Telangana High Court
Voltas Ltd vs The Union Of India 2 Others on 24 August, 2022
Author: K. Lakshman
Bench: K. Lakshman
HON'BLE SRI JUSTICE K. LAKSHMAN
WRIT PETITION No.12795 OF 2009
ORDER:
Heard Mr.C.R. Sridharan, learned senior counsel representing Mr. G.V.S. Ganesh, learned counsel for the petitioner, learned Assistant Solicitor General of India, appearing for respondent No.1 and learned Assistant Government Pleader for Labour appearing for respondent Nos.4 and 5. Respondent No.3 is only a formal party as per the cause title. In view of impleading respondent No.5 on account of bifurcation of State, the presence / appearance of respondent No.2 is inconsequential.
2. This Writ Petition is filed to declare that the activities undertaken by the petitioner herein under the Contract as per Annexure P.1 with the Hyderabad International Airport, for supply, installation, testing, commissioning of the Heating, Ventilation and Air-conditioning (HVAC) system, Building Automation System and SCADA, Fire Detection and Suppression Systems, Visual Docking Guidance System and Access Control Systems in the passenger Terminal Building at the Hyderabad International Airport do not fall within the scope and ambit of the expression 'building or other 2 KL,J W.P. No.12795 of 2009 construction work' as defined under Section 2 (d) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Services) Act, 1996; and that the provisions of the said Act are not attracted in so far as the activities undertaken by the petitioner is concerned at the above place.
3. The petitioner herein is a Company engaged in the business of manufacturing, selling various kinds of equipments and machinery, such as Air Conditioners, Chiller packages, fork lift trucks, cranes, freezers, visi coolers etc. It also undertakes projects in the fields of Heating, Ventilation and Air-Conditioning (HVAC), electro mechanical systems including plumbing, electrical work, building automotive system etc.
i) On sub-contract, a work was awarded to the petitioner in the Passenger Terminal Building at Hyderabad International Airport, vide Contract No.303, dated 01.09.2005 by the China State Construction Engineering (Hong Kong) Limited for the supply, installation, testing, commissioning of the HVAC system, Electrical System, Plumbing and Drainage System, Fire Fighting System, Building Automation System & SCADA, Fire Detection and Suppression Systems, Visual 3 KL,J W.P. No.12795 of 2009 Docking Guidance System and Access Control Systems in the Passenger Terminal Building at the Hyderabad International Airport.
ii) The petitioner herein is one of the Subcontractors of the said China Company, who had been entrusted by respondent No.3 with a contract for Hyderabad International Airport - Passenger Terminal Building Works.
iii) The nature of work being executed by the petitioner as a subcontractor was specifically mentioned in Appendix-II.
iv) The Airport became operational in all respects. When the petitioner was expecting payments from respondent No.3, it had received a letter dated 14.08.2008 from respondent No.3 requesting it to submit proof of payment Cess paid under the Cess Act. The petitioner had submitted a reply dated 22.08.2008 categorically stating that the activities carried out by it under the aforesaid contract does not fall under the provisions of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (for short 'Act, 1996'). The petitioner was compelled to address a letter dated 18.11.2008 to respondent No.2 narrating the entire facts. Respondent No.2 requested the petitioner to furnish some more 4 KL,J W.P. No.12795 of 2009 documents and accordingly the petitioner had submitted all the documents. Even then, there is no consideration by the respondents herein. Therefore, the petitioner filed the present writ petition.
4. Learned Assistant Government Pleader for Labour appearing for respondent Nos.4 and 5 would submit that the works executed by the petitioner as subcontractor includes construction activity and, therefore, the provisions of the Act, 1996 would apply. Thus, the petitioner herein has to pay cess in accordance with the provisions of the Act, 1996. It is a beneficial Legislation. The petitioner herein instead of complying with the said provisions of the Act, 1996, filed the present writ petition. In view of the same, he sought to dismiss the present writ petition.
5. In view of the above submissions, to decide the lis involved in the present writ petition and in view of the nature of relief sought by the petitioner herein, it is relevant to extract the objects of the Act, 1996 and certain provisions thereunder. In Dewan Chand Builders & Contractors v. Union of India1, the Hon'ble Supreme Court 1 . (2012) 1 SCC 101 5 KL,J W.P. No.12795 of 2009 examined the object of the Act, 1996, welfare of workers engaged in building and construction work, and held as under:
"3. The background in which the BOCW Act was enacted, is set out in the Statement of Objects and Reasons appended to the Bill preceding its enactment. To better appreciate the legislative intent, it would be instructive to refer to the following extract from the Statement of Objects and Reasons:
'Statement of Objects and Reasons.--It is estimated that about 8.5 million workers in the country are engaged in building and other construction works. Building and other construction workers are one of the most numerous and vulnerable segments of the unorganised labour in India. The building and other construction works are characterised by their inherent risk to the life and limb of the workers.
The work is also characterised by its casual nature, temporary relationship between employer and employee, uncertain working hours, lack of basic amenities and inadequacy of welfare facilities. In the absence of adequate statutory provisions, the requisite information regarding the number and nature of accidents is also not forthcoming. In the absence of such information, it is difficult to fix responsibility or to take any corrective action.
2. Although the provisions of certain Central Acts are applicable to the building and other construction workers yet a need has been felt for a comprehensive Central Legislation for regulating their safety, health, welfare and other conditions of service.'
4. A fairly long Preamble to the BOCW Act is again indicative of its purpose. It reads thus:
'An Act to regulate the employment and conditions of service of building and other construction workers and to provide for their safety, health and welfare measures and for other matters connected therewith or incidental thereto.' 6 KL,J W.P. No.12795 of 2009 ***
11. The Statement of Objects and Reasons to the BOCW Act explained that it had been considered:
'... necessary to levy a cess on the cost of construction incurred by the employers on the building and other construction works for ensuring sufficient funds for the Welfare Boards to undertake the social security Schemes and welfare measures.' Simultaneously with the enactment of the BOCW Act, Parliament enacted the Cess Act. The Statement of Objects and Reasons to the Cess Act noted that the intention was to 'provide for the levy and collection of a cess on the cost of construction incurred by the employers for augmenting the resources of the Building and Other Construction Workers' Welfare Boards constituted by the State Governments under the Building and Other Construction Workers' (Regulation of Employment and Conditions of Service) Ordinance, 1995.' ***
17. It is manifest from the overarching schemes of the BOCW Act, the Cess Act, the Rules made thereunder that their sole object is to regulate the employment and conditions of service of building and other construction workers, traditionally exploited sections in the society and to provide for their safety, health and other welfare measures. The BOCW Act and the Cess Act break new ground in that, the liability to pay cess falls not only on the owner of a building or establishment, but under Section 2(1)(i)(iii) of the BOCW Act:
'2. (1)(i)(iii) in relation to a building or other construction work carried on by or through a contractor, or by the employment of building workers supplied by a contractor, the contractor;' The extension of the liability on to the contractor is with a view to ensure that, if for any reason it is not possible to collect cess 7 KL,J W.P. No.12795 of 2009 from the owner of the building at a stage subsequent to the completion of the construction, it can be recovered from the contractor. The Cess Act and the Cess Rules ensure that the cess is collected at source from the bills of the contractors to whom payments are made by the owner. In short, the burden of cess is passed on from the owner to the contractor."
6. In Lanco Anpara Power Ltd. v. State of U.P.2, the Apex Court held as under:
"37. We now advert to the core issue touching upon the construction of Section 2(1)(d) of the BOCW Act. The argument of the appellants is that language thereof is unambiguous and literal construction is to be accorded to find the legislative intent. To our mind, this submission is of no avail. Section 2 (1)
(d) of the BOCW Act dealing with the building or construction work is in three parts. In the first part, different activities are mentioned which are to be covered by the said expression, namely, construction, alterations, repairs, maintenance or demolition. Second part of the definition is aimed at those buildings or works in relation to which the aforesaid activities are carried out. The third part of the definition contains exclusion clause by stipulating that it does not include 'any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), applies'. Thus, first part of the definition contains the nature of activity; second part contains the subject-matter in relation to which the activity is carried out and the third part excludes those building or other construction work to which the provisions of the Factories Act or the Mines Act apply."2
. (2016) 10 SCC 329 8 KL,J W.P. No.12795 of 2009
7. Considering the above observations, the Apex Court, in U.P. Power Transmission Corpn. Ltd. v. CG Power & Industrial Solutions Ltd.3, held as under:
"51. The clear statutory scheme of the BOCW Act excludes a supply contract from within its ambit. On behalf of Respondent 1, it is pointed out that several public authorities and corporations, such as the Delhi Metro Rail Corporation and Karnataka Power Transmission Corporation Ltd., have issued instructions that no cess under the BOCW Act is leviable on a contract for supply of goods. Copies of the KPTCL Circulars dated 22-8-2012 and 28-8-2012 to this effect are annexed to the rejoinder of Respondent 1 in the High Court.
52. Under Section 2(1)(g) of the BOCW Act the term "Contractor" means a person who undertakes to produce a given result for any establishment, other than a mere supply of goods or articles of manufacture, by the employment of building workers or who supplies building workers for any work of the establishment and includes a sub-contractor. Respondent 1 is apparently not a contractor, within the meaning of Section 2(1)(g) of the BOCW Act in respect of the first, second and fourth contracts. Nor is Respondent 1 employer within the meaning of Section 2(1)(i) of the BOCW Act. Section 2(1)(i) of the BOCW Act defines "employer" to include the contractor in relation to a building and other construction work carried on by or through a contractor or by employment of building workers supplied by a contractor. Respondent 1 neither falls within the definition of "contractor" in Section 2(1)(g) nor 2(1)(i)(iii) of 3 . (2021) 6 SCC 15 9 KL,J W.P. No.12795 of 2009 the BOCW Act. Apparently, Respondent 1 is not liable to cess in respect of the first, second and fourth contracts.
53. Cess under the Cess Act read with the BOCW Act is leviable in respect of building and other construction works. The condition precedent for imposition of cess under the Cess Act is the construction, repair, demolition or maintenance of and/or in relation to a building or any other work of construction, transmission towers, in relation inter alia to generation, transmission and distribution of power, electric lines, pipelines, etc. Mere installation and/or erection of pipelines, equipments for generation or transmission or distribution of power, electric wires, transmission towers, etc. which do not involve construction work are not amenable to cess under the Cess Act. Accordingly no intimation or information was given or any return filed with the assessing officer under the Cess Act or the Inspector under the BOCW Act in respect of the first and second contracts, either by UPPTCL or by Respondent 1.
54. A contractor who enters into a pure supply contract is statutorily exempted from levy under the BOCW Act...."
8. Further, it is apt to extract the relevant definitions envisaged under Section - 2 of the Act, 1996, which are as under:
"2 (b) "beneficiary" means a building worker registered under section 12;"
"2(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 (including storm water drainage 10 KL,J W.P. No.12795 of 2009 works), generation, transmission and distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio, television, telephone, telegraph and overseas communications, dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqueducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specified in this behalf by the appropriate Government, by notification but does not include 5 any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), apply;"
"2 (e) "building worker" means a person who is employed to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, in connection with any building or other construction work but does not include any such person--
(i) who is employed mainly in a managerial or administrative capacity; or
(ii) who, being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature';
"2 (g) "contractor" means a person who undertakes to produce a given result for any establishment, other than a mere supply of goods or articles of manufacture, by the employment of building workers or who supplies building workers for any work of the establishment; and includes a sub-contractor; 11
KL,J W.P. No.12795 of 2009 "2 (j) "establishment" means any establishment belonging to, or under the control of, Government, anybody corporate or firm, an individual or association or other body of individuals which or who employs building workers in any building or other construction work; and includes an establishment belonging to a contractor, but does not include an individual who employs such workers in any building or construction work in relation to his own residence the total cost of such construction not being more than rupees ten lakhs."
9. In view of the above said provisions, the question that falls for examination by this Court is:
Whether the contract executed by the petitioner herein pursuant to Contract No.303, dated 01.09.2005, falls under the provisions of the Act, 1996 or not?
10. To decide the above, it is relevant to refer to the nature of contract, which is entrusted under the aforesaid Contract, dated 01.09.2005 as mentioned in Appendix - 2 is relevant.
"Appendix 2 - Subcontract Works Information App.2.1 Included Activities & Responsibilities The Subcontractor performs all of the work and assumes all of the responsibilities and liabilities for the works of the following main contract Cost Centres as defined in the main contract, on a back-to-back basis with the main contract requirements save where expressly excluded in 12 KL,J W.P. No.12795 of 2009 this Appendix 2 and in any case subject to the Subcontract Data:
Cost Centre Description
4 HVAC System
5 Electrical System
6A Plumbing and Drainage System
6B Fire Fighting System
7A Building Automation System & SCADA
7B Fire Detection and Suppression Systems
11B Visual Docking Guidance System
12B Access Control Systems"
11. As stated above, HVAC System means Heating, Ventilation and Air-conditioning. Thus, the petitioner was awarded the aforesaid subcontract for the supply, installation, testing, commissioning of the HVAC System, Electrical System, Plumbing and Drainage System, Fire Fighting System, Building Automation System and SCADA, Fire Detection and Suppression Systems, Visual Docking Guidance System and Access Control Systems. Thus, the petitioner was awarded with the said contract for carrying out the aforesaid activities. The terms and conditions were specifically mentioned in the aforesaid contract, dated 01.09.2005. There is no construction, repair, demolition or maintenance of and/or in relation to 13 KL,J W.P. No.12795 of 2009 a building or any other work of construction, transmission towers, in relation inter alia to generation, transmission and distribution of power, electric lines, pipelines etc. The petitioner has to install the aforesaid systems. Therefore, there is no construction activity. Thus, the said activities carried on by the petitioner pursuant to the aforesaid contract, dated 01.09.2005 will not fall within the purview of 'building or other construction work' as defined under Section - 2 (d) of the Act, 1996.
12. As observed by the Apex Court in U.P. Power Transmission Corpn. Ltd.3, the Cess Act read with the Act, 1996 is leviable in respect of building and other construction works. Therefore, this Court is of the considered view that the nature of work and activities being carried out by the petitioner company in terms of E&M Subcontract, dated 01.09.2005 entered between the Contractor and the petitioner herein, subcontractor will fall under the aforesaid definition.
13. The petitioner herein has specifically mentioned the aforesaid facts in its reply dated 22.08.2008 to the notice dated 14.08.2008 issued by respondent No.3. But, there is no consideration 14 KL,J W.P. No.12795 of 2009 of the said reply submitted by the petitioner herein. There is no consideration of the same in the letter dated 22.10.2008 by respondent No.3.
14. Thereafter, vide letter dated 18.11.2008, the petitioner herein sought clarification from respondent No.2 with regard to the applicability of the provisions of the Act, 1996 and payment of cess by specifically mentioning its nature of activities. Despite receiving and acknowledging the said letter, there is no response from respondent No.2. Therefore, the petitioner herein had filed the present writ petition.
15. It is also relevant to note that in similar circumstances with similar allegations, the Appropriate Authority - cum - Deputy Labour Commissioner under the Building and Other Construction Workers Welfare Cess Act, New Delhi vide order, dated 17.07.2007, clarified that the nature of the activity which is being carried out by the petitioner does not fall under the definition of the Act, 1996 and consequently the employees employed by the Management do not fall under the definition of the Act. Therefore, the Building and Other 15 KL,J W.P. No.12795 of 2009 Construction Workers Welfare Cess Act, 1996 is inapplicable to the petitioner herein.
16. It is relevant to note that the petitioner herein had executed a similar contract in respect of Visakhapatnam Airport, and when respondent No.1 had issued a notice dated 22.07.2008 requesting the petitioner to pay cess on the ground that the provisions of the Act are applicable to the petitioner herein, the petitioner herein had filed a writ petition in W.P. No.28861 of 2008 challenging the said notice. Considering the nature of activities, the provisions of the Act, 1996, referring to the principle laid down by the Apex Court in U.P. Power Transmission Corpn. Ltd.3 and the proceedings 17.07.2007 issued by the Deputy Labour Commissioner under the Building and other Construction Workers Welfare Cess Act, New Delhi, the A.P. High Court had allowed the said writ petition setting aside the said notice dated 22.07.2008.
17. Learned Assistant Government Pleader for Labour, referring to the common judgment rendered by a Division Bench of the High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh in W.A. No.1012 of 2013 & batch, dated 06.08.2015, would submit that the activities carried on by the 16 KL,J W.P. No.12795 of 2009 petitioner herein pursuant to the contract dated 01.09.2005 would fall under the provisions of the Act, 1996 and the petitioner has to register under the provisions of the Act, 1996 and pay the Cess. In the said batch of cases, Infrastructural Development Companies/Contractors had filed writ petitions challenging the notices issued by the Officials of the Labour Department directing the said Companies to pay the cess since the activities being carried out by the writ petitioners therein would fall under the provisions of the Act, 1996. In the said cases, the petitioners had carried out the work of designing, manufacturing, supplying, erecting, testing and commissioning of blast furnace including civil and structural works. On examination of the facts therein, the Division Bench of the said High Court held that blast furnace or cranes are covered by the definition of 'building or other construction works and that the contractors / employees engaged /employed by the contractors for construction of the same are covered by the provisions of the Act, 1996.
18. Whereas, in Lanco Anpara Power Limited v. State of Uttar Pradesh4, the Apex Court held that Section - 2 (d) of the Act, 1996 deals with building or construction work is in three parts. In the 4 . (2016) 10 SCC 329 17 KL,J W.P. No.12795 of 2009 first part, different activities are mentioned which are to be covered by the said expression, namely, construction, alterations, repairs, maintenance or demolition. Second part of the definition is aimed at those buildings or works in relation to which the aforesaid activities are carried out. The third part of the definition contains exclusion clause by stipulating that it does not include "any building or other construction work to which the provisions of the Factories Act, 1948, or the Mines Act, 1952 apply". Thus, first part of the definition contains the nature of activity; second part contains the subject-matter in relation to which the activity is carried out and the third part excludes those building or other construction work to which the provisions of the Factories Act or the Mines Act apply.
19. As stated above, in the present case, the petitioner herein being the subcontractor had executed the work which is specifically mentioned in Appendix - 2. Out of eight (08) works, none of them including plumbing and drainage system fall under the aforesaid three (03) categories. Therefore, this Court is of the considered view that the contract being executed by the petitioner herein will not fall under the provisions of the Act, 1996. Thus, the facts covered by the judgment dated 06.08.2005 rendered by a Division Bench in W.A. 18 KL,J W.P. No.12795 of 2009 No.1012 of 2013 and batch are different to the facts of the present case.
20. In view of the aforesaid discussion, the present Writ Petition is allowed by declaring that the activities undertaken by the petitioner company vide Contract No.303, dated 01.09.2005 will not fall under the provisions of the Act, 1996, more particularly within the meaning of "building or other construction work" as defined under Section - 2 (d). Therefore, the respondents cannot claim the cess from the petitioner company under the provisions of the Building and Other Construction Workers Welfare Cess Act, 1996. However, in the circumstances of the case, there shall be no order as to costs.
As a sequel, the miscellaneous petitions, if any, pending in the writ petition shall stand closed.
_________________ K. LAKSHMAN, J 24th August, 2022 Mgr