@JUDGMENTTAG-ORDER
K. Chandru, J.@mdashThis writ petition is filed by M.E.S. Builders'' Association of India represented by its Secretary. It is claimed that the said
Association is a registered association. Its parent body is having its registered office at New Delhi. The petitioner being the branch consisting of 46
members comprising of various builders undertaking contract work to Military Engineering Service. They have come forward to challenge the
order of the fourth respondent Controller of Defence Accounts, dated 12.3.2010 as illegal and ultra vires to the Constitution of India.
2. By virtue of the Building and Other Construction Workers'' (Regulation of Employment and Conditions of Service) Act, 1996 (Central Act 27
of 1996) and more particularly u/s 18 of the said Act, the State Governments should constitute a Board known as Building and Other Construction
Workers'' Welfare Board, which board shall be a body corporation having perpetual succession and a common seal. The said Board as per
proviso to Section 18(3), shall include an equal number of members representing the State Government, the employers and the building workers
and that at least one member of the Board shall be a woman.
3. By virtue of the Building and Other Constructions Workers'' Welfare Cess Act, 1996 (Central Act 28 of 1996), more particularly u/s 3, there
must be levy of cess not exceeding 2%, but not less than 1% of the cost of construction incurred by an employer, as the Central Government, by
notification in the Official Gazette, from time to time may specify. u/s 3(2), cess levied shall be collected from every employer in such a manner and
at such time, including deduction at source in relation to a building or other construction work of a Government or of a public sector undertaking as
may be prescribed. u/s 3(3), the amount collected by way of Cess shall be paid by the local authority or the State Government collecting the Cess
to the Board after deducting the cost of collection of such cess not exceeding 1% of the amount collected.
4. The term ""Board"" has been defined u/s 2(a) as the Board constituted by the State Government u/s 18(1) of the Building and Other Construction
Workers (Regulation of Employment and Conditions of Service) Act, 1996. By the impugned circular by the Controller of Defence Accounts, he
informed that the headquarters had issued instructions to levy cess of 1% to 2% on the total cost of construction to provide welfare measures to
the workers and transfer the amount to the Building and Other Construction Welfare Board constituted by the State Government. It was also
directed that in all contract agreement, a clause must be introduced regarding the collection of Cess in terms of 1996 Act. Therefore, the CDA
requested that issue should be taken up with the State Governments of Tamil Nadu and Kerala as to whether they have constituted the Board in
terms of Section 18(1) of the Central Act 27/1996. Pending receipt of reply from the State Government, 2% of Cess are to be recovered from the
bills processed by the office of the Chief Engineer under the jurisdiction of the Controller of Defence Accounts.
5. It is the case of the petitioner that the members of the petitioner association are engaged in contract work with MES undertaking civil contract
works. For the purpose of executing the contract, various clauses of contract have been prescribed with pecuniary limit and for participation in the
tenders, security deposits have also been provided. It is their case that usually respondents 1 to 14 estimate the construction cost including the tax,
levies, of which the rate will be quoted by the contractors. Till date the estimation cost given by respondents for construction workers was never
added. By the present demand for collection of cess at the rate of 2% will be an unnecessary force on them. The collection of Cess at the rate of
2% on contract value will be huge.
6. It was also contended that under the Central Act, 27/1996, Section 18 provides for constitution of the Board and so far, the State of Tamil
Nadu has not notified the said Act. The State Government by virtue of its power vested under the Tamil Nadu Manual Workers (Regulation of
Employment and Conditions of Work) Act, 1982 had constituted a Board known as Construction Workers'' Welfare Board. When they sought
information from that Board, they were informed by the 16th respondent, i.e. Tamil Nadu Construction Workers Welfare Board, Chennai, by
letter dated 27.5.2008 that Cess collected under the Central Act 28/1996 is not dealt with by the Board and they were only collecting a
contribution of 0.3% of the estimated cost of the construction work towards Manual Workers General Welfare Fund of the Tamil Nadu
Construction Workers Welfare Board as per the Tamil Nadu Manual Workers (Construction Workers) Welfare Scheme, 1994 in terms of
G.O.Ms. No. 95, Labour and Employment Department, dated 2.7.1997 and G.O.Ms. No. 151, Labour and Employment Department, dated
24.9.1999. Therefore, it was contended by the petitioner that while they have no objection in providing for fund created by the State Government
to be credited to the 16th respondent, they have objection for the collection of 2% Cess as per the impugned circular.
7. It was also contended that the fourth respondent''s attempt to initiate deduction will be an encroachment into the power of the State Government
and it will be contrary to the contract executed by them. It was also stated that while no one can quarrel about collection of amount for welfare
measures, the amount proposed to be deducted will not be utilized for the welfare of the workers. Therefore, in that view of the matter, they sought
for setting aside the circular.
8. However, this Court is not inclined to entertain the writ petition. Merely because the State Government has not constituted a Board will not
make the petitioner builders not to pay Cess as per the notified enactment. The Central Act, 27/1996 was brought into effect from 1.3.1996. In
relation to the contract work executed on behalf of the defence establishment, an appropriate Government is the Central Government as per
Section 2(a) of the said Act. The Board that is contemplated under the Central Act is the Board constituted u/s 18(1) of the said Act. The term
building or other construction work"" is also defined u/s 2(d) of the Act. The Act obliges the State Government to constitute a Board u/s 18.
9. Similarly, Cess Act (Central Act 28/1996) was also brought into force with effect from 3.11.1995. The Act has mandated u/s 3 for levy and
collection of Cess. Therefore, the petitioner have no way out in getting over the welfare scheme conceived by the Act of Parliament.
10. It must be noted that the National Campaign Committee of Construction Labour filed a writ petition under Article 32 of the Constitution before
the Supreme Court complaining that many provisions of the Act are not put in practice. The Supreme Court entertaining the said writ petition had
given directions as noted in the order in National Campaign Committee, C.L., Labour v. Union of India and Ors. reported in 2009 (3) SCC 269.
In paragraph 1 of the order, the nature of the complaint is set out, which is as follows:
1. The Building and Other Construction Workers'' (Regulation of Employment and Conditions of Service) Act, 1996 (for short ""the Act""), was
passed by Parliament and in this writ petition it is alleged that many of the provisions of the enactment are not put in practice and the respective
authorities have not complied with the statutory provisions. All the State Government and Union Territories are impleaded as parties in this writ
petition. The Act is intended to benefit the unorganised workers in the construction sector.
11. In paragraph 5 of the order, the collection of Cess is referred to, which is as follows:
5. Parliament has also passed the Building and Other Construction Workers'' Welfare Cess Act, 1996 for the purpose of levy and collection of
cess and Section 3 of the Act envisages that:
3. Levy and collection of cess. - There shall be levied and collected a cess for the purposes of the Building and Other Construction Workers''
(Regulation of Employment and Conditions of Service) Act, 1996, at such rate not exceeding two per cent but not less than one per cent of the
cost of construction incurred by an employer, as the Central Government may, by notification in the Official Gazette, from time to time specify.
Section 62* of the Building and Other Construction Workers'' Welfare Cess Act says that proper rules are to be framed by the Government after
consultation with the Expert Committee.
12. With reference to directions given by the Supreme Court to the State of Tamil Nadu and other States, the same is found in paragraph 9, which
is as follows:
9. We direct the Chief Secretaries of the respective States and Secretary (Labour) of each State and Union Territories to take timely steps as per
the provisions of the Act, if not already done. We would like to have the appraisal report in the first week of May as to what steps have been
taken in this regard. If any of the State Government has not done anything pursuant to the Act, urgent steps are to be taken so that the benefits of
this legislation shall not go waste. Otherwise the unorganised workers of the construction sector will be denied the benefit of the Act.
13. These directions were given as early as 13.1.2009 and more than 14 months have elapsed from the date of direction. Even assuming that the
State Government despite direction of the Supreme Court had not constituted a Board in terms of Section 18(1) of the Act, that by itself will not
entitle the builders represented by the petitioner association to refuse to pay Cess as mandated by the Act of Parliament. It is immaterial that their
obligation to pay Cess towards the work undertaken by them to be kept in a fund, which will be ultimately transferred to the Board constituted by
the State Government. First of all, the Board has to come into existence and only thereafter, they will make their contributions. On the other hand,
since both the enactments (Central Act 27/1996 and 28/1996) have already come into force and the liability to pay cess had already started.
Ultimately, when a Board constituted by the appropriate State Government comes into existence, the money so transferred will be utilized towards
the welfare of the construction workers, who have no legal protection till date.
14. The fact that the State Government has also constituted a Board under a general enactment, i.e. Tamil Nadu Manual Workers (Regulation of
Employment and Conditions of Work) Act, 1982 and fixed a lower rate of collection of cess will not make the petitioner not to pay the Cess. It is
not their claim that they are paying Cess towards the State enactment. On the other hand, the present enactment is confined only to the buildings in
relation to the Central Government. Therefore, all the works that are undertaken by them in relation to the construction of buildings in the Indian
Military areas, they are bound to pay the Cess. The members of the petitioner association cannot plead ignorance or any economic difficulty, since
the Acts are in existence for the last 15 years. It is their own folly if they have not paid the amount. At least the Controller of Defence Accounts
had opened their eyes to the ground reality and had issued circular for collecting the amounts.
15. It may not be out of place to refer to the judgment of the Supreme Court where the Supreme Court took serious note of the non
implementation of the Beedi and Cigar Workers (Conditions of Employment) Act, 1966. The Supreme Court gave directions vide its judgment in
Rajangam, Secretary, District Beedi Workers'' Union Vs. State of Tamil Nadu and Others, and in paragraph 4.8, it gave the following direction,
which is as follows:
4(8) The Beedi Workers Welfare Cess Act, 1976 and the Beedi Workers Welfare Fund Act, 1976 which contain beneficial provisions should be
implemented in the true spirit and since they are legislations of the Central Government, the machinery of the Central Government should be made
operational in the area.
16. It cannot be said that the Act is violative of any of the fundamental Rights guaranteed by the Constitution. On the contrary, the Act implements
the Constitutional mandates of Articles 41 and 43 of the Constitution. The Cess being only 2% of the cost of construction, it cannot be said to be
an unreasonable restriction depriving the petitioner''s right to carry on trade. The amount of Cess collected will only be a reasonable restriction
covered by Article 19(6) of the Constitution.
17. In the light of the above, the writ petition will stand dismissed. No costs. Consequently, connected miscellaneous petitions stand closed.
