Featured image for Supreme Court Judgment dated 29-11-2019 in case of petitioner name Food Corporation of India vs Pratap Kundu
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Food Corporation of India vs. Contractor: Supreme Court Rules on Wage Payments

The case of Food Corporation of India (FCI) vs. Pratap Kundu revolved around a dispute regarding wage payments to contract laborers at the Bikna Depot in West Bengal. The Supreme Court had to determine whether the contractor was entitled to claim a higher rate of payment (471% Above Schedule of Rates – ASOR) on wages paid to contract laborers under an agreement with FCI.

The judgment clarifies the interpretation of wage agreements under contracts, the role of government directives in wage calculations, and the legal obligations of contractors in handling labor payments.

Background of the Case

The dispute originated from a contract between FCI and contractor Pratap Kundu for handling and transporting goods at the Bikna Depot. The agreement included a clause stating that the contractor would be paid at 471% ASOR for services, but the wage payments to laborers would be based on a rate determined by a pending Supreme Court case.

The contract initially covered the period from January 18, 2000, to January 17, 2002 but was later extended until July 13, 2004. Meanwhile, FCI was involved in litigation concerning wage payments to contract laborers. The Supreme Court had ruled in 2010 that laborers must be paid wages in line with Scale-II pay levels, revised periodically.

Following the Supreme Court’s 2010 ruling, the contractor demanded 471% ASOR on wages paid to laborers, arguing that the agreement entitled him to a proportionate increase based on the adjusted wage scale. FCI, however, refused to pay the additional amount, leading to a prolonged legal battle.

Petitioner’s Arguments (Food Corporation of India)

FCI contended:

  • The contract stipulated that labor wages were to be paid as per the Supreme Court ruling, which did not include ASOR.
  • The contractor had already been reimbursed for wages paid to workers, and no further claims were valid.
  • Allowing ASOR on wages would lead to unjust enrichment for the contractor.
  • As the contract explicitly excluded ASOR from wage payments, the contractor’s claim was without legal basis.

Respondent’s Arguments (Pratap Kundu)

The contractor argued:

  • The agreement specified a 471% ASOR rate on all payment items, including wages.
  • As the contractor had followed all wage payment directives, he was entitled to compensation at the agreed ASOR rate.
  • The contract did not include any exclusion for wage-related ASOR claims.
  • Other payments under the contract had been made at ASOR rates, and the same principle should apply to labor costs.

Supreme Court’s Judgment

The Supreme Court ruled in favor of FCI, dismissing the contractor’s claim for 471% ASOR on labor wages. The key findings were:

  • The contract clearly stated that labor wages would be paid based on the Supreme Court’s ruling, which determined the applicable wage scale.
  • The agreement did not entitle the contractor to ASOR on wage payments, as the relevant section of the contract did not include an explicit rate.
  • The Supreme Court’s 2010 ruling had already settled labor wage rates, and the contractor had no right to demand additional payments.
  • The contractor’s demand amounted to an attempt to gain windfall profits beyond what was contractually agreed.

The Court stated:

“The contractor shall not be entitled to 471% ASOR basis with respect to the supply of casual laborers, and wages shall be paid strictly according to the rates specified in the order dated 14.01.2010.”

Key Takeaways

  • Contractual agreements must be interpreted in light of governing legal rulings.
  • Contractors cannot claim ASOR on payments unless explicitly mentioned in agreements.
  • The ruling reinforces that public funds must not be used for unjust enrichment.
  • The Supreme Court’s prior decisions on wage payments are binding and cannot be altered through subsequent contractor claims.
  • This judgment sets a precedent in government contract wage disputes by reaffirming that laborers should be paid fairly without undue financial burdens on public institutions.

The Supreme Court’s ruling provides much-needed clarity on labor payments in government contracts, ensuring fair treatment for workers while preventing misuse of public funds.


Petitioner Name: Food Corporation of India.
Respondent Name: Pratap Kundu.
Judgment By: Justice Ashok Bhushan, Justice M.R. Shah.
Place Of Incident: Bikna Depot, West Bengal.
Judgment Date: 29-11-2019.

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