Court rules disputes over statutory cess under BOCW Act non-arbitrable, reinforcing statutory adjudication
In a significant ruling, the Chhattisgarh High Court has dismissed the arbitration requests filed by S.K. Samanta and Co. (P) Ltd. against South Eastern Coalfields Limited (SECL) concerning the deduction of cess under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act) and its associated Cess Act. The court, presided over by Chief Justice Ramesh Sinha, emphasized that disputes arising from statutory provisions governing the levy and collection of cess are not suitable for arbitration, as they fall under the purview of statutory adjudication.
The core of the dispute revolved around a 1% cess deduction from the contractor's bills, mandated by the BOCW Cess Act. The petitioner argued that the BOCW Act should not apply to their activities related to setting up and maintaining workshops within coal mine precincts, as these fall under the Mines Act, 1952. They contended that SECL had no authority to deduct the cess, which should be adjudicated through arbitration as per their contract's arbitration clause.
However, the court ruled that the dispute was not purely contractual but involved the applicability and operation of statutory provisions. Chief Justice Sinha highlighted that the cess deduction was conducted under statutory provisions, government notifications, and contractual stipulations that the applicant had accepted. The court noted that the SECL acted merely as a collecting agency for the cess, which was then deposited with state authorities, making the matter fundamentally statutory.
The court also pointed out that the BOCW Act and the BOCW Cess Act provide a comprehensive mechanism for the adjudication of such disputes, and issues concerning statutory liabilities should be addressed by the appropriate statutory forum. The judgment underscored that the mere existence of an arbitration clause does not automatically render all disputes arbitrable, especially when they pertain to statutory liabilities.
This ruling reinforces the principle that disputes involving statutory provisions are to be resolved through statutory forums rather than arbitration, a significant reaffirmation for similar cases in the future.
Bottom line:-
Arbitration - Disputes arising from statutory provisions governing levy and collection of cess, such as under the BOCW Act and BOCW Cess Act, are not arbitrable as they fall within the domain of statutory adjudication.
Statutory provision(s):
Arbitration and Conciliation Act, 1996, Section 11(6); Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; Building and Other Construction Workers' Welfare Cess Act, 1996; Mines Act, 1952; Contract Labour (Regulation and Abolition) Act, 1970.
