Skip to content


Antony D'Cruz and Ors. Vs. B. Ramadas and Ors. (21.02.1979 - KERHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial;Arbitration
CourtKerala High Court
Decided On
Case NumberMisc. First Appeal No. 150 of 1978
Judge
Reported inAIR1979Ker209
ActsArbitration Act, 1940 - Sections 20; Contract Labour (Regulation and Abolition) Act, 1970 - Sections 21
AppellantAntony D'Cruz and Ors.
RespondentB. Ramadas and Ors.
Appellant Advocate P. Gopalakrishnan Nair, Adv.
Respondent AdvocateGovt. Pleader
DispositionAppeal allowed
Excerpt:
.....the time of dispute or if there be no chief engineer, the administrative head of the said central publ 4. we find that the reference by the court below was not well advised. when once appellants who are strangers to the arbitration agreement were impleaded in the suit as additional defendants the court was not well advised to refer the matter for arbitration......govern the parties to the agreement and it is incorporated as part of the agreement between the parties. clause (12) thereof authorises the labour welfare officer or any other person authorised by the central government on their behalf to make enquiries with a view to ascertaining and enforcing due and proper observance of the, fair wage clauses and the provisions of the central public works department contractors labour regulations. such officer is to investigate into any complaint regarding the default made by the contractor or subcontractor in regard to such provision clause (13) thereof obliges the labour officer or other person authorised to submit a report of result of his investigation or enquiry to the executive engineer concerned indicating the extent, if any, to which the.....
Judgment:

Subramanian Poti, J.

1. The first respondent in this appeal is a Government contractor. He had entered into a contract with the Union of India for carrying out certain works relating to the construction of an operational wall at Civil Aerodrome, Trivandrum, The appellants are said to represent the workmen employed by the first respondent in connection with the work carried out by him pursuant to the agreement entered into with the second respondent. The first respondent moved O. S. (Arbira-tion) No. 187 of 1977 before the Sub-Court, Trivandrum seeking that the Union of India be called upon to file the agreement entered into by him with the second respondent in Court and refer the dispute mentioned in the Original Suit to arbitration of the named arbitrator contemplated in the agreement or an arbitrator appointed by the Court. The complaint in the suit was that the defendant, the Union of India had arbitrarily, unilaterally and without any justification recovered a sum of Rs. 19,191 on 24-8-1977 from the bill amount payable to the plaintiff on account of wages payable to the labourers engaged by the plaintiff. It was contended that he had never defaulted payment of wages to the labourers engaged by him for the work, and therefore he disputed the claim of the defendant to recover such amount. It was this that was to be referred tc arbitration. The defendant appeared and filed the agreement entered into between the parties which incidentally contained all annexures relevant thereto. It appears that the Court was moved lor impleading the appellants here as additional defendants by an application I. A. No. 6634 of 1977 and by an order dated 20-9-1977 they were impleaded as additional defendants 2 and 8. There-after, by a very short order, the Court below referred the matter to the Government Arbitrator, Trivandrum. It is that (order) which is challenged in this appeal by the appellants who are the additional defendants 2 and 3.

2. Before we refer to the objection raised to the order of the Court below, it may be necessary to state a matter brought to our notice by parties at the hearing. Central Public Works Department Contractors' Labour Regulations govern the parties to the agreement and it is incorporated as part of the agreement between the parties. Clause (12) thereof authorises the Labour Welfare Officer or any other person authorised by the Central Government on their behalf to make enquiries with a view to ascertaining and enforcing due and proper observance of the, fair wage clauses and the provisions of the Central Public Works Department Contractors Labour Regulations. Such officer is to investigate into any complaint regarding the default made by the contractor or subcontractor in regard to such provision Clause (13) thereof obliges the Labour Officer or other person authorised to submit a report of result of his investigation or enquiry to the Executive Engineer concerned indicating the extent, if any, to which the default has been committed with a note that necessary deductions from the contractor's bill be made and the wages and other dues be paid to the labourers concerned. In case an appeal is made by the contractor under Clause (14) the actual payment to labourers will be made by the Executive Engineer after the Regional Labour Commissioner has given his decision on such appeal. It is provided in cl. (14) that any person aggrieved by the decision and recommendations of the Labour Welfare Officer or other person so authorised may appeal against such decision to the Regional Labour Commissioner concerned within 30 days from the date of decision, forwarding simultaneously a copy of his appeal to the Executive Engineer concerned but subject to such appeal, the decision of the officer shall be final and binding upon the contractor. It is agreed that in the case of the first respondent there was a claim made by the appellants for payment of wages and the Labour Welfare Officer had adjudicated on that claim. Of course, the first respondent has a case that that adjudication is not valid and proper and that is said to have been challenged in anappeal. There is some dispute as to whether there is such an appeal filed or not. Anyhow we are not concerned with that question here. We are only referring to this to indicate that the recovery from the bill of the sum of Rs. 19,191 appears to be pursuant to the adjudication by the Labour Welfare Officer and not consequent upon any dispute which arose under the contract between the plaintiff and first defendant. It is withheld only because of the order of the Labour Welfare Officer.

3. Clause (25) of the Conditions of Contract between respondents 1 and 2 provides, among other things, that except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings, and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Chief Engineer, Central Public Works Department, in charge of the work at the time of dispute or if there be no Chief Engineer, the administrative head of the said Central Public Works Department at the time of such appointment. The Arbitration suit at the instance of the first respondent is evidently invoking Clause (25) of the Conditions of the Contract. Without examining whether the above said clause would enable such arbitration to be made and further, whether in view of the impleading of additional defendants 2 and 3, such reference to arbitration would be possible, the Court below has passed the order for reference and that is the objection raised by the appellants in this appeal.

4. We find that the reference by the Court below was not well advised. It had not bestowed its mind to the question whether in the circumstances there could be any reference under the Arbitration Act. There are two questions which had necessarily to be noticed when deciding to refer the matter. Whether the dispute is one which falls within Clause (25) of theConditions of Contract is the first of these questions. Whether there should be reference at all in an arbitration suit in which strangers have been impleaded as parties is an equally important question.

5. Clause (25) of the agreement refers to the nature of disputes that could be made the subject of arbitration and according to counsel Shri Venkatakrishnan, appearing for the Union of India, this is not one of the matters which falls within Clause (25). In fact Clause (25) concerns disputes arising between the parties and according to counsel there is no dispute as to any amount payable under the terms of the contract by second respondent to the first respondent. The dispute is really between the first respondent and the appellants here and that is not is dispute in which the second respondent is interested. Withholding of amount was only because of the obligation to do so by reason of the adjudication in accordance with Clause (13) of the Regulations already adverted to. Further, reference is made to Contract Labour (Regulation and Abolition) Act, 1970. Section 21 of the Act reads thus:

'21, Responsibility for payment of wages :

1. A contractor shall be responsiblefor payment of wages to each worker employed by him as contract labour and such wages shall be paid before the expiry of such period as may be prescribed.

2. Every principal employer shall nominate a representative duly authorised by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner as may be prescribed.

3. It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorised representative of the principal employer.

4. In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.'

Sub-section (4) of Section 21 recognises the obligation of the principal employer tomake payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor. If therefore recovery is statutorily permitted under Sub-section (4) of Section 21 it is a matter which is 'otherwise provided' for and since there is particular provision in Clause (13) of the Regulations referring to this, it is otherwise provided for in the contract. Such a matter is excluded from the purview of Clause (25) of the agreement in the opening part of the clause itself. In this view we need not go further into the question whether even otherwise it will fall in Clause (25). In withholding the amount what the first respondent has done is an action similar to one where a debtor withholds payments to his creditor on account of a notice to a garnishes from Court. If he admits that he is willing to pay and withholding is only because of garnishee proceedings the withholding is under an obligation imposed by a statute and that cannot be a subject of arbitration. In these circum-stances Clause (25) would not apply in this case.

6. Even otherwise, for a more fundamental reason the Court should have been alerted to the fact that no arbitration would be possible. It goes without saying that arbitration depends for its authority and validity on consent of parties and there cannot be compulsory arbitration. Arbitration only works out an earlier agreement of parties that they would rather resort to an adjudication by a process different from that of an adjudication in Civil Court. That would not be possible in a case where the parties had not agreed to submit to arbitration. Additional defendants 2 and 3 are not parties to any arbitration agreement and what is sought to be done now is to have an arbitration with them on party array so as to arrive at an arbitration award binding on them. In other words they have been subjected to compulsory arbitration unknown to the rule of arbitration and foreign to the very concept of arbitration. When once appellants who are strangers to the arbitration agreement were impleaded in the suit as additional defendants the Court was not well advised to refer the matter for arbitration.

It goes without saying that therefore there is no justification to refer the matter to arbitration. The order is vacated and the arbitration Original Suitis dismissed. The appeal is allowed as above, with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //