Deductions for Labour Cess are only valid if included in the contract estimates, reaffirming the principle that contractors cannot be penalized for omissions not reflected in their agreements.

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. 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