Factory Act & The Building and Other Construction Workers'
Welfare Cess Act, 1996" (Act 28 of 1996)- levying a cess of 1% on contract amount given for constructing a blast furnaces by labour commissioner under Factory Act - High court held that it is without jurisdiction and hence set aside the order of Labour commissioner =
the orders/decisions of
respondents 1 and 2 to charge 1% of the value of the contracts entered by
petitioners with third respondent to undertake design, manufacture, supply,
erect, testing and commissioning of blast furnace-3 including civil and
structural works as cess under "The Building and Other Construction Workers'
Welfare Cess Act, 1996" (Act 28 of 1996). =
Rashtriya Ispat Nigam Limited (third respondent) is a factory
registered under the Indian Factories Act, 1948 (for short the Act, 1948).
In
order to expand its operations and increase the production capacity third
respondent obtained necessary permissions to establish another blast furnace.
This expansion required design, manufacture, supply, erect, testing and
commissioning of blast furnace-3 inclusive of civil and structural works and all
facilities. For this purpose third respondent entered into agreements with
the petitioners. Petitioners have executed the works in accordance with the
terms of the agreement.
The Commissioner of Labour (first respondent) held that
petitioners are governed by Act Nos. 27 and 28 of 1996, determined amount
payable as cess under Act 28 of 1996 and demanded the amount quantified and
issued incidental directions.
The first and second
respondents directed the third respondent to deduct 1% of the amount payable
to the petitioners and remit the same to the Government towards cess payable
under the Act 28 of 1996. In terms of the said mandate of the first and second
respondents, third respondent deducted 1% contractual amount from the amounts
payable to the contractors. Said orders of the first and second respondents
are under challenge in this batch of writ petitions. =
Relevant provisions of Act 27 of 1996, Act 28 of 1996 and Act, 1948 and
Factories Rules, 1950 read as under:
Act 27 of 1996
"Sections 2 (d) : "Building or other construction work" means the construction,
alteration, 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
communications, 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 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,
Section 2 (g): "Contractor" means a person who undertakes to produce a given
result for any establishment, other than a mere supply of goods or articles of
manufacture, by the employment of buildings workers or who supplies building
workers for any work of the establishment; and includes a sub-contractor;
Section 2 (j): "Establishment" means any establishment belonging to, or under
the control of, Government, any body corporate or firm, an individual or
association or other body of individuals which or who employs building workers
in any building or other construction work; and includes an establishment
belonging to a contractor, but does not include an individual who employs such
workers in any building or construction work in relation to his own residence
the total cost of such construction not being more than rupees ten lakhs;
Act 28 of 1996:
Sub Section 2 and 3 of Section 3 of Act 28 of 1996 reads as under:
"3. Levy and collection of cess :-- (1)........
(2). The cess levied under sub-section (1) shall 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 public
sector undertaking or advance collection through a local authority where an
approval of such building or other construction work by such local authority is
required, as may be prescribed.
(3). The proceeds of the cess collected under sub section (2) shall
be paid by the local authority or 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."
The Factories Act, 1948:-
Sections 2 (l), (m), 6 (1) (a), (b), (c), (d), 6 (3) of The Factories Act, 1948
read as under:
Section 2(l) : "Worker" means a person 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, but does not include any
member of the armed forces of the Union.
Section 2 (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, railway
running shed or a hotel, restaurant or eating place.
"6. Approval, licensing and registration of factories :--(1) The State
Government may make rules--
(a). ....
(aa) requiring the previous permission in writing of the State Government or
the Chief Inspector to be obtained for the site on which the factory is to be
situated and for the construction or extension of any factory or class or
description of factories;
(b)...
(c)...
(d)...
(e)......
(2).....
(3). Where a State Government or a Chief Inspector refuses to
grant permission to the site, construction or extension of a factory or to the
registration and licensing of a factory, the applicant may within thirty days of
the date of such refusal appeal to the Central Government if the decision
appealed from was of the State Government and to the State Government in any
other case."
Explanation:- A factory shall not be deemed to be extended
within the meaning of this section by reason only of the replacement of any
plant of machinery or within such limits as may be prescribed, of the addition
of any plant or machinery if such replacement or addition does not reduce the
minimum clear space required for safe working around the plant or machinery or
adversely affect the environmental conditions from the evolution or emission of
steam, heat or dust or fumes injurious to health.
The A.P. Factories Rules, 1950.
Rule 3 : Submission and Approval of plans:-- (1) In the case of any
factory where,--
(a). any hazardous process of the nature specified in the First Schedule
of the Act is proposed to be carried on whether or not with the aid of power and
notwithstanding that the number of persons employed is less than any number
specified in Section 2 (m) of the Act; or
(b). the installed power is proposed to be or extended to 75 H.P. or
more;
No site shall be used for the location of a factory nor shall any building
in a factory be constructed, extended or taken into use as a factory or part of
a factory and no machine, or plant or any permanent fixture shall be installed
or fixed, nor shall any manufacturing process be carried on in any factory or
part of a factory, unless the occupier or the owner of the factory obtains the
previous permission in writing approving the plans from the Chief Inspector."
27 and 28 of 1996, impugned orders of the respondents 1 and 2 in directing the
petitioners to pay 1% of the contractual amount as cess under Acts 27 and 28 of
1996 are without jurisdiction and competence and are therefore liable to be set
aside and the same are hereby set aside.
42. Accordingly, the writ petitions are allowed. Sequel to the same,
miscellaneous petitions, if any shall stand dismissed. No costs.
HONOURABLE SRI JUSTICE P.NAVEEN RAO
WRIT PETITION NOs.9111 of 2010 AND BATCH
28-11-2013
Larsen and Toubro Limited....petitioner
The Commissioner of Labour,Andhra Pradesh, Hyderabad and others ... Respondents
Counsel for the petitioner: Sri C.R. Sridharan
Counsel for the Respondents 1,2 & 4: G.P. for Labour
Counsel for Respondent No.3 : Sri V.Ravinder Rao
<Gist :
>Head Note:
? Cases referred:
(1990) 3 SCC 682
(2001) 7 SCC 71
(2002) 4 SCC 297
(2005) 2 SCC 271
(2008) 5 SCC 176
(1986) 3 SCC 238
AIR 1967 SC 1364
AIR 1973 SC 365
AIR 2005 SC 286
AIR 1953 SC 83
AIR 1956 Bombay 219 (Vol.43 C.81 April)
2010 LLR 184
2010 LLR 752
LAWS (JHAR)-2008-9-30=LLJ 2009-1693
Date: 28.11.2013
This Court made the following :-
HONOURABLE SRI JUSTICE P.NAVEEN RAO
WRIT PETITION NOs.9111, 10176, 12499, 12760, 12761, 12762, 12765, 12768, 12796,
17286, 17287, 17992, 18920, 20082, 21313, 23112, 24018, 24209, 24275, 24860,
29317, 30103, 31571 and 33586 of 2010
COMMON ORDER:
These writ petitions raise common question of law, as such, they have been
heard together and disposed of by common order.
2. The challenge made in the writ petitions is to the orders/decisions of
respondents 1 and 2 to charge 1% of the value of the contracts entered by
petitioners with third respondent to undertake design, manufacture, supply,
erect, testing and commissioning of blast furnace-3 including civil and
structural works as cess under "The Building and Other Construction Workers'
Welfare Cess Act, 1996" (Act 28 of 1996).
3. For convenience sake facts and material papers in W.P.No.9111 of 2010 are
considered. Rashtriya Ispat Nigam Limited (third respondent) is a factory
registered under the Indian Factories Act, 1948 (for short the Act, 1948).
In
order to expand its operations and increase the production capacity third
respondent obtained necessary permissions to establish another blast furnace.
This expansion required design, manufacture, supply, erect, testing and
commissioning of blast furnace-3 inclusive of civil and structural works and all
facilities. For this purpose third respondent entered into agreements with
the petitioners. Petitioners have executed the works in accordance with the
terms of the agreement.
The Commissioner of Labour (first respondent) held that
petitioners are governed by Act Nos. 27 and 28 of 1996, determined amount
payable as cess under Act 28 of 1996 and demanded the amount quantified and
issued incidental directions. One such demand notice is filed as Annexure P-9
to W.P.No.9111 of 2010. Consequently, similar demand is made by Joint
Commissioner for Labour (second respondent) in March, 2010. One such demand
notice is filed as Annexure P-14 to W.P.No.9111 of 2010. The first and second
respondents directed the third respondent to deduct 1% of the amount payable
to the petitioners and remit the same to the Government towards cess payable
under the Act 28 of 1996. In terms of the said mandate of the first and second
respondents, third respondent deducted 1% contractual amount from the amounts
payable to the contractors. Said orders of the first and second respondents
are under challenge in this batch of writ petitions.
4. Heard Sri C.R. Sridharan, Sri S.Dwarkanath, Sri Gaddam Srinivas, Sri
A.Sanjeev Kumar, Sri S.Ram Babu, Sri P.Venkata Rao,
Sri V.B.Subrahmanyam, Sri K.B.Ramananna Dora, Sri G.Rama Gopal, Sri V.Ramu, Sri
S.Niranjan Reddy and Sri Arcot Mahesh, learned counsels appearing for respective
petitioners, learned Government Pleader for Labour for first and second
respondents and Sri V.Ravinder Rao, learned counsel appearing for third
respondent.
5. Learned counsel Sri C.R. Sridharan contended that third respondent is a
factory established under the Factories Act, 1948 and the factories established
in accordance with the provisions of the Factories Act are excluded from
application of the provisions of "The Buildings and Other Construction Workers
(Regulation of Employment and Conditions of Service) Act, 1996" (Act 27 of 1996)
and Act 28 of 1996.
6. Leaned counsel relying on relevant provisions of the Factories Act, 1948,
Act 27 of 1996 and Act 28 of 1996 submitted that the contractors who entered
into agreements to execute civil and structural works, design, manufacture,
supply, erect, test and commission with the third respondent, it being factory,
governed by the Factories Act, are not required to pay cess as mandated by Act
28 of 1996 read with Act 27 of 1996 and therefore the demand made by the first
and second respondents is ex facie illegal, without power and jurisdiction.
7. Learned counsel further submits that the Act, 1948 takes care of the
welfare measures required to be followed by factories established under the Act
and the contractors who execute the works for the factory and submits that in
terms of the mandate of the Act, 1948 and in terms of the agreements entered
into between the petitioners and third respondent, the contractors have complied
with the obligations imposed thereunder and imposition of cess of 1% is in
addition to the obligations already fulfilled and amounts to fixing liability
twice on the petitioners.
8. Learned counsel emphasized on the terms used in definition clause in
Section 2(d) of Act 27 of 1996 more particularly word "means" and "does not
include" to contend that factories governed by the Act 1948 are excluded from
the provisions of the Act 28 of 1996 read with Act 27 of 1996. Learned
counsel for petitioners Sri C.R.Sridharan cited plethora of judgments in
support of his contention that the word 'means' used in Section 2(d) of Act 27
of 1996 is very clear and categorical and provisions of Act 27 and 28 of 1996
are not applicable to the factories governed by the Act, 1948. Learned
counsel further emphasized that when the language of the statute is unambiguous,
it must be given effect irrespective of its consequences.
9. He therefore submits that Acts 27 and 28 of 1996 have no application to
the petitioners and impugned action is ex facie without jurisdiction and power.
The respondents 1 and 2 cannot seek to draw power from said Acts to levy cess on
petitioners under the said enactments. Since the judgments cited are many on
each of the propositions, I propose to consider few of the decisions which
support the contentions of the learned counsels for petitioners.
10. In Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding
Officer, Labour Court1, Hon'ble Supreme Court was considering the definition of
work "retrenchment" as defined in Section 2(oo) of Industrial Disputes Act,
1947. Section 2(oo) reads as under:
Section 2(oo) : "retrenchment" means the termination by the employer of
the service of a workman for any reason whatsoever, otherwise than as a
punishment inflicted by way of disciplinary action, but does not include.......
Explaining the importance of word "means" Hon'ble Supreme Court held as
under:
72. The definition has used the word 'means'. When a statute says that a word or
phrase shall "mean"- not merely that it shall "include" - certain things or
acts, "the definition is a hard-and-fast definition, and no other meaning can be
assigned to the expression than is put down in definition" (per Esher, M.R.,
Gough v. Gough( 1891 (2) QB 665:65 LT). A definition is an explicit statement of
the full connotation of a term."
11. The Hon'ble Supreme Court in Dadi Jagannadham v. Jammulu Ramulu2, held as
under:
"13. We have considered the submissions made by the parties. 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 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."
12. The Hon'ble Supreme Court in Grasim Industries Ltd. v. Collector of
Customs3, held 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 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 "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, Union of India
v. Deoki Nandan Aggarwal, Institute of Chartered Accountants of India v. Price
Waterhouse and Harbhajan Singh v. Press Council of India.)"
13. The Hon'ble Supreme Court in Nathi Devi v. Radha Devi Gupta4, held as
under:
"12. On the other hand counsel for the respondent heavily relied on the decision
of this Court in Kanta Goel( 1977 (2)SCC 814 ) and submitted that for the
application of Section 14-D it is not necessary that the premises must have been
let out either by the petitioning widow or by her husband. For the application
of this section it is enough to prove that she was the landlord of the premises
and entitled to institute proceedings qua landlord. The use of the words "let
out by him" only convey the idea that the premises must be owned by him directly
and the lease must be under him directly.
13. The interpretative function of the court is to discover the true legislative
intent. It is trite that in interpreting a statute the court must, if the words
are clear, plain, unambiguous and reasonably susceptible to only one meaning,
give to the words that meaning, irrespective of the consequences. Those words
must be expounded in their natural and ordinary sense. When the language is
plain and unambiguous and admits of only one meaning, no question of
construction of statute arises, for the Act speaks for itself. Courts are not
concerned with the policy involved or that the results are injurious or
otherwise, which may follow from giving effect to the language used. If the
words used are capable of one construction only then it would not be open to the
courts to adopt any other hypothetical construction on the ground that such
construction is more consistent with the alleged object and policy of the Act.
In considering whether there is ambiguity, the court must look at the statute as
a whole and consider the appropriateness of the meaning in a particular context
avoiding absurdity and inconsistencies or unreasonableness which may render the
statute unconstitutional.
14. It is equally well settled that in interpreting a statute, effort should
be made to give effect to each and every word used by the legislature. The
courts always presume that the legislature inserted every part thereof for a
purpose and the legislative intention is that every part of the statute should
have effect. A construction which attributes redundancy to the legislature will
not be accepted except for compelling reasons such as obvious drafting errors.
(See State of U.P. v. Dr. Vijay Anand Maharaj( AIR 1963 SC 946), Rananjaya Singh
v. Baijnath Singh( AIR 1954 SC 749), Kanai Lal Sur v. Paramnidhi Sadhukhan(AIR
1957 SC 907), Nyadar Singh v. Union of India(1998 (4) SCC 170), J.K. Cotton Spg.
and Wvg. Mills Co. Ltd. v. State of U.P.(AIR 1961 SC 1170 and Ghanshyamdas v.
CST(AIR 1964 SC 766)"
14. The Hon'ble Supreme Court in Karnataka State Financial Corpn. V.
N.Narasimahaiah5, held as under:
"42. Interpretation of a statute would not depend upon a contingency. It
has to be interpreted on its own. It is a trite law that the court would
ordinarily take recourse to the golden rule of literal interpretation. It is not
a case where we are dealing with a defect in the legislative drafting. We cannot
presume any. In a case where a court has to weigh between a right of recovery
and protection of a right, it would also lean in favour of the person who is
going to be deprived therefrom. It would not be the other way round. Only
because a speedy remedy is provided for that would itself (sic not) lead to the
conclusion that the provisions of the Act have to be extended although the
statute does not say so. The object of the Act would be a relevant factor for
interpretation only when the language is not clear and when two meanings are
possible and not in a case where the plain language leads to only one
conclusion."
15. In support of his contention that the work entrusted to the petitioners by
the third respondent is in addition to the existing factory already established
by the third respondent, learned counsel placed reliance on the decision of the
Supreme Court in Regional Director, ESI Corpn. V. South India Flour Mills (P)
Ltd.,6. The issue in the said case was whether provisions of ESI Act apply to
workers involved in construction of another building in the compound of existing
factory for the expansion of the factory. It was held as under:
"12. Therefore, the investigation under the principal question formulated above
boils down to this, namely, whether the construction of factory buildings for
the expansion of the existing factories is incidental or preliminary to or
connected with the work of the factory or not. It has been already noticed that
the definition of the term 'employee' under Section 2 (9) of the Act is very
wide. It includes within it any person employed on any work incidental or
preliminary to or connected with the work of the factory or establishment. It
is difficult to enumerate the different types of work which may be said to be
incidental or preliminary to or connected with the work of the factory or
establishment. It seems that any work that is conducive to the work of the
factory or establishment or that is necessary for the augmentation of the work
of the factory or establishment will be incidental or preliminary to or
connected with the work of the factory or establishment. In the instant cases,
the additional buildings have been constructed for the expansion of the
factories in question. It is because of these additional buildings that the
existing factories will be expanded and, consequently, there will be increase in
the production, that is to say, increase in the work of the factories concerned.
So the work of construction of these additional buildings has a link with the
work of the factories. It cannot be said that the construction work has no
connection with the work or the purpose of the factories. So it is difficult to
hold that the work of construction of these additional factory buildings is not
work incidental or preliminary to or connected with the work of the factories."
16. Learned Government Pleader submits that Act 27 of 1996 is a social
welfare legislation and it is noticed by Government of India that by the year
1996 about 8.5 million workers are engaged in building and other construction
works and are found to be vulnerable segments of the labour force and they are
characterized by their inherent risk to life and limb. Works undertaken by
them are of casual nature and temporary relation exists between employer and
employee; working hours are not certain and basic amenities are not provided
and did not have adequate welfare facilities. Government of India therefore
felt it desirable to create statutory mechanism to ensure welfare of those
workers and to establish Welfare Boards in every State so as to provide and
monitor social security schemes and welfare measures for the benefit of building
and other construction workers. With the said objective in mind, Act 27 of
1996 was promulgated. Act 27 of 1996 intends to regulate employment and
conditions of service of building and other construction workers and to provide
for their safety and welfare measures. Learned Government Pleader further
submits that in accordance with the provisions of Act 27 of 1996, welfare boards
are established. As a supplementary to the above enactment, the Parliament also
promulgated Act 28 of 1996 with an objective to levy and collect cess on the
cost of construction incurred by the employer with a view to augment the
resources of the welfare boards constituted under Act 27 of 1996. In terms of
the provisions contained in Acts 27 and 28 of 1996, 1% of cess is imposed on the
petitioners and imposing and collecting such cess is mandatory for effective and
smoother running of the welfare boards. Learned Government Pleader emphasized
that it being a social welfare legislation any amount of effort by the
contractors to eschew from payment of cess would be detrimental to the very
objective for which these enactments were made and such exclusive provision
should be construed strictly and the objective of the enactments should receive
liberal construction.
17. Learned Government Pleader submits that as per Section 6(1) of the Act,
1948, the State Government is empowered to make rules and accordingly rules were
made in the year 1950. According to Rule3 of the Rules, it is mandatory for any
organization to obtain prior permission including permission for construction or
extension of any factory or class or description of factories. Relying on the
definition of 'factory' incorporated in Section 2 (m) of the Act, 1948, learned
Government Pleader contends that factory means a place where manufacturing
process is being carried on. Insofar as the agreements entered into between the
petitioners and third respondent, the terms of agreements would mean that
petitioners have to undertake civil construction works to enable the third
respondent to expand the factory and to commence manufacturing process in the
new extended unit. To commence the manufacturing process detailed procedure is
envisaged by the Act, 1948 and unless the procedure is followed and
manufacturing process is commenced, the said building cannot be treated as a
factory and therefore the exclusion provision provided in Section 2 (d) of Act
27 of 1996 has no application. Referring to definition of 'worker' as
contained in Section 2(l) of Act, 1948, learned Government Pleader submits that
this definition also envisages that worker should involve in manufacturing
process or incidental or connected there with and works executed by the
petitioners do not answer the description of the factory since manufacturing
process has not commenced in the new establishment, and therefore the workers
engaged by petitioners are not the workers as defined under the Act 1948. He
therefore contends that Acts 27 and 28 of 1996 continue to apply to the workers
engaged by petitioners who are involved in building and construction activity
prior to commencement of manufacturing process in the new establishment of third
respondent.
18. Learned Government Pleader placed reliance on following decisions for the
proposition that an establishment does not become a factory unless manufacturing
process commences:
THE NAGPUR ELECTRIC LIGHT AND POWER COMPANY LIMITED Vs. THE REGIONAL
DIRECTOR, EMPLOYEES' STATE INSURANCE CORPORATION7 and WORKMEN OF DELHI ELECTRIC
SUPPLY UNDERTAKING Vs. THE MANAGEMENT OF DELHI ELECTRIC SUPPLY UNDERTAKING8.
19. Learned Government Pleader contends that as held by the Supreme Court in
POLYMAT INDIA PRIVATE LIMITED Vs NATIONAL INSURANCE COMPANY LIMITED9 the work
undertaken by petitioners does not constitute the expression 'factory'.
20. On the proposition that the intent of the legislation has to be seen by
reading the words and phrases in the Act as a whole but not in isolation or in
detached manner disassociated from the context, learned Government Pleader
relies on the decision of the Supreme Court in DARSHAN SINGH BALWANT SINGH Vs
THE UNION OF INDIA10.
21. Learned Government Pleader contends that the object of the enactments
being to protect the workers working in unorganized building construction
sector, unless cess is collected from the contractors, the welfare boards cannot
be effectively managed and welfare of the workers cannot be taken care of.
For the said proposition he relies on the decisions in STATE Vs. ARDESHIR
HORMUSJI BHIWANDIWALA11, M/s.GANNON DUNKERLEY & CO LTD Vs STATE OF MADHYA
PRADESH12, ADANI AGRI LOGISTICS LIMITED AND ANOTHER Vs THE STATE OF HARYANA AND
OTHERS13 and VISHOPS SCHOOL Vs STATE OF BIHAR14.
22. Sri V.Ravinder Rao, learned counsel appearing for third respondent submits
that contractual terms are very clear and petitioners have fulfilled all the
obligations imposed on them as per the terms of contracts and the obligations
imposed by the Act, 1948. The third furnace established by the third
respondent is in-consequence to the existing furnace operated by the third
respondent and third respondent is already recognized as a factory and what is
contemplated by the agreements entered by the petitioners is extension of the
existing facilities in the factory, therefore, the provisions of the Act, 1948
are applicable and in view of the exclusion provision provided in Act 27 of 1996
and Act 28 of 1996 are not applicable.
23. The point for determination is whether the works executed by petitioners
in the third respondent factory are the works incidental to and/or connected
with the works of the third respondent factory and thus exempted from the
provisions of "The Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Act, 1996 ?
24. To appreciate the rival contentions, it is necessary to understand the
mandate of relevant provisions of the three enactments in issue i.e., Act 27 of
1996, Act 28 of 1996 and Act, 1948.
25. Relevant provisions of Act 27 of 1996, Act 28 of 1996 and Act, 1948 and
Factories Rules, 1950 read as under:
Act 27 of 1996
"Sections 2 (d) : "Building or other construction work" means the construction,
alteration, 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
communications, 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 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,
Section 2 (g): "Contractor" means a person who undertakes to produce a given
result for any establishment, other than a mere supply of goods or articles of
manufacture, by the employment of buildings workers or who supplies building
workers for any work of the establishment; and includes a sub-contractor;
Section 2 (j): "Establishment" means any establishment belonging to, or under
the control of, Government, any body corporate or firm, an individual or
association or other body of individuals which or who employs building workers
in any building or other construction work; and includes an establishment
belonging to a contractor, but does not include an individual who employs such
workers in any building or construction work in relation to his own residence
the total cost of such construction not being more than rupees ten lakhs;
Act 28 of 1996:
Sub Section 2 and 3 of Section 3 of Act 28 of 1996 reads as under:
"3. Levy and collection of cess :-- (1)........
(2). The cess levied under sub-section (1) shall 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 public
sector undertaking or advance collection through a local authority where an
approval of such building or other construction work by such local authority is
required, as may be prescribed.
(3). The proceeds of the cess collected under sub section (2) shall
be paid by the local authority or 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."
The Factories Act, 1948:-
Sections 2 (l), (m), 6 (1) (a), (b), (c), (d), 6 (3) of The Factories Act, 1948
read as under:
Section 2(l) : "Worker" means a person 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, but does not include any
member of the armed forces of the Union.
Section 2 (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, railway
running shed or a hotel, restaurant or eating place.
"6. Approval, licensing and registration of factories :--(1) The State
Government may make rules--
(a). ....
(aa) requiring the previous permission in writing of the State Government or
the Chief Inspector to be obtained for the site on which the factory is to be
situated and for the construction or extension of any factory or class or
description of factories;
(b)...
(c)...
(d)...
(e)......
(2).....
(3). Where a State Government or a Chief Inspector refuses to
grant permission to the site, construction or extension of a factory or to the
registration and licensing of a factory, the applicant may within thirty days of
the date of such refusal appeal to the Central Government if the decision
appealed from was of the State Government and to the State Government in any
other case."
Explanation:- A factory shall not be deemed to be extended
within the meaning of this section by reason only of the replacement of any
plant of machinery or within such limits as may be prescribed, of the addition
of any plant or machinery if such replacement or addition does not reduce the
minimum clear space required for safe working around the plant or machinery or
adversely affect the environmental conditions from the evolution or emission of
steam, heat or dust or fumes injurious to health.
The A.P. Factories Rules, 1950.
Rule 3 : Submission and Approval of plans:-- (1) In the case of any
factory where,--
(a). any hazardous process of the nature specified in the First Schedule
of the Act is proposed to be carried on whether or not with the aid of power and
notwithstanding that the number of persons employed is less than any number
specified in Section 2 (m) of the Act; or
(b). the installed power is proposed to be or extended to 75 H.P. or
more;
No site shall be used for the location of a factory nor shall any building
in a factory be constructed, extended or taken into use as a factory or part of
a factory and no machine, or plant or any permanent fixture shall be installed
or fixed, nor shall any manufacturing process be carried on in any factory or
part of a factory, unless the occupier or the owner of the factory obtains the
previous permission in writing approving the plans from the Chief Inspector."
26. Underlying objective to enact Act No.27 of 1996 is that there is no law
which regulate the conditions of employment and welfare of workers working in
the Building and other Construction Sector and these workers are the most
deprived class in the working force. Thus, the Act intends to provide
statutory frame work to regulate the employment and conditions of service of
workers involved in building and other construction workers working in
unorganized sector and to ensure their safety, health and welfare. Act 28 of
1996 takes care of funds required to enforce the objectives of Act 27 of 1996.
To establish a factory and also to expand existing factory undertaking
construction of buildings and other equipment is mandatory. The factory needs
work force to run a factory and to undertake civil construction. The Factories
Act, 1948 regulate all aspects of a factory from the stage of proposal, to
establish, to run and to expand and welfare of workers. The definition of
worker in Factories Act, 1948 is comprehensive and encompasses workers involved
in construction activity.
27. In these writ petitions the demand made is on the work executed by
petitioners as per agreements entered into with third respondent. Third
respondent is a factory governed by Factories Act, 1948. Act 27 of 1996
excludes from its purview establishments governed by Factories Act, 1948. The
scheme of the Act would show that workers involved in building or other
construction work in an establishment covered by Act, 1948 are treated as a
class by themselves. Objective underlining such classification appears to be
that the Act, 1948 is a self contained code dealing with all the provisions
concerning the safety, health and welfare of the workers working in the
factories.
28. All provisions which are intended by Act 27 of 1996 are already
incorporated in Act, 1948. Act, 1948 is divided into several chapters. Chapter
III deals with health, Chapter IV deals with safety, Chapter V deals with
welfare and Chapter VI deals with working hours of adults, Chapter VIII deals
with wages. Other chapters deal with various aspects like safety, care and
caution that is required to be taken in ensuring safety and health of the
workers. The Act also incorporates penal provisions if the mandate of the
enactment is violated. Thus, objectives of the Act 27 of 1996 are already
enshrined in Act, 1948. All the welfare measures for building and other
construction workers are taken care of by the Act, 1948. It is thus clear that
in the definition clause in Section 2(d) of Act 27 of 1996 incorporating the
exclusion of the building or other construction workers from the purview of Act
27 of 1996 is a clear provision expressing the intent of the Legislature. But
for such exclusion, it would have been two provisions of law operating in the
same filed and in such a situation it would have been a matter for consideration
as to which provision would apply. There is no ambiguity in the provision and
the provision is capable of giving only one meaning. When provision is
expressive and clear no interference can be drawn to view otherwise. More so,
when Factories Act, 1948 is also a welfare legislation and enough provisions are
made to safeguard the interest of work force involved in Building and Other
Construction work in a factory.
29. It is thus necessary to be seen whether the works executed by the
petitioners are governed by the Act, 1948. Section 2(m) of the Act, 1948
defines 'Factory'. Factory means any premises including the precincts thereof
where manufacturing process is carried on. Section 2(k) defines 'manufacturing
process'. Section 2 (l) defines 'worker'. Worker means a person involved in
any manufacturing process, or in cleaning, any part of the machinery or premises
used for manufacturing process or in any other kind of work incidental to, or
connected with, the manufacturing process.
30. It is enough if the employer does some work which is ancillary,
incidental, relevance to or link with the object of the establishment. The work
of construction of additional structure, manufacturing, erection, testing and
commissioning of blast furnace entrusted to petitioners is ancillary,
incidental and connected to the work of the factory. These works were intended
to augment and increase the production. The construction activity taken up by
the third respondent is incidental to and connected with the manufacturing
process undertaken by the third respondent. As held by Supreme Court in
Regional Director ESI (para 12 of judgment extracted above at para 15) any work
that is necessary for augmentation of the work of the factory is connected with
the work of the factory. Work of construction of additional buildings has link
with work of the factory. Therefore work undertaken by the petitioners forms
part of the third respondent factory and therefore governed by the provisions of
the Act, 1948. Thus, the workers engaged by the petitioners are the workers
governed by the provisions of Act, 1948. Conscious of the mandate of the Act,
1948 the third respondent has incorporated all the requisite clauses in the
agreements entered with the petitioners with reference to the welfare of the
workers engaged by the petitioners as part of its expansion activity.
31. As per Act 28 of 1996, the cess to be collected is for the purpose of
strengthening the Welfare Boards constituted under the Act 27 of 1996. When the
provisions of the Act 27 of 1996 are excluded from its application to the
establishment governed by the provisions of the Act, 1948 there is no obligation
on the part of such establishment to pay cess as demanded by the respondents 1
and 2.
32. The argument of the learned Government Pleader if accepted, would amount
to creating one more class of building workers i.e., building workers involved
in building and construction work relating to factory which is governed by the
Act, 1948, but the buildings which were under construction where no
manufacturing process is commenced, a mini-classification of the 'building and
other construction worker' working in a factory. Such an inference cannot
be drawn by reading the definition clause in Section 2 (d) of the Act 27 of
1996. The principle laid down by Supreme Court in Regional Director ESI
Corporation, Madras (referred to supra) is complete answer to negate the
contention of the learned Government Pleader.
33. When the provision is very clear and express and provision does not intend
to create such classification, no inference can be drawn to create a mini-
classification of the building and other construction workers working in a
factory. Building and other construction worker involved in construction
activity means he would have to undertake construction of building or some other
establishment which may be used after such construction for manufacturing
purposes. The Parliament was conscious of the term 'building and other
construction worker' and also conscious of the fact that a building and other
construction worker wherever he works is involved in construction of the
building or some other construction and building or other construction can be
utilized only when construction is complete. Thus consciously all building
or other construction workers working in a factory are excluded from the
application of the provisions of Act 27 of 1996. Therefore, there cannot be a
further classification of such building or other construction workers.
Definition of 'worker' provided in the Act, 1948 is more expansive than the
definition of the building or other construction worker provided in Act 27 of
1996. Building or other construction worker as defined in Act 27 covers a
person who is involved in connection with any building or other construction
work whereas a 'worker' as defined in Act, 1948 includes a worker not only
involved in manufacturing process, cleaning any machinery but also in any other
kind of work which is incidental or connected with manufacturing process.
Agreements entered by third respondent with petitioners are for expansion of the
production capacity and is incidental to and connected with the manufacturing
process. Thus, by virtue of the exclusive clause in Section 2 (d) of Act 27
of 11996 mandate of Act 27 of 1996 is excluded to a worker working in a factory
involved in 'building or other construction work' to whom Act 1948 would apply.
34. The Parliament carved out a separate class of 'Building and Other
Construction Workers' working in connection with factory within the category of
'Building and Other Construction Workers' and excluded said class of 'Building
and Other Construction Worker' from the purview of Acts 27 and 28 of 1996, as
the said work-force is already covered by the Factories Act. The classification
brought out is based on intelligible differentia. The class of 'Building and
Other Construction Workers' who are working in a factory established under
Factories Act, 1948 are treated as different from 'Building and Other
Construction Workers' working else where, more particularly in unorganized
sectors, such as real estate developments. Thus, classification is based on
the fact that the objective of enacting Acts 27 and 28 of 1996 is to provide
safety and welfare to building workers working in unorganized construction
industry, whereas Factories Act, 1948 takes care of safety and welfare of
workers working in a factory. 'Worker' working in a factory cannot be
classified as working in unorganized sector. A factory governed by Factories
Act 1948 is bound by the provisions of the Act, 1948. The Act imposes
mandatory obligations on the management of the factory to ensure safety and
welfare of workers working in a factory. Act also imposes penal consequences
if management fails to provide safety and welfare. Thus, the principal
objective to enact Acts 27 and 28 of 1996 is achieved by Act, 1948 and but for
exclusive clause it would have been duplication. Thus, the exclusion of
'Building and other construction workers' working in a factory governed by Act,
1948 is clearly intended and there is no ambiguity in the provision to read
otherwise and infer a different meaning. Therefore, there cannot be a further
classification as argued by the learned Government Pleader.
35. As admitted by the third respondent, the provisions of Act, 1948 are made
applicable to the workers engaged by the petitioners for undertaking additional
fixtures on the premises of the third respondent factory to increase its
production and therefore all the safety and welfare clauses which are required
to be followed for any worker in the factory are incorporated in the agreements
entered with the petitioners. There is no allegation of petitioners not taking
welfare measures.
36. The decision of Supreme Court in Polymat India turns on its facts. The
issue was on insurance claim. Insurance policy covered "plant and machinery".
The entire premises of factory was not covered by the policy. Supreme Court
held as under:
"16........... Loosely the expression, 'factory' may include the whole
premises of factory. But each expression has to be given the meaning in the
context where it occurs. The expression "Factory-cum-Godown" has to be read in
the present context with the other conditions which appear in the Policy
document "....."
37. In Nagpur Electric Light, company was involved in transforming and
transmitting electrical energy. Inside the premises there are several
buildings and yards. The receiving station, the workshop, meter testing
department, the engineers quarters, the general office and stores are located in
different buildings inside the premises. The Supreme Court held entire
premises of the company constitutes 'factory'. Supreme Court held all workers
working in the premises, including in the administrative building and workers
outside the factory are held to be workers of the factory as they are engaged in
connection with the work of the factory. The principle decided therein
supports the stand of the petitioners.
38. In Delhi Electric Supply Undertaking, the issue for consideration was
whether sub-stations and zonal stations of electrical company were located at
various places and it was contended that sub stations or the zonal stations
located at various places constitute as one unit and form part of factory.
Rejecting the said contention, the Supreme Court held that sub-stations and
zonal stations do not form part of factory. The said decision turns on its
facts and the facts are not similar to the cases on hand.
39. The principles deducible from the plethora of decisions cited by learned
counsel for petitioners are, a definition is an explicit statement of the full
commutation of a term. The Court must proceed on the assumption that the
legislature did not make a mistake and that it did what it intended to do.
The Court must, as far as possible adopt a construction which will carry out the
obvious intention of the legislature. The Court cannot add words to a Statute
or read words into it which are not there, especially when the literal reading
produces as intelligible result. Where the words are clear, plain, unambiguous
and reasonably susceptible to only one meaning and intention of legislature is
clearly conveyed, Court cannot take up the task of amending or altering the
statutory provisions and give to the words that meaning, irrespective of the
consequences. A construction which attributes redundancy to the legislature
cannot be made. The object of the Act is a relevant factor for interpretation
only when language is not clear.
40. Applying the above principles and on a plain reading of definition in
Section 2 (d) of Act 27 of 1996, that in clear and unambiguous terms excludes
application of Act no.27 of 1996 to workers involved in "Building or other
construction works" in a factory governed by Act, 1948, third respondent being a
factory governed by Factories Act, 1948 and petitioners engaged workers to
undertake obligations under the agreements entered with the third respondent for
expansion of the factory, the said workers are excluded from the purview of Act
27 of 1996 and therefore no levy can be imposed on petitioners as per provisions
of Act 28 of 1996.
41. On an interactive analysis of various provisions of the Act, 1948 and Acts
27 and 28 of 1996, impugned orders of the respondents 1 and 2 in directing the
petitioners to pay 1% of the contractual amount as cess under Acts 27 and 28 of
1996 are without jurisdiction and competence and are therefore liable to be set
aside and the same are hereby set aside.
42. Accordingly, the writ petitions are allowed. Sequel to the same,
miscellaneous petitions, if any shall stand dismissed. No costs.
__________________________
JUSTICE P. NAVEEN RAO
Date: 28.11.2013
Welfare Cess Act, 1996" (Act 28 of 1996)- levying a cess of 1% on contract amount given for constructing a blast furnaces by labour commissioner under Factory Act - High court held that it is without jurisdiction and hence set aside the order of Labour commissioner =
the orders/decisions of
respondents 1 and 2 to charge 1% of the value of the contracts entered by
petitioners with third respondent to undertake design, manufacture, supply,
erect, testing and commissioning of blast furnace-3 including civil and
structural works as cess under "The Building and Other Construction Workers'
Welfare Cess Act, 1996" (Act 28 of 1996). =
Rashtriya Ispat Nigam Limited (third respondent) is a factory
registered under the Indian Factories Act, 1948 (for short the Act, 1948).
In
order to expand its operations and increase the production capacity third
respondent obtained necessary permissions to establish another blast furnace.
This expansion required design, manufacture, supply, erect, testing and
commissioning of blast furnace-3 inclusive of civil and structural works and all
facilities. For this purpose third respondent entered into agreements with
the petitioners. Petitioners have executed the works in accordance with the
terms of the agreement.
The Commissioner of Labour (first respondent) held that
petitioners are governed by Act Nos. 27 and 28 of 1996, determined amount
payable as cess under Act 28 of 1996 and demanded the amount quantified and
issued incidental directions.
The first and second
respondents directed the third respondent to deduct 1% of the amount payable
to the petitioners and remit the same to the Government towards cess payable
under the Act 28 of 1996. In terms of the said mandate of the first and second
respondents, third respondent deducted 1% contractual amount from the amounts
payable to the contractors. Said orders of the first and second respondents
are under challenge in this batch of writ petitions. =
Relevant provisions of Act 27 of 1996, Act 28 of 1996 and Act, 1948 and
Factories Rules, 1950 read as under:
Act 27 of 1996
"Sections 2 (d) : "Building or other construction work" means the construction,
alteration, 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
communications, 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 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,
Section 2 (g): "Contractor" means a person who undertakes to produce a given
result for any establishment, other than a mere supply of goods or articles of
manufacture, by the employment of buildings workers or who supplies building
workers for any work of the establishment; and includes a sub-contractor;
Section 2 (j): "Establishment" means any establishment belonging to, or under
the control of, Government, any body corporate or firm, an individual or
association or other body of individuals which or who employs building workers
in any building or other construction work; and includes an establishment
belonging to a contractor, but does not include an individual who employs such
workers in any building or construction work in relation to his own residence
the total cost of such construction not being more than rupees ten lakhs;
Act 28 of 1996:
Sub Section 2 and 3 of Section 3 of Act 28 of 1996 reads as under:
"3. Levy and collection of cess :-- (1)........
(2). The cess levied under sub-section (1) shall 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 public
sector undertaking or advance collection through a local authority where an
approval of such building or other construction work by such local authority is
required, as may be prescribed.
(3). The proceeds of the cess collected under sub section (2) shall
be paid by the local authority or 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."
The Factories Act, 1948:-
Sections 2 (l), (m), 6 (1) (a), (b), (c), (d), 6 (3) of The Factories Act, 1948
read as under:
Section 2(l) : "Worker" means a person 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, but does not include any
member of the armed forces of the Union.
Section 2 (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, railway
running shed or a hotel, restaurant or eating place.
"6. Approval, licensing and registration of factories :--(1) The State
Government may make rules--
(a). ....
(aa) requiring the previous permission in writing of the State Government or
the Chief Inspector to be obtained for the site on which the factory is to be
situated and for the construction or extension of any factory or class or
description of factories;
(b)...
(c)...
(d)...
(e)......
(2).....
(3). Where a State Government or a Chief Inspector refuses to
grant permission to the site, construction or extension of a factory or to the
registration and licensing of a factory, the applicant may within thirty days of
the date of such refusal appeal to the Central Government if the decision
appealed from was of the State Government and to the State Government in any
other case."
Explanation:- A factory shall not be deemed to be extended
within the meaning of this section by reason only of the replacement of any
plant of machinery or within such limits as may be prescribed, of the addition
of any plant or machinery if such replacement or addition does not reduce the
minimum clear space required for safe working around the plant or machinery or
adversely affect the environmental conditions from the evolution or emission of
steam, heat or dust or fumes injurious to health.
The A.P. Factories Rules, 1950.
Rule 3 : Submission and Approval of plans:-- (1) In the case of any
factory where,--
(a). any hazardous process of the nature specified in the First Schedule
of the Act is proposed to be carried on whether or not with the aid of power and
notwithstanding that the number of persons employed is less than any number
specified in Section 2 (m) of the Act; or
(b). the installed power is proposed to be or extended to 75 H.P. or
more;
No site shall be used for the location of a factory nor shall any building
in a factory be constructed, extended or taken into use as a factory or part of
a factory and no machine, or plant or any permanent fixture shall be installed
or fixed, nor shall any manufacturing process be carried on in any factory or
part of a factory, unless the occupier or the owner of the factory obtains the
previous permission in writing approving the plans from the Chief Inspector."
=
On an interactive analysis of various provisions of the Act, 1948 and Acts27 and 28 of 1996, impugned orders of the respondents 1 and 2 in directing the
petitioners to pay 1% of the contractual amount as cess under Acts 27 and 28 of
1996 are without jurisdiction and competence and are therefore liable to be set
aside and the same are hereby set aside.
42. Accordingly, the writ petitions are allowed. Sequel to the same,
miscellaneous petitions, if any shall stand dismissed. No costs.
HONOURABLE SRI JUSTICE P.NAVEEN RAO
WRIT PETITION NOs.9111 of 2010 AND BATCH
28-11-2013
Larsen and Toubro Limited....petitioner
The Commissioner of Labour,Andhra Pradesh, Hyderabad and others ... Respondents
Counsel for the petitioner: Sri C.R. Sridharan
Counsel for the Respondents 1,2 & 4: G.P. for Labour
Counsel for Respondent No.3 : Sri V.Ravinder Rao
<Gist :
>Head Note:
? Cases referred:
(1990) 3 SCC 682
(2001) 7 SCC 71
(2002) 4 SCC 297
(2005) 2 SCC 271
(2008) 5 SCC 176
(1986) 3 SCC 238
AIR 1967 SC 1364
AIR 1973 SC 365
AIR 2005 SC 286
AIR 1953 SC 83
AIR 1956 Bombay 219 (Vol.43 C.81 April)
2010 LLR 184
2010 LLR 752
LAWS (JHAR)-2008-9-30=LLJ 2009-1693
Date: 28.11.2013
This Court made the following :-
HONOURABLE SRI JUSTICE P.NAVEEN RAO
WRIT PETITION NOs.9111, 10176, 12499, 12760, 12761, 12762, 12765, 12768, 12796,
17286, 17287, 17992, 18920, 20082, 21313, 23112, 24018, 24209, 24275, 24860,
29317, 30103, 31571 and 33586 of 2010
COMMON ORDER:
These writ petitions raise common question of law, as such, they have been
heard together and disposed of by common order.
2. The challenge made in the writ petitions is to the orders/decisions of
respondents 1 and 2 to charge 1% of the value of the contracts entered by
petitioners with third respondent to undertake design, manufacture, supply,
erect, testing and commissioning of blast furnace-3 including civil and
structural works as cess under "The Building and Other Construction Workers'
Welfare Cess Act, 1996" (Act 28 of 1996).
3. For convenience sake facts and material papers in W.P.No.9111 of 2010 are
considered. Rashtriya Ispat Nigam Limited (third respondent) is a factory
registered under the Indian Factories Act, 1948 (for short the Act, 1948).
In
order to expand its operations and increase the production capacity third
respondent obtained necessary permissions to establish another blast furnace.
This expansion required design, manufacture, supply, erect, testing and
commissioning of blast furnace-3 inclusive of civil and structural works and all
facilities. For this purpose third respondent entered into agreements with
the petitioners. Petitioners have executed the works in accordance with the
terms of the agreement.
The Commissioner of Labour (first respondent) held that
petitioners are governed by Act Nos. 27 and 28 of 1996, determined amount
payable as cess under Act 28 of 1996 and demanded the amount quantified and
issued incidental directions. One such demand notice is filed as Annexure P-9
to W.P.No.9111 of 2010. Consequently, similar demand is made by Joint
Commissioner for Labour (second respondent) in March, 2010. One such demand
notice is filed as Annexure P-14 to W.P.No.9111 of 2010. The first and second
respondents directed the third respondent to deduct 1% of the amount payable
to the petitioners and remit the same to the Government towards cess payable
under the Act 28 of 1996. In terms of the said mandate of the first and second
respondents, third respondent deducted 1% contractual amount from the amounts
payable to the contractors. Said orders of the first and second respondents
are under challenge in this batch of writ petitions.
4. Heard Sri C.R. Sridharan, Sri S.Dwarkanath, Sri Gaddam Srinivas, Sri
A.Sanjeev Kumar, Sri S.Ram Babu, Sri P.Venkata Rao,
Sri V.B.Subrahmanyam, Sri K.B.Ramananna Dora, Sri G.Rama Gopal, Sri V.Ramu, Sri
S.Niranjan Reddy and Sri Arcot Mahesh, learned counsels appearing for respective
petitioners, learned Government Pleader for Labour for first and second
respondents and Sri V.Ravinder Rao, learned counsel appearing for third
respondent.
5. Learned counsel Sri C.R. Sridharan contended that third respondent is a
factory established under the Factories Act, 1948 and the factories established
in accordance with the provisions of the Factories Act are excluded from
application of the provisions of "The Buildings and Other Construction Workers
(Regulation of Employment and Conditions of Service) Act, 1996" (Act 27 of 1996)
and Act 28 of 1996.
6. Leaned counsel relying on relevant provisions of the Factories Act, 1948,
Act 27 of 1996 and Act 28 of 1996 submitted that the contractors who entered
into agreements to execute civil and structural works, design, manufacture,
supply, erect, test and commission with the third respondent, it being factory,
governed by the Factories Act, are not required to pay cess as mandated by Act
28 of 1996 read with Act 27 of 1996 and therefore the demand made by the first
and second respondents is ex facie illegal, without power and jurisdiction.
7. Learned counsel further submits that the Act, 1948 takes care of the
welfare measures required to be followed by factories established under the Act
and the contractors who execute the works for the factory and submits that in
terms of the mandate of the Act, 1948 and in terms of the agreements entered
into between the petitioners and third respondent, the contractors have complied
with the obligations imposed thereunder and imposition of cess of 1% is in
addition to the obligations already fulfilled and amounts to fixing liability
twice on the petitioners.
8. Learned counsel emphasized on the terms used in definition clause in
Section 2(d) of Act 27 of 1996 more particularly word "means" and "does not
include" to contend that factories governed by the Act 1948 are excluded from
the provisions of the Act 28 of 1996 read with Act 27 of 1996. Learned
counsel for petitioners Sri C.R.Sridharan cited plethora of judgments in
support of his contention that the word 'means' used in Section 2(d) of Act 27
of 1996 is very clear and categorical and provisions of Act 27 and 28 of 1996
are not applicable to the factories governed by the Act, 1948. Learned
counsel further emphasized that when the language of the statute is unambiguous,
it must be given effect irrespective of its consequences.
9. He therefore submits that Acts 27 and 28 of 1996 have no application to
the petitioners and impugned action is ex facie without jurisdiction and power.
The respondents 1 and 2 cannot seek to draw power from said Acts to levy cess on
petitioners under the said enactments. Since the judgments cited are many on
each of the propositions, I propose to consider few of the decisions which
support the contentions of the learned counsels for petitioners.
10. In Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding
Officer, Labour Court1, Hon'ble Supreme Court was considering the definition of
work "retrenchment" as defined in Section 2(oo) of Industrial Disputes Act,
1947. Section 2(oo) reads as under:
Section 2(oo) : "retrenchment" means the termination by the employer of
the service of a workman for any reason whatsoever, otherwise than as a
punishment inflicted by way of disciplinary action, but does not include.......
Explaining the importance of word "means" Hon'ble Supreme Court held as
under:
72. The definition has used the word 'means'. When a statute says that a word or
phrase shall "mean"- not merely that it shall "include" - certain things or
acts, "the definition is a hard-and-fast definition, and no other meaning can be
assigned to the expression than is put down in definition" (per Esher, M.R.,
Gough v. Gough( 1891 (2) QB 665:65 LT). A definition is an explicit statement of
the full connotation of a term."
11. The Hon'ble Supreme Court in Dadi Jagannadham v. Jammulu Ramulu2, held as
under:
"13. We have considered the submissions made by the parties. 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 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."
12. The Hon'ble Supreme Court in Grasim Industries Ltd. v. Collector of
Customs3, held 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 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 "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, Union of India
v. Deoki Nandan Aggarwal, Institute of Chartered Accountants of India v. Price
Waterhouse and Harbhajan Singh v. Press Council of India.)"
13. The Hon'ble Supreme Court in Nathi Devi v. Radha Devi Gupta4, held as
under:
"12. On the other hand counsel for the respondent heavily relied on the decision
of this Court in Kanta Goel( 1977 (2)SCC 814 ) and submitted that for the
application of Section 14-D it is not necessary that the premises must have been
let out either by the petitioning widow or by her husband. For the application
of this section it is enough to prove that she was the landlord of the premises
and entitled to institute proceedings qua landlord. The use of the words "let
out by him" only convey the idea that the premises must be owned by him directly
and the lease must be under him directly.
13. The interpretative function of the court is to discover the true legislative
intent. It is trite that in interpreting a statute the court must, if the words
are clear, plain, unambiguous and reasonably susceptible to only one meaning,
give to the words that meaning, irrespective of the consequences. Those words
must be expounded in their natural and ordinary sense. When the language is
plain and unambiguous and admits of only one meaning, no question of
construction of statute arises, for the Act speaks for itself. Courts are not
concerned with the policy involved or that the results are injurious or
otherwise, which may follow from giving effect to the language used. If the
words used are capable of one construction only then it would not be open to the
courts to adopt any other hypothetical construction on the ground that such
construction is more consistent with the alleged object and policy of the Act.
In considering whether there is ambiguity, the court must look at the statute as
a whole and consider the appropriateness of the meaning in a particular context
avoiding absurdity and inconsistencies or unreasonableness which may render the
statute unconstitutional.
14. It is equally well settled that in interpreting a statute, effort should
be made to give effect to each and every word used by the legislature. The
courts always presume that the legislature inserted every part thereof for a
purpose and the legislative intention is that every part of the statute should
have effect. A construction which attributes redundancy to the legislature will
not be accepted except for compelling reasons such as obvious drafting errors.
(See State of U.P. v. Dr. Vijay Anand Maharaj( AIR 1963 SC 946), Rananjaya Singh
v. Baijnath Singh( AIR 1954 SC 749), Kanai Lal Sur v. Paramnidhi Sadhukhan(AIR
1957 SC 907), Nyadar Singh v. Union of India(1998 (4) SCC 170), J.K. Cotton Spg.
and Wvg. Mills Co. Ltd. v. State of U.P.(AIR 1961 SC 1170 and Ghanshyamdas v.
CST(AIR 1964 SC 766)"
14. The Hon'ble Supreme Court in Karnataka State Financial Corpn. V.
N.Narasimahaiah5, held as under:
"42. Interpretation of a statute would not depend upon a contingency. It
has to be interpreted on its own. It is a trite law that the court would
ordinarily take recourse to the golden rule of literal interpretation. It is not
a case where we are dealing with a defect in the legislative drafting. We cannot
presume any. In a case where a court has to weigh between a right of recovery
and protection of a right, it would also lean in favour of the person who is
going to be deprived therefrom. It would not be the other way round. Only
because a speedy remedy is provided for that would itself (sic not) lead to the
conclusion that the provisions of the Act have to be extended although the
statute does not say so. The object of the Act would be a relevant factor for
interpretation only when the language is not clear and when two meanings are
possible and not in a case where the plain language leads to only one
conclusion."
15. In support of his contention that the work entrusted to the petitioners by
the third respondent is in addition to the existing factory already established
by the third respondent, learned counsel placed reliance on the decision of the
Supreme Court in Regional Director, ESI Corpn. V. South India Flour Mills (P)
Ltd.,6. The issue in the said case was whether provisions of ESI Act apply to
workers involved in construction of another building in the compound of existing
factory for the expansion of the factory. It was held as under:
"12. Therefore, the investigation under the principal question formulated above
boils down to this, namely, whether the construction of factory buildings for
the expansion of the existing factories is incidental or preliminary to or
connected with the work of the factory or not. It has been already noticed that
the definition of the term 'employee' under Section 2 (9) of the Act is very
wide. It includes within it any person employed on any work incidental or
preliminary to or connected with the work of the factory or establishment. It
is difficult to enumerate the different types of work which may be said to be
incidental or preliminary to or connected with the work of the factory or
establishment. It seems that any work that is conducive to the work of the
factory or establishment or that is necessary for the augmentation of the work
of the factory or establishment will be incidental or preliminary to or
connected with the work of the factory or establishment. In the instant cases,
the additional buildings have been constructed for the expansion of the
factories in question. It is because of these additional buildings that the
existing factories will be expanded and, consequently, there will be increase in
the production, that is to say, increase in the work of the factories concerned.
So the work of construction of these additional buildings has a link with the
work of the factories. It cannot be said that the construction work has no
connection with the work or the purpose of the factories. So it is difficult to
hold that the work of construction of these additional factory buildings is not
work incidental or preliminary to or connected with the work of the factories."
16. Learned Government Pleader submits that Act 27 of 1996 is a social
welfare legislation and it is noticed by Government of India that by the year
1996 about 8.5 million workers are engaged in building and other construction
works and are found to be vulnerable segments of the labour force and they are
characterized by their inherent risk to life and limb. Works undertaken by
them are of casual nature and temporary relation exists between employer and
employee; working hours are not certain and basic amenities are not provided
and did not have adequate welfare facilities. Government of India therefore
felt it desirable to create statutory mechanism to ensure welfare of those
workers and to establish Welfare Boards in every State so as to provide and
monitor social security schemes and welfare measures for the benefit of building
and other construction workers. With the said objective in mind, Act 27 of
1996 was promulgated. Act 27 of 1996 intends to regulate employment and
conditions of service of building and other construction workers and to provide
for their safety and welfare measures. Learned Government Pleader further
submits that in accordance with the provisions of Act 27 of 1996, welfare boards
are established. As a supplementary to the above enactment, the Parliament also
promulgated Act 28 of 1996 with an objective to levy and collect cess on the
cost of construction incurred by the employer with a view to augment the
resources of the welfare boards constituted under Act 27 of 1996. In terms of
the provisions contained in Acts 27 and 28 of 1996, 1% of cess is imposed on the
petitioners and imposing and collecting such cess is mandatory for effective and
smoother running of the welfare boards. Learned Government Pleader emphasized
that it being a social welfare legislation any amount of effort by the
contractors to eschew from payment of cess would be detrimental to the very
objective for which these enactments were made and such exclusive provision
should be construed strictly and the objective of the enactments should receive
liberal construction.
17. Learned Government Pleader submits that as per Section 6(1) of the Act,
1948, the State Government is empowered to make rules and accordingly rules were
made in the year 1950. According to Rule3 of the Rules, it is mandatory for any
organization to obtain prior permission including permission for construction or
extension of any factory or class or description of factories. Relying on the
definition of 'factory' incorporated in Section 2 (m) of the Act, 1948, learned
Government Pleader contends that factory means a place where manufacturing
process is being carried on. Insofar as the agreements entered into between the
petitioners and third respondent, the terms of agreements would mean that
petitioners have to undertake civil construction works to enable the third
respondent to expand the factory and to commence manufacturing process in the
new extended unit. To commence the manufacturing process detailed procedure is
envisaged by the Act, 1948 and unless the procedure is followed and
manufacturing process is commenced, the said building cannot be treated as a
factory and therefore the exclusion provision provided in Section 2 (d) of Act
27 of 1996 has no application. Referring to definition of 'worker' as
contained in Section 2(l) of Act, 1948, learned Government Pleader submits that
this definition also envisages that worker should involve in manufacturing
process or incidental or connected there with and works executed by the
petitioners do not answer the description of the factory since manufacturing
process has not commenced in the new establishment, and therefore the workers
engaged by petitioners are not the workers as defined under the Act 1948. He
therefore contends that Acts 27 and 28 of 1996 continue to apply to the workers
engaged by petitioners who are involved in building and construction activity
prior to commencement of manufacturing process in the new establishment of third
respondent.
18. Learned Government Pleader placed reliance on following decisions for the
proposition that an establishment does not become a factory unless manufacturing
process commences:
THE NAGPUR ELECTRIC LIGHT AND POWER COMPANY LIMITED Vs. THE REGIONAL
DIRECTOR, EMPLOYEES' STATE INSURANCE CORPORATION7 and WORKMEN OF DELHI ELECTRIC
SUPPLY UNDERTAKING Vs. THE MANAGEMENT OF DELHI ELECTRIC SUPPLY UNDERTAKING8.
19. Learned Government Pleader contends that as held by the Supreme Court in
POLYMAT INDIA PRIVATE LIMITED Vs NATIONAL INSURANCE COMPANY LIMITED9 the work
undertaken by petitioners does not constitute the expression 'factory'.
20. On the proposition that the intent of the legislation has to be seen by
reading the words and phrases in the Act as a whole but not in isolation or in
detached manner disassociated from the context, learned Government Pleader
relies on the decision of the Supreme Court in DARSHAN SINGH BALWANT SINGH Vs
THE UNION OF INDIA10.
21. Learned Government Pleader contends that the object of the enactments
being to protect the workers working in unorganized building construction
sector, unless cess is collected from the contractors, the welfare boards cannot
be effectively managed and welfare of the workers cannot be taken care of.
For the said proposition he relies on the decisions in STATE Vs. ARDESHIR
HORMUSJI BHIWANDIWALA11, M/s.GANNON DUNKERLEY & CO LTD Vs STATE OF MADHYA
PRADESH12, ADANI AGRI LOGISTICS LIMITED AND ANOTHER Vs THE STATE OF HARYANA AND
OTHERS13 and VISHOPS SCHOOL Vs STATE OF BIHAR14.
22. Sri V.Ravinder Rao, learned counsel appearing for third respondent submits
that contractual terms are very clear and petitioners have fulfilled all the
obligations imposed on them as per the terms of contracts and the obligations
imposed by the Act, 1948. The third furnace established by the third
respondent is in-consequence to the existing furnace operated by the third
respondent and third respondent is already recognized as a factory and what is
contemplated by the agreements entered by the petitioners is extension of the
existing facilities in the factory, therefore, the provisions of the Act, 1948
are applicable and in view of the exclusion provision provided in Act 27 of 1996
and Act 28 of 1996 are not applicable.
23. The point for determination is whether the works executed by petitioners
in the third respondent factory are the works incidental to and/or connected
with the works of the third respondent factory and thus exempted from the
provisions of "The Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Act, 1996 ?
24. To appreciate the rival contentions, it is necessary to understand the
mandate of relevant provisions of the three enactments in issue i.e., Act 27 of
1996, Act 28 of 1996 and Act, 1948.
25. Relevant provisions of Act 27 of 1996, Act 28 of 1996 and Act, 1948 and
Factories Rules, 1950 read as under:
Act 27 of 1996
"Sections 2 (d) : "Building or other construction work" means the construction,
alteration, 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
communications, 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 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,
Section 2 (g): "Contractor" means a person who undertakes to produce a given
result for any establishment, other than a mere supply of goods or articles of
manufacture, by the employment of buildings workers or who supplies building
workers for any work of the establishment; and includes a sub-contractor;
Section 2 (j): "Establishment" means any establishment belonging to, or under
the control of, Government, any body corporate or firm, an individual or
association or other body of individuals which or who employs building workers
in any building or other construction work; and includes an establishment
belonging to a contractor, but does not include an individual who employs such
workers in any building or construction work in relation to his own residence
the total cost of such construction not being more than rupees ten lakhs;
Act 28 of 1996:
Sub Section 2 and 3 of Section 3 of Act 28 of 1996 reads as under:
"3. Levy and collection of cess :-- (1)........
(2). The cess levied under sub-section (1) shall 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 public
sector undertaking or advance collection through a local authority where an
approval of such building or other construction work by such local authority is
required, as may be prescribed.
(3). The proceeds of the cess collected under sub section (2) shall
be paid by the local authority or 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."
The Factories Act, 1948:-
Sections 2 (l), (m), 6 (1) (a), (b), (c), (d), 6 (3) of The Factories Act, 1948
read as under:
Section 2(l) : "Worker" means a person 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, but does not include any
member of the armed forces of the Union.
Section 2 (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, railway
running shed or a hotel, restaurant or eating place.
"6. Approval, licensing and registration of factories :--(1) The State
Government may make rules--
(a). ....
(aa) requiring the previous permission in writing of the State Government or
the Chief Inspector to be obtained for the site on which the factory is to be
situated and for the construction or extension of any factory or class or
description of factories;
(b)...
(c)...
(d)...
(e)......
(2).....
(3). Where a State Government or a Chief Inspector refuses to
grant permission to the site, construction or extension of a factory or to the
registration and licensing of a factory, the applicant may within thirty days of
the date of such refusal appeal to the Central Government if the decision
appealed from was of the State Government and to the State Government in any
other case."
Explanation:- A factory shall not be deemed to be extended
within the meaning of this section by reason only of the replacement of any
plant of machinery or within such limits as may be prescribed, of the addition
of any plant or machinery if such replacement or addition does not reduce the
minimum clear space required for safe working around the plant or machinery or
adversely affect the environmental conditions from the evolution or emission of
steam, heat or dust or fumes injurious to health.
The A.P. Factories Rules, 1950.
Rule 3 : Submission and Approval of plans:-- (1) In the case of any
factory where,--
(a). any hazardous process of the nature specified in the First Schedule
of the Act is proposed to be carried on whether or not with the aid of power and
notwithstanding that the number of persons employed is less than any number
specified in Section 2 (m) of the Act; or
(b). the installed power is proposed to be or extended to 75 H.P. or
more;
No site shall be used for the location of a factory nor shall any building
in a factory be constructed, extended or taken into use as a factory or part of
a factory and no machine, or plant or any permanent fixture shall be installed
or fixed, nor shall any manufacturing process be carried on in any factory or
part of a factory, unless the occupier or the owner of the factory obtains the
previous permission in writing approving the plans from the Chief Inspector."
26. Underlying objective to enact Act No.27 of 1996 is that there is no law
which regulate the conditions of employment and welfare of workers working in
the Building and other Construction Sector and these workers are the most
deprived class in the working force. Thus, the Act intends to provide
statutory frame work to regulate the employment and conditions of service of
workers involved in building and other construction workers working in
unorganized sector and to ensure their safety, health and welfare. Act 28 of
1996 takes care of funds required to enforce the objectives of Act 27 of 1996.
To establish a factory and also to expand existing factory undertaking
construction of buildings and other equipment is mandatory. The factory needs
work force to run a factory and to undertake civil construction. The Factories
Act, 1948 regulate all aspects of a factory from the stage of proposal, to
establish, to run and to expand and welfare of workers. The definition of
worker in Factories Act, 1948 is comprehensive and encompasses workers involved
in construction activity.
27. In these writ petitions the demand made is on the work executed by
petitioners as per agreements entered into with third respondent. Third
respondent is a factory governed by Factories Act, 1948. Act 27 of 1996
excludes from its purview establishments governed by Factories Act, 1948. The
scheme of the Act would show that workers involved in building or other
construction work in an establishment covered by Act, 1948 are treated as a
class by themselves. Objective underlining such classification appears to be
that the Act, 1948 is a self contained code dealing with all the provisions
concerning the safety, health and welfare of the workers working in the
factories.
28. All provisions which are intended by Act 27 of 1996 are already
incorporated in Act, 1948. Act, 1948 is divided into several chapters. Chapter
III deals with health, Chapter IV deals with safety, Chapter V deals with
welfare and Chapter VI deals with working hours of adults, Chapter VIII deals
with wages. Other chapters deal with various aspects like safety, care and
caution that is required to be taken in ensuring safety and health of the
workers. The Act also incorporates penal provisions if the mandate of the
enactment is violated. Thus, objectives of the Act 27 of 1996 are already
enshrined in Act, 1948. All the welfare measures for building and other
construction workers are taken care of by the Act, 1948. It is thus clear that
in the definition clause in Section 2(d) of Act 27 of 1996 incorporating the
exclusion of the building or other construction workers from the purview of Act
27 of 1996 is a clear provision expressing the intent of the Legislature. But
for such exclusion, it would have been two provisions of law operating in the
same filed and in such a situation it would have been a matter for consideration
as to which provision would apply. There is no ambiguity in the provision and
the provision is capable of giving only one meaning. When provision is
expressive and clear no interference can be drawn to view otherwise. More so,
when Factories Act, 1948 is also a welfare legislation and enough provisions are
made to safeguard the interest of work force involved in Building and Other
Construction work in a factory.
29. It is thus necessary to be seen whether the works executed by the
petitioners are governed by the Act, 1948. Section 2(m) of the Act, 1948
defines 'Factory'. Factory means any premises including the precincts thereof
where manufacturing process is carried on. Section 2(k) defines 'manufacturing
process'. Section 2 (l) defines 'worker'. Worker means a person involved in
any manufacturing process, or in cleaning, any part of the machinery or premises
used for manufacturing process or in any other kind of work incidental to, or
connected with, the manufacturing process.
30. It is enough if the employer does some work which is ancillary,
incidental, relevance to or link with the object of the establishment. The work
of construction of additional structure, manufacturing, erection, testing and
commissioning of blast furnace entrusted to petitioners is ancillary,
incidental and connected to the work of the factory. These works were intended
to augment and increase the production. The construction activity taken up by
the third respondent is incidental to and connected with the manufacturing
process undertaken by the third respondent. As held by Supreme Court in
Regional Director ESI (para 12 of judgment extracted above at para 15) any work
that is necessary for augmentation of the work of the factory is connected with
the work of the factory. Work of construction of additional buildings has link
with work of the factory. Therefore work undertaken by the petitioners forms
part of the third respondent factory and therefore governed by the provisions of
the Act, 1948. Thus, the workers engaged by the petitioners are the workers
governed by the provisions of Act, 1948. Conscious of the mandate of the Act,
1948 the third respondent has incorporated all the requisite clauses in the
agreements entered with the petitioners with reference to the welfare of the
workers engaged by the petitioners as part of its expansion activity.
31. As per Act 28 of 1996, the cess to be collected is for the purpose of
strengthening the Welfare Boards constituted under the Act 27 of 1996. When the
provisions of the Act 27 of 1996 are excluded from its application to the
establishment governed by the provisions of the Act, 1948 there is no obligation
on the part of such establishment to pay cess as demanded by the respondents 1
and 2.
32. The argument of the learned Government Pleader if accepted, would amount
to creating one more class of building workers i.e., building workers involved
in building and construction work relating to factory which is governed by the
Act, 1948, but the buildings which were under construction where no
manufacturing process is commenced, a mini-classification of the 'building and
other construction worker' working in a factory. Such an inference cannot
be drawn by reading the definition clause in Section 2 (d) of the Act 27 of
1996. The principle laid down by Supreme Court in Regional Director ESI
Corporation, Madras (referred to supra) is complete answer to negate the
contention of the learned Government Pleader.
33. When the provision is very clear and express and provision does not intend
to create such classification, no inference can be drawn to create a mini-
classification of the building and other construction workers working in a
factory. Building and other construction worker involved in construction
activity means he would have to undertake construction of building or some other
establishment which may be used after such construction for manufacturing
purposes. The Parliament was conscious of the term 'building and other
construction worker' and also conscious of the fact that a building and other
construction worker wherever he works is involved in construction of the
building or some other construction and building or other construction can be
utilized only when construction is complete. Thus consciously all building
or other construction workers working in a factory are excluded from the
application of the provisions of Act 27 of 1996. Therefore, there cannot be a
further classification of such building or other construction workers.
Definition of 'worker' provided in the Act, 1948 is more expansive than the
definition of the building or other construction worker provided in Act 27 of
1996. Building or other construction worker as defined in Act 27 covers a
person who is involved in connection with any building or other construction
work whereas a 'worker' as defined in Act, 1948 includes a worker not only
involved in manufacturing process, cleaning any machinery but also in any other
kind of work which is incidental or connected with manufacturing process.
Agreements entered by third respondent with petitioners are for expansion of the
production capacity and is incidental to and connected with the manufacturing
process. Thus, by virtue of the exclusive clause in Section 2 (d) of Act 27
of 11996 mandate of Act 27 of 1996 is excluded to a worker working in a factory
involved in 'building or other construction work' to whom Act 1948 would apply.
34. The Parliament carved out a separate class of 'Building and Other
Construction Workers' working in connection with factory within the category of
'Building and Other Construction Workers' and excluded said class of 'Building
and Other Construction Worker' from the purview of Acts 27 and 28 of 1996, as
the said work-force is already covered by the Factories Act. The classification
brought out is based on intelligible differentia. The class of 'Building and
Other Construction Workers' who are working in a factory established under
Factories Act, 1948 are treated as different from 'Building and Other
Construction Workers' working else where, more particularly in unorganized
sectors, such as real estate developments. Thus, classification is based on
the fact that the objective of enacting Acts 27 and 28 of 1996 is to provide
safety and welfare to building workers working in unorganized construction
industry, whereas Factories Act, 1948 takes care of safety and welfare of
workers working in a factory. 'Worker' working in a factory cannot be
classified as working in unorganized sector. A factory governed by Factories
Act 1948 is bound by the provisions of the Act, 1948. The Act imposes
mandatory obligations on the management of the factory to ensure safety and
welfare of workers working in a factory. Act also imposes penal consequences
if management fails to provide safety and welfare. Thus, the principal
objective to enact Acts 27 and 28 of 1996 is achieved by Act, 1948 and but for
exclusive clause it would have been duplication. Thus, the exclusion of
'Building and other construction workers' working in a factory governed by Act,
1948 is clearly intended and there is no ambiguity in the provision to read
otherwise and infer a different meaning. Therefore, there cannot be a further
classification as argued by the learned Government Pleader.
35. As admitted by the third respondent, the provisions of Act, 1948 are made
applicable to the workers engaged by the petitioners for undertaking additional
fixtures on the premises of the third respondent factory to increase its
production and therefore all the safety and welfare clauses which are required
to be followed for any worker in the factory are incorporated in the agreements
entered with the petitioners. There is no allegation of petitioners not taking
welfare measures.
36. The decision of Supreme Court in Polymat India turns on its facts. The
issue was on insurance claim. Insurance policy covered "plant and machinery".
The entire premises of factory was not covered by the policy. Supreme Court
held as under:
"16........... Loosely the expression, 'factory' may include the whole
premises of factory. But each expression has to be given the meaning in the
context where it occurs. The expression "Factory-cum-Godown" has to be read in
the present context with the other conditions which appear in the Policy
document "....."
37. In Nagpur Electric Light, company was involved in transforming and
transmitting electrical energy. Inside the premises there are several
buildings and yards. The receiving station, the workshop, meter testing
department, the engineers quarters, the general office and stores are located in
different buildings inside the premises. The Supreme Court held entire
premises of the company constitutes 'factory'. Supreme Court held all workers
working in the premises, including in the administrative building and workers
outside the factory are held to be workers of the factory as they are engaged in
connection with the work of the factory. The principle decided therein
supports the stand of the petitioners.
38. In Delhi Electric Supply Undertaking, the issue for consideration was
whether sub-stations and zonal stations of electrical company were located at
various places and it was contended that sub stations or the zonal stations
located at various places constitute as one unit and form part of factory.
Rejecting the said contention, the Supreme Court held that sub-stations and
zonal stations do not form part of factory. The said decision turns on its
facts and the facts are not similar to the cases on hand.
39. The principles deducible from the plethora of decisions cited by learned
counsel for petitioners are, a definition is an explicit statement of the full
commutation of a term. The Court must proceed on the assumption that the
legislature did not make a mistake and that it did what it intended to do.
The Court must, as far as possible adopt a construction which will carry out the
obvious intention of the legislature. The Court cannot add words to a Statute
or read words into it which are not there, especially when the literal reading
produces as intelligible result. Where the words are clear, plain, unambiguous
and reasonably susceptible to only one meaning and intention of legislature is
clearly conveyed, Court cannot take up the task of amending or altering the
statutory provisions and give to the words that meaning, irrespective of the
consequences. A construction which attributes redundancy to the legislature
cannot be made. The object of the Act is a relevant factor for interpretation
only when language is not clear.
40. Applying the above principles and on a plain reading of definition in
Section 2 (d) of Act 27 of 1996, that in clear and unambiguous terms excludes
application of Act no.27 of 1996 to workers involved in "Building or other
construction works" in a factory governed by Act, 1948, third respondent being a
factory governed by Factories Act, 1948 and petitioners engaged workers to
undertake obligations under the agreements entered with the third respondent for
expansion of the factory, the said workers are excluded from the purview of Act
27 of 1996 and therefore no levy can be imposed on petitioners as per provisions
of Act 28 of 1996.
41. On an interactive analysis of various provisions of the Act, 1948 and Acts
27 and 28 of 1996, impugned orders of the respondents 1 and 2 in directing the
petitioners to pay 1% of the contractual amount as cess under Acts 27 and 28 of
1996 are without jurisdiction and competence and are therefore liable to be set
aside and the same are hereby set aside.
42. Accordingly, the writ petitions are allowed. Sequel to the same,
miscellaneous petitions, if any shall stand dismissed. No costs.
__________________________
JUSTICE P. NAVEEN RAO
Date: 28.11.2013
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