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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6223 OF 2016

LANCO ANPARA POWER LIMITED .....APPELLANT(S)

VERSUS

STATE OF UTTAR PRADESH & ORS. .....RESPONDENT(S)

W I T H

CIVIL APPEAL NO. OF 2016

(ARISING OUT OF SLP (C) NOS. 29105-29106 OF 2011)

W.P. (C) NO. 64 OF 2012

W.P. (C) NO. 848 OF 2013

W.P. (C) NO. 385 OF 2014

CIVIL APPEAL NO. 6569 OF 2014

T.P. (C) NO. 342 OF 2014

T.C. (C) NO. 29 OF 2015

W.P. (C) NO. 174 OF 2016

W.P. (C) NO. 311 OF 2016

CIVIL APPEAL NO. 6571 OF 2014

T.C. (C) NO. 38 OF 2016

CIVIL APPEAL NO. OF 2016

(ARISING OUT OF SLP (C) NO. 26363 OF 2016)

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W.P. (C) NO. 698 OF 2016

AND

CIVIL APPEAL NO. OF 2016

(ARISING OUT OF SLP (C) NO. 26330 OF 2016)

J U D G M E N T

A.K. SIKRI, J.

Leave granted in SLP (C) Nos. 29105-29106 of 2011, SLP (C) No.

26363 of 2016 and SLP (C) No. 26330 of 2016. Since pure question of

law is involved, we allow the transfer petition and transfer cases and

also take up, along with these appeals, the writ petitions which were

filed before the respective High Courts.

2.These appeals are filed by the appellants challenging the orders passed

by different High Courts i.e. High Court of Allahabad, High Court of

Orissa, High Court of Madhya Pradesh and High Court of Karnataka.

These High Courts, however, are unanimous in their approach and have

reached the same conclusion. In all these cases, appellants were

issued show cause notices by the concerned authorities under the

provisions of the Building And Other Construction Workers (Regulation

of Employment and Conditions of Service) Act, 1996 (hereinafter

referred to as 'BOCW Act') and Buildings And Other Construction

Workers Welfare Cess Act, 1996 (hereinafter referred to as 'Welfare

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Cess Act'). They had challenged those notices by filing writ petitions in

the High Courts on the ground that the provisions of BOCW Act or

Welfare Cess Act were not applicable to them because of the reason

that they were registered under the Factories Act, 1948. It may be

mentioned that at the relevant time no manufacturing operation had

commenced by the appellants. In fact, all these appellants were in the

process of construction of civil works/factory buildings etc. wherein they

had planned to set up their factories. As the process of construction of

civil works was undertaken by the appellants wherein construction

workers were engaged, the respondent authorities took the view that the

provisions of the aforesaid Acts which were meant for construction

workers became applicable and the appellants were supposed to pay

the cess for the welfare of the said workers engaged in the construction

work. The appellants had submitted 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. All the High Courts

have negated the aforesaid plea of the appellants on the ground that the

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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.

This is, in nutshell, the subject matter of all these appeals. However, in

order to understand the full implication of the issue involved and to

answer the said issue, it would be apt to take note of certain facts from

one of these appeals. This factual canvass is suitably available in the

events that have occurred leading to the filing of Civil Appeal No.

6223/2016.

3.In this appeal, the appellant proposed to set up a 2X600 Megawatt

capacity coal-based thermal power project namely “Anpara C” at Anpara

in District Sonebhadra, Uttar Pradesh (“the Project”), pursuant to being

selected in a tariff-based competitive bidding initiated by the Uttar

Pradesh Rajya Vidyut Utpadan Nigam Ltd. (UPRVUNL) on behalf of the

Uttar Pradesh Power Corporation Ltd. (UPPCL). The project consists of

two Steam Turbine Generators (STG) each having capacity of 600 MW

and two pulverised coal fired steam generators and the balance of plant.

The appellant, in respect of the aforesaid project, made an application to

the Director of Factories, Uttar Pradesh, submitting the layout/drawings

of the proposed plants and requesting for registration of the project as a

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factory under the provisions of the Factories Act, 1948 and the Uttar

Pradesh Factories Rules, 1950. The appellant was granted registration

and licence under Section 6 of the Factories Act, 1948 read with Uttar

Pradesh Factories Rules, 1950 for the said Project, as a factory.

Respondent No. 1 notified the Uttar Pradesh Building and other

Construction Workers (Regulation of Employment and Conditions of

Service) Rules, 2009 (for short 'BOCW Rules') on 04.02.2009.

Immediately thereafter, the appellant received a notice of even date

issued by respondent No. 2, intimating that the Chief Secretary,

Government of Uttar Pradesh had directed that “establishments”

engaged in construction activities were required to get themselves

registered under the provisions of the BOCW Act and the BOCW Rules.

Simultaneously, a letter of even date was also received from the District

Collector, Sonebhadra, Uttar Pradesh, calling upon the appellant to get

itself/its contractors registered under the provisions of the BOCW Act

and the BOCW Rules. The appellant, vide its letter of even date, replied

to the aforesaid communication dated 19.04.2010 of the District

Collector, Sonebhadra, stating that the appellant was undertaking the

construction activity of the Project under the provisions of the Factories

Act and as such, in view of Section 2(1)(d) of the BOCW Act, the Project

was exempted from the application of the BOCW Act, and consequently

the Welfare Cess Act and BOCW Rules inasmuch as the provisions of

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the Factories Act apply to the Project.

4.The respondents were not satisfied with the aforesaid stand taken by the

appellant. Thus, show cause notice dated 17.02.2011 was issued by

respondent No. 2 as to why action be not taken against the appellant for

failing to get itself registered under BOCW Act. It was followed by

another notice of even date stating that the appellant had not furnished

requisite information relating to construction activities undertaken by it

as required under Section 4 of the Welfare Cess Act read with Rule 6 of

the Welfare Cess Rules. Some more notices were issued to the similar

effect with regard to the construction activities in respect of the township

in Anpara, undertaken by the appellant. Insofar as township is

concerned, appellant got itself registered through its principal

contractors under Welfare Cess Act and started paying the cess.

However, in respect of construction activity and factory premises, the

appellant reiterated its stand that by virtue of Section 2(1)(d) of the

BOCW Act, it was excluded from the coverage thereof. The contention

of the appellant was rejected by the respondents which led to issuance

of further notices demanding cess.

5.At this juncture, the appellant filed the writ petition in the High Court of

Judicature at Allahabad challenging the validity of notices dated

14.03.2011 and 02.04.2011 demanding payment of cess, on the

following grounds:

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(i) That the appellant is not amenable to assessment of liability under

the Welfare Cess Act inasmuch as the Factories Act is applicable to the

Project, and the Project is as such, exempt from the applicability of the

said Act by virtue of the exclusionary cause contained in Section 2(1)(d)

of the BOCW Act.

(ii) That respondent No. 2, vide impugned notice dated 02.04.2011,

was proceeding to calculate the alleged cess payable by the appellant

on the basis of the cost of the Project, and not on the cost of

construction of the said Project, whereas under the scheme of the Cess

Act, cess is payable only on the cost of construction incurred annually,

and not on the entire project cost, which includes several other

components apart from civil construction works.

6.The respondents filed their counter affidavit contesting the petition. After

hearing, the writ petition has been dismissed by the High Court vide

judgment dated 28.04.2015, gist whereof has already been taken note

of above.

7.Emphatic submissions were made by Mr. Sundaram, learned senior

counsel appearing in some of these appeals, questioning the approach

and conclusion reached by the High Court. Other senior counsel Mr.

Gaurab Banerji and Mr. Akhil Sibal supplemented those submissions

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lending their candour thereto. These submissions were further

supplemented by M/s. Prashant Shukla, Arunabh Chowdhury and K.

Raghava Charyulu, Advocates. It may not be necessary to take note of

individual submissions made by these counsel. Instead, for the sake of

brevity, we are reproducing the submissions of these counsel in

consolidated form hereinafter.

8.These counsel have led two prong attacks on the demands raised by the

respondents for payment of cess under BOCW Act read with Welfare

Cess Act, which is as under:

i) In the first instance, it is argued that BOCW Act does not apply to

those undertakings which are registered under the Factories Act. To

support this submission, emphasis was laid on the definition of “building

or other construction work” as contained in Section 2(1)(d) of BOCW

Act, which reads as under:

“Section 2(1)(d) : “building or other construction work”

means the construction, alternation, repairs,

maintenance or demolition of or, in relation to, buildings,

streets, roads, railways, tramways, airfields, irrigation,

drainage, embankment and navigation works, flood

control works (including storm water drainage works),

generation, transmission and distribution of power,

water works (including channels for distribution of

water), oil and gas installations, electric lines, wireless,

radio, television, telephone, telegraph and overseas

communication dams, canals, reservoirs, watercourses,

tunnels, bridges, viaducts, aquaducts, pipelines, towers,

cooling towers, transmission towers and such other

work as may be specified in this behalf by the

appropriate Government, by notification but does not

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include any building or other construction work to which

the provisions of the Factories Act, 1948 (63 of 1948), or

the Mines Act, 1952 (35 of 1952), apply.

(emphasis added)”

(ii) Second submission, which in fact flows from first submission noted

above, was that the approach of the High Court in dealing with the

matter was contrary to law. In this behalf, it was pointed out that the

High Court has rejected the case of the appellants herein on the ground

that even if the appellants had obtained a licence under the Factories

Act for registration to work a factory, the appellants were still not

excluded from the provisions of Welfare Cess Act as no manufacturing

process or factory operation had started by the appellants and,

therefore, appellants did not answer the description of 'factory' within the

meaning of Factories Act. As per the High Court, since the appellants

had only undertaken the process of construction of premises which are

to be ultimately used as factories, and since such power project has not

started and there was no operation for which the licence was obtained

under the Factories Act till the production commences, it could not be

said that “factory” has come into existence and, therefore, the appellants

were not entitled to take advantage of mere registration under the

Factories Act.

Dubbing the aforesaid approach as erroneous, it was the argument

of the appellants that the High Court ignored the pertinent aspect that

even when the building was under construction, the establishments

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which were covered by the Factories Act stood excluded by virtue of

definition contained in Section 2(d) of BOCW Act which pertained to

construction of building and, therefore, specifically covered the stage of

construction itself. It was argued that matter should have been seen

from that angle. Advancing this argument further, it was also submitted

that the Legislature is alive to the fact that the factory is not running at

the stage when building or other construction work is going on.

However, it still chose to exclude those buildings or other construction

work to which the provisions of Factories Act apply.

9.Expanding the aforesaid submissions, the appellants even gave the

rationale in couching the definition of Section 2(d) of the BOCW Act in

that specific manner by submitting that once the provisions of Factories

Act apply, all the benefits which are admissible to the workers under the

BOCW Act and Welfare Cess Act are granted under the Factories Act as

well. This submission was buttressed by pointing out the

provisions/conditions stipulated while granting the permission under the

Factories Act. It was submitted that the safety measures and facilities

which the appellants were obligated under those conditions were the

same as stipulated in BOCW Act.

10.Taking support of interpretative tools to support the aforesaid twin

submissions, it was submitted by the counsel for the appellants that

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Section 2(d) had to be given literal meaning, in the absence of any

ambiguity in the said provision and number of judgments were cited in

this behalf. Some of those judgments are as under:

i) In Punjab Land Development and Reclamation Corporation Ltd.,

Chandigarh v. Presiding Officer, Labour Court, Chandigarh and

Others

1

, this Court while interpreting the word 'means' observed that if

the definition has used the word 'means', it shall include certain things or

acts and the definition has used the word 'means', it shall include certain

things or acts and the definition is a hard-and-fast definition and no other

meaning can be assigned to the expression than is put down in

definition. This Court further observed that if the words of the statute are

in themselves precise and unambiguous, then no more can be

necessary than to expound those words in their natural and ordinary

sense. The words themselves alone do, in such case, best declare the

intention of the law. This Court after making reference to its judgment in

B.N. Mutto v. T.K. Nandi

2

observed that “the Court has to determine the

intention as expressed by the words used. If the words of a statute are

themselves precise and unambiguous, then no more can be necessary

than to expound those words in their ordinary and natural sense”. It was

further observed that “the cardinal rule of construction of statute is to

read statutes literally, that is, by giving to the words their ordinary,

1

(1990) 3 SCC 682

2

(1979) 1 SCC 361

Page 12 12

natural and grammatical meaning.”

ii) In Shri Hariprasad Shivshanker Shukla and another v. Shri

A.D. Divelkar and others

3

, it was held that “there is no doubt that when

the Act itself provides a dictionary for the words used, we must look into

that dictionary first for an interpretation of the words used in the statute.

We are not concerned with any presumed intention of the legislature;

our task is to get at the intention as expressed in the statute”.

iii)In Regional Director, Employees State Insurance Corporation,

Trichur v. Ramanuja Match Industries

4

, the Court pointed out that

“there is no doubt that beneficial legislations should have liberal

construction with a view to implementing the legislative intent but where

such beneficial legislation has a scheme of its own there is no warrant

for the Court to travel beyond the scheme and extend the scope of the

statute on the pretext of extending the statutory benefit to those who are

not covered by the scheme”.

iv)In Dadi Jagannadham v. Jammulu Ramulu and Others

5

, this

Court, while interpreting the provisions that fell for consideration, made

the following observations in paragraph 13:

“13. …. The settled principles of interpretation are that

the court must proceed on the assumption that the

legislature did not make a mistake and that it did what it

3

1957 SCR 121

4

(1985) 1 SCC 218

5

(2001) 7 SCC 71

Page 13 13

intended to do. The court must, as far as possible, adopt

a construction which will carry out the obvious intention

of the legislature. Undoubtedly if there is a defect or an

omission in the words used by the legislature, the court

would not go to its aid to correct or make up the

deficiency. The court could not add words to a statute or

read words into it which are not there, especially when

the literal reading produces an intelligible result. The

court cannot aid the legislature's defective phrasing of

an Act, or add and mend, and, by construction, make up

deficiencies which are there.”

v)In Shyam Sunder and others v. Ram Kumar and another

6

, this Court

explained as to how to interpret the provisions of an enactment in the

following words:

“... when the words used in a statute are capable of only

one meaning. In such a situation, the courts have been

hesitant to apply the rule of benevolent construction. But

if it is found that the words used in the statute give rise

to more than one meaning, in such circumstances, the

courts are not precluded from applying such rule of

construction. The third situation is when there is no

ambiguity in a provision of a statute so construed. If the

provision of a statute is plain, unambiguous and does

not give rise to any doubt, in such circumstances the

rule of benevolent construction has no application.”

vi) Similarly in Grasim Industries Ltd. v. Collector of Customs,

Bombay

7

, the Constitution Bench of this Court explained the principle of

literal interpretation as under:

“10. No words or expressions used in any statute can

be said to be redundant or superfluous. In matters of

interpretation one should not concentrate too much on

one word and pay too little attention to other words. No

provision in the statute and no word in any section can

be construed in isolation. Every provision and every

word must be looked at generally and in the context in

which it is used. It is said that every statute is an edict of

the legislature. The elementary principle of interpreting

6

(2001) 8 SCC 24

7

(2002) 4 SCC 297

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any word while considering a statute is to gather the

mens or sententia legis of the legislature. Where the

words are clear and there is no obscurity, and there is

no ambiguity and the intention of the legislature is

clearly conveyed, there is no scope for the court to take

upon itself the task of amending or alternating

(sic altering) the statutory provisions. Wherever the

language is clear the intention of the legislature is to be

gathered from the language used. While doing so, what

has been said in the statute as also what has not been

said has to be noted. The construction which requires

for its support addition or substitution of words or which

results in rejection of words has to be avoided. As

stated by the Privy Council in Crawford v. Spooner

[(1846) 6 Moore PC 1 : 4 MIA 179] “we cannot aid the

legislature's defective phrasing of an Act, we cannot add

or mend and, by construction make up deficiencies

which are left there”. In case of an ordinary word there

should be no attempt to substitute or paraphrase of

general application. Attention should be confined to what

is necessary for deciding the particular case. This

principle is too well settled and reference to a few

decisions of this Court would suffice. (See: Gwalior

Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested

Forests [1990 Supp SCC 785 : AIR 1990 SC 1747],

Union of India v. Deoki Nandan Aggarwal [1992 Supp

(1) SCC 323 : 1992 SCC (L&S) 248 : (1992) 19 ATC 219

: AIR 1992 SC 96] ,Institute of Chartered Accountants of

India v. Price Waterhouse [(1997) 6 SCC 312] and

Harbhajan Singh v. Press Council of India [(2002) 3

SCC 722 : JT (2002) 3 SC 21])”

vii)In Deepal Girishbhai Soni and Others v. United India Insurance Co.

Ltd., Baroda

8

, while interpreting the provisions that fell for

consideration, the principle was applied even in the context of beneficial

legislation, when the language was plain, depicting clear intention of the

legislature, in the following terms:

“53. Although the Act is a beneficial one and, thus,

deserves liberal construction with a view to

implementing the legislative intent but it is trite that

where such beneficial legislation has a scheme of its

8

(2004) 5 SCC 385

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own and there is no vagueness or doubt therein, the

court would not travel beyond the same and extend the

scope of the statute on the pretext of extending the

statutory benefit to those who are not covered thereby.

(See Regional Director, ESI Corpn. v. Ramanuja Match

Industries [(1985) 1 SCC 218 : 1985 SCC (L&S) 213 :

AIR 1985 SC 278]).”

Relying upon all the aforesaid judgments, the forceful exhortation

was to follow this literal construction while interpreting Section 2(d) of

BOCW Act in the manner appellants suggested to us.

11.Mr. Rana and Mr. Srivastava countered the aforesaid submissions giving

equally salubrious response. Their fervent plea was that the view taken

by the High Court while interpreting the provisions of Section 2(d) of

BOCW Act was perfectly justified and any other interpretation as

suggested by the appellants would defeat the very purpose of these

Acts. It was argued that mere registration under the Factories Act would

be of no consequence inasmuch as definition of 'factory' contained in

Section 2(m) of the Act unambiguously suggest that the provisions of the

said Act would apply only when manufacturing process is actually

carried on. It was further submitted that the definition of 'worker' under

the Factories Act does not include construction workers and, therefore,

construction workers would not be entitled to various benefits which are

contained in different provisions of the Factories Act. It is for this reason

at the stage of construction of the building, which is to be ultimately used

as a factory, the provisions of BOCW Act would be applied. It was also

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emphasised that while interpreting the provisions of these two Acts,

“superior purpose” behind therein had to be kept in mind and this

enactment which is for the welfare of the weaker section, i.e. workers of

unorganised sector, had to be liberally construed by giving that

construction which accords them the benefit eschewing the other

approach which would preclude them from getting the benefit under the

Acts. In this hue, the learned counsel strongly urged upon this Court to

invoke the principle of purposive interpretation, which is in vogue, to do

complete justice in the matter. It was also argued that exclusion

provision contained in Section 2(d) of BOCW Act had to be construed

narrowly as per the settled proposition of law.

12.We have bestowed our due and serious consideration to the

submissions made of both sides, which these submissions deserve.

The central issue is the meaning that is to be assigned to the language

of Section 2(d) of the Act, particularly that part which is exclusionary in

nature, i.e. which excludes such building and construction work to which

the provisions of Factories Act apply. Before coming to the grip of this

central issue, we deem it appropriate to refer to the objectives with

which the Factories Act and BOCW Act were enacted, as that would be

the guiding path to answer the core issue delineated above.

13.Insofar as Factories Act is concerned, its Preamble mentions that it is an

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Act to consolidate and amend the law regulating labour in factories. It is

enacted primarily with the object of protecting workers employed in

factories against industrial and occupational hazards. For that purpose

it seeks to impose upon the owners or occupiers certain obligations to

protect workers unwary as well as negligent and to secure for them

employment in conditions conducive to their health and safety. This Act

also requires that the workers should work in healthy and sanitary

conditions and for that purpose it provides that precautions should be

taken for the safety of workers and prevention of accidents. Incidental

provisions in Factories Act are made for securing information necessary

to ensure that the objects are carried out and the State Governments

are empowered to appoint Inspectors, to call for reports and to inspect

the prescribed registers with a view to maintain effective supervision.

The duty of the employer under this Act is to secure the health and

safety of workers and extends to providing adequate plant, machinery

and appliances, supervision over workers, healthy and safe premises,

proper system of working and extends to giving reasonable restrictions.

Detailed provisions are, therefore, made in diverse chapters of the Act

imposing obligations upon the owners of the factories to maintain

inspecting staff and for maintenance of health, cleanliness, prevention of

overcrowding and provision for amenities such as lighting, drinking

water, etc. Provisions are also made for safety of workers and their

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welfare, such as restrictions on working hours and on the employment of

young persons and females, and grant of annual leave with wages. In

Bhikusa Yamasa Kshatriya (P) Ltd. v. Union of India and another

9

,

this Court highlighted the necessity and rationale behind legislating this

Act and the objectives which it sought to achieve, in the following

manner:

“9. The Factories Act, as the preamble recites, is an Act

to consolidate and amend the law regulating labour in

factories. The Act is enacted primarily with the object of

protecting workers employed in factories against

industrial and occupational hazards. For that purpose it

seeks to impose upon the owners or the occupiers

certain obligations to protect workers unwary as well as

negligent and to secure for them employment in

conditions conducive to their health and safety. The Act

requires that the workers should work in healthy and

sanitary conditions and for that purpose it provides that

precautions should be taken for the safety of workers

and prevention of accidents. Incidental provisions are

made for securing information necessary to ensure that

the objects are carried out and the State Governments

are empowered to appoint Inspectors, to call for reports

and to inspect the prescribed registers with a view to

maintain effective supervision. The duty of the employer

is to secure the health and safety of workers and

extends to providing adequate plant, machinery and

appliances, supervision over workers, healthy and safe

premises, proper system of working and extends to

giving reasonable instructions. Detailed provisions are

therefore made in diverse chapters of the Act imposing

obligations upon the owners of the factories to maintain

inspecting staff and for maintenance of health,

cleanliness, prevention of overcrowding and provision

for amenities such as lighting, drinking water, etc. etc.

Provisions are also made for safety of workers and their

welfare, such as restrictions on working hours and on

the employment of young persons and females, and

grant of annual leave with wages. Employment in a

manufacturing process was at one time regarded as a

matter of contract between the employer and the

9

1964 SCR (1) 860

Page 19 19

employee and the State was not concerned to impose

any duties upon the employer. It is however now

recognised that the State has a vital concern in

preventing exploitation of labour and in insisting upon

proper safeguards for the health and safety of the

workers. The Factories Act undoubtedly imposes

numerous restrictions upon the employers to secure to

the workers adequate safeguards for their health and

physical well-being. But imposition of such restrictions is

not and cannot be regarded, in the context of the

modem outlook on industrial relations, as

unreasonable....”

14.Coming to BOCW Act, its Statement of Objects and Reasons, depicting

the legislative intent, reads as under:

“(1) It is estimated that about 8.5 million workers in the

country are engaged in building and other construction

works. Building and other construction workers are one

of the most numerous and vulnerable segments of the

unorganised labour in India. The building and other

construction works are characterized by their inherent

risk to the life and limb of the workers. The work is also

characterised by its casual nature, temporary

relationship between employer and employee, uncertain

working hours, lack of basic amenities and inadequacy

of welfare facilities. In the absence of adequate

statutory provisions, the requisite information regarding

the number and nature of accidents is also not

forthcoming. In the absence of such information, it is

difficult to fix responsibility or to take any corrective

action.

(2) Although the provisions of certain Central Acts are

applicable to the building and other construction workers

yet a need has been felt for a comprehensive Central

Legislation for regulating their safety, health, welfare and

other conditions of service. It had been considered

necessary to levy a cess on the cost of construction

incurred by the employers on the building and other

construction works for ensuring sufficient funds for the

Welfare Boards to undertake the social security

schemes and welfare measures.”

15.In the Statement of Objects and Reasons of this Act itself, it was

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considered necessary to levy a cess on the cost of construction incurred

by the employers while constructing building etc. This led to passing of

Welfare Cess Act. The Statement of Objects and Reasons behind this

Act was to provide for the levy and collection of a cess on the cost of

construction incurred by the employers for augmenting the resources of

the Building, and Other Construction Workers' Welfare Boards

constituted by the State Governments under the Building and Other

Construction Workers' (Regulation of Employment and Conditions of

Service) Ordinance, 1995.

16.Scheme of BOCW Act came up for consideration by this Court in the

Dewan Chand Builders and Contractors v. Union of India and

Others

10

. Recognising that the noble purpose behind the said Act is to

ensure welfare of the building and construction workers in order to

provide basic human dignity enshrined in Article 21 of the Constitution,

the Court observed as under:

“10. It is thus clear from the scheme of the BOCW Act

that its sole aim is the welfare of building and

construction workers, directly relatable to their

constitutionally recognised right to live with basic human

dignity, enshrined in Article 21 of the Constitution of

India. It envisages a network of authorities at the

Central and State levels to ensure that the benefit of the

legislation is made available 'to every building and

construction worker, by constituting Welfare Boards and

clothing them with sufficient powers to ensure

enforcement of the primary purpose of the BOCW Act.

The means of generating revenues for making effective

the welfare provisions of the BOCW Act is through the

10

(2012) 1 SCC 101

Page 21 21

Cess Act, which is questioned in these appeals as

unconstitutional.

xx xx xx

17. It is manifest from the overarching schemes of the

BOCW Act, the Cess Act and the Rules made

thereunder that their sole object is to regulate the

employment and conditions of service of building and

other construction workers, traditionally exploited

sections in the society and to provide for their safety,

health and other welfare measures. The BOCW Act and

the Cess Act break new ground in that, the liability to

pay cess falls not only on the owner of a building or

establishment, but under Section 2(1)(i)(iii) of the

BOCW Act

“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”;

The extension of the liability on to the contractor is with

a view to ensure that, if for any reason it is not possible

to collect cess from the owner of the building at a stage

subsequent to the completion of the construction, it can

be recovered from the contractor. The Cess Act and the

Cess Rules ensure that the cess is collected at source

from the bills of the contractors to whom payments are

made by the owner. In short, the burden of cess is

passed on from the owner to the contractor.”

(emphasis supplied)

17.Keeping in view the aforesaid objective of the respective Acts, we now

deal with the scope and ambit of Section 2(d) of BOCW Act. As noticed

above, one of the submissions of the appellants is that literal

interpretation needs to be given to the said provision as it categorically

excludes those building or construction work to which Factories Act

apply. In this very hue, it is argued that as the benefit under the

Factories Act are already given to the construction workers who are

Page 22 22

involved in the construction work, there is no need for covering the

construction workers who are engaged in building or construction work

of the appellants under BOCW Act or Welfare Cess Act.

18.Before dealing with the argument predicated on literal construction, we

would like to deal with the second aspect as the answer to that would

facilitate the answer to this aspect as well. Section 2(m) of the Factories

Act defines 'factory' in the following manner:

“(m) "factory" means any premises including the

precincts thereof-

(i) whereon ten or more workers are working, or were

working on any day of the preceding twelve months, and

in any part of which a manufacturing process is being

carried on with the aid of power, or is ordinarily so

carried on, or

(ii) Whereon twenty or more workers are working, or

were working on any day of the preceding twelve

months, and in any part of which a manufacturing

process is being carried on without the aid of power, or

is ordinarily so carried on,-

but does not include a mine subject to the operation of

[the Mines Act, 1952 (35 of 1952)] or

[a mobile unit

belonging to the armed forces of the Union, a railway

running shed or a hotel, restaurant or eating place].

[Explanation [I] - For computing the number of workers

for the purposes of this clause all the workers in

[different groups and relays] in a day shall be taken into

account;]

[Explanation II - For the purposes of this clause, the

mere fact that an Electronic Data Processing Unit or a

Computer Unit is installed in any premises or part

thereof, shall not be construed to make it a factory if no

manufacturing process is being carried on in such

premises or part thereof;]...”

Page 23 23

19.Section 2(k) of the Factories Act defines 'manufacturing process' in the

following manner:

(k) "manufacturing process" means any process for-

(i) making, altering, repairing, ornamenting, finishing,

packing, oiling, washing, cleaning, breaking up,

demolishing, or otherwise treating or adapting any

article or substance with a view to its use, sale,

transport, delivery or disposal, or

(ii)[pumping oil, water, sewage or any other

substance; or]

(iii)generating, transforming or transmitting power; or

(iv)[composing types for printing, printing by letter

press, lithography, photogravure or other similar process

or book binding;] [or]

(v)constructing, reconstructing, repairing, refitting,

finishing or breaking up ships or vessels;[or]

(vi) [preserving or storing any article in cold storage;]

20.It is also necessary to take note of the definition of 'worker', which is

contained in Section 2(l) of the Factories Act. It reads as under:

(l)"worker" means a person 8[employed, directly or

by or through any agency (including a contractor) with

or without the knowledge of the principal employer,

whether for remuneration or not], in any manufacturing

process, or in cleaning any part of the machinery or

premises used for a manufacturing process, or in any

other kind of work incidental to, or connected with, the

manufacturing process, or the subject of the

manufacturing process 7[but does not include any

member of the armed forces of the Union];

21.On the conjoint reading of the aforesaid provisions, it becomes clear that

“factory” is that establishment where manufacturing process is carried

Page 24 24

on with or without the aid of power. Carrying on this manufacturing

process or manufacturing activity is thus a prerequisite. It is equally

pertinent to note that it covers only those workers who are engaged in

the said manufacturing process. Insofar as these appellants are

concerned, construction of building is not their business activity or

manufacturing process. In fact, the building is being constructed for

carrying out the particular manufacturing process, which, in most of

these appeals, is generation, transmission and distribution of power.

Obviously, the workers who are engaged in construction of the building

also do not fall within the definition of 'worker' under the Factories Act.

On these two aspects there is no cleavage and both parties are at ad

idem. What follows is that these construction workers are not covered

by the provisions of the Factories Act.

22.Having regard to the above, 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. Could this be the intention while providing the

definition of 'building and other construction work' in Section 2(d) of

BOCW Act? Clear answer to this has to be in the negative.

23.We may mention at this stage that High Court is right in observing that

Page 25 25

merely because the appellants have obtained a licence under Section 6

of the Factories Act for registration to work a factory, it would not follow

therefrom that they answer the description of the “factory” within the

meaning of the Factories Act. We have reproduced the definition of

'factory' and a bare reading thereof 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.

24.We now advert to the core issue touching upon the construction of

Section 2(d) of the BOCW Act. The argument of the appellants is that

language thereof is unambiguous and literal construction is to be

accorded to find the legislative intent. To our mind, this submission is of

no avail. Section 2(d) of the BOCW Act dealing with the building or

construction work is in three parts. In the first part, different activities are

mentioned which are to be covered by the said expression, namely,

construction, alterations, repairs, maintenance or demolition. Second

part of the definition is aimed at those buildings or works in relation to

which the aforesaid activities are carried out. The third part of the

definition contains exclusion clause by stipulating that it does not include

'any building or other construction work to which the provisions of the

Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952),

Page 26 26

applies'. Thus, first part of the definition contains the nature of activity;

second part contains the subject matter in relation to which the activity is

carried out and third part excludes those building or other construction

work to which the provisions of Factories Act or Mines Act apply.

25.It is not in dispute that construction of the projects of the appellants is

covered by the definition of “building or other construction work” as it

satisfies first two elements of the definition pointed out above. In order

to see whether exclusion clause applies, we need to interpret the words

'but does not include any building or other construction work to which

the provisions of the Factories Act …......... apply'. The question is

as to whether the provisions of the Factories Act apply to the

construction of building/project of the appellants. We are of the firm

opinion that they do not apply. 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. That is how the exclusion clause is to be

interpreted and that would be the plain meaning of the said clause. This

meaning to the exclusion clause ascribed by us is in tune with the

approach adopted by this Court in Organo Chemical Industries v.

Union of India

11

. Two separate, but concurring, opinions were given by

Justice V.R. Krishna Iyer and Justice A.P. Sen, and we reproduce here

11

(1979) 4 SCC 573

Page 27 27

below some excerpts from both opinions:

“Justice A.P. Sen (para 23)

Each word, phrase or sentence is to be considered in the

light of general purpose of the Act itself. A bare

mechanical interpretation of the words 'devoid of concept

or purpose' will reduce much of legislation to futility. It is a

salutary rule, well established, that the intention of the

legislature must be found by reading the statute as a

whole.

Justice V.R. Krishna Iyer (para 241)

A policy-oriented interpretation, when a welfare legislation

falls for determination, especially in the context of a

developing country, is sanctioned by principle and

precedent and is implicit in Article 37 of the Constitution

since the judicial branch is, in a sense, part of the State.

So it is reasonable to assign to 'damages' a larger, fulfilling

meaning.”

26.The aforesaid meaning attributed to the exclusion clause of the definition

is also in consonance with the objective and purpose which is sought to

be achieved by the enactment of BOCW Act and Welfare Cess Act. As

pointed out above, if the construction of this provision as suggested by

the appellants is accepted, the construction workers who are engaged in

the construction of buildings/projects will neither get the benefit of the

Factories Act nor of BOCW Act/Welfare Cess Act. 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.

27.Purposive interpretation in a social amelioration legislation is an

Page 28 28

imperative, irrespective of anything else. This is so eloquently brought

out in the following passage in the case of Atma Ram Mittal v. Ishwar

Singh Punia

12

:

“9. Judicial time and energy is more often than not

consumed in finding what is the intention of Parliament or

in other words, the will of the people. Blackstone tells us

that the fairest and most rational method to interpret the

will of the legislator is by exploring his intentions at the

time when the law was made, by signs most natural and

probable. And these signs are either the words, the

context, the subject-matter, the effects and consequence,

or the spirit and reason of the law. (emphasis by the court)

See Commentaries on the Laws of England (facsimile of

1st Edn. of 1765, University of Chicago Press, 1979, Vol.

1, p. 59). Mukherjea, J. as the learned Chief Justice then

was, in Poppatlal Shah v. State of Madras [AIR 1953 SC

274 : 1953 SCR 677 : 1953 Cri LJ 1105: (1953) 4 STC

188] said that each word, phrase or sentence was to be

construed in the light of purpose of the Act itself. But words

must be construed with imagination of purpose behind

them said Judge Learned Hand, a long time ago. It

appears, therefore, that though we are concerned with

seeking of intention, we are rather looking to the meaning

of the words that the legislature has used and the true

meaning of what words [Ed.: Lord Reid in the aforecited

case had observed: (All ER p. 814) “We often say that we

are looking for the intention of Parliament, but this is not

quite accurate. We are seeking the meaning of the words

which Parliament used. We are seeking not what

Parliament meant but the true meaning of what they said.”]

as was said by Lord Reid in Black-Clawson International

Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G [1975 AC

591, 613 : (1975) 1 All ER 810: (1975) 2 WLR 513] . We

are clearly of the opinion that having regard to the

language we must find the reason and the spirit of the

law.”

28.How labour legislations are to be interpreted has been stated and

restated by this Court time and again. In M.P. Mineral Industry

12

(1988) 4 SCC 284

Page 29 29

Association v. Regional Labour Commr. (Central)

13

, this Court while

dealing with the provisions of the Minimum Wages Act, 1948, observed

that this Act is intended to achieve the object of doing social justice to

workmen employed the scheduled employments by prescribing

minimum rates of wages for them, and so in construing the said

provisions the court should adopt what is sometimes described as a

beneficent rule of construction. In Surendra Kumar Verma v. The

Central Government Industrial Tribunal

14

, this Court reminded that

semantic luxuries are misplaced in the interpretation of 'bread and

butter' statutes. Welfare statutes must, of necessity, receive a broad

interpretation. Where legislation is designed to give relief against certain

kinds of mischief, the Court is not to make inroads by making

etymological excursions.

29.We would also like to reproduce a passage from Workmen of

American Express v. Management of American Express

15

, which

provides complete answer to the argument of the appellants based on

literal construction:

“4. The principles of statutory construction are well settled.

Words occurring in statutes of liberal import such as social

welfare legislation and human rights' legislation are not to

be put in Procrustean beds or shrunk to Liliputian

dimensions. In construing these legislations the imposture

of literal construction must be avoided and the prodigality

of its misapplication must be recognised and reduced.

13

AIR 1960 SC 1068

14

(1980) 4 SCC 443

15

(1985) 4 SCC 71

Page 30 30

Judges ought to be more concerned with the “colour”, the

“content” and the “context” of such statutes (we have

borrowed the words from Lord Wilberforce's opinion in

Prenn v. Simmonds [(1971) 3 All ER 237] ). In the same

opinion Lord Wilberforce pointed out that law is not to be

left behind in some island of literal interpretation but is to

enquire beyond the language, unisolated from the matrix

of facts in which they are set; the law is not to be

interpreted purely on internal linguistic considerations...”

30.In equal measure is the message contained in Carew and Co. Ltd. v.

Union of India

16

:

“21. The law is not “a brooding omnipotence in the sky”

but a pragmatic instrument of social order. It is an

operational art controlling economic life, and interpretative

effort must be imbued with the statutory purpose. No

doubt, grammar is a good guide to meaning but a bad

master to dictate...”

31.The sentiments were echoed in Bombay Anand Bhavan Restaurant v.

Deputy Director, Employees' State Insurance Corporation & Anr.

17

in the following words:

“20. The Employees' State Insurance Act is a beneficial

legislation. The main purpose of the enactment as the

Preamble suggests, is to provide for certain benefits to

employees of a factory in case of sickness, maternity and

employment injury and to make provision for certain other

matters in relation thereto. The Employees' State

Insurance Act is a social security legislation and the

canons of interpreting a social legislation are different from

the canons of interpretation of taxation law. The courts

must not countenance any subterfuge which would defeat

the provisions of social legislation and the courts must

even, if necessary, strain the language of the Act in order

to achieve the purpose which the legislature had in placing

this legislation on the statute book. The Act, therefore,

must receive a liberal construction so as to promote its

objects.

16

(1975) 2 SCC 791

17

(2009) 9 SCC 61

Page 31 31

32.In taking the aforesaid view, we also agree with the learned counsel for

the respondents that 'superior purpose' contained in BOCW Act and

Welfare Cess Act has to be kept in mind when two enactments – the

Factories Act on the one hand and BOCW Act/Welfare Cess Act on the

other hand, are involved, both of which are welfare legislations. (See

Allahabad Bank v. Canara Bank

18

, which has been followed in

Pegasus Assets Reconstruction P. Ltd. v. M/s. Haryana Concast

Limited & Anr.

19

in the context of Securitization and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002 and

Companies Act, 1956. Here the concept of 'felt necessity' would get

triggered and as per the Statement of Objects and Reasons contained in

BOCW Act, since the purpose of this Act is to take care of a particular

necessity i.e. welfare of unorganised labour class involved in

construction activity, that needs to be achieved and not to be discarded.

Here the doctrine of Purposive Interpretation also gets attracted which is

explained in recent judgments of this Court in Richa Mishra v. State of

Chhattisgarh and Others

20

and Shailesh Dhairyawan v. Mohan

Balkrishna Lulla

21

.

33.We are left to deal with the argument of the appellants that while

18

(2000) 4 SCC 406

19

2016 (1) SCALE 1

20

(2016) 4 SCC 179 at Page No. 197

21

(2016) 3 SCC 619 – Para 31

Page 32 32

granting permission under the Factories Act, various conditions are

imposed which the appellants are required to fulfill and these conditions

are almost the same which are contained in BOCW Act. We are not

convinced with this submission either. It is already held that provisions

of Factories Act are not applicable to these construction workers.

Registration under the Factories Act becomes necessary in view of

provisions contained in Section 6 of the said Act as this Section requires

taking of approval and registration of factories even at preparatory stage

i.e. at the stage when the premises where factory is to operate has to

ensure that construction will be done in such a manner that it takes care

of safety measures etc. which are provided in the Factories Act. This

means to ensure that construction is carried out in such a manner that

provisions in the Factories Act to ensure health, safety and provisions

relating to hazardous process as well as welfare measures are taken

care of. It is for this reason that even after the building is completed

before it is occupied, notice under Section 7 is to be given by the

occupier to the Chief Inspector of Factories so that a necessary

inspection is carried out to verify that all such measures are in place.

Therefore, when the permissions for construction of factories is given,

the purpose is altogether different.

34.It is stated at the cost of repetition that construction workers are not

covered by the Factories Act and, therefore, welfare measures

Page 33 33

specifically provided for such workers under the BOCW Act and Welfare

Cess Act cannot be denied.

35.We, thus, hold that all these appeals are bereft of any merit. Accordingly,

these appeals, along with the writ petitions filed before this Court as also

those which are the subject matter of the transfer petition and transfer

cases, are dismissed with cost. We, however, make it clear that insofar

as objection to the calculation of cess as contained in the show cause

notices is concerned, it would be open to the appellants to agitate the

same before the adjudicating authorities.

No costs.

.............................................J.

(A.K. SIKRI)

.............................................J.

(N.V. RAMANA)

NEW DELHI;

OCTOBER 18, 2016