Case BriefsSupreme Court

Supreme Court:

“Construction workers do not assist only in building infrastructure, but they also assist in building the nation, in their own small way.”

After it was brought to the notice of the bench of Madan B. Lokur and Deepak Gupta, JJ that under the Building and Other Construction Workers‘ Welfare Cess Act, 1996, more than Rs. 37,400 crores have been collected for the benefit of construction workers, but only about Rs. 9500 crores have been utilized ostensibly for their benefit, the Bench issued various directions after stating:

“No State Government and no Union Territory Administration (UTA) seems willing to fully adhere to and abide by (or is perhaps even capable of fully adhering to and abiding by) two  laws solemnly enacted by Parliament, namely, the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (the BOCW Act) and the Building and Other Construction Workers‘ Welfare Cess Act, 1996 (the Cess Act).”

The Court, hence, asked the Ministry of Labour and Employment, the State Governments and the UTAs to:

  • put in place and strengthen the registration machinery, both for the registration of establishments as well as registration of construction workers at the earliest.
  • establish and strengthen the machinery for the collection of cess.
  • frame one composite Model Scheme for the benefit of construction workers in consultation with all stakeholders including NGOs who are actually working at the grassroots level with construction workers. The scheme should include within it, inter alia, issues and concerns of education, health, social security, old age and disability pension and other benefits that are necessary for living a life of dignity as postulated by the Constitution of India.
  • conduct a social audit on the implementation of the BOCW Act so that in future there is better and more effective and meaningful implementation of the BOCW Act.

The Court also issued certain general directions for the implementation of the BOCW Act:

  • Every State Government and UTA shall constitute a State Advisory Committee, if not already constituted.
  • Every State Government and UTA shall constitute an Expert Committee and frame statutory Rules under Section 62 of the BOCW Act, if such statutory Rules have not already been framed.
  • The State Governments and UTAs must appoint Registering Officers for registration of establishments and construction workers.
  • Every State Government and UTA should establish a Welfare Board in terms of Section 18 of the BOCW Act. It must be appreciated that this is not a body that can be created by an executive order. The law requires that the Welfare Board shall be a body corporate having perpetual succession and a common seal.
  • Every State Government and UTA should establish a Welfare Fund for the benefit of the construction workers, with appropriate rules for utilisation of the funds.
  • all construction workers should be given identity cards and should be registered in terms of Section 12 of the BOCW Act.
  • The Ministry of Labour and Employment shall actively consider
  • making available to the construction workers the benefits of The Maternity Benefit Act, 1961 and The Minimum Wages Act, 1948, The Employees‘ State Insurance Act, 1948, the Employees‘ Provident Funds and Miscellaneous Provisions Act, 1952, as well as (to the extent possible) the Mahatma Gandhi National Rural Employment Guarantee Act, 2005.
  • The Ministry of Labour and Employment should also consider whether projects of the Government of India in the railways, defence and other establishments are brought within the purview of the BOCW Act.
  • The Monitoring Committee which has had quite a few meetings so far should pro-actively ensure full compliance of the provisions of the BOCW Act, the Cess Act and the directions issued by this Court.

The Court asked the Union of India to take a decision on the management of the cess already collected. Noticing that the benefits and entitlements that have accrued to the construction workers cannot be passed on to them due to the passage of time, with the whereabouts of some of them not known. Accordingly, a decision will have to be taken by the Union of India on the gainful utilization of the cess already collected so that the Welfare Boards are not unjustly enriched – the beneficiaries having unfortunately lost out. [National Campaign Committee for Central Legislation on Construction Labour v. Union of India, 2018 SCC OnLine SC 236, decided on 19.03.2018]

Case BriefsSupreme Court

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]

Case BriefsSupreme Court

Supreme Court: Stating that a property developer has to respect the contractual commitment, the 3-Judge Bench of Dipak Misra, Amitava Roy and A.M. Khanwilkar, JJ said that the developer has to live up to the terms of the contract and gain trust so that the people who dream of houses can repose faith in him.

In the case at hand, the 39 respondents had argued that their patience is on the burial pyre and they cannot wait any longer believing in the concept of optimism and expectation, for the appellant had not built the flats as assured, and in fact, compelled them to land up in such a financial crisis that they had never conceived of.

Taking note of the contention of the respondents, the Court said that the appellant by delaying or procrastinating the completion of the flats cannot base its stand on excuses or any subterfuge to advance the stand that the constructions take time. It is “flat” or “money” and nothing else.

The appellant had suggested that it would complete three towers by the end of April, 2017 and would hand over possession to some of the respondents by that time and further the respondents can be allowed to take some amount by direction of this Court that is to say that the respondents can be distributed Rs.5,00,00,000/- towards the principal and be handed over flats by the end of April, 2017 and some shall be given thereafter when the other towers are complete. The rest of the amount, that is, Rs.10,00,00,000/- that have been deposited before the Registry of this Court be allowed to be refunded to the appellant for facilitating the construction.

Considering the fact that the respondents were not interested in the flats and hadmade a demand for refund of money because they have fought the litigation with ceaseless vigour and enormous hope, the Court said that the principal amount deposited by the respondents amounts to Rs.16,55,02,525/-  as Rs.15,00,00,000/- have been invested and some interest has accrued, let the same be given to the respondents on pro rata basis on proper identification by the learned counsel. The Court directed that the appellant company is directed to deposit a further sum of Rs.2,00,00,000/-  within four weeks hence. [Unitech Residential Resorts Ltd. v. Atul Gupta, 2016 SCC OnLine SC 1155 , decided on 19.10.2016]