With

JUDGMENT

(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.

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 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.

i) In Punjab Land Development and Reclamation Corporation Ltd., Chandigarh v. Presiding Officer, Labour Court, Chandigarh and Others, (1990) 3 SCC 682, this Court while interpreting the word 'means' observed that if the definition has used the word 'means', it shall include certain things or acts and the definition has used the word 'means', it shall include certain things or acts and the definition is a hard-and-fast definition and no other meaning can be assigned to the expression than is put down in definition. This Court further observed that if the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do, in such case, best declare the intention of the law. This Court after making reference to its judgment in B.N. Mutto v. T.K. Nandi, 1979(1) RCR (Rent) 144 : (1979) 1 SCC 361 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, natural and grammatical meaning."

ii) In Shri Hariprasad Shivshanker Shukla and another v. Shri A.D. Divelkar and others, 1957 SCR 121 it was held that "there is no doubt that when the Act itself provides a dictionary for the words used, we must look into that dictionary first for an interpretation of the words used in the statute. We are not concerned with any presumed intention of the legislature; our task is to get at the intention as expressed in the statute".

iii) In Regional Director, Employees State Insurance Corporation, Trichur v. Ramanuja Match Industries, (1985) 1 SCC 218 the Court pointed out that "there is no doubt that beneficial legislations should have liberal construction with a view to implementing the legislative intent but where such beneficial legislation has a scheme of its own there is no warrant for the Court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme".

iv) In Dadi Jagannadham v. Jammulu Ramulu and Others, 2001(4) RCR (Civil) 267 : (2001) 7 SCC 71 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 intended to do. The court must, as far as possible, adopt a construction which will carry out the obvious intention of the legislature. Undoubtedly if there is a defect or an omission in the words used by the legislature, the court would not go to its aid to correct or make up the deficiency. The court could not add words to a statute or read words into it which are not there, especially when the literal reading produces an intelligible result. The court cannot aid the legislature's defective phrasing of an Act, or add and mend, and, by construction, make up deficiencies which are there."

v) In Shyam Sunder and others v. Ram Kumar and another, 2001(3) RCR (Civil) 754 : (2001) 8 SCC 24 this Court explained as to how to interpret the provisions of an enactment in the following words:

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

vi) Similarly in Grasim Industries Ltd. v. Collector of Customs, Bombay, (2002) 4 SCC 297 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 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 Supreme Court 1747], Union of India v. Deoki Nandan Aggarwal, 1991(3) S.C.T. 670 : [1992 Supp (1) SCC 323 : 1992 SCC (L&S) 248 : (1992) 19 ATC 219 : AIR 1992 Supreme Court 96], Institute of Chartered Accountants of India v. Price Waterhouse [(1997) 6 SCC 312] and Harbhajan Singh v. Press Council of India [(2002) 3 SCC 722 : JT (2002) 3 SC 21])"

vii) In Deepal Girishbhai Soni and Others v. United India Insurance Co. Ltd., Baroda, 2004(2) RCR (Civil) 466 : (2004) 5 SCC 385 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 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 Supreme Court 278])."

"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 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...."

"(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 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.

(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."

"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 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)

"(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;]..."

(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;]

(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];

" 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."

"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 Supreme Court 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 afore cited 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."

"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. 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..."

"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..."

"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.