VidhiSangh

Supreme Court of India · 19/04/2018

UNION OF INDIA versus M/S. VARINDERA CONSTRUCTIONS LTD. ETC.

[2018] 5 S.C.R. 587 · 2018 INSC 375

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Summary

The Supreme Court rejected reimbursement of increased labour wages under the construction contracts before it. Clause 19 expressly barred escalation on any account, and clause 6.3 reinforced the allocation of wage risk. A separate clause dealing with octroi, sales tax and duties could not be used to create a wage-reimbursement exception. The Union’s appeals were allowed and the decisions below and arbitral award were set aside in the dispute confined to that escalation claim.

Issues

  1. Whether the express no-escalation terms permitted reimbursement after a government-notified wage increase.
  2. Whether the tax-and-duty clause created an exception for wages.

Held

Result

Union’s appeals allowed; decisions of the courts below and arbitral award set aside in the dispute concerning the wage-escalation claim. Parties to bear their own costs.

Judgment PDF: Supreme Court of India, [2018] 5 S.C.R. 587.