Case: Lanco Anpara Power Ltd Vs. State Of Uttar Pradesh

3. In this appeal, the appellant proposed to set up a 2X600 Megawatt capacity coal-based thermal power project namely "Anpara C" at Anpara in District Sonebhadra, Uttar Pradesh ("the Project"), pursuant to being selected in a tariff-based competitive bidding initiated by the Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (UPRVUNL) on behalf of the Uttar Pradesh Power Corporation Ltd. (UPPCL). The project consists of two Steam Turbine Generators (STG) each having capacity of 600 MW and two pulverised coal fired steam generators and the balance of plant. The appellant, in respect of the aforesaid project, made an application to the Director of Factories, Uttar Pradesh, submitting the layout/drawings of the proposed plants and requesting for registration of the project as a factory under the provisions of the Factories Act, 1948 and the Uttar Pradesh Factories Rules, 1950. The appellant was granted registration and licence under Section 6 of the Factories Act, 1948 read with Uttar Pradesh Factories Rules, 1950 for the said Project, as a factory. Respondent No. 1 notified the Uttar Pradesh Building and other Construction Workers (Regulation of Employment and Conditions of Service) Rules, 2009 (for short BOCW Rules) on 04.02.2009. Immediately thereafter, the appellant received a notice of even date issued by respondent No. 2, intimating that the Chief Secretary, Government of Uttar Pradesh had directed that "establishments" engaged in construction activities were required to get themselves registered under the provisions of the BOCW Act and the BOCW Rules. Simultaneously, a letter of even date was also received from the District Collector, Sonebhadra, Uttar Pradesh, calling upon the appellant to get itself/its contractors registered under the provisions of the BOCW Act and the BOCW Rules. The appellant, vide its letter of even date, replied to the aforesaid communication dated 19.04.2010 of the District Collector, Sonebhadra, stating that the appellant was undertaking the construction activity of the Project under the provisions of the Factories Act and as such, in view of Section 2(1)(d) of the BOCW Act, the Project was exempted from the application of the BOCW Act, and consequently the Welfare Cess Act and BOCW Rules inasmuch as the provisions of the Factories Act apply to the Project.4. The respondents were not satisfied with the aforesaid stand taken by the appellant. Thus, show cause notice dated 17.02.2011 was issued by respondent No. 2 as to why action be not taken against the appellant for failing to get itself registered under BOCW Act. It was followed by another notice of even date stating that the appellant had not furnished requisite information relating to construction activities undertaken by it as required under Section 4 of the Welfare Cess Act read with Rule 6 of the Welfare Cess Rules. Some more notices were issued to the similar effect with regard to the construction activities in respect of the township in Anpara, undertaken by the appellant. Insofar as township is concerned, appellant got itself registered through its principal contractors under Welfare Cess Act and started paying the cess. However, in respect of construction activity and factory premises, the appellant reiterated its stand that by virtue of Section 2(1)(d) of the BOCW Act, it was excluded from the coverage thereof. The contention of the appellant was rejected by the respondents which led to issuance of further notices demanding cess.5. At this juncture, the appellant filed the writ petition in the High Court of Judicature at Allahabad challenging the validity of notices dated 14.03.2011 and 02.04.2011 demanding payment of cess, on the following grounds: (i) That the appellant is not amenable to assessment of liability under the Welfare Cess Act inasmuch as the Factories Act is applicable to the Project, and the Project is as such, exempt from the applicability of the said Act by virtue of the exclusionary cause contained in Section 2(1)(d) of the BOCW Act. (ii) That respondent No. 2, vide impugned notice dated 02.04.2011, was proceeding to calculate the alleged cess payable by the appellant on the basis of the cost of the Project, and not on the cost of construction of the said Project, whereas under the scheme of the Cess Act, cess is payable only on the cost of construction incurred annually, and not on the entire project cost, which includes several other components apart from civil construction works.6. The respondents filed their counter affidavit contesting the petition. After hearing, the writ petition has been dismissed by the High Court vide judgment dated 28.04.2015, gist whereof has already been taken note of above.

Court's reasoning:
21. On the conjoint reading of the aforesaid provisions, it becomes clear that "factory" is that establishment where manufacturing process is carried on with or without the aid of power. Carrying on this manufacturing process or manufacturing activity is thus a prerequisite. It is equally pertinent to note that it covers only those workers who are engaged in the said manufacturing process. Insofar as these appellants are concerned, construction of building is not their business activity or manufacturing process. In fact, the building is being constructed for carrying out the particular manufacturing process, which, in most of these appeals, is generation, transmission and distribution of power. Obviously, the workers who are engaged in construction of the building also do not fall within the definition of worker under the Factories Act. On these two aspects there is no cleavage and both parties are at ad idem. What follows is that these construction workers are not covered by the provisions of the Factories Act.22. Having regard to the above, if the contention of the appellants is accepted, the construction workers engaged in the construction of building undertaken by the appellants which is to be used ultimately as factory, would stand excluded from the provisions of BOCW Act and Welfare Cess Act as well. Could this be the intention while providing the definition of building and other construction work in Section 2(d) of BOCW Act? Clear answer to this has to be in the negative.23. We may mention at this stage that High Court is right in observing that merely because the appellants have obtained a licence under Section 6 of the Factories Act for registration to work a factory, it would not follow therefrom that they answer the description of the "factory" within the meaning of the Factories Act. We have reproduced the definition of factory and a bare reading thereof makes it abundantly clear that before this stage, when construction of the project is completed and the manufacturing process starts, factory within the meaning of Section 2(m) of the Factories Act does not come into existence so as to be covered by the said Act.24. We now advert to the core issue touching upon the construction of Section 2(d) of the BOCW Act. The argument of the appellants is that language thereof is unambiguous and literal construction is to be accorded to find the legislative intent. To our mind, this submission is of no avail. Section 2(d) of the BOCW Act dealing with the building or construction work is in three parts. In the first part, different activities are mentioned which are to be covered by the said expression, namely, construction, alterations, repairs, maintenance or demolition. Second part of the definition is aimed at those buildings or works in relation to which the aforesaid activities are carried out. The third part of the definition contains exclusion clause by stipulating that it does not include any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), applies. Thus, first part of the definition contains the nature of activity; second part contains the subject matter in relation to which the activity is carried out and third part excludes those building or other construction work to which the provisions of Factories Act or Mines Act apply.26. The aforesaid meaning attributed to the exclusion clause of the definition is also in consonance with the objective and purpose which is sought to be achieved by the enactment of BOCW Act and Welfare Cess Act. As pointed out above, if the construction of this provision as suggested by the appellants is accepted, the construction workers who are engaged in the construction of buildings/projects will neither get the benefit of the Factories Act nor of BOCW Act/Welfare Cess Act. That could not have been the intention of the Legislature. BOCW Act and Welfare Cess Act are pieces of social security legislation to provide for certain benefits to the construction workers.taking the aforesaid view, we also agree with the learned counsel for the respondents that superior purpose contained in BOCW Act and Welfare Cess Act has to be kept in mind when two enactments - the Factories Act on the one hand and BOCW Act/Welfare Cess Act on the other hand, are involved, both of which are welfare legislations. (See Allahabad Bank v. Canara Bank, (2000) 4 SCC 406     which has been followed in Pegasus Assets Reconstruction P. Ltd. v. M/s. Haryana Concast Limited & Anr., 2016(3) Recent Apex Judgments (R.A.J.) 37 : 2016 (1) SCALE 1     in the context of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Companies Act, 1956. Here the concept of felt necessity would get triggered and as per the Statement of Objects and Reasons contained in BOCW Act, since the purpose of this Act is to take care of a particular necessity i.e. welfare of unorganised labour class involved in construction activity, that needs to be achieved and not to be discarded. Here the doctrine of Purposive Interpretation also gets attracted which is explained in recent judgments of this Court in Richa Mishra v. State of Chhattisgarh and Others, 2016(1) S.C.T. 776 : (2016) 4 SCC 179     at Page No. 197 and Shailesh Dhairyawan v. Mohan Balkrishna Lulla, 2016(1) R.C.R.(Civil) 928 : 2016(1) Recent Apex Judgments (R.A.J.) 503 : (2016) 3 SCC 619   - Para 31.is already held that provisions of Factories Act are not applicable to these construction workers. Registration under the Factories Act becomes necessary in view of provisions contained in Section 6 of the said Act as this Section requires taking of approval and registration of factories even at preparatory stage i.e. at the stage when the premises where factory is to operate has to ensure that construction will be done in such a manner that it takes care of safety measures etc. which are provided in the Factories Act. This means to ensure that construction is carried out in such a manner that provisions in the Factories Act to ensure health, safety and provisions relating to hazardous process as well as welfare measures are taken care of. It is for this reason that even after the building is completed before it is occupied, notice under Section 7 is to be given by the occupier to the Chief Inspector of Factories so that a necessary inspection is carried out to verify that all such measures are in place. Therefore, when the permissions for construction of factories is given, the purpose is altogether different.34. It is stated at the cost of repetition that construction workers are not covered by the Factories Act and, therefore, welfare measures specifically provided for such workers under the BOCW Act and Welfare Cess Act cannot be denied.