High Court of KeralaSingle Judge2024-01-23Writ petition allowed; impugned proceedings set...

REENA ENGINEERS AND CONTRACTORS PVT. LTD. v. KERALA WATER AUTHORITY AND OTHERS

Case / Petition Number:WP(C) NO. 39292 OF 2023

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Devan Ramachandran
Judgment Date: 2024-01-23
Court Decision / Holding: Writ petition allowed; impugned proceedings set aside; direct the competent Authority of KWA to hear the petitioner and assess their claim that they are not liable to pay Cess under KCWWF Act because they only supply materials and are not concerned with construction work. The hearing and assessment should be conducted with due process, considering the cited precedents. Until orders are communicated, any recovery of cess is deferred. If the assessment concludes cess cannot be imposed, the authorities must refund amounts already collected without delay.
Final Disposition: Writ petition allowed; impugned proceedings set aside; proceed with hearing and assessment by KWA; deferral of cess recovery pending order; refunds if cess not payable

Parties to the Case

Appellants / Petitioners

REENA ENGINEERS AND CONTRACTORS PVT. LTD. rep. by its Managing Director K.C. James

Respondents

KERALA WATER AUTHORITY rep. by its Managing Director, Jalabhavan, Vellayambalam, Thiruvananthapuram; The Superintending Engineer Office of the Superintending Engineer, PH Circle, KWA, Kozhikode; The Executive Engineer Office of the Executive Engineer, KWA, Project Division-Kozhikode; The Kerala Construction Workers Welfare Fund Board rep. by its Chairman, Nirmanbhavan, Mettukada, Thycaud, Thiruvananthapuram

Legal Representation & Advocates

Counsels for Petitioners

• P. Shanes Methar
• N. Krishna Prasad

Counsels for Respondents

• P.M. Johny – Standing Counsel for KWA

Case Synopsis & Summary

Reena Engineers and Contractors Pvt. Ltd., a works contractor engaged by the Kerala Water Authority (KWA), challenges a deduction of 1% cess under the Kerala Construction Workers Welfare Fund Act (KCWWF Act) from its bill. The petitioner asserts that it was contracted solely to supply materials for pipeline works and had no role in actual construction or labor performance, hence there is no statutory basis to levy cess against it. It relies on judicial precedents—Poulose and Others v. State of Kerala and Others (1993) and Kerala Construction WWF Board v. State of Kerala (1995)—to support the argument that cess cannot be imposed where the contractor’s involvement does not extend to construction activities. The respondents, represented by the KWA, contend that a contractor’s obligation to pay cess is clear and unavoidable as long as the contractor is engaged in construction works, and that even the supply of materials may fall within the scope of construction activity. The court notes a factual dispute about the exact nature of the contracts and emphasizes that KCWWF Act has a defined ambit that becomes applicable only when specific criteria are satisfied. It also underscores the principle that a party cannot be penalized unilaterally without due process. The judge allows the petition, sets aside the impugned proceedings, and directs the KWA to hear the petitioner, assess its claim, and decide in light of the cited precedents, with ongoing deferral of any recovery until orders are communicated. If the cess cannot be imposed after assessment, amounts collected will be refunded promptly.

Provisions of Law Cited

Kerala Construction Workers Welfare Fund Act (KCWWF Act)

Legal Doctrines & Maxims

Audi alteram partem (opportunity to be heard); principle of natural justice; cannot unilaterally impose a detriment without hearing

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner argued that it was engaged only to supply materials for pipeline works and had no role in construction or direct performance of works. Therefore, payment of Cess under KCWWF Act could not be imposed on them. It relied on precedents cited in its pleadings (Poulose and Others v. State of Kerala and Others; Kerala Construction WWF Board v. State of Kerala) to show that the Act’s levy cannot stretch to contractors who merely supply materials. The petitioner sought quashing of the impugned deductions and a declaration that they are not liable for cess.

Contentions of Respondents

The respondents argued that a contractor under KWA remains bound to pay Cess under KCWWF Act as long as construction work is involved, and that even the supply of materials is considered part of construction activity. They urged that the Act’s scheme is applicable where the criteria are satisfied and that the deduction from bills is a legitimate mechanism to secure cess obligations. They pressed for the maintenance of the assessment process rather than a wholesale exoneration of the petitioner.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Poulose and Others v. State of Kerala and Others	1993(3) ILR Kerala 675	Mentioned Only	Petitioner cited this case; the judgment does not indicate adoption or distinguishing of its principles, but refers to it in context to precedents to be considered.
Kerala Construction WWF Board v. State of Kerala	1995(2) KLT 724	Mentioned Only	Cited by petitioner in argument; the court notes to consider the declarations in the cited precedents without stating a direct application or distinction.

Diagnostic Tool

Beta

Does this judgment govern your specific facts?

Don't risk relying on a distinguishable precedent. Enter your facts or proposition below. We will test it against REENA ENGINEERS AND CONTRACTORS PVT. LTD. v. KERALA WATER AUTHORITY AND OTHERS and instantly map out authorities that support, challenge, or govern your position.

Extracted Judgment Text

Exact text extracted from official judgment records.

# `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ## `THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN` ``` TUESDAY, THE 23[RD] DAY OF JANUARY 2024 / 3RD MAGHA, 1945 ``` ## `WP(C) NO. 39292 OF 2023` ## `PETITIONER:` ``` REENA ENGINEERS AND CONTRACTORS PVT. LTD. REP. BY ITS MANAGING DIRECTOR K.C.JAMES 602, SHIV TOWER, PATTOPLAZA, PANAJI, GOA., PIN - 403001 BY ADVS. P.SHANES METHAR N.KRISHNA PRASAD ``` ## `RESPONDENTS:` - `1 KERALA WATER AUTHORITY REP. BY ITS MANAGING DIRECTOR, JALABHAVAN, VELLAYAMBALAM, THIRUVANANTHAPURAM., PIN - 695033` - `2 THE SUPERINTENDING ENGINEER OFFICE OF THE SUPERINTENDING ENGINEER, PH CIRCLEKOZHIKODE, KERALA WATER AUTHORITY, MALAPARAMBA.P.O, KOZHIKODE:, PIN - 673009` - `3 THE EXECUTIVE ENGINEER OFFICE OF THE EXECUTIVE ENGINEER, KERALA WATER AUTHORITY, PROJECT DIVISION-KOZHIKODE, MALAPARAMBA.P.O., KOZHIKODE:, PIN - 673009` - `4 THE KERALA CONSTRUCTION WORKERS WELFARE FUND BOARD REP. BY ITS CHAIRMAN, NIRMANBHAVAN, METTUKKADA,THYCAUD.P.O., THIRUVANANTHAPURAM., PIN - 695014` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C) NO. 39292 OF 2023 ``` ``` 2 ``` ## `JUDGMENT` ``` The petitioner is stated to be a Works Contractor, engaged by the respondent - Kerala Water Authority (KWA). ``` `2. The specific case of the petitioner is` ``` that they have been contracted with the ‘KWA’ ``` ``` only to supply materials for pipeline works ``` ``` being carried on by them; and that they have no ``` ``` connection with such construction work, or its ``` ``` allied performance. They argue that, obviously, ``` ``` therefore, no ‘Cess’ under the Kerala ``` ``` ConstructionWorkersWelfareFundAct ``` ``` (hereinafter referred to as‘KCWWF Act’ for ``` ``` short), could have been imposed against them, ``` ``` since the contracts entered into by them have no ``` ``` relation to the construction work at all, or to the construction workers. ``` **==> picture [405 x 14] intentionally omitted <==** ``` WP(C) NO. 39292 OF 2023 ``` ``` 3 ``` ``` spite of this, 1% of their bill amount is sought to be now deducted towards ‘Cess’ under the ‘KCWWF Act’; and consequently, that they have been constrained to approach this Court, through this Writ Petition. They asserts that their contentions are supported by the judgments of this Court inPoulose and Others v. State of Kerala and Others[1993(3 )ILR Kerala 675] and Kerala Construction WWF Board v. State of Kerala [1995(2) KLT 724]. ``` ``` 4. Sri.P.M.Johny – learned Standing Counsel for the ‘KWA’, however, in response to the afore submissions of Sri.P.Shanes Methar – learned counsel for the petitioner, argued that, since petitioner is a contractor under the ‘KWA’, his obligation to pay ‘Cess’ under the ‘KCWWF Act’ is unmistakable and unavoidable. He argued that, as long as the petitioner is involved in ``` ``` WP(C) NO. 39292 OF 2023 ``` ``` 4 ``` ``` construction works, he certainly has to pay ``` ``` ‘Cess’ and cannot refuse it in any manner, whatsoever. ``` `5. It is luculent from the afore rival` ``` positions that there is factual disputation as ``` ``` to the nature of the contracts entered into by ``` ``` the petitioner with the ‘KWA’. While they ``` ``` maintain that they are to only supply materials, ``` ``` without having any participation in the actual construction work; the ‘KWA’ appears to take the stand that, even the supply of materials is part of the construction work. ``` `6. However, it must be borne in mind that` - `‘KCWWF’ Scheme has a particular ambit to it and` ``` its purlieus are also well defined. It is only if all the criteria thereunder are satisfied, will the obligation of a contractor to pay ‘Cess’ thereunder be attracted. ``` ``` WP(C) NO. 39292 OF 2023 ``` ``` 5 ``` `7. In the case at hand, as I have already` ``` said above, it is the specific contention of the petitioner that they only supplies materials and ``` ``` has no part in the construction work. If this be so, certainly, it is a matter which the ``` ``` Superintendent or such other competent Authority ``` ``` of ‘KWA’ must consider, before imposing ‘Cess’ upon him, through an automatic deduction from his bills. ``` ``` 8. When there is a clear factual dispute as ``` ``` afore, it would not be proper for one of the ``` ``` contracting parties unilaterally to impose a detriment on the other, citing that they are liable to pay ‘Cess’, without even making an assessment of the same and without affording them an opportunity of being heard. ``` ``` In the afore circumstances, I allow this Writ ``` ``` Petition and set aside the impugned proceedings ``` ``` WP(C) NO. 39292 OF 2023 ``` ``` 6 ``` ``` and direct the competent Authority of the ‘KWA’ to hear the petitioner and assess their claim, that they are not liable to pay ‘Cess’ under the ‘KCWWF Act’ because, they only supply materials and is not concerned with the construction work. ``` ``` The afore shall be done, after affording the ``` ``` petitioner an opportunity of being heard and after assessing their contentions and the germane documentary materials; thus culminating in an appropriate order and necessary action thereon, as expeditiously as is possible. This shall be done also adverting specifically to the declarations in the afore cited precedents. ``` ``` Needless to say, until such time as the afore is done and the resultant orders ``` ``` communicated to the petitioner, action to recover any amount from their Bill amounts towards ‘Cess’ under the ‘KCWWF Act’, will stand ``` ``` WP(C) NO. 39292 OF 2023 ``` ``` 7 ``` ``` deferred; and will be taken forward only after the said orders are communicated to him and in terms of the decisions to be arrived at. ``` ``` As a corollary, if, through the afore exercise, it is to be found that ‘Cess’ under the ‘KCWWF Act’ cannot beimposedagainst the petitioner, then the amounts already collected fromthem under such head will be returned without any avoidable delay. ``` ``` Sd/- ``` ## `DEVAN RAMACHANDRAN` ``` JUDGE ``` ``` SAS ``` ``` WP(C) NO. 39292 OF 2023 ``` ``` 8 ``` ## `APPENDIX OF WP(C) 39292/2023` ``` PETITIONER’S EXHIBITS: ``` |`Exhibit P1`|`A TRUE COPY OF THE ETENDER NO : SE/`| |---|---| ||`PHC/KKD/17/2022-2023 DATED 12/07/2022`| ||`PUBLISHED BY THE SECOND RESPONDENT`| |`Exhibit P2`|`A TRUE COPY OF THE WORK ORDER TOGETHER WITH`| ||`THE ACCEPTED SCHEDULE (LETTER NO.`| ||`1945/D6/2022/PHC - KKD DATED 15-10-2022 OF THE`| ||`SECOND RESPONDENT)`| |`Exhibit P3`|`A TRUE COPY OF THE RELEVANT PAGES OF AGREEMENT`| ||`NO. SE / PHC /KKD / 16/2022-2023 DATED`| ||`28/10/2022`| |`Exhibit P4`|`A TRUE COPY OF THE CB3 VOUCHER PERTAINING TO`| ||`CC FIRST & PART BILL DATED 11-01-2023`| |`Exhibit P5`|`A TRUE COPY OF THE CB3 VOUCHER PERTAINING TO`| ||`CC SECOND & PART BILL DATED 10-02-2023`| |`Exhibit P6`|`A TRUE COPY OF THE REPRESENTATION DATED`| ||`09.10.2023 SUBMITTED BY THE PETITIONER BEFORE`| ||`THE SECOND RESPONDENT`| |`Exhibit P7`|`A TRUE COPY OF THE ORDER DATED 07-11-2023 OF`| ||`THIS HON'BLE COURT IN W.P.(C) NO. 36832 OF`| ||`2023`|