2010 (7) TMI 1224 - HC - Indian Laws

Summary

Issues involved: Government orders mandating deduction of 0.25% from contractors' bills for contribution to National Academy of Construction (NAC) challenged as lacking legal sanction.

Construction Contracts Regulation:
The construction of Roads and Buildings (R&B) in Andhra Pradesh by the Government is regulated by the Andhra Pradesh Detailed Standard Specification, Law of Contracts, and Tax Laws. The R&B contractor is required to execute the contract in the prescribed form, which comprehensively provides for terms and conditions, tax payments, deductions, dispute resolution, etc., either through arbitration or in a Civil Court.

Establishment of NAC and Forced Contributions:
In 1998, the Government established the National Academy of Construction (NAC) to promote the construction industry's development. Government orders mandated contractors to contribute 0.25% of the gross bill amount to NAC, initially on a voluntary basis but later made mandatory through circular memoranda and subsequent orders.

Legal Challenge and Court Decision:
Government orders G.O.Ms.No.92 and G.O.Ms.No.98 were challenged in court, contending that the deductions lacked legal authority. The Single Judge set aside the orders, stating that the deductions were not backed by any existing law, and the Builders Association of India's resolution did not override the petitioners' right to challenge the orders.

Contractual Disputes and Affidavit Evidence:
The petitioners asserted that their contracts did not include clauses authorizing deductions for NAC contributions, which remained uncontradicted in the counter affidavits. The court emphasized the significance of uncontraverted affidavit averments in deciding disputes based on affidavit evidence.

Comparison with Excise Laws Litigation:
The judgment referenced cases involving levy and collection of charges in excise laws, highlighting the necessity for statutory backing for such expropriations to be constitutional. The court distinguished cases where statutory authority was lacking for levies on entities not directly involved in the resolutions prompting the contributions.

Final Decision:
The court dismissed the writ appeals, upholding the Single Judge's decision that the Government orders lacked legal sanction and could not be enforced against contractors. The mandatory contributions to NAC were deemed impermissible under the law, leading to the dismissal of the appeals with costs.