Twist: L&T to face hefty penalty!

There seem to be no ending for the woes of the concessionaire of Hyderabad Metro Rail Project, Larsen and Toubro. The project is estimated at Rs 14,132 crore and according to the Building and Other Construction Workers’ Welfare Cess Act, 1996, L&T has to pay one percent of the cost as labour cess. However, the company had paid only one Crore so far and despite several reminders fails to respond.

The Labour department of Telangana State had decided to issue a final notice next week and initiate action action against the company if it fails to pay the balance 140 Crore. This collection of labour cess is mandatory for any construction works and the labour department in turn will utilise the fund for the welfare of construction workers including payments as compensation for loss of life or injury while at work.

In the event of non-compliance by L&T, the labour department can demand 50% of the cess as penalty (apart from one per cent cess) and two per cent on the total cess amount as interest. If the company continues to ignore the notices, then the state can invoke the Revenue Recovery Act and seize movable assets of the construction company including cranes and other construction equipment.