‘Can’t pay dues of contractor’s staff’
Ashish Roy | tnn | Jan 29, 2019, 05:28 ISTNagpur: There is no ray of hope for unpaid employees and sub-contractors of MahaMetro’s contractors. MahaMetro has ruled out paying their dues by deducting the amount from bank guarantee (BG) of the contractor. Metro officials say that there is no provision in law to do this. Only the provident fund (PF) contribution is the responsibility of the principal employer.
Employees and sub-contractors of Infrastructure Leasing & Financial Services (IL & FS), Capacite Structures Limited (CSL), Pratibha Industries and Sudhir Constructions, who have not been paid salaries and bills, have been urging MahaMetro to pay them by deducting the amount from BG of these companies.
However, this proposal is not feasible because National Company Law Tribunal (NCLT) has stayed the encashment of IL & FS’ BG while MahaMetro is yet to terminate the contract of the joint venture of the troika. Work being done by the JV has slowed down but not stopped altogether.
A MahaMetro official told TOI, “We have already paid the principal contractor for works done by it. If we pay the employees and sub-contractors then it will amount to double payment and would invite an audit objection. BG is not for meant for meeting third party liabilities but to compensate for the loss incurred by MahaMetro.”
The official further said that MahaMetro could not use the BG for paying employees and sub-contractors because the contractor may challenge the termination of contract. “If the contractor wins the case we will have refund the BG amount. Then the dues paid to employees and sub-contractors will become an illegal transaction for us,” he added.
Senior lawyer Anil Kilor supported MahaMetro’s stand. “How can MahaMetro pay the employees and sub-contractors of the principal contractor when they do not exist on its record? There is no provision in the Indian Contract Act for paying them by encashing the BG,” he said.
However, in order to restart the work on seven stations on Sitabuldi-Khapri stretch, MahaMetro had paid an ex-gratia amount of Rs5,000 to each worker of IL & FS.
Employees and sub-contractors of Infrastructure Leasing & Financial Services (IL & FS), Capacite Structures Limited (CSL), Pratibha Industries and Sudhir Constructions, who have not been paid salaries and bills, have been urging MahaMetro to pay them by deducting the amount from BG of these companies.
However, this proposal is not feasible because National Company Law Tribunal (NCLT) has stayed the encashment of IL & FS’ BG while MahaMetro is yet to terminate the contract of the joint venture of the troika. Work being done by the JV has slowed down but not stopped altogether.
A MahaMetro official told TOI, “We have already paid the principal contractor for works done by it. If we pay the employees and sub-contractors then it will amount to double payment and would invite an audit objection. BG is not for meant for meeting third party liabilities but to compensate for the loss incurred by MahaMetro.”
The official further said that MahaMetro could not use the BG for paying employees and sub-contractors because the contractor may challenge the termination of contract. “If the contractor wins the case we will have refund the BG amount. Then the dues paid to employees and sub-contractors will become an illegal transaction for us,” he added.
Senior lawyer Anil Kilor supported MahaMetro’s stand. “How can MahaMetro pay the employees and sub-contractors of the principal contractor when they do not exist on its record? There is no provision in the Indian Contract Act for paying them by encashing the BG,” he said.
However, in order to restart the work on seven stations on Sitabuldi-Khapri stretch, MahaMetro had paid an ex-gratia amount of Rs5,000 to each worker of IL & FS.
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