Karnataka HC directs release of revised minimum wages of Rs 3.65 crore to contractor

The petitioner had submitted a claim for the period April 1, 2016, till March 18, 2018, for the services of mechanized housekeeping contract labour.

Bengaluru: The Karnataka High Court has directed the Estate Officer of Karnataka State Legislature to reconsider the claim of a firm engaged in providing security and manpower services for reimbursement of the differential Revised Minimum Wages of Rs 3.65 crore.

Justice Sachin Shankar Magadum said that refusal to revise wages despite statutory increase introduces commercial impossibility, thereby frustrating the very basis of the contract.

The petitioner Asian Security and Personnel Arrangements is a firm engaged in providing security and manpower services for over 35 years.

According to the petitioner, the wages payable to the labourers were revised during the subsistence of the contract. This was pursuant to statutory notifications issued under Minimum Wages Act and Labour Welfare Legislation.

The petitioner had submitted a claim for the period April 1, 2016, till March 18, 2018, for the services of mechanised housekeeping contract labour.

The firm moved the high court after its representation seeking reimbursement was rejected on the ground that contract was entered into based on prevailing wage structure and therefore, it is not entitled for the differential wages as per 2016 notification.

It was argued on behalf of the Estate Officer that the contractor had entered into an agreement in February 2016 which stipulates that fees shall remain unchanged throughout the term of the contract and any change in statutory minimum wage structure shall be borne by the service providers.

After perusing the material, the court observed that a contract entered into by the state cannot override statutory obligation.

“Any clause in the contract which has the effect of defending a statutory mandate is unenforceable in law. The doctrine is well settled that there can be no estoppel against the statute. Therefore, even assuming that contract did not provide for escalation and there is a clause indicating that any escalation revision shall be borne by the contractor, the state being an instrumentality under Article 12 of the Constitution, is expected to act as a model employer and cannot take advantage of contractual rigidity to indirectly compel violation of labour welfare statutes,” Justice Magadum said, while granting three months’ time for quantification as well as release of the differential amount to the petitioner firm.