This was followed by reminder letter dated 01.06.2018 since Petitioner had received a summons from the Central Labour Commissioner’s office by that time. On 09.07.2018, Petitioner addressed a further reminder letter to Railway intimating 30 of 49 wp.972.19 with group.doc that the Regional Labour Commissioner (Central), Mumbai had initiated proceedings against both, Petitioner - Contractor and Railway and during the hearing before the Regional Labour Commissioner, both parties were warned that in the event if the differential minimum wages were not paid in compliance with the order passed by the High Court, substantial penalty would be imposed upon them. It was stated in the letter that during the hearing held on 25.04.2018 direction was given to Railway to make payment to Petitioner of the differential amount of minimum wages, however even 2.[5] months thereafter no steps were taken by Railway.

24.3. Thereafter it is seen that on 19.09.2018, Petitioner addressed a further reminder letter to Railway, inter alia, notifying that Petitioner had been distributing full wages to the workers and this had completely drained its financial resources and it did not have any more funds to pay their salaries due to severe financial constraints. Railway was therefore called upon to release the differential minimum wages to Petitioner in as per the order of the Division Bench. Railway did not respond at all.

24.4. On 23.10.2018, a further reminder letter (fourth reminder) was addressed by Petitioner to Railway intimating that the Regional Labour Commissioner had issued notices to both parties and summoned them to appear on 29.10.2018 for final disposal of the 31 of 49 wp.972.19 with group.doc pending Application under Section 20(2) of the said Act. It is seen that on 28.12.2018 a fifth reminder letter was also addressed to Railway for effecting the payment. Thus, it is seen that all along Railway was reluctant to abide by the judgment of the Division Bench and responsible for delay.

25. The date of all impugned orders is 30.10.2023. The date of the disposal of the Special Leave Petition filed by Railway is 22.11.2018.

26. There are in all 5 impugned orders, all dated 30.10.2018 covering 723 workers. All orders are identical, save and except in respect of the number of workers and amounts stated therein. Facts are also identical.

27. Hence in the above backdrop, the impugned orders are now required to be seen and understood. It is argued by Mr. Mishra that the impugned orders require payment of differential / increased minimum wages to workers which are statutory wages payable under the said Act and along therewith there is a direction to pay one time compensation of an equivalent amount also. He would submit that there is a third direction to pay differential of overtime wages to some of the workers who are covered and entitled to it in view of the differential minimum wages payable to them in the first instance. Hence, he would submit that in so far as the first and third liability is 32 of 49 wp.972.19 with group.doc concerned, the same is a direct liability due and payable under the provisions of the said Act in respect of differential minimum wages and it stands completely settled by the judgment dated 25.04.2018 passed by the Division Bench of this Court while disposing of Writ Petition No.1996 of 2017. I have no hesitation whatsoever in agreeing with the submissions made by Mr. Mishra, in view of my aforesaid observations and findings.

28. However, there is a substantial debate and argument before me between parties in respect of the second liability amount namely payment of one time compensation awarded in the impugned orders of an equivalent amount of the outstanding differential minimum wages. It is Petitioner’s contention that once the principal liability as determined is that of Railway, the amount of one time compensation has to be paid by Railway as it is in view of the delay caused for nonpayment of the minimum wages under the statutory provisions, the same has been awarded. However contrary to Petitioner's submission, Mr. Deshmukh would submit that irrespective of the fact as to which party is liable to pay the one time compensation awarded under the impugned orders, workers are entitled to the same and therefore to that extent the impugned orders are required to be sustained. He has drawn my attention to the impugned orders and specifically drawn my attention to the contents of paragraph Nos.[2] to 5 (In Writ Petition 33 of 49 wp.972.19 with group.doc No.973 of 2019) thereof. For the sake of convenience and reference, paragraph Nos.[2] to 5 are reproduced below:- “2. The Applicant is her application submitted that she has inspected the establishment of opponent – 1 on 14–11–2017 at 1100 hours under the provisions of Minimum Wages Act, 1948. The Opponent – 1 has engaged its workers in mechanized cleaning of coaches, watering of rakes including cleaning of depot premises and on board housekeeping services at CSMT, Mumbai. The above category of employment falls under scheduled employment for which wages had been fixed by the Government of India vide Notification S.O. 190(E) dated 19-01-

2017. The applicant has personally interrogated few workers at the worksspot in the present of the representative of the Opponent 1. About thirty-six male workers were working at the time of inspection. Out of thirty-six workers, statement of five workers been recorded by the applicant as other workers were pre-occupied in their respective work assignment. All the five have confirmed non-receipt of minimum wages and overtime wages. After getting confirmation about the non-receipt of minimum wages and non-payment of overtime from the workmen of the Opponent – 1, the applicant has raised the claim under Section 20(2) of the minimum Wages Act, 1948 before the authority under the minimum Wages Act, 1948 raising a claim of Rs.12,05,612/- (Rupees Twelve Lakhs Five Thousand Six Hundred and Twelve Only) in respect of thirty-six workers towards difference of minimum wages and Rs.1,27,687/- (Rupees one Lakhs Twenty-seven Thousand Six Hundred and Eighty-seven Only) of overtime wages from 01- 01-2017 to 31-10-2017 in respect of thirty- three workers.

3. The applicant in her claim application has also insisted for payment of difference between the wages payable under the Minimum Wages Act, 1948 i.e. Rs.12,05,612/-(Rupees Twelve lakhs Five Thousand Six Hundred and Twelve Only) to the thirty-six workers along with ten times compensation as per Section 20(3)(i) of the Minimum Wages Act, 1948 i.e. Rs.1,20,56,120/-(Rupees One Crore Twenty Lakhs Fifty-six Thousand One Hundred and Twenty Only). The applicant also insisted for payment of overtime due to the workers i.e. Rs.1,27,687/- in respect of thirty-three workers along with eligible compensation as per Section 20(3)(ii) of the Minimum Wages Act, 1948.

4. The Opponent - 1 has submitted that it is in agreement with the views expressed by the Applicant and endorsed that the workers should get their wages as per central Government notification. Despite non-payment of difference of minimum wages by the Opponent - 2, effective from 19–01-2017, it has started making payment as per the notified wages effective from January 2018. The amount due by the Opponent – 2 works out 34 of 49 wp.972.19 with group.doc to more than rupees ten crores and as a consequence it has dried up its resources and hence not in a position to make payment of the differential payment to the workers concerned. Under the circumstances, it was compelled to approach the Hon’ble High Court of Bombay seeking appropriate relief from Opponent – 2 in W.P. No. 1966 of 2017. The Hon’ble High Court of Bombay vide its order dated 25.04.2018 has directed the Opponent – 2 make payment of the difference in wages (between Rs.374/ to Rs.523/- per day). On the contrary, the Opponent – 2 has not shown any inclination to pay the difference to facilitate payment to its workers as on date. It has also informed the Authority of its intention to move the Contempt Petition (No. 112 of 2018 dated 06.10.2018) before the Hon’ble High Court of Bombay for failure to implement the Order of the Hon’ble High Court. It has been categorical that it would not pay the difference of wages to the workers unless and until the same made good by the Opponent – 2. It has not objected to the claim preferred by the Applicant but expressed its difficulties to pay the arrears due to paucity of funds.

5. The Opponent - 2 has infact attended all the hearing and did not object to the claim of the Applicant in any manner but pleaded that it is the responsibility of the Opponent – 1 to make good of the shortfall as the contract offered was a ‘job contract’ wherein the contractor is required to take full responsibility of payment of dues/eligible wages, no revision/review is made during the currency of the contract. Accordingly, it has advised the Opponent – 1 to honor the Central Government notification on minimum wages and start paying the difference pending decision of the Railway Board. It has also confirmed the receipt of the order of the Hon’ble High Court of Bombay and been examining the pros and cons of the decision and sought time to verify/audit the documents so rendered by the opponent – 1. In the hearing held on 29.10.2018, it has indicated its intention to challenge the order of the Hon’ble High court of Bombay in Hon’ble Supreme Court. It has confirmed for having preferred the application before Hon’ble Supreme Court and the same is yet to be admitted. It has undertaken to make the payment to the individual workers and to deduct the same from the opponent -1 pending bills subject to opponent - 1 giving letter of undertaking. The opponent - 1 has however refused to submit such a letter and requested the opponent - 2 to release its pending bills to facilitate making payment of difference of wages immediately.”

28.1. It is seen that during the hearing before the Competent Authority, Petitioner - Contractor being Opponent No.1 therein had supported the workers i.e. Applicants’ case. In paragraph No.5 it is 35 of 49 wp.972.19 with group.doc clearly noted that Railway being Opponent No.2 attended all hearings, but did not object the claim of workers i.e. Applicants in any manner and only pleaded that it was responsibility of the Petitioner i.e. Opponent No.1 to make good the shortfall of deferential minimum wages as the contract offered was a job contract and it was the entire responsibility of Petitioner - Contractor for payment of dues/eligible wages. It is also noted in paragraph No.5 that Railways had in the hearing held on 29.10.2018 indicated its intention to challenge the judgment of the Division Bench before the Supreme Court and only in that view of the matter, it had undertaken to make payment to the individual workers and deduct the same from Petitioner’s pending bills.

29. In this background, the Regional Labour Commissioner i.e. Competent Authority passed the impugned orders directing Petitioner - Contractor to pay the differential minimum wages and infact completely exonerated the Railway from any liability whatsoever despite the clear findings and observations of the Division Bench. However in doing so, it is pertinent to note the findings returned by the Regional Labour Commissioner i.e. Competent Authority in the impugned order which form the basis of the operative part of its order. These findings are contained in paragraph No.12 of the order. Paragraph No.12 reads thus:- 36 of 49 wp.972.19 with group.doc

34. From the above decisions, it is seen that the object of the said Act is to prevent exploitation of workers and for that purpose minimum wages are fixed which every employer must pay. Any delay in payment of minimum wages is therefore viewed very strictly. The award of one time compensation of an equivalent amount of the differential minimum wages in the facts and circumstances of the present case is therefore fully justified and is upheld with a caveat that the said amount is liable to be paid by the Railway and not by the Petitioner - Contractor in view of the findings returned by the Division Bench of this Court in its judgment dated 25.04.2018 in Writ Petition No.1996 of 2017. I therefore hold that workers are entitled to the one time compensation and the differential overtime wages as held by the Competent Authority, but the same shall be paid by the Railway as the same is in consonance with the payment of differential minimum wages which was not paid on time to the workers. In that view of the matter, all 5 impugned orders, all dated 30.10.2018 are upheld with the following modification:-

(i) Claim Application of the Applicant in all 5 Applications succeed;

(ii) Respondent – Railway is held liable to pay the differential minimum wages to the number of workers specified in Clause (2) of the operative part of the 5 impugned orders in each of the five Writ Petitions alongwith the one time compensation amount awarded 47 of 49 wp.972.19 with group.doc and the differential overtime wages;

(iii) Railway is directed to deposit the one time compensation amount and overtime differential wages with the Labour Enforcement Officer (Central) – III, Mumbai within a period of four (4) weeks from the date of uploading of this judgment, failing which the entire payment shall attract interest @ 9% per annum until it is deposited;

(iv) The direction to Petitioner to deposit the liability /

(v) In view of the direction contained in (iv) above, all other directions qua liability of the Petitioner – Contractor as stated in the impugned orders stand quashed and set aside;

(vi) If Railway fails to deposit the amounts stated above, the

Labour Enforcement Officer (Central) – III, Mumbai shall take steps to recover the amount from the Railway in accordance with law; if the amounts are deposited, the Labour Enforcement Officer (Central) – III, Mumbai shall immediately disburse the amounts to the workers entitled to the same; it is clarified that if Petitioner has reimbursed any of the differential overtime wages to the workers, in that case after ascertaining proof of the same, the Labour Enforcement Officer (Central) – III shall pay that / those amounts to the Petitioner;

(vii) Impugned orders shall stand modified accordingly to the above extent;

48 of 49 wp.972.19 with group.doc (viii)In view of the above modification in the 5 impugned orders all dated 30.10.2018, in so far as reliefs prayed for by Petitioner in all 5 Writ Petitions are concerned, it is directed that the amount of Rs.3,15,16,715/withheld by Railway in respect of the 3 concluded contracts with the Petitioner shall be returned / refunded to the Petitioner – Contractor within a period of four (4) weeks from the date of uploading of this judgment. It is directed that Railway has no Authority in law to withhold the said amount of Rs.3,15,16,715/which belongs to the Petitioner - Contractor in view of the decision of the Division Bench of this Court dated 25.04.2018 in Writ Petition No.1996 of 2017 and the findings returned in the present judgment. If Railway fails to refund the above amount as directed, it shall be liable to pay interest on the said amount @ 9% per annum until it is paid to the Petitioner.

35. With the above directions, all five Writ Petitions stand allowed and disposed. [ MILIND N. JADHAV, J. ]

36. After the above judgment is pronounced in open Court, Mr. Pandian seeks a stay of the judgment to enable the Railway to approach the Appellate Court. At his request, the judgment is stayed for a period of four (4) weeks from the date of uploading of the judgment. [ MILIND N. JADHAV, J. ] Ajay