The main legal point established in the judgment is that a Government Company, despite being an instrumentality or agency of the Central Government, cannot claim exemption from the Welfare Funds Act. The court emphasized the Act's objective to protect the welfare of laborers and refused to interpret the Act in a manner that would exclude government entities from its purview.

Headnote:
Welfare Funds Act - Government Company - Kerala Construction Workers Welfare Funds Act, 1989 (Act No. 20 of 1989) - S. 2, S. 8 - The court discussed the applicability of the Welfare Funds Act to a Government Company wholly owned and controlled by the Central Government. The key legal provisions discussed were S. 2(c) and S. 8 of the Welfare Funds Act, which define 'Construction Work' and 'Contribution to the Fund' respectively. The court interpreted these provisions to determine the scope of the Act and its applicability to government entities. The court's decision was influenced by the legislative intent to protect the welfare of laborers and the absence of specific exclusion of government companies from the Act.
Fact of the Case:

The appellant, a Government Company wholly owned and controlled by the Central Government, entered into a construction agreement with a development authority in Kerala. The authority made deductions from the appellant's bills for contributions under the Welfare Funds Act, which the appellant contested, claiming exemption as a government entity.
Finding of the Court:

The court held that the appellant, despite being an instrumentality or agency of the Central Government, cannot be considered a department or establishment of the Government for the purpose of exemption from the Welfare Funds Act. The court emphasized the Act's objective to protect the welfare of laborers and refused to interpret the Act in a manner that would exclude government entities from its purview.
Issues: The key issue was whether the appellant, as a Government Company, is excluded from the scope of the Welfare Funds Act, despite being an instrumentality or agency of the Central Government.
Ratio Decidendi: The court's decision was based on the interpretation of the Welfare Funds Act, legislative intent to protect laborers' welfare, and the absence of specific exclusion of government companies from the Act. The court refused to extend the exemption to government entities, emphasizing the Act's beneficial purpose.
Final Decision: The appeal was dismissed, and the court upheld the decision of the Kerala High Court, ruling that the appellant is not exempt from the Welfare Funds Act. No costs were awarded.

Judgment :-

1. Leave granted. Heard learned counsel for the parties.

2. The short question that arises for decision in this appeal is whether the appellant which is Government Company wholly owned and controlled by the Central Government is excluded from the purview of the Kerala Construction Workers Welfare Funds Act, 1989 (Act No. 20 of 1989) hereinafter, referred to as the Welfare Funds Act.

3. The appellant company entered into an agreement for construction of a stadium at Kaloor, Ernakulam, Kerala with the respondent No. 2 Greater Cochin Development Authority. The terms of the contract inter alia stipulated that the sub contractors to be employed by the appellant for execution of the contract were to be approved by the respondent No. 2. The appellant commenced work of construction of stadium and from time to time engaged different contractors on a turnkey basis.

4. The respondent No.2 started making deduction from the part payment of the bills raised by the appellant at the rate of 1 % of the billed amount for the works executed by the appellant on account of contribution under the Welfare Funds Act and the schemes framed thereunder. The appellant company made protests against such deduction by the respondent No. 2 by contending that the appellant being a company wholly owned and controlled by the Central Government, did not come within the purview of the Welfare Funds Act.

5. For the purpose of appreciating rival contentions of the parties to the appeal the following provisions of the Welfare Funds Act are set out hereunder:

S. 2. Definitions - In this Act, unless the context otherwise requires, (a) (b)

(c) "Construction Work" means any construction work carried out by the State Government or quasi - governmental agency or by a public or private undertaking or by a Society or by private individual and includes construction of any building, road, pathway, causeway, bridge, culvert, canal tank, channel, pond, dam, tunnel, sea walls, walls for the prevention of soil erosion, embankments, bunds, drainage, kanas, culverts, jetties, compound walls, well, and the like, breaking of rocks and rubbles and the repair in whatsoever manner relating thereto and the demolition thereof but does not include the construction works relating to place of public worship or construction work for a residence by a person for his own residential purposes costing not more than Rs.1 lakh, repair works other than extensions and reconstruction of his residence, construction work undertaken, by the Government of India or any of its establishments or institutions.

(d)

(c) 'Contractor' means any person registered as a contractor with any Department of the Government of Kerala or with any Department of any other State Government, or with any local authority or with the Kerala Water Authority or Devaswom Boards or Universities in the State, for carrying out construction work for consideration or any person carrying out construction for consideration for a Government Company as defined in S.617 of the Companies Act 1956 (Central Act 1 of 1956) for any Board, Corporation or Society owned or controlled by the Government of Kerala and includes the Kerala State Construction Corporation.

(f)

(g) "Employer" means,

(i) in the case of construction work undertaken for the State Government or for the Local Authority or for the Kerala Water Authority or for any Universities in the State for Kerala Government Company as defined in S.617 of the Companies Act, 1956 (Central Act 1 of 1956) or for a Board, Corporation or a Society owned or controlled by the Kerala Government, the Contractor;

(ii) In any other case, the person for whom construction work is done".

Section B. Contribution to the Fund (1) A member of the Fund shall contribute to the Fund at the rate specified in any of the slabs hereunder: SLAB

A. Ten rupees per month

B. Fifteen rupees per month

C. Twenty Rupees Per month

Provided that a member may change his rate of contribution at his opinion at the commencement of any y

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1997 Supreme(Ker) 140

Cases Referred (1)