Supreme Court: The Bench of Dr. A.K. Sikri and N.V. Ramana, JJ held that construction workers are not covered by the Factories Act, 1948 and, therefore, are entitled to the welfare measure specifically provided for such workers under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act) and Buildings And Other Construction Workers Welfare Cess Act, 1996 (Welfare Cess Act).

The appellants, who were in the process of construction of civil works/factory buildings etc. wherein they had planned to set up their factories, had contended that Section 2(d) of the BOCW Act which defines ‘building or other construction work’ specifically states that it does not include any building or construction work to which the provision of the Factories Act, 1948 or the Mines Act, 1952 apply. Since the appellants stood registered under the Factories Act, they were not covered by the definition of building or other construction work as contained in Section 2(d) of the Act and, therefore, said Act was not applicable to them by virtue of Section 1(4) thereof.

Interpreting Section 2(d) of BOCW Act, the Court said that the provisions of the Factories Act would “apply” only when the manufacturing process starts for which the building/project is being constructed and not to the activity of construction of the project. The Court said that that is how the exclusion clause, which excludes those building or other construction work to which the provisions of Factories Act or Mines Act apply, is to be interpreted and that would be the plain meaning of the said clause.

The Court said that if the contention of the appellants is accepted, the construction workers engaged in the construction of building undertaken by the appellants which is to be used ultimately as factory, would stand excluded from the provisions of BOCW Act and Welfare Cess Act as well. That could not have been the intention of the Legislature. BOCW Act and Welfare Cess Act are pieces of social security legislation to provide for certain benefits to the construction workers.

The appellants would not be covered by the definition of factory defined under Section 2(m) of the Factories Act in the absence of any operations/ manufacturing process and, therefore, mere obtaining a licence under Section 6 of the Factories Act would not suffice and rescue them from their liability to pay cess under the Welfare Cess Act. It was held that a bare reading of the definition of “Factory” makes it abundantly clear that before this stage, when construction of the project is completed and the manufacturing process starts, ‘factory’ within the meaning of Section 2(m) of the Factories Act does not come into existence so as to be covered by the said Act. [Lanco Anpara Power Limited v. State of Uttar Pradesh, 2016 SCC OnLine SC 1153 , decided on 18.10.2016]

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One comment

  • Hello Prachi, thanks for sharing this valuable information. This blog was a great read. Hope for better days to come. Regards.

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