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2014 Supreme(Cal) 823
IN THE HIGH COURT OF CALCUTTA
Jyotirmay Bhattacharya, Tapash Mookherjee, JJ.
Steel Authority of India Limited and another - Appellants
Versus
NCC Limited (formerly known as Nagarjuna Construction Company) - Respondent
M.A.T. No. 339 of 2014 with CAN No. 2265 of 2014
Decided on : 19-11-2014.
For the Appellants :Mr. L.K. Gupta and Mr. Ananda Sen, Advocates.
For the Respondent:Mr. Arunava Ghosh, Mr. D. N. Roy and Ms. Munmun Tewary, Advocates.
The applicability of the Building & Other Construction Workers’ Welfare Cess Act, 1996, and the Cess Act, 1996, to construction work for the expansion of a factory is excluded if the Factories Act, 1948, applies to such work.
Headnote:
CESS ACT - BUILDING & OTHER CONSTRUCTION WORKERS’ WELFARE CESS ACT, 1996 - SECTION 2(1)(b) - FACTORIES ACT, 1948 - SECTION 2(m)(i) - Applicability of BOCW Act and Cess Act - Construction work for expansion of factory - Whether BOCW Act and Cess Act apply - Interpretation of relevant provisions.
Fact of the Case:
The appellant company invited tenders for structural works, reheating furnaces, and rolling mills for the expansion of its steel plant. The writ petitioner was awarded the contract. A dispute arose regarding the deduction of an amount under the Building & Other Construction Workers’ Welfare Cess Act, 1996, from the petitioner's bills. The petitioner filed a writ petition challenging the deduction, claiming that the BOCW Act and Cess Act were not applicable to the contract.
Finding of the Court:
The court held that the Factories Act, 1948, was applicable to the present case as the construction work related to the expansion of the appellant's factory. Therefore, the provisions of the BOCW Act and the Cess Act did not apply. However, the court found that the issue of whether the petitioner included any amount towards labor cess in its bills and whether the appellant paid any amount to the petitioner on that account was disputed and could not be resolved without a trial on evidence. The court referred this part of the dispute to arbitration for speedy disposal.
Issues: 1. Whether the BOCW Act and Cess Act apply to the construction work for the expansion of a factory. 2. Whether the petitioner included any amount towards labor cess in its bills and whether the appellant paid any amount to the petitioner on that account.
Ratio Decidendi: The court held that the Factories Act, 1948, applied to the construction work in question, excluding the applicability of the BOCW Act and the Cess Act. The court further held that the issue of whether the petitioner included any amount towards labor cess in its bills and whether the appellant paid any amount to the petitioner on that account was disputed and could not be resolved without a trial on evidence. Therefore, this part of the dispute was referred to arbitration for speedy disposal.
Final Decision: The court disposed of the appeal and directed the parties to arbitration to resolve the disputed issue of whether the petitioner included any amount towards labor cess in its bills and whether the appellant paid any amount to the petitioner on that account. The court also affirmed the findings of the trial judge regarding the inapplicability of the BOCW Act and the Cess Act in the present case, subject to the decision of the arbitral tribunal on the disputed issue.
Jyotirmay Bhattacharya, J.
This mandamus appeal is directed against the judgment and/or order passed by a Learned Single Judge of this Court on 17th December, 2013 at the instance of some of the respondents of the said writ petition.
2. The writ petitioner filed the said writ petition challenging the action of the appellants herein in deducting some amount under the Building & Other Construction Workers’ Welfare Cess Act, 1996 in relation to the contract entered into between the parties for execution of the construction work. An interim relief was also claimed in the said writ petition for refund of the amount deducted towards Labour Cess from the bills of the petitioner pertaining to contract agreements bearing nos. PEDD/EXPN-B/STRL-201/006 dated 22nd May, 2008 and PEDD/EXPN-B/STRL-200/065 dated 22nd May, 2008. Such relief was sought for by the writ petitioner in the following set of facts.
3. The appellant/company invited tender for structural works, reheating furnaces and rolling mills for expansion of IISCO steel plant at Burnpur. The writ petitioner was declared as a successful tenderer and was awarded the contract. Clause-IX of general conditions of contract provides that the contractors shall bear and pay all taxes, duties, levies and charges assessed on the contractor, sub-contractor or their employees by Municipal, State or Central Government authorities except those specifically provided in the contract. A meeting was held at the pre-bid stage wherein it was agreed that the tenderer shall quote the rates by including all types of taxes, duties, levies, transport, freights, insurance etc., as applicable and as may be made applicable till completion for which no extra payment shall be made on any account whatsoever.
4. The R.A. bills were raised in terms of the contract but some amount was withheld by the appellant/company which constrained the writ petitioner to write a letter for providing the reasons for withholding the said amount. The appellant/company herein in its reply stated that the amount has been deducted on account of Cess Act, 1996, insurance lapse, lapses on safety and cost of materials issued. The appellant/company sought to invoke Clause 8 of the special condition of contract which provides that the contractor shall also be responsible for implementation of all statutory rules and regulations including the building and other conditions of Contract Act, 1996 (if applicable) and the Cess Act, 1996. Other correspondences exchanged between the parties could not bring the parties to a consensus relating to the applicability of the Building & Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996 and Cess Act to the nature of the work provided under the said work contract.
5. As a matter of fact, the fate of the writ petition was dependent on the answer on the issue as to whether the BOCW Act and the Cess Act are applicable to the present contract or not. If it is found that the BOCW Act is applicable and consequently the Cess Act is also applicable then the deduction which was made by the appellant/company will be illegal.
6. The parties, in fact, restricted their submissions on the issue regarding applicability of those two Acts in the facts of the present case, before the learned Trial Judge. They did neither advance any other argument before the Learned Trial Judge nor invited the Learned Trial Judge to decide any issue other than the issue regarding applicability of those two Acts in the facts of the present case. Accordingly, the Learned Trial Judge concentrated on the issue regarding applicability of those two Acts in the facts of the instant case and ultimately by relying upon an unreported judgment of the Orissa High Court in the case of M/s. Sterlite Energy Limited v. State of Orissa & Ors. (W.P. No. 15924 of 2009) decided on 4th September, 2010 held that if the building and other construction work is made in relation to a factory or mines to which the provis
