2021 Supreme(SC) 258

SUPREME COURT OF INDIA
UDAY UMESH LALIT, INDIRA BANERJEE, JJ.
UTTAR PRADESH POWER TRANSMISSION CORPORATION LTD. AND ANR. – APPELLANT
VERSUS
CG POWER AND INDUSTRIAL SOLUTIONS LIMITED AND ANR. - RESPONDENTS
SPECIAL LEAVE PETITION (C) NO.8630 OF 2020
Decided on : 12-05-2021

IMPORTANT POINTS
(1) Cess could only be recovered in the manner stipulated in Cess Act and Rules framed thereunder.
(2) A contractor who enters into a pure Supply Contract is statutorily exempted from levy under BOCW Act.
(3) When statute requires a thing to be done in a particular manner, it is to be done in that manner alone.
(4) Existence of an arbitration clause does not debar court from entertaining a writ petition. Monetary relief can also be granted in a writ petition.

Headnote:

(A) Building and Other Construction Workers’ Welfare Cess Act, 1996 – Sections 3 sub-sections (1) and (2) read with Rules 3, 4 (1), (2) (3) and (4) of Building and Other Construction Workers Welfare Cess Rules, 1998 and Section 2 (1)(d), (g) and (i) of Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996 – Liability to pay labour cess – In terms of Framework Agreement, work was split, and covered by four separate contracts – Cess under Cess Act is payable in respect of Third Contract which covers all civil works – First and second contracts which cover all works other than civil works and do not involve any construction, do not attract cess under Cess Act – Cess could only be recovered in the manner stipulated in Cess Act and Rules framed thereunder – There does not appear to be any provision in first contract, second contract, third contract, or fourth contract or in Special Conditions of Contract or General Conditions for Supply of Plant and Execution of work which enables UPPTCL to withhold any amount from bills raised by Respondent No.1 on UPPTCL towards any taxes, cess or any other statutory dues of contractor – Nor has UPPTCL adverted to any specific provision of contract which enables UPPTCL to do so – It is nobody’s case that Respondent No.1 has committed any breach or default in performance of First Contract, that is, Supply Contract, rendering it liable for any damages, costs or expenses – Respondent No.1 duly discharged its obligations under First Contract (Supply Contract) to satisfaction of UPPTCL, and accordingly all payments due to it were cleared – Performance Guarantees furnished by Respondent No.1 were also partially discharged except to the extent of covering cess on First (Supply) contract – Clause 8 of Special Conditions of Contract does not enable UPPTCL to withhold payments or to realize cess by revocation of a Performance Guarantee – Clear statutory scheme of BOCW Act excludes a supply contract from within its ambit – Respondent No.1 neither falls within definition of ‘contractor in Section 2(1)(g) nor 2(1)(i)(iii) of BOCW Act – Respondent No.1 is not liable to cess in respect of First, Second and Fourth contracts. (Paras 21, 23, 44. 45, 47, 48, 51 and 52)

(B) Building and Other Construction Workers’ Welfare Cess Act, 1996 – Sections 3 sub-sections (1) and (2) read with Rules 3, 4 (1), (2) (3) and (4) of Building and Other Construction Workers Welfare Cess Rules, 1998 and Section 2 (1)(d), (g) and (i) of Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996 – Direction to remit labour cess – Reversal by High Court – Cess under Cess Act read with BOCW Act is leviable in respect of building and other construction works – Condition precedent for imposition of cess under Cess Act is construction, repair, demolition or maintenance of and/or in relation to a building or any other work of construction, transmission towers, in relation to generation, transmission and distribution of power, electric lines, pipelines etc. – Mere installation and/or erection of pipelines, equipments for generation or transmission or distribution of power, electric wires, transmission towers etc. which do not involve construction work are not amenable to Cess under Cess Act – Accordingly no intimation or information was given or any return filed with Assessing Officer under Cess Act or Inspector under BOCW Act in respect of First and Second Contracts, either by UPPTCL or by Respondent No.1 – A contractor who enters into a pure Supply Contract is statutorily exempted from levy under BOCW Act – Contract in question is a Supply Contract – There can be no comparison between realization of disputed cess by withholding bills raised by Respondent No.1 or by invocation of a bank guarantee furnished by Respondent No.1 after release of payment to Respondent No.1, and deduction of Income Tax at source which is a statutory obligation of any person making a payment which constitutes ‘income’ under Section 192 of Income Tax Act, 1961 – In absence of any adjudication, it was impermissible for UPPTCL to issue impugned communication to realize cess solely on the basis of report of CAG – UPPTCL has no power and authority and or jurisdiction to realize labour cess under Cess Act in respect of first contract by withholding dues in respect of other contracts and/or invoking a performance guarantee – There is no legal infirmity in finding of High Court that UPPTCL acted in excess of power by its acts impugned, when there was admittedly no assessment or levy of cess under Cess Act – When statute requires a thing to be done in a particular manner, it is to be done in that manner alone – UPPTCL could not have taken recourse to methods adopted by it – Impugned communications have rightly been set aside – Judgment and order of High Court impugned does not call for inference. (Paras 53, 54, 59, 60, 70, 71 and 72)

(C) Constitution of India – Article 226 – Writ Jurisdiction – Alternative remedy – Existence of an arbitration clause does not debar court from entertaining a writ petition – Availability of an alternative remedy does not prohibit High Court from entertaining a writ petition in an appropriate case – High Court may entertain a writ petition, notwithstanding availability of an alternative remedy, particularly (1) where writ petition seeks enforcement of a fundamental right; (ii) where there is failure of principles of natural justice or (iii) where impugned orders or proceedings are wholly without jurisdiction or (iv) vires of an Act is under challenge – Relief under Article 226 of Constitution of India may be granted in a case arising out of contract – However, writ jurisdiction under Article 226, being discretionary, High Courts usually refrain from entertaining a writ petition which involves adjudication of disputed questions of fact which may require analysis of evidence of witnesses – Monetary relief can also be granted in a writ petition. (Paras 66, 67, 69)

Facts of the case:

Instant Special Leave Petition, under Article 136 of the Constitution of India, filed by Petitioner (UPPTCL), is against a final Judgment and Order dated 24th February 2020 passed by High Court of Judicature at Allahabad (Lucknow Bench), allowing writ petition filed by Respondent No.1 and setting aside the letters dated 2nd September 2016 and 29th December 2018 issued by Executive Engineer, Unnao UPPTCL directing the Respondent No.1 to remit Labour Cess amounting to Rs.2,60,68,814/-, computed at 1% of the contract value, under Sections 3 sub-section (1) and (2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, read with Rules 3 and Rule 4 (1), (2) (3) and (4) of Building and Other Construction Workers Welfare Cess Rules, 1998 and also Section 2 (1)(d), (g) and (i) of Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996.

Findings of Court:

Even though there is an arbitration clause, the Petitioner herein has not opposed the writ petition on the ground of existence of an arbitration clause. There is no whisper of any arbitration agreement in the Counter Affidavit filed by UPPTCL to the writ petition in the High Court. In any case, the existence of an arbitration clause does not debar the court from entertaining a writ petition.

Result : Special Leave Petition dismissed.