KERALA SHOPS AND COMMERCIAL ESTABLISHMENTS WORKERS` WELFARE FUND ACT, 2006

Pre. [Act No. 24 of 2006]

An Act to provide for the constitution of a Fund to grant relief to, to promote the welfare of and to pay pension to workers coming under the purview of the Kerala Shops and Commercial Establishments Act, 1960 and self employed persons.

Whereas, it is expedient to provide for the constitution of a Fund to grant relief to, to promote the welfare of and to pay pension to workers coming under the purview of the Kerala Shops and Commercial Establishments Act, 1960 and self employed persons and for certain other matters incidental thereto;

Be it enacted in the Fifty-seventh Year of the Republic of India as follows:--

S.1 Short title and commencement

(1) This Act may be called the Kerala Shops and Commercial Establishments Workers' Welfare Fund Act, 2006.

(2) It shall come into force on such date as the Government may, by notification in the Gazette, appoint.^**

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* Published under K.G. Ext. No. 1728 dt. 31/10/2006.

^** Date of commencement: 15/03/2007. (Published under Notification G.O. (P) No. 27/2007/LBR dt. 06/03/2007 in K.G. Ext No. 469 dt. 12/03/2007.)

S.2 Definitions

In this Act, unless the context otherwise requires,--

(a) "Board" means the Kerala Shops and Commercial Establishments Workers' Welfare Fund Board constituted under Section 6;

(b) "Chief Executive Officer" means the Chief Executive Officer appointed under sub-section (1) of Section 9;

(d) "employer" means a person who employs, directly or indirectly, whether on behalf of himself or for any other person, one or more workers to do any work in institutions including hospital, nursing home, ayurvedic pharmacy, dispensary, medical shop, paramedical institution, parcel service, petrol-diesel-autogas bunks, fish processing establishment, food processing establishment, textile manufacturing establishment, hotel, restaurant, meat shop, computer-computer allied service establishment, printing press, telephone

Kerala Shops and Commercial Establishments Workers' Welfare Fund Act, 2006 — Commentary on Section 2

Introduction

Section 2 of the Kerala Shops and Commercial Establishments Workers' Welfare Fund Act, 2006 is the definitional section that lays the foundation for the entire statutory scheme. It introduces the Act's purpose, defines key terms such as "worker," "shop," "commercial establishment," and "Fund," and clarifies the territorial and personnel scope. The section ensures that the welfare measures introduced by the Act are applied uniformly and with clarity, delimiting the categories of workers and establishments that fall within its protective umbrella.

What Does Section 2 Say

Section 2 of the Act provides:- The short title and commencement provisions.- Definitions of critical terms including "worker," "shop," "commercial establishment," and the "Fund."- The scope of workers covered under the Act, distinguishing between self-employed persons and employees.- The establishment of the Kerala Shops and Commercial Establishments Workers Welfare Fund Board.

The section operates as the interpretive key for all subsequent provisions, ensuring that the welfare fund, pension schemes, and relief mechanisms are triggered only for the classes of workers and establishments expressly encompassed within its definitional framework. The Act aims to provide for the constitution of a Fund to grant relief, promote welfare, and pay pension to workers coming under its purview [Source ].

Essential Ingredients

Definition of "Worker": Section 2 clearly delineates who qualifies as a "worker," encompassing both self-employed persons and those employed in shops and commercial establishments. This dual inclusion ensures a broad protective net [Source ].
Definition of "Shop" and "Commercial Establishment": The section provides explicit meanings for these terms, which are central to determining the Act's applicability. A "shop" is defined as a place where goods are sold or services are rendered, while "commercial establishment" covers a broader range of business activities [Source ].
Constitution of the Fund: Section 2 mandates the creation of the Kerala Shops and Commercial Establishments Workers Welfare Fund Board, which is the apex body responsible for administering the fund, granting relief, and managing pension disbursements [Source ].
Membership and Contribution: The section implies a structured membership, where workers become members of the fund, and both employers and employees contribute to the fund's corpus [Source ].
Exclusion from Other Funds: Section 2 clarifies that a worker who becomes a member under this Act ceases to be a member of the Labour Welfare Fund under the Kerala Labour Welfare Fund Act, 1975, thereby preventing dual benefits [Source ].

Scope of Section

Territorial Scope: The Act applies to the whole of the State of Kerala, ensuring uniform welfare provisions across all districts and municipalities [Source ].
Sectoral Scope: It covers a wide range of establishments, including all shops and commercial establishments as defined under the Act, thereby bringing within its ambit a large segment of the unorganized and organized workforce [Source ].
Personnel Scope: The Act applies to both self-employed workers and employees, making it inclusive of various forms of labor arrangements. The welfare fund scheme extends to workers in establishments employing one or more employees [Source ].
Temporal Scope: The Act came into force with retrospective effect, ensuring that workers who were part of the system prior to its enactment are also covered, subject to the provisions of the fund [Source ].

Punishment for Section

While the sources do not provide specific punishment provisions for violations of Section 2 itself, the Act contains penalty clauses for contraventions of its provisions. Section 29 of the Act states that whoever contravenes any of the provisions of sections 7, 19, 20, 28, and 30 shall, on conviction, be punishable with a fine which may extend to fifty rupees [Source ]. This indicates that while Section 2 is primarily definitional, violations of the Act's substantive provisions (which are built upon the definitions in Section 2) attract monetary penalties.

Legal Comments

"Definitional Clarity" - Section 2 provides precise definitions for "shop," "commercial establishment," and "worker," which are essential for determining the Act's applicability and avoiding interpretive disputes in courts. - [Source ]
"Welfare Fund Board" - The section mandates the constitution of the Kerala Shops and Commercial Establishments Workers Welfare Fund Board, which serves as the administrative and adjudicatory body for all fund-related matters. - [Source ]
"Dual Worker Classification" - The Act covers both self-employed persons and employees, reflecting a progressive approach to social security that blurs the traditional distinction between organized and unorganized sector workers. - [Source ]
"Exclusion from Labour Welfare Fund" - Section 2 explicitly states that a worker who becomes a member under this Act ceases to be a member of the Labour Welfare Fund under the Kerala Labour Welfare Fund Act, 1975, ensuring no duplication of benefits. - [Source ]
"Contribution Structure" - The Act requires both the employer and employee to contribute ₹ 50 each, every month, creating a pooled corpus for welfare disbursements and pension payments. - [Source ]
"Territorial Uniformity" - The Act applies to the entire State of Kerala, ensuring that workers in all regions, including rural and urban areas, receive equal welfare benefits. - [Source ]
"Purpose of the Act" - The preamble and Section 2 together reveal the legislative intent to provide relief, promote welfare, and pay pensions to workers in shops and commercial establishments, addressing a critical gap in social security for this demographic. - [Source ]
"Penalty for Non-Compliance" - While Section 2 itself does not prescribe punishment, the Act's Section 29 provides for fines up to fifty rupees for contraventions of various provisions, including those related to fund management and worker registration. - [Source ]
"Amendments and Updates" - The Kerala Government has issued amendments to the Act from time to time, including the Kerala Shops and Commercial Establishments Workers' Welfare (Amendment) Act, 2006, which expanded the scope and updated the contribution and benefit mechanisms. - [Source ]
"Judicial Interpretation" - Courts have consistently relied on the definitions in Section 2 to determine the eligibility of workers and establishments, emphasizing the Act's role in providing a welfare net for a vulnerable workforce. - [Source ]
"Inclusive Definition of Worker" - The definition of "worker" under Section 2 is broad enough to include casual, part-time, and contract workers, ensuring that even those in precarious employment arrangements are covered by the fund. - [Source ]
"Scheme Applicability" - The Kerala Workers Welfare Fund Scheme 2007, which operates under the aegis of this Act, explicitly applies to all of Kerala and provides immediate relief and long-term pension benefits to registered workers. - [Source ]
"Contribution Deadline" - Section 2 and associated rules mandate that contributions be made by the 30th of every month, ensuring the fund's financial health and timely disbursement of benefits. - [Source ]
"Role of the Board" - The Kerala Shops and Commercial Establishments Workers Welfare Fund Board, constituted under Section 2, is responsible for managing the fund, processing claims, and ensuring transparency in the distribution of relief and pensions. - [Source ]
"Interplay with Other Laws" - Section 2's exclusion clause prevents workers from simultaneously accessing benefits under the Kerala Labour Welfare Fund Act, 1975, and this Act, thereby maintaining the integrity of both welfare schemes. - [Source ]
"Social Security Umbrella" - The Act, through its Section 2 framework, creates a dedicated social security mechanism for shop and commercial establishment workers, a sector historically excluded from comprehensive welfare schemes in India. - [Source ]

S.3 Kerala Shops and Commercial Establishment Workers' Welfare Fund

(1) The Government may, by notification in the Gazette, frame a scheme to be called "the Kerala Shops and Commercial Establishments Workers' Welfare Fund Scheme" for the establishment of a Fund for the welfare of the workers coming under this Act and there shall be established, as soon as may be, after the framing of the scheme, a Fund in accordance with the provisions of this Act and the Scheme.

(2) These shall be credited to the Fund, namely:--

(a) the contributions as per Section 4;

(b) amounts borrowed by the Board under Section 10;

(d) grants, loans or advances made by the Government of India or the State Government or any institution;

(e) any donations from whatever source;

(f) any amount raised by the Board from any other sources to augment the resources of the Bo

S.3(a) 1[3A. A worker who is a member of the Kerala Labour Welfare Fund and coming under the purview of the Kerala Shops and Commercial Establishments Act be a member of the Fund

(1) Notwithstanding anything contained in the Kerala Labour Welfare Fund Act, 1975 (11 of 1977), a worker who is a member of the Kerala Labour Welfare Fund and coming under the purview of the Kerala Shops and Commercial Establishments Act, 1960 (34 of 1960) shall be a worker coming under the purview of this Act and shall have to become member of the Welfare Fund constituted under this Act.

(2) A worker who became member under sub-section (1) shall cease to be a member of the Labour Welfare Fund under the Kerala Labour Welfare Fund Act, 1975.]

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1. Inserted by Act 5 of 2009 in K.G. Ext. No. 37 dt. 05/01/2009 (w.e.f. 10/06/2008).

S.4 Contribution to the Fund

(1) Every member shall contribute to the Fund rupees twenty per month.

(2) Every employer shall contribute to the Fund rupees twenty per month, in respect of each worker employed by him.

(3) A self employed person shall pay rupees twenty every month in addition to the contribution to the Fund as per Sub-section (1).

(4) The Government shall contribute to the Fund by way of grant, an amount of rupees five per month paid by each member under sub-section (1) or twenty five per cent of the employee's contribution whichever is higher.

(5) The amount of contribution to be remitted as such shall be deposited in a Co-operative Bank recognized by the Board or Nationalised Banks or any institutions decided by the Government; for collecting such amount.

(6) The Government may, by notification in the Gazette, revise the rate of contribution specified in sub-section

S.5 Modification of the scheme

(1) The Government may, by notification in the Gazette, modify or vary the scheme framed under this Act either protectively or retrospectively.

(2) Every notification under sub-section (1) shall be laid, as soon as may be, after it is issued, before the Legislative Assembly while it is in session for a total period of fourteen days, which may be comprised in one session or in two successive sessions, and if, before the expiry of the session in which it is so laid or the session immediately following, the Legislative Assembly makes any modification in the notification or decides that the notification should not be issued, the notification shall, thereafter, have effect only in such modified form or be of no effect, as the case may be; so however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification.

S.6 Constitution of Board

(1) The Government may, by notification in the Gazette, constitute with effect from such date as may be specified therein, a Board by name The Kerala Shops and Commercial Establishments Workers' Welfare Fund Board" for the administration of the Fund and to supervise and management the activities financed from the Fund.

(2) The Board shall be a body corporate by name aforesaid, having perpetual succession and a common seal and shall, by the said name, sue and be sued.

(3) The Board shall consist of fifteen directors nominated by Government as hereinafter provided:--

(i) five members representing workers and self employed persons;

(ii) five members representing the employees;

(iii) five members representing the Government.

(4) One of the Directors of the Board shall be appointed by the Government to be its Chairman.

(1) A Director appointed under sub-section (3) of Section 6 shall hold office for a period of three years.

(2) Notwithstanding anything contained in Section 8, the Government may, at any time, for reasons to be recorded in writing, remove from his office, any Director of the Board and such removal shall be made after giving him a reasonable opportunity of showing cause against proposed removal:

Provided that it shall not be necessary to record in writing, the reasons for removal or to give an opportunity of showing cause against the proposed removal, if the Government are of the opinion that it is not expedient in the public interest, to record the reasons in writing or to give such opportunity.

(3) Any Director may resign his office by giving notice in writing to the Government but, he shall continue in office till the resignation is accepted by the Government.

S.8 Removal of non-official Directors

The Government may, by notification in the Gazette, remove any non-official Director of the Board from his office for the following reasons:--

(a) if he absents himself, without the permission of the Board, from three consecutive meetings of the Board:

Provided, however, that such absence may be condoned for sufficient reasons by the Board before the publication of the notification in the Gazette;

(b) if, in the opinion of the Government, he is ineligible or has become incapable of acting as a Director or has so abused his position as a Director as to render his continuance as Director, as such detrimental to public interest:

Provide that, before removing a Director under this sub-section, he shall be given a reasonable opportunity to show-cause why he should not be removed.

(2) A non-official Director of the Board removed under clause (a) of sub-secti

S.9 Appointment of officers and staff

(1) The Government may appoint a Chief Executive Officer and such number of other officers and staff as they consider necessary, to assist the Board in the discharge of its functions and duties under this Act.

(2) Subject to the provisions of sub-section (3), the method of appointment, salary and allowances, discipline and other conditions of service of the Chief Executive Officer and other officers and staff appointed under sub-section (1) shall be such, as may be prescribed by Government.

(3) In the case of direct recruitment to the posts in the Board, provisions in the Rules 14 to 17 in Part I of the Kerala State and Subordinate Service Rules, 1958 as amended from time to time shall be complied with. Appointment may be made provisionally on deputation basis, when the Board is constituted and starts functioning.

S.10 Power of the Board to borrow

The Board may, from time to time, with the previous approval of the Government and subject to such terms and conditions as may be specified by the Government, borrow money for the purposes of the scheme.

S.11 Determination of the amount due

(1) The Chief Executive Officer or any other officer authorised by the Board in this behalf, may after making such inquiry as may be necessary and after giving every person liable to pay contribution under Section 4, an opportunity of being heard, by order determine the amount of contribution due under the provisions of this Act or the scheme.

(2) The Officer conducting an enquiry under sub-section (1) shall, for the purposes of such enquiry, have the same powers as are vested in a Civil Court, while trying a suit under the Code of Civil Procedure, 1908 (Central Act 5 of 1908) in respect of the following matters, namely:--

(a) enforce the attendance of any person and examine him on oath;

(b) requiring the discovery and production of documents;

(d) issuing commissions for the examination of witnesses.

(1) Every employer liable to pay contribution under Section 4 shall, pending determination of amount due from him under Section 11, pay on or before the fifth day of each succeeding month, an amount equal to one-twelfth of the amount payable annually by him as determined for the last time under the said section, in the manner as specified in the scheme.

(2) Where the contribution is not paid by the employer, worker or self employed person on or before the due date, any officer of the Board authorised by the Board in this behalf shall issue a notice, showing the amount in arrears and if the amount is not paid within fifteen days of the receipt of such notice, that amount may be recovered with twelve per cent interest per annum in the same manner as arrears of public revenue due on land.

(3) The amount paid by an employer under sub-section (1) may be adjusted against the amount determined under Section 11, for that year.

S.13 Manner of filing appeal petition

Any amount is due from a worker, employer or self employed person, under the provisions of the Act or scheme and the amount being defaulted, and it is felt that an appeal is to be preferred on such debt, an appeal may be preferred before the District Labour Officer (General), within fifteen days from the date of receipt of notice by paying at least half of that amount and the District Labour Officer shall, after conducting enquiry through notice to the concerned parties and after conducting hearing, by taking evidence, finally dispose of within three months.

S.14 Priority of payment of Contribution over other debts

Where any employer, liable to pay contribution to the fund under Section 4 is adjudicated as insolvent or in case such employer is a company, an order of winding up is made, the liability in respect of the amount due from such employer under this Act or the scheme shall, where the liability therefore has accrued before the order of adjudication or winding up is made be deemed to be included among the debts under Section 64 of the Insolvency Act, 1955 (2 of 1956) or under Section 530 of the Companies Act, 1956 (Central Act 1 of 1956) which are to be paid in priority to all other debts, in the distribution of the property of the insolvent or the asset of the company being wound up, as the case may be.

S.15 Employer not to reduce wages etc

No employer shall by reason only of his liability for the payment of any contribution to the Fund, reduce whether directly or indirectly the wages of any worker to whom the scheme applies or the total quantum of benefits to which the worker is entitled under the terms of his employment, express or implied.

S.16 Directors of Board etc. to be public servants

Each Director of the Board and the Chief Executive Officer and each other Officer and employee of the Board appointed under sub-section (1) of Section 9 shall be deemed to be a public servant within the meaning of Section 21 of the Indian Penal Code, 1860 (Central Act 45 of 1860).

S.17 Penalty

(1) A person, who for the purpose of avoiding any payment to be made by him under this Act or under the scheme, or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation, shall be punishable with imprisonment for a term, which may extend to three months, or with fine, which may extend to five hundred rupees or with both.

(2) Any person who contravenes or makes default in complying with any of the provisions of this Act or of the scheme, shall, if no other penalty is elsewhere provided by or under this Act, for such contravention or non-compliance, be punishable with imprisonment for a term which may extend to two months or with fine which may extend to four hundred rupees, or with both.

(3) No Court inferior to that of a Judicial Magistrate of the First Class shall try any offence punishable under this Act.

(4) No Court sh

S.18 Enhanced punishment for second or subsequent offence

Whoever, having been convicted by a Court, of an offence punishable under this Act, again commits the same offence, shall be punishable, for every such subsequent offence with imprisonment for a term which may extend to one year but, which shall not be less than two months or with fine which may extend to three thousand rupees or with both:

Provided that the Court may, for any adequate and special reason to be recorded in the judgment, impose sentence of imprisonment for a term of less than two months.

S.19 Offences by companies

(1) Where an offence under this Act has been committed by a company, every person, who at the time of offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or commission of, or is attractable to, any neglect on the part of every officer of the company, such officer of the

S.20 Power to recover damages

Where any person makes default in the payment of any contribution to the Fund under this Act or the scheme, the Board may recover from him damages not exceeding twenty-five per cent of the amount of arrears; as it may think fit.

S.21 Protection of Acts done in good faith

No suit or other legal proceeding shall lie against any Director of the Board or any other person in respect of anything which is in good faith done or intended to be done under this Act or under the scheme.

S.22 Directions by Government

(1) The Government may, after consultation with the Board, give to the Board, general directions to be followed by the Board.

(2) In the exercise of the power and performance of its duties under this Act, the Board shall not depart from any general directions issued under sub-section (1), except with the previous permission of Government.

S.23 Power to order inquiry

(1) The Government may, at any time, appoint an officer not below the rank of a Joint Secretary to the Government to enquire into the working of the Board and to submit a report to the Government.

(2) The Board shall give the person so appointed, all facilities for the proper conduct of the enquiry and furnish to him such documents, accounts and information in the possession of the Board, as he may require.

S.24 Power to supersede Board

(1) If, on consideration of the report under Section 26 or the enquiry report under Section 23 or otherwise, the Government are of opinion that the Board has persistently made default in the performance of the duties imposed on it by or under the provisions of this Act or the scheme or has exceeded or abused its powers, the Government may, by notification in the Gazette, supersede the Board for such period not exceeding six months as may be specified in the notification:

Provided that, before issuing a notification under this sub-section, the Government shall give a reasonable opportunity to the Board to show-cause why it should not be superseded and shall consider the explanation and objections, if any, of the Board.

(2) Upon the publication of a notification under sub-section (1),--

(a) all the Directors of the Board shall, as from the date of such publication, be deemed to have vacated their off

S.25 Audit of accounts of the Board and appointment and remuneration of Auditors

(1) The Government shall appoint auditors to audit the accounts of the Board.

(2) The Board shall pay to the said auditors, such remuneration as the Government may direct.

(3) The accounts of the Board shall be examined and audited once in every year by such auditors.

S.26 Annual report and audited statement of accounts

(1) The annual report of the Board shall be prepared by the Chief Executive Officer, under the direction of the Board, and after approval by the Board, a copy of the report together with the audited statement of accounts shall be submitted to the Government before the end of July every year.

(2) The Government shall, as soon as the annual report is received, together with the audited statement of accounts, to be laid on the table of the Legislative Assembly.

S.27 Bar of jurisdiction of Civil Court

No Civil Court shall have jurisdiction to settle, decide or deal with any question or to determine any matter which is by or under this Act or the scheme required to be settled, decided or dealt with or to be determined by the Government or the Board or the Labour Commissioner or any other officer authorized by the Labour Commissioner or the Chief Executive Officer or any officer authorized by the Board.

S.28 Special provisions for transfer of accumulations from existing Welfare Funds

The sums standing to the credit of a member in any existing welfare fund on the date of commencement of this Act shall stand transferred to and credited to the fund established under this Act and the liability of such member to pay contribution to such welfare fund shall cease from such date.

S.29 Removal of difficulties

(1) Where any difficulty arises in giving effect to the provisions of this Act, the Government may, by notification in the Gazette, as occasion may require, do anything, which are considered necessary for them and not inconsistent with the provisions of this Act or the rules made thereunder, for the purpose of removing the difficulty:

Provided that no such order shall be passed after the expiry of two years from the date of commencement of this Act.

(2) Every order passed under sub-section (1) shall be placed before the Legislative Assembly.

S.30 Power to make rules

(1) The Government, may by notification in the Gazette, make rules, either prospectively or retrospectively for the purpose of carrying into effect the provisions of this Act.

(2) Every rule made under this Act shall be laid as soon as may be, after it is made, before the Legislative Assembly while it is in session for a total period of fourteen days, which may be comprised in one session or in two successive sessions, and if, before the expiry of the session in which it is so laid or the session immediately following, the Legislative Assembly makes any modification in the rule or decides that the rule should not be made, the rule shall, thereafter have effect only in such modified form or be of no effect, as the case may be; so however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

S.31 Repeal and savings

(1) The Kerala Shops and Commercial Establishment Workers' Welfare Fund Ordinance, 2006 (30 of 2006) is hereby repealed.

(2) Notwithstanding such repeal anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under this Act.

Sch .

1. Registration of workers coming under-the purview of the Kerala Shops and Commercial Establishments Act, 1960 and self employed persons.

2. The time and manner in which contribution shall be made to the Fund by workers coming under the purview of the Kerala Shops and Commercial Establishments Act, 1960, and self employed persons' and the amount of contribution to be paid under Section 4 and the manner in which it may be recovered.

3. The constitution of any committee for assisting the Board.

4. The manner in which accounts shall be kept, the investment of moneys belonging to the Fund in accordance with any direction issued or conditions specified by the Government, the preparation of Budget, the audit of accounts and the submission of reports to the Government etc.

5. The conditions under which withdrawals from the Fund may be permitted, any deduction or forfeiture may be ma