Research › Search › Judgment

Andhra High Court · body

2024 DIGILAW 1274 (AP)

SSR Constructions v. Government of AP

2024-09-09

G.RAMAKRISHNA PRASAD

body2024
ORDER : G. Ramakrishna Prasad, J. 1. Heard Sri C. Subodh, learned Counsel for the Writ Petitioners and Sri Arjun Chowdary, learned Asst. Government Pleader for Revenue. 2. The main prayer sought in the present Writ Petition is as under: "It is therefore prayed that this Hon'ble Court may be pleased to issue a writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the Respondents in not including the 1% towards Labour Cess in respect of all the works allotted to the Petitioner and payments made after 26.06.2007 by revising the estimates as per the U.O.Note No.4763/PFS.F8(A1)98-4, dated 28.02.2008, as highly, arbitrary, illegal, discriminatory apart from violative of Articles 14 and 19(1)(g) of the Constitution of India and consequently direct the Respondents to include the 1% towards Labour Cess in all the works "(a) Construction of H.L.B. across Kurrapalli Vagu at K.M.90/10 of Kavali-Udayagiri-Sitarampuram Road in SPSR Nellore district (b) Road from Kanukuru village to Chavatapalem village, of Venkatachalam mandalam in SPSR Nellore district (c) Urgent repairs to Podalakuru-Viruvuru road from KM 10/0 to 12/6 in SPSR Nellore district entrusted to the 1st petitioner and Package: - (i) Improvement to Rapuru to Penchalakona, (alternative road) from KM 7/0 to 15/045 (ii) Improvements to Guduru-Tirumerla road From KM 15/0 to 20/00 in SPSR Nellore district entrusted to the 2nd petitioner and for all the payments made after 26.06.2007 as per the U.O. Note No.4763/PFS.F8(A1)/98-4 dated 28.02.2008 and also to release the amounts which were already recovered in this regard, to the Petitioner and pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case." 3. It is stated in the Affidavit filed in support of this Writ Petition that both the Writ Petitioners are Contractors engaged in the business of construction of various infrastructure projects and that they have been submitting the bids, negotiating and entered into the contracts and executing various works awarded to them by the Official Respondents since several years. 4. The Writ Petitioner No.1 had participated in a Tender/Bid vide Tender Notice No.NIT No:59/13th FC/DEE1/2011-12, Dt:21-11-2011. 4. The Writ Petitioner No.1 had participated in a Tender/Bid vide Tender Notice No.NIT No:59/13th FC/DEE1/2011-12, Dt:21-11-2011. The Writ Petitioner No.1 was awarded the following works: (a) Construction of H.L.B. across Kurrpalli Vagu at K.M 90/10 of Kavali-Udayagiri-Sitarampuram Road in SPSR Nellore district; (b) Road from Kanukuru village to Chavatapalem village, of Venkatachalam mandalam in SPSR Nellore district; and (c) Urgent repairs to Podalakuru-Viruvuru road from KM 10/0 to 12/6 in SPSR Nellore district. 5. The Writ Petitioner No.2 had participated in the Tender Notification bearing NIT No: CE (R&B) NABARD/96/2010-11, Dated 26-11- 2010. The said Writ Petitioner was awarded the following works: Package:- (i) Improvement to Rapuru to Penchalakona (alternative road) from 7/0 to 15/045; and (ii) Improvements to Guduru-Tirumerla road From KM 15/0 to 20/00 in SPSR Nellore district. 6. It is submitted by the learned Counsel for the Writ Petitioners that the Building and Other Construction Workers Welfare Cess Act, 1966 (popularly referred to as 'Labour Cess') came into force w.e.f 03.11.1995 and that as per Section 18 of the said Act, the Welfare Board has to be constituted before effecting the recovery of 'Labour Cess' from the Contractors. The Government of Andhra Pradesh constituted the Welfare Board on 30.04.2007 and subsequently an Amendment was brought to the Rules vide G.O.Ms.No.57, dated 26.06.2007. 7. It is stated that the works were entrusted to the Writ Petitioners/ Contractors at a time when the recovery of 1% Labour Cess was not contemplated. It is also stated that the Writ Petitioners/Contractors have also not factored-in Labour Cess of 1% in their estimates. 8. However, the Official Respondents have started arbitrarily recovering 1% of 'Labour Cess' from the bills of the Writ Petitioners from 26.06.2007. Heavy amounts were already recovered and the amounts are sought to be recovered even for the future also in respect of the new bills, which are to be submitted. Vide Order dated 24.04.2012, at the stage of admission, this Court was pleased to pass an ad-interim Order of Stay of further recovery while issuing notice to the Official Respondents. It transpires from the record that the Official Respondents have not filed Counter-Affidavit so far. 9. Vide Order dated 24.04.2012, at the stage of admission, this Court was pleased to pass an ad-interim Order of Stay of further recovery while issuing notice to the Official Respondents. It transpires from the record that the Official Respondents have not filed Counter-Affidavit so far. 9. Learned Counsel for the Writ Petitioners would submit that the deduction of 1% amount of 'Labour Cess' from the bills of the Writ Petitioners is bad in law inasmuch as the deduction of 1% of 'Labour Cess' has not been factored-in the Contract. He would submit that learned Single Judge of this Court has already considered this issue and had held in favour of the Contractor and against the Official Respondents that in the absence of specific covenant/recital in the contract, the Official Respondents are not entitled to deduct 1% as 'Labour Cess'. 10. Learned Counsel for the Writ Petitioners has placed reliance on the Judgment of the learned Single Judge dated 22.10.2009 in Ch.V.V.Subba Rao Vs. The Government of Andhra Pradesh, rep. by its Principal Secretary (in W.P.No.11269 of 2009 and Batch). It is submitted that this Judgment had attained finality. The relevant portion of the Judgment is usefully extracted hereunder: "Independent of the said note, the departments of the Government are expected to recognize their obligation under 1996 Act. Assuming that there existed any justification for their omission to include the amount payable towards cess in the estimates, they cannot be permitted to deduct that amount while making payments to the contractors. In a way, it would amount to either penalizing the contractor or affecting the levy contrary to the provisions of 1996 Act. The consequences that flow from any violation of 1996 Act must in fact be directed towards agency that has undertaken construction. Therefore, the inescapable conclusion is that the occasion for an agency to deduct the cess under the Cess Act would arise only when the corresponding amount is included in the estimates. Conversely, if the amount representing the cess, is not included in the estimates, deductions cannot be made while making payments to the contractors. Therefore, the inescapable conclusion is that the occasion for an agency to deduct the cess under the Cess Act would arise only when the corresponding amount is included in the estimates. Conversely, if the amount representing the cess, is not included in the estimates, deductions cannot be made while making payments to the contractors. Therefore, the writ petitions are disposed of directing that: - (a) the respondents shall include 1% cess in the estimates for the works which they propose to undertake, if the work continues for or beyond twelve months and involves engagement of 10 workers or more; and (b) the respondents shall not deduct any amount towards cess, unless the corresponding amount is included in the estimates. 11. In this view of the matter, this Court is of the opinion that the issue involved in the present Writ Petition is squarely covered by the above decision. 12. Accordingly, this Writ Petition is allowed in terms of the final Order dated 22.10.2009 in W.P.No.11269 of 2009 and Batch. No order as to costs. 13. Interlocutory Applications, if any, stand closed in terms of this order.