Supreme Court settles whether construction workers are consumers under Consumer Protection Act: Joint Labour Commissioner vs. Kesar Lal (2020)

Introduction

Date of the Judgment: 17 March 2020

Citation: (2020) INSC 269

Judges: Dr Dhananjaya Y Chandrachud, J and Ajay Rastogi, J. The judgment was authored by Dr Dhananjaya Y Chandrachud, J.

Can a construction worker, who contributes to a welfare fund, be considered a ‘consumer’ when seeking benefits under a government scheme? The Supreme Court of India tackled this important question, examining whether a beneficiary of a statutory welfare scheme can seek remedies under the Consumer Protection Act, 1986. This case revolves around a construction worker who was denied financial assistance for his daughter’s marriage and whether he could seek redressal under the Consumer Protection Act. The Supreme Court, in this case, clarifies the scope of ‘consumer’ under the Consumer Protection Act, 1986, in the context of welfare schemes.

Case Background

The respondent, Kesar Lal, was a construction worker registered under the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996. He obtained a Labour Beneficiary Identity Card on 29 December 2011 after paying a registration fee of Rs 25 and an annual contribution of Rs 60. The card was valid for one year, from 29 December 2011 to 28 December 2012.

On 6 November 2012, Kesar Lal applied for financial assistance of Rs 51,000 under a scheme for the marriage of his daughter, which was scheduled for 24 November 2012. However, his application, along with 326 others, was rejected by the Joint Commissioner of Labour, Jaipur, nine months later, citing technical defects. The rejection order mentioned issues such as incomplete application forms, incorrect certificates, and applications submitted after the marriage.

Aggrieved by the rejection, Kesar Lal filed a consumer complaint before the District Consumer Disputes Redressal Forum. The District Forum dismissed his complaint on 6 October 2016. However, the State Consumer Disputes Redressal Commission overturned this decision on 20 August 2019, directing the appellants to pay Rs 51,000 along with compensation, expenses, and interest. The National Consumer Disputes Redressal Commission affirmed this order on 25 October 2019, but reduced the interest rate from 18% to 9% per annum. The present appeal was filed by the Joint Labour Commissioner against the order of the National Commission.

Timeline:

Course of Proceedings

The District Consumer Disputes Redressal Forum initially dismissed Kesar Lal’s complaint on 6 October 2016. The State Consumer Disputes Redressal Commission overturned this decision on 20 August 2019, directing the appellants to pay Rs 51,000 along with compensation, expenses, and interest. The National Consumer Disputes Redressal Commission upheld the State Commission’s order on 25 October 2019, but reduced the interest rate from 18% to 9% per annum. The appellants then filed an appeal in the Supreme Court of India.

Legal Framework

The core of this case involves the interpretation of two key statutes: the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996 (referred to as “the Act of 1996”) and the Consumer Protection Act, 1986.

✓ The Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996: This Act aims to regulate the employment and conditions of service of building and other construction workers, providing for their safety, health, and welfare.

✓ Section 2(b) of the Act of 1996 defines a ‘beneficiary’ as “*a building worker registered under Section 12*”.

✓ Section 2(k) of the Act of 1996 defines ‘fund’ as “*the Building and Other Construction Workers Welfare Fund of a Board constituted under sub-section (1) of Section 24*”.

✓ Section 11 of the Act of 1996 states that “*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*”.

✓ Section 16 of the Act of 1996 mandates that a registered building worker must contribute to the fund until they reach the age of sixty years. It states:

“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.”

✓ Section 22 of the Act of 1996 outlines the functions of the Board, including providing assistance in case of accidents, making pension payments, sanctioning loans for house construction, providing financial assistance for education, and meeting medical expenses.

✓ Section 24 of the Act of 1996 provides for the constitution of a welfare fund.

✓ Rule 43 of the Rajasthan Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Rules, 2009 provides for the constitution of the welfare fund.

✓ Rule 45 of the Rajasthan Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Rules, 2009 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.”

✓ The Consumer Protection Act, 1986: This Act defines a ‘consumer’ and provides remedies for deficiency in services.

✓ Section 2(d) of the Consumer Protection Act, 1986 defines a ‘consumer’ as:

“(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 and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment; ]”

✓ Section 2(1)(o) of the Consumer Protection Act, 1986 defines ‘service’ as:

“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;”

Arguments

Appellants’ Arguments:

• The appellants, represented by Dr. Manish Singhvi, argued that the welfare schemes are funded by a cess collected under the Building and Other Construction Workers Welfare Cess Act, 1996, which is a tax under Article 366(28) of the Constitution.
• They submitted that the contribution made by the workers is a token amount for registration and identification and is not the primary source of funding for the welfare schemes.
• The appellants contended that the services provided under the welfare schemes are not ‘services’ within the meaning of the Consumer Protection Act, 1986, as they are primarily financed by budgetary allocations and the cess collected.
• They relied on the decision in Bihar School Examination Board v Suresh Prasad Sinha [(2009) 8 SCC 483], arguing that a statutory function like conducting examinations does not constitute a ‘service’ under the Consumer Protection Act.
• The appellants distinguished the cases of Regional Provident Commissioner v Shiv Kumar Joshi [(2000) 1 SCC 98] and Regional Provident Fund Commissioner v Bhawani [(2008) 7 SCC 111], stating that the EPF scheme is funded by contributions from employers and employees, not by the State.
• They also cited the recent judgment in Ministry of Water Resources v Shreepat Rao Kamde [Civil Appeal No 8472 of 2019], which held that a government servant contributing to the General Provident Fund is not a ‘consumer’.
• The appellants argued that the Consumer Protection Act, 1986 is meant for contractual or commercial transactions and not for welfare functions of the State.

Respondent’s Arguments (Amicus Curiae):

• Mr. P.V. Dinesh, the amicus curiae, argued that a construction worker is a ‘beneficiary’ under the Act and Rules and a contributor to the workers’ welfare fund.
• He submitted that the service provided is not gratuitous, as workers make contributions to the fund.
• The amicus curiae contended that the State Welfare Board is a body corporate capable of suing and being sued and that its functions are not sovereign functions.
• He argued that the fact that the benefits are higher than the contribution does not negate the fact that it is a contribution.
• The amicus curiae relied on Canara Bank v United India Insurance Company Limited [2020 SCC Online SC 132], stating that even a beneficiary who is not a party to the contract is a ‘consumer’ under the Act.
• He argued that there was a deficiency of service on the part of the appellants and that the denial of benefits was casual and mechanical.
• The amicus curiae emphasized that the remedy under the Consumer Protection Act, 1986 is valuable for providing access to justice, and a construction worker should not be required to approach a civil court for a small claim.
• He relied on Lucknow Development Authority v M.K. Gupta [(1994) 1 SCC 243], Shiv Kumar Joshi [(2000) 1 SCC 98], and Punjab Urban Planning and Development Authority (now GLADA) v Vidya Chetal [(2019) 9 SCC 83] to support his arguments.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether a construction worker who is registered under the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996 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.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

On the definition of ‘consumer’ and the ambit of the Consumer Protection Act, 1986:

• Lucknow Development Authority v M.K. Gupta [(1994) 1 SCC 243] – Supreme Court of India: The Court emphasized the accountability of public authorities and held that the definition of ‘consumer’ is wide, including beneficiaries of services.
• Regional Provident Commissioner v Shiv Kumar Joshi [(2000) 1 SCC 98] – Supreme Court of India: The Court held that a member of the Employees’ Provident Fund Scheme can invoke the remedies under the Consumer Protection Act, 1986, against the Provident Fund Commissioner.
• Punjab Urban Planning and Development Authority (now GLADA) v Vidya Chetal [(2019) 9 SCC 83] – Supreme Court of India: The Court reiterated that statutory obligations are not necessarily sovereign functions and that consumer forums have jurisdiction over services provided by statutory authorities.
• Canara Bank v United India Insurance Company Limited [2020 SCC Online SC 132] – Supreme Court of India: The Court held that a beneficiary of a service, in the context of insurance, need not be a party to the contract to be considered a ‘consumer’.

On the interpretation of ‘service’ under the Consumer Protection Act, 1986:

• Section 2(1)(o) of the Consumer Protection Act, 1986: The Court noted that the definition of ‘service’ is wide and includes any service made available to potential users, except services rendered free of charge.

On cases where the Consumer Protection Act, 1986, does not apply:

• Bihar School Examination Board v Suresh Prasad Sinha [(2009) 8 SCC 483] – Supreme Court of India: The Court held that a statutory School Examination Board does not fall under the purview of the Consumer Protection Act, 1986, when it conducts examinations.
• Ministry of Water Resources v Shreepat Rao Kamde [Civil Appeal No 8472 of 2019] – Supreme Court of India: The Court held that a subscriber to the General Provident Fund does not fulfill the definition of being a ‘consumer’ under the Consumer Protection Act, 1986.

On the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996:

• Section 2(b) of the Act of 1996: Defines ‘beneficiary’.
• Section 2(k) of the Act of 1996: Defines ‘fund’.
• Section 11 of the Act of 1996: States the entitlement of a beneficiary to the benefits provided by the Board.
• Section 16 of the Act of 1996: Mandates contributions by building workers.
• Section 22 of the Act of 1996: Outlines the functions of the Board.
• Section 24 of the Act of 1996: Provides for the constitution of a welfare fund.

On the Rajasthan Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Rules, 2009:

• Rule 43 of the Rules of 2009: Provides for the constitution of the welfare fund.
• Rule 45 of the Rules of 2009: Provides for contributions to the fund.

Authorities Considered by the Court:

Judgment

The Supreme Court dismissed the appeal, holding that construction workers registered under the Building and Other Construction Workers’ Act of 1996 are ‘consumers’ under the Consumer Protection Act, 1986.

How each authority was viewed by the Court:

• The Court relied on Lucknow Development Authority v M.K. Gupta [(1994) 1 SCC 243]* to emphasize the accountability of public authorities and the wide definition of ‘consumer’.
• The Court followed Regional Provident Commissioner v Shiv Kumar Joshi [(2000) 1 SCC 98]* to hold that a beneficiary of a statutory scheme can invoke the Consumer Protection Act.
• The Court followed Punjab Urban Planning and Development Authority (now GLADA) v Vidya Chetal [(2019) 9 SCC 83]* to reiterate that statutory obligations are not necessarily sovereign functions and consumer forums have jurisdiction.
• The Court relied on Canara Bank v United India Insurance Company Limited [2020 SCC Online SC 132]* to state that a beneficiary of a service need not be a party tothe contract to be considered a ‘consumer’.
• The Court distinguished Bihar School Examination Board v Suresh Prasad Sinha [(2009) 8 SCC 483]* on the ground that the examination board does not provide a service to the students.
• The Court distinguished Ministry of Water Resources v Shreepat Rao Kamde [Civil Appeal No 8472 of 2019]* on the ground that a subscriber to the General Provident Fund does not fulfill the definition of being a ‘consumer’ under the Consumer Protection Act, 1986.

Key Takeaways:

• Construction workers who contribute to a welfare fund and are registered under the Act of 1996 are considered ‘consumers’ under the Consumer Protection Act, 1986.
• The services provided by the Board are not free of charge, as workers make contributions to the fund.
• The Consumer Protection Act, 1986, is a valuable remedy for workers seeking redressal for deficiency in services.
• The judgment ensures that welfare schemes are accountable and that beneficiaries have access to justice.

Flowchart of the Court’s Reasoning

Impact of the Judgment

The Supreme Court’s decision has a significant impact on the rights of construction workers in India. By recognizing them as ‘consumers,’ the Court has provided them with an avenue for seeking redressal for grievances related to welfare schemes. This ensures that the welfare schemes are not only accessible but also accountable.

The judgment emphasizes that the contribution made by workers, even if it is a small amount, is a consideration for the services provided by the Board. This clarifies that the services are not gratuitous and that beneficiaries have a right to expect timely and proper delivery of benefits.

Furthermore, the decision underscores the importance of the Consumer Protection Act, 1986, as a tool for providing access to justice for marginalized sections of society. It reinforces that the Act is not limited to commercial transactions but also extends to welfare schemes where there is a consideration involved.

The judgment will likely lead to greater scrutiny of the implementation of welfare schemes for construction workers and may encourage the authorities to be more responsive to the needs of the beneficiaries.

Conclusion

The Supreme Court’s judgment in Joint Labour Commissioner vs. Kesar Lal is a landmark decision that clarifies the scope of ‘consumer’ under the Consumer Protection Act, 1986, in the context of welfare schemes. The Court’s ruling ensures that construction workers, who contribute to welfare funds, are recognized as ‘consumers’ and can seek redressal for deficiency in services. This decision not only provides a valuable remedy for construction workers but also promotes accountability and transparency in the functioning of welfare schemes.

The judgment underscores the importance of the Consumer Protection Act, 1986 as a vital tool for access to justice and emphasizes that the Act is not limited to commercial transactions but also extends to welfare schemes where there is a consideration involved.