THE JOINT LABOUR COMMISSIONER AND REGISTERING OFFICER & ANR. versus KESAR LAL on 17 March 2020

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SUPREME COURT REPORTS

[2020] 5 S.C.R.

ATHE JOINT LABOUR COMMISSIONERAND REGISTERING OFFICER & ANR.

v.

KESAR LAL

(Civil Appeal No. 2014 of 2020)

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MARCH 17, 2020

[DR. DHANANJAYA Y. CHANDRACHUDAND AJAY RASTOGI, JJ.]

Consumer Protection Act, 1986 – s.2(d) and 2(1)(o)–C‘Consumer’– If includes beneficiary of a statutory welfare scheme– Parliament enacted 1996 Act to regulate employment, serviceconditions of building & other construction workers and also toprovide for their safety, health & welfare measures – Pursuantthereto, State of Rajasthan framed 2009 Rules – RajasthanDBuilding & Other Construction Workers Welfare Board wasconstituted – One of the schemes formulated by Board forbeneficiaries registered under the Act rendered financial assistanceon the occasion of marriage of a beneficiary’s daughter –Respondent obtained Labour Beneficiary Identity Card fromappellants after depositing Rs.25 as registration fee and Rs.60 asEannual contribution – Submitted application for availing financialaid for the marriage of his daughter – Rejected – District Forumdismissed respondent’s complaint – Order set aside by StateCommission – Affirmed by NCDRC – Held: Functions of the Boardsquarely fall within the definition of ‘service’ within the meaningFof s.2(1)(o) – Exception is a service rendered free of charge –Workers registered under 1996 Act are beneficiaries of schemesmade by the Board – Upon registration, every worker is requiredto make a contribution to the fund at such rate per month as maybe prescribed by State government – Fund is applied inter alia formeeting the expenses incurred to fulfill the objects & purposesGauthorized by legislation – True test is not whether the amountcontributed by beneficiary is adequate to defray the entire cost ofexpenditure envisaged under the scheme – So long as the servicerendered is not free of charge, any deficiency of service is amenableto the fora for redressal constituted under Consumer Act–Hu/s.2(1)(d), a ‘consumer’ includes not only a person who has hired or availed of service but even a beneficiary of a service – Publicauthorities such as the appellants constituted under an enactmentof Parliament are entrusted with a solemn duty of providing welfareservices to registered workers – Public accountability is asignificant consideration underlying the provisions of ConsumerAct – No reason to interfere with State Commission’s decision toaward the claim, subject to modification of rate of interest byNCDRC– Building and Other Construction Workers’(Regulation ofEmployment and Conditions of Service) Act, 1996 – ss.2(b), (k),11, 12, 16-18, 22, 24 – Building and Other Construction Workers’(Regulation of Employment and Conditions of Service) Rules,1998– Rajasthan Building and Other Construction Workers (Regulationof Employment and Conditions of Service) Rules, 2009 – rr.43-45,52, 58 – Building and Other Construction Workers Welfare CessAct, 1996.

Dismissing the appeal, the Court

Conclusion

Dismissing the appeal, the Court

HELD: 1.1 In relation to a service, the definition of theexpression incorporates in the first part any person who hiresor avails of any service for a consideration which has been paidor promised (wholly or in part). In its latter component, thedefinition includes the beneficiary of such a service other thanthe person who actually avails of the service for considerationpaid or promised, so long as such services are availed of withthe approval of the person who hires or avails of the service forconsideration. The ambit of the first component of theexpression in Section 2(d)(ii) is expanded by the inclusivedefinition in the latter component. The expression ‘beneficiary’is defined in Section 2(b), Building and Other ConstructionWorkers’ (Regulation of Employment and Conditions of Service)Act, 1996 to mean ‘a building worker registered under Section12’. The expression ‘fund’ is defined in Section 2(k) to mean‘the Building and Other Construction Workers Welfare Fund ofa Board constituted under sub-section (1) of Section 24’. Hence,every building worker who is registered as a beneficiary underthe enactment is entitled to the benefits provided by the Boardfrom the fund. The effect of a non-payment of the contributionunder sub-section (1) of Section 16 for a continuous period ofnot less than one year is that under Section 17 the individualceases to be a beneficiary. However, under the proviso, a person ABC

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Awho is in default is allowed to deposit the arrears if there wassufficient ground to satisfy the secretary of the Board in regardto the non-payment of the contribution, upon which theregistration is to stand restored. Section 22 provides for thefunctions of the Board. Under Section 24, the statute hasprovided for the constitution of a welfare fund into which areBcredited (i) grants and loans made to the Board by the Centralgovernment; (ii) contributions made by the beneficiaries; and (iii)sums received by the Board from other sources as decided bythe Central government. The fund is applied, under sub-section(2) of Section 24 to meet the expenses of the Board in theCdischarge of its statutory functions; towards payment of salaries,allowances and remuneration and for meeting the expenses onobjects and for purposes authorized by the Act. The Rules of2009 have been framed in terms of the provisions governing therule making power. Rule 43 provides for the constitution of theDwelfare fund. Rule 44 provides for the registration of buildingworkers as beneficiaries. Rule 45 provides for contributions tothe fund. Rule 52 provides for the expenditure from the fund.Under Rule 58, the Board is empowered to notify schemesregarding benefits. The Board has been entrusted with specificfunctions which have been defined in Section 22. These functionsEsquarely fall within the definition of the expression ‘service’within the meaning of Section 2(1)(o) of the Consumer ProtectionAct 1986. The expression ‘service’ has been defined in thewidest possible terms to mean ‘service of any description whichis made available to potential users’. The exception in SectionF2(1) (o) is a service which is rendered free of charge. Theworkers who are registered under the provisions of the Act of1996 are beneficiaries of the schemes made by the Board. Uponregistration, every worker is required to make a contributionto the fund at such rate per month as may be prescribed by theState government. The fund into which the contributions byGpersons who are registered under the Act are remitted,comprises among other sources, the contributions made by thebeneficiaries. The fund is applied inter alia for meeting theexpenses incurred to fulfill the objects and purposes authorizedby the legislation. In view of the statutory scheme, the servicesHwhich are rendered by the Board to the beneficiaries are not

services which are provided free of charge so as to constitutean exclusion from the statutory definition contained in Section2(1)(o) and Section 2(d)(ii) of the Consumer Protection Act 1986.The true test is not whether the amount which has beencontributed by the beneficiary is adequate to defray the entirecost of the expenditure envisaged under the scheme. So longas the service which has been rendered is not rendered free ofcharge, any deficiency of service is amenable to the fora forredressal constituted under the Consumer Protection Act 1986.The Act does not require an enquiry into whether the cost ofproviding the service is entirely defrayed from the price whichis paid for availing of the service. Under the definition containedin Section 2(1)(d), a ‘consumer’ includes not only a person whohas hired or availed of service but even a beneficiary of aservice. The registered workers are clearly beneficiaries of theservice provided by the Board in a statutory capacity. [Paras 12,13] [191-C-E; 196-C-F; 197-A-C; 198-C-F; 199-B-H]

1.2 As a matter of interpretation, the provisions containedin the Consumer Protection Act 1986 must be construed in apurposive manner. Parliament has provided a salutary remedyto consumers of both goods and services. Public authorities suchas the appellants who have been constituted under an enactmentof Parliament are entrusted with a solemn duty of providingwelfare services to registered workers. The workers who areregistered with the Board make contributions on the basis ofwhich they are entitled to avail of the services provided in termsof the schemes notified by the Board. Public accountability is asignificant consideration which underlies the provisions of theConsumer Protection Act 1986. The evolution of jurisprudencein relation to the enactment reflects the need to ensure a senseof public accountability by allowing consumers a redressal in thecontext of the discharge of non-sovereign functions which arenot rendered free of charge. This test is duly met in the presentcase. There is no reason to interfere with the ultimate decisionof the State Commission to award the claim, subject to themodification of the rate of interest by the order of the NationalCommission. [Paras 14, 15] [200-A-D]

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Dr. Manish Singhvi, Sr. Adv., D.K. Devesh, Sandeep Kumar Jha,Advs. for the Appellants.

P.V. Dinesh, Adv. (AC), Ms. Sindhu T.P., Mukund P Unny,Bineesh K., Ashwini Kumar Singh, C. Sanal Nambiar, Advs. for theRespondent.

The Judgment of the Court was delivered by DR. DHANANJAYA Y. CHANDRACHUD, J.

1. The neat issue which has to be adjudicated upon in this appealis whether a construction worker who is registered under the Buildingand Other Construction Workers’ (Regulation of Employment andConditions of Service) Act, 1996[1] and is a beneficiary of the Schememade 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 determinewhether a beneficiary of a statutory welfare scheme is entitled to exactaccountability by invoking the remedies under the Consumer ProtectionAct 1986.

2. Parliament enacted the Act of 1996 “to regulate the employmentand conditions of service of building and other construction workers andto provide for their safety, health and welfare measures and for othermatters connected therewith or with incidental thereto”. In pursuanceof the rule-making powers conferred by Sections 40 and 62, the UnionGovernment has framed the Building and Other Construction Workers’(Regulation of Employment and Conditions of Service) Rules, 1998. TheState of Rajasthan has also framed the Rajasthan Building and OtherConstruction Workers (Regulation of Employment and Conditions ofService) Rules in 2009[2]. In pursuance of the provisions contained inSection 18, the State government constituted the Rajasthan Building andOther Construction Workers Welfare Board. The Welfare Board hasformulated several schemes for beneficiaries registered under the Act.One of the schemes which was formulated on 1 August 2011 is forrendering financial assistance on the occasion of the marriage of adaughter of a beneficiary. The scheme envisages that financialassistance of Rs 51,000 is provided on the occasion of marriage, subjectto a limit of assistance on two occasions.

1 Act of 1996

2 Rules of 2009

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A3. The respondent obtained a Labour Beneficiary Identity Cardon 29 December 2011 under the Welfare Board from the appellants afterdepositing the registration fee of Rs 25 and an annual contribution ofRs 60. The identity card was valid for a period of one year, from 29December 2011 to 28 December 2012. Seeking to avail financial aidunder the scheme, the respondent submitted an application on 6BNovember 2012 in anticipation of the marriage of his daughter whichwas to take place on 24 November 2012. Nine months after theapplication was submitted, the Joint Commissioner of Labour, Jaipurissued an order of rejection covering 327 such applications, findingtechnical defects as a ground for the decision. The order reads thus:

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C“Upon scrutiny of applications received in this office, followingpoints 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 aftersolemnization of marriage and non-submission of affidavit orabsence of some information in application and letter was issuedDreminding to complete the details, and upon non- submission ofany answer to that in the office, it is not possible to grant themarriage assistance amount hence in following matters (list of327 cases is annexed) the application for the marriage assistanceare rejected.”E

4. The respondent instituted a consumer complaint before theDistrict Consumer Disputes Redressal Forum[3]. The complaint wasdismissed on 6 October 2016. In appeal, the State Consumer DisputesRedressal Commission[4] set aside the order of the District Forum on20 August 2019 and directed the appellants to pay an amount of RsF51,000 to the respondent together with Rs 10,000 as compensation, Rs5,000 for expenses and interest of 18 per cent per annum from the dateof the institution of the complaint. The National Consumer DisputesRedressal Commission[5] by its judgment and order dated 25 October2019 affirmed the decision, overruling the objection that the respondentis not a ‘consumer’ within the meaning of the Consumer ProtectionGAct 1986. The National Commission, however, reduced the rate ofinterest from 18 percent per annum to 9 percent per annum. The presentappeal has arisen from the order of the National Commission.

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3 District Forum

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5. On 27 January 2000, the appellants stated before this Courtthat the amount which was awarded to the respondent would be paid.The appellants, however, pressed the question of law. Instead of saddlingthe respondent who is a construction worker with the insuperable burdenof defending the proceedings before this Court, we requested Mr PVDinesh, learned counsel to assist the Court as amicus curiae. We wishto record our appreciation of the able and objective assistance whichhas been rendered to the Court by Mr PV Dinesh.

6. Dr Manish Singhvi, learned Senior Counsel appearing on behalfof the appellants, urged the following submissions:

(i) Parliament enacted the Building and Other ConstructionWorkers Welfare Cess Act, 1996[6]. The cess which iscollected under the Act is contributed to the fund. Thefund is defined both under the Cess Act of 1996 as wellas the Act of 1996. The cess which is collected formsa part of the Welfare Board constituted under Section24(1). The collection of the cess which runs intothousands of crores becomes part of the fund which isgenerated from the compulsory exaction from employerswho engage construction workers;

(ii) A circular was issued on 25 January 2011 by the Stateof Rajasthan for the registration of construction workers.Under the circular, at the relevant point of time, anamount of Rs 25 was to be deposited as subscriptionfee for the preparation of an identification card whileRs 60 per year was charged as a contribution underSection 16(1) of the Act of 1996. On 24 November 2015the subscription was reduced to Re 1 per month (Rs 12per annum) so as to comprise of a payment of Rs 60for a period of five years. This contribution is in thenature of a token amount to ensure registration andidentification of building workers who can avail of thebenefits under the Act of 1996 and even this contributioncan be relaxed under the proviso to Section 16(1) uponthe satisfaction of the Board that the beneficiary is unableto pay the contribution; A

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184SUPREME COURT REPORTS

A(iii) About 22,46,904 workers have been registered under theAct of 1996, out of which about 64,678 have benefitedunder the scheme between 2010-11 and 2019-20. Outof a cess of Rs 2,671 crores which has been collected,about Rs 1,488 crores is expended for the welfareschemes. The welfare schemes are funded by the cessBand not by the contributions made under Section 16(1).Between 2010 and 2020, the contribution of the workersis Rs 27.92 crores which is meagre in comparison tothe expenditure on the welfare schemes;

(iv) The welfare schemes initiated by the State governmentCare to keep up with the rapid expansion of welfareactivities. The cess which is collected under the CessAct is for a specific purpose. The cess is nothing but atax under Article 366(28) of the Constitution;

(v) Undoubtedly, where the state for its multifariousDfunctions, charges a fee and services are rendered ona quid pro quo basis, the activities of the State wouldbe amenable to the jurisdiction of a consumer forumwhen a complaint of deficiency of service is made;

(vi) On the other hand, where the State commits itself toEwelfare schemes and a negligible amount is charged intoken of the services which are rendered, thebeneficiary of a service is not a ‘consumer’ within themeaning of Section 2(d) of the Consumer Protection Act1986. Such services are primarily financed out ofFbudgetary allocations. In the present case, though aservice is rendered by the Board, the expenditure on thewelfare scheme is defrayed from the cess which iscollected and hence, is not a ‘service’ within the meaningof Consumer Protection Act 1986;

G(vii) In Bihar School Examination Board v SureshPrasad Sinha[7](“Bihar School Examination Board”)this Court held that where a statutory function was beingdischarged by a public examination authority, a studentaggrieved by the evaluation of the answer was not a H7 (2009) 8 SCC 483

‘consumer’ nor was the Board a ‘service provider’. Ona parity of reasoning, the Welfare Board is not a serviceprovider under the Consumer Protection Act 1986;

(viii) In the two decisions of this Court in RegionalProvident Commissioner v Shiv Kumar Joshi[8](“ShivKumar Joshi”) and Regional Provident FundCommissioner v Bhawani[9], it was held that theRegional Provident Fund Commissioner is a serviceprovider within the meaning of Section 2(1)(o) of theConsumer Protection Act 1986. These decisions aresought to be distinguished on the ground that the corpusof the EPF scheme is contributed by the employers andthe employees, there being no contribution by the Stateout of the tax revenues. In a recent judgment of thisCourt in Ministry of Water Resources v ShreepatRao Kamde[10](“Shreepat Rao Kamde”) decided on6 November 2019, it has been held that a governmentservant who makes a contribution to the GeneralProvident Fund lies outside the purview of the ConsumerProtection Act 1986; and

(ix) The edifice of the Consumer Protection Act 1986 is tocodify a remedy for a contractual or commercialtransaction in substitution of the remedy of filing a civilsuit. The enactment of the Consumer Protection Act1986 does not cover a redressal mechanism for an injurywhich is caused absent a commercial or businesstransaction. The Act will not cover the services providedby the State in the discharge of its welfare functionswhich are highly subsidized or free.

7. Mr PV Dinesh, learned amicus curiae has, in his detailedwritten submissions, controverted the logic of the approach which hasbeen adopted by the appellants. Mr Dinesh submits that the salientfeatures 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; 8 (2000) 1 SCC 98

9 (2008) 7 SCC 111

10 Civil Appeal No 8472 of 2019

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A(ii) Under Section 12, every worker should be registered asa beneficiary. Section 12(3) provides that an applicationmust be submitted with documents together with a feenot exceeding Rs 50 as may be prescribed;

(iii) Section 18 deals with the constitution of the StateWelfare Board which is a body corporate havingperpetual succession and a common seal; B

(iv) Section 24 requires the constitution of a WorkersWelfare Fund into which the contribution of thebeneficiaries is credited. The provisions of Rules 28 and43 implement Section 24.

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(v) Under Rule 43(b), the contribution paid by a beneficiaryforms a part of the fund together with grants, loans, sumsreceived by the Board and advances from the Union orState Governments, local authorities and other resourcesas decided by the Central or State Governments; D

(vi) Rule 45 deals with the contribution to be made by eachbeneficiary and the consequence of non-contribution;

(vii) Rules 58, 59 and 60 deal with the notification of variouswelfare schemes.

E8. Based on the above provisions of the Act and the Rules, MrPV Dinesh submitted that:

(i) Every construction worker who is a beneficiary underthe Act and the Rules is a contributor to the workers’welfare fund, and the service which is provided is notFgratuitous;

(ii) The welfare schemes which are implemented by theBoard cannot be construed as a sovereign function. TheState Welfare Board is a body corporate which iscapable of suing and being sued; G

(iii) Though the claims of benefits provided under the schemeare higher than the contribution by the worker –beneficiary, this cannot be a reason to hold that it is nota contribution;

(iv) In the context of the denial of insurance claims, thisHCourt while construing the provisions of Section 2(d) of

the Consumer Protection Act 1986, has held in CanaraBank v United India Insurance Company Limited[11](“Canara Bank”) that even a beneficiary who is not aparty to the contract is a ‘consumer’ under the Act;

(v) In the present case, there was a gross deficiency ofservice on the part of the appellants and the denial ofbenefits under the welfare scheme was casual andmechanical. A poor construction worker was constrainedto approach the consumer court, faced with the rejectionof his application on the specious ground that it was notaccompanied by an application for exemption from theprocedural requirement of submitting it 90 days beforethe marriage of his daughter. The defect, if any, wascurable and not fatal; and

(vi) The remedy under the Consumer Protection Act 1986is a valuable provision made by the Parliament to provideaccess to justice and the purpose embedded in theConsumer Protection Act 1986 will be defeated if aconstruction worker is required to approach a civil courtor the writ jurisdiction under Article 226 to seek reliefof a small claim.

In this context, reliance has been placed on the decisions inLucknow Development Authority v M.K. Gupta[12](“LucknowDevelopment Authority”), Shiv Kumar Joshi and Punjab UrbanPlanning and Development Authority (now GLADA) v VidyaChetal[13](“Vidya Chetal”).

9. The rival submissions will now be analysed.

10. Before we deal with the specific issues of law which havebeen raised in these proceedings, we begin with a reference to ajudgment of a two Judge bench of this Court in National CampaignCommittee for the Central Legislation on Construction Labourv Union of India[14]. The judgment of this Court took note of the statusof the implementation of the Act of 1996 and the Cess Act. Reviewing 11 2020 SCC Online SC 13212 (1994) 1 SCC 24313 (2019) 9 SCC 8314 (2018) 5 SCC 607

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Athe status of implementation across the country, Justice Madan B Lokurprefaced the judgment with the following observations:

“Symbolic justice—there is nothing more to offer to severalmillions of construction workers in the unorganisedsector—not social justice, not economic justice. TheBreason is quite simple. No State Government and no UnionTerritory Administration (UTA) seems willing to fullyadhere to and abide by (or is perhaps even capable of fullyadhering to and abiding by) two laws solemnly enacted byParliament, namely, the Building and Other ConstructionWorkers’ (Regulation of Employment and Conditions of Service)CAct, 1996 (the BOCW Act) and the Building and OtherConstruction Workers’ Welfare Cess Act, 1996 (the Cess Act).Directions given by this Court from time to time toimplement the two laws have been flouted with impunity.What is equally tragic is that multiple directions issued even byDthe Government of India under Section 60 of the BOCW Acthave been disregarded by State Governments and UTAs — andthis is candidly admitted in a statement made by the learnedAdditional Solicitor General in this Court and also by the Unionof India on affidavit. Hopefully, the gravity of the situationin the constitutional and federal context, the human rightsEand social justice context will be realised by someone,somewhere and at some time.”

The Court noted that more than Rs 37,400 crores has beencollected for the benefit of construction workers under the Cess ActFof which only an amount of Rs 9,500 crores has been utilized, ostensiblyfor their benefit. The Court emphasised that these laws were enactedto implement the Directive Principles of State Policy contained in Articles39 and 42 of the Constitution and for enforcing the right to life underArticle 21. The Court observed that monies which have been earmarkedGfor construction workers had not been spent, and a clear picture emergesabout the shocking state of affairs in regard to the welfare boards acrossthe country. The Court noted:

“…Overall, the affidavits gave a clear picture of a shocking stateof affairs inasmuch as some Welfare Boards had expenditureHout of the collected cess for payment of entry tax/value added tax, purchase of washing machines for constructionworkers and purchase of laptops for construction workers.This Court found that rather astonishing since it appearedthat there was no rationale in providing washing machines andlaptops to construction workers who were by and large poor anduneducated as well as migrant labour…”

Adverting to the vulnerabilities of the construction workers, theCourt noted:

“What makes the situation even worse is that many of theconstruction workers are believed to be women and at least someof them have small children to look after. That even they arevictims of official apathy truly reflects a very sad state of affairs,and the loss already caused to them and other constructionworkers cannot be remedied. The reason for this is that it is notknown which construction worker is entitled to get how much interms of money or what benefit and under which scheme. Someof these construction workers from the 1990s and even later, mayperhaps have unfortunately passed away or might be untraceableor old enough to deserve a pension. The question therefore is:what should be done with the thousands of crores that have beencollected for the benefit of construction workers but cannot beutilised for their benefit? Can the State Governments and theUTAs or the Welfare Boards unjustly benefit and fill their coffersat 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 anyanswers at all — it is entirely for the Government of India andParliament to decide how to legally appropriate these thousandsof crores of rupees and then utilise the amounts for the benefitof construction workers, at least for the future, assuming nothingcan be done for the past. It is a mammoth task for which thepowers that be must brace themselves, if they are serious inassisting people with multiple vulnerabilities.”

The position in the State of Rajasthan was specifically mentionedin the judgment with regard to the failure to utilize the cess which wascollected. The judgment noted that though in 2011-12, an amount ofRs 154.01 crores was collected, no figures for expenditure were A

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Asubmitted. For 2012-13, an amount of Rs 173.83 crores was collectedwhile the expenditure incurred for various schemes was only Rs 11.95crores. In 2013- 14, an amount of Rs 251.95 crores was collected, ofwhich only Rs 25.93 crores was spent.

11. The appellants have been entrusted with the solemn duty ofBenforcing and implementing the provisions of the welfare legislationwhich has been enacted by Parliament specifically to ameliorate theplight of construction workers. Construction workers belong to theunorganized sector of the economy. Many among them are women.Child labour is rampant. Their vulnerabilities have been attempted tobe safeguarded by a law which unfortunately has not been implementedCeither in letter, or in spirit. Yet, we have in the present case, thespectacle of a statutory welfare board seeking to exempt itself frombeing held accountable to the remedies provided under the ConsumerProtection Act 1986. The submission which has been urged before theCourt, simply put, boils down to this: the beneficiaries of the serviceDpay such a meagre amount as contributions that they cannot be regardedas ‘consumers’ within the meaning of Section 2(d) of the ConsumerProtection Act 1986. That is the submission which now falls forconsideration.

12. Section 2(d) of the Consumer Protection Act 1986 providesEas follows:

“(d) “consumer” means any person who,—

(i) buys any goods for a consideration which has been paidor promised or partly paid and partly promised, or underany system of deferred payment and includes any userFof such goods other than the person who buys suchgoods for consideration paid or promised or partly paidor partly promised, or under any system of deferredpayment when such use is made with the approval ofsuch person, but does not include a person who obtainsGsuch goods for resale or for any commercial purpose;or

(ii) [hires or avails of] any services for a considerationwhich has been paid or promised or partly paid and partlypromised, or under any system of deferred payment andincludes any beneficiary of such services other than theH

person who 8[hires or avails of] the services forconsideration paid or promised, or partly paid and partlypromised, or under any system of deferred payment,when such services are availed of with the approval ofthe first mentioned person [but does not include a personwho avails of such services for any commercialpurpose]; [Explanation.—For the purposes of this clause,“commercial purpose” does not include use by a personof goods bought and used by him and services availedby him exclusively for the purposes of earning hislivelihood by means of self- employment; ]”

In relation to a service, the definition of the expressionincorporates in the first part any person who hires or avails of anyservice for a consideration which has been paid or promised (whollyor in part). In its latter component, the definition includes the beneficiaryof such a service other than the person who actually avails of the servicefor consideration paid or promised, so long as such services are availedof with the approval of the person who hires or avails of the servicefor consideration. The ambit of the first component of the expressionin Section 2(d)(ii) is expanded by the inclusive definition in the lattercomponent. This was noticed in the judgment of a two Judge bench ofthis Court in Lucknow Development Authority where Justice RMSahai, speaking for the Court, explained the ambit of Section 2(d):

“It is in two parts. The first deals with goods and the other withservices. Both parts first declare the meaning of goods andservices by use of wide expressions. Their ambit is furtherenlarged by use of inclusive clause. For instance, it is not onlypurchaser of goods or hirer of services but even those who usethe goods or who are beneficiaries of services with approval ofthe person who purchased the goods or who hired services areincluded in it..”

Emphasising the accountability of public authorities, the Courtobserved:

“Under our Constitution sovereignty vests in the people. Everylimb of the constitutional machinery is obliged to be peopleoriented. No functionary in exercise of statutory power can claim A

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Aimmunity, except to the extent protected by the statute itself.Public authorities acting in violation of constitutional or statutoryprovisions oppressively are accountable for their behavior beforeauthorities created under the statute like the commission or thecourts entrusted with responsibility of maintaining the rule of law.Each hierarchy in the Act is empowered to entertain a complaintBby the consumer for value of the goods or services andcompensation…”

In Shiv Kumar Joshi, a Bench of two learned Judges of thisCourt held that the invocation of the remedies under the ConsumerProtection Act 1986 is permissible against the Provident FundCCommissioner by a member of the Employees’ Provident FundScheme. The Court held that the Regional Provident FundCommissioner discharges a statutory function and is not delegated withany of the sovereign powers of the State. In that context, the Courtheld:

D“…The definition of “consumer” under the Act includes not onlythe person who hires the “services” for consideration but alsothe beneficiary, for whose benefits such services are hired. Evenif it is held that administrative charges are paid by the CentralGovernment and no part of it is paid by the employee, the servicesEof the Provident Fund Commissioner in running the Scheme shallbe deemed to have been availed of for consideration by theCentral Government for the benefit of employees who would betreated as beneficiaries within the meaning of that word used inthe definition of “consumer”...”

FThe Court rejected the submission that the services which areprovided under the EPF Scheme are rendered free of charge andtherefore, would not qualify as a service under the Consumer ProtectionAct 1986. The same view has been reiterated by a Bench of threelearned Judges of this Court in Vidya Chetal. The reference beforethe three Judge Bench arose upon a doubt having been expressed inGregard to the correctness of the decision of a two Judge Bench inHUDA v Sunita[15]. The issue was whether the National Commissionlacks the jurisdiction to decide the legitimacy of a demand for acomposition 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 leftthe task to expound the provision on a case-to-case basis to thejudiciary. The purpose of leaving this provision open ended,without providing an exhaustive list indicates the requirement fora liberal interpretation. Broadly speaking, it is inclusive of all thoseservices performed for a consideration, except gratuitous servicesand contract of personal services. Moreover, the aforesaidprovision reflects the legislative intent of providing impetus to“consumerism”. It may be noted that such a phenomenon hashad a benevolent effect on the government undertakings, whereina new dynamism of innovation, accountability and transparencyare imbibed.”

Justice NV Ramana, speaking for the three Judge Bench, notedthat all statutory obligations are not sovereign functions. Althoughsovereign functions/services are regulated and performed under aconstitutional/statutory framework, yet there are other functions, whichmay be statutory, but cannot be called as sovereign functions. The Courtheld:

“..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, fordeficiency in service, or specifically provides for an alternativeforum, the consumer forums would continue to have thejurisdiction to deal with the same. We need to caution againstover-inclusivity and the tribunals need to satisfy theingredients under Consumer Protection Laws, beforeexercising the jurisdiction.”

In the view of the Court:

“Therefore, it is a clearly established principle that certainstatutory dues, such as fees, can arise out of a specific relation.

16 2. (1)(o) “service” means service of any description which is made available topotential users and includes, but not limited to, the provision of facilities in connectionwith banking, financing, insurance, transport, processing, supply of electrical or otherenergy, board or lodging or both, housing construction, entertainment, amusement orthe purveying of news or other information, but does not include the rendering ofany service free of charge or under a contract of personal service;”

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ASuch statutory dues might be charged as a quid pro quo for aprivilege conferred or for a service rendered by the authority.As noted above, there are exactions which are for the commonburden, 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 allBstatutory dues/exactions are amenable to the jurisdiction of theconsumer forum, rather only those exactions which are exactedfor a service rendered, would be amenable to the jurisdiction ofthe consumer forum.”

A Bench of two learned judges has in Canara Bank elaboratedCupon the width of the definition contained in Section 2(d)(ii) in relationto the availing or hiring of services. Justice Deepak Gupta, speakingfor the Bench, held:

“..As far as the definition of the consumer in relation to hiringor availing of services is concerned, the definition, in our view,Dis much wider. In this part of the section, consumer includes notonly the person who has hired or availed of the services but alsoincludes any beneficiary of such services. Therefore, an insuredcould be a person who hires or avails of the services of theinsurance company but there could be many other persons whoEcould be the beneficiaries of the services. It is not necessary thatthose beneficiaries should be parties to the contract of insurance.They are the consumers not because they are parties to thecontract of insurance but because they are the beneficiaries ofthe policy taken out by the insured.”FThe Court consequently came to the conclusion that a beneficiaryof a service, in the context of a contract of insurance, need not be aparty to the contract. Beneficiaries fall within the purview of theexpression ‘consumer’.

In Bihar School Examination Board, the question before theGCourt was whether a statutory School Examination Board falls withinthe purview of the Consumer Protection Act 1986 when it performs astatutory function of conducting examinations. A two judge Bench ofthis Court held that the fee paid by a student to the Board for the conductof examinations does not amount to a ‘consideration’ paid for a service.HJustice Markandey Katju, speaking for the Court observed:

“When the Examination Board conducts an examination indischarge of its statutory function, it does not offer its “services”to any candidate. Nor does a student who participates in theexamination conducted by the Board, hire or avail of any servicefrom the Board for a consideration. On the other hand, acandidate who participates in the examination conducted by theBoard, is a person who has undergone a course of study andwho requests the Board to test him as to whether he has imbibedsufficient knowledge to be fit to be declared as having successfullycompleted the said course of education; and if so, determine hisposition or rank or competence vis-à-vis other examinees. Theprocess is not, therefore, availment of a service by astudent, but participation in a general examinationconducted by the Board to ascertain whether he is eligibleand fit to be considered as having successfully completedthe secondary education course. The examination fee paidby the student is not the consideration for availment of anyservice, but the charge paid for the privilege ofparticipation in the examination.”

(Emphasis supplied)

In Shreepat Rao Kamde, the issue before the Court waswhether a subscriber to the General Provident Fund fulfills the definitionof being a ‘consumer’ within the meaning of the Consumer ProtectionAct 1986. The issue had been considered in an earlier decision of thisCourt in Jagmittar Sain Bhagat v Director, Health Services,Haryana[17], and was answered in the negative, holding that agovernment servant is entitled to claim retiral benefits strictly inaccordance with the regulations governing the conditions of service andthe statutory rules for which the appropriate forum for redressal wouldbe the State Administrative Tribunal, if any, or the civil court but notthe consumer forum. It was held thus:

“…it is evident that by no stretch of imagination can agovernment servant raise any dispute regarding his serviceconditions or for payment of gratuity or GPF or any of hisretiral benefits before any of the forum under the Act. Thegovernment servant does not fall under the definition of a“consumer” as defined under Section 2(1)(d)(ii) of the Act.

ABC

D

E

F

G

H

A

Such government servant is entitled to claim his retiral benefitsstrictly in accordance with his service conditions and regulationsor statutory rules framed for that purpose. The appropriate forum,for redressal of any of his grievance, may be the StateAdministrative Tribunal, if any, or the civil court but certainly nota forum under the Act.”

B

(Emphasis added)

This decision was followed by the two judge Bench in ShreepatRao Kamde. Justice Uday Umesh Lalit noted that in view of the earlierdecision, a consumer complaint in regard to the dues payable under theCGPF was not amenable under the Consumer Protection Act 1986.

13. Now it is in this context that it is necessary to briefly advertto the provisions of the Act of 1996. The expression ‘beneficiary’ isdefined in Section 2(b) to mean ‘a building worker registered underSection 12’. The expression ‘fund’ is defined in Section 2(k) to meanD‘the Building and Other Construction Workers Welfare Fund of a Boardconstituted under sub-section (1) of Section 24’. Section 11 speaks ofthe beneficiaries of the fund:

“11. Beneficiaries of the Fund:-Subject to the provisions ofthis Act, every building worker registered as a beneficiary underthis Act shall be entitled to the benefits provided by the BoardEfrom its Fund under this Act.”

Hence, every building worker who is registered as a beneficiaryunder the enactment is entitled to the benefits provided by the Boardfrom the fund. Section 16 requires a building worker who has beenregistered as a beneficiary to make a contribution:F

“16. Contribution of building workers:- (1) A building workerwho has been registered as a beneficiary under this Act shall,until he attains the age of sixty years, contribute to the Fund atsuch rate per mensem, as may be specified by the StateGovernment, by notification in the Official Gazette and differentGrates of contribution may be specified for different classes ofbuilding workers:

Provided that the Board may, if satisfied that a beneficiary isunable to pay his contribution due to any financial hardship, waivethe payment of contribution for a period not exceeding threeHmonths at a time.

(2) A beneficiary may authorise his employer to deduct hiscontribution from his monthly wages and to remit the same, withinfifteen 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 isthat under Section 17 the individual ceases to be a beneficiary. However,under the proviso, a person who is in default is allowed to deposit thearrears if there was sufficient ground to satisfy the secretary of theBoard in regard to the non-payment of the contribution, upon whichthe registration is to stand restored. Section 18 provides for theconstitution of the State Welfare Boards. Section 22 provides for thefunctions of the Board in the following terms:

“22. Functions of the Boards:-(1) The Board may—

(a) provide immediate assistance to a beneficiary in caseof accident; (b) make payment of pension to the beneficiaries who havecompleted the age of sixty years;

(c) sanction loans and advances to a beneficiary forconstruction of a house not exceeding such amount andon such terms and conditions as may be prescribed; (d) pay such amount in connection with premia for GroupInsurance Scheme of the beneficiaries as may beprescribed; (e) give such financial assistance for the education ofchildren of the beneficiaries as may be prescribed; (f) meet such medical expenses for treatment of majorailments of a beneficiary or, such dependent, as may beprescribed; (g) make payment of maternity benefit to the femalebeneficiaries; and (h) make provision and improvement of such other welfaremeasures and facilities as may be prescribed.

(2) The Board may grant loan or subsidy to a local authority oran employer in aid of any scheme approved by the StateGovernment for the purpose connected with the welfare ofbuilding workers in any establishment.

A

B

C

D

E

F

G

H

A

(3) The Board may pay annually grants-in-aid to a local authorityor to an employer who provides to the satisfaction of the Boardwelfare measures and facilities of the standard specified by theBoard for the benefit of the building workers and the membersof their family, so, however that the amount payable as grants-in-aid to any local authority or employer shall not exceed—

B

(a) the amount spent in providing welfare measures andfacilities as determined by the State Government or anyperson specified by it in this behalf, or (b) such amount as may be prescribed. whichever is less:

C

Provided that no grant-in-aid shall be payable in respect of anysuch welfare measures and facilities where the amount spentthereon determined as aforesaid is less than the amountprescribed in this behalf.”

Under Section 24, the statute has provided for the constitutionDof a welfare fund into which are credited (i) grants and loans made tothe Board by the Central government; (ii) contributions made by thebeneficiaries; and (iii) sums received by the Board from other sourcesas decided by the Central government. The fund is applied, under sub-sectionE(2) of Section 24 to meet the expenses of the Board in the

(2) of Section 24 to meet the expenses of the Board in thedischarge of its statutory functions; towards payment of salaries,allowances and remuneration and for meeting the expenses on objectsand for purposes authorized by the Act. The Rules of 2009 have beenframed in terms of the provisions governing the rule making power. Rule43 provides for the constitution of the welfare fund. Rule 44 providesFfor the registration of building workers as beneficiaries. Rule 45 providesfor contributions to the fund:

“45. Contribution to the Fund.-(1) A beneficiary of the fundshall contribute to the fund at such rate per mensem as may benotified by the State Government under section 16 of the Act.GThis contribution shall be remitted in advance once in threemonths in any of the banks specified by the Board in the districtin which the member resides.

(2) If a beneficiary commits default in the payment of contributioncontinuously for a period of one year, he shall cease to be H

beneficiary of the Fund. However, with the permission of theSecretary or an officer authorized by him in this behalf themembership may be resumed on repayment of arrears ofcontribution with a fine of Rs 2 per month subject to the conditionthat such resumption shall not be allowed more than twice.”

Rule 52 provides for the expenditure from the fund. Under Rule58, the Board is empowered to notify schemes regarding benefits. TheBoard has been entrusted with specific functions which have beendefined in Section 22. These functions squarely fall within the definitionof the expression ‘service’ within the meaning of Section 2(1)(o) ofthe Consumer Protection Act 1986. The expression ‘service’ has beendefined in the widest possible terms to mean ‘service of any descriptionwhich is made available to potential users’. The exception in Section2(1)(o) is a service which is rendered free of charge. The workers whoare registered under the provisions of the Act of 1996 are beneficiariesof the schemes made by the Board. Upon registration, every workeris required to make a contribution to the fund at such rate per monthas may be prescribed by the State government. The fund into whichthe contributions by persons who are registered under the Act areremitted, comprises among other sources, the contributions made bythe beneficiaries. The fund is applied inter alia for meeting the expensesincurred to fulfill the objects and purposes authorized by the legislation.

In view of the statutory scheme, the services which are rendered bythe Board to the beneficiaries are not services which are provided freeof charge so as to constitute an exclusion from the statutory definitioncontained in Section 2(1)(o) and Section 2(d)(ii) of the ConsumerProtection Act 1986. The true test is not whether the amount whichhas been contributed by the beneficiary is adequate to defray the entirecost of the expenditure envisaged under the scheme. So long as theservice which has been rendered is not rendered free of charge, anydeficiency of service is amenable to the fora for redressal constitutedunder the Consumer Protection Act 1986. The Act does not require an

enquiry into whether the cost of providing the service is entirelydefrayed from the price which is paid for availing of the service. Aswe have seen from the definition contained in Section 2(1)(d), a‘consumer’ includes not only a person who has hired or availed ofservice but even a beneficiary of a service. The registered workersare clearly beneficiaries of the service provided by the Board in astatutory capacity.

A

BC

D

E

F

G

H

A14. As a matter of interpretation, the provisions contained in theConsumer Protection Act 1986 must be construed in a purposivemanner. Parliament has provided a salutary remedy to consumers ofboth goods and services. Public authorities such as the appellants whohave been constituted under an enactment of Parliament are entrustedwith a solemn duty of providing welfare services to registered workers.BThe workers who are registered with the Board make contributions onthe basis of which they are entitled to avail of the services provided interms of the schemes notified by the Board. Public accountability is asignificant consideration which underlies the provisions of the ConsumerProtection Act 1986. The evolution of jurisprudence in relation to theCenactment reflects the need to ensure a sense of public accountabilityby allowing consumers a redressal in the context of the discharge ofnon-sovereign functions which are not rendered free of charge. Thistest is duly met in the present case.

15. Consequently, and for the reasons that we have indicated,Dthere is no reason to interfere with the ultimate decision of the StateCommission to award the claim, subject to the modification of the rateof interest by the order of the National Commission. The appeal shallaccordingly stand dismissed. There shall be no order as to costs.

EDivya Pandey

Appeal dismissed.

F

G

H