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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6223 OF 2016

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

VERSUS

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

W I T H

CIVIL APPEAL NO.                   OF 2016 (ARISING OUT OF SLP (C) NOS. 29105-29106 OF 2011)

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

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

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

CIVIL APPEAL NO. 6569 OF 2014

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

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

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

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

CIVIL APPEAL NO. 6571 OF 2014

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

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

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

AND

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

J U D G M E N T

A.K. SIKRI, J.

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

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

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

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

filed before the respective High Courts.

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

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

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

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

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

issued  show  cause  notices  by  the  concerned  authorities  under  the

provisions of the Building And Other Construction Workers (Regulation

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

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

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

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

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

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

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

mentioned that  at  the  relevant  time  no  manufacturing  operation  had

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

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

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

civil  works  was   undertaken  by  the  appellants  wherein  construction

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

provisions  of  the  aforesaid  Acts  which  were  meant  for  construction

workers became applicable and the appellants were supposed to pay

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

work.  The appellants had submitted that Section 2(d) of the BOCW Act

which defines 'building or other construction work' specifically states that

it  does  not  include  any  building  or  construction  work  to  which  the

provision of the Factories Act, 1948 or the Mines Act, 1952 apply.  Since

the appellants stood registered under the Factories Act, they were not

covered  by  the  definition  of  building  or  other  construction  work  as

contained in Section 2(d) of the Act and, therefore, said Act  was not

applicable to them by virtue of Section 1(4) thereof.  All the High Courts

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

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appellants  would  not  be  covered  by  the  definition  of  factory  defined

under  Section  2(m)  of  the  Factories  Act  in  the  absence  of  any

operations/  manufacturing  process  and,  therefore,  mere  obtaining  a

licence  under  Section  6  of  the  Factories  Act  would  not  suffice  and

rescue them from their liability to pay cess under the Welfare Cess Act.

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

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

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

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

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

6223/2016.

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

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

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

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

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

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

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

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

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

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

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

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

Pradesh Factories Rules, 1950.  The appellant was granted registration

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

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

Respondent  No.  1  notified  the  Uttar  Pradesh  Building  and  other

Construction  Workers  (Regulation  of  Employment  and  Conditions  of

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

Immediately  thereafter,  the  appellant  received  a  notice  of  even  date

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

Government  of  Uttar  Pradesh  had  directed  that  “establishments”

engaged  in  construction  activities  were  required  to  get  themselves

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

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

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

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

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

to  the  aforesaid  communication  dated  19.04.2010  of  the  District

Collector, Sonebhadra, stating that the appellant was undertaking the

construction activity of the Project under the provisions of the Factories

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

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

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

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the Factories Act apply to the Project.   

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

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

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

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

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

requisite information relating to construction activities undertaken by it

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

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

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

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

concerned,  appellant  got  itself  registered  through  its  principal

contractors  under  Welfare  Cess  Act  and  started  paying  the  cess.

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

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

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

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

of further notices demanding cess.

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

Judicature  at  Allahabad  challenging  the  validity  of  notices  dated

14.03.2011  and  02.04.2011  demanding  payment  of  cess,  on  the

following grounds:

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

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

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

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

of the BOCW Act.

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

was proceeding to calculate the alleged cess payable by the appellant

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

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

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

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

components apart from civil construction works.  

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

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

judgment dated 28.04.2015, gist whereof has already been taken note

of above.

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

counsel appearing in some of these appeals, questioning the approach

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

Gaurab Banerji  and Mr. Akhil  Sibal  supplemented those submissions

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lending  their  candour  thereto.   These  submissions  were  further

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

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

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

brevity,  we  are  reproducing  the  submissions  of  these  counsel  in

consolidated form hereinafter.

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

respondents for payment of cess under BOCW Act read with Welfare

Cess Act, which is as under:

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

those undertakings which are registered under the Factories Act.   To

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

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

Act, which reads as under:   

“Section 2(1)(d) : “building or other construction work” means  the  construction,  alternation,  repairs, maintenance or demolition of or, in relation to, buildings, streets,  roads,  railways,  tramways,  airfields,  irrigation, drainage,  embankment  and  navigation  works,  flood control  works (including storm water  drainage works), generation,  transmission  and  distribution  of  power, water  works  (including  channels  for  distribution  of water), oil and gas installations, electric lines, wireless, radio,  television,  telephone,  telegraph  and  overseas communication dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aquaducts, pipelines, towers, cooling  towers,  transmission  towers  and  such  other work  as  may  be  specified  in  this  behalf  by  the appropriate  Government,  by  notification  but  does  not

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include any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), apply.

(emphasis added)”

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

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

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

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

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

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

excluded from the provisions of Welfare Cess Act as no manufacturing

process  or  factory  operation  had  started  by  the  appellants  and,

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

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

had only undertaken the process of construction of premises which are

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

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

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

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

were  not  entitled  to  take  advantage  of  mere  registration  under  the

Factories Act.

Dubbing the aforesaid approach as erroneous, it was the argument

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

even  when  the  building  was  under  construction,  the  establishments

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

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

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

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

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

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

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

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

work to which the provisions of Factories Act apply.   

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

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

that specific manner by submitting that once the provisions of Factories

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

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

well.   This  submission  was  buttressed  by  pointing  out  the

provisions/conditions stipulated while granting the permission under the

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

which the appellants were obligated under those conditions were the

same as stipulated in BOCW Act.

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

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

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

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

this behalf. Some of those judgments are as under:

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

Chandigarh  v.  Presiding  Officer,  Labour  Court,  Chandigarh  and

Others1, this Court while interpreting the word 'means' observed that if

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

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

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

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

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

in  themselves  precise  and  unambiguous,  then  no  more  can  be

necessary than to expound those words in their  natural  and ordinary

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

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

B.N. Mutto v. T.K. Nandi2 observed that “the Court has to determine the

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

themselves precise and unambiguous, then no more can be necessary

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

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

read  statutes  literally,  that  is,  by  giving  to  the  words  their  ordinary, 1

(1990) 3 SCC 682 2 (1979) 1 SCC 361

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natural and grammatical meaning.”

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

A.D. Divelkar and others3, it was held that “there is no doubt that when

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

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

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

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

iii) In  Regional  Director,  Employees  State  Insurance  Corporation,

Trichur  v.  Ramanuja  Match  Industries4,  the  Court  pointed  out  that

“there  is  no  doubt  that  beneficial  legislations  should  have  liberal

construction with a view to implementing the legislative intent but where

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

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

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

not covered by the scheme”.

iv) In  Dadi Jagannadham  v.  Jammulu Ramulu and Others5,  this

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

the following observations in paragraph 13:

“13.  …. The settled principles of interpretation are that the  court  must  proceed  on  the  assumption  that  the legislature did not make a mistake and that it did what it

3 1957 SCR 121 4 (1985) 1 SCC 218 5 (2001) 7 SCC 71

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intended to do. The court must, as far as possible, adopt a construction which will carry out the obvious intention of the legislature. Undoubtedly if there is a defect or an omission in the words used by the legislature, the court would  not  go  to  its  aid  to  correct  or  make  up  the deficiency. The court could not add words to a statute or read words into it which are not there, especially when the  literal  reading  produces  an  intelligible  result.  The court cannot aid the legislature's defective phrasing of an Act, or add and mend, and, by construction, make up deficiencies which are there.”

v) In Shyam Sunder and others v. Ram Kumar and another6, this Court

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

following words:

“... when the words used in a statute are capable of only one meaning. In such a situation, the courts have been hesitant to apply the rule of benevolent construction. But if it is found that the words used in the statute give rise to more than one meaning, in such circumstances, the courts  are  not  precluded  from  applying  such  rule  of construction.  The  third  situation  is  when  there  is  no ambiguity in a provision of a statute so construed. If the provision of a statute is plain, unambiguous and does not give rise to any doubt,  in such circumstances the rule of benevolent construction has no application.”

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

Bombay7, the Constitution Bench of this Court explained the principle of

literal interpretation as under:

“10.  No words or expressions used in any statute can be said to be redundant  or superfluous.  In matters of interpretation one should not concentrate too much on one word and pay too little attention to other words. No provision in the statute and no word in any section can be  construed  in  isolation.  Every  provision  and  every word must be looked at generally and in the context in which it is used. It is said that every statute is an edict of the legislature. The elementary principle of interpreting

6 (2001) 8 SCC 24 7 (2002) 4 SCC 297

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any word while  considering a statute  is  to  gather  the mens or  sententia  legis  of  the  legislature.  Where  the words are clear and there is no obscurity, and there is no  ambiguity  and  the  intention  of  the  legislature  is clearly conveyed, there is no scope for the court to take upon  itself  the  task  of  amending  or  alternating (sic altering)  the  statutory  provisions.  Wherever  the language is clear the intention of the legislature is to be gathered from the language used. While doing so, what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results  in  rejection  of  words  has  to  be  avoided.   As stated  by  the  Privy  Council  in  Crawford  v.  Spooner [(1846) 6 Moore PC 1 : 4 MIA 179] “we cannot aid the legislature's defective phrasing of an Act, we cannot add or  mend  and,  by  construction  make  up  deficiencies which are left there”. In case of an ordinary word there should  be  no  attempt  to  substitute  or  paraphrase  of general application. Attention should be confined to what is  necessary  for  deciding  the  particular  case.  This principle  is  too  well  settled  and  reference  to  a  few decisions  of  this  Court  would  suffice.  (See:  Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests  [1990  Supp  SCC 785  :  AIR  1990  SC 1747], Union of  India  v.  Deoki Nandan Aggarwal  [1992 Supp (1) SCC 323 : 1992 SCC (L&S) 248 : (1992) 19 ATC 219 : AIR 1992 SC 96] ,Institute of Chartered Accountants of India  v.  Price  Waterhouse  [(1997)  6  SCC  312]  and Harbhajan  Singh  v.  Press  Council  of  India  [(2002)  3 SCC 722 : JT (2002) 3 SC 21])”

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

Ltd.,  Baroda8,  while  interpreting  the  provisions  that  fell  for

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

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

legislature, in the following terms:

“53.  Although the Act  is a beneficial  one and,  thus, deserves  liberal  construction  with  a  view  to implementing  the  legislative  intent  but  it  is  trite  that where such beneficial  legislation has a scheme of its

8 (2004) 5 SCC 385

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own and there is no vagueness or doubt therein,  the court would not travel beyond the same and extend the scope  of  the  statute  on  the  pretext  of  extending  the statutory benefit to those who are not covered thereby. (See Regional Director, ESI Corpn. v. Ramanuja Match Industries [(1985) 1 SCC 218 : 1985 SCC (L&S) 213 : AIR 1985 SC 278]).”

Relying upon all the aforesaid judgments, the forceful exhortation

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

BOCW Act in the manner appellants suggested to us.

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

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

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

BOCW  Act  was  perfectly  justified  and  any  other  interpretation  as

suggested by the appellants would defeat  the very purpose of  these

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

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

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

said  Act  would  apply  only  when  manufacturing  process  is  actually

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

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

construction workers would not be entitled to various benefits which are

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

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

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

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emphasised  that  while  interpreting  the  provisions  of  these  two  Acts,

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

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

unorganised  sector,  had  to  be  liberally  construed  by  giving  that

construction  which  accords  them  the  benefit  eschewing  the  other

approach which would preclude them from getting the benefit under the

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

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

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

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

narrowly as per the settled proposition of law.   

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

submissions  made  of  both  sides,  which  these  submissions  deserve.

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

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

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

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

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

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

the guiding path to answer the core issue delineated above.

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

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

enacted  primarily  with  the  object  of  protecting  workers  employed  in

factories against industrial and occupational hazards.  For that purpose

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

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

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

also  requires  that  the  workers  should  work  in  healthy  and  sanitary

conditions and for that purpose it provides that precautions should be

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

provisions in Factories Act are made for securing information necessary

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

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

the prescribed registers with a view to maintain effective supervision.

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

safety of workers and extends to providing adequate plant, machinery

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

proper system of working and extends to giving reasonable restrictions.

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

imposing  obligations  upon  the  owners  of  the  factories  to  maintain

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

overcrowding  and  provision  for  amenities  such  as  lighting,  drinking

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

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

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

Bhikusa Yamasa Kshatriya (P) Ltd.  v. Union of India and another9,

this Court highlighted the necessity and rationale behind legislating this

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

manner:

“9.  The Factories Act, as the preamble recites, is an Act to consolidate and amend the law regulating labour in factories.  The Act is enacted primarily with the object of protecting  workers  employed  in  factories  against industrial and occupational hazards. For that purpose it seeks  to  impose  upon  the  owners  or  the  occupiers certain obligations to protect workers unwary as well as negligent  and  to  secure  for  them  employment  in conditions conducive to their health and safety.  The Act requires  that  the  workers  should  work  in  healthy  and sanitary conditions and for that purpose it provides that precautions should be taken for  the safety of  workers and  prevention  of  accidents.  Incidental  provisions  are made for securing information necessary to ensure that the objects are carried out and the State Governments are empowered to appoint Inspectors, to call for reports and to inspect  the prescribed registers with a view to maintain effective supervision. The duty of the employer is  to  secure  the  health  and  safety  of  workers  and extends  to  providing  adequate  plant,  machinery  and appliances, supervision over workers, healthy and safe premises,  proper  system  of  working  and  extends  to giving  reasonable  instructions.  Detailed  provisions  are therefore made in diverse chapters of the Act imposing obligations upon the owners of the factories to maintain inspecting  staff  and  for  maintenance  of  health, cleanliness,  prevention  of  overcrowding  and  provision for amenities such as lighting, drinking water, etc. etc. Provisions are also made for safety of workers and their welfare,  such as restrictions on working hours and on the  employment  of  young  persons  and  females,  and grant  of  annual  leave  with  wages.  Employment  in  a manufacturing process was at one time regarded as a matter  of  contract  between  the  employer  and  the

9 1964 SCR (1) 860

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employee and the State was not concerned to impose any  duties  upon  the  employer.  It  is  however  now recognised  that  the  State  has  a  vital  concern  in preventing exploitation of  labour and in  insisting upon proper  safeguards  for  the  health  and  safety  of  the workers.   The  Factories  Act  undoubtedly  imposes numerous restrictions upon the employers to secure to the workers  adequate  safeguards  for  their  health  and physical well-being. But imposition of such restrictions is not  and  cannot  be  regarded,  in  the  context  of  the modem  outlook  on  industrial  relations,  as unreasonable....”

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

the legislative intent, reads as under:

“(1)  It is estimated that about 8.5 million workers in the country are engaged in building and other construction works.  Building and other construction workers are one of the most numerous and vulnerable segments of the unorganised  labour  in  India.   The  building  and  other construction works are characterized by their  inherent risk to the life and limb of the workers.  The work is also characterised  by  its  casual  nature,  temporary relationship between employer and employee, uncertain working hours, lack of basic amenities and inadequacy of  welfare  facilities.   In  the  absence  of  adequate statutory provisions, the requisite information regarding the  number  and  nature  of  accidents  is  also  not forthcoming.  In the absence of such information, it  is difficult  to  fix  responsibility  or  to  take  any  corrective action.   

(2)  Although the provisions of certain Central Acts are applicable to the building and other construction workers yet a need has been felt for a comprehensive Central Legislation for regulating their safety, health, welfare and other  conditions  of  service.   It  had  been  considered necessary  to  levy  a  cess  on  the  cost  of  construction incurred  by  the  employers  on  the  building  and  other construction works for ensuring sufficient funds for the Welfare  Boards  to  undertake  the  social  security schemes and welfare measures.”

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

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

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

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

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

construction incurred by the employers for augmenting the resources of

the  Building,  and  Other  Construction  Workers'  Welfare  Boards

constituted  by  the  State  Governments  under  the  Building  and  Other

Construction  Workers'  (Regulation  of  Employment  and  Conditions  of

Service) Ordinance, 1995.

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

Dewan  Chand  Builders  and  Contractors  v.  Union  of  India  and

Others10.  Recognising that the noble purpose behind the said Act is to

ensure  welfare  of  the  building  and  construction  workers  in  order  to

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

the Court observed as under:

“10.  It is thus clear from the scheme of the BOCW Act that  its  sole  aim  is  the  welfare  of  building  and construction  workers,  directly  relatable  to  their constitutionally recognised right to live with basic human dignity,  enshrined  in  Article  21  of  the  Constitution  of India.   It  envisages  a  network  of  authorities  at  the Central and State levels to ensure that the benefit of the legislation  is  made  available  'to  every  building  and construction worker, by constituting Welfare Boards and clothing  them  with  sufficient  powers  to  ensure enforcement of the primary purpose of the BOCW Act. The means of generating revenues for making effective the welfare provisions of the BOCW Act is through the

10 (2012) 1 SCC 101

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Cess   Act,  which  is  questioned  in  these  appeals  as unconstitutional.   

xx xx xx

17.  It is manifest from the overarching schemes of the BOCW  Act,  the  Cess  Act  and  the  Rules  made thereunder  that  their  sole  object  is  to  regulate  the employment  and conditions of  service of  building and other  construction  workers,  traditionally  exploited sections in the society  and to provide for  their  safety, health and other welfare measures.  The BOCW Act and the Cess Act break new ground in that, the liability to pay cess falls  not  only  on the owner of  a building or establishment,  but  under  Section  2(1)(i)(iii)  of  the BOCW Act  

“in  relation  to  a  building  or  other  construction  work carried  on  by  or  through  a  contractor,  or  by  the employment  of  building  workers  supplied  by  a contractor, the contractor”;

The extension of the liability on to the contractor is with a view to ensure that, if for any reason it is not possible to collect cess from the owner of the building at a stage subsequent to the completion of the construction, it can be recovered from the contractor.  The Cess Act and the Cess Rules ensure that the cess is collected at source from the bills of the contractors to whom payments are made by the owner.  In  short,  the  burden of  cess is passed on from the owner to the contractor.”

(emphasis supplied)

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

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

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

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

excludes  those  building  or  construction  work  to  which  Factories  Act

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

Factories  Act  are  already  given to  the  construction workers  who are

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

construction workers who are engaged in building or construction work

of the appellants under BOCW Act or Welfare Cess Act.

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

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

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

Act defines 'factory' in the following manner:

“(m)  "factory"  means  any  premises  including  the precincts thereof-

(i)  whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried  on  with  the  aid  of  power,  or  is  ordinarily  so carried on, or

(ii)   Whereon twenty or  more workers are working,  or were  working  on  any  day  of  the  preceding  twelve months,  and  in  any  part  of  which  a  manufacturing process is being carried on without the aid of power, or is ordinarily so carried on,-

but does not include a mine subject to the operation of [the  Mines  Act,  1952  (35  of  1952)]  or [a  mobile  unit belonging to the armed forces of  the Union, a railway running shed or a hotel, restaurant or eating place].

[Explanation  [I] -  For computing the number of workers for  the  purposes  of  this  clause  all  the  workers  in [different groups and relays] in a day shall be taken into account;]

[Explanation  II -  For  the  purposes  of  this  clause,  the mere fact that an Electronic Data Processing Unit or a Computer  Unit  is  installed  in  any  premises  or  part thereof, shall not be construed to make it a factory if no manufacturing  process  is  being  carried  on  in  such premises or part thereof;]...”

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

following manner:

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

(i)   making,  altering,  repairing,  ornamenting,  finishing, packing,  oiling,  washing,  cleaning,  breaking  up, demolishing,  or  otherwise  treating  or  adapting  any article  or  substance  with  a  view  to  its  use,  sale, transport, delivery or disposal, or

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

(iii) generating, transforming or transmitting power; or

(iv) [composing  types  for  printing,  printing  by  letter press, lithography, photogravure or other similar process or book binding;] [or]

(v) constructing,  reconstructing,  repairing,  refitting, finishing or breaking up ships or vessels;[or]

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

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

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

(l) "worker" means a person 8[employed, directly or by or through any agency (including a contractor) with or  without  the  knowledge  of  the  principal  employer, whether for remuneration or not], in any manufacturing process,  or  in  cleaning  any  part  of  the  machinery  or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing  process,  or  the  subject  of  the manufacturing  process 7[but  does  not  include  any member of the armed forces of the Union];

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

“factory” is that establishment where manufacturing process is carried

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

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

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

the  said  manufacturing  process.   Insofar  as  these  appellants  are

concerned,  construction  of  building  is  not  their  business  activity  or

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

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

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

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

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

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

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

by the provisions of the Factories Act.

22. Having  regard  to  the  above,  if  the  contention  of  the  appellants  is

accepted,  the  construction  workers  engaged  in  the  construction  of

building undertaken by the appellants which is to be used ultimately as

factory, would  stand excluded from the provisions of  BOCW Act  and

Welfare Cess Act as well.  Could this be the intention while providing the

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

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

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

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merely because the appellants have obtained a licence under Section 6

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

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

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

'factory' and a bare reading thereof makes it abundantly clear that before

this  stage,  when  construction  of  the  project  is  completed  and  the

manufacturing  process  starts,  'factory'  within  the  meaning  of  Section

2(m) of  the Factories Act  does not  come into existence so as to be

covered by the said Act.   

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

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

language  thereof  is  unambiguous  and  literal  construction  is  to  be

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

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

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

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

construction,  alterations,  repairs,  maintenance or demolition.   Second

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

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

definition contains exclusion clause by stipulating that it does not include

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

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

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

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

carried out and third part excludes those building or other construction

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

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

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

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

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

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

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

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

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

opinion that they do not apply. The provisions of the Factories Act would

“apply”  only   when  the  manufacturing  process  starts  for  which  the

building/project  is  being  constructed  and  not  to  the  activity  of

construction of the project.  That is how the exclusion clause is to be

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

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

approach  adopted  by  this  Court  in  Organo  Chemical  Industries  v.

Union of India11.  Two separate, but concurring, opinions were given by

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

11 (1979) 4 SCC 573

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below some excerpts from both opinions:

“Justice A.P. Sen   (para 23)

Each word, phrase or sentence is to be considered in the light  of  general  purpose  of  the  Act  itself.   A  bare mechanical interpretation of the words 'devoid of concept or purpose' will reduce much of legislation to futility.  It is a salutary  rule,  well  established,  that  the  intention  of  the legislature  must  be  found  by  reading  the  statute  as  a whole.

Justice V.R. Krishna Iyer   (para 241)

A policy-oriented interpretation, when a welfare legislation falls  for  determination,  especially  in  the  context  of  a developing  country,  is  sanctioned  by  principle  and precedent and is implicit in Article 37 of the Constitution since the judicial branch is, in a sense, part of the State. So it is reasonable to assign to 'damages' a larger, fulfilling meaning.”

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

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

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

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

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

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

Factories Act nor of BOCW Act/Welfare Cess Act.  That could not have

been the intention of the Legislature. BOCW Act and Welfare Cess Act

are pieces of social security legislation to provide for certain benefits to

the construction workers.

27. Purposive  interpretation  in  a  social  amelioration  legislation  is  an

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

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

Singh Punia12:

“9.  Judicial  time  and  energy  is  more  often  than  not consumed in finding what is the intention of Parliament or in other words, the will of the people. Blackstone tells us that the fairest and most rational method to interpret the will  of  the legislator  is by exploring his  intentions at  the time when the law was made, by signs most natural and probable.  And  these  signs  are  either  the  words,  the context, the subject-matter, the effects and consequence, or the spirit and reason of the law. (emphasis by the court) See  Commentaries on the Laws of England  (facsimile of 1st Edn. of 1765, University of Chicago Press, 1979, Vol. 1, p. 59). Mukherjea, J. as the learned Chief Justice then was, in  Poppatlal Shah v. State of Madras  [AIR 1953 SC 274 : 1953 SCR 677 : 1953 Cri LJ 1105: (1953) 4 STC 188] said that each word, phrase or sentence was to be construed in the light of purpose of the Act itself. But words must  be  construed  with  imagination  of  purpose  behind them  said  Judge  Learned  Hand,  a  long  time  ago.  It appears,  therefore,  that  though  we  are  concerned  with seeking of intention, we are rather looking to the meaning of  the words that  the legislature has used and the true meaning of what words [Ed.: Lord Reid in the aforecited case had observed: (All ER p. 814) “We often say that we are looking for the intention of Parliament, but this is not quite accurate. We are seeking the meaning of the words which  Parliament  used.  We  are  seeking  not  what Parliament meant but the true meaning of what they said.”] as was said by Lord Reid in Black-Clawson International Ltd.  v. Papierwerke Waldhof-Aschaffenburg A.G [1975 AC 591, 613 : (1975) 1 All ER 810: (1975) 2 WLR 513] . We are  clearly  of  the  opinion  that  having  regard  to  the language we must  find the reason and the spirit  of  the law.”

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

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

12 (1988) 4 SCC 284

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Association v. Regional Labour Commr. (Central)13, this Court while

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

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

workmen  employed  the  scheduled  employments  by  prescribing

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

provisions the court  should adopt  what  is  sometimes described as a

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

Central  Government  Industrial  Tribunal14,  this  Court  reminded that

semantic  luxuries  are  misplaced  in  the  interpretation  of  'bread  and

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

interpretation.  Where legislation is designed to give relief against certain

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

etymological excursions.   

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

American  Express  v.  Management  of  American  Express15,  which

provides complete answer to the argument of the appellants based on

literal construction:

“4. The principles of statutory construction are well settled. Words occurring in statutes of liberal import such as social welfare legislation and human rights' legislation are not to be  put  in  Procrustean  beds  or  shrunk  to  Liliputian dimensions. In construing these legislations the imposture of literal construction must be avoided and the prodigality of  its  misapplication  must  be  recognised  and  reduced.

13 AIR 1960 SC 1068 14 (1980) 4 SCC 443 15 (1985) 4 SCC 71

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Judges ought to be more concerned with the “colour”, the “content”  and  the  “context”  of  such  statutes  (we  have borrowed  the  words  from  Lord  Wilberforce's  opinion  in Prenn  v. Simmonds  [(1971) 3 All ER 237] ). In the same opinion Lord Wilberforce pointed out that law is not to be left behind in some island of literal interpretation but is to enquire beyond the language, unisolated from the matrix of  facts  in  which  they  are  set;  the  law  is  not  to  be interpreted purely on internal linguistic considerations...”

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

Union of India16:

“21.  The law is not “a brooding omnipotence in the sky” but  a  pragmatic  instrument  of  social  order.  It  is  an operational art controlling economic life, and interpretative effort  must  be  imbued  with  the  statutory  purpose.  No doubt,  grammar is  a  good guide to  meaning but  a  bad master to dictate...”

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

Deputy Director, Employees' State Insurance Corporation & Anr. 17

in the following words:

“20.  The Employees' State Insurance Act is a beneficial legislation.  The  main  purpose  of  the  enactment  as  the Preamble  suggests,  is  to  provide  for  certain  benefits  to employees of a factory in case of sickness, maternity and employment injury and to make provision for certain other matters  in  relation  thereto.  The  Employees'  State Insurance  Act  is  a  social  security  legislation  and  the canons of interpreting a social legislation are different from the  canons  of  interpretation  of  taxation  law.  The  courts must not countenance any subterfuge which would defeat the  provisions  of  social  legislation  and  the  courts  must even, if necessary, strain the language of the Act in order to achieve the purpose which the legislature had in placing this  legislation  on  the  statute  book.  The  Act,  therefore, must  receive a liberal  construction so as to promote its objects.

16 (1975) 2 SCC 791 17 (2009) 9 SCC 61

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

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

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

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

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

Allahabad  Bank  v.  Canara  Bank18,  which  has  been  followed  in

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

Limited & Anr.19 in the context of Securitization and Reconstruction of

Financial  Assets  and Enforcement  of  Security  Interest  Act,  2002 and

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

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

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

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

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

Here the doctrine of Purposive Interpretation also gets attracted which is

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

Chhattisgarh  and  Others20 and  Shailesh  Dhairyawan  v.  Mohan

Balkrishna Lulla21.

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

18 (2000) 4 SCC 406 19 2016 (1) SCALE 1 20 (2016) 4 SCC 179 at Page No. 197 21 (2016) 3 SCC 619 – Para 31

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granting  permission  under  the  Factories  Act,  various  conditions  are

imposed which the appellants are required to fulfill and these conditions

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

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

of  Factories  Act  are  not  applicable  to  these  construction  workers.

Registration  under  the  Factories  Act  becomes  necessary  in  view  of

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

taking of approval and registration of factories even at preparatory stage

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

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

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

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

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

relating to hazardous process as well as welfare measures are taken

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

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

occupier  to  the  Chief  Inspector  of  Factories  so  that  a  necessary

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

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

the purpose is altogether different.   

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

covered  by  the  Factories  Act  and,  therefore,  welfare  measures

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specifically provided for such workers under the BOCW Act and Welfare

Cess Act cannot be denied.

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

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

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

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

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

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

same before the adjudicating authorities.

No costs.

.............................................J. (A.K. SIKRI)

.............................................J. (N.V. RAMANA)

NEW DELHI; OCTOBER 18, 2016