1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 2014 of 2020
(Arising out of SLP(C) No 2150 of 2020)
The Joint Labour Commissioner and
Registering Officer and Anr Appellants
Versus
Kesar Lal Respondent
J U D G M E N T
Dr Dhananjaya Y Chandrachud, J
1 The neat issue which has to be adjudicated upon in this appeal is whether a
construction worker who is registered under the Building and Other Construction
Workers’ (Regulation of Employment and Conditions of Service) Act, 19961 and is a
beneficiary of the Scheme made under the Rules framed pursuant to the enactment, is a
‘consumer’ within the meaning of Section 2(d) of the Consumer Protection Act 1986. The
issue assumes significance because the answer will determine whether a beneficiary of
a statutory welfare scheme is entitled to exact accountability by invoking the remedies
under the Consumer Protection Act 1986.
1 Act of 1996
2
2 Parliament enacted the Act of 1996 “to regulate the employment and conditions of
service of building and other construction workers and to provide for their safety, health
and welfare measures and for other matters connected therewith or with incidental
thereto”. In pursuance of the rule-making powers conferred by Sections 40 and 62, the
Union Government has framed the Building and Other Construction Workers’ (Regulation
of Employment and Conditions of Service) Rules, 1998. The State of Rajasthan has also
framed the Rajasthan Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Rules in 20092
. In pursuance of the provisions
contained in Section 18, the State government constituted the Rajasthan Building and
Other Construction Workers Welfare Board. The Welfare Board has formulated several
schemes for beneficiaries registered under the Act. One of the schemes which was
formulated on 1 August 2011 is for rendering financial assistance on the occasion of the
marriage of a daughter of a beneficiary. The scheme envisages that financial assistance
of Rs 51,000 is provided on the occasion of marriage, subject to a limit of assistance on
two occasions.
3 The respondent obtained a Labour Beneficiary Identity Card on 29 December 2011
under the Welfare Board from the appellants after depositing the registration fee of Rs 25
and an annual contribution of Rs 60. The identity card was valid for a period of one year,
from 29 December 2011 to 28 December 2012. Seeking to avail financial aid under the
scheme, the respondent submitted an application on 6 November 2012 in anticipation of
2 Rules of 2009
3
the marriage of his daughter which was to take place on 24 November 2012. Nine months
after the application was submitted, the Joint Commissioner of Labour, Jaipur issued an
order of rejection covering 327 such applications, finding technical defects as a ground
for the decision. The order reads thus:
“Upon scrutiny of applications received in this office, following
points are found to be incomplete like incomplete application
form, incompleteness of certificate of the planner in Form ‘B’,
non-correctness of birth certificate, submission of application
after solemnization of marriage and non-submission of affidavit
or absence of some information in application and letter was
issued reminding to complete the details, and upon nonsubmission of any answer to that in the office, it is not possible
to grant the marriage assistance amount hence in following
matters (list of 327 cases is annexed) the application for the
marriage assistance are rejected.”
4 The respondent instituted a consumer complaint before the District Consumer
Disputes Redressal Forum3
. The complaint was dismissed on 6 October 2016. In appeal,
the State Consumer Disputes Redressal Commission4 set aside the order of the District
Forum on 20 August 2019 and directed the appellants to pay an amount of Rs 51,000 to
the respondent together with Rs 10,000 as compensation, Rs 5,000 for expenses and
interest of 18 per cent per annum from the date of the institution of the complaint. The
National Consumer Disputes Redressal Commission5 by its judgment and order dated
25 October 2019 affirmed the decision, overruling the objection that the respondent is not
a ‘consumer’ within the meaning of the Consumer Protection Act 1986. The National
Commission, however, reduced the rate of interest from 18 percent per annum to 9
3 District Forum
4 State Commission
5 National Commission
4
percent per annum. The present appeal has arisen from the order of the National
Commission.
5 On 27 January 2000, the appellants stated before this Court that the amount which
was awarded to the respondent would be paid. The appellants, however, pressed the
question of law. Instead of saddling the respondent who is a construction worker with the
insuperable burden of defending the proceedings before this Court, we requested Mr PV
Dinesh, learned counsel to assist the Court as amicus curiae. We wish to record our
appreciation of the able and objective assistance which has been rendered to the Court
by Mr PV Dinesh.
6 Dr Manish Singhvi, learned Senior Counsel appearing on behalf of the appellants,
urged the following submissions:
(i) Parliament enacted the Building and Other Construction Workers Welfare
Cess Act, 19966
. The cess which is collected under the Act is contributed to the
fund. The fund is defined both under the Cess Act of 1996 as well as the Act of
1996. The cess which is collected forms a part of the Welfare Board constituted
under Section 24(1). The collection of the cess which runs into thousands of crores
becomes part of the fund which is generated from the compulsory exaction from
employers who engage construction workers;
(ii) A circular was issued on 25 January 2011 by the State of Rajasthan for the
registration of construction workers. Under the circular, at the relevant point of
6 The Cess Act
5
time, an amount of Rs 25 was to be deposited as subscription fee for the
preparation of an identification card while Rs 60 per year was charged as a
contribution under Section 16(1) of the Act of 1996. On 24 November 2015 the
subscription was reduced to Re 1 per month (Rs 12 per annum) so as to comprise
of a payment of Rs 60 for a period of five years. This contribution is in the nature
of a token amount to ensure registration and identification of building workers who
can avail of the benefits under the Act of 1996 and even this contribution can be
relaxed under the proviso to Section 16(1) upon the satisfaction of the Board that
the beneficiary is unable to pay the contribution;
(iii) About 22,46,904 workers have been registered under the Act of 1996, out
of which about 64,678 have benefited under the scheme between 2010-11 and
2019-20. Out of a cess of Rs 2,671 crores which has been collected, about Rs
1,488 crores is expended for the welfare schemes. The welfare schemes are
funded by the cess and not by the contributions made under Section 16(1).
Between 2010 and 2020, the contribution of the workers is Rs 27.92 crores which
is meagre in comparison to the expenditure on the welfare schemes;
(iv) The welfare schemes initiated by the State government are to keep up with
the rapid expansion of welfare activities. The cess which is collected under the
Cess Act is for a specific purpose. The cess is nothing but a tax under Article
366(28) of the Constitution;
6
(v) Undoubtedly, where the state for its multifarious functions, charges a fee
and services are rendered on a quid pro quo basis, the activities of the State would
be amenable to the jurisdiction of a consumer forum when a complaint of
deficiency of service is made;
(vi) On the other hand, where the State commits itself to welfare schemes and
a negligible amount is charged in token of the services which are rendered, the
beneficiary of a service is not a ‘consumer’ within the meaning of Section 2(d) of
the Consumer Protection Act 1986. Such services are primarily financed out of
budgetary allocations. In the present case, though a service is rendered by the
Board, the expenditure on the welfare scheme is defrayed from the cess which is
collected and hence, is not a ‘service’ within the meaning of Consumer Protection
Act 1986;
(vii) In Bihar School Examination Board v Suresh Prasad Sinha7
(“Bihar
School Examination Board”) this Court held that where a statutory function was
being discharged by a public examination authority, a student aggrieved by the
evaluation of the answer was not a ‘consumer’ nor was the Board a ‘service
provider’. On a parity of reasoning, the Welfare Board is not a service provider
under the Consumer Protection Act 1986;
(viii) In the two decisions of this Court in Regional Provident Commissioner v
Shiv Kumar Joshi8
(“Shiv Kumar Joshi”) and Regional Provident Fund
7
(2009) 8 SCC 483
8
(2000) 1 SCC 98
7
Commissioner v Bhawani9
, it was held that the Regional Provident Fund
Commissioner is a service provider within the meaning of Section 2(1)(o) of the
Consumer Protection Act 1986. These decisions are sought to be distinguished on
the ground that the corpus of the EPF scheme is contributed by the employers and
the employees, there being no contribution by the State out of the tax revenues. In
a recent judgment of this Court in Ministry of Water Resources v Shreepat Rao
Kamde10 (“Shreepat Rao Kamde”) decided on 6 November 2019, it has been held
that a government servant who makes a contribution to the General Provident
Fund lies outside the purview of the Consumer Protection Act 1986; and
(ix) The edifice of the Consumer Protection Act 1986 is to codify a remedy for a
contractual or commercial transaction in substitution of the remedy of filing a civil
suit. The enactment of the Consumer Protection Act 1986 does not cover a
redressal mechanism for an injury which is caused absent a commercial or
business transaction. The Act will not cover the services provided by the State in
the discharge of its welfare functions which are highly subsidized or free.
7 Mr PV Dinesh, learned amicus curiae has, in his detailed written submissions,
controverted the logic of the approach which has been adopted by the appellants. Mr
Dinesh submits that the salient features of the Act and the Rules are as follows:
(i) A construction worker is a ‘beneficiary’ under the Act, Rules and the
Schemes which have been framed;
9
(2008) 7 SCC 111
10 Civil Appeal No 8472 of 2019
8
(ii) Under Section 12, every worker should be registered as a beneficiary.
Section 12(3) provides that an application must be submitted with documents
together with a fee not exceeding Rs 50 as may be prescribed;
(iii) Section 18 deals with the constitution of the State Welfare Board which is a
body corporate having perpetual succession and a common seal;
(iv) Section 24 requires the constitution of a Workers Welfare Fund into which
the contribution of the beneficiaries is credited. The provisions of Rules 28 and 43
implement Section 24.
(v) Under Rule 43(b), the contribution paid by a beneficiary forms a part of the
fund together with grants, loans, sums received by the Board and advances from
the Union or State Governments, local authorities and other resources as decided
by the Central or State Governments;
(vi) Rule 45 deals with the contribution to be made by each beneficiary and the
consequence of non-contribution;
(vii) Rules 58, 59 and 60 deal with the notification of various welfare schemes.
8 Based on the above provisions of the Act and the Rules, Mr PV Dinesh submitted
that:
(i) Every construction worker who is a beneficiary under the Act and the Rules
is a contributor to the workers’ welfare fund, and the service which is provided is
not gratuitous;
(ii) The welfare schemes which are implemented by the Board cannot be
construed as a sovereign function. The State Welfare Board is a body corporate
9
which is capable of suing and being sued;
(iii) Though the claims of benefits provided under the scheme are higher than
the contribution by the worker – beneficiary, this cannot be a reason to hold that it
is not a contribution;
(iv) In the context of the denial of insurance claims, this Court while construing
the provisions of Section 2(d) of the Consumer Protection Act 1986, has held in
Canara Bank v United India Insurance Company Limited11 (“Canara Bank”)
that even a beneficiary who is not a party to the contract is a ‘consumer’ under the
Act;
(v) In the present case, there was a gross deficiency of service on the part of
the appellants and the denial of benefits under the welfare scheme was casual and
mechanical. A poor construction worker was constrained to approach the
consumer court, faced with the rejection of his application on the specious ground
that it was not accompanied by an application for exemption from the procedural
requirement of submitting it 90 days before the marriage of his daughter. The
defect, if any, was curable and not fatal; and
(vi) The remedy under the Consumer Protection Act 1986 is a valuable provision
made by the Parliament to provide access to justice and the purpose embedded
in the Consumer Protection Act 1986 will be defeated if a construction worker is
required to approach a civil court or the writ jurisdiction under Article 226 to seek
relief of a small claim.
11 2020 SCC Online SC 132
10
In this context, reliance has been placed on the decisions in Lucknow Development
Authority v M.K. Gupta12 (“Lucknow Development Authority”), Shiv Kumar Joshi
and Punjab Urban Planning and Development Authority (now GLADA) v Vidya
Chetal13 (“Vidya Chetal”).
9 The rival submissions will now be analysed.
10 Before we deal with the specific issues of law which have been raised in these
proceedings, we begin with a reference to a judgment of a two Judge bench of this Court
in National Campaign Committee for the Central Legislation on Construction
Labour v Union of India14. The judgment of this Court took note of the status of the
implementation of the Act of 1996 and the Cess Act. Reviewing the status of
implementation across the country, Justice Madan B Lokur prefaced the judgment with
the following observations:
“Symbolic justice—there is nothing more to offer to
several millions of construction workers in the
unorganised sector—not social justice, not economic
justice. The reason is quite simple. No State Government
and no Union Territory Administration (UTA) seems
willing to fully adhere to and abide by (or is perhaps even
capable of fully adhering to and abiding by) two laws
solemnly enacted by Parliament, namely, the Building and
Other Construction Workers' (Regulation of Employment and
Conditions of Service) Act, 1996 (the BOCW Act) and the
Building and Other Construction Workers' Welfare Cess Act,
1996 (the Cess Act). Directions given by this Court from
time to time to implement the two laws have been flouted
with impunity. What is equally tragic is that multiple
directions issued even by the Government of India under
12 (1994) 1 SCC 243
13 (2019) 9 SCC 83
14 (2018) 5 SCC 607
11
Section 60 of the BOCW Act have been disregarded by State
Governments and UTAs — and this is candidly admitted in a
statement made by the learned Additional Solicitor General in
this Court and also by the Union of India on affidavit.
Hopefully, the gravity of the situation in the constitutional
and federal context, the human rights and social justice
context will be realised by someone, somewhere and at
some time.” (emphasis supplied)
The Court noted that more than Rs 37,400 crores has been collected for the benefit of
construction workers under the Cess Act of which only an amount of Rs 9,500 crores has
been utilized, ostensibly for their benefit. The Court emphasised that these laws were
enacted to implement the Directive Principles of State Policy contained in Articles 39 and
42 of the Constitution and for enforcing the right to life under Article 21. The Court
observed that monies which have been earmarked for construction workers had not been
spent, and a clear picture emerges about the shocking state of affairs in regard to the
welfare boards across the country. The Court noted:
“…Overall, the affidavits gave a clear picture of a shocking
state of affairs inasmuch as some Welfare Boards had
expenditure out of the collected cess for payment of entry
tax/value added tax, purchase of washing machines for
construction workers and purchase of laptops for
construction workers. This Court found that rather
astonishing since it appeared that there was no rationale in
providing washing machines and laptops to construction
workers who were by and large poor and uneducated as well
as migrant labour…” (emphasis supplied)
Adverting to the vulnerabilities of the construction workers, the Court noted:
“What makes the situation even worse is that many of the
construction workers are believed to be women and at least
some of them have small children to look after. That even they
12
are victims of official apathy truly reflects a very sad state of
affairs, and the loss already caused to them and other
construction workers cannot be remedied. The reason for this
is that it is not known which construction worker is entitled to
get how much in terms of money or what benefit and under
which scheme. Some of these construction workers from the
1990s and even later, may perhaps have unfortunately passed
away or might be untraceable or old enough to deserve a
pension. The question therefore is: what should be done with
the thousands of crores that have been collected for the benefit
of construction workers but cannot be utilised for their benefit?
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 utilise 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 position in the State of Rajasthan was specifically mentioned in the judgment with
regard to the failure to utilize the cess which was collected. The judgment noted that
though in 2011-12, an amount of Rs 154.01 crores was collected, no figures for
expenditure were submitted. For 2012-13, an amount of Rs 173.83 crores was collected
while the expenditure incurred for various schemes was only Rs 11.95 crores. In 2013-
14, an amount of Rs 251.95 crores was collected, of which only Rs 25.93 crores was
spent.
11 The appellants have been entrusted with the solemn duty of enforcing and
implementing the provisions of the welfare legislation which has been enacted by
Parliament specifically to ameliorate the plight of construction workers. Construction
13
workers belong to the unorganized sector of the economy. Many among them are
women. Child labour is rampant. Their vulnerabilities have been attempted to be
safeguarded by a law which unfortunately has not been implemented either in letter, or
in spirit. Yet, we have in the present case, the spectacle of a statutory welfare board
seeking to exempt itself from being held accountable to the remedies provided under the
Consumer Protection Act 1986. The submission which has been urged before the Court,
simply put, boils down to this: the beneficiaries of the service pay such a meagre amount
as contributions that they cannot be regarded as ‘consumers’ within the meaning of
Section 2(d) of the Consumer Protection Act 1986. That is the submission which now
falls for consideration.
12 Section 2(d) of the Consumer Protection Act 1986 provides as follows:
“(d) “consumer” means any person who,—
(i) buys any goods for a consideration which has been paid or
promised or partly paid and partly promised, or under any
system of deferred payment and includes any user of such
goods other than the person who buys such goods for
consideration paid or promised or partly paid or partly
promised, or under any system of deferred payment when
such use is made with the approval of such person, but does
not include a person who obtains such goods for resale or for
any commercial purpose; or
(ii) [hires or avails of] any services for a consideration which
has been paid or promised or partly paid and partly promised,
or under any system of deferred payment and includes any
beneficiary of such services other than the person who 8[hires
or avails of] the services for consideration paid or promised,
or partly paid and partly promised, or under any system of
deferred payment, when such services are availed of with the
approval of the first mentioned person [but does not include a
person who avails of such services for any commercial
purpose];
[Explanation.—For the purposes of this clause, “commercial
purpose” does not include use by a person of goods bought
14
and used by him and services availed by him exclusively for
the purposes of earning his livelihood by means of selfemployment; ]”
In relation to a service, the definition of the expression incorporates in the first part any
person who hires or avails of any service for a consideration which has been paid or
promised (wholly or in part). In its latter component, the definition includes the beneficiary
of such a service other than the person who actually avails of the service for consideration
paid or promised, so long as such services are availed of with the approval of the person
who hires or avails of the service for consideration. The ambit of the first component of
the expression in Section 2(d)(ii) is expanded by the inclusive definition in the latter
component. This was noticed in the judgment of a two Judge bench of this Court in
Lucknow Development Authority where Justice RM Sahai, speaking for the Court,
explained the ambit of Section 2(d):
“It is in two parts. The first deals with goods and the other with
services. Both parts first declare the meaning of goods and
services by use of wide expressions. Their ambit is further
enlarged by use of inclusive clause. For instance, it is not only
purchaser of goods or hirer of services but even those who use
the goods or who are beneficiaries of services with approval of
the person who purchased the goods or who hired services are
included in it..”
Emphasising the accountability of public authorities, the Court observed:
“Under our Constitution sovereignty vests in the people. Every
limb of the constitutional machinery is obliged to be people
oriented. No functionary in exercise of statutory power can
claim immunity, except to the extent protected by the statute
itself. Public authorities acting in violation of constitutional or
statutory provisions oppressively are accountable for their
behavior before authorities created under the statute like the
commission or the courts entrusted with responsibility of
15
maintaining the rule of law. Each hierarchy in the Act is
empowered to entertain a complaint by the consumer for value
of the goods or services and compensation…”
In Shiv Kumar Joshi, a Bench of two learned Judges of this Court held that the
invocation of the remedies under the Consumer Protection Act 1986 is permissible
against the Provident Fund Commissioner by a member of the Employees’ Provident
Fund Scheme. The Court held that the Regional Provident Fund Commissioner
discharges a statutory function and is not delegated with any of the sovereign powers of
the State. In that context, the Court held:
“…The definition of “consumer” under the Act includes not only
the person who hires the “services” for consideration but also
the beneficiary, for whose benefits such services are hired.
Even if it is held that administrative charges are paid by the
Central Government and no part of it is paid by the employee,
the services of the Provident Fund Commissioner in running
the Scheme shall be deemed to have been availed of for
consideration by the Central Government for the benefit of
employees who would be treated as beneficiaries within the
meaning of that word used in the definition of “consumer”...”
The Court rejected the submission that the services which are provided under the EPF
Scheme are rendered free of charge and therefore, would not qualify as a service under
the Consumer Protection Act 1986. The same view has been reiterated by a Bench of
three learned Judges of this Court in Vidya Chetal. The reference before the three Judge
Bench arose upon a doubt having been expressed in regard to the correctness of the
decision of a two Judge Bench in HUDA v Sunita15
. The issue was whether the National
Commission lacks the jurisdiction to decide the legitimacy of a demand for a composition
15 (2005) 2 SCC 479
16
fee and an extension fee on a challenge that there was a deficiency in service. Referring
to the definition of the expression ‘service’ in Section 2(1)(o)16
, the Court held:
“This definition is not exhaustive, rather the legislature has left
the task to expound the provision on a case-to-case basis to
the judiciary. The purpose of leaving this provision open ended,
without providing an exhaustive list indicates the requirement
for a liberal interpretation. Broadly speaking, it is inclusive of all
those services performed for a consideration, except gratuitous
services and contract of personal services. Moreover, the
aforesaid provision reflects the legislative intent of providing
impetus to “consumerism”. It may be noted that such a
phenomenon has had a benevolent effect on the government
undertakings, wherein a new dynamism of innovation,
accountability and transparency are imbibed.”
Justice NV Ramana, speaking for the three Judge Bench, noted that all statutory
obligations are not sovereign functions. Although sovereign functions/services are
regulated and performed under a constitutional/statutory framework, yet there are other
functions, which may be statutory, but cannot be called as sovereign functions. The Court
held:
“..if the statutory authority, other than the core sovereign
duties, is providing service, which is encompassed under the
Act, then, unless any statute exempts, or provides for
immunity, for deficiency in service, or specifically provides for
an alternative forum, the consumer forums would continue to
have the jurisdiction to deal with the same. We need to caution
against over-inclusivity and the tribunals need to satisfy the
ingredients under Consumer Protection Laws, before
exercising the jurisdiction.”
16 2. (1)(o) “service” means service of any description which is made available to potential users and includes, but not
limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of
electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of
news or other information, but does not include the rendering of any service free of charge or under a contract of personal
service;”
17
In the view of the Court:
“Therefore, it is a clearly established principle that certain
statutory dues, such as fees, can arise out of a specific
relation. Such statutory dues might be charged as a quid pro
quo for a privilege conferred or for a service rendered by the
authority. As noted above, there are exactions which are for
the common burden, like taxes, there are dues for a specific
purpose, like cess, and there are dues in lieu of a specific
service rendered. Therefore, it is clear from the above
discussion that not all statutory dues/exactions are amenable
to the jurisdiction of the consumer forum, rather only those
exactions which are exacted for a service rendered, would be
amenable to the jurisdiction of the consumer forum.”
A Bench of two learned judges has in Canara Bank elaborated upon the width of the
definition contained in Section 2(d)(ii) in relation to the availing or hiring of services.
Justice Deepak Gupta, speaking for the Bench, held:
“..As far as the definition of the consumer in relation to hiring
or availing of services is concerned, the definition, in our view,
is much wider. In this part of the section, consumer includes
not only the person who has hired or availed of the services but
also includes any beneficiary of such services. Therefore, an
insured could be a person who hires or avails of the services
of the insurance company but there could be many other
persons who could be the beneficiaries of the services. It is not
necessary that those beneficiaries should be parties to the
contract of insurance. They are the consumers not because
they are parties to the contract of insurance but because they
are the beneficiaries of the policy taken out by the insured.”
The Court consequently came to the conclusion that a beneficiary of a service, in the
context of a contract of insurance, need not be a party to the contract. Beneficiaries fall
within the purview of the expression ‘consumer’.
18
In Bihar School Examination Board, the question before the Court was whether a
statutory School Examination Board falls within the purview of the Consumer Protection
Act 1986 when it performs a statutory function of conducting examinations. A two judge
Bench of this Court held that the fee paid by a student to the Board for the conduct of
examinations does not amount to a ‘consideration’ paid for a service. Justice Markandey
Katju, speaking for the Court observed:
“When the Examination Board conducts an examination in
discharge of its statutory function, it does not offer its “services”
to any candidate. Nor does a student who participates in the
examination conducted by the Board, hire or avail of any
service from the Board for a consideration. On the other hand,
a candidate who participates in the examination conducted by
the Board, is a person who has undergone a course of study
and who requests the Board to test him as to whether he has
imbibed sufficient knowledge to be fit to be declared as having
successfully completed the said course of education; and if so,
determine his position or rank or competence vis-à-vis other
examinees. The process is not, therefore, availment of a
service by a student, but participation in a general
examination conducted by the Board to ascertain whether
he is eligible and fit to be considered as having
successfully completed the secondary education course.
The examination fee paid by the student is not the
consideration for availment of any service, but the charge
paid for the privilege of participation in the examination.”
(Emphasis supplied)
In Shreepat Rao Kamde, the issue before the Court was whether a subscriber to the
General Provident Fund fulfills the definition of being a ‘consumer’ within the meaning of
the Consumer Protection Act 1986. The issue had been considered in an earlier decision
of this Court in Jagmittar Sain Bhagat v Director, Health Services, Haryana17
, and
17 (2013) 10 SCC 136
19
was answered in the negative, holding that a government servant is entitled to claim
retiral benefits strictly in accordance with the regulations governing the conditions of
service and the statutory rules for which the appropriate forum for redressal would be the
State Administrative Tribunal, if any, or the civil court but not the consumer forum. It was
held thus:
“…it is evident that by no stretch of imagination can a
government servant raise any dispute regarding his
service conditions or for payment of gratuity or GPF or any
of his retiral benefits before any of the forum under the
Act. The government servant does not fall under the
definition of a “consumer” as defined under Section
2(1)(d)(ii) of the Act. Such government servant is entitled to
claim his retiral benefits strictly in accordance with his service
conditions and regulations or statutory rules framed for that
purpose. The appropriate forum, for redressal of any of his
grievance, may be the State Administrative Tribunal, if any, or
the civil court but certainly not a forum under the Act.”
(Emphasis added)
This decision was followed by the two judge Bench in Shreepat Rao Kamde. Justice
Uday Umesh Lalit noted that in view of the earlier decision, a consumer complaint in
regard to the dues payable under the GPF was not amenable under the Consumer
Protection Act 1986.
13 Now it is in this context that it is necessary to briefly advert to the provisions of the
Act of 1996. The expression ‘beneficiary’ is defined in Section 2(b) to mean ‘a building
worker registered under Section 12’. The expression ‘fund’ is defined in Section 2(k) to
mean ‘the Building and Other Construction Workers Welfare Fund of a Board constituted
under sub-section (1) of Section 24’. Section 11 speaks of the beneficiaries of the fund:
20
“11. Beneficiaries of the Fund:-Subject to the provisions of
this Act, every building worker registered as a beneficiary
under this Act shall be entitled to the benefits provided by the
Board from its Fund under this Act.”
Hence, every building worker who is registered as a beneficiary under the enactment is
entitled to the benefits provided by the Board from the fund. Section 16 requires a building
worker who has been registered as a beneficiary to make a contribution:
“16. Contribution of building workers:- (1) A building worker
who has been registered as a beneficiary under this Act shall,
until he attains the age of sixty years, contribute to the Fund at
such rate per mensem, as may be specified by the State
Government, by notification in the Official Gazette and different
rates of contribution may be specified for different classes of
building workers:
Provided that the Board may, if satisfied that a beneficiary is
unable to pay his contribution due to any financial hardship,
waive the payment of contribution for a period not exceeding
three months at a time.
(2) A beneficiary may authorise his employer to deduct his
contribution from his monthly wages and to remit the same,
within fifteen days from such deduction, to the Board.”
The effect of a non-payment of the contribution under sub-section (1) of Section 16 for a
continuous period of not less than one year is that under Section 17 the individual ceases
to be a beneficiary. However, under the proviso, a person who is in default is allowed to
deposit the arrears if there was sufficient ground to satisfy the secretary of the Board in
regard to the non-payment of the contribution, upon which the registration is to stand
restored. Section 18 provides for the constitution of the State Welfare Boards. Section
22 provides for the functions of the Board in the following terms:
“22. Functions of the Boards:-(1) The Board may—
(a) provide immediate assistance to a beneficiary in case of
accident;
21
(b) make payment of pension to the beneficiaries who have
completed the age of sixty years;
(c) sanction loans and advances to a beneficiary for
construction of a house not exceeding such amount and on
such terms and conditions as may be prescribed;
(d) pay such amount in connection with premia for Group
Insurance Scheme of the beneficiaries as may be prescribed;
(e) give such financial assistance for the education of children
of the beneficiaries as may be prescribed;
(f) meet such medical expenses for treatment of major
ailments of a beneficiary or, such dependent, as may be
prescribed;
(g) make payment of maternity benefit to the female
beneficiaries; and
(h) make provision and improvement of such other welfare
measures and facilities as may be prescribed.
(2) The Board may grant loan or subsidy to a local authority
or an employer in aid of any scheme approved by the State
Government for the purpose connected with the welfare of
building workers in any establishment.
(3) The Board may pay annually grants-in-aid to a local
authority or to an employer who provides to the satisfaction of
the Board welfare measures and facilities of the standard
specified by the Board for the benefit of the building workers
and the members of their family, so, however that the amount
payable as grants-in-aid to any local authority or employer
shall not exceed—
(a) the amount spent in providing welfare measures and
facilities as determined by the State Government or any
person specified by it in this behalf, or
(b) such amount as may be prescribed.
whichever is less:
Provided that no grant-in-aid shall be payable in respect of
any such welfare measures and facilities where the amount
spent thereon determined as aforesaid is less than the
amount prescribed in this behalf.”
Under Section 24, the statute has provided for the constitution of a welfare fund into which
are credited (i) grants and loans made to the Board by the Central government; (ii)
contributions made by the beneficiaries; and (iii) sums received by the Board from other
22
sources as decided by the Central government. The fund is applied, under sub-section
(2) of Section 24 to meet the expenses of the Board in the discharge of its statutory
functions; towards payment of salaries, allowances and remuneration and for meeting
the expenses on objects and for purposes authorized by the Act. The Rules of 2009 have
been framed in terms of the provisions governing the rule making power. Rule 43
provides for the constitution of the welfare fund. Rule 44 provides for the registration of
building workers as beneficiaries. Rule 45 provides for contributions to the fund:
“45. Contribution to the Fund.-(1) A beneficiary of the fund
shall contribute to the fund at such rate per mensem as may
be notified by the State Government under section 16 of the
Act. This contribution shall be remitted in advance once in
three months in any of the banks specified by the Board in the
district in which the member resides.
(2) If a beneficiary commits default in the payment of
contribution continuously for a period of one year, he shall
cease to be beneficiary of the Fund. However, with the
permission of the Secretary or an officer authorized by him in
this behalf the membership may be resumed on repayment of
arrears of contribution with a fine of Rs 2 per month subject to
the condition that such resumption shall not be allowed more
than twice.”
Rule 52 provides for the expenditure from the fund. Under Rule 58, the Board is
empowered to notify schemes regarding benefits. The Board has been entrusted with
specific functions which have been defined in Section 22. These functions squarely fall
within the definition of the expression ‘service’ within the meaning of Section 2(1)(o) of
the Consumer Protection Act 1986. The expression ‘service’ has been defined in the
widest possible terms to mean ‘service of any description which is made available to
potential users’. The exception in Section 2(1)(o) is a service which is rendered free of
23
charge. The workers who are registered under the provisions of the Act of 1996 are
beneficiaries of the schemes made by the Board. Upon registration, every worker is
required to make a contribution to the fund at such rate per month as may be prescribed
by the State government. The fund into which the contributions by persons who are
registered under the Act are remitted, comprises among other sources, the contributions
made by the beneficiaries. The fund is applied inter alia for meeting the expenses
incurred to fulfill the objects and purposes authorized by the legislation. In view of the
statutory scheme, the services which are rendered by the Board to the beneficiaries are
not services which are provided free of charge so as to constitute an exclusion from the
statutory definition contained in Section 2(1)(o) and Section 2(d)(ii) of the Consumer
Protection Act 1986. The true test is not whether the amount which has been contributed
by the beneficiary is adequate to defray the entire cost of the expenditure envisaged
under the scheme. So long as the service which has been rendered is not rendered free
of charge, any deficiency of service is amenable to the fora for redressal constituted
under the Consumer Protection Act 1986. The Act does not require an enquiry into
whether the cost of providing the service is entirely defrayed from the price which is paid
for availing of the service. As we have seen from the definition contained in Section
2(1)(d), a ‘consumer’ includes not only a person who has hired or availed of service but
even a beneficiary of a service. The registered workers are clearly beneficiaries of the
service provided by the Board in a statutory capacity.
14 As a matter of interpretation, the provisions contained in the Consumer Protection
Act 1986 must be construed in a purposive manner. Parliament has provided a salutary
24
remedy to consumers of both goods and services. Public authorities such as the
appellants who have been constituted under an enactment of Parliament are entrusted
with a solemn duty of providing welfare services to registered workers. The workers who
are registered with the Board make contributions on the basis of which they are entitled
to avail of the services provided in terms of the schemes notified by the Board. Public
accountability is a significant consideration which underlies the provisions of the
Consumer Protection Act 1986. The evolution of jurisprudence in relation to the
enactment reflects the need to ensure a sense of public accountability by allowing
consumers a redressal in the context of the discharge of non-sovereign functions which
are not rendered free of charge. This test is duly met in the present case.
15 Consequently, and for the reasons that we have indicated, there is no reason to
interfere with the ultimate decision of the State Commission to award the claim, subject
to the modification of the rate of interest by the order of the National Commission. The
appeal shall accordingly stand dismissed. There shall be no order as to costs.
…………...…...….......………………........J.
[Dr Dhananjaya Y Chandrachud]
…..…..…....…........……………….…........J.
[Ajay Rastogi]
New Delhi;
March 17, 2020.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 2014 of 2020
(Arising out of SLP(C) No 2150 of 2020)
The Joint Labour Commissioner and
Registering Officer and Anr Appellants
Versus
Kesar Lal Respondent
J U D G M E N T
Dr Dhananjaya Y Chandrachud, J
1 The neat issue which has to be adjudicated upon in this appeal is whether a
construction worker who is registered under the Building and Other Construction
Workers’ (Regulation of Employment and Conditions of Service) Act, 19961 and is a
beneficiary of the Scheme made under the Rules framed pursuant to the enactment, is a
‘consumer’ within the meaning of Section 2(d) of the Consumer Protection Act 1986. The
issue assumes significance because the answer will determine whether a beneficiary of
a statutory welfare scheme is entitled to exact accountability by invoking the remedies
under the Consumer Protection Act 1986.
1 Act of 1996
2
2 Parliament enacted the Act of 1996 “to regulate the employment and conditions of
service of building and other construction workers and to provide for their safety, health
and welfare measures and for other matters connected therewith or with incidental
thereto”. In pursuance of the rule-making powers conferred by Sections 40 and 62, the
Union Government has framed the Building and Other Construction Workers’ (Regulation
of Employment and Conditions of Service) Rules, 1998. The State of Rajasthan has also
framed the Rajasthan Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Rules in 20092
. In pursuance of the provisions
contained in Section 18, the State government constituted the Rajasthan Building and
Other Construction Workers Welfare Board. The Welfare Board has formulated several
schemes for beneficiaries registered under the Act. One of the schemes which was
formulated on 1 August 2011 is for rendering financial assistance on the occasion of the
marriage of a daughter of a beneficiary. The scheme envisages that financial assistance
of Rs 51,000 is provided on the occasion of marriage, subject to a limit of assistance on
two occasions.
3 The respondent obtained a Labour Beneficiary Identity Card on 29 December 2011
under the Welfare Board from the appellants after depositing the registration fee of Rs 25
and an annual contribution of Rs 60. The identity card was valid for a period of one year,
from 29 December 2011 to 28 December 2012. Seeking to avail financial aid under the
scheme, the respondent submitted an application on 6 November 2012 in anticipation of
2 Rules of 2009
3
the marriage of his daughter which was to take place on 24 November 2012. Nine months
after the application was submitted, the Joint Commissioner of Labour, Jaipur issued an
order of rejection covering 327 such applications, finding technical defects as a ground
for the decision. The order reads thus:
“Upon scrutiny of applications received in this office, following
points are found to be incomplete like incomplete application
form, incompleteness of certificate of the planner in Form ‘B’,
non-correctness of birth certificate, submission of application
after solemnization of marriage and non-submission of affidavit
or absence of some information in application and letter was
issued reminding to complete the details, and upon nonsubmission of any answer to that in the office, it is not possible
to grant the marriage assistance amount hence in following
matters (list of 327 cases is annexed) the application for the
marriage assistance are rejected.”
4 The respondent instituted a consumer complaint before the District Consumer
Disputes Redressal Forum3
. The complaint was dismissed on 6 October 2016. In appeal,
the State Consumer Disputes Redressal Commission4 set aside the order of the District
Forum on 20 August 2019 and directed the appellants to pay an amount of Rs 51,000 to
the respondent together with Rs 10,000 as compensation, Rs 5,000 for expenses and
interest of 18 per cent per annum from the date of the institution of the complaint. The
National Consumer Disputes Redressal Commission5 by its judgment and order dated
25 October 2019 affirmed the decision, overruling the objection that the respondent is not
a ‘consumer’ within the meaning of the Consumer Protection Act 1986. The National
Commission, however, reduced the rate of interest from 18 percent per annum to 9
3 District Forum
4 State Commission
5 National Commission
4
percent per annum. The present appeal has arisen from the order of the National
Commission.
5 On 27 January 2000, the appellants stated before this Court that the amount which
was awarded to the respondent would be paid. The appellants, however, pressed the
question of law. Instead of saddling the respondent who is a construction worker with the
insuperable burden of defending the proceedings before this Court, we requested Mr PV
Dinesh, learned counsel to assist the Court as amicus curiae. We wish to record our
appreciation of the able and objective assistance which has been rendered to the Court
by Mr PV Dinesh.
6 Dr Manish Singhvi, learned Senior Counsel appearing on behalf of the appellants,
urged the following submissions:
(i) Parliament enacted the Building and Other Construction Workers Welfare
Cess Act, 19966
. The cess which is collected under the Act is contributed to the
fund. The fund is defined both under the Cess Act of 1996 as well as the Act of
1996. The cess which is collected forms a part of the Welfare Board constituted
under Section 24(1). The collection of the cess which runs into thousands of crores
becomes part of the fund which is generated from the compulsory exaction from
employers who engage construction workers;
(ii) A circular was issued on 25 January 2011 by the State of Rajasthan for the
registration of construction workers. Under the circular, at the relevant point of
6 The Cess Act
5
time, an amount of Rs 25 was to be deposited as subscription fee for the
preparation of an identification card while Rs 60 per year was charged as a
contribution under Section 16(1) of the Act of 1996. On 24 November 2015 the
subscription was reduced to Re 1 per month (Rs 12 per annum) so as to comprise
of a payment of Rs 60 for a period of five years. This contribution is in the nature
of a token amount to ensure registration and identification of building workers who
can avail of the benefits under the Act of 1996 and even this contribution can be
relaxed under the proviso to Section 16(1) upon the satisfaction of the Board that
the beneficiary is unable to pay the contribution;
(iii) About 22,46,904 workers have been registered under the Act of 1996, out
of which about 64,678 have benefited under the scheme between 2010-11 and
2019-20. Out of a cess of Rs 2,671 crores which has been collected, about Rs
1,488 crores is expended for the welfare schemes. The welfare schemes are
funded by the cess and not by the contributions made under Section 16(1).
Between 2010 and 2020, the contribution of the workers is Rs 27.92 crores which
is meagre in comparison to the expenditure on the welfare schemes;
(iv) The welfare schemes initiated by the State government are to keep up with
the rapid expansion of welfare activities. The cess which is collected under the
Cess Act is for a specific purpose. The cess is nothing but a tax under Article
366(28) of the Constitution;
6
(v) Undoubtedly, where the state for its multifarious functions, charges a fee
and services are rendered on a quid pro quo basis, the activities of the State would
be amenable to the jurisdiction of a consumer forum when a complaint of
deficiency of service is made;
(vi) On the other hand, where the State commits itself to welfare schemes and
a negligible amount is charged in token of the services which are rendered, the
beneficiary of a service is not a ‘consumer’ within the meaning of Section 2(d) of
the Consumer Protection Act 1986. Such services are primarily financed out of
budgetary allocations. In the present case, though a service is rendered by the
Board, the expenditure on the welfare scheme is defrayed from the cess which is
collected and hence, is not a ‘service’ within the meaning of Consumer Protection
Act 1986;
(vii) In Bihar School Examination Board v Suresh Prasad Sinha7
(“Bihar
School Examination Board”) this Court held that where a statutory function was
being discharged by a public examination authority, a student aggrieved by the
evaluation of the answer was not a ‘consumer’ nor was the Board a ‘service
provider’. On a parity of reasoning, the Welfare Board is not a service provider
under the Consumer Protection Act 1986;
(viii) In the two decisions of this Court in Regional Provident Commissioner v
Shiv Kumar Joshi8
(“Shiv Kumar Joshi”) and Regional Provident Fund
7
(2009) 8 SCC 483
8
(2000) 1 SCC 98
7
Commissioner v Bhawani9
, it was held that the Regional Provident Fund
Commissioner is a service provider within the meaning of Section 2(1)(o) of the
Consumer Protection Act 1986. These decisions are sought to be distinguished on
the ground that the corpus of the EPF scheme is contributed by the employers and
the employees, there being no contribution by the State out of the tax revenues. In
a recent judgment of this Court in Ministry of Water Resources v Shreepat Rao
Kamde10 (“Shreepat Rao Kamde”) decided on 6 November 2019, it has been held
that a government servant who makes a contribution to the General Provident
Fund lies outside the purview of the Consumer Protection Act 1986; and
(ix) The edifice of the Consumer Protection Act 1986 is to codify a remedy for a
contractual or commercial transaction in substitution of the remedy of filing a civil
suit. The enactment of the Consumer Protection Act 1986 does not cover a
redressal mechanism for an injury which is caused absent a commercial or
business transaction. The Act will not cover the services provided by the State in
the discharge of its welfare functions which are highly subsidized or free.
7 Mr PV Dinesh, learned amicus curiae has, in his detailed written submissions,
controverted the logic of the approach which has been adopted by the appellants. Mr
Dinesh submits that the salient features of the Act and the Rules are as follows:
(i) A construction worker is a ‘beneficiary’ under the Act, Rules and the
Schemes which have been framed;
9
(2008) 7 SCC 111
10 Civil Appeal No 8472 of 2019
8
(ii) Under Section 12, every worker should be registered as a beneficiary.
Section 12(3) provides that an application must be submitted with documents
together with a fee not exceeding Rs 50 as may be prescribed;
(iii) Section 18 deals with the constitution of the State Welfare Board which is a
body corporate having perpetual succession and a common seal;
(iv) Section 24 requires the constitution of a Workers Welfare Fund into which
the contribution of the beneficiaries is credited. The provisions of Rules 28 and 43
implement Section 24.
(v) Under Rule 43(b), the contribution paid by a beneficiary forms a part of the
fund together with grants, loans, sums received by the Board and advances from
the Union or State Governments, local authorities and other resources as decided
by the Central or State Governments;
(vi) Rule 45 deals with the contribution to be made by each beneficiary and the
consequence of non-contribution;
(vii) Rules 58, 59 and 60 deal with the notification of various welfare schemes.
8 Based on the above provisions of the Act and the Rules, Mr PV Dinesh submitted
that:
(i) Every construction worker who is a beneficiary under the Act and the Rules
is a contributor to the workers’ welfare fund, and the service which is provided is
not gratuitous;
(ii) The welfare schemes which are implemented by the Board cannot be
construed as a sovereign function. The State Welfare Board is a body corporate
9
which is capable of suing and being sued;
(iii) Though the claims of benefits provided under the scheme are higher than
the contribution by the worker – beneficiary, this cannot be a reason to hold that it
is not a contribution;
(iv) In the context of the denial of insurance claims, this Court while construing
the provisions of Section 2(d) of the Consumer Protection Act 1986, has held in
Canara Bank v United India Insurance Company Limited11 (“Canara Bank”)
that even a beneficiary who is not a party to the contract is a ‘consumer’ under the
Act;
(v) In the present case, there was a gross deficiency of service on the part of
the appellants and the denial of benefits under the welfare scheme was casual and
mechanical. A poor construction worker was constrained to approach the
consumer court, faced with the rejection of his application on the specious ground
that it was not accompanied by an application for exemption from the procedural
requirement of submitting it 90 days before the marriage of his daughter. The
defect, if any, was curable and not fatal; and
(vi) The remedy under the Consumer Protection Act 1986 is a valuable provision
made by the Parliament to provide access to justice and the purpose embedded
in the Consumer Protection Act 1986 will be defeated if a construction worker is
required to approach a civil court or the writ jurisdiction under Article 226 to seek
relief of a small claim.
11 2020 SCC Online SC 132
10
In this context, reliance has been placed on the decisions in Lucknow Development
Authority v M.K. Gupta12 (“Lucknow Development Authority”), Shiv Kumar Joshi
and Punjab Urban Planning and Development Authority (now GLADA) v Vidya
Chetal13 (“Vidya Chetal”).
9 The rival submissions will now be analysed.
10 Before we deal with the specific issues of law which have been raised in these
proceedings, we begin with a reference to a judgment of a two Judge bench of this Court
in National Campaign Committee for the Central Legislation on Construction
Labour v Union of India14. The judgment of this Court took note of the status of the
implementation of the Act of 1996 and the Cess Act. Reviewing the status of
implementation across the country, Justice Madan B Lokur prefaced the judgment with
the following observations:
“Symbolic justice—there is nothing more to offer to
several millions of construction workers in the
unorganised sector—not social justice, not economic
justice. The reason is quite simple. No State Government
and no Union Territory Administration (UTA) seems
willing to fully adhere to and abide by (or is perhaps even
capable of fully adhering to and abiding by) two laws
solemnly enacted by Parliament, namely, the Building and
Other Construction Workers' (Regulation of Employment and
Conditions of Service) Act, 1996 (the BOCW Act) and the
Building and Other Construction Workers' Welfare Cess Act,
1996 (the Cess Act). Directions given by this Court from
time to time to implement the two laws have been flouted
with impunity. What is equally tragic is that multiple
directions issued even by the Government of India under
12 (1994) 1 SCC 243
13 (2019) 9 SCC 83
14 (2018) 5 SCC 607
11
Section 60 of the BOCW Act have been disregarded by State
Governments and UTAs — and this is candidly admitted in a
statement made by the learned Additional Solicitor General in
this Court and also by the Union of India on affidavit.
Hopefully, the gravity of the situation in the constitutional
and federal context, the human rights and social justice
context will be realised by someone, somewhere and at
some time.” (emphasis supplied)
The Court noted that more than Rs 37,400 crores has been collected for the benefit of
construction workers under the Cess Act of which only an amount of Rs 9,500 crores has
been utilized, ostensibly for their benefit. The Court emphasised that these laws were
enacted to implement the Directive Principles of State Policy contained in Articles 39 and
42 of the Constitution and for enforcing the right to life under Article 21. The Court
observed that monies which have been earmarked for construction workers had not been
spent, and a clear picture emerges about the shocking state of affairs in regard to the
welfare boards across the country. The Court noted:
“…Overall, the affidavits gave a clear picture of a shocking
state of affairs inasmuch as some Welfare Boards had
expenditure out of the collected cess for payment of entry
tax/value added tax, purchase of washing machines for
construction workers and purchase of laptops for
construction workers. This Court found that rather
astonishing since it appeared that there was no rationale in
providing washing machines and laptops to construction
workers who were by and large poor and uneducated as well
as migrant labour…” (emphasis supplied)
Adverting to the vulnerabilities of the construction workers, the Court noted:
“What makes the situation even worse is that many of the
construction workers are believed to be women and at least
some of them have small children to look after. That even they
12
are victims of official apathy truly reflects a very sad state of
affairs, and the loss already caused to them and other
construction workers cannot be remedied. The reason for this
is that it is not known which construction worker is entitled to
get how much in terms of money or what benefit and under
which scheme. Some of these construction workers from the
1990s and even later, may perhaps have unfortunately passed
away or might be untraceable or old enough to deserve a
pension. The question therefore is: what should be done with
the thousands of crores that have been collected for the benefit
of construction workers but cannot be utilised for their benefit?
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 utilise 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 position in the State of Rajasthan was specifically mentioned in the judgment with
regard to the failure to utilize the cess which was collected. The judgment noted that
though in 2011-12, an amount of Rs 154.01 crores was collected, no figures for
expenditure were submitted. For 2012-13, an amount of Rs 173.83 crores was collected
while the expenditure incurred for various schemes was only Rs 11.95 crores. In 2013-
14, an amount of Rs 251.95 crores was collected, of which only Rs 25.93 crores was
spent.
11 The appellants have been entrusted with the solemn duty of enforcing and
implementing the provisions of the welfare legislation which has been enacted by
Parliament specifically to ameliorate the plight of construction workers. Construction
13
workers belong to the unorganized sector of the economy. Many among them are
women. Child labour is rampant. Their vulnerabilities have been attempted to be
safeguarded by a law which unfortunately has not been implemented either in letter, or
in spirit. Yet, we have in the present case, the spectacle of a statutory welfare board
seeking to exempt itself from being held accountable to the remedies provided under the
Consumer Protection Act 1986. The submission which has been urged before the Court,
simply put, boils down to this: the beneficiaries of the service pay such a meagre amount
as contributions that they cannot be regarded as ‘consumers’ within the meaning of
Section 2(d) of the Consumer Protection Act 1986. That is the submission which now
falls for consideration.
12 Section 2(d) of the Consumer Protection Act 1986 provides as follows:
“(d) “consumer” means any person who,—
(i) buys any goods for a consideration which has been paid or
promised or partly paid and partly promised, or under any
system of deferred payment and includes any user of such
goods other than the person who buys such goods for
consideration paid or promised or partly paid or partly
promised, or under any system of deferred payment when
such use is made with the approval of such person, but does
not include a person who obtains such goods for resale or for
any commercial purpose; or
(ii) [hires or avails of] any services for a consideration which
has been paid or promised or partly paid and partly promised,
or under any system of deferred payment and includes any
beneficiary of such services other than the person who 8[hires
or avails of] the services for consideration paid or promised,
or partly paid and partly promised, or under any system of
deferred payment, when such services are availed of with the
approval of the first mentioned person [but does not include a
person who avails of such services for any commercial
purpose];
[Explanation.—For the purposes of this clause, “commercial
purpose” does not include use by a person of goods bought
14
and used by him and services availed by him exclusively for
the purposes of earning his livelihood by means of selfemployment; ]”
In relation to a service, the definition of the expression incorporates in the first part any
person who hires or avails of any service for a consideration which has been paid or
promised (wholly or in part). In its latter component, the definition includes the beneficiary
of such a service other than the person who actually avails of the service for consideration
paid or promised, so long as such services are availed of with the approval of the person
who hires or avails of the service for consideration. The ambit of the first component of
the expression in Section 2(d)(ii) is expanded by the inclusive definition in the latter
component. This was noticed in the judgment of a two Judge bench of this Court in
Lucknow Development Authority where Justice RM Sahai, speaking for the Court,
explained the ambit of Section 2(d):
“It is in two parts. The first deals with goods and the other with
services. Both parts first declare the meaning of goods and
services by use of wide expressions. Their ambit is further
enlarged by use of inclusive clause. For instance, it is not only
purchaser of goods or hirer of services but even those who use
the goods or who are beneficiaries of services with approval of
the person who purchased the goods or who hired services are
included in it..”
Emphasising the accountability of public authorities, the Court observed:
“Under our Constitution sovereignty vests in the people. Every
limb of the constitutional machinery is obliged to be people
oriented. No functionary in exercise of statutory power can
claim immunity, except to the extent protected by the statute
itself. Public authorities acting in violation of constitutional or
statutory provisions oppressively are accountable for their
behavior before authorities created under the statute like the
commission or the courts entrusted with responsibility of
15
maintaining the rule of law. Each hierarchy in the Act is
empowered to entertain a complaint by the consumer for value
of the goods or services and compensation…”
In Shiv Kumar Joshi, a Bench of two learned Judges of this Court held that the
invocation of the remedies under the Consumer Protection Act 1986 is permissible
against the Provident Fund Commissioner by a member of the Employees’ Provident
Fund Scheme. The Court held that the Regional Provident Fund Commissioner
discharges a statutory function and is not delegated with any of the sovereign powers of
the State. In that context, the Court held:
“…The definition of “consumer” under the Act includes not only
the person who hires the “services” for consideration but also
the beneficiary, for whose benefits such services are hired.
Even if it is held that administrative charges are paid by the
Central Government and no part of it is paid by the employee,
the services of the Provident Fund Commissioner in running
the Scheme shall be deemed to have been availed of for
consideration by the Central Government for the benefit of
employees who would be treated as beneficiaries within the
meaning of that word used in the definition of “consumer”...”
The Court rejected the submission that the services which are provided under the EPF
Scheme are rendered free of charge and therefore, would not qualify as a service under
the Consumer Protection Act 1986. The same view has been reiterated by a Bench of
three learned Judges of this Court in Vidya Chetal. The reference before the three Judge
Bench arose upon a doubt having been expressed in regard to the correctness of the
decision of a two Judge Bench in HUDA v Sunita15
. The issue was whether the National
Commission lacks the jurisdiction to decide the legitimacy of a demand for a composition
15 (2005) 2 SCC 479
16
fee and an extension fee on a challenge that there was a deficiency in service. Referring
to the definition of the expression ‘service’ in Section 2(1)(o)16
, the Court held:
“This definition is not exhaustive, rather the legislature has left
the task to expound the provision on a case-to-case basis to
the judiciary. The purpose of leaving this provision open ended,
without providing an exhaustive list indicates the requirement
for a liberal interpretation. Broadly speaking, it is inclusive of all
those services performed for a consideration, except gratuitous
services and contract of personal services. Moreover, the
aforesaid provision reflects the legislative intent of providing
impetus to “consumerism”. It may be noted that such a
phenomenon has had a benevolent effect on the government
undertakings, wherein a new dynamism of innovation,
accountability and transparency are imbibed.”
Justice NV Ramana, speaking for the three Judge Bench, noted that all statutory
obligations are not sovereign functions. Although sovereign functions/services are
regulated and performed under a constitutional/statutory framework, yet there are other
functions, which may be statutory, but cannot be called as sovereign functions. The Court
held:
“..if the statutory authority, other than the core sovereign
duties, is providing service, which is encompassed under the
Act, then, unless any statute exempts, or provides for
immunity, for deficiency in service, or specifically provides for
an alternative forum, the consumer forums would continue to
have the jurisdiction to deal with the same. We need to caution
against over-inclusivity and the tribunals need to satisfy the
ingredients under Consumer Protection Laws, before
exercising the jurisdiction.”
16 2. (1)(o) “service” means service of any description which is made available to potential users and includes, but not
limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of
electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of
news or other information, but does not include the rendering of any service free of charge or under a contract of personal
service;”
17
In the view of the Court:
“Therefore, it is a clearly established principle that certain
statutory dues, such as fees, can arise out of a specific
relation. Such statutory dues might be charged as a quid pro
quo for a privilege conferred or for a service rendered by the
authority. As noted above, there are exactions which are for
the common burden, like taxes, there are dues for a specific
purpose, like cess, and there are dues in lieu of a specific
service rendered. Therefore, it is clear from the above
discussion that not all statutory dues/exactions are amenable
to the jurisdiction of the consumer forum, rather only those
exactions which are exacted for a service rendered, would be
amenable to the jurisdiction of the consumer forum.”
A Bench of two learned judges has in Canara Bank elaborated upon the width of the
definition contained in Section 2(d)(ii) in relation to the availing or hiring of services.
Justice Deepak Gupta, speaking for the Bench, held:
“..As far as the definition of the consumer in relation to hiring
or availing of services is concerned, the definition, in our view,
is much wider. In this part of the section, consumer includes
not only the person who has hired or availed of the services but
also includes any beneficiary of such services. Therefore, an
insured could be a person who hires or avails of the services
of the insurance company but there could be many other
persons who could be the beneficiaries of the services. It is not
necessary that those beneficiaries should be parties to the
contract of insurance. They are the consumers not because
they are parties to the contract of insurance but because they
are the beneficiaries of the policy taken out by the insured.”
The Court consequently came to the conclusion that a beneficiary of a service, in the
context of a contract of insurance, need not be a party to the contract. Beneficiaries fall
within the purview of the expression ‘consumer’.
18
In Bihar School Examination Board, the question before the Court was whether a
statutory School Examination Board falls within the purview of the Consumer Protection
Act 1986 when it performs a statutory function of conducting examinations. A two judge
Bench of this Court held that the fee paid by a student to the Board for the conduct of
examinations does not amount to a ‘consideration’ paid for a service. Justice Markandey
Katju, speaking for the Court observed:
“When the Examination Board conducts an examination in
discharge of its statutory function, it does not offer its “services”
to any candidate. Nor does a student who participates in the
examination conducted by the Board, hire or avail of any
service from the Board for a consideration. On the other hand,
a candidate who participates in the examination conducted by
the Board, is a person who has undergone a course of study
and who requests the Board to test him as to whether he has
imbibed sufficient knowledge to be fit to be declared as having
successfully completed the said course of education; and if so,
determine his position or rank or competence vis-à-vis other
examinees. The process is not, therefore, availment of a
service by a student, but participation in a general
examination conducted by the Board to ascertain whether
he is eligible and fit to be considered as having
successfully completed the secondary education course.
The examination fee paid by the student is not the
consideration for availment of any service, but the charge
paid for the privilege of participation in the examination.”
(Emphasis supplied)
In Shreepat Rao Kamde, the issue before the Court was whether a subscriber to the
General Provident Fund fulfills the definition of being a ‘consumer’ within the meaning of
the Consumer Protection Act 1986. The issue had been considered in an earlier decision
of this Court in Jagmittar Sain Bhagat v Director, Health Services, Haryana17
, and
17 (2013) 10 SCC 136
19
was answered in the negative, holding that a government servant is entitled to claim
retiral benefits strictly in accordance with the regulations governing the conditions of
service and the statutory rules for which the appropriate forum for redressal would be the
State Administrative Tribunal, if any, or the civil court but not the consumer forum. It was
held thus:
“…it is evident that by no stretch of imagination can a
government servant raise any dispute regarding his
service conditions or for payment of gratuity or GPF or any
of his retiral benefits before any of the forum under the
Act. The government servant does not fall under the
definition of a “consumer” as defined under Section
2(1)(d)(ii) of the Act. Such government servant is entitled to
claim his retiral benefits strictly in accordance with his service
conditions and regulations or statutory rules framed for that
purpose. The appropriate forum, for redressal of any of his
grievance, may be the State Administrative Tribunal, if any, or
the civil court but certainly not a forum under the Act.”
(Emphasis added)
This decision was followed by the two judge Bench in Shreepat Rao Kamde. Justice
Uday Umesh Lalit noted that in view of the earlier decision, a consumer complaint in
regard to the dues payable under the GPF was not amenable under the Consumer
Protection Act 1986.
13 Now it is in this context that it is necessary to briefly advert to the provisions of the
Act of 1996. The expression ‘beneficiary’ is defined in Section 2(b) to mean ‘a building
worker registered under Section 12’. The expression ‘fund’ is defined in Section 2(k) to
mean ‘the Building and Other Construction Workers Welfare Fund of a Board constituted
under sub-section (1) of Section 24’. Section 11 speaks of the beneficiaries of the fund:
20
“11. Beneficiaries of the Fund:-Subject to the provisions of
this Act, every building worker registered as a beneficiary
under this Act shall be entitled to the benefits provided by the
Board from its Fund under this Act.”
Hence, every building worker who is registered as a beneficiary under the enactment is
entitled to the benefits provided by the Board from the fund. Section 16 requires a building
worker who has been registered as a beneficiary to make a contribution:
“16. Contribution of building workers:- (1) A building worker
who has been registered as a beneficiary under this Act shall,
until he attains the age of sixty years, contribute to the Fund at
such rate per mensem, as may be specified by the State
Government, by notification in the Official Gazette and different
rates of contribution may be specified for different classes of
building workers:
Provided that the Board may, if satisfied that a beneficiary is
unable to pay his contribution due to any financial hardship,
waive the payment of contribution for a period not exceeding
three months at a time.
(2) A beneficiary may authorise his employer to deduct his
contribution from his monthly wages and to remit the same,
within fifteen days from such deduction, to the Board.”
The effect of a non-payment of the contribution under sub-section (1) of Section 16 for a
continuous period of not less than one year is that under Section 17 the individual ceases
to be a beneficiary. However, under the proviso, a person who is in default is allowed to
deposit the arrears if there was sufficient ground to satisfy the secretary of the Board in
regard to the non-payment of the contribution, upon which the registration is to stand
restored. Section 18 provides for the constitution of the State Welfare Boards. Section
22 provides for the functions of the Board in the following terms:
“22. Functions of the Boards:-(1) The Board may—
(a) provide immediate assistance to a beneficiary in case of
accident;
21
(b) make payment of pension to the beneficiaries who have
completed the age of sixty years;
(c) sanction loans and advances to a beneficiary for
construction of a house not exceeding such amount and on
such terms and conditions as may be prescribed;
(d) pay such amount in connection with premia for Group
Insurance Scheme of the beneficiaries as may be prescribed;
(e) give such financial assistance for the education of children
of the beneficiaries as may be prescribed;
(f) meet such medical expenses for treatment of major
ailments of a beneficiary or, such dependent, as may be
prescribed;
(g) make payment of maternity benefit to the female
beneficiaries; and
(h) make provision and improvement of such other welfare
measures and facilities as may be prescribed.
(2) The Board may grant loan or subsidy to a local authority
or an employer in aid of any scheme approved by the State
Government for the purpose connected with the welfare of
building workers in any establishment.
(3) The Board may pay annually grants-in-aid to a local
authority or to an employer who provides to the satisfaction of
the Board welfare measures and facilities of the standard
specified by the Board for the benefit of the building workers
and the members of their family, so, however that the amount
payable as grants-in-aid to any local authority or employer
shall not exceed—
(a) the amount spent in providing welfare measures and
facilities as determined by the State Government or any
person specified by it in this behalf, or
(b) such amount as may be prescribed.
whichever is less:
Provided that no grant-in-aid shall be payable in respect of
any such welfare measures and facilities where the amount
spent thereon determined as aforesaid is less than the
amount prescribed in this behalf.”
Under Section 24, the statute has provided for the constitution of a welfare fund into which
are credited (i) grants and loans made to the Board by the Central government; (ii)
contributions made by the beneficiaries; and (iii) sums received by the Board from other
22
sources as decided by the Central government. The fund is applied, under sub-section
(2) of Section 24 to meet the expenses of the Board in the discharge of its statutory
functions; towards payment of salaries, allowances and remuneration and for meeting
the expenses on objects and for purposes authorized by the Act. The Rules of 2009 have
been framed in terms of the provisions governing the rule making power. Rule 43
provides for the constitution of the welfare fund. Rule 44 provides for the registration of
building workers as beneficiaries. Rule 45 provides for contributions to the fund:
“45. Contribution to the Fund.-(1) A beneficiary of the fund
shall contribute to the fund at such rate per mensem as may
be notified by the State Government under section 16 of the
Act. This contribution shall be remitted in advance once in
three months in any of the banks specified by the Board in the
district in which the member resides.
(2) If a beneficiary commits default in the payment of
contribution continuously for a period of one year, he shall
cease to be beneficiary of the Fund. However, with the
permission of the Secretary or an officer authorized by him in
this behalf the membership may be resumed on repayment of
arrears of contribution with a fine of Rs 2 per month subject to
the condition that such resumption shall not be allowed more
than twice.”
Rule 52 provides for the expenditure from the fund. Under Rule 58, the Board is
empowered to notify schemes regarding benefits. The Board has been entrusted with
specific functions which have been defined in Section 22. These functions squarely fall
within the definition of the expression ‘service’ within the meaning of Section 2(1)(o) of
the Consumer Protection Act 1986. The expression ‘service’ has been defined in the
widest possible terms to mean ‘service of any description which is made available to
potential users’. The exception in Section 2(1)(o) is a service which is rendered free of
23
charge. The workers who are registered under the provisions of the Act of 1996 are
beneficiaries of the schemes made by the Board. Upon registration, every worker is
required to make a contribution to the fund at such rate per month as may be prescribed
by the State government. The fund into which the contributions by persons who are
registered under the Act are remitted, comprises among other sources, the contributions
made by the beneficiaries. The fund is applied inter alia for meeting the expenses
incurred to fulfill the objects and purposes authorized by the legislation. In view of the
statutory scheme, the services which are rendered by the Board to the beneficiaries are
not services which are provided free of charge so as to constitute an exclusion from the
statutory definition contained in Section 2(1)(o) and Section 2(d)(ii) of the Consumer
Protection Act 1986. The true test is not whether the amount which has been contributed
by the beneficiary is adequate to defray the entire cost of the expenditure envisaged
under the scheme. So long as the service which has been rendered is not rendered free
of charge, any deficiency of service is amenable to the fora for redressal constituted
under the Consumer Protection Act 1986. The Act does not require an enquiry into
whether the cost of providing the service is entirely defrayed from the price which is paid
for availing of the service. As we have seen from the definition contained in Section
2(1)(d), a ‘consumer’ includes not only a person who has hired or availed of service but
even a beneficiary of a service. The registered workers are clearly beneficiaries of the
service provided by the Board in a statutory capacity.
14 As a matter of interpretation, the provisions contained in the Consumer Protection
Act 1986 must be construed in a purposive manner. Parliament has provided a salutary
24
remedy to consumers of both goods and services. Public authorities such as the
appellants who have been constituted under an enactment of Parliament are entrusted
with a solemn duty of providing welfare services to registered workers. The workers who
are registered with the Board make contributions on the basis of which they are entitled
to avail of the services provided in terms of the schemes notified by the Board. Public
accountability is a significant consideration which underlies the provisions of the
Consumer Protection Act 1986. The evolution of jurisprudence in relation to the
enactment reflects the need to ensure a sense of public accountability by allowing
consumers a redressal in the context of the discharge of non-sovereign functions which
are not rendered free of charge. This test is duly met in the present case.
15 Consequently, and for the reasons that we have indicated, there is no reason to
interfere with the ultimate decision of the State Commission to award the claim, subject
to the modification of the rate of interest by the order of the National Commission. The
appeal shall accordingly stand dismissed. There shall be no order as to costs.
…………...…...….......………………........J.
[Dr Dhananjaya Y Chandrachud]
…..…..…....…........……………….…........J.
[Ajay Rastogi]
New Delhi;
March 17, 2020.
