Andhra Pradesh High Court - Amravati
M/S Aurobindo Pharma Ltd., vs The Regional Vigilance Enforcement, on 5 October, 2021
Author: U.Durga Prasad Rao
Bench: U. Durga Prasad Rao
HON'BLE SRI JUSTICE U. DURGA PRASAD RAO
Writ Petition No.20040 of 2009
ORDER:
The petitioner pharma company implores for writ of mandamus declaring the notice vide C.No.21/ V&E /SKL /DEV /2009, dated 03.08.2009 issued by respondent No.1, as arbitrary, illegal and void and against Articles 14 and 19(1)(g) of the Constitution of India and also against the provisions of the Building and other Construction workers (Regulation of Employment and Conditions of Service) Act, 1996 (for short, 'the BOCW Act 27 of 1996') and for such other orders.
2. The petitioner's case succinctly is thus:
The petitioner company is a manufacturer and trader in bulk drugs and formulations and for the said purpose it has established one of its factories in the year 2002 at its land situated in Pydibhimavaram Village and Chittivalasa Village, Ranasthalam Mandal, Srikakulam District. In the year 2008 the petitioner company has decided to expand its activity at the said factory site by making construction that are necessary for setting up its additional plant and machinery, storage, upkeep, maintenance etc. Such expansion activity is governed by Section 6(1)(aa) of the Factories Act, 1948. The petitioner company submitted relevant construction plans to the Inspector of Factory, Government of Andhra Pradesh and obtained approval.
While so, the respondent No.2 issued notice dated 06.04.2009 to the petitioner directing to deduct 1% cess on all the bills paid to contractors who has undertaken building or other construction work from 26.06.2007 and 2 remit it to Andhra Pradesh Building and other Construction workers welfare fund in terms of Act 27 of 1996 though the buildings and other premises come under the purview of Factories Act, 1948. The petitioner company submitted its objections. Again respondent No.2 issued notice dated 24.04.2009 under the Building and Other Construction Workers Welfare Cess Act, 1996 (for short 'Act 28 of 1996') directing the petitioner to submit records to make assessment of cess payable from 26.06.2007. For the said notice also the petitioner submitted a detailed reply along with approved plans stating that the construction works carried out at the petitioner's site in Pydibhimavaram and Chittivalasa village are for extension of factory and establishment of its additional plant and machinery and those constructions are governed by Section-6 of the Factories Act, 1948 and as such they are not covered by the BOCW Act 27 of 1996 and Act 28 of 1996.
Subsequently, on 29.06.2009 the respondent No.1 herein issued notice vide C.No.21/V&E/SKL/DEV/2009 calling upon the petitioner to furnish the particulars of remittances of labour cess on the cost of works valued more than Rs.10 lakhs carried out since 26.06.2007 at the petitioner's unit. The petitioner submitted its explanation. However, without properly considering the objections raised by the petitioner, the respondent No.1 herein issued impugned notice C.No.21/ V&E /SKL /DEV /2009, dated 03.08.2009 directing the petitioner to pay the cess.
Hence, the writ petition.
3. The 2nd respondent filed counter opposing the writ petition inter alia contending thus:
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The petitioner's contention that the work now carried on in the factory premises is an extension to the factory and hence, said establishment is covered under the Factories Act and therefore, the petitioner is not liable to pay cess under the BOCW Act 27 of 1996 is not correct. The BOCW Act 27 of 1996 applies to all "establishments" employing 10 or more workers on any day. The term 'establishment' means any establishment belonging to, or under the control of the Government or any body corporate or firm, an individual or association or other body of individuals who employees building workers in any building or other construction of work and includes an establishment belonging to a contractor, but does not include an individual who employs such workers in any building or construction work in relation to his own residence the total cost of such construction not being more than Rs.10.00 lakhs. Even in case of the Central Government Departments and Establishments which should be registered with the Central Government Labour Officers, even then they are liable to pay cess to the A.P. Building and the Constructions Welfare Board. Therefore, the petitioner's establishment is covered under the Building and other Constructions Workers Act. The exclusion provided under Section 2(d) of the BOCW Act 27 of 1996 in respect of certain works under the Factories Act and Mines Act, is not applicable to the establishment like the petitioner herein. The pre-requirements such as construction of building for Factories do not come under the manufacturing process as per Section 2(k) of the Factories Act. Hence, the workers connected to pre-requirement will not come under Section 2(m) of the Factories Act. Therefore, the establishment who employs the workers for pre-requirement will not come under Section 4 2(m) of the Factories Act. For this reason it is not correct to say that the pre- requirements for extension of the factory are excluded from the purview of Section 2(d) of BOCW Act 27 of 1996. Such exclusion is not permissible even if the license is obtained under the Factories Act.
It is further contended that the Factories Act is engaged for the welfare, health and safety of the workers only in the Factories, whereas the BOCW Act, 27 of 1996 and Act 28 of 1996 are enacted for the welfare, health and safety of building and other construction workers who work for pre-requirement of the factories. The contents in the reply submitted by the petitioner to the notices issued by the respondent are not correct. The respondents thus prayed to dismiss the writ petition.
4. Heard learned counsel for the petitioner Sri Vikram Pooserla and learned Government Pleader for Finance and Labour representing respondents.
5. It must be made clear that the contention of learned counsel for the petitioner that inasmuch as the petitioner obtained permit from the Factory Inspector to construct the Factory and therefore, the subject construction would squarely comes under the Factories Act, 1948 but not under BOCW Act 27 of 1996 and Act 28 of 1996 and therefore, the petitioner need not collect cess from the payments made to the contractor and remit to the respondent can only be considered to be rejected, for, the question of law raised by the petitioner is no more res integra as Hon'ble Apex Court 5 considered and rejected the said contention in Lanco Anpara Power Limited v. State of Uttar Pradesh1. It was observed thus:
"37. We now advert to the core issue touching upon the construction of Section 2(1)(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(1)(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 the third part excludes those building or other construction work to which the provisions of the Factories Act or the Mines Act apply.
38. It is not in dispute that construction of the projects of the appellants is covered by the definition of "building or other construction work" as it satisfies first two elements of the definition pointed out above. In order to see whether exclusion clause applies, we need to interpret the words "but does not include any building or other construction work to which the provisions of the Factories Act ... apply" (emphasis supplied). The question is as to whether the provisions of the Factories Act apply to the construction of building/project of the appellants. We are of the firm opinion that they do not apply. The provisions of the Factories Act would "apply" only when the manufacturing process starts for which the building/project is being constructed and not to the activity of construction of the project. That is how the exclusion clause is to be interpreted and that would be the plain meaning of the said clause.
46. We are left to deal with the argument of the appellants that while granting permission under the Factories Act, various conditions are imposed which the appellants are required to fulfil and these conditions are almost the same which are contained in the BOCW Act. We are not convinced with this submission either. It is already held that provisions of the Factories Act are not applicable to these construction workers. Registration under the Factories Act becomes necessary in view of the 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 1 (2016) 10 SCC 329 6 such measures are in place. Therefore, when the permissions for construction of factories is given, the purpose is altogether different."
6. Thus, the Apex Court has empathetically held that merely because the permission was obtained under the Factories Act for construction of Factory, the application of provisions of BOCW Act 27/1996 do not cease to operate. The provisions of the Factories Act would apply only when the manufacturing process starts for which building/project is being constructed and not to the activity of the construction of the project. In that view, I find no merits in the writ petition.
7. Accordingly, the writ petition is dismissed. No costs.
As a sequel, interlocutory applications pending, if any, shall stand closed.
_________________________ U.DURGA PRASAD RAO, J 05.10.2021 KRK 7 HON'BLE SRI JUSTICE U.DURGA PRASAD RAO Writ Petition No.20040 of 2009 05th October, 2021 KRK