SC: UPPTCL acted in excess of power to realize labour cess under Cess Act by withholding dues

Uttar Pradesh Power Transmission Corporation Ltd. Vs CG Power And Industrial Solutions Limited (Supreme Court of India)

Conclusion: UPPTCL had no power and authority and or jurisdiction to realize labour cess under the Cess Act in respect of the first contract by withholding dues in respect of other contracts and/or invoking a performance guarantee. The finding of the High Court was sustainable as UPPTCL acted in excess of power by its acts impugned, when there was admittedly no assessment or levy of cess under the Cess Act.

Held: SLP under Article 136 of the Constitution of India, filed by assessee-UPPTCL, as against a final order passed by High Court, allowing the writ petition filed by Respondent No.1  and directing the Respondent No.1 to remit Labour Cess amounting to Rs.2,60,68,814/-, computed at 1% of the contract value, under Sections 3 sub-section (1) and (2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996 (“Cess Act”), read with Rules 3 and Rule 4 (1), (2) (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998, (“Cess Rules”) and also section 2 (1)(d), (g) and (i) of the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996, hereinafter referred to as the “BOCW Act”. . The Statement of Objects and Reasons revealed that the necessity to enact BOCW Act arose from the necessity to levy cess on the cost of construction incurred by the employers on a building and on other construction works, in order to generate funds for the Welfare Boards to enable such Welfare Boards to undertake social security schemes and welfare measures for building and construction workers. It was held that the action of UPPTCL in forcibly extracting building cess from the Respondent in respect of the first contract, solely on the basis of the CAG report, was in excess of power conferred on UPPTCL by law or in terms of the contract. In other words, UPPTCL had no power and authority and or jurisdiction to realize labour cess under the Cess Act in respect of the first contract by withholding dues in respect of other contracts and/or invoking a performance guarantee. There was no legal infirmity in the finding of the High Court that UPPTCL acted in excess of power by its acts impugned, when there was admittedly no assessment or levy of cess under the Cess Act.  Even otherwise, the Cess Act and/or statutory rules framed thereunder prescribe the mode and manner of recovery of outstanding cess under the Cess Act. It was well settled that when statute required a thing to be done in a particular manner, it was to be done in that manner alone. UPPTCL could not have taken recourse to the methods adopted by it. The impugned communications had rightly been set aside.  The judgment and order of the High Court impugned did not call for inference under Article 136 of the Constitution of India.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

1. This Special Leave Petition, under Article 136 of the Constitution of India, filed by the Petitioner, hereinafter referred to as the UPPTCL, is against a final Judgment and Order dated 24^th February 2020 passed by the High Court of Judicature at Allahabad (Lucknow Bench), allowing the writ petition filed by Respondent No.1 and setting aside the letters dated 2nd September 2016 and 29^th December 2018 issued by the Executive Engineer, Unnao UPPTCL directing the Respondent No.1 to remit Labour Cess amounting to Rs.2,60,68,814/-, computed at 1% of the contract value, under Sections 3 sub-section (1) and (2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, hereinafter referred to as the “Cess Act”, read with Rules 3 and Rule 4 (1), (2) (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998, hereinafter referred to as the “Cess Rules” and also Section 2 (1)(d), (g) and (i) of the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996, hereinafter referred to as the “BOCW Act”.

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