Supreme Court Bats for Construction Labourers, Issues Slew of Directions

“Construction workers do not assist only in building infrastructure, they also assist in building the nation, in their own small way."

The Supreme Court bench of Justices Madan B. Lokur and Deepak Gupta on Monday deplored the apathy of the Centre, state and union territory governments towards implementing two welfare laws enacted by the parliament in 1996 to augment the living conditions of construction workers and their families. In order to ensure meaningful implementation of these twin legislations, the apex court then issued a slew of directions to the authorities.

The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act) and the Building and Other Construction Workers Welfare Cess Act, 1996 (Cess Act) were enacted by parliament to fill the legislative void on the subject. It was done with the due consent of state governments and union territory administrations (UTAs).

The BOCW Act aims to ensure that building and construction workers are not exploited because of their poverty and their children do not suffer for lack of education, healthy living and whatever else it takes to live a life of dignity. The Cess Act enables the state governments and UTAs to collect a cess from every employer as defined in the BOCW Act to be utilised for the benefit of registered construction workers.

The cess so collected is 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.

The Supreme Court expressed its dismay that although more than Rs 37,400 crore has been collected under the Cess Act, only about Rs 9,500 crore has been utilised “ostensibly” for the benefit of construction workers.

The Centre filed several affidavits in the Supreme Court to indicate its helplessness in effectively implementing the two legislations despite several statutory directions issued by it. The affidavits filed by the state governments and the UTAs indicated a lack of understanding on how to spend the cess that had been collected. It appeared that the money was actually being used for purposes other than for the benefit of construction workers.

The Centre suggested to the Supreme Court in September 2015 that it intended to provide each construction worker with a universal access number so if he/she migrates to a different state, the benefit of registration would not get lost. Nor would the worker need to get registered in the other state. The Court found that though there were more than four crore construction workers, only about 1.5 crores had been registered with the concerned authorities.

The Shakespearean tragedy put to shame

Some state welfare boards had spent a part of the collected cess on entry tax/value-added tax for the washing machines and laptops purchased for construction workers. The court also found that huge amounts were being spent for administrative purposes thereby exceeding the 5% limit provided for in Section 24(3) of the BOCW Act. “As far as the beneficiaries were concerned, hardly 10% of the collected amount of cess was utilised for their benefit, even including the expenditure on washing machines and laptops”, the bench noted in its judgment.

On November 10 last year, the secretary in the labour ministry informed the Supreme Court that there had been an increase in the number of registered construction workers, from about 2.15 crores to about 2.8 crores. Increase in the collection of cess to Rs 37,000 crore and expenditure from about Rs 5,371 crore to about Rs 9,491 crores were also reported.

Unimpressed with the official claims, the bench observed that states and UTAs are only interested in announcing one scheme after another without giving any thought to the formulation of these schemes, monitoring their efficacy and supervising their implementation. “The implementation of these schemes appears to be only on paper,” the bench says.

The Centre disclosed in its affidavit dated October 9, 2015, that not a single State Advisory Committee, constituted for the purpose, held a meeting during the previous 12 months. The bench observed: “This is a clear indication that there is a total lack of concern and apathy on the part of the powers that be in doing anything substantial for the benefit of construction workers. This is indeed an extremely sorry state of affairs that puts a Shakespearean tragedy to shame”.

Troubling questions, elusive answers

The court asked:

“Can the State Governments and the UTAs or the Welfare Boards unjustly benefit and fill their coffers at the expense of unknown and helpless construction workers, some of whom are women and some having small children? These are questions for which we have not been provided any answers at all – it is entirely for the Government of India and Parliament to decide how to legally appropriate these thousands of crores of rupees and then utilize the amounts for the benefit of construction workers, at least for the future, assuming nothing can be done for the past. It is a mammoth task for which the powers that be must brace themselves, if they are serious in assisting people with multiple vulnerabilities.”

The court expressed its dismay that some of the construction workers – who were entitled to the benefits – did not receive any because of official apathy, and might have passed away, or might be untraceable or old enough to deserve a pension.

The bench passed scathing remarks against successive governments at the Centre and in states/UTs thus:

“Governance is not about mouthing platitudes, or framing good looking schemes, but about action and it is quite clear to us that insofar as the rights of construction workers are concerned, that vulnerable section of society has been badly let down by the governance structure.”

The number of construction workers has increased five-fold over the last 20 years, as estimated by the Ministry of Labour and Employment. In 1995-96, the number of construction workers was estimated to be in the region of 8.5 million (85 lakhs). The bench pointed out that the state apathy, in a situation like this, virtually amounts to the exploitation of construction workers, and if the state turns exploitative, there is little hope for vulnerable sections of society.

Huge discrepancy in cess collected

Moreover, the bench expressed its anguish over the huge discrepancy between the official figures on the collection of cess, and the figures presented by the Comptroller and Auditor General of India (CAG). The official figures record that the quantum of cess collected in one quarter from March 31, 2017, to June 30, 2017, was about Rs 5,000 crores.

This is a huge amount and would work out to about Rs 20,000 crore annual collection. But the bench felt this is perhaps the minimum – the cess collected could be much, much more, if the registration machinery and the collection machinery are strengthened and work to their potential.

Comparing this with the low figures presented by the CAG or the Standing Committee – which do not disclose such a huge collection – the bench observed:

“Obviously, there is something terribly rotten with the collection and accounting mechanism and it is quite clear that the exercise of registration, both of the establishments and of the construction workers is not being carried out satisfactorily”.

Directions and deadlines

The bench, therefore, directed the labour ministry, the state governments and the UTAs to put in place and strengthen the registration machinery, both for the registration of establishments as well as that of construction workers. “This should be done within a specified time-frame to be decided by them, but at the earliest”, the bench held.

Secondly, the bench directed them to establish and strengthen the machinery for the collection of cess.

Thirdly, the bench directed the labour ministry to frame one composite Model Scheme for the benefit of construction workers in consultation with all stakeholders, including NGOs working at the grassroots level with them. The bench found that it had not been possible to monitor the success of too many schemes – being run by the states, just for publicity.

However, it cautioned the labour ministry to ensure the Model Scheme is comprehensive, can easily be implemented, is pragmatic and does not involve too much paperwork. The Model Scheme, the bench made it clear, must include issues and concerns of education, health, social security, old age and disability pension and other benefits that are necessary for living a life of dignity.   The Model Scheme should be prepared and publicised before September 30, the bench held.

The bench asked the CAG to take stock of issues and problems pertaining to the implementation of the BOCW Act and to ensure that effective and meaningful audits are carried out, keeping in view that huge amounts are involved.

Periodical conduct of the social audit, the constitution of a State Advisory Committee to meet at least once in six months and an Expert Committee to frame statutory rules under Section 62 of the BOCW Act before September 30 are among the bench’s other directions.

Appointment of registering officers, establishment of a Welfare Board and Welfare Fund, issue of identity cards to all construction workers and their registration are some other.

The labour ministry was also directed to consider making available to the construction workers the benefits of the Maternity Benefit Act, 1961, the Minimum Wages Act, 1948, the Employees State Insurance Act, 1948, the Employees Provident Funds and Miscellaneous Provisions Act, 1952, as well as (to the extent possible) the Mahatma Gandhi National Rural Employment Guarantee Act, 2005.

The bench also asked the Centre to consider whether railways, defence and other establishments could be brought within the purview of the BOCW Act.

“Construction workers do not assist only in building infrastructure, they also assist in building the nation, in their own small way,” the bench observed. The bench will review compliance with its directions on May 1.