THROUGH the Judgement of the case – Uttar Pradesh Power Transmission Corporation Ltd. (UPPTCL) and Another v. CG Power and Industrial Solutions, delivered on May 12, 2021, Justice Uday Umesh Lalit and Justice Indira Banerjee, at the Supreme Court, have pointed out that it is now well settled by a plethora of SC decisions that relief under Article 226 of the Constitution of India may be granted in a case arising out of contract. However, the SC has stated that the writ jurisdiction under Article 226, being discretionary, the High Courts usually refrain from entertaining a writ petition which involves adjudication of disputed questions of fact which may require analysis of evidence of witnesses.

 

Monetary relief can also be granted in a writ petition. By a letter of December 29, 2018, the Superintendent Engineer of the UPPTC requested the Executive Engineer, Unnao, to recover labour cess for the supply part of the composite contract from the pending bills of the respondent – CG Power and Industrial Solutions and, in case any amount still remained outstanding, to deduct such amount by encashment of the Performance Bank Guarantee for Rs 2,60,68,814/- held to secure the payment of labour cess. On or about January 3, 2019, the respondent filed a writ petition before the Lucknow Bench of the Allahabad High Court challenging the said communication. In or about February, 2019, while the writ petition was pending ,the Executive Engineer, Unnao, purported to deposit Rs 38,38,104/- with the Building and Other Construction Workers Welfare Board (BOCWWB) as part payment towards labour cess. By an interim order on January 7, 2020, the HC restrained the UPPTCL from encashing the bank guarantee.

 

The question of law as to whether cess would be payable in respect of supply of equipment by the respondent-1 to UPPTCL was kept open. UPPTCL filed a Counter Statement to the writ petition and the respondent filed a rejoinder thereto contending that the provisions of the BOCW Act were not applicable to the Supply Contract and levy and deduction of labour cess in respect of Supply Contract, was not permissible in law. UPPTCL did not take any objection to the maintainability of the writ petition on the ground of existence of an alternative remedy as is evident from its Counter Statement/affidavit filed in the HC. On February 24, 2020, the HC passed the impugned order, setting aside the letters of September 2, 2016 and December 29, 2018, sent by the petitioner to the respondent demanding outstanding labour cess amounting to Rs 2,60,68,814/- computed at the rate of 1 pc of the contract value. The HC accepted the submission of the respondent herein that in the absence of levy and assessment under the Cess Act, 1996 and the Rules made thereunder, the letters of the UPPTCL were not sustainable in law. Cess could only be recovered in the manner stipulated in the Cess Act and the Rules.

 

The HC observed that if cess were leviable under the Cess Act, it would be necessary for the concerned authorities to undertake the exercise of assessment and levy of cess under the Cess Act of 1996 as amended, before the same could be realised from a contractor. The HC found that in the absence of any order for levy and assessment under the Cess Act of 1996, recovery could not be made pursuant to an audit objection of CAG. There does not appear to be any provision in the first, second, third or fourth contract or in the special conditions of contract or the general conditions for Supply of Plant and the execution of work which enables UPPTCL to withhold any amount from the bills raised by the respondent-1 on UPPTCL. Even though there is an arbitration clause, the petitioner herein has not opposed the writ petition on the ground of existence of an arbitration clause.

 

There is no whisper of any arbitration agreement in the Counter Affidavit filed by UPPTCL to the writ petition in the HC. In any case, the existence of an arbitration clause does not debar the Court from entertaining a writ petition. It is well settled that availability of an alternative remedy does not prohibit the High Court from entertaining a writ petition in an appropriate case. The HC may entertain a writ petition, notwithstanding the availability of an alternative remedy, particularly (1) where the writ petition seeks enforcement of a fundamental right; (2) where there is failure of principles of natural justice; or (3) where the impugned orders or proceedings are wholly without jurisdiction; or (4) the Constitutional validity of an Act is under challenge. For proper guidance reference can be made to the decisions in the case – Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & Others- AIR 1999 SC 22 and Pimpri Chinchwad Municipal Corporation & Others v. Gayatri Construction Company & Others –(2008) 8 SCC 172. These decisions were cited on behalf of the respondent -1. In the decision of the case – Harbanslal Sahnia and Others v. Indian Oil Corporation Ltd.- (2003) 2 SCC 107, the SC had allowed the appeal from an order of the High Court dismissing a writ petition and set aside the impugned judgement of the HC as also the impugned order of the Indian Oil Corporation terminating the dealership of the appellants, notwithstanding the fact that the dealership agreement contained an arbitration clause. In this case, the action of UPPTCL in forcibly extracting building cess from the respondent-1 in respect of the first contract, solely on the basis of the CAG report is in excess of power conferred on UPPTCL by law or in terms of the contract.

 

In other words UPPTCL has no power and authority and or jurisdiction to realise 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 is no legal infirmity in finding of the HC that UPPTCL acted in excess of power by its acts impugned, when admittedly, there was no assessment or levy of cess under the Cess Act. According to the SC, 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. UPPTCL could not have taken recourse to the methods adopted by it. The impugned communications have been rightly set aside. In the SC’s considered opinion, the impugned judgment and order of the HC does not call for interference under Article 136 of the Constitution of India and it dismissed the Special Leave Petition.