Document Fragment View

Matching Fragments

4. The application for temporary injunction was opposed by the HSCL and a counter affidavit had been filed. The contentions of the HSCL as revealed from the counter affidavit are thus : The Bank guarantee is a separate agreement and the underlying contract or the respective contentions of the parties on merits cannot be dragged into the matter of invocation of Bank guarantee. Three Bank guarantees were furnished for the refund of retention money and the Bank has undertaken unconditionally to pay the amount claimed by the HSCL on demand and without any demur. The HSCL is the sole judge to say whether Geo-Tech has committed any breach or breaches of any of the terms and conditions of the contract between the parties. The contemporaneous correspondence would prove that there was no fraud being played by the HSCL and it was specifically agreed to by the Geo-Tech that all the liabilities under the law for the time being in force in respect of any labour employed by the contractor and any expenditure incurred by the employer shall be payable by the Geo-Tech and the HSCL has a lien for such amounts on the security deposit which includes the retention amount. A formal agreement was entered into between the Geo-Tech and the HSCL on 7-4-1994, which contains several documents including tender documents, general conditions of contract, correspondence exchanged between the HSCL and the Geo-Tech and the Memorandum of Understanding between the parties, letter of intent issued in favour of the Geo-Tech and the form of agreement between them. Under Clause 27 of the General Conditions of Contract, Geo-Tech shall at all times indemnify the HSCL against all claims of compensation in respect of any workmen employed by the Geo-Tech. In view of this and various other provisions contained in the general conditions of contract and the terms contained in the Bank guarantees and other attendant circumstances, it would reveal that the Geo-Tech had agreed to retain the Bank guarantees, indemnify the HSCL in case it had to incur any expenditure by way of contribution towards Kerala Construction Workers Welfare Fund. The Bank had an unconditional liability to pay the amount to the HSCL and the Geo-Tech had agreed for the same in its letter dated 20-12-1996. The Geo-Tech is bound to pay the contribution to the Kerala Construction Workers Welfare Fund in respect of the workers engaged by it. The plea of fraud and irretrievable injustice is totally unfounded. Under the agreement dated 7-4-1994 any liability including the contribution payable to the Kerala Construction Workers Welfare Fund is that of the Geo-Tech.

5. The Court below marked the photo copies of three Bank guarantees CLI 41/94-95, CLI 42/ 94-95 and CLI 43/94-95 as Exts. A1 to A3 respectively, Ext. B 1 is the copy of the General Conditions of contract (extracts) and Ext, B 2 is the copy of the General Instructions and notice inviting tenders. After considering these and other documents produced in the case, the court below found that the Geo-Tech is liable to pay the contribution under the Kerala Construction Workers Welfare Fund Act inasmuch as it admitted the execution of Exts. B 1 and B 2. While dismissing the petition on the ground that the Geo-Tech failed to make out a prima facie case for temporary injunction the Court below, inter alia, observed to the following effect: The HSCL being the contractor G.C.D.A. deducted 1% from the part payments of the bills towards the contribution under the Construction Workers Welfare Fund Act. Though HSCL challenged the said deduction in this court and Supreme Court it had no case that the liability to pay contribution is on Geo-Tech. However, the liability arises in view of execution of Exts. B 1 and B 2. The plea of 'irretrievable injustice' made by the Geo-Tech is negatived inasmuch as the HSCL as not done any act fraudulently causing injustice to the Geo-Tech.

8. The underlying dispute between the parties is whether the Geo-Tech is liable to indemnify the HSCL in respect of the contribution paid or payable under the provisions of the Kerala Construction Workers Welfare Fund Act. This is an Act intended to provide for the constitution of a fund to grant relief to promote the welfare of and to pay pension to the construction workers in the State of Kerala and for other matters incidental thereto. In view of the provisions contained in Clause (e) of Section 2, the Geo-Tech will be the 'contractor' and the HSCL will be the 'employer' and in view of Sub-section (2) of Section 8 the employer shall contribute 1% of the cost of construction work undertaken by it to the Fund. The above Act came up for interpretation before this Court in Poulose v. State of Kerala. ILR (1993) 3 Kerala 675. There the main challenge was directed against Section 2 (g) and Section 8(2) of the Act as also the levy of licence fee under Section 9. This court found Sections 2 (g) and 8(2) of the Act and Clauses 25 and 26 of the Scheme valid. The learned single judge of this court observed :

However, the HSCL filed writ petition. O. P. No. 1 1626 of 1994 claiming exemption from the provisions of the Kerala Construction Workers Welfare Fund Act on the ground that it is a government company wholly owned and controlled by the Central Government. The above contention was negatived by this Court and the matter went up in appeal before the Supreme Court in Hindustan Steel Works Construction Ltd. v. State of Kerala, (1997) 5 SCC 171 : (AIR 1997 SC 2275). The Supreme Court in the said decision upheld the decision of this Court in Poulose's case, ILR (1993) (3) Kerala 675 and the claim of the HSCL for exclusion from the purview of the Act was negatived. However, the Supreme Court in page 180 of the report observed (at page 2280 of AIR) :