Prakash Atlanta Jv vs. National Highways Authority Of India

Reportable
2026 INSC 76
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION


CIVIL APPEAL NO. 4513 OF 2025

PRAKASH ATLANTA (JV) … Appellant

versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA … Respondent


WITH

C.A. No. 5416 of 2025

C.A. No. 5302 of 2025

C.A. No. 5301 of 2025

C.A. No. 5304 of 2025

C.A. No. 5412 of 2025


J U D G M E N T
SANJAY KUMAR, J
1. These civil appeals, sourced in arbitral awards passed under the
1
Arbitration and Conciliation Act, 1996 , seek to raise questions about the
interpretation and implementation of two enactments – ‘The Building and
Signature Not Verified
Digitally signed by
babita pandey
Date: 2026.01.20
17:11:17 IST
Reason:
Other Construction Workers (Regulation of Employment and Conditions

1
For short, the ‘Arbitration Act’
1


2
of Service) Act, 1996’ , and ‘The Building and Other Construction Workers’
3
Welfare Cess Act, 1996’ . Prakash Atlanta (JV) filed the first of these
appeals, viz., Civil Appeal No. 4513 of 2025, while National Highways
4
Authority of India is the appellant in the other five appeals, viz., Civil
Appeal Nos. 5301, 5302, 5304, 5412 and 5416 of 2025. Insofar as the
appeals filed by NHAI are concerned, a common issue arises therein. The
issue is as to whether the BOCW Act and the Cess Act can be treated as
‘subsequent legislation’ for the purposes of the contracts entered into by
NHAI with its contractors, the respondents in NHAI’s five appeals. By way
of their awards passed in favour of the said respondents, the arbitral
tribunals held that these Acts did qualify as ‘subsequent legislation’.
2. This being the milieu, it would be apposite to first note the statutory
schemes of the BOCW Act and the Cess Act. Both these enactments had
their origin in Ordinances promulgated on 03.11.1995. These Ordinances
were followed by the later Ordinances dated 05.01.1996, 27.03.1996 and
20.06.1996. Finally, both the enactments took shape on 19.08.1996, with
the sanction of the Parliament. The BOCW Act came into force on
01.03.1996, as per Section 1(3) thereof. The Cess Act, on the other hand,
came into force even earlier on 03.11.1995, as per Section 1(3) thereof.
The preamble to the BOCW Act states that it is an Act to regulate the

2
For short, ‘the BOCW Act’
3
For short, ‘the Cess Act’
4
For short, ‘NHAI’
2


employment and conditions of service of building and other construction
workers and to provide for their safety, health and welfare measures and
for other matters connected therewith or incidental thereto. The Cess Act
is linked to the BOCW Act, as is evident from its preamble and Statement
of Objects and Reasons, which state that it is an Act to provide for levy
and collection of cess on the cost of construction incurred by employers
with a view to augmenting the resources of the Building and Other
Construction Workers’ Welfare Boards constituted under the BOCW Act.
3. Section 1(4) of the BOCW Act states that the said enactment would
apply to every establishment which employs, or had employed on any day
of the preceding twelve months, ten or more building workers in any
building or other construction work. Section 2(1)(a) thereof defines
‘appropriate Government’ to mean the Central Government in cases
falling within Clauses (i) and (ii). Section 2(1)(a)(ii) pertains to public sector
undertakings which may be specified by the Central Government, under
notification, that employ building workers either directly or through a
contractor. The ‘ Explanation’ thereto provides that a public sector
undertaking (PSU) means any corporation established by or under any
Central, State or Provincial Act or a Government company, which is
owned, controlled or managed by the Central Government. Section
2(1)(a)(iii) states that, in relation to any other establishment which
employs building workers, either directly or through a contractor, the
3


Government of the State in which that other establishment is situated
would be the appropriate Government. Section 2(1)(c) defines ‘Board’ to
mean a Building and Other Construction Workers’ Welfare Board
constituted under Section 18(1) thereof. Section 2(1)(d) defines ‘Building
or other construction work’ to include construction, alteration, repairs,
maintenance or demolition of, or in relation to, amongst others, roads also.
Section 2(1)(i) defines ‘employer’ inclusively and it reads as follows:
‘(i) “employer”, in relation to an establishment, means the owner thereof,
and includes,—
(i) in relation to a building or other construction work carried on by or under
the authority of any department of the Government, directly without any
contractor, the authority specified in this behalf, or where no authority is
specified, the head of the department;
(ii) in relation to a building or other construction work carried on by or on
behalf of a local authority or other establishment, directly without any
contractor, the chief executive officer of that authority or establishment;
(iii) in relation to a building or other construction work carried on by or
through a contractor, or by the employment of building workers supplied by
a contractor, the contractor.’

4. Section 2(1)(k) defines ‘Fund’ to mean the Building and Other
Construction Workers’ Welfare Fund, constituted under Section 24(1)
thereof. Chapter III of the BOCW Act pertains to ‘Registration of
Establishments’. Section 6 therein is titled ‘Appointment of registering
officers’ and states that the appropriate Government may, by order notified
in the Official Gazette, appoint gazetted officers of the Government to be
registering officers for the purposes of the BOCW Act, duly defining the
limits within which such registering officers shall exercise the powers
4


conferred upon them by or under the said enactment. Section 7 thereof
pertains to registration of establishments and requires every employer to
make an application to the registering officer for registration of the
establishment to which the BOCW Act applies within a period of sixty
days. The proviso thereto, however, empowers the registering officers to
entertain belated applications upon being satisfied that there was
sufficient cause for the delay. Section 10 deals with non-registration and
states that no employer of an establishment to which the BOCW Act
applies who has either failed to get the establishment registered, or whose
registration has been revoked and has attained finality, shall employ
building workers in the establishment after expiry of the stipulated period.
5. Chapter IV of the BOCW Act is titled ‘Registration of Building
Workers as Beneficiaries’. Section 11 therein provides that, subject to the
provisions of the enactment, every building worker registered as a
beneficiary thereunder shall be entitled to the benefits provided by the
Board from its Fund under the enactment. Section 12 deals with
registration of building workers as beneficiaries. Section 12(1) defines
eligibility of building workers for registration as beneficiaries under the
BOCW Act. The other sub-sections provide the procedure for registration
to be carried out and stipulate that the Secretary of the Board shall
maintain such registers as may be prescribed in relation to the building
workers who have been registered as beneficiaries.
5


6. Section 15 of the BOCW Act requires every employer to maintain a
register showing the details of employment of beneficiaries employed in
the building or other construction work undertaken by him. Section 16 of
the BOCW Act pertains to contributions by the building workers who are
registered as beneficiaries and stipulates that they must contribute to the
fund at the rate per month as prescribed by the State Government, by
notification in the Official Gazette, and Section 17 of the BOCW Act
provides that failure on the part of the beneficiary to pay his contribution
for a continuous period of not less than one year would result in his
ceasing to be a beneficiary.
7. Chapter V of the BOCW Act, comprising Sections 18 to 27, deals
with the Buildings and Other Construction Workers’ Welfare Boards.
Section 18 therein deals with constitution of State Welfare Boards. Section
18(1) provides that every State Government shall appoint and constitute
a Welfare Board to exercise the powers conferred on, and perform the
functions assigned to, it under the BOCW Act, by notification. Section
18(2) provides that the Board shall be a body corporate having perpetual
succession and a common seal. Section 18(3) states that the Board shall
consist of a Chairperson nominated by the Central Government and such
number of members, not exceeding 15, as may be appointed by the State
Government. Section 22 of the BOCW Act details the functions of the
Welfare Board.
6


8. Section 24 of the BOCW Act pertains to the ‘Building and Other
Construction Workers’ Welfare Fund and its application’. This fund is to be
constituted by the Welfare Board and all grants and loans made to the
Board by the Central Government; all contributions made by the
beneficiaries; all sums received from such other sources as may be
decided by the Central Government should be credited to the said fund.
Sections 40 and 62 of the BOCW Act empower the appropriate
Government to make Rules, be it with regard to the measures to be taken
for the safety and health of building workers in the course of their
employment and the equipment and appliances to be provided to them for
ensuring their safety, health and protection during such employment, or
for carrying out the provisions of the BOCW Act. In exercise of power
thereunder, the Building and Other Construction Workers’ (Regulation of
5
Employment and Conditions of Service) Central Rules, 1998 , were
framed by the Government of India, vide G.S.R. 689 (E) dated 19.11.1998,
published in the Gazette of India, Extraordinary, dated 19.11.1998.
9. The Cess Act, as is manifest from its preamble and Statement of
Objects and Reasons, is complementary to the BOCW Act. Section 2(a)
thereof defines ‘Board’ to mean the Welfare Board constituted under
Section 18(1) of the BOCW Act by the State Government. Section 2(b)

5
For short, ‘the BOCW Rules’
7


defines ‘Fund’ to mean the Building and Other Construction Workers’
Welfare Fund, constituted by that Board. Section 3 thereof deals with levy
and collection of cess. Section 3(1) states that there shall be levied and
collected a cess for the purposes of the BOCW Act at such rate, not
exceeding two per cent but not less than one per cent of the cost of
construction incurred by an employer, as the Central Government may, by
notification in the Official Gazette, from time to time specify. In exercise of
power under Section 3(1) of the Cess Act, the Ministry of Labour,
Government of India, issued Notification No. S.O. 2899 dated 26.09.1996,
published in the Gazette of India, Extraordinary, dated 12.10.1996, in
modification and supersession of Notification dated 17.05.1996,
specifying the cess for the purpose of the BOCW Act @ 1 per cent of the
cost of construction incurred by an employer. Section 3(2) states that the
cess levied under Section 3(1) should be collected from every employer
in such manner and at such time, including deduction at source, in relation
to a building or other construction work of a Government or of a PSU, etc,
as may be prescribed. Section 3(3) states that the cess collected under
Section 3(2) shall be paid by the State Government collecting the cess to
the Board, after deducting the cost of collection of such cess, not
exceeding one per cent of the amount collected.
10. Section 14 of the Cess Act empowers the Central Government to
make Rules for carrying out the provisions thereof by notifying the same
8


in the Official Gazette. Pursuant thereto, the Building and Other
6
Construction Workers’ Welfare Cess Rules, 1998 , were framed by the
Government of India, vide G.S.R. 149 (E) dated 26.03.1998, published in
the Gazette of India, Extraordinary, dated 26.03.1998. Rule 2(f) defines
‘Cess Collector’ to mean an officer appointed by the State Government for
collection of cess under the Act. Rule 2(g) defines ‘Assessing Officer’ to
mean a gazetted officer of a State Government or an officer of a local
authority, holding an equivalent post to a gazetted officer of the State
Government, appointed by such State Government for assessment of
cess under the BOCW Act. Rule 3 of the Cess Rules, titled ‘Levy of cess’,
provides that, for the purpose of levy of cess under Section 3(1) of the
BOCW Act, the cost of construction shall include all expenditure incurred
by an employer in connection with the building or other construction work,
subject to certain exclusions. Rule 4 of the Cess Rules is titled ‘Time and
manner of collection’. It reads as follows:
‘4. Time and manner of collection. — (1) The cess levied under sub-
section (1) of section 3 of the Act shall be paid by an employer, within
thirty days of completion of the construction project or within thirty days
of the date on which assessment of cess payable is finalised, whichever
is earlier, to the cess collector.
(2) Notwithstanding the provisions of sub-rule (1), where the duration of
the project or construction work exceeds one year, cess shall be paid
within thirty days of completion of one year from the date of
commencement of work and every year thereafter at the notified rates on
the cost of construction incurred during the relevant period.

6
For short, ‘the Cess Rules’
9


(3) Notwithstanding the provisions of sub-rule (1) and sub-rule (2),
where the levy of cess pertains to building and other construction work of
a Government or of a Public Sector Undertaking, such Government or
the Public Sector Undertaking shall deduct or cause to be deducted the
cess payable at the notified rates from the bills paid for such works.
(4) Notwithstanding the provisions of sub-rule (1) and sub-rule (2),
where the approval of a construction work by a local authority is required,
every application for such approval shall be accompanied by a crossed
demand draft in favour of the Board and payable at the station at which
the Board is located for an amount of cess payable at the notified rates
on the estimated cost of construction:
Provided that if the duration of the project is likely to exceed one year,
the demand draft may be for the amount of cess payable on cost of
construction estimated to be incurred during one year from the date of
commencement and further payments of cess due shall be made as per
the provisions of sub-rule (2).
(5) An employer may pay in advance an amount of cess calculated on
the basis of the estimated cost of construction along with the notice of
commencement of work under section 46 of the Main Act by a crossed
demand draft in favour of the Board and payable at the station at which
the Board is located:
Provided that if the duration of the project is likely to exceed one year,
the demand draft may be for the amount of cess payable on cost of
construction estimated to be incurred during one year from the date of
such commencement and further payment of cess due shall be made as
per the provisions of sub-rule (2).
(6) Advance cess paid under sub-rules (3), (4) and (5), shall be adjusted
in the final assessment made by the Assessing Officer.’

11. Rule 4(3) above manifests that, unlike a case falling under Rules
4(1) and (2), if the levy of cess pertains to the building and other
construction work of a Government or of a PSU, that Government or PSU
should deduct or cause to be deducted the cess payable at the notified
rate from the bills paid for such works. Rule 4(6) states that the advance
cess paid under Rule 4(3) shall be adjusted in the final assessment made
by the Assessing Officer. Further, Rule 5 of the Cess Rules stipulates that
10


the proceeds of the cess collected under Rule 4 should be transferred by
the Government, PSU, etc., to the Welfare Board within thirty days of its
collection. Rule 6 is titled information to be furnished by an employer and
provides that every employer, within thirty days of commencement of his
work, shall furnish to the Assessing Officer, information in Form I and any
change or modification in the information, so furnished, should be
communicated to the Assessing Officer immediately and not later than
thirty days from the date of affecting the modification or change.
12. Rule 7 pertains to ‘Assessment’. Rule 7(1) provides that the
Assessing Officer, on receipt of information in Form I from an employer is
required to make an order of assessment within a period not exceeding
six months from the date of receipt of information in Form I, indicating the
amount of cess payable by the employer. A copy thereof is to be furnished
to the employer; to the Welfare Board; and to the Cess Collector within
five days of the date on which such order is made. Rule 7(2) provides that
the order shall, inter alia , specify the amount of cess due, cess paid by the
employer or deducted at source and the balance amount payable and the
date, by which the cess should be paid to the Cess Collector.
13. We deemed it necessary to deal with and set out the contents of the
BOCW Act, the Cess Act and the concomitant Rules to stress upon how
exhaustive, comprehensive and detailed were the schemes of these two
welfare legislations and the steps and measures to be taken thereunder.
11


14. It is, however, a matter of record that the BOCW Act and the Cess
Act just remained on paper owing to the failure of the appropriate
Governments in taking necessary steps and measures, as provided in
those welfare legislations, to give full effect to them. A 3-Judge Bench of
this Court took note of this sorry state of affairs in National Campaign
7
Committee, C.L., Labour vs. Union of India and others and directed
the State Governments and Union Territories (UTs) which had not framed
Rules under Section 62 of the BOCW Act to adopt the Rules already
framed by the Delhi Government in that regard. Further directions were
issued on 18.01.2010 for implementation of the Acts by such States/UTs
without further delay. One such direction was with regard to constitution
of Welfare Boards, with adequate full-time staff, by each State/UT within
three months. By order dated 10.09.2010, a 3-Judge Bench of this Court
observed that time had come to enforce the earlier orders for
implementation of the BOCW Act and directed the Central Government to
call for the necessary information from the States/UTs concerned and to
issue directions for setting up Welfare Boards within eight weeks, in terms
of the earlier order dated 18.01.2010.
15. The Central Government was also asked to furnish a status report
with regard to implementation of the BOCW Act and the guidelines given

7
(2009) 3 SCC 269
12


in the earlier order dated 18.01.2010. Contempt proceedings were
initiated for non-implementation of the directions of this Court in the orders
dated 18.01.2010, 13.08.2010 and 10.09.2010. Notices were issued to
the authorities of the Central Government, Lakshadweep, Meghalaya and
Nagaland in that regard, vide order dated 15.03.2011. Thereafter, by order
dated 28.11.2011, another 3-Judge Bench of this Court granted an
opportunity to enable each defaulting State to explain as to why contempt
action should not be taken.
16. By order dated 07.02.2012, taking note of substantial compliance by
most of the States, this Court closed the contempt cases, but with further
directions to ensure full compliance. Again, by order dated 16.10.2015, a
3-Judge Bench noted further inaction on the part of stakeholders in giving
effect to these legislations, as only about 1.5 crores out of 4 crore
construction workers had been registered with the authorities concerned.
Further directions came to be issued for full and proper implementation of
these Acts on 30.10.2017. This Court took note of the dismal situation in
the context of misuse of the BOCW Act, as ₹29,000 crores had been
collected but not even 10 per cent thereof was spent for the benefit of
construction workers. The matter was accordingly adjourned to enable the
Secretary in the Ministry of Labour, Government of India, to report. Having
heard the Secretary on 10.11.2017, this Court directed involvement of civil
society in the effective management of the BOCW Act and adjourned the
13


matter to enable the Secretary to hold a meeting with the Labour
Secretaries of all the States/UTs within a time frame to ensure proper and
complete implementation. The matter was heard again on 19.03.2018 and
further directions were given by this Court. The matter was directed to be
listed on 01.05.2018 to ascertain whether timelines were fixed by the
authorities concerned for compliance with such directions. The last
reported order of this Court in this regard is National Campaign
Committee for Central Legislation on Construction Labour (NCC-CL)
8
vs. Union of India and others .
17. It is, thus, clear that neither the BOCW Act nor the Cess Act were
actually implemented till this Court intervened and actively monitored the
steps to be taken therefor from time to time. It is owing to this lassitude
and lethargy on the part of the States, UTs and stakeholders that the
present litigation arises. The failure on the part of several States in
constituting Welfare Boards and in appointing authorities to give effect to
these enactments lays foundation for the present conundrum. The
contention of NHAI is that, notwithstanding the delayed constitution of
Welfare Boards and lack of effective implementation, both the enactments
should be construed to have come into effect on the dates notified, i.e.,
01.03.1996 (BOCW Act) and 03.11.1995 (Cess Act) and they cannot,

8
(2018) 5 SCC 607
14


therefore, be taken to be ‘subsequent legislation’ under its contractual
clauses. NHAI would contend that, as the rate of the cess to be collected,
i.e., @ one per cent of the cost of construction, was specified by the
Central Government as long back as on 26.09.1996, the respondents in
its five appeals cannot claim ignorance thereof and they ought to have
factored in the same in their price bids while submitting tenders for its
works. NHAI would argue that, as per Rule 4 of the Cess Rules, deduction
at source was to be effected if the work pertained to a Government or a
PSU and, therefore, the cess was deductible irrespective of the
constitution of Welfare Boards. NHAI would further argue that, if the Cess
Act is to be given effect by linking it to constitution of Welfare Boards, such
interpretation would undermine and defeat the very scheme and intent
underlying these welfare legislations, as that would mean that they came
into operation on different dates in different States/UTs depending upon
the constitution of Welfare Boards in such States/UTs.
18. NHAI would rely on the judgments of various High Courts holding
that the Cess Act came into force on 03.11.1995 itself and not when the
Welfare Boards were constituted. Reference is made to the decisions of
the Delhi High Court in Delhi Metro Rail Corporation Limited vs.
9
Simplex Infrastructures Limited and BBEL-MIPL Joint Venture vs.

9
2011 SCC OnLine Del 3603
15


10
National Highway Authority of India ; of the Andhra Pradesh High
Court in Coromandel Prestcrete (P) Ltd. vs. State of Andhra Pradesh
11
and others ; of the Madras High Court in M.E.S. Builders' Association
12
of India vs. Union of India and others , and of the Sikkim High Court
13
in Sikkim Urja Limited vs. Abir Infrastructure Pvt. Ltd. and others .
19. At this stage, we may note that a Bench of this Court heard
arguments in a batch of matters, including the special leave petitions of
Gammon-Atlanta (JV) and PCL Suncon (JV), from which the present Civil
Appeal Nos. 5416 and 5302 of 2025 arise. Notably, Civil Appeal No. 7141
of 2012, titled Gammon Rizzani (JV) vs. Delhi Metro Rail Corporation
Limited , arising out of the common judgment of the Delhi High Court
reported in Delhi Metro Rail Corporation Limited vs. Simplex
Infrastructures Limited ( supra ), was also part of the said batch.
Judgment was reserved in those cases on 08.04.2015 but, on 03.08.2015,
all the matters were reopened and adjourned to a later date. Again, on
12.10.2015, the Bench reserved judgment in the matters. However, the
matters were again reopened on 16.11.2015 and posted for rehearing.
The order dated 16.11.2015 recorded the two doubts that had compelled
such rehearing. The order dated 16.11.2015 reads thus:

10
2015 SCC OnLine Del 10222
11
2008 SCC OnLine AP 355
12
2010 SCC OnLine Mad 2919
13
2025 SCC OnLine Sikkim 50
16


‘(i) whether the judgment rendered in Dewan Chand Builders and
Contractors vs.Union of India and Others (2012) 1 SCC 101, as held in
paragraph 18, that The Cess Act and the Cess Rules have become
operative in the whole of NCT of Delhi with effect from January, 2002,
would confer the benefit on the contractors in view of Clause 70.8 of the
Contract or it shall not in view of the language employed in Clause 34.2
of the said instrument in respect of the National Highways Authority
cases;
(ii) whether the conclusion arrived at in Dewan Chand Builders and
Contractors case correctly states the law or it has to be differently
understood for the purpose of applicability of the Act qua the workers and
for the purpose of coming into force of the Act as regards deposit or
realization.’

20. Thereafter, NKG Infrastructure, Hindustan Construction Co. Ltd. and
DIC-NCC (JV) filed their cases in 2017, 2018 and 2019 respectively and
they were clubbed with the pending cases of Gammon-Atlanta (JV) and
PCL Suncon (JV). In fact, on 20.02.2020, when DIC-NCC (JV)’s case
came up for consideration, this Court was informed that identical issues
arose for consideration in the matters pertaining to Delhi Metro Rail
Corporation Limited and other connected matters and it was directed that
all the matters be clubbed for joint hearing. The special leave petition of
Prakash Atlanta (JV) then came to be tagged with NHAI’s cases.
Thereafter, by order dated 26.10.2020, it was observed that NHAI’s five
cases raised common questions of law and they would be heard first. The
appeals relating to Delhi Metro Rail Corporation Limited were detagged
and directed to be listed as per procedure. Leave was granted in these
cases on 25.03.2025. That is how the appeal filed by Prakash Atlanta (JV)
and NHAI’s five appeals are now before us.
17


21. Reference was made in the aforestated order dated 16.11.2015 of
the Bench to the earlier decision of this Court in Dewan Chand Builders
14
and Contractors vs. Union of India and others . That decision arose
out of the judgment dated 28.02.2007 of a Division Bench of the Delhi
High Court, reported in Builders Association of India vs. Union of India
15
and another , which dealt with the validity of the BOCW Act and the Cess
Act. While upholding the two Acts, the Division Bench had observed that
they were not notified for application in Delhi till the year 2002. The
Division Bench expressed concern at the tardy implementation of these
welfare enactments, alluding to the fact that the Rules framed under
Section 62 of the BOCW Act were brought into force in Delhi only on
10.01.2002. In Dewan Chand Builders ( supra ), this Court affirmed the
judgment of the Division Bench of the Delhi High Court and observed: -
‘18. Although both the statutes were enacted in 1996, the Central
Government in exercise of its powers under Section 62 of the BOCW Act
notified the Delhi Building and Other Construction Workers' (Regulation
of Employment and Conditions of Service) Rules, 2002 (for short "the
Delhi Rules") vide Notification No. DLC/CLA/BCW/01/19 dated
10.1.2002. Accordingly, the Government of NCT of Delhi constituted the
Delhi Building and Other Construction Workers' Welfare Board vide
Notification No. DLC/CLA/BCW/02/596 dated 2-9-2002. Thus, the Cess
Act and the Cess Rules are operative in the whole of NCT of Delhi w.e.f.
January 2002.’ ( emphasis is ours )

This Court further observed that the levy of cess on the cost of
construction incurred by the employers on the building or construction

14
(2012) 1 SCC 101
15
(2007) 139 DLT 578 (DB)
18


works is to ensure sufficient funds for Welfare Boards to undertake social
security schemes and welfare measures for building and construction
workers. It was observed that the fund so collected is directed towards the
specific ends spelt out in the BOCW Act and, therefore, applying the
principle laid down in the decisions of this Court, it was clear that the said
levy is a fee and not a tax. It was noted that the fund is set apart and
appropriated specifically for the performance of a specified purpose; that
it is not merged into the public revenues for benefit of the general public,
and as such, a nexus between the cess and the purpose for which it is
levied is established, satisfying the element of quid pro quo in the scheme.
22. In A. Prabhakara Reddy and Company vs. State of Madhya
16
Pradesh and others , the appellants therein had entered into contracts
with the Government of Madhya Pradesh between December, 2002 and
March, 2003. The Madhya Pradesh Building and Other Construction
Workers’ Welfare Board was constituted only on 09.04.2003, followed by
a publication in the Official Gazette on 10.04.2003. The appellants
unsuccessfully challenged imposition of the cess liability on them before
the High Court. Their argument before this Court, thereafter, was that if
demand of cess is made on construction works undertaken or even
contemplated on issuance of work orders before constitution of the

16
(2016) 1 SCC 600
19


Welfare Boards, then such demand would amount to making the Cess Act
operate retrospectively and that would be illegal. This Court noted that the
scheme of the BOCW Act or the Cess Act did not warrant that unless all
workers are duly registered or the Welfare Fund is created or welfare
measures are made available, no cess can be levied, despite the
constitution of the Welfare Board. In other words, per this Court,
registration of workers and providing welfare services to workers was not
a condition precedent for the levy of cess as rendering of such services
can reasonably be undertaken only after cess is levied, collected and
credited to the Welfare Fund. It was observed that the task of registering
workers and providing them benefits may take some time and that would
not affect the liability to pay the levy as per the Cess Act, as any other
interpretation would defeat the rights of the workers, whose protection is
the principal aim and primary concern and objective of the BOCW Act and
the Cess Act. It was in these circumstances that this Court rejected the
challenge by the appellants and dismissed their appeals.
23. This being the case law on the BOCW Act and the Cess Act, we are
conscious of the fact that, in essence, we are examining the validity of
arbitral awards in five of these six appeals which were passed against
NHAI and in favour of the respective claimants before the arbitral
tribunals, viz., the respondents in those appeals. The scope of
interference by a Court, in exercise of jurisdiction under Section 34 or
20


Section 37 of the Arbitration Act, now stands settled by the Constitution
Bench judgment in Gayatri Balasamy vs. ISG Novasoft Technologies
17
Limited . The majority view therein held that modification of an arbitral
award is permissible only on limited grounds, i.e., when the arbitral award
is severable and the invalid portion can be severed from the valid portion
thereof; when clerical, computational or typographical errors therein are
amenable to correction or any other manifest errors are present which can
be corrected, provided such modification does not involve a merits-based
evaluation; by modifying the post-award interest in certain situations and
circumstances; and where exercise of power by the Supreme Court under
Article 142 of the Constitution is necessitated, albeit with great care and
caution, and within the limits of such power.
18
24. In Associate Builders vs. Delhi Development Authority , this
Court noted that the expression ‘public policy of India’ in Section
34(2)(b)(ii) of the Arbitration Act was given a wider meaning in Oil &
19
Natural Gas Corporation Ltd. vs. Saw Pipes Ltd. . It was held therein
that the concept of public policy connotes some matter which concerns
public good and public interest. It was observed that what is for public
good or in public interest or what would be injurious or harmful to the public
good or public interest has varied from time to time but an arbitral award

17
(2025) 7 SCC 1
18
(2015) 3 SCC 49
19
(2003) 5 SCC 705
21


which, on the face of it, is patently in violation of statutory provisions,
cannot be said to be in public interest. It was further observed that such
an award is likely to adversely affect the administration of justice. This
Court, therefore, held that, in addition to the narrower meaning given to
the term ‘public policy’ by a 3-Judge Bench of this Court in Renusagar
20
Power Co. Ltd. v. General Electric Co. , an arbitral award can be set
aside if it is patently illegal. The result was that an arbitral award could be
set aside if it was contrary to the fundamental policy of Indian law; or the
interest of India; or justice or morality; or if it is patently illegal. It was
observed that illegality must go to the root of the matter but, if the illegality
is of trivial nature, it cannot be held that the award is against public policy.
It was further held that if the award is so unfair and unreasonable that it
shocks the conscience of the Court, it would be opposed to public policy.
25. Thereafter, in Oil and Natural Gas Corporation Limited vs.
21
Western Geco International Ltd. , a 3-Judge Bench of this Court added
three other distinct and fundamental juristic principles which must be
understood as part and parcel of the fundamental policy of Indian law. The
first is the principle that in every determination that affects the rights of a
citizen or leads to civil consequences, whether by a Court or other
authority, such Court or authority is bound to adopt what is, in legal

20
1994 Supp (1) SCC 644
21
(2014) 9 SCC 263
22


parlance, called ‘judicial approach’. The second principle is that a Court
and so also a quasi-judicial authority, while determining rights and
obligations of parties before it, must do so in accordance with the
principles of natural justice. It was observed that, in addition to audi
alteram partem , the Court/ authority deciding the matter must apply its
mind to the attendant facts and circumstances as non-application of mind
is a defect that is fatal to any adjudication. It was, therefore, held that the
requirement that an adjudicating authority must apply its mind is so deeply
embedded in our jurisprudence that it can be described as the
fundamental policy of Indian law. The last principle is that a decision which
is perverse or so irrational that no reasonable person would have arrived
at the same cannot be sustained. Decisions that fall short of the standards
of reasonableness were, therefore, held liable to challenge in a Court of
law and even in statutory processes wherever the same were available.
26. It was further held in Associate Builders ( supra ) that when a Court
is applying the public policy test to an arbitral award, it does not act as a
Court of appeal and, consequently, errors of fact cannot be corrected. A
plausible view by the arbitrator on facts necessarily has to pass muster as
the arbitrator is the ultimate master of the quantity and quality of evidence
to be relied upon when he delivers his award. It was observed that an
award based on little evidence or on evidence which does not measure
up in quality to a trained legal mind would not be invalid on this score.
23


Once it is found that the arbitrator’s approach was not arbitrary or
capricious, then he is the last words on facts.
27. As long back as in the year 2006, in McDermott International Inc.
22
vs. Burn Standard Co. Ltd. and others , this Court affirmed that
construction of a contract is within the jurisdiction of the arbitrator and
interpretation thereof is a matter for the arbitrator to determine, even if it
gives rise to a question of law. This was affirmed in National Highways
23
Authority of India vs. ITD Cementation India Limited , wherein this
Court held that construction of the terms of a contract is primarily for an
arbitrator to decide and he is entitled to take the view that he holds to be
the correct one, after considering the material and after interpreting the
terms of the contract. It was observed that the Court, while considering a
challenge to an arbitral award, does not sit in appeal over the findings and
decision therein, unless the arbitrator construed the contract in such a way
that no fair-minded or reasonable person would do. We may note that, in
this case, the issue was whether additional costs owing to a change in the
seigniorage fee had been taken into account in the indexing of inputs,
while providing for price adjustment in the contract. NHAI had contended
that the said levy was already factored into the indexing price formula and,
therefore, no further payments were to be made to the contractor.

22
(2006) 11 SCC 181
23
(2015) 14 SCC 21
24


28. In that context, this Court had observed that the terms and
conditions of the bid stipulated that all duties, taxes and other levies
payable by the contractor under the contract, as of the date 28 days prior
to the deadline for submission of bids, were to be included in the rates and
prices and in the bid submitted by the bidder. On facts, this Court found
that the seigniorage fee on stone, sand, and earth was enhanced after the
contract was executed by and between the parties and the arbitral tribunal
had unanimously found that the contractor had incurred additional costs
because of the change in the rates of the seigniorage fee pursuant to the
change in legislation and that it would be entitled to be paid such costs.
This Court, accordingly, held that construction of the terms of the contract
by the arbitral tribunal was completely consistent with the principles laid
down in earlier decisions of this Court and that, upon construing the
material on record, the arbitral tribunal concluded that the matter would
be covered by the ‘subsequent legislation’ clause. This Court, therefore,
confirmed that the view taken by the arbitral tribunal after considering the
material on record and the terms of the contract was certainly a possible
view, to say the least, and that no reason was made out to interfere.
29. In UHL Power Company Limited vs. State of Himachal
24
Pradesh , a 3-Judge Bench of this Court reiterated that if there are two

24
(2022) 4 SCC 116
25


plausible interpretations of the terms and conditions of the contract, then
no fault can be found if the arbitrator proceeds to accept one interpretation
as against the other. Again, in Ssangyong Engineering and
Construction Company Limited vs. National Highways Authority of
25
India , this Court held that construction of the terms of a contract is
primarily for an arbitrator to decide unless the arbitrator construes the
contract in a manner that no fair-minded or reasonable person would; in
short, that the arbitrator’s view is not a plausible view to take.
30. In Dyna Technologies Private Limited vs. Crompton Greaves
26
Limited , a 3-Judge Bench of this Court held that an arbitral award
should not be interfered with in a casual and cavalier manner, unless the
perversity of the award goes to the root of the matter, without there being
a possibility of an alternative interpretation that may sustain it. It was held
that Section 34 is different in its approach and cannot be equated with
normal appellate jurisdiction and that its mandate is to respect the finality
of the award and the parties’ autonomy to get the dispute adjudicated by
an alternative forum as provided by law. This Court cautioned that if Courts
were to interfere with awards in the usual course on factual aspects, then
the commercial wisdom behind opting for alternative dispute resolution
would stand frustrated.

25
(2019) 15 SCC 131
26
(2019) 20 SCC 1
26


27
31. In MMTC Limited vs. Vedanta Limited , this Court observed that
the position is well settled that the Court exercising jurisdiction under
Section 34 does not sit in appeal over an arbitral award and can interfere
on the limited grounds provided under Section 34. Referring to the
amendment of Section 34 with effect from 23.10.2015, this Court
observed that the ambit of contravention of public policy has been
modified to the extent that it now means fraud or corruption in the making
of the arbitral award, violation of Sections 75 or 81 of the Arbitration Act,
contravention of the fundamental policy of Indian law and conflict with the
most basic notions of justice or morality. It was noted that the newly
inserted Section 34(2A) provides that, in domestic arbitrations, violation of
public policy would also include patent illegality appearing on the face of
the arbitral award. It was also noted that interference under Section 37
cannot travel beyond the restrictions laid down in Section 34 of the
Arbitration Act, i.e., Courts cannot undertake independent assessment of
the merits of the award and must only ascertain that exercise of power by
the Court under Section 34 has not exceeded the scope of the provision.
It was observed that in case an arbitral award has been confirmed under
Section 34 and, thereafter, in appeal under Section 37, this Court would
be extremely cautious and slow in disturbing such concurrent findings.

27
(2019) 4 SCC 163
27


32. In Sumitomo Heavy Industries Limited vs. Oil and Natural Gas
28
Corporation Limited , this Court observed that, while considering a
challenge to an arbitral award, neither the Court exercising jurisdiction
under Section 34 of the Arbitration Act nor the Court sitting in appeal under
Section 37 thereof would exercise appellate jurisdiction over the findings
and decisions of the arbitrator. Once the award is held to be a plausible
one, interference by the Court is not called for.
33. In OPG Power Generation Private Limited vs. Enexio Power
29
Cooling Solutions India Private Limited and another , a 3-Judge
Bench of this Court, upon a comprehensive recce of relevant case law,
held that the legal position which emerges, after the amendment of the
Arbitration Act in 2016, is that the phrase ‘in conflict with the public policy
of India’ must be accorded a restricted meaning in terms of Explanation 1
as the expression ‘in contravention with the fundamental policy of Indian
law’ by use of the word ‘fundamental’ before the phrase ‘policy of Indian
law’ made the expression narrower in its application than the phrase ‘in
contravention with the policy of Indian law’. This was held to mean that
mere contravention of law is not enough to make an award vulnerable and
to bring the contravention within the fold of the ‘fundamental policy of
Indian law’, the award must contravene all or any of such fundamental

28
(2010) 11 SCC 296
29
(2025) 2 SCC 417
28


principles that provide a basis for administration of justice and
enforcement of law in this country. Further, by way of inexhaustive
illustrations, the Bench observed that ( a ) violation of the principles of
natural justice; ( b ) disregarding orders of superior courts in India or the
binding effect of the judgment of a superior court; and ( c ) violating laws of
India linked to public good or public interest could be considered to be in
contravention of the fundamental policy of Indian law. The Bench,
however, cautioned that, while assessing whether there is a contravention
of the fundamental policy of Indian law, the extent of judicial scrutiny must
not exceed the limit as set out in Explanation 2 to Section 34(2)( b )( ii ).
It was further noted that, ordinarily, the terms of the contract should be
understood in the way the parties wanted and intended them to be.
34. NHAI’s applications under Section 34 of the Arbitration Act in
relation to the arbitral awards of Gammon-Atlanta (JV), Hindustan
Construction Co. Ltd. and PCL Suncon (JV) (Civil Appeal Nos. 5416, 5304
and 5302 of 2025) were before Act No. 3 of 2016, whereby the provisions
of the Arbitration Act, including Section 34 thereof, stood amended with
retrospective effect from 23.10.2015. NHAI’s applications under Section
34 of the Arbitration Act against the arbitral awards pertaining to NKG
Infrastructure Limited and DIC-NCC (JV) (Civil Appeal Nos. 5301 and
5412 of 2025) were filed after such amendment. Therefore, three of the
five arbitral awards presently under scrutiny would have to be reviewed in
29


the light of the law laid down in Associate Builders ( supra ) while the other
two would have to be examined in the light of the amended Section 34 of
the Arbitration Act, including the ground of patent illegality falling under
Section 34(2A) thereof. In that context, the changed outlines of Section
34 of the Arbitration Act are pointed out and NHAI would contend that
perversity would form part of ‘patent illegality’, the ground that was
introduced in Section 34(2A). NHAI contends that the arbitral awards must
also be held to be in breach of Section 28(1)(a) of the Arbitration Act,
which requires the arbitrator to decide the dispute in accordance with the
substantive law in force in India. Be it before or after the amendment of
the Arbitration Act, it is clear that neither the Courts exercising jurisdiction
under Sections 34 and 37 of the Arbitration Act nor this Court, in exercise
of jurisdiction under Article 136 of the Constitution, would undertake a
merits-based evaluation or sit in appeal over a plausible and possible view
on facts taken by the arbitral tribunal.
35. In this scenario, we may again re-examine the BOCW Act and the
Cess Act. The argument of NHAI is that these Acts came into effect in the
years 1996 and 1995 respectively and, therefore, they cannot be treated
as ‘subsequent legislation’ for the purposes of its contractual clauses.
However, we must note that the preamble to the Cess Act categorically
states that the said enactment was made to provide for levy and collection
of cess on the cost of construction incurred by employers with a view to
30


augment the resources of the Welfare Boards constituted under the
BOCW Act. Therefore, the Cess Act being brought into effect from
03.11.1995 is totally incomprehensible as the BOCW Act was brought into
effect only on 01.03.1996. This was clearly a case of putting the cart
before the horse! Even thereafter, the Cess Act could not have been given
effect in a vacuum before constitution of Welfare Boards under the BOCW
Act, as augmenting of ‘Welfare Board resources’ cannot arise even before
such Boards came into existence. This being one aspect, it is the
established position that no effective steps were taken either by the
Central Government or by the Governments of the States/UTs in this
country to implement the provisions of the BOCW Act and the Cess Act
until they were prodded to do so, time and again, by this Court, vide its
orders in the case filed by the National Campaign Committee . It was only
pursuant to the persistent efforts made by this Court that necessary
machinery was put in place in different States/UTs on different dates.
36. Though the Central Government issued Notification dated
26.09.1996 stipulating the rate of cess @ one per cent, no steps were
taken to monitor the actual implementation of the Acts so as to ensure that
the prescribed one per cent cess was levied, collected and deposited. In
fact, Welfare Boards were not even constituted under Section 18 of the
BOCW Act for a long time. However, the BOCW Act and the Cess Act
clearly envisage appropriate machinery being put in place for timely levy,
31


collection and deposit of cess. In the absence of such machinery, the
question of levying and collecting cess cannot logically arise. More so as,
in the absence of Welfare Boards which could accept such cess once it is
collected, the same invariably had to be placed by the State in its
consolidated fund and used for public purposes. Such appropriation would
have impacted the very validity of such collection and would have made it
debatable whether the distinction drawn by this Court between a ‘tax’ and
a ‘fee’ in the context of this cess could still be maintained.
37. Though reference was made by NHAI to Rule 4(3) of the Cess Rules
in the context of deduction at source of the cess leviable upon buildings
and other construction works of a Government or a PSU from the bills paid
for such works, we may note that as per Rule 5 of the Cess Rules, upon
such collection, the Government or PSU is required to transfer the same
to the Welfare Board within thirty days of its collection. Obviously, in the
absence of a Welfare Board, even if the cess is deducted at source, be it
by a Government or by a PSU while making bill payments, the same could
not be deposited as per Rule 5. Notably, though NHAI placed reliance on
Rule 4(3), it is an admitted fact that it did not resort to any such deduction
at source and recoveries were sought to be made by NHAI only
subsequently. It is, therefore, patently clear that, though the BOCW Act
and the Cess Act, along with the Rules framed thereunder, remained on
the statute book for eons, they were not given actual effect owing to the
32


complete absence of the required machinery for the levy, collection,
deposit and utilisation of the cess to be collected thereunder for the benefit
of building and other construction workers. The failure to effectively
implement the BOCW Act and the Cess Act has to be laid squarely at the
door of the authorities, i.e., the Central Government and the Governments
of the States/UTs concerned.
38. This being the backdrop for the arbitral awards under scrutiny, we
will now consider the contractual terms between the NHAI and the
respondents in its appeals. In three of the five cases, i.e., in the contracts
relating to Hindustan Construction Co. Ltd., PCL Suncon (JV) and NKG
Infrastructure Limited, the BOCW Act and the Cess Act were specifically
mentioned amongst the labour legislations that were to be complied with
by them (Clause 34.2). However, in the contracts of Gammon-Atlanta (JV)
and DIC-NCC (JV), no mention was made of the BOCW Act and the Cess
Act. While so, Clause 14.3 and Clause 70.8 (‘Subsequent Legislation’) in
the contract document provided that the time-frame of twenty-eight days
before the last date for submission of the bid was crucial to ascertain what
should be factored into the prices and rates in the bid offer. In the event a
particular aspect was not to be factored into the bid price at that point of
time as per the extant legal regime but it came into focus thereafter, due
to a change in the scenario, it qualified as ‘subsequent legislation’
attracting the procedure under Clause 70.8.
33


39. We may note that NHAI has a prescribed template for its contracts.
Volume I thereof pertains to the ‘Bidding Document’. Clause 14.3 falls in
Section I therein, titled ‘Invitation for Bids’. Clause 14 deals with ‘Bid
Prices’ and Clause 14.3 therein states as follows:
‘All duties, taxes and other levies payable by the Contractor under the
Contract or for any other cause as of the date 28 days prior to the
deadline for submission of bids, shall be included in the rates and prices
and the total bid price submitted by the bidder and the evaluation and
comparison of bids by the Employer shall be made accordingly.’

40. Clause 70.8, titled ‘Subsequent Legislation’, forms part of Section
IV Part 2, titled ‘Conditions of Particular Application’ (COPA). It reads thus:
‘If, after the date 28 days prior to the latest date for submission of tenders
for the Contract there occur in the country in which the Works are being
or are to be executed changes to any National or State Statute,
Ordinance, Decree or other Law or any regulation or by-law of any local
or other duly constituted authority, or the introduction of any such State
Statute, Ordinance, Decree, Law, regulation or by-law which causes
additional or reduced cost to the Contractor, other than under the
preceding Sub-Clauses of this Clause, in the execution of the Contract,
such additional or reduced cost shall, after due consultation with the
Employer and the Contractor, be determined by the Engineer and shall
be added to or deducted from the Contract Price and the Engineer shall
notify the Contractor accordingly, with a copy to the Employer.
Notwithstanding the foregoing, such additional or reduced cost shall not
be separately paid or credited if the same shall already have taken into
account in the indexing of any inputs to the Price Adjustment Formulae
in accordance with the provisions of Sub-Clauses 70.1 to 70.7.’

41. In the context of the aforestated factual and legal position, we may
now deal with the each of the appeals individually. In Civil Appeal No. 4513
of 2025, Prakash Atlanta (JV) is the appellant and NHAI is the respondent.
Tenders were invited by NHAI for the construction of a segment of the
Lucknow Bypass in the year 2001. Prakash Atlanta (JV) submitted its bid
for the work on 21.03.2001 and emerged successful. It entered into a
34


contract with NHAI on 10.08.2001. It is an admitted fact that, in the
contract dated 10.08.2001, specific mention was made of the BOCW Act
and the Cess Act amongst the labour legislations that the appellant, being
the contractor, would have to abide by. There was neither a clause akin to
Clause 14.3 in its contract nor was there a ‘subsequent legislation’ clause,
akin to Clause 70.8. NHAI terminated the contract with the appellant on
14.03.2008. However, disputes had arisen between the parties during the
subsistence of the contract and the Dispute Resolution Expert, to whom
the matter was referred, held in favour of Prakash Atlanta (JV).
42. Aggrieved thereby, NHAI initiated arbitration proceedings.
Significantly, these proceedings were initiated in the year 2002 and went
on till June, 2004, but NHAI never raised the issue of the levy and
collection of cess under the BOCW Act and the Cess Act during the course
of such proceedings. The arbitral tribunal rendered its award on
26.06.2004, dismissing NHAI’s claims while accepting the counter-claim
of Prakash Atlanta (JV) towards price adjustment for extra items. NHAI’s
application under Section 34 of the Arbitration Act against the arbitral
award dated 26.06.2004 was dismissed, vide order dated 15.12.2011, by
a learned Judge of the Delhi High Court in OMP No. 339 of 2004. The
appeal filed by NHAI under Section 37 of the Arbitration Act against this
order was dismissed by a Division Bench of the Delhi High Court, vide
order dated 03.02.2012 in FAO(OS) No. 55 of 2012. Special Leave
35


Petition (Civil) No. 17736 of 2012 filed by NHAI was dismissed as
withdrawn on 05.07.2012, taking note of the submission made that NHAI
intended to apply for review of the said judgment. The NHAI did so in
Review Petition No. 419 of 2012 but met with only limited success,
irrelevant to the present adjudication. Long after the termination of the
appellant’s contract in March, 2008, the Government of Uttar Pradesh
issued Circular dated 17.02.2010 stating that the provisions of the BOCW
Act should be made applicable to all projects being executed on or after
04.02.2009 and that cess @ 1% of the project price should be deposited
in the fund. Admittedly, this was the first instance of the levy of cess under
the BOCW Act and the Cess Act in the State of Uttar Pradesh. As per the
Circular, the cess was to be levied on all projects which were ongoing on
04.02.2009, irrespective of when they had commenced.
43. It was only during the course of the execution proceedings in
Execution Petition No. 165 of 2012 initiated by Prakash Atlanta (JV) in
connection with the arbitral award dated 26.06.2004 that NHAI attempted
to adjust the amount allegedly payable by Prakash Atlanta (JV) towards
the cess under the BOCW Act and the Cess Act for the period that it had
worked. NHAI tendered a sum of ₹3,13,26,990/- to the appellant as
against its claim for ₹7,70,43,623/- along with interest. However, by order
dated 09.11.2012, the executing Court, viz., a learned Judge of the Delhi
High Court, held that the deduction of 1% cess on a pro-rata basis against
36


the value of work completed by the appellant till 2008 was permissible,
though it was prior to the cut-off date , viz., 04.02.2009. Aggrieved by this
order, the appellant filed EFA (OS) No. 4 of 2012. However, the same was
dismissed on 12.02.2013 by a Division Bench of the High Court, observing
that the cess is to be calculated on the entire cost of the project; that it
was made applicable to projects that were ongoing on 04.02.2009 and, as
the subject project stood concluded only in 2012, i.e., after 04.02.2009,
the appellant was liable to bear the cess liability for the extent of work
executed by it prior to termination of its contract. Aggrieved by this
judgment, Prakash Atlanta (JV) is before this Court by way of this appeal.
44. In Civil Appeal No. 5301 of 2025 filed by NHAI, the work awarded to
NKG Infrastructure Ltd., the respondent therein, was the balance work of
constructing a segment of the Lucknow Bypass and the contract was
signed on 25.02.2009. Clause 34.2 referred to the BOCW Act and the
Cess Act, along with other labour legislations, that the respondent/
contractor had to abide by. Clause 14.3 and Clause 70.8, viz., the
‘subsequent legislation’ clause were also applicable. NKG Infrastructure
Ltd. had submitted its bid for the subject contract on 05.12.2008, more
than 28 days prior to the Circular dated 17.02.2010 issued by the
Government of Uttar Pradesh, notifying the levy of cess under the BOCW
Act and the Cess Act from 04.02.2009. The question that arises is whether
the ‘subsequent legislation’ clause would apply or whether the respondent
37


is to bear the levy of cess, in terms of the Circular dated 17.02.2010 and
owing to the inclusion of the BOCW Act and the Cess Act (Clause 34.2).
By award dated 24.11.2015, the arbitral tribunal held in favour of the
respondent and directed NHAI to reimburse a sum of ₹1,14,05,033/- to
the respondent, being the amount of cess wrongly deducted by it. The
arbitral tribunal opined that there was a clear admission on the part of
NHAI that the BOCW Act was made applicable in the State of Uttar
Pradesh only from 04.02.2009. This admission was inferred from NHAI’s
letter dated 09.03.2010, wherein it clearly mentioned that the BOCW Act
was applicable in the State of Uttar Pradesh with effect from 04.02.2009
on construction projects which continued on or after 04.02.2009 and 1%
cess was payable on the total project cost. The arbitral tribunal opined that
the ‘subsequent legislation’ clause would apply. Relying on the decision of
the Delhi High Court in Gammon-Atlanta (JV), the arbitral tribunal held
that NKG Infrastructure Ltd. was entitled to reimbursement. This award
was confirmed by a learned Judge of the Delhi High Court, vide order
dated 02.11.2016 in O.M.P. (COMM) No. 60 of 2016, NHAI’s application
under Section 34 of the Arbitration Act. The same stood confirmed by a
Division Bench of the Delhi High Court, vide order dated 10.01.2017,
whereby the appeal in FAO (OS) (COMM) No. 11 of 2017 filed by NHAI
under Section 37 of the Arbitration Act stood dismissed, following the
earlier Division Bench judgment in the case of Gammon-Atlanta (JV).
38


45. In Civil Appeal No. 5302 of 2025 filed by NHAI, the respondent is
PCL Suncon (JV). It submitted its bid on 14.05.2001. NHAI and PCL
Suncon (JV) entered into contract dated 20.09.2001, whereby it was to
execute 4-laning and strengthening of National Highway No. 2 in the State
of Jharkhand. Clause 34.2 included the BOCW Act and the Cess Act
amongst the labour legislations that the respondent, PCL Suncon (JV),
was required to abide by. Further, this contract also contained Clause 14.3
and Clause 70.8, viz., the ‘subsequent legislation’ clause. Admittedly, it
was only on 01.08.2007 that the Government of Jharkhand issued S.O.19
dated 01.08.2007, notifying the Building and Other Construction Workers’
(Regulation of Employment and Conditions of Service) Jharkhand Rules,
2006, which were to be given effect in the State of Jharkhand from the
date of their publication in the Gazette. The question that arose was
whether the respondent was liable to bear the levy of cess or whether it
would be covered by the ‘subsequent legislation’ clause. By award dated
24.02.2013, the arbitral tribunal held in favour of the respondent and
directed NHAI to reimburse the amount deducted from the respondent’s
bills towards cess. The arbitral tribunal noted that the welfare measures
to be undertaken by the State Government under the BOCW Act could not
be made operative till Rules were framed for carrying out the functions
under the said Act. Taking note of Rule 5 of the Cess Rules, which required
the cess collected to be transferred to the Welfare Board within 30 days
39


of its collection, the arbitral tribunal noted that if any such cess had been
levied and collected in the year 2001 when the contract was entered into,
as there was no Welfare Board in existence, the cess would have been
appropriated to the consolidated fund of the State which is used for public
purposes. In that manner, the character of the cess collected would have
changed from fee to tax, thereby rendering the Cess Act itself open to
challenge. The arbitral tribunal noted that this was the reason why the
State Government had decided to levy and collect cess only from
01.08.2007, when the Jharkhand Rules were notified in the Gazette. As
the Jharkhand Rules were obviously a ‘subsequent legislation’ and were
crucial for the levy and collection of cess under the BOCW Act and the
Cess Act, the arbitral tribunal applied the ‘subsequent legislation’ clause
and held PCL Suncon (JV) entitled to reimbursement of the cess deducted
from its bills. This award stood confirmed under Section 34 of the
Arbitration Act when a learned Judge of the Delhi High Court rejected
NHAI’s application thereunder, vide order dated 30.09.2013, corrected on
08.01.2014. Aggrieved thereby, NHAI preferred an appeal under Section
37 of the Arbitration Act in FAO (OS) No. 128 of 2014 but the same came
to be dismissed by a Division Bench of the High Court on 11.03.2014,
following the earlier decision in the case of Gammon Atlanta (JV).
46. As regards Civil Appeal 5304 of 2025 filed by NHAI, Hindustan
Construction Co. Ltd. is the respondent therein. Hindustan Construction
40


Co. Ltd. submitted its bid on 15.07.2005 for award of the work relating to
4-laning of National Highway No. 28 from Km 92.00 to Km 135.00 of the
Lucknow-Ayodhya Section. The contract between them was executed on
21.10.2005. Clause 34.2 therein included the BOCW Act and the Cess Act
while Clause 14.3 and the ‘subsequent legislation’ clause (Clause 70.8)
were also included. This matter also pertains to the State of Uttar Pradesh
and, therefore, the Circular dated 17.02.2010 fixing the cut-off date,
04.02.2009, was the first instance whereby levy of cess under the BOCW
Act and the Cess Act came to be imposed. The issue was whether the
respondent was liable to bear such levy. By award dated 22.07.2014, the
arbitral tribunal held in favour of the respondent and directed NHAI to
reimburse ₹4,21,38,074/- towards the cess that had been deducted from
its bills. The arbitral tribunal noted that the State of Uttar Pradesh had
taken effective measures to implement the BOCW Act and the Cess Act
only on 04.02.2009 and NHAI did not even attempt to recover cess from
Hindustan Construction Co. Ltd. till March, 2010. The argument of NHAI
that Clause 34.2 specifically mentioned the BOCW Act and the Cess Act
and provided for recovery of cess was rejected. It was held that recovery
of cess could not have been made when the necessary machinery
therefor was not in place. It was observed that constitution of Welfare
Boards was necessary for levy and collection of cess and without the
same being in place, the question of such levy and collection did not arise.
41


The arbitral tribunal, accordingly, applied the ‘subsequent legislation’
clause as the State Government’s notification was issued long after the
bid related date in terms thereof and, in consequence, constituted
‘subsequent legislation’ thereunder. The sum of ₹ 10,76,959/- was directed
to be reimbursed to Hindustan Construction Co. Ltd. along with interest
thereon. We find that, in the case of Hindustan Construction Co. Ltd., the
NHAI deducted a much larger sum towards cess but only deposited
₹3,30,000/- with the Welfare Board. The award stood confirmed when a
learned Judge of the Delhi High Court rejected the application filed by
NHAI under Section 34 of the Arbitration Act on 20.04.2017. NHAI’s
appeal under Section 37 of the Arbitration Act came to be dismissed on
23.03.2018 by a Division Bench of the Delhi High Court, following the
earlier Division Bench decision in the case of Gammon-Atlanta (JV).
47. In Civil Appeal No. 5412 of 2025, NHAI is again the appellant while
DIC-NCC (JV) is the respondent. The contract between the parties was in
relation to rehabilitation and upgradation of Garamore-Gagodhar Road
Section of National Highway-8 and National Highway-15 in the State of
Gujarat. The Gujarat Government framed the Gujarat Building and Other
Construction Workers’ (Regulation of Employment and Conditions of
Service) Rules, 2003, and the same were published in the Gujarat
Government Gazette Extraordinary dated 18.08.2003. Thereafter, on
18.12.2004, the Gujarat Government notified that its Principal Secretary,
42


Labour and Employment Department, would hold the office of the Building
and Other Construction Workers’ Welfare Board for the purpose of the
BOCW Act until a Board was duly constituted. Further, vide Resolution
dated 30.01.2006, the Government of Gujarat instructed all Government
Departments, PSUs, and local authorities to pay cess as per the BOCW
Act and the Cess Act. They were advised to incorporate this cess in their
estimates for all new works. Significantly, reference was made therein to
the Notification dated 03.01.2005, whereby all Heads of Departments of
the Government, all Executive Heads of PSUs, and all Executive Heads
of local authorities were notified as Cess Collectors and Assessing
Officers. Reference was also made to the Resolution passed by the
Building and Other Construction Workers’ Welfare Board to collect the
cess with effect from 18.12.2004. It was directed that the cess payable by
Government Offices, PSUs, local authorities to Cess Collectors was to be
made in the challan prescribed under the major head, minor head and
sub-head stipulated therein. Admittedly, DIC-NCC (JV) submitted its bid
on 10.12.2023 and a letter of acceptance was issued to it on 22.11.2004.
The ad-hoc Welfare Board, as noted earlier, was constituted thereafter on
18.12.2004 and the contract between the parties came to be executed on
23.12.2004. The contract required compliance with labour legislations and
was worded inclusively. However, no mention was made of the BOCW Act
and the Cess Act therein. Clause 14.3 and Clause 70.8, pertaining to
43


‘subsequent legislation’, were included. The arbitral award dated
18.07.2017 held in favour of the respondent on the issue of deductions
made from its bills to the tune of ₹3,93,77,776/- by NHAI towards cess
and directed release of the bank guarantee furnished by the respondent
for that sum. The arbitral tribunal noted that the Government had framed
Rules under Section 62 of the BOCW Act on 18.08.2003. It constituted an
ad hoc Welfare Board on 18.12.2004 and passed a resolution on
30.01.2006 that Cess Collectors were to deposit with the Welfare Board
the cess collected with effect from 18.12.2004. The arbitral tribunal,
therefore, concluded that the BOCW Act and the Cess Act became
operative in the State of Gujarat only upon such instructions being issued
and, therefore, the same could not be made applicable to a contract which
was based on DIC-NCC (JV)’s bid submitted on 10.12.2003. The arbitral
tribunal noted that upon the insistence of NHAI, DIC-NCC (JV) had
furnished a bank guarantee for ₹ 3,93,77,776/- towards the cess claimed
by NHAI and, accordingly, directed release thereof. It was also noted that,
had it been the intention of NHAI that DIC-NCC (JV) was liable to pay cess
from December, 2004 itself, i.e., after the contract was entered into
between the parties, it would have made deductions right from then but it
had failed to do so and it was only on 13.03.2012 that NHAI stated that
audit objections had been raised and asked DIC-NCC (JV) to deposit the
cess component of over ₹ 3,50,00,000/-, failing which it threatened to
44


recover the same from its bank guarantees. The arbitral tribunal applied
the ‘subsequent legislation’ clause and held in favour of DIC-NCC (JV).
The same came to be confirmed by a learned Judge of the Delhi High
Court under Section 34 of the Arbitration Act, vide order dated 12.10.2018.
NHAI’s appeal under Section 37 of the Arbitration Act in FAO (OS)
(COMM) No. 20 of 2019 was dismissed by a Division Bench of the Delhi
High Court on 14.03.2019.
48. Civil Appeal No. 5416 of 2025 pertains to Gammon-Atlanta (JV).
Gammon-Atlanta (JV)’s bid for the award of work relating to National
Highway-5 in the State of Orissa (now, Odisha), from Km 387.700 to Km
414.000 (Khurda to Bhubaneshwar), was submitted on 17.10.2000. The
contract was entered into by and between them on 20.12.2000. The
contract provided for compliance with labour legislations, as detailed in
Annexures-A and A1. However, the Annexures were only inclusive in
nature and not exhaustive. Neither the BOCW Act nor the Cess Act was
mentioned among the labour legislations enumerated by way of illustration
therein. Clause 14.3 and the ‘subsequent legislation’ clause in Clause
70.8 were included. It was on 02.08.2002 that the State of Orissa framed
the Orissa Building and Other Construction Workers’ (Regulation of
Employment and Conditions of Service) Rules, 2002. However, it was only
by Notification No. 1455/LE dated 11.02.2004 that the State Government
appointed all Assistant Labour Officers, District Labour Officers working in
45


the field, the Labour Commissioner, the Joint Labour Commissioner and
the Assistant Labour Commissioners posted in the Directorate of the
Labour Commissioner, Orissa, as Cess Collectors. Provision was made
by the State Government, under Resolution dated 15.12.2008 published
in the Orissa Gazette Extraordinary dated 18.12.2008, for the Orissa
Building and Other Construction Workers’ Welfare Board to function from
the Office of the Labour Commissioner, Orissa, Bhubaneshwar, with eight
designated staff, as per the sanction of the Finance Department. The said
Resolution also made it mandatory for the collection and remittance of the
cess @ 1% from the date of issuance of the said Resolution. By award
dated 20.02.2012, the arbitral tribunal held in favour of the respondent,
Gammon-Atlanta (JV), on the issue of recovery of the cess payable under
the BOCW Act and the Cess Act. The arbitral tribunal opined that NHAI
could not have recovered the cess amount from Gammon-Atlanta (JV) in
view of the ‘subsequent legislation’ clause. The award recorded, in para
14.29.8, that the amount recovered towards cess was ₹1,04,96,006/-, but
only ₹3,30,225/- therefrom was paid by NHAI to the Welfare Board and
NHAI adjusted the recovery in excess thereof against liquidated damages.
This action on the part of NHAI was held to be unlawful and the arbitral
tribunal directed reimbursement of the deducted amount along with
interest. These findings of the arbitral tribunal stood confirmed under
Section 34 of the Arbitration Act by a learned Judge of the Delhi High Court
46


on 17.07.2012. Further, NHAI’s appeal against the said order came to be
dismissed by a Division Bench of the Delhi High Court, vide order dated
14.08.2013, passed in FAO (OS) No. 366 of 2013. Reliance was placed
by the Division Bench on the observations of this Court in Dewan Chand
Builders ( supra ), which held to the effect that the BOCW Act and the Cess
Act become operative only upon notification of the Rules framed under
Section 62 of the BOCW Act. As, in this case, the bid was submitted by
the appellant in the year 2000 and the notification in question was issued
in the year 2008, the Division Bench opined that the reasoning of the
arbitral tribunal could not be found fault with. This judgment was applied
in the later decisions which are the subject matter of the other appeals.
49. These being the factual matrices of the appeals on hand, learned
senior counsel/counsel, appearing for the respondents/contractors, would
contend in unison that, when reasoned arbitral awards have been passed
after considering all the facts and circumstances, including the terms and
conditions of the contract, and the same have been confirmed by the
Courts exercising jurisdiction under Sections 34 and 37 of the Arbitration
Act, this Court ought not to interfere with the same.
50. Having given our earnest consideration to all aspects of the matter,
we find that the ultimate obligation to bear the statutory levy of the subject
cess would lie with the ‘employer’, under Section 3(2) of the Cess Act.
‘Employer’ in relation to an establishment is defined by Section 2(1)(i) of
47


the BOCW Act to mean the ‘owner’ thereof but includes the ‘contractor’, if
the building or construction work is carried on by or through such
contractor or by employment of workers provided by such contractor. This
being one aspect of the matter, the crucial issue, insofar as ‘contractors’
are concerned, is whether they could have factored in the levy of such
cess in their bid prices at the time they submitted their bids when such a
levy was not even in existence then. This question would arise,
irrespective of whether the contracts made a mention of the BOCW Act
and the Cess Act. The answer is simple - the contractors could not have
factored such cess component into their bid prices prior to a mechanism
being put in place for its collection, as that would have led to unjust and
unlawful enrichment on their part. In consequence, the question would
arise as to when the liability to pay the subject cess commences. The
observations in para 12 of A. Prabhakara Reddy ( supra ) are of guidance.
This Court held therein that after the Cess Act and the Rules came into
effect and the Welfare Board was constituted, with the notification
specifying the rate of cess to be levied upon the cost of construction
incurred by the employer already in place, the authorities were duty-bound
to collect the cess by raising demands in respect of the ongoing
construction works and it was not necessary to wait till such building and
construction workers were registered under Section 12 of the BOCW Act
or till welfare measures were provided to them. Therefore, the constitution
48


of Welfare Boards is the sine qua non for giving effect to the BOCW Act
and the Cess Act and the cess in connection therewith could not have
been levied or collected before the constitution of such Welfare Boards.
51. In this regard, we find that Gammon-Atlanta (JV) submitted its bid
on 17.10.2000 and the Cess Act was notified in the State of Orissa only
on 15.12.2008. PCL Suncon (JV) submitted its bid on 14.05.2001 and it
was only pursuant to the Rules framed by the Government of Jharkhand,
notified on 01.08.2007, that cess was levied under the provisions of the
BOCW Act and the Cess Act. PCL Suncon (JV) submitted its bid on
14.05.2001 and its contract was signed on 20.09.2001. Notification of the
Rules framed by the Jharkhand Government under Section 62 of the
BOCW Act was on 01.08.2007, whereby the provisions of the BOCW Act
and the Cess Act were given effect. As regards DIC-NIC (JV), the
submission of its bid was on 10.12.2003 and collection of cess in the State
of Gujarat started from 18.12.2004, i.e., long after the submission of its
bid. NKG Infrastructure Limited submitted its bid on 05.12.2008, long prior
to the notification dated 17.02.2010 brought out by the Government of
Uttar Pradesh, giving effect to the provisions of the BOCW Act and the
Cess Act from 04.02.2009. Hindustan Construction Co. Ltd.’s bid was
submitted on 15.07.2005, which culminated in the contract agreement
dated 21.10.2005, and it was only long thereafter, i.e., on 17.02.2010, that
the Government of Uttar Pradesh gave effect to the provisions of the
49


BOCW Act and the Cess Act from 04.02.2009. Prakash Atlanta (JV)
submitted its bid for the work on 21.03.2001 and its contract itself stood
terminated on 14.03.2008, long before the Government of Uttar Pradesh’s
Notification dated 17.02.2010. Therefore, in none of these cases were
Welfare Boards in existence when the bids were submitted by the
contractors and the question of them factoring the levy of cess into their
prices while submitting their bids did not arise.
52. The issue, in effect, boils down to whether the failure of the
respondents to factor in their bid prices the cess payable under the BOCW
Act and the Cess Act can be said to be in keeping with Clause 14.3,
thereby attracting the ‘subsequent legislation’ procedure in Clause 70.8.
In essence, it would come down to interpretation of these terms of the
contract. The argument of NHAI that the ‘subsequent legislation’ clause
only pertains to changes in existing laws or introduction of new laws
overlooks the fact that there was a specific timeframe of twenty-eight days
mentioned therein which was linked to the last date for submission of the
bids and that is the basis on which the arbitral tribunals construed and
interpreted that provision. Having considered the arbitral awards passed
by the arbitral tribunals in the five appeals filed by NHAI, we find that the
interpretation and construction of those terms and clauses by the arbitral
tribunals cannot be said to be arbitrary, perverse or patently illegal. Given
the situation obtaining in relation to the two Acts at the relevant time, the
50


arbitral awards cannot be said to have violated the public policy of India
or be in breach of Section 28(1)(a) of the Arbitration Act. Once the view
taken by the arbitral tribunal is found to be a plausible and possible one
on facts and not an unreasonable one, it is not for the Courts, under
Sections 34 or 37 of the Arbitration Act, or for this Court to sit in appeal or
substitute its view for that of the arbitral tribunal.
53. NHAI would contend that the decision in Dewan Chand Builders
( supra ) is being misconstrued as that decision pertained to the validity of
the BOCW Act and the Cess Act and the date of coming into force thereof
was not in issue. It is contended that a stray sentence or observation made
in a judgment cannot be taken to be its ratio decidendi . However, the
observation made in para 18 of Dewan Chand Builders ( supra ) was not
a stray observation as this aspect had also been considered by the Delhi
High Court and this Court affirmed the same. Further, the later decision of
this Court in A. Prabhakara Reddy ( supra ) put it beyond the pale of doubt
that constitution of the Welfare Boards was essential to give actual effect
to the BOCW Act and the Cess Act.
54. It is further contended on behalf of NHAI that, as there was no
‘subsequent legislation’ clause in Prakash Atlanta (JV)’s contract, the
decision in the context of the other appeals cannot be extended to it.
However, even in the absence of such contractual clauses, we must take
note of the fact that NHAI never raised the issue of recovery of cess during
51


the course of the arbitral proceedings or even thereafter. Having filed a
review petition before the High Court, pursuant to the liberty granted by
this Court, NHAI did not raise this issue even then. It was only during the
execution proceedings that it came up with the idea of deducting the cess
allegedly due from Prakash Atlanta (JV) from the amounts payable to it
under the arbitral award. Further, this attempt was made by the NHAI only
in September, 2012, long after the Notification dated 17.02.2010 was
issued by the Uttar Pradesh Government. Thus, it was clearly an
afterthought on the part of NHAI. This clutching at straws so as to reduce
its own liability by NHAI must necessarily be recognized for what it is
worth. Further, the same rationale with regard to factoring the cess
component in its bid in the year 2001, without a corresponding reality,
would arise in the case of Prakash Atlanta (JV) also as it does in the other
appeals. Had the Government of Uttar Pradesh not brought out the
Notification dated 17.02.2010 on the lines that it did or if it had made the
payment of cess prospective from that date, instead of applying it to all
ongoing contracts as on 04.02.2009, Prakash Atlanta (JV) would have
been unjustly enriched had it factored in such levy of cess into its price.
Its failure to factor in such levy, therefore, cannot be found fault with at this
late stage and it cannot be visited with such liability with retrospective
effect, long after the termination of its contract. This appeal must also be
52


decided on the same lines as the appeals filed by NHAI, notwithstanding
its factual narrative being entirely different.
55. As regards the additional issue raised in Civil Appeal No. 5304 of
2025, pertaining to Hindustan Construction Co. Ltd., we may note that
Claim 4 before the arbitral tribunal pertained to ‘withholding of part of the
payment due towards price adjustment on foreign currency portion from
interim payment certificates.’ The arbitral tribunal noted in the award that
this issue turned upon analysis of the contract to ascertain whether it
provided for additional adjustment of 85% of the foreign currency
component over and above 85% provided in the formula. Having perused
the relevant terms of the contract - Clause No. 72.2 in Section 4, Part 1 of
Volume I, titled ‘Conditions of contract’, along with Clauses 70.3 and 70.4
of the COPA in Section 5 Part 2 of Volume I, the arbitral tribunal noted that
the contract provided for payment in two currencies, i.e., Indian Rupees
(90%) and Euros (10%). Further, the arbitral tribunal found that the
contract provided for price adjustment for both currencies as per the
formulae set out in Clause 70.3 of the COPA. Construing these terms, the
arbitral tribunal noted that the portion of the work done, that is, ‘R’ and the
portion of ‘R’ which was payable in foreign currency was set out in the
contract. It was noted that the word used was payable ‘R’ and not
adjustable foreign currency (‘Rf’). The Tribunal, accordingly, observed that
‘Rf’ used in the formula is the portion of ‘R’ payable in foreign currency
53


and not the adjustable one. It was also noted that the contract required
the bidder to provide the break-up of total foreign currency component and
the contract indicated 15% as non-adjustable which, in other words,
meant that 85% was adjustable. Therefore, the arbitral tribunal opined that
when the Note (15% non-adjustable) is read with the formula under
Clause 70.3 (viii) of the COPA, it is clear that 85% of the Euro component
is adjustable and, therefore, there cannot be further 85% adjustment as
the same would result in 72.2% adjustment which is not in keeping with
the terms of the contract. The arbitral tribunal also took note of the
submission on behalf of NHAI that there was a mistake in the formula
given in Clause 70.3 of the COPA and opined that there was no room for
it to correct the so-called mistake in the contract, if any. The arbitral
tribunal, accordingly, affirmed that a harmonious reading of the relevant
provisions suggested that 85% of the Euro component alone could be
adjusted and not over and above that.
56. We may note that NHAI filed written submissions on this claim, viz.
Claim 4, though no arguments were advanced by it during the course of
the hearing. Therein, it sought to place its own take on how Clause 70.3
and the formulae prescribed therein are to be construed and acted upon.
However, as the arbitral tribunal dealt with this contractual term and also
noted the submission made on behalf of NHAI that there was a mistake in
the formula itself, we can find no fault with the arbitral tribunal in holding
54


that it could not undertake correction of such mistake and in giving effect
to the contract and the formulae prescribed therein as per its construction,
which we find to be reasonable. The award insofar as it pertains to this
claim, therefore, falls beyond the scope of interference by this Court.
57. As these appeals focus only upon the issue of cess payable under
the BOCW Act and the Cess Act and arguments were also advanced only
on that issue, the note submitted by NHAI touching upon other claims in
relation to Gammon-Atlanta (JV)’s award, i.e., with regard to the refund of
liquidated damages together with interest; recovery of alleged penalty for
not providing vehicles to the Engineer; claim for refund of interest on
discretionary advance; claim regarding recovery of earthwork pertaining
to clearing and grubbing; and claim for interest pendente lite and future
interest are not considered. In any event, these claims also turned upon
the contractual terms and interpretation thereof and a merits-based
evaluation of such findings of the arbitral tribunal is beyond the ken of this
Court, just as it was beyond the ken of the Courts exercising jurisdiction
under Section 34 and 37 of the Arbitration Act. Further, we may note that
limited notice was issued in these matters only on the issue of cess
payable under the BOCW Act and the Cess Act. It is, therefore, not open
to NHAI to enlarge the scope of these matters at this late stage.
58. IA No. 84855 of 2015 was filed for intervention in Civil Appeal No.
5416 of 2025. M/s. Centrodorstroy, the intervener, entered into contracts
55


with NHAI in relation to works to be carried out in Uttar Pradesh in 2001.
It claims to have completed the works under contract packages IIC and
IIIC on 27.05.2010 and 25.03.2009 respectively. In view of the
Government notifying the UP Rules of 2009 with effect from 04.02.2009,
NHAI deducted amounts from its bills towards the cess payable under the
BOCW Act and the Cess Act. Arbitration proceedings having been
initiated, awards were passed on 03.11.2016 and 18.05.2018 in its favour.
The amount payable under the awards was released to the intervener
under affidavit of undertaking dated 06.03.2016. Though the awards were
never challenged, they were made subject to the outcome of the pending
appeals before this Court. It is on this ground that M/s. Centrodorstroy
sought to intervene before this Court so as to make itself heard. In the
light of our decision in these appeals, we do not deem it necessary to
consider the additional grounds sought to be urged by it. The intervention
application is, accordingly, rejected along with the additional grounds.
59. We may now sum up our conclusions as under:
(i) The observation made by this Court in Dewan Chand Builders
( supra ) to the effect that the Cess Act along with the Rules framed
thereunder became operative in the whole of the NCT of Delhi from
January, 2002 was an affirmation of the finding in that regard by the
Division Bench of the Delhi High Court.
56


(ii) The BOCW Act and the Cess Act were brought into force on the
dates notified therein but could not have been given effect to till Welfare
Boards were constituted under Section 18 of the BOCW Act.
Notwithstanding the dates from which these two enactments were brought
into force, the BOCW Act and the Cess Act remained dormant, in fact,
owing to the failure of the appropriate Governments in taking necessary
measures to bring the provisions thereof into actual effect.
(iii) The Cess Act is complementary to the BOCW Act and was enacted
for augmenting the resources of the Welfare Boards, constituted under
Section 18 of the BOCW Act. Therefore, in the absence of such Welfare
Boards, levy and collection of cess under the Cess Act did not arise, given
the scheme and structure of the two Acts and the Rules.
(iv) As pointed out in A. Prabhakara Reddy ( supra ), constitution of
Welfare Boards was essential and was a condition precedent for levy and
collection of the cess in relation to the BOCW Act and the Cess Act. The
registration of workers or providing of welfare measures to them, however,
are not pre-conditions for the levy and collection of such cess.
(v) Mere mention of the BOCW Act and the Cess Act in Clause 34.2 of
its contracts by NHAI had no significance or import in the absence of the
requisite machinery being put in place by the authorities concerned for
levy, collection and deposit of the cess with the Welfare Boards.
57


(vi) If an arbitral tribunal’s view is found to be a possible and plausible
one, it cannot be substituted merely because an alternate view is possible.
Construction and interpretation of a contract and its terms is a matter for
the arbitral tribunal to determine. Unless the same is found to be one that
no fair-minded or reasonable person would arrive at, it cannot be
interfered with. If there are two plausible interpretations of the terms of a
contract, then no fault can be found if the arbitrator accepts one such
interpretation as against the other. To be in conflict with the public policy
of India, the award must contravene the fundamental policy of Indian law,
which makes it narrower in its application.
(vii) We find that the arbitral awards in NHAI’s five appeals turned upon
interpretation and construction of identical terms in the contract and as the
view taken by the arbitral tribunals was not only a plausible and possible
one but also a justified one, on facts, we find no reason to interfere
therewith. The awards are not perverse, patently illegal or opposed to the
public policy of India. Further, we do not find the awards to be in breach
of Section 28(1)(a) of the Arbitration Act.
60. On the above analysis, we find no merit in the appeals filed by NHAI
against the orders of the High Court affirming the arbitral awards
pertaining to Gammon-Atlanta (JV), PCL Suncon (JV), NKG Infrastructure
Limited, Hindustan Construction Co. Ltd. and DIC-NCC (JV). The appeals,
viz., C.A. Nos. 5301, 5302, 5304, 5412 and 5416 of 2025 are accordingly
58


dismissed. Insofar as Civil Appeal No. 4513 filed by Prakash Atlanta (JV)
is concerned, we find that neither the executing Court nor the appellate
Court was justified in holding it liable to pay cess under the BOCW Act
and the Cess Act in relation to a contract entered into by it in the year 2001
which stood terminated in the year 2008, long thereafter, in the year 2012,
on the basis of the Government of Uttar Pradesh’s notification of the Rules
with effect from 04.02.2009. C.A. No. 4513 of 2025 is, accordingly, allowed
setting aside the said orders. NHAI shall, in consequence, release the
amount that has been adjusted from out of the amounts payable by it in
relation to Prakash Atlanta (JV)’s arbitral award dated 26.06.2004 along
with interest payable thereon as per the said award.
IA Nos. 77056 of 2013 and 2 of 2013 are allowed, permitting
additional facts, documents and annexures to be placed on record.
Other pending applications shall stand disposed of.

……………………...J
[SANJAY KUMAR]



.……………………...J
[ALOK ARADHE]
New Delhi;
January 20, 2026.
59