SC Stays Allahabad HC Judgment Which Directed UPPTCL To Release Bank Guarantee Of Contractor

The matter was taken up through Video- Conferencing, and the bench was presided by  JUSTICE UDAY UMESH LALIT,  JUSTICE S. RAVINDRA BHAT, and JUSTICE HRISHIKESH ROY.

The present Special Leave Petition has been preferred against the final judgment and order dated 24.02.2020 passed by the High Court of Judicature at Allahabad (Lucknow Bench, Lucknow) in MISC. BENCH (M/B) No. - 125 of 2019, whereby the Division Bench of the Hon'ble Allahabad High Court set aside the letters issued by the UPPTCL (Petitioners herein) to M/s Cg Power & Industrial Solutions Ltd. for payment of outstanding labour cess computed @1% of the contract value to be deposited with the Labour Welfare Board. The High Court had further directed UPPTCL to release the Bank Guarantee withheld by the corporation for realisation of the outstanding Cess amount. It had been contended by the Petitioner's M/s Cg Power & Industrial Solutions Ltd. in its the petition before the Allahabad High Court that the 1% Labour Cess is not applicable on the cost of supply equipment as per the provisions of the Building and Construction Workers Welfare Cess Act, 1996.

The principal controversy before the Supreme Court is with respect to the applicability of labour cess of 1% on the construction cost of the project i.e. including the cost of supply component, as provided under Section 3 sub-clause (1) and (2) of the Building and Construction Workers Welfare Cess Act, 1996 read with Section 3, and Section 4 sub-clause (1), (2) and (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998 and Section 2 sub-clause (d) and (g) and (i) of the Building and Other Construction Workers (Regulation etc.), Act 1996.

The Supreme Court, in addition to granting stay on effect and operation of the impugned judgment further directed that the Bank Guarantee furnished by Respondent No.1 M/s Cg Power & Industrial Solutions Ltd. shall be retained by the Petitioner till further orders and the Bank Guarantee shall always be kept alive by Respondent No.1 till further orders.

An excerpt from the order is reproduced herein below –

"Pending further consideration, there shall be ad-interim stay of the operation of the final judgment and order dated 24.2.2020 passed by the High Court, presently under challenge.

It is also clarified that the Bank Guarantee furnished by Respondent No.1 shall be retained by the petitioner till further orders and the Bank Guarantee shall always be kept alive by the Respondent No.1 till further orders."

The Petitioner UTTAR PRADESH POWER TRANSMISSION CORPORATION LIMITED was represented by its special counsel Mr. Shishir Prakash, Advocate, Ms. Karuna Krishan Thareja Advocate and Mr Rahul Bhatia (AOR). The Respondent CG Power & Industrial Solutions Ltd. was represented by Mr. Ramesh Singh, Adv., Mrs. Monisha Handa, Adv. And Mr. Mohit D. Ram, AOR. The next date in the matter is fixed for 7th December 2020.

Click here to download the Order