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Registered Construction Worker is covered by Consumer Protection Act

By:Nidhi Tandon

The Supreme Court of India (SC) recently ruled in the case of The Joint Labour Commissioner and Registering Officer and another v. Kesar Lal that the beneficiary of a statutory welfare scheme, in this case a registered construction worker, can approach a consumer forum as a “consumer” if the government denies him/her the promised statutory benefits under welfare schemes implemented with the funds collected as ‘cess’ from builders.

Who is a beneficiary of a statutory welfare scheme?

As per the Building and Other Construction Workers Welfare Cess Act, 1996 (Regulation of Employment and Conditions of Service)(Act) it is mandatory that the State governments register construction workers as a beneficiary and set up Welfare Boards that would provide registered construction workers and their dependants immediate assistance under various heads — in case of accident, pension to those above 60 years, loans and advances for the construction of house, premium for group insurance scheme for workers, financial assistance for education of children, medical expenses for treatment of major ailments, maternity benefit to female workers, and provision and improvement of other welfare measures and facilities as prescribed. Upon registration, every worker is required to make a contribution to the fund at such rate per month as may be prescribed by the State government.


In this case, a construction worker obtained a Labour Beneficiary Identity Card from the Commissioner of Labour after depositing the registration fee and annual contribution under Rules made pursuant to theAct.

The State of Rajasthan had formulated a scheme (Scheme) for rendering financial assistance of Rs. 51,000 on the occasion of the marriage of a daughter of a beneficiary. The Respondent applied under the scheme to the Commissioner of Labour, Jaipur which was rejected on grounds of technical defects i.e. inadequate papers/certificates.

Challenging this rejection, the Respondent approached the District Consumer Disputes Redressal Forum for relief. The State disputed his challenge stating that beneficiaries under statutory schemes were not consumers under the Consumer Protection Act, 1986. The District Forum accepted this stance and ruled against the Respondent. However, both the State Consumer Disputes Redressal Commission and National Consumer Disputes Redressal Commission (NCDRC) overruled the objection that the respondent is not a ‘consumer’ within the meaning of the Consumer Protection Act 1986 and directed the Appellants to pay the assistance to the Respondent together with compensation and expenses and interest of 18 per cent.

The Joint Labour Commissioner then filed an appeal before the Supreme Court against the decision of the NCDRC. In the appeal before the Supreme Court, the contention raised was that the Consumer Protection Act 1986 does not cover the services provided by the State in the discharge of its welfare functions which are highly subsidized or free. Further, that the beneficiaries of the service pay such a meagre amount as contributions that they cannot be regarded as ‘consumers’ within the meaning of Section 2(d) of the Consumer Protection Act 1986.

Whether the Construction worker who’s beneficiary in statutory scheme is a “consumer”?

  1. Parliament has provided a salutary remedy to consumers of both goods and services. Public liability is a significant consideration which underlies the provisions of the Consumer Protection Act, 1986.

  2. Any service which is not available free of charge falls within the definition of the expression ‘service’ within the meaning of Section 2(1)(o) of the Consumer Protection Act 1986. In the instant case the workers who are registered under the Act make contributions to the fund at such rate per month as may be prescribed by the State government on the basis of which they have the right to make use of the services provided in terms of the schemes notified by the Board. Taking the above into consideration, the services which are rendered by the Board to the beneficiaries are not services that are provided free of charge. Accordingly, these services fall within the definition of the expression ‘service’.

  3. As long as the service is not rendered free of charge, any deficiency of service is amenable to the fora for redressal constituted under the Consumer Protection Act 1986.

  4. Further, the Consumer Protection Act, 1986 does not require an enquiry into whether the cost of providing the service is entirely defrayed from the price paid for availing the service. In this case, the services rendered by the Welfare Board to the beneficiaries were not provided free of charge so as to constitute an exclusion from the statutory definitions contained in the Consumer Protection Act 1986. It is not necessary that the amount which has been contributed by the beneficiary should be adequate to meet the whole cost of the expenditure envisaged under the scheme. Even a meagre amount contributed by the worker to the Board to avail the benefits is considered as a service not free of charge.

  5. As per section 2(1)(d(ii)of the Consumer Protection Act, 1986, a ‘consumer’ includes not only a person who has hired or availed of service but even a beneficiary of a service. Therefore, registered workers are clearly beneficiaries of the service provided by the Board in a statutory capacity.

In view of these observations, the appeal was dismissed.


Construction workers belong to the unorganized sector of the economy. As of today, government has collected nearly Rs 40,000 crores as cess from builders but has spent a meagre amount on welfare of registered construction workers. This decision of the apex court will allow such workers to approach consumer fora for redressal of their grievances.


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