The Supreme Court has ruled that a rise in the minimum wages of labour involved in construction work should be considered by the government while paying the contractor, though the tender may be according to a ‘fixed price contract’. When the wages are raised compulsorily by the government, the contractor cannot be told to cut down on his profit. Escalation of costs is normal and a routine incident in this inflationary age, the court said in its judgement, Union of India vs Saraswat Trading Company.
In this case, the firm responded to a tender invitation and contracted to undertake work for the railways. But after one year, the government revised the wages of the labourers. When this was claimed from the Railways as part of the costs, it rejected the demand. The dispute went to an arbitrator who delivered an award in favour of the contractor. The railways approached the Supreme Court, but it dismissed the appeal.
Incentives should not be withdrawn arbitrarily
The Supreme Court reiterated last week that the incentives given to industries for setting up units in backward areas and expansion of the existing ones should not be withheld or modified later to the disadvantage of the industries. This judgment in Assistant Commissioner vs Amara Raja Batteries involved a large number of industries in Andhra Pradesh which had set up units trusting the government’s promise of liberal terms in taxes and infrastructure.
The offer was later ‘modified’ which hurt the industries. They moved the court. Both the high court and the Supreme Court rejected the government’s defence of change in its policy.
Insurance disputes sent to larger bench
The Supreme Court has referred to a larger bench the question of compensation to road accident victims calculated according to the second schedule in the Motor Vehicles Act. In the judgement, Reshma Kumari vs Madan Mohan, a two-judge bench found that there was divergence of opinion among the judges in the earlier cases.
More From This Section
Compensation would be different if petitions are filed under two different sections of the Act (166 and 163-A). “It defies logic as to why in a similar situation the insured claimant or his heirs in the case of death, on proof of negligence by the driver, would get a lesser amount than the one specified in the second schedule,” the present judgment said. The issue will now be decided by a new bench to be constituted by the Chief Justice.
The court, in another case, Bhagyalakshmi v United Insurance Co, referred to a larger bench another question on which there was difference among the judges: the liability of the insurance company for the death of a person travelling in a private car. The insurance company argued that it was not liable to pay compensation according to its standard form of contract.
Consumer complaints cannot be treated as civil suits
The Supreme Court last week accepted the argument of EICM Exports Ltd that its complaint before the consumer forum against South Indian Corporation was not a ‘suit’(as in a civil court) and therefore the rules in the Indian Carriage of Goods by Sea Act, 1925, would not apply. The exporters sent goods to the US, but it was delayed and kept in the warehouse in New York with a demand of demurrage.
The exporter then demanded compensation from the carrier company. The carrier objected to the demand as it was made beyond the time limit prescribed under the Act. The commission accepted the argument of the carrier and dismissed the complaint of the exporter. On appeal, the Supreme Court remitted the case to the commission stating that consumer forums deal with ‘complaints’ and therefore are not governed by the rules regarding ‘suits’ mentioned in the Carriage of Goods Act. A suit is a long process, while a complaint before a consumer forum is fast and cheap.
Consumer fora cannot send complaints to civil courts
The Supreme Court last week set aside the ruling of the National Consumer Commission asking Sigma Diagnostics Ltd and United India Insurance Co to take their dispute to the civil court. It asked the commission to decide the issues instead of sending the parties to the civil courts.
The Punjab consumer commission had asked the insurer to pay compensation for damage to diagnostic equipment. Both parties appealed to the National Commission. It directed the parties to approach the civil court. The Supreme Court stated that after deciding the issues by the consumer court, they should not be sent to the civil court. A civil court takes long to decide issues in a suit.