THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE P. DURGA PRASAD WRIT APPEAL Nos. 279, 280, 284, 285, 288, 289, 290, 292, 293, 294, 299, 300, 301, 322, 572, 825, 885 and 1007 of 2009 COMMON JUDGMENT: (Per the Hon’ble Sri Justice Goda Raghuram) All these appeals involve an identical issue, being directed against judgments of learned single Judges in the several writ petitions. The common appellant in all the appeals i.e. the National Construction Academy (‘NCA’ for short), which is a respondent in many of the writ petitions; or not being so, filed the appeals after obtaining the leave of this Court; aggrieved by the judgments under appeal, whereby and whereunder G.O.Ms.Nos. 61 TR &B Department dated 11.4.2000, G.O.Ms.No.98 (I&CAD) dated 5.7.2000 and G.O.Ms.No.159 TR &B Department dated 11.4.2000 were quashed; following the earlier judgment in W.P. No. 23750 of 2000 dated 19.7.2005 and a judgment in another batch of writ petitions - W.P. No. 21120 of 2008 and batch dated 26.8.2008 and consequently the respondents therein were directed to refund 0.25% of the amount, if any, recovered from the bills payable to the writ petitioners with a further direction not to recover any amount from future bills payable to them. All the writ petitioners are Contractors, who entered into contracts either with the State of Andhra Pradesh or its instrumentalities for the execution of public works. For the first time in G.O.Ms.No. 92 dated 19.5.1998 the State Government issued orders felicitating collection of 0.25% from the Contractors’ gross bills towards the corpus, for development and functioning of the National Academy of Construction, which was established vide G.O.Ms.No.103 TR&B (R.III) Department dated 16.6.1998, a body later registered under the A.P. (Telangana Area) Public Societies Registration Act, 1350 Fasli, on 24.9.1999. Thereafter, in G.O.Ms.No.61, a direction was issued to all the Departments of the State as well as Corporations under State control to incorporate a condition in all tender documents and agreement forms, enabling collection of 0.25% from the Contractors’ gross bills, as their contribution to the NAC, thereby making the contributions mandatory. Paragraph 8 of this G.O. enjoins, “the Departments shall also ensure that estimates shall not be increased to include the above contribution and it shall not be covered in the Standard Schedule of Rates. This contribution has to come from the contractors out of their profit element only”. In a subsequent order in G.O.Ms.98, issued by the Irrigation and Command Area Development, a provision similar to that made in G.O.Ms.61 was incorporated, making the compulsory exaction of 0.25% for the benefit of NAC a part of the terms and conditions of the contracts relating to the Irrigation Department as well. In the last of the Government Orders we are concerned with in these appeals i.e. G.O.Ms.No.159; and after consultation with the Builders’ Association of India, orders were issued to apportion, the amounts collected from the Contractors under the regime of compulsory exaction (now masquerading as a term in the agreements between the Contractors and the State or its instrumentalities), between Chief Minister’s Relief Fund and for the benefit of NAC, in the ratio of 0.15% and 0.10% (of the total compulsory exaction of 0.25% from the Contractors’ bills). By the common judgment dated 19.7.2005 in W.P. No. 23750 of 2000 and batch, a learned single Judge of this Court had declared G.O.Ms.No.92 and a consequent circular issued by the Engineer-in-Chief, R&B Department to be illegal, without the authority of law and allowed the writ petitions. Thereagainst, the State preferred appeals, which were dismissed by a learned Division Bench in State of A.P. v. National Academy of Construction, Hyderabad and another[1]. The learned Division Bench reiterated the express constitutional injunction that a taxation measure without the legislative authority (Article 265) is impermissible and that the Government orders mandating contribution of 0.25% from the bills of the Contractors constitutes a compulsory exaction under an executive dispensation, without the authority of law and is, therefore, unsustainable. In the meanwhile, as despite the declaration of law by the learned single Judge in the judgment dated 19.7.2005 in W.P. No. 23750 of 2000 and batch, the State and its instrumentalities were continuing to deduct from the Contractors’ bills 0.25% of the bill amounts for the benefit of the NAC, under subsequent executive orders in G.O.Ms.No.98 and G.O.Ms.No.159 and on the basis of clauses incorporated in the contracts between the State and its instrumentalities on the one hand and the Contractors on the other, other writ petitions came to be filed and by the judgments against which these appeals are filed, learned single Judges, by separate judgments, following the earlier declaration of law, allowed the writ petitions, invalidated the executive orders and reiterated the absence of any power or authority in the State or its instrumentalities to make compulsory exactions under the façade of constitutionally unsustainable executive orders. Sri O. Manohar Reddy, the learned counsel representing the NAC would strenuously contend that the NAC is a body, which, though not a State or an instrumentality of the State, is engendered for the purpose of providing construction workers with the skills and craft necessary for executing public works with greater fidelity and competence and with a view to support such an Organization, a laudable objective, the State issued various executive instructions for collecting a negligible percentage from the bills of the Contractors for the benefit of the NAC, for its sustenance and upkeep and to enable it to render effective service for the benefit of construction workers. It is also contended that since post G.O.Ms.Nos. 61, 98 and 159, all agreements between the State and several instrumentalities of the States and the Contractors contain a clause whereby the Contractors voluntarily agree to make this contribution and since the Contractors/writ petitioners have not chosen to specifically challenge the clauses in the contracts they have entered into with the State or its instrumentalities, no interference was legitimately called for in the writ petitions. The above is a contention that is stated to be rejected. The contracts entered into between the State and its instrumentalities and the writ petitioners/Contractors are contracts of adhesion or printed-form contracts. There is no mutuality involved. Ordinarily, clauses in such contracts, though absent mutuality in substance, are not liable to be interfered with in the public law domain under Article 226 of the Constitution, since there would be no established grossly unequal power or no inequality of a magnitude warranting a clause in such contracts to being characterized as arbitrary conduct of the State or its instrumentalities and also since normal clauses in contracts may not fall foul of the injunctions in the Indian Contract Act, which prohibits enforcement of contracts contrary to public policy. Though this is the generic doctrine, in particular it must be noticed that the compulsory exaction, which is the subject matter of the present appeals, is in the nature of a tax or cess collected by the State for the purpose of what is admittedly a non-statutory body – the NAC. It is axiomatic and follows from the constitutional injunctions in Article 265 that there could be no compulsory exaction by way of tax or a cess without legislative authority. Article 265 is at the heart of the democratic architecture of the Indian Constitution and the provision follows a venerated aspect of democratic governance, namely, that there should be no taxation without representation. In the context of the fact that the compulsory exaction regime mandated on contractors is traceable to executive orders issued by the State in purported exercise of its powers under Article 162 of the Constitution, the State ought not to be permitted to exercise its executive power in the manner that would transgress constitutional limitations. It is clear from the constitutional scheme that while executive power of the State is complementary to legislative power, the exercise of executive power must conform to the limitations of the Constitution. When the Constitution mandates that there shall be no taxation without legislative authority, that constitutional injunction cannot be circumvented by issuance of executive orders which circumnavigate the constitutional injunction by enjoining that compulsory exaction by way of a tax or cess could be made from a contractor by the devise of incorporating a clause in the contract. The above is the sum and substance of the ratio ratio reiterated by the learned Division Bench in the State of U.P. (supra). We are in respectful agreement with the ratio and, consequently, the appeals must fail and are accordingly dismissed. ______________________ JUSTICE GODA RAGHURAM ______________________ JUSTICE P. DURGA PRASAD Date: 28-6-2011. MVB. [1] 2010 (5) ALD 591