LABOUR RIGHTS

DELHI HIGH COURT UPHELD CONSTITUTIONAL VALIDITY OF THE BUILDING AND OTHER CONSTRUCTION WORKERS’(REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1996 AND BUILDING AND OTHER CONSTRUCTION WORKERS’ WELFARE CESS ACT, 1996

The Building and Other Construction Workers, (Regulations and Employment and Conditions of Service) Act, 1996 (BOCW Act) 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 worker. The provisions concerning registration of workers, providing them with identity cards, constitution of Welfare Boards and registration of beneficiaries under the Fund, providing for augmentation of the Fund and specifying the purposes for which the Fund will be used, providing for the safety and health of the worker, making the contravention of the provisions of the statute punishable and entailing penalties for the violator all go to emphasise the primary purpose of the BOCW Act, which is the welfare of the building and construction worker. These aspects of the BOCW Act are sought to be supplemented in considerable measure by the making of the Central Rules in 1998. Detailed rules have been made with regards to particular aspects of safety in construction work and for the health and welfare of the workers.

Simultaneously, with the enactment of the BOCW Act in 1996, the Parliament enacted the Building and Other Construction Workers’ Welfare Cess Act, 1996(Cess Act). The the Statement of Objects and Reasons (SOR) to the BOCW Act explained that 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.’ The SOR to the Cess Act noted that “the intention was to make over, after due appropriation by Parliament by law, the proceeds of the cess, to the State Building and Other Construction Workers’ Welfare Boards and the cost of collection not exceeding one percent of the cess collected to the State Governments to whom it was proposed to delegate the authority to collect the cess.”

The Builders Association of India challenged the constitutional validity of BOCW Act and Cess Act before the Hon’ble Delhi High Court by way of writ petitions under Article 226 of the Constitution of India on the ground of lack of legislative competence in Parliament. It has been pleaded that BOCW Act is in fact law pertaining to buildings and since a cess is in fact a tax the subject matter of legislation falls under Entry 49 List II (State List) of the Seventh Schedule to the Constitution of India. In reply, it has been stated by the Union of India that the legislation is traceable to Entries 23 (social security and social insurance; employment and unemployment) and 24 (welfare of labour including conditions of work, etc.) of the Concurrent List (List III). It is submitted that in any event, even if the statutes under challenge cannot be explained with reference to any specific entry in List II and III, the legislations in question can certainly be justified under the residuary Entry 97 of List I (Union List).

The Division Bench of Delhi High Court by judgment dated 28.02.2007 reported in 139 (2007) Delhi Law Times 578 (DB) upheld the constitutional validity of the aforementioned Acts and dismissed the writ petitions filed by Builders Association of India.

Taking note of the delayed implementation of the aforementioned social legislations, the Hon’ble Delhi High Court observed:

“It is a matter of concern that although the BOCW Act and the Cess Act have been on the statute book since 1996 they were not notified for application in the NCT of Delhi till 2002. The reasons for this are not available despite the Court asking the learned Counsel for the Government of the NCT of Delhi to explain the inexcusable delay on the part of the Government in enforcing these labour welfare legislation. What adds to this concern is the apparent loss of revenue to the Government given the fact that in the past decade Delhi has witnessed the execution of a large number of construction contracts involving hundreds of crores. The corresponding loss of revenue to the Government on account of its failure to notify the BOCW Act and the Cess Act in Delhi till 2002 must be in no small measures. The beneficiary of such inaction by the Government has been, without doubt, the construction industry. The loser has been the building and construction worker for whose welfare the cess is supposed to have been collected. In effect the State has subsidized the cost of construction by not collecting cess which it was entitled to and this has been to the detriment of the workers. This failure on behalf of the State is questionable and should not be permitted to be perpetuated.

Even after the Act was notified in 2002, it was not until August, 2005, the Government of NCT of Delhi issued an order, which has been referred to earlier in this judgment, reminding the Government departments that such a law exist. There was a further three years’ delay in making known to the various State agencies their statutory responsibilities under the BOCW and the Cess Acts. This further delay is inexcusable. Significantly, it was only in January 2006 when the DMRC issued a Circular that most of the construction contractors rushed to this Court for interim orders. Till then they never bothered about their statutory obligation to pay cess.”