The court held that deductions for the cess on construction payments are valid under the relevant welfare legislation, affirming that activities like laying pipelines constitute construction work.

JUDGMENT :

ZIYAD RAHMAN A.A., J.

In all these Writ Petitions, the petitioners are contractors, who were awarded with the works by the Kerala Water Authority, mainly in connection with drawing of pipelines and other matters. The question that arises in these cases is with regard to the deduction proposed to be made from the contract amounts at the rate of 1% thereof, towards the payment of the Cess payable under the provisions of The Building and Other Construction Workers’ Welfare Cess Act, 1996, (hereinafter referred to as the “Cess Act”). In all these cases, interim orders were granted by this Court directing the Kerala Water Authority not to deduct the said amount at the said rate.

2. The challenge raised against such demands are mainly on the ground that the activities included in the contract are not entirely coming within the scope of the definition of “Building or other construction work” as defined under Section 2 (1)(d) of The Buildings and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (hereinafter referred to as the “Regulation Act”). Thus, according to the petitioners, the deduction of 1% on the total contract value as specified in the contract, is beyond the scope of the statutory stipulations contained in the Regulation Act as well as the Cess Act. The petitioners have mainly relied on the observations made by the Hon’ble Supreme Court in Uttar Pradesh Power Transmission Corporation Limited and Another v. CG Power and Industrial Solutions Limited and Another [(2021) 6 SCC 15].

3. The respondents, i.e., State Government, the Kerala Water Authority as well as the Kerala Building and Other Construction Workers Welfare Board, filed their counter affidavits disputing the contentions raised by the petitioners and opposing their reliefs.

4. Heard Shri.N.Krishna Prasad, Shri.P.Shanes Methar, learned counsel for the petitioners and Shri.Asok M. Cherian, learned Additional Advocate General, assisted by Sri Shyam Prasad, the learned Government Pleader, for the State Government, Shri.S.Krishnamoorthy, learned Standing Counsel for the Kerala Building and Other Construction Workers Welfare Board, Shri.Georgie Johny, Shri.Sujith Mathew Jose and Shri. Justine Jacob, the learned Standing Counsel appearing for the Kerala Water Authority.

5. Before going into the factual and legal contentions raised in these Writ Petitions, it is necessary to examine the relevant statutory provisions that are applicable to these cases. As observed above, the resolution of the dispute in these Writ Petitions, involves interpretation of various statutory provisions contained in the Regulation Act as well as the Cess Act. As far as the Regulation Act is concerned, the same is an enactment, which was introduced for the purpose of ensuring welfare of the building and other construction workers. The Section 2 (1)(d) of the said Act, defines the term “building or other construction work’ which reads as follows:

“(d) “building or other construction work” means the construction, alteration, repairs, maintenance or demolition, of or, in relation to, buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works, flood control works (including storm water drainage works), generation, transmission and distribution of power, water works (including channels for distri