The division judge bench of the Jharkhand High Court held that any unjust retention of money or property of another shall be against the fundamental principles of justice, equity, and good conscience. The court furthermore held that unauthorized deductions from the running bills of the petitioner-Firm by the Jharkhand Bijli Vitran Nigam Limited (JBVNL) are patently illegal.
Brief facts
The factual matrix of the case is that Petitioner-Firm was selected for the rural electrification works under Deen Dayal Upadhyaya Gram Jyoti Yojna in XIIth Plan for Giridih, Bokaro, and Dhanbad and JBVNL issued the letters of award. The JBVNL started deductions @ 2% from the running bills raised by the petitioner-firm for the supply of materials and retained Rs. 2,90,32,000/- on the pretext of “Income Tax Contingency”. Through several communications, the petitioner-firm requested the JBVNL to release the amount so withheld as Income Tax contingency. However, the JBVNL did not release the illegally deducted amount nor deposited the said amount with the Income Tax Department. The Petitioner approached the court in order to challenge the action of JBVNL.
Contentions of the Petitioner
The Petitioner submitted that the Petitioner is not a party to the dispute between JBVNL and the Income tax department and the action of JBVNL in holding the Rs. 2,90,32,000/- without issuing the TDS certificate is arbitrary and unlawful. It was furthermore submitted that the failure to deduct or pay any sum as per the provisions of the Income Tax Act follows the consequences as provided under section 201 of the Income Tax Act; one of such consequences is the levy of interest thereon. Also, JBVNL claimed before the CIT (appeal) that it was not under an obligation to deduct 2% TDS from the running bills of the Contractor raised towards the supply of materials and, on the other hand, it has retained Rs. 2,90,32,000/- towards payment of 2% TDS deductions on that count and also the said amount was not deposited with the income tax department.
Contentions of the Respondent
The Respondent submitted that the JBVNL has made deductions against the demand of tax by the Income Tax Department, in accordance with the terms of Clause 10 of the General Conditions of Contract.
Observations of the court
The Hon’ble Court observed that any unjust holding of another person's money or property is against the core values of justice, equity, and morality. It is obviously unlawful for the petitioner-firm to have made unlawful deductions from its running bills. The petitioner firm, which filed its income tax return but was denied Rs. 2,90,32,000/-, experienced losses as a result of these deductions, including business or principal interest losses.
The court noted that the JBVNL must refund Rs. 2,90,32,000/- along with the interest and the interest is to be paid as per clause 10.7.4 of the Regulation of 2015. The court relied upon the judgment titled Indian Council for Enviro-Legal Action v. Union of India.
Based on these considerations, the court was of the view that the Petitioner was unnecessarily dragged to the court and, that too, knowingly and for no fault on its part. Therefore, the court imposed the cost of Rs Lacs which shall be recovered from the Managing Director of JBVNL.
The decision of the court
With the above direction, the court allowed the writ Petition.
Case title: M/s Anvil Cables Private Limited V. The State of Jharkhand
Coram: Hon’ble Mr. Acting Chief Justice Shree Chandrashekhar, and Hon’ble Mr. Justice Navneet Kumar
Case No.: W.P.(T) No. 5475 of 2023
Advocate for the Petitioner: Mr. M.S. Mittal, Sr. Advocate Mr. Rahul Lamba, Advocate Mr. Salona Mittal, Advocate
Advocate for the JBVLN: Mr. Rajiv Ranjan, Advocate General Mr. Sachin Kumar, Sr. Standing Counsel
Advocate for the Income Tax Department: Mr. Anurag Vijay, Standing Counsel Mr. Om Prakash, AC to Standing Counsel Mr. Shivam Singh, AC to Standing Counsel
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