Dredging activities fall within the definition of construction work under the BOCW Act, affirming cess obligations for such activities.

ORDER :

D.BHARATHA CHAKRAVARTHY, J.

A. The Petition:

1.This Writ Petition is filed for a mandamus directing the first respondent to refund a sum of Rs.3,14,58,004/- to the petitioner in view of the inapplicability of the Building and Other Construction Workers Cess (Regulation of Employment and Conditions of Service) Act, 1996 (hereinafter referred to as ‘BOCW Act’) for the work undertaken by the second respondent contractor.

B. The Factual Matrix:

2. The brief facts leading to filing of this writ petition are, that the petitioner owns and operates the Port at Ennore under the Ministry of Ports, Shipping and Waterways, Government of India. The Chennai Ports Authority holds the entire shares of the petitioner. In the year 2014/2015, the petitioner proposed to expand the Port by dredging the Port Basin and the shore to create additional berths. After issuing global tenders, the petitioner had awarded the contract to the second respondent by an agreement, dated 12.08.2015 for the execution of Capital Dredging Phase – III at the Port.

3. During the execution of the project, the Chief Technical Examiner of the organization made a technical inspection of the project from 02.08.2016 to 05.08.2016. While so, he observed that as per the Act, the capital dredging work will come within its purview. Even during the pre-bid clarification, the tenderer sought for waiver of the payment of cess, which was not granted and as per the conditions of the tender, the contractor was required to pay all the taxes, duties etc. However, the cess payable under the Building and Other Construction Workers’ Welfare Cess Act, 1996, (hereinafter referred to as ‘the CESS Act’) was not deducted from the contractor’s bills. On the strength of the above report, the Chief Technical Examiner of the organization, advised the petitioner to comply with the statutory liability and remit the cess.

4. Accordingly, in order to avoid any penal action and to comply with the statutory liability, the petitioner had remitted a sum of Rs.2,96,26,374/- and another sum of Rs.27,56,053/- towards the cess payable under the CESS Act with the first respondent Board. The above payments were duly acknowledged by the receipts, dated 22.02.2018 and28.08.2018.

5. In the meanwhile, a complaint was filed by the Labour Enforcement Officer, the third respondent, under Section 50 of the BOCW Act against the second respondent before the Director General of Inspection/Deputy Chief Labour Commissioner (Central), the fourth respondent, alleging breach of Section 7 and Rule 240 and prayed for imposing fine under the provisions of of the BOCW Act. Pursuant to the said complaint, proceedings were initiated by the Director General of Inspection/Deputy Chief Labour Commissioner (Central) under the BOCW Act. On 16.11.2018, the fourth respondent passed an order that the dredging of the seaport will not be a ‘construction’ activity under Section 2 (d) of the BOCW Act and held that no fine could be levied. Under the said circumstances, the petitioner made a representation to the first respondent on 19.03.2019 to reimburse the said sum of Rs.3,14,58,004/- in view of the order passed by the fourth respondent.

6. In the meanwhile, the second respondent - contractor had also initiated arbitration proceedings. On 07.03.2024, an award was also passed by the Arbitral Tribunal directing the petitioner to pay to the second respondent the amount of cess deducted and remitted to the first respondent. The said award is also under challenge in O.P.No.335 of 2024, which is pending on the file of this Court. Af