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IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J.MEHTA, J.
BBEL-MIPL Joint Venture - Petitioner
Versus
National Highway Authority of India - Respondent
OMP No. 363/2015
Decided on : 7-7-2015
Arbitration and Conciliation Act - Building and Other Construction Workers’ Welfare Cess Act - 1996 - [Section 34] - [Summary of Acts and Sections: The court discussed the Building and Other Construction Workers’ Welfare Cess Act, 1996 and its relevant sections including Section 3(1), 3(2), 14(1), and 14(3). The court also referred to the Cess Rules under the Cess Act and the relevant notifications specifying the cess rate. The judgment highlighted that the BOCW Act came into force in 1996 and the Cess Rules became effective in 1998, emphasizing the liability to levy cess under the Cess Act was not dependent on the constitution of the Welfare Boards. The court also cited a Division Bench judgment of the Delhi High Court and relevant observations and ratio from the judgment. The judgment emphasized that the Central Act had come into force in 1996 and the relevant notification was issued by the Central Government fixing the cess at 1%. The court also discussed the petitioner's reliance on other judgments but concluded that they did not support the petitioner's argument. The court held that the Award was not illegal, in violation of the law, or in violation of any contractual clause, and thus dismissed the petition.
Fact of the Case:
The petitioner claimed reimbursement of the labour cess amount deducted from each interim payment certificate under the Building and Other Construction Workers’ Welfare Cess Act, 1996, arguing that the Act came into force after the bid was submitted and the cess should be reimbursed.
Finding of the Court:
The court found that the Building and Other Construction Workers’ Welfare Cess Act, 1996 came into force in 1996, and the liability to levy cess under the Cess Act was not dependent on the constitution of the Welfare Boards. The court dismissed the petition, holding that the Award was not illegal or in violation of any contractual clause.
Issues: The main issue was whether the Building and Other Construction Workers’ Welfare Cess Act, 1996 was a subsequent legislation as per the contract between the parties, and whether the petitioner was entitled to reimbursement of the deducted cess amount.
Ratio Decidendi: The court relied on the Division Bench judgment of the Delhi High Court, emphasizing that the Central Act had come into force in 1996 and the relevant notification was issued by the Central Government fixing the cess at 1%. The court also highlighted that the liability to levy cess under the Cess Act was not dependent on the constitution of the Welfare Boards.
Final Decision: The court dismissed the petition, holding that the Award was not illegal, in violation of the law, or in violation of any contractual clause.
Valmiki J. Mehta, J.
1. This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996. Petitioner was the claimant in the arbitration proceedings. Claim no.2 was made by the petitioner for reimbursement of the labour cess amount of Rs.2,68,71,577/-. Cess was deducted from each interim payment certificate at 1% of the gross value of the work done. The case of the petitioner is that the cess which has been imposed under the Building and Other Construction Workers’ Welfare Cess Act, 1996 (in short ‘BOCW Act’) is a subsequent legislation which came into force after opening of the bid submitted by the petitioner, and being a subsequent legislation, respondent had wrongly deducted the cess which is liable to be reimbursed to the petitioner.
2. The sole issue before this Court is as to whether the BOCW Act is a ‘subsequent legislation’ as per the contract between the parties, because as per the petition this Act has come into force after the period of 28 days after opening of the bid submitted by the petitioner. The Arbitral Tribunal comprising of three arbitrators has negated the claim of the petitioner. Relevant portion of the Award with regard to claim no.2 is dealt with from paras 80 to 104 of the Award. In these paragraphs the arbitral tribunal has referred to and considered the issue and held that the BOCW Act cannot be said to be a subsequent legislation. The conclusion is stated in paras 102 and 103 of the Award and these paras read as under:-
“102. From the above it is clear that under the BOCW Service Act the Orissa Govt. had already made the BOCW Service Rule in 2002. Hence the Board and the other Service Rules for the Welfare of the BOCW Service Act was also constituted in 02.08.2002. In our considered opinion that the Resolution of the Labour and Employment department published on 18.12.2008 cannot be construed as a subsequent legislation for more than one reason namely (i) it was only the Central Govt. which had the authority to fix the rate of Cess under Sec. 3(1) and from the rules under Sec. 14(1) & 14(3) which would be applicable for the whole country, (ii) The Orissa Govt. had adopted for implementation in its Gazette Notification dated 29.07.2003 the Central Govt. Cess Rules 1998, (iii) Orissa state had adopted the Central Rules from 29.07.2003 the Cess Rules were in force from that date, (iv) The BOCW Cess Act under Sec. 3(1) empowers only the Central Govt. to levy the Cess by notification in the official Gazette, (v) Under Sec. 3(2) of the Cess Act only the manner of collection of Cess as levied by the Central Govt. in relation to “……….a building or other construction work of a Government or a public sector undertaking or advance collection through a local authority where…….” is specified. Hence, the time of implementation of the provisions of the Cess Act or the time at which it should be implemented is not left to “a Government or a public sector undertaking or advance collection through a local authority” since the Cess Act on a conjoint reading of Secs. 3(1), 3(2), 14(1), 14(3) make it clear that the Central Govt. only has the prerogative to fix the rate of Cess and levy the same.
103. In the light of the above findings we find that in the present case the resolution of the Orissa Govt. gazette on 18.12.2008 cannot be considered as a subsequent legislation to invoke provisions of Clause 70.8 of the Contract since the Central Govt. had notified the rate of Cess in 1996 and the Orissa Govt. had already framed and adopted the BOCW Service Rules on 02.08.2002”
3. The issue to be decided is no longer res integra and the same has been pronounced upon by a Division Bench judgment of this Court in the case reported as Delhi Metro Rail Corporation Limited Vs. Simplex Infrastructures Limited 2011 (3) ArbLR 307 (Delhi). This judgment categorically holds that merely because a State Government seeks to implement the BOCW Act subsequently by making rules and constitution of the Board to be constitut
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