HON’BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY WRIT PETITION No.9482 of 2019

ORDER:

This writ petition is filed seeking following relief:

“To declare the action of the respondents in withholding an amount of Rs.9,29,449/- towards 1 % labour cess from final bill without adding for the work referred to in the agreement No.67/CGME/PCC-II/JNNURM/Inlet-Out-Distn/3ML GLSR- Patigadda/2008-09 dated 12.03.2009, as illegal and arbitrary, as illegal and arbitrary.”

2. Heard Sri P. Shashi Kiran, learned counsel for the petitioner and Sri A. Veeresh Kumar, learned Standing counsel for respondent Nos.2 and 6.

3. Learned counsel for the petitioner would submit that respondent No.3 has invited e-tender dated 24.10.2008 from eligible contractors for "providing inlet, outlet and distribution system for 3.0 ML capacity new GLSR at Patigadda in Prakashnagar Zone"; that petitioner participated in the said bidding and became successful bidder; that an agreement dated 12.03.2009, was entered for value of work of Rs.19,72,37,580.60 ps for part-I and Rs.19,38,182-76 for part-II and Rs.1,58,02,359.69 for part-III. He further submitted that petitioner has raised bills from time to time and completed the contract. In the meanwhile, Government of Andhra Pradesh issued a memo No.636/Reforms-A1/2008 dated 08.06.2011 for payment of labour cess and compliance of Statutory provisions of Building and other Construction workers (Regulation of Employment and Conditions of Service Act), 1996 (for short “the Act, 1996”) and the Rules made there under. Accordingly, the respondents have withhold a sum of Rs.19,92,118/- towards labour cess without including the said amount in the contract. He would further submit that 1 % labour cess can be deducted only if the same is included in the contract. However, in the present case, while issuing e-tender, there is no provision made for labour cess and the same was also not included in the contract. Therefore, deduction of 1 % labour cess is illegal and contrary to the terms of the agreement and thus, prayed this Court to allow this writ petition and direct the respondents to release an amount of Rs.9,29,449/- to the petitioner.

4. He would further submit that erstwhile High Court of Andhra Pradesh, Hyderabad vide Order dated 22.10.2009 in W.P.Nos.11269 of 2009 and batch, and Order dated 11.04.2012 in W.P.No.6090 of 2011 dated 11.04.2012, held that not refunding the amount already collected towards labour cess was unsustainable and further held that the petitioners were entitled for the said amount. He further submitted that the High Court of Andhra Pradesh in W.P.No.16156 of 2020 and batch, vide order dated 20.09.2023, directed the respondents therein to verify the bills of the petitioners therein. Learned counsel for the petitioner further submitted that in the present case, labour cess was not included in e-tender and therefore, respondents cannot deduct the amount towards labour cess.

5. Learned Standing counsel for respondent Nos.2 and 6 would submit that the petitioner paid final bills and deducted 1 % labour cess in view of the Act, 1996 and memo No.636/Reforms-A1/2008 dated 08.06.2011.

6. Admittedly, the e-tender was issued on 24.10.2008 which is prior to memo dated 08.06.2011, by which the erstwhile State of Andhra Pradesh decided to impose labour cess in the State. However, as on the date of settlement of final bill, the above act came into force and in view of proceedings dated 08.06.2011, respondents deducted the 1 % labour cess. The order dated 20.09.2023 in W.P.No.16156 of 2020 and batch, wherein the erstwhile High Court of Andhra Pradesh has held that if the corresponding amount is included in the estimates, the respondents can deduct the amount as prescribed at the rate of 1 % labour cess and in case, respondents found that the corresponding amount is not included in the estimates, the respondents shall not take steps to deduct the amount/recover the amount from the petitioners towards labour cess. In the present case