IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 09TH DAY OF APRIL 2019 BEFORE THE HON’BLE MR.JUSTICE ALOK ARADHE WRIT PETITION NO.9470 OF 2014 (GM-RES) BETWEEN M/S DEEPAK CABLES (INDIA) LTD A COMPANY REGISTERED UNDER THE COMPANIES ACT, REPRESENTED BY ITS MANAGING DIRECTOR AND AUTHORIZED REPRESENTATIVE OF THE BOARD OF DIRECTOR SRI.K.VENKATESHWARA RAO, S/O K.SURYA RAO, AGED ABOUT 51 YEARS, NO.7, N.S.IYENGAR STREET, SESHADRIPURAM, BANGALORE:560020.
(By Sri : L M CHIDANANDAYYA, ADVOCATE) ... PETITIONER AND 1. STATE OF KARNATAKA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF LABOUR, VIKASA SOUDHA, BANGALORE:560001.
2. KARNATAKA POWER TRANSMISSION CO.LTD, REPRESENTED BY ITS CHIEF ENGINEER (ELECTRICITY), TENDERING & PROCUREMENT, KAVERI BHAVAN, BANGALORE-560009.
3. KARNATAKA BUILDING & OTHER CONSTRUCTION WORKERS WELFARE BOARD, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER, KOUSHLYA BHAVAN, BANNERGHATTA ROAD, BANGALORE-560029.
4. CHIEF ENGINEER (ELECTRICITY) TRANSMISSION ZONE, KARNATAKA POWER TRANSMISSION CO.LTD. PRASARA BHAVAN, 3RD FLOOR, SANTHEPETA, B.M.ROAD, HASSAN-573201.
5. EXECUTIVE ENGINEER (C) 400 KV TRANSMISSION LINE WORKS DIVISION 1ST FLOOR, KPTCL BHAVAN, SANTHEPETE, HASSAN-573201.
... RESPONDENTS (By Sri : Y.D.HARSHA, AGA FOR R1 Sri : SRIRANGA, ADV. FOR R2-R5 (VK FILED FOR R-2 & R-4 ONLY) Sri : RAMACHANDRAN, ADV. FOR Sri M.R.C.RAVI, ADV. FOR R3) THIS WRIT PETITION FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO DIRECT THE FIRST, SECOND AND THIRD RESPONDENT TO REFUND SUM OF RS.2,81,43,856/- (RUPEES TWO CRORES EIGHTY ONE LAKHS FORTY THREE THOUSAND EIGHT HUNDRED & FIFTY SIX ONLY) VIDE ANNX-M & M1 DEDUCTED FROM THE RUNNING ACCOUNT BILLS TOWARDS THE WORKERS WELFARE CESS ON THE SUPPLY PORTIONS OF THE CONTRACT TOGETHER WITH INTEREST AT THE RATE OF 12% P.A. FROM THE DATE OF DEDUCTION AND ETC.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R Sri L.M.Chidanandayya, learned counsel for the petitioner, Sri Y.D.Harsha, learned Additional Government Advocate for respondent No.1, Sri Sriranga, learned counsel for respondent Nos.2 and 4 and Sri Ramachandran, learned counsel for respondent No.3.
2. The writ petition is admitted for hearing.
With the consent of the parties, the matter is heard finally.
3. In this petition, the petitioner inter alia seeks for a writ of mandamus directing respondent Nos.1 to 3 to refund a sum of Rs.2,81,43,856/- (Rupees Two Crores Eighty One Lakh Forty Three Thousand Eight Hundred and Fifty Six only) deducted from the running account bills towards the workers welfare cess on the supply portions of the contract together with interest at the rate of 12% per annum from the date of deduction.
4. When the matter was taken up today, learned Senior counsel for respondent Nos.2 and 4 while inviting attention of this Court to a Division Bench decision of Madhya Pradesh High Court in W.P.No.3956/2009 (M/S. TECHNICAL ASSOCIATES LIMITED VS. THE ASSISTANT LABOUR COMMISSIONER, JABALPUR AND OTHERS) submitted that the Division Bench of the Madhya Pradesh High Court while interpreting Rule 3 of the Cess Rules has held as follows:
14. A joint reading of the above quoted Section 3 and Rule 3 shows that cess levied not less than one per cent of the cost of construction incurred by the petitioners as employers is payable by them. The cost of construction cannot be divided in parts, as argued by the petitioners, into supply portion and erection portion. Even the cost for supply portion is incurred by the petitioners and cannot be separated from the total cost incurred mentioned in Clause 5.2(iv). The cess is on the total cost of construction. The definition of cost of construction in Rule 3 excludes only cost of land and any compensation paid or payable to worker or his kin under the Workmen's Compensation Act, 1923. The expression "expenditure" in Rule 3 does not obviously include cost of land even so it is specifically excluded in the proviso to the Rule. If the intention of the Cess Act and Cess Rules was to exclude the cost of supply part, it would have been referred in Rule 3 where exceptions are provided. We, therefore, hold that respondent no.2 is entitled to deduct one per cent cess on the total contract price mentioned in Clause 5.2(iv) and that the petitioners are liable to pay cess even for supply portion.
5. It is also pointed out by learned Senior counsel for respondent Nos.2 and 4 that based on the aforesaid decision, the Government of Karnataka has issued a Circular on 17.01.2018 and respondent No.2 in turn has issued a Circular on 20.03.2018. It is further submitted that in view of the aforesaid decision of Division Bench of Madhya Pradesh High Court as well as the circular issued by the respondent No.2, no relief can be granted to the petitioner.
6. On the other hand, learned counsel for the petitioner submits that the aforesaid circulars do not have retrospective application.
7. I have considered the submissions made by learned counsel for the parties and I have perused the records.
8. In view of the decision of Division Bench of Madhya Pradesh High Court, the respondents have issued circulars dated 17.01.2018 and 20.03.2018 and the interpretation put forth by the Division Bench of Madhya Pradesh High Court on Section 3 of the Building and Other Construction Workers’ Welfare Cess Act, 1996 and Rule 3 of the Building and Other Construction Workers’ Cess Rules, 1998 has been accepted.
9. For the reasons assigned by the Division Bench of the Madhya Pradesh High Court in the order dated 03.05.2012 passed in W.P.No.3956/2009, I do not find any merit in the writ petition, the same fails and is hereby dismissed.
SD/- JUDGE DKB