# NATIONAL CAMPAIGN COMMITTEE FOR CENTRAL LEGISLATION ON CONSTRUCTION LABOUR (NCC-CL) v. UNION OF INDIA AND ORS

- **Citation:** [2018] 9 S.C.R. 204
- **Court:** Supreme Court of India
- **Decided:** 2018-03-19
- **Bench:** Madan B. Lokur, Deepak Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/national-campaign-committee-for-central-legislation-on-construction-labour-ncc-33821
- **Pages:** 44

## Headnote

Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Act, 1996 - Building and
Other Construction Workers' Welfare Cess Act, 1996 -
Implementation of the Acts - BOCW Act and Cess Act are social
legislations - They were enacted keeping in mind the Directive
Principles of State Policy, particularly Art.39 which requires the
State to direct its policy to secure the health and strength of workers,
and Art.42 which concerns just and humane conditions of work -
However, neither State Government nor Union Territory
Administration (UTA) were willing to fully adhere to abide by two
above mentioned laws enacted by Parliament and even the directions
issued by the Government of India had been disregarded by the
State Governments and UTAs - Specific directions issued: (i) Ministry
of Labour and Employment, the State Governments and UTAs to put
in place and strengthen the registration machinery, both for
registration of establishments as well as registration of construction
workers - (ii) Ministry, the State Governments and UTAs to establish
and strengthen the machinery for collection of cess - (iii) Ministry
of Labour and Employment to frame a composite Model Scheme for
benefit of construction workers in consultation with all stakeholders
including NGOs actually working at the grassroots level with
construction workers - (iv) State Governments and the Welfare
Boards in every State and UTA to conduct a social audit on
implementation of the BOCW Act so that in future there is better and
more effective and meaningful implementation of the BOCW Act -
Apart from the said specific directions some general directions also
passed so that the BOCW Act is fully implemented with responsibility
- Constitution of India - Arts. 21,39 and 42.
[2018] 9 S.C.R. 204
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Issuing the directions, the Court
HELD: 1. There can be no doubt that the Building and other
Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996 (BOCW) and its sister
legislation, the Building and Other Construction Workers'
Welfare Cess Act, 1996 (Cess) are social justice legislations.
They were enacted keeping in mind the Directive Principles of
State Policy, particularly Article 39 of the Constitution which
requires the State to direct its policy to secure the health and
strength of workers and Article 42 of the Constitution concerning
just and humane conditions of work. In addition, Article 21 of
the Constitution cannot be forgotten. A life of dignity is a
fundamental right given to all persons and that includes
construction workers. It is in this background that the two welfare
and beneficent legislations must be understood and appreciated.
[Para 63] [239-F-H]
2. The Statement of Objects and Reasons for the BOCW
Act refers to 8.5 million construction workers (85 lakhs) in 19951996. They were the vulnerable section of society who needed
the support of the State for their safety, health and welfare. They
have been consistently let down by the State and even directions
given by this Court and by the Ministry of Labour and Employment
has not brought about any substantive change. The task before
the State - to effectively implement the laws enacted by Parliament
for the benefit and welfare of a vulnerable section of society is
enormous, and as the progression in the case shows, the State
might well be unable to live up to the expectations of Parliament
unless there is a strong will to bring about a positive change.
State apathy in a situation such as this virtually amounts to
exploitation of the construction workers, and if the State turns
exploitative, there is little hope for vulnerable sections of society.
[Para 64] [240-A-B; C-D]
Specific Directions
3. First direction, therefore, is to the Ministry of Labour
and Employment, the State Governments and the UTAs to put in
place and strengthen the registration machinery, both for the
registration of

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NATIONAL CAMPAIGN COMMITTEE FOR CENTRAL
LEGISLATION ON CONSTRUCTION LABOUR (NCC-CL)
v.
UNION OF INDIA AND ORS.
(Writ Petition (Civil) No. 318 of 2006)
MARCH 19, 2018
[MADAN B. LOKUR AND DEEPAK GUPTA, JJ.]
Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Act, 1996 - Building and
Other Construction Workers' Welfare Cess Act, 1996 -
Implementation of the Acts - BOCW Act and Cess Act are social
legislations - They were enacted keeping in mind the Directive
Principles of State Policy, particularly Art.39 which requires the
State to direct its policy to secure the health and strength of workers,
and Art.42 which concerns just and humane conditions of work -
However, neither State Government nor Union Territory
Administration (UTA) were willing to fully adhere to abide by two
above mentioned laws enacted by Parliament and even the directions
issued by the Government of India had been disregarded by the
State Governments and UTAs - Specific directions issued: (i) Ministry
of Labour and Employment, the State Governments and UTAs to put
in place and strengthen the registration machinery, both for
registration of establishments as well as registration of construction
workers - (ii) Ministry, the State Governments and UTAs to establish
and strengthen the machinery for collection of cess - (iii) Ministry
of Labour and Employment to frame a composite Model Scheme for
benefit of construction workers in consultation with all stakeholders
including NGOs actually working at the grassroots level with
construction workers - (iv) State Governments and the Welfare
Boards in every State and UTA to conduct a social audit on
implementation of the BOCW Act so that in future there is better and
more effective and meaningful implementation of the BOCW Act -
Apart from the said specific directions some general directions also
passed so that the BOCW Act is fully implemented with responsibility
- Constitution of India - Arts. 21,39 and 42.
[2018] 9 S.C.R. 204
 204
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Issuing the directions, the Court
HELD: 1. There can be no doubt that the Building and other
Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996 (BOCW) and its sister
legislation, the Building and Other Construction Workers'
Welfare Cess Act, 1996 (Cess) are social justice legislations.
They were enacted keeping in mind the Directive Principles of
State Policy, particularly Article 39 of the Constitution which
requires the State to direct its policy to secure the health and
strength of workers and Article 42 of the Constitution concerning
just and humane conditions of work. In addition, Article 21 of
the Constitution cannot be forgotten. A life of dignity is a
fundamental right given to all persons and that includes
construction workers. It is in this background that the two welfare
and beneficent legislations must be understood and appreciated.
[Para 63] [239-F-H]
2. The Statement of Objects and Reasons for the BOCW
Act refers to 8.5 million construction workers (85 lakhs) in 19951996. They were the vulnerable section of society who needed
the support of the State for their safety, health and welfare. They
have been consistently let down by the State and even directions
given by this Court and by the Ministry of Labour and Employment
has not brought about any substantive change. The task before
the State - to effectively implement the laws enacted by Parliament
for the benefit and welfare of a vulnerable section of society is
enormous, and as the progression in the case shows, the State
might well be unable to live up to the expectations of Parliament
unless there is a strong will to bring about a positive change.
State apathy in a situation such as this virtually amounts to
exploitation of the construction workers, and if the State turns
exploitative, there is little hope for vulnerable sections of society.
[Para 64] [240-A-B; C-D]
Specific Directions
3. First direction, therefore, is to the Ministry of Labour
and Employment, the State Governments and the UTAs to put in
place and strengthen the registration machinery, both for the
registration of establishments as well as registration of
NATIONAL CAMPAIGN COMMITTEE (NCC-CL) v.
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construction workers. This should be done within a specified timeframe to be decided by them, but at the earliest. [Para 68]
[241-C-D]
4. Second direction to the Ministry, the State Governments
and UTAs in this regard is to establish and strengthen the
machinery for the collection of cess. It is a matter of common
knowledge that there is a tremendous amount of construction
activity going on all over the country and there is no reason why
establishments involved in the construction activity, both formal
as well as non-formal, should not pay the cess, especially when
they are utilizing the services of the construction workers.
Similarly, there is no reason why the construction workers of these
establishments should be denied their entitlements and benefits
under the BOCW Act and other laws. [Para 69] [241-D-F]
5. Third direction, therefore, is to the Ministry of Labour
and Employment to frame one composite Model Scheme for the
benefit of construction workers in consultation with all
stakeholders including NGOs who are actually working at the
grassroots level with construction workers. While there is an
urgency in framing such a Model Scheme, the Ministry of Labour
and Employment is cautioned to make haste slowly and to prepare
a Model Scheme that is comprehensive and can easily be
implemented, is pragmatic and does not involve too much
paperwork. [Para 71] [242-B-C]
6. Fourth direction is to the Ministry of Labour and
Employment, the State Governments and the UTAs to conduct a
social audit on the implementation of the BOCW Act so that in
future there is better and more effective and meaningful
implementation of the BOCW Act. [Para 76] [243-C-D]
General Directions
7. Every State Government and UTA shall constitute a State
Advisory Committee, if not already constituted, and that State
Advisory Committee shall meet regularly for conducting its
business. Rule 20 of the Building and Other Construction
Workers' (Regulation of Employment and Conditions of Service)
Central Rules, 1998 provides that the Central Advisory
Committee shall meet at least once in six months. This could be
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used as a good guideline for meetings of the State Advisory
Committee. [Para 78] [244-B-D]
8. Every State Government and UTA shall constitute an
Expert Committee and frame statutory Rules under Section 62
of the BOCW Act, if such statutory Rules have not already been
framed. Setting up an Expert Committee and framing statutory
rules should be in a time bound manner. [Para 78] [244-D-E]
9. The State Governments and UTAs must appoint
Registering Officers for registration of establishments and
construction workers. This is a critical aspect of the
implementation of the BOCW Act as well as the Cess Act. [Para
78] [244-E-F]
10. Every State Government and UTA should establish a
Welfare Board in terms of Section 18 of the BOCW Act. It must
be appreciated that this is not a body that can be created by an
executive order. The law requires that the Welfare Board shall
be a body corporate having perpetual succession and a common
seal. There are therefore legal formalities to be carried out for
the constitution of a Welfare Board. [Para 78] [244-F-G]
11. Every State Government and UTA should establish a
Welfare Fund for the benefit of the construction workers, with
appropriate rules for utilisation of the funds. [Para 78] [244-G-H]
12. It is imperative that all construction workers should be
given identity cards and should be registered in terms of Section
12 of the BOCW Act. The Ministry of Labour and Employment
has proposed the issuance of a Universal Access Number for
each construction worker. This issue is left open to the Ministry
of Labour and Employment to decide on an appropriate system
of identification and registration, provided it is effective and
meaningful. [Para 78] [245-A-C]
13. The Ministry of Labour and Employment shall actively
consider making available to the construction workers the
benefits of The Maternity Benefit Act, 1961 and The Minimum
Wages Act, 1948, The Employees' State Insurance Act, 1948,
the Employees' Provident Funds and Miscellaneous Provisions
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Act, 1952, as well as (to the extent possible) the Mahatma Gandhi
National Rural Employment Guarantee Act, 2005. [Para 78]
[245-C-D]
14. The Ministry of Labour and Employment should also
consider whether projects of the Government of India in the
railways, defence and other establishments are brought within
the purview of the BOCW Act. [Para 78] [245-D-E]
15. The Monitoring Committee which has had quite a few
meetings so far should pro-actively ensure full compliance of the
provisions of the BOCW Act, the Cess Act and the directions
issued by this Court. It needs to meet far more frequently, and in
any case once in three months, considering that thousands of
crores of rupees are not being gainfully utilized, and in some
instances, misutilized. [Para 78] [245-E-F]
16. The Union of India must take a decision on the
management of the cess already collected. A decision will have
to be taken by the Union of India on the gainful utilization of the
cess already collected so that the Welfare Boards are not unjustly
enriched - the beneficiaries having unfortunately lost out. [Para79]
[245-G-H]
Builders Association of India v. Union of India ILR
(2007) 1 Del 1143; Hingir-Rampur Coal Co. Ltd. v. State
of Orissa (1961) 2 SCR 537; Bandhua Mukti Morcha
v. Union of India (1984) 3 SCC 161 : [1984] 2 SCR
67; Dewan Chand Builders & Contractors v. Union of
India (2012) 1 SCC 101 : [2011] 13 SCR 214; State of
W.B. v. Kesoram Industries Ltd. (2004) 10 SCC 201 :
[2004] 1 SCR 564; A. Prabhakara Reddy and Company
v. State of Madhya Pradesh (2016) 1 SCC 600 : [2015]
9 SCR 675; National Campaign Committee for Central
Legislation on Construction Labour v. Union of India
(2011) 4 SCC 653; National Campaign Committee for
Central Legislation on Construction Labour v. Union
of India (2012) 3 SCC 336; National Campaign
Committee for Central Legislation on Construction
Labour v. Union of India, (2015) 17 SCC 166; National
Campaign Committee for Central Legislation on
Construction Labour v. Union of India, (2015) 17 SCC
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169; National Campaign Committee for Central
Legislation on Construction Labour v. Union of India
(2015) 17 SCC 171; National Campaign Committee for
Central Legislation on Construction Labour v. Union
of India, (2015) 17 SCC 173; National Campaign
Committee for Central Legislation on Construction
Labour v. Union of India, (2015) 17 SCC 174 - referred
to.
Case Law Reference
ILR (2007) 1 Del 1143
referred to
Para 13
(1961) 2 SCR 537
referred to
Para 13
[1984] 2 SCR 67
referred to
Para 15
[2011] 13 SCR 214
referred to
Para 17
[2004] 1 SCR 564
referred to
Para 18
[2015] 9 SCR 675
referred to
Para 20
(2011) 4 SCC 653
referred to
Para 33
(2012) 3 SCC 336
referred to
Para 37
(2015) 17 SCC 166
referred to
Para 39
(2015) 17 SCC 169
referred to
Para 42
(2015) 17 SCC 171
referred to
Para 42
(2015) 17 SCC 173
referred to
Para 44
(2015) 17 SCC 174
referred to
Para 46
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil)
No. 318 of 2006
Under Article 32 of the Constitution of India
WITH
Contempt Petition (C) No. 52/2013 in W. P. (C) No. 318/2006.
Maninder Singh, ASG, D. K. Thakur, S.S. Shamshery, AAGs,
Vivek K. Tankha, Sr. Adv. (A.C.), Colin Gonsalves, Rana Mukherjee,
R. Venkataramani, Sr. Advs., Choudhary Ali Zia Kabir, Ms. Jyoti
Mendiratta, S. Wasim A. Qadri, R. Balasubramanian, Prabhas Bajaj,
NATIONAL CAMPAIGN COMMITTEE (NCC-CL) v.
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Akhay Amritanshu, Pranay Rajan, Ms. Kasturika Kaumudi, Ms. Ekta
Pradhan, B.V. Balram Das, Bharat Singh, Ms. Sunita Sharma, Ms.
Gunwant Dara, Zaid Ali, Raj Bahadur Yadav, Mrs. G. Dara, Ms. Sreoshi
Chatterjee, Ms. Aarti Sharma, Ms. Anil Katiyar, Gurmeet Singh Makker,
B. Krishna Prasad, Ms. Anitha Shenoy, Ms. Srishti Agnihotri, Guntur
Prabhakar, Ms. Prerna Singh, Debojit Borkakati, Shuvodeep Roy, M/
s.Corporate Law Group, Anil Shrivastav, Gopal Singh, Manish Kumar,
A. P. Mayee, Avnish M. Oza, Chirag Jain, Ms. Hemantika Wahi, Ms.
Jesal Wahi, Ms. Puja Singh, Ms. Mamta Singh, Ms. Shodhika Sharma,
Dr. Monika Gusain, Piyush Hans, Ms. Parul Sharma, Varinder Kumar
Sharma, M. Shoeb Alam, Ms. Fauzia Shakil, Ujjwal Singh, Mojahid Karim
Khan, Anil Kumar Jha, Ms. Priyanka Tiyage, V.N. Raghupathy, Parikshit
P. Angadi, G. Prakash, Jishnu M.L., Mrs. Priyanka Prakash, Mrs. Beena
Prakash, Vijay Shankar V. L., Mishra Saurabh, Mahaling Pandarge,
Nishant R. Katneshwarkar, Leishangthem Roshmani Kh, Ms. Maibam
Babina, Amit Kumar, Ranjan Mukherjee, Daniel Stone Lyngdoh, Ganesh
Bapu, Shikhar Garg, P.V. Yogeswaran, Mrs. K. Enatoli Sema, Edward
Belho, Amit Kumar Singh, K. Luikang Michael, Sibo Sankar Mishra,
Karan Bharihoke, S. S. Ray, Amit Sharma, Sandeep Singh, Ankit Raj,
Ms. Indira Bhakar, Ms. Ruchi Kohli, Ms. Aruna Mathur, Avneesh
Arputham, Ms. Anuradha Arputham, Ms. Simran Jeet (for M/s Arputham
Aruna & Co.), T.R.B. Sivakumar, S. Udaya Kumar Sagar, Mrityunjai
Singh, Gopal Singh, Rituraj Biswas, Abhishek, Ramjee Pandey, Rajendran
Balan, Jatinder Kumar Bhatia, Ashutosh Kumar Sharma, Soumitra G.
Chaudhuri, Chanchal K. Ganguli, Bhupesh Narula, K.V. Jagdishvaran,
Mrs. G. Indira, V.G. Pragasam, S. Prabu Ramasubramanian, S. Manuraj,
Yashraj Singh Bundela, Praveen Vignesh, Rajvinder Singh, Hitesh Kumar
Sharma, T.V. Talwar (for Kuldip Singh), Ravi Prakash Mehrotra, Ashok
Kumar Singh, Parijat Sinha, Anil K. Chopra, Ms. Asha Gopalan Nair,
Vinay Garg, Advs. for the appearing parties.
The Judgment of the Court was delivered by
MADAN B. LOKUR, J.
1. Symbolic justice - there is nothing more to offer to several
millions of construction workers in the unorganized sector - not social
justice, not economic justice. The reason is quite simple. No State
Government and no Union Territory Administration (UTA) seems willing
to fully adhere to and abide by (or is perhaps even capable of fully
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adhering to and abiding by) two laws solemnly enacted by Parliament,
namely, the Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Act, 1996 (the BOCW Act)
and the Building and Other Construction Workers' Welfare Cess Act,
1996 (the Cess Act). Directions given by this Court from time to time to
implement the two laws have been flouted with impunity. What is equally
tragic is that multiple directions issued even by the Government of India
under Section 60 of the BOCW Act have been disregarded by State
Governments and UTAs - and this is candidly admitted in a statement
made by the learned Additional Solicitor General in this Court and also
by the Union of India on affidavit. Hopefully, the gravity of the situation
in the constitutional and federal context, the human rights and social
justice context will be realized by someone, somewhere and at some
time.
2. We have been informed that under the Cess Act, more than
Rs. 37,400 crores have been collected for the benefit of construction
workers, but only about Rs. 9500 crores have been utilized ostensibly
for their benefit. What is being done with the remaining about Rs. 28,000
crores? Why is it that construction workers across the country are
being denied the benefit of this enormous amount? These are some
questions that arise in this petition - are the answers blowing in the
wind?
Brief background
3. The petitioner is said to be a non-registered Committee of
registered trade unions concerned with the rights of workers in the
unorganized sector including construction workers, especially in areas
of safety, occupational health and welfare measures. The petitioner says
that it is "appalled by the attitude and ignorance" of most State
Governments and UTAs towards implementation of the BOCW Act.
According to the petitioner, the non-implementation of the BOCW Act
violates the provisions of Articles 15(3), 39(e) and (f) and also Articles
45 and 47 of the Constitution, which impose a primary responsibility on
the State to ensure that all the needs of workers are met and that their
basic rights are fully protected. The non-implementation also violates
Article 21 of the Constitution, which provides for the right to live with
dignity. It is averred that the BOCW Act and the Cess Act are based on
an international convention, namely, the Safety and Health in Construction
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Convention (No. 167) adopted by the International Labour Organization
in 1988 and its accompanying recommendation (No.175) which provide
for a foundation of law on which safe and healthy working conditions
are built.
4. Based on its experiences and studies carried out which indicate
the absence of any effective system for the safe and healthy working
conditions for construction workers, the petitioner preferred a writ petition
in this Court under Article 32 of the Constitution in which several prayers
have been made but essentially the prayer is that the BOCW Act and
the Cess Act should be meaningfully implemented in letter and spirit.
The BOCW Act and the Cess Act
5. The BOCW Act and the Cess Act were both enacted in 1996.
The Preamble to the BOCW Act states that it is an Act "to regulate the
employment and conditions of service of building and other construction
workers and to provide for their safety, health and welfare measures
and for other matters connected therewith or incidental thereto." The
Preamble to the Cess Act states that it is an Act "to provide for the levy
and collection of cess on the cost of construction incurred by employers
with a view to augmenting the resources of the Building and Other
Construction Workers Welfare Boards constituted under the BOCW
Act."
6.
The relevant paragraphs of the Statement of Objects and Reasons
for the enactment of the BOCW Act read:
"It is estimated that about 8.5 million workers in the country are
engaged in building and other construction works. Building and
other construction workers are one of the most numerous
and vulnerable segments of the unorganised labour in India.
The building and other construction works are characterised by
their inherent risk to the life and limb of the workers. The work is
also characterised by its casual nature, temporary relationship
between employer and employee, uncertain working hours, lack
of basic amenities and inadequacy of welfare facilities. In the
absence of adequate statutory provisions, the requisite information
regarding the number and nature of accidents is also not
forthcoming. In the absence of such information, it is difficult to
fix responsibility or to take any corrective action.
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2. Although the provisions of certain Central Acts are applicable
to the building and other construction workers yet a need has
been felt for a comprehensive Central Legislation for regulating
their safety, health, welfare and other conditions of service. The
State Governments and Union Territory Administrations have been
consulted in the matter and a majority of them have favoured
such a legislation. Also, in a meeting of the Committee of State
Labour Ministers constituted pursuant to the decision of the 41st
Labour Ministers' Conference held under the Chairmanship of
the then Union Labour Minister on the 18th May, 1995, a general
consensus had emerged on the need for the proposed Central
Legislation.
3. In view of the circumstances explained above, it has been
considered necessary to constitute 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. For the said purpose, it has been considered appropriate
to bring in a comprehensive legislation by suitably amplifying the
provisions of the Building and Other Construction Workers
(Regulation of Employment and Conditions of Service) Bill, 1988
which was introduced in the Rajya Sabha on the 5th December,
1988. It has also been considered necessary to levy a cess on the
cost of construction incurred by the employers on the building and
other construction works for ensuring sufficient funds for the
Welfare Boards to undertake the social security Schemes and
welfare measures." [Emphasis supplied].
7. The BOCW Act provides, inter alia, for the constitution of
Central and State Advisory Committee(s) to advise the appropriate
Government on matters concerning the administration of the BOCW
Act (Sections 3 and 4); the constitution of Expert Committee(s) for
advising the appropriate Government to frame Rules under the BOCW
Act (Section 5); appointment of registering officers and registration of
establishments employing building and construction workers by making
an application to the registering officer (Sections 6 and 7); registration
of building and construction workers as beneficiaries under the BOCW
Act and issuance of identity cards to them (Sections 12 and 13);
constitution of State Welfare Boards with identified functions including
providing necessary benefits and assistance to beneficiaries (Sections
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18 and 22); creation of a Welfare Fund for the benefit of building and
construction workers (Section 24) and providing hours of work, welfare
measures relating, inter alia, to safety and health and other conditions
of service of building and construction workers (Chapters VI and VII of
the BOCW Act).
8. Clearly, the BOCW Act is a welfare legislation intended and
enacted for the benefit of the unorganized sector of building and
construction workers. It has a strong flavour of social justice and is a
serious attempt by Parliament to ensure that building and construction
workers are not exploited because of their poverty and their children do
not suffer their fate in terms of education, healthy living and whatever it
takes to live a life of dignity. It is in this background and context that the
BOCW Act was enacted by Parliament.
9. Parliament simultaneously enacted the Cess Act which enables
the State Governments and the UTAs to collect a cess from every
employer as defined in the BOCW Act to be utilized for the benefit of
registered construction workers.
10. The Cess Act provides for the levy and collection of cess in
terms of Section 3 thereof. This Section enables the deduction of cess
at source in relation to building or other construction work of a government
or a public sector undertaking or advance collection through a local
authority. The cess so collected shall be paid to the Welfare Board
constituted under the BOCW Act after deducting the cost of collection
which shall not exceed 1% of the amount collected. Section 3 of the
Cess Act reads as follows:
"3. Levy and collection of cess.---(1) There shall be levied
and collected a cess for the purposes of the Building and Other
Construction Workers (Regulation of Employment and Conditions
of Service) Act, 1996, at such rate not exceeding two per cent but
not less than one per cent of the cost of construction incurred by
an employer, as the Central Government may, by notification in
the Official Gazette, from time to time specify.
(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
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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.
(4) Notwithstanding anything contained in sub-section (1) or subsection (2), the cess leviable under this Act including payment of
such cess in advance may, subject to final assessment to be made,
be collected at a uniform rate or rates as may be prescribed on
the basis of the quantum of the building or other construction work
involved."
11. Sections 4 and 5 of the Cess Act require every employer to
furnish a return to the concerned officer or authority and that officer or
authority is obliged to make an assessment of the amount of cess payable
by the employer. The concerned officer or authority is also empowered
to specify the date within which the cess shall be paid by the employer
on assessment. In the event of any delay in payment of cess, interest is
liable to be paid under Section 8 of the Cess Act at 2% for every month
or part thereof. There is of course a provision for an appeal as well as
an enforcement provision whereby penalty can be levied under the
provisions of the Cess Act.
12. The constitutional validity of the BOCW Act and the Cess
Act was challenged in the Delhi High Court by the Builders Association
of India. As regards the BOCW Act it was contended that it is bad for
vagueness and as far as the Cess Act is concerned, it was contended
that the cess is a compulsory and involuntary exaction without reference
to any special benefit for the payer of the cess and therefore the cess
was in fact a tax. It was contended that Parliament lacked legislative
competence to impose a tax on lands and buildings which was the effect
of the Cess Act.
13. In Builders Association of India v. Union of India1 the
contentions urged were repelled by the Delhi High Court and the
constitutional validity of the BOCW Act and the Cess Act was upheld.
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14. The Delhi High Court relied upon Hingir-Rampur Coal Co.
Ltd. v. State of Orissa2 in which the Constitution Bench explained the
difference between a tax, a fee and cess in the following words:
"......It is true that between a tax and a fee there is no generic
difference. Both are compulsory exactions of money by public
authorities; but whereas a tax is imposed for public purposes and
is not, and need not, be supported by any consideration of service
rendered in return, a fee is levied essentially for services rendered
and as such there is an element of quid pro quo between the
person who pays the fee and the public authority which imposes
it. If specific services are rendered to a specific area or to a
specific class of persons or trade or business in any local area,
and as a condition precedent for the said services or in return for
them cess is levied against the said area or the said class of persons
or trade or business the cess is distinguishable from a tax and is
described as a fee. Tax recovered by public authority invariably
goes into the consolidated fund which ultimately is utilised for all
public purposes, whereas a cess levied by way of fee is not intended
to be, and does not become, a part of the consolidated fund. It is
earmarked and set apart for the purpose of services for which it
is levied. There is, however, an element of compulsion in the
imposition of both tax and fee. When the Legislature decides to
render a specific service to any area or to any class of persons, it
is not open to the said area or to the said class of persons to plead
that they do not want the service and therefore they should be
exempted from the payment of the cess. Though there is an
element of quid pro quo between the tax payer and the public
authority there is no option to the tax-payer in the matter of
receiving the service determined by public authority. In regard to
fees there is, and must always be, co-relation between the fee
collected and the service intended to be rendered. Cases may
arise where under the guise of levying a fee Legislature may
attempt to impose a tax; and in the case of such a colourable
exercise of legislative power courts would have to scrutinise the
scheme of the levy very carefully and determine whether in fact
there is a co-relation between the service and the levy, or whether
the levy is either not co-related with service or is levied to such an
2 (1961) 2 SCR 537
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excessive extent as to be a pretence of a fee and not a fee in
reality. In other words, whether or not a particular cess levied by
a statute amounts to a fee or tax would always be a question of
fact to be determined in the circumstances of each case....."
15. With regard to the objectives of the enactments, the Delhi
High Court took sustenance from the decision of this Court in Bandhua
Mukti Morcha v. Union of India.3 The following passage was referred
to and relied upon with regard to the purpose behind Article 21, Article
39, Article 41 and Article 42 of the Constitution. It was stated in Bandhua
Mukti Morcha:
"......It is the fundamental right of everyone in this country, assured
under the interpretation given to Article 21 by this Court in Francis
Mullin case [Francis Coralie Mullin v. Administrator, Union
Territory of Delhi and others]4 to live with human dignity, free
from exploitation. This right to live with human dignity enshrined
in Article 21 derives its life breath from the Directive Principles
of State Policy and particularly clauses (e) and (f) of Article 39
and Articles 41 and 42 and at the least, therefore, it must include
protection of the health and strength of workers, men and women,
and of the tender age of children against abuse, opportunities and
facilities for children to develop in a healthy manner and in
conditions of freedom and dignity, educational facilities, just and
humane conditions of work and maternity relief. These are the
minimum requirements which must exist in order to enable a person
to live with human dignity and no State - neither the Central
Government nor any State Government - has the right to take
any action which will deprive a person of the enjoyment of these
basic essentials. Since the Directive Principles of State policy
contained in clauses (e) and (f) of Article 39, Articles 41 and 42
are not enforceable in a Court of law, it may not be possible to
compel the State through the judicial process to make provision
by statutory enactment or executive fiat for ensuring these basic
essentials which go to make up a life of human dignity but where
legislation is already enacted by the State providing these basic
requirements to the workmen and thus investing their right to live
with basic human dignity, with concrete reality and content, the
3 (1984) 3 SCC 161
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State can certainly be obligated to ensure observance of such
legislation for inaction on the part of the State in securing
implementation of such legislation would amount to denial of the
right to live with human dignity enshrined in Article 21...........The
Central Government is therefore bound to ensure observance of
various social welfare and labour laws enacted by Parliament for
the purpose of securing to the workmen a life of basic human
dignity in compliance with the Directive Principles of State Policy."
16. In short, the Delhi High Court held that the BOCW Act was
not vague but in keeping with the Directive Principles of State Policy
and Parliament was justified in levying the cess through the Cess Act.
17. The decision of the Delhi High Court was challenged in this
Court and that challenge was repelled in Dewan Chand Builders &
Contractors v. Union of India5. This Court noted the scheme of the
BOCW Act in the context of Article 21 of the Constitution and observed
as follows:
"It is thus clear from the scheme of the BOCW Act that its sole
aim is the welfare of building and construction workers, directly
relatable to their constitutionally recognised right to live with basic
human dignity, enshrined in Article 21 of the Constitution of India.
It envisages a network of authorities at the Central and State
levels to ensure that the benefit of the legislation is made available
to every building and construction worker, by constituting Welfare
Boards and clothing them with sufficient powers to ensure
enforcement of the primary purpose of the BOCW Act. The means
of generating revenues for making effective the welfare provisions
of the BOCW Act is through the Cess Act, which is questioned in
these appeals as unconstitutional."
18. This Court referred to the Constitution Bench decision in
Hingir-Rampur Coal Co. Ltd., and another Constitution Bench decision
being State of W.B. v. Kesoram Industries Ltd.6 This Court referred to
the views expressed by Justice R.C. Lahoti (speaking for the majority in
Kesoram Industries) in the following words:
"146. ......The term cess is commonly employed to connote a tax
with a purpose or a tax allocated to a particular thing. However, it
5 (2012) 1 SCC 101
6 (2004) 10 SCC 201
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also means an assessment or levy. Depending on the context and
purpose of levy, cess may not be a tax; it may be a fee or fee as
well. It is not necessary that the services rendered from out of
the fee collected should be directly in proportion with the amount
of fee collected. It is equally not necessary that the services
rendered by the fee collected should remain confined to the persons
from whom the fee has been collected. Availability of indirect
benefit and a general nexus between the persons bearing the
burden of levy of fee and the services rendered out of the fee
collected is enough to uphold the validity of the fee charged....."
19. The Court then came to the conclusion that there is a clear
distinction between a tax and a fee and looking to the purpose of the
BOCW Act and the Cess Act, it was held that the levy of cess was a
fee and not a tax.
20. The interpretation of the BOCW Act and the Cess Act was
again considered in A. Prabhakara Reddy and Company v. State of
Madhya Pradesh.7 The emphasis in this case was on registering the
construction workers and providing them necessary benefits. Since the
levy of cess is a fee, it was urged that urgent steps should be taken for
implementation of the two Acts. It was further observed that merely
because there was some delay in the effective implementation of both
the statutes it could not be a ground for invalidating the levy of cess, nor
could the levy of cess be said to have retrospective application. It was
held as follows:
"The fact that the task of registering the workers and providing
them the benefit may take some time, would not affect the liability
to pay the levy as per the Cess Act. Any other interpretation
would defeat the rights of the workers whose protection is the
principal aim or primary concern and objective of the BOCW Act
as well as the Cess Act. Cess is a fee for service and hence, its
calculation, as per settled law is not to be strictly in accordance
with quid pro quo rule and does not require any mathematical
exactitude. The scheme of the BOCW Act, the Cess Act and the
Rules warrant that the lawfully imposable cess should be imposed,
collected and put in the statutory welfare fund without delay so
that the benefits may flow to the eligible workers at the earliest.
The scheme of the BOCW Act or the Cess Act does not warrant
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that unless all the workers are already registered or the welfare
fund is duly credited or the welfare measures are made available,
no cess can be levied. In other words the service to the workers
is not required to be a condition precedent for the levy of the
cess. The rendering of welfare services can reasonably be
undertaken only after the cess is levied, collected and credited to
the welfare fund.
We also find no merit in other submission advanced on behalf of
the appellants that there is a legal impediment in charging levy on
the cost of construction incurred by the employer from a particular
period on account of constitution of the Board from a particular
date or for any other reason. This argument is fallacious. Such
beneficial measures for the welfare of the workers are applicable
even to the construction activity which may have commenced
before coming into force of the BOCW Act and the Cess Act, if
they are subsequently covered by the provisions of these Acts.
There can be no legal obstacle in ignoring the construction cost
incurred before the cess became leviable by distinguishing it from
the cost of construction incurred later, from a date when the Board
is available to render service to the building and other construction
workers. The levy of cess in these facts and circumstances cannot
be faulted for any reason. The demand of cess in the given facts
cannot amount to retrospective application of the Cess Act. Hence
the appeals must fail."
21. Notwithstanding the law being absolutely clear and
constitutionally valid, it was not being implemented in accordance with
the intent of Parliament. Therefore, there was a need for the petitioner
to move this Court and for this Court to take up the issues raised as
matters relating to social justice and human rights.
Positive directions issued by the Court
22. Bearing in mind the welfare and beneficial intent behind the
BOCW Act and the Cess Act and for their effective and meaningful
implementation, this Court has issued a series of directions since May
2008. This Court was compelled do so since even twelve years after the
enactment of the BOCW Act, the basic statutory mandates had not
been carried out by the State Governments and UTAs. It is not necessary
to advert to all the directions, even though each one of them is significant.
A few of them, referred to infra, are enough to indicate the progression
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of the case. Later, we will also refer to various affidavits filed by the
Union of India to indicate its helplessness in effectively implementing
the BOCW Act and the Cess Act despite several statutory directions
issued by it.
23. When the case was taken up for consideration by this Court
on 12th May, 2008 it was informed by the petitioner that even after a
decade of the enactment of the BOCW Act, the minimum and basic
requirements of its provisions had not been implemented or considered
by almost every State Government and UTA. It was submitted that
Section 4 of the BOCW Act requires a Committee to be constituted
called the State Building and Other Construction Workers Advisory
Committee. The purpose of this State Advisory Committee is to advise
the State Government on matters relating to the administration of the
BOCW Act. It was submitted that perhaps no State Government had
yet constituted the State Advisory Committee under Section 4 of the
BOCW Act which reads:
"4.