Contractor vs. FCI: Determination of Profit and Wage Dispute

In a significant legal battle, the Supreme Court of India delved into the dispute over profit determination and wage issues between a contractor and FCI. The case revolves around the interpretation of contract terms and the rates to be paid to casual laborers, with implications for both parties involved. This landmark judgment sets a precedent for similar disputes in the future.


  • The respondent-contractor submitted a bill dated 19.07.2002 claiming ASOR of 471% on the amount paid to the contract casual labourers after the original contract was over.
  • A contempt petition was filed alleging non-compliance of earlier judgments and orders by the High Court, confirmed up to the Supreme Court.
  • The tender provided a schedule of rates and required the tenderer to quote rates above the schedule rates.
  • Civil Appeal Nos. 6064-6065 of 1998 related to rates for supply of casual labour were pending before the Supreme Court.
  • By judgment dated 28.09.2000, the Supreme Court upheld the High Court’s decision.
  • Writ Petition No. 7790 of 2004 was filed by the contractor seeking additional payment for contract casual labourers.
  • The High Court’s order in a contempt petition was subject matter in Civil Appeal Nos. 9472-9473 of 2003.
  • Civil Appeal Nos. 9472-9473 of 2003 directed FCI to make payments directly to workmen without involving any contractor or agency.
  • Contempt petitions 56-57 of 2011 alleged non-compliance of the 14.01.2010 order passed in Civil Appeal Nos. 9472-9473 of 2003.
  • FCI CMD passed an order stating the contractor was not entitled to claim 471% of ASOR on wages paid to casual labourers based on the contract terms.
  • Further proceedings before the High Court were stayed by this Court. The contractor prayed for mandamus to make payment per the bill submitted, including 471% ASOR above Schedule Rate.
  • Communications dated 08.12.2011 and 15.03.2012 were important in the proceedings.
  • Calcutta High Court directed that contract casual labourers should be paid wages equivalent to Class IV employees in 1998
  • FCI’s appeal against the High Court’s decision was dismissed in 1998
  • FCI challenged the High Court’s decision before the Supreme Court through Civil Appeal Nos. 6064-6065 of 1998
  • High Court convicted FCI officers for contempt of court in 2003 for non-payment to contract casual labourers
  • FCI’s Writ Petition No. 7790 of 2004 was allowed by the Single Judge in 2016, directing CMD to verify and make payment of unpaid dues
  • FCI appealed against the Single Judge’s decision before the Division Bench in 2016

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  • The issue in question is the amount representing the profit receivable by the respondent.
  • The Chairman will determine the profit to be earned by the respondent out of this contract, in accordance with the law.

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  • The claim of 471% above schedule of rates (ASOR) is not applicable to the supply of casual labour as there was no schedule of rate for Item No 24.
  • The contractor paid wages at Rs.106.38 per day for casual labour, and accepting the enhanced claim of 471% ASOR would lead to unjust enrichment to the contractor.
  • The additional claim of Rs. 5,34,41,520/- for Item No 24 is disputed by the FCI.
  • Both parties are bound by the terms of the agreement, and when the contractor’s tender with 471% ASOR was accepted, it entitles the contractor to the same on every item.
  • The High Court’s order to refer the matter back to the Chairman of FCI is seen as a futile exercise, as the Chairman had already rejected the contractor’s claim.
  • The High Court erred in directing the determination of profit to be earned by the contractor, especially after this Court already decided the rate of wages for casual labour.
  • The Division Bench of the High Court interfered with the Single Judge’s decision regarding Clause 24 of the agreement on wages of casual labourers and the obligation of FCI to pay 471% ASOR.
  • The contract specified that the agreed rate of 471% was above the schedule of rates provided in Appendix VIII, which did not have rates specified for casual labourers in Item No 24.
  • The order passed by this Court in 2010 was compliant with, and the High Court erred in directing the CMD to re-calculate the wages.
  • There is no question of not paying 471% ASOR for the supply of casual laborers.
  • The demand of the contractor for 471% ASOR is just and proper as per the agreement between the parties.
  • The learned Single Judge correctly understood and appreciated the terms and conditions of the agreement.
  • The Division Bench of the High Court erred in interfering with the judgment of the learned Single Judge.
  • The contractor is entitled to 471% ASOR for Item Nos. 1 to 23 and 25 according to FCI.

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  • The Chairman shall make a determination within four months of communication of the order
  • The determination shall be made after hearing both parties
  • If any amount is determined to be payable to the appellant, it should be released to the appellant within 8 weeks of the determination
  • The contractor shall not be entitled to wages for casual laborers on 471% ASOR basis.
  • Wages for laborers should be paid at the rate specified in the order dated 14.01.2010.
  • The judgment and order dated 14.01.2010 specified the rates for wages to be paid.
  • Contempt proceedings were initiated due to ongoing disputes.
  • Division Bench of the High Court affirmed that wages should be as per the 14.01.2010 judgment.
  • Chairman of FCI directed to determine how the wage differentials for casual laborers were calculated.
  • Interpretation dispute centered around Clause 24 of the agreement.
  • Claim for determining contractor’s profit was rejected by the Chairman of FCI.
  • Workers’ contempt petition was dismissed as the 14.01.2010 order was deemed compliant.
  • Contractor later claimed 471% ASOR rates for casual laborers ranging from Rs. 607.43 to Rs. 1225.19 per day.


  • The dispute regarding wages of casual labourers was settled by the order dated 14.01.2010 in Civil Appeal Nos. 9472-9473/2003.
  • FCI is liable to pay the wages based on the rates specified in the mentioned order, not on the 471% ASOR basis claimed by the contractor.
  • The contractor can seek reimbursement for the wages paid at Rs.106.38 per labourer if not reimbursed by FCI.
  • Remand to the Chairman of FCI is to determine the wages as per the 14.01.2010 order in Civil Appeal Nos. 9472-9473/2003.
  • FCI determined and paid wages ranging between Rs.308.85 to 391.35 per day as per the direction of the Court.
  • Civil Appeal Nos. 9472-9473/2003 directed FCI to fix pay for casual labourers and deceased workers in Scale-II.


Case Number: C.A. No.-009127-009127 / 2019

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