1  

 REPORTABLE  

 IN THE SUPREME COURT OF INDIA  

CIVIL APPELLATE JURISDICTION  

 Civil Appeal No    2014   of 2020  

(Arising out of SLP(C) No 2150 of 2020)    

 The Joint Labour Commissioner and   Registering Officer and Anr                Appellants     

Versus    

Kesar Lal                   Respondent  

J U D G M E N T    

 Dr Dhananjaya Y Chandrachud, J        1 The neat issue which has to be adjudicated upon in this appeal is whether a  

construction worker who is registered under the Building and Other Construction  

Workers’ (Regulation of Employment and Conditions of Service) Act, 19961 and is a  

beneficiary of the Scheme made 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 determine whether a beneficiary of  

a statutory welfare scheme is entitled to exact accountability by invoking the remedies  

under the Consumer Protection Act 1986.   

 1 Act of 1996

2  

2 Parliament enacted the Act of 1996 “to regulate the employment and conditions of  

service of building and other construction workers and to provide for their safety, health  

and welfare measures and for other matters connected therewith or with incidental  

thereto”. In pursuance of the rule-making powers conferred by Sections 40 and 62, the  

Union Government has framed the Building and Other Construction Workers’ (Regulation  

of Employment and Conditions of Service) Rules, 1998. The State of Rajasthan has also  

framed the Rajasthan Building and Other Construction Workers (Regulation of  

Employment and Conditions of Service) Rules in 20092. In pursuance of the provisions  

contained in Section 18, the State government constituted the Rajasthan Building and  

Other Construction Workers Welfare Board. The Welfare Board has formulated several  

schemes for beneficiaries registered under the Act.  One of the schemes which was  

formulated on 1 August 2011 is for rendering financial assistance on the occasion of the  

marriage of a daughter of a beneficiary.  The scheme envisages that financial assistance  

of Rs 51,000 is provided on the occasion of marriage, subject to a limit of assistance on  

two occasions.   

 3 The respondent obtained a Labour Beneficiary Identity Card on 29 December 2011  

under the Welfare Board from the appellants after depositing the registration fee of Rs 25  

and an annual contribution of Rs 60. The identity card was valid for a period of one year,  

from 29 December 2011 to 28 December 2012.  Seeking to avail financial aid under the  

scheme, the respondent submitted an application on 6 November 2012 in anticipation of  

 2 Rules of 2009

3  

the marriage of his daughter which was to take place on 24 November 2012. Nine months  

after the application was submitted, the Joint Commissioner of Labour, Jaipur issued an  

order of rejection covering 327 such applications, finding technical defects as a ground  

for the decision. The order reads thus:  

“Upon scrutiny of applications received in this office, following  

points 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  

after solemnization of marriage and non-submission of affidavit  

or absence of some information in application and letter was  

issued reminding to complete the details, and upon non-

submission of any answer to that in the office, it is not possible  

to grant the marriage assistance amount hence in following  

matters (list of 327 cases is annexed) the application for the  

marriage assistance are rejected.”  

4 The respondent instituted a consumer complaint before the District Consumer  

Disputes Redressal Forum3. The complaint was dismissed on 6 October 2016.  In appeal,  

the State Consumer Disputes Redressal Commission4 set aside the order of the District  

Forum on 20 August 2019 and directed the appellants to pay an amount of Rs 51,000 to  

the respondent together with Rs 10,000 as compensation, Rs 5,000 for expenses and  

interest of 18 per cent per annum from the date of the institution of the complaint.  The  

National Consumer Disputes Redressal Commission5 by its judgment and order dated  

25 October 2019 affirmed the decision, overruling the objection that the respondent is not  

a ‘consumer’ within the meaning of the Consumer Protection Act 1986.  The National  

Commission, however, reduced the rate of interest from 18 percent per annum to 9  

 3 District Forum  4 State Commission  5 National Commission

4  

percent per annum.  The present appeal has arisen from the order of the National  

Commission.  

 5 On 27 January 2000, the appellants stated before this Court that the amount which  

was awarded to the respondent would be paid.  The appellants, however, pressed the  

question of law. Instead of saddling the respondent who is a construction worker with the  

insuperable burden of defending the proceedings before this Court, we requested Mr PV  

Dinesh, learned counsel to assist the Court as amicus curiae.  We wish to record our  

appreciation of the able and objective assistance which has been rendered to the Court  

by Mr PV Dinesh.  

 6 Dr Manish Singhvi, learned Senior Counsel appearing on behalf of the appellants,  

urged the following submissions:  

(i) Parliament enacted the Building and Other Construction Workers Welfare  

Cess Act, 19966. The cess which is collected under the Act is contributed to the  

fund. The fund is defined both under the Cess Act of 1996 as well as the Act of  

1996. The cess which is collected forms a part of the Welfare Board constituted  

under Section 24(1). The collection of the cess which runs into thousands of crores  

becomes part of the fund which is generated from the compulsory exaction from  

employers who engage construction workers;  

(ii) A circular was issued on 25 January 2011 by the State of Rajasthan for the  

registration of construction workers. Under the circular, at the relevant point of  

 6 The Cess Act  

5  

time, an amount of Rs 25 was to be deposited as subscription fee for the  

preparation of an identification card while Rs 60 per year was charged as a  

contribution under Section 16(1) of the Act of 1996. On 24 November 2015 the  

subscription was reduced to Re 1 per month (Rs 12 per annum) so as to comprise  

of a payment of Rs 60 for a period of five years. This contribution is in the nature  

of a token amount to ensure registration and identification of building workers who  

can avail of the benefits under the Act of 1996 and even this contribution can be  

relaxed under the proviso to Section 16(1) upon the satisfaction of the Board that  

the beneficiary is unable to pay the contribution;  

(iii) About 22,46,904 workers have been registered under the Act of 1996, out  

of which about 64,678 have benefited under the scheme between 2010-11 and  

2019-20. Out of a cess of Rs 2,671 crores which has been collected, about Rs  

1,488 crores is expended for the welfare schemes. The welfare schemes are  

funded by the cess and not by the contributions made under Section 16(1).  

Between 2010 and 2020, the contribution of the workers is Rs 27.92 crores which  

is meagre in comparison to the expenditure on the welfare schemes;  

 (iv) The welfare schemes initiated by the State government are to keep up with  

the rapid expansion of welfare activities. The cess which is collected under the  

Cess Act is for a specific purpose. The cess is nothing but a tax under Article  

366(28) of the Constitution;  

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(v) Undoubtedly, where the state for its multifarious functions, charges a fee  

and services are rendered on a quid pro quo basis, the activities of the State would  

be amenable to the jurisdiction of a consumer forum when a complaint of  

deficiency of service is made;  

(vi) On the other hand, where the State commits itself to welfare schemes and  

a negligible amount is charged in token of the services which are rendered, the  

beneficiary of a service is not a ‘consumer’ within the meaning of Section 2(d) of  

the Consumer Protection Act 1986. Such services are primarily financed out of  

budgetary allocations. In the present case, though a service is rendered by the  

Board, the expenditure on the welfare scheme is defrayed from the cess which is  

collected and hence, is not a ‘service’ within the meaning of Consumer Protection  

Act 1986;  

(vii) In Bihar School Examination Board v Suresh Prasad Sinha7 (“Bihar  

School Examination Board”) this Court held that where a statutory function was  

being discharged by a public examination authority, a student aggrieved by the  

evaluation of the answer was not a ‘consumer’ nor was the Board a ‘service  

provider’. On a parity of reasoning, the Welfare Board is not a service provider  

under the Consumer Protection Act 1986;  

(viii) In the two decisions of this Court in Regional Provident Commissioner v  

Shiv Kumar Joshi8 (“Shiv Kumar Joshi”) and Regional Provident Fund  

 7 (2009) 8 SCC 483  8 (2000) 1 SCC 98

7  

Commissioner v Bhawani9, it was held that the Regional Provident Fund  

Commissioner is a service provider within the meaning of Section 2(1)(o) of the  

Consumer Protection Act 1986. These decisions are sought to be distinguished on  

the ground that the corpus of the EPF scheme is contributed by the employers and  

the employees, there being no contribution by the State out of the tax revenues. In  

a recent judgment of this Court in Ministry of Water Resources v Shreepat Rao  

Kamde10 (“Shreepat Rao Kamde”) decided on 6 November 2019, it has been held  

that a government servant who makes a contribution to the General Provident  

Fund lies outside the purview of the Consumer Protection Act 1986; and  

(ix) The edifice of the Consumer Protection Act 1986 is to codify a remedy for a  

contractual or commercial transaction in substitution of the remedy of filing a civil  

suit. The enactment of the Consumer Protection Act 1986 does not cover a  

redressal mechanism for an injury which is caused absent a commercial or  

business transaction. The Act will not cover the services provided by the State in  

the discharge of its welfare functions which are highly subsidized or free.  

 7 Mr PV Dinesh, learned amicus curiae has, in his detailed written submissions,  

controverted the logic of the approach which has been adopted by the appellants. Mr  

Dinesh submits that the salient features 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;  

 9 (2008) 7 SCC 111  10 Civil Appeal No 8472 of 2019  

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(ii) Under Section 12, every worker should be registered as a beneficiary.   

Section 12(3) provides that an application must be submitted with documents  

together with a fee not exceeding Rs 50 as may be prescribed;  

(iii) Section 18 deals with the constitution of the State Welfare Board which is a  

body corporate having perpetual succession and a common seal;  

(iv) Section 24 requires the constitution of a Workers Welfare Fund into which  

the contribution of the beneficiaries is credited. The provisions of Rules 28 and 43  

implement Section 24.   

(v) Under Rule 43(b), the contribution paid by a beneficiary forms a part of the  

fund together with grants, loans, sums received by the Board and advances from  

the Union or State Governments, local authorities and other resources as decided  

by the Central or State Governments;  

(vi) Rule 45 deals with the contribution to be made by each beneficiary and the  

consequence of non-contribution;  

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

 8 Based on the above provisions of the Act and the Rules, Mr PV Dinesh submitted  

that:  

(i) Every construction worker who is a beneficiary under the Act and the Rules  

is a contributor to the workers’ welfare fund, and the service which is provided is  

not gratuitous;  

(ii) The welfare schemes which are implemented by the Board cannot be  

construed as a sovereign function. The State Welfare Board is a body corporate

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which is capable of suing and being sued;  

(iii) Though the claims of benefits provided under the scheme are higher than  

the contribution by the worker – beneficiary, this cannot be a reason to hold that it  

is not a contribution;  

(iv) In the context of the denial of insurance claims, this Court while construing  

the provisions of Section 2(d) of the Consumer Protection Act 1986, has held in  

Canara Bank v United India Insurance Company Limited11 (“Canara Bank”)  

that even a beneficiary who is not a party to the contract is a ‘consumer’ under the  

Act;  

(v) In the present case, there was a gross deficiency of service on the part of  

the appellants and the denial of benefits under the welfare scheme was casual and  

mechanical. A poor construction worker was constrained to approach the  

consumer court, faced with the rejection of his application on the specious ground  

that it was not accompanied by an application for exemption from the procedural  

requirement of submitting it 90 days before the marriage of his daughter. The  

defect, if any, was curable and not fatal; and  

(vi) The remedy under the Consumer Protection Act 1986 is a valuable provision  

made by the Parliament to provide access to justice and the purpose embedded  

in the Consumer Protection Act 1986 will be defeated if a construction worker is  

required to approach a civil court or the writ jurisdiction under Article 226 to seek  

relief of a small claim.  

 11 2020 SCC Online SC 132

10  

In this context, reliance has been placed on the decisions in Lucknow Development  

Authority v M.K. Gupta12 (“Lucknow Development Authority”), Shiv Kumar Joshi  

and Punjab Urban Planning and Development Authority (now GLADA) v Vidya  

Chetal13 (“Vidya Chetal”).  

 9 The rival submissions will now be analysed.  

10 Before we deal with the specific issues of law which have been raised in these  

proceedings, we begin with a reference to a judgment of a two Judge bench of this Court  

in National Campaign Committee for the Central Legislation on Construction  

Labour v Union of India14.  The judgment of this Court took note of the status of the  

implementation of the Act of 1996 and the Cess Act. Reviewing the status of  

implementation across the country, Justice Madan B Lokur prefaced the judgment with  

the following observations:  

“Symbolic justice—there is nothing more to offer to  

several millions of construction workers in the  

unorganised sector—not social justice, not economic  

justice. The reason is quite simple. No State Government  

and no Union Territory Administration (UTA) seems  

willing to fully adhere to and abide by (or is perhaps even  

capable of fully adhering to and abiding by) two laws  

solemnly enacted by Parliament, namely, the Building and  

Other Construction Workers' (Regulation of Employment and  

Conditions of Service) Act, 1996 (the BOCW Act) and the  

Building and Other Construction Workers' Welfare Cess Act,  

1996 (the Cess Act). Directions given by this Court from  

time to time to implement the two laws have been flouted  

with impunity. What is equally tragic is that multiple  

directions issued even by the Government of India under  

 12 (1994) 1 SCC 243  13 (2019) 9 SCC 83  14 (2018) 5 SCC 607

11  

 Section 60 of the BOCW Act have been disregarded by State  

Governments and UTAs — and this is candidly admitted in a  

statement made by the learned Additional Solicitor General in  

this Court and also by the Union of India on affidavit.  

Hopefully, the gravity of the situation in the constitutional  

and federal context, the human rights and social justice  

context will be realised by someone, somewhere and at  

some time.”                                           (emphasis supplied)  

The Court noted that more than Rs 37,400 crores has been collected for the benefit of  

construction workers under the Cess Act of which only an amount of Rs 9,500 crores has  

been utilized, ostensibly for their benefit.  The Court emphasised that these laws were  

enacted to implement the Directive Principles of State Policy contained in Articles 39 and  

42 of the Constitution and for enforcing the right to life under Article 21. The Court  

observed that monies which have been earmarked for construction workers had not been  

spent, and a clear picture emerges about the shocking state of affairs in regard to the  

welfare boards across the country. The Court noted:  

“…Overall, the affidavits gave a clear picture of a shocking  

state of affairs inasmuch as some Welfare Boards had  

expenditure out of the collected cess for payment of entry  

tax/value added tax, purchase of washing machines for  

construction workers and purchase of laptops for  

construction workers. This Court found that rather  

astonishing since it appeared that there was no rationale in  

providing washing machines and laptops to construction  

workers who were by and large poor and uneducated as well  

as migrant labour…”                             (emphasis supplied)  

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

“What makes the situation even worse is that many of the  

construction workers are believed to be women and at least  

some of them have small children to look after. That even they

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 are victims of official apathy truly reflects a very sad state of  

affairs, and the loss already caused to them and other  

construction workers cannot be remedied. The reason for this  

is that it is not known which construction worker is entitled to  

get how much in terms of money or what benefit and under  

which scheme. Some of these construction workers from the  

1990s and even later, may perhaps have unfortunately passed  

away or might be untraceable or old enough to deserve a  

pension. The question therefore is: what should be done with  

the thousands of crores that have been collected for the benefit  

of construction workers but cannot be utilised for their benefit?  

Can the State Governments and the UTAs or the Welfare  

Boards unjustly benefit and fill their coffers at 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 any answers  

at all — it is entirely for the Government of India and Parliament  

to decide how to legally appropriate these thousands of crores  

of rupees and then utilise the amounts for the benefit of  

construction workers, at least for the future, assuming nothing  

can be done for the past. It is a mammoth task for which the  

powers that be must brace themselves, if they are serious in  

assisting people with multiple vulnerabilities.”  

 The position in the State of Rajasthan was specifically mentioned in the judgment with  

regard to the failure to utilize the cess which was collected.  The judgment noted that  

though in 2011-12, an amount of Rs 154.01 crores was collected, no figures for  

expenditure were submitted.  For 2012-13, an amount of Rs 173.83 crores was collected  

while the expenditure incurred for various schemes was only Rs 11.95 crores. In 2013-

14, an amount of Rs 251.95 crores was collected, of which only Rs 25.93 crores was  

spent.    

 11 The appellants have been entrusted with the solemn duty of enforcing and  

implementing the provisions of the welfare legislation which has been enacted by  

Parliament specifically to ameliorate the plight of construction workers. Construction

13  

workers belong to the unorganized sector of the economy. Many among them are  

women. Child labour is rampant. Their vulnerabilities have been attempted to be  

safeguarded by a law which unfortunately has not been implemented either in letter, or  

in spirit. Yet, we have in the present case, the spectacle of a statutory welfare board  

seeking to exempt itself from being held accountable to the remedies provided under the  

Consumer Protection Act 1986. The submission which has been urged before the Court,  

simply put, boils down to this: 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.  That is the submission which now  

falls for consideration.   

 12 Section 2(d) of the Consumer Protection Act 1986 provides as follows:  

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

(i) buys any goods for a consideration which has been paid or  

promised or partly paid and partly promised, or under any  

system of deferred payment and includes any user of such  

goods other than the person who buys such goods for  

consideration paid or promised or partly paid or partly  

promised, or under any system of deferred payment when  

such use is made with the approval of such person, but does  

not include a person who obtains such goods for resale or for  

any commercial purpose; or   

(ii) [hires or avails of] any services for a consideration which  

has been paid or promised or partly paid and partly promised,  

or under any system of deferred payment and includes any  

beneficiary of such services other than the person who 8[hires  

or avails of] the services for consideration paid or promised,  

or partly paid and partly promised, or under any system of  

deferred payment, when such services are availed of with the  

approval of the first mentioned person [but does not include a  

person who avails of such services for any commercial  

purpose];  

[Explanation.—For the purposes of this clause, “commercial  

purpose” does not include use by a person of goods bought

14  

 and used by him and services availed by him exclusively for  

the purposes of earning his livelihood by means of self-

employment; ]”  

In relation to a service, the definition of the expression incorporates in the first part any  

person who hires or avails of any service for a consideration which has been paid or  

promised (wholly or in part).  In its latter component, the definition includes the beneficiary  

of such a service other than the person who actually avails of the service for consideration  

paid or promised, so long as such services are availed of with the approval of the person  

who hires or avails of the service for consideration. The ambit of the first component of  

the expression in Section 2(d)(ii) is expanded by the inclusive definition in the latter  

component. This was noticed in the judgment of a two Judge bench of this Court in  

Lucknow Development Authority where Justice RM Sahai, speaking for the Court,  

explained the ambit of Section 2(d):  

“It is in two parts. The first deals with goods and the other with  

services. Both parts first declare the meaning of goods and  

services by use of wide expressions. Their ambit is further  

enlarged by use of inclusive clause.  For instance, it is not only  

purchaser of goods or hirer of services but even those who use  

the goods or who are beneficiaries of services with approval of  

the person who purchased the goods or who hired services are  

included in it..”  

Emphasising the accountability of public authorities, the Court observed:  

“Under our Constitution sovereignty vests in the people.  Every  

limb of the constitutional machinery is obliged to be people  

oriented. No functionary in exercise of statutory power can  

claim immunity, except to the extent protected by the statute  

itself.  Public authorities acting in violation of constitutional or  

statutory provisions oppressively are accountable for their  

behavior before authorities created under the statute like the  

commission or the courts entrusted with responsibility of

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 maintaining the rule of law.  Each hierarchy in the Act is  

empowered to entertain a complaint by the consumer for value  

of the goods or services and compensation…”  

In Shiv Kumar Joshi, a Bench of two learned Judges of this Court held that the  

invocation of the remedies under the Consumer Protection Act 1986 is permissible  

against the Provident Fund Commissioner by a member of the Employees’ Provident  

Fund Scheme. The Court held that the Regional Provident Fund Commissioner  

discharges a statutory function and is not delegated with any of the sovereign powers of  

the State. In that context, the Court held:  

“…The definition of “consumer” under the Act includes not only  

the person who hires the “services” for consideration but also  

the beneficiary, for whose benefits such services are hired.   

Even if it is held that administrative charges are paid by the  

Central Government and no part of it is paid by the employee,  

the services of the Provident Fund Commissioner in running  

the Scheme shall be deemed to have been availed of for  

consideration by the Central Government for the benefit of  

employees who would be treated as beneficiaries within the  

meaning of that word used in the definition of “consumer”...”  

The Court rejected the submission that the services which are provided under the EPF  

Scheme are rendered free of charge and therefore, would not qualify as a service under  

the Consumer Protection Act 1986.  The same view has been reiterated by a Bench of  

three learned Judges of this Court in Vidya Chetal.  The reference before the three Judge  

Bench arose upon a doubt having been expressed in regard to the correctness of the  

decision of a two Judge Bench in HUDA v Sunita15. The issue was whether the National  

Commission lacks the jurisdiction to decide  the legitimacy of a demand for a composition  

 15 (2005) 2 SCC 479

16  

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 left  

the task to expound the provision on a case-to-case basis to  

the judiciary. The purpose of leaving this provision open ended,  

without providing an exhaustive list indicates the requirement  

for a liberal interpretation. Broadly speaking, it is inclusive of all  

those services performed for a consideration, except gratuitous  

services and contract of personal services. Moreover, the  

aforesaid provision reflects the legislative intent of providing  

impetus to “consumerism”. It may be noted that such a  

phenomenon has had a benevolent effect on the government  

undertakings, wherein a new dynamism of innovation,  

accountability and transparency are imbibed.”  

Justice NV Ramana, speaking for the three Judge Bench, noted that all statutory  

obligations are not sovereign functions. Although sovereign functions/services are  

regulated and performed under a constitutional/statutory framework, yet there are other  

functions, which may be statutory, but cannot be called as sovereign functions.  The Court  

held:  

“..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, for deficiency in service, or specifically provides for  

an alternative forum, the consumer forums would continue to  

have the jurisdiction to deal with the same. We need to caution  

against over-inclusivity and the tribunals need to satisfy the  

ingredients under Consumer Protection Laws, before  

exercising the jurisdiction.”  

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

17  

In the view of the Court:  

“Therefore, it is a clearly established principle that certain  

statutory dues, such as fees, can arise out of a specific  

relation. Such statutory dues might be charged as a quid pro  

quo for a privilege conferred or for a service rendered by the  

authority. As noted above, there are exactions which are for  

the common burden, 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 all statutory dues/exactions are amenable  

to the jurisdiction of the consumer forum, rather only those  

exactions which are exacted for a service rendered, would be  

amenable to the jurisdiction of the consumer forum.”  

A Bench of two learned judges has in Canara Bank elaborated upon the width of the  

definition contained in Section 2(d)(ii) in relation to the availing or hiring of services.  

Justice Deepak Gupta, speaking for the Bench, held:  

“..As far as the definition of the consumer in relation to hiring  

or availing of services is concerned, the definition, in our view,  

is much wider. In this part of the section, consumer includes  

not only the person who has hired or availed of the services but  

also includes any beneficiary of such services. Therefore, an  

insured could be a person who hires or avails of the services  

of the insurance company but there could be many other  

persons who could be the beneficiaries of the services. It is not  

necessary that those beneficiaries should be parties to the  

contract of insurance. They are the consumers not because  

they are parties to the contract of insurance but because they  

are the beneficiaries of the policy taken out by the insured.”  

The Court consequently came to the conclusion that a beneficiary of a service, in the  

context of a contract of insurance, need not be a party to the contract.  Beneficiaries fall  

within the purview of the expression ‘consumer’.

18  

In Bihar School Examination Board, the question before the Court was whether a  

statutory School Examination Board falls within the purview of the Consumer Protection  

Act 1986 when it performs a statutory function of conducting examinations. A two judge  

Bench of this Court held that the fee paid by a student to the Board for the conduct of  

examinations does not amount to a ‘consideration’ paid for a service. Justice Markandey  

Katju, speaking for the Court observed:  

 “When the Examination Board conducts an examination in  

discharge of its statutory function, it does not offer its “services”  

to any candidate. Nor does a student who participates in the  

examination conducted by the Board, hire or avail of any  

service from the Board for a consideration. On the other hand,  

a candidate who participates in the examination conducted by  

the Board, is a person who has undergone a course of study  

and who requests the Board to test him as to whether he has  

imbibed sufficient knowledge to be fit to be declared as having  

successfully completed the said course of education; and if so,  

determine his position or rank or competence vis-à-vis other  

examinees. The process is not, therefore, availment of a  

service by a student, but participation in a general  

examination conducted by the Board to ascertain whether  

he is eligible and fit to be considered as having  

successfully completed the secondary education course.  

The examination fee paid by the student is not the  

consideration for availment of any service, but the charge  

paid for the privilege of participation in the examination.”  

                                                                (Emphasis supplied)  

In Shreepat Rao Kamde, the issue before the Court was whether a subscriber to the  

General Provident Fund fulfills the definition of being a ‘consumer’ within the meaning of  

the Consumer Protection Act 1986.  The issue had been considered in an earlier decision  

of this Court in Jagmittar Sain Bhagat v Director, Health Services, Haryana17, and  

 17 (2013) 10 SCC 136

19  

was answered in the negative, holding that a government servant is entitled to claim  

retiral benefits strictly in accordance with the regulations governing the conditions of  

service and the statutory rules for which the appropriate forum for redressal would be the  

State Administrative Tribunal, if any, or the civil court but not the consumer forum.  It was  

held thus:  

“…it is evident that by no stretch of imagination can a  government servant raise any dispute regarding his  

service conditions or for payment of gratuity or GPF or any  

of his retiral benefits before any of the forum under the  

Act. The government servant does not fall under the  

definition of a “consumer” as defined under Section  

2(1)(d)(ii) of the Act. Such government servant is entitled to  

claim his retiral benefits strictly in accordance with his service  

conditions and regulations or statutory rules framed for that  

purpose. The appropriate forum, for redressal of any of his  

grievance, may be the State Administrative Tribunal, if any, or  

the civil court but certainly not a forum under the Act.”  

                                                                   (Emphasis added)  

This decision was followed by the two judge Bench in Shreepat Rao Kamde.  Justice  

Uday Umesh Lalit noted that in view of the earlier decision, a consumer complaint in  

regard to the dues payable under the GPF was not amenable under the Consumer  

Protection Act 1986.   

 13 Now it is in this context that it is necessary to briefly advert to the provisions of the  

Act of 1996.  The expression ‘beneficiary’ is defined in Section 2(b) to mean ‘a building  

worker registered under Section 12’. The expression ‘fund’ is defined in Section 2(k) to  

mean ‘the Building and Other Construction Workers Welfare Fund of a Board constituted  

under sub-section (1) of Section 24’. Section 11 speaks of the beneficiaries of the fund:

20  

 “11. Beneficiaries of the Fund:-Subject to the provisions of  

this Act, every building worker registered as a beneficiary  

under this Act shall be entitled to the benefits provided by the  

Board from its Fund under this Act.”  

Hence, every building worker who is registered as a beneficiary under the enactment is  

entitled to the benefits provided by the Board from the fund. Section 16 requires a building  

worker who has been registered as a beneficiary to make a contribution:  

“16. Contribution of building workers:- (1) A building worker  

who has been registered as a beneficiary under this Act shall,  

until he attains the age of sixty years, contribute to the Fund at  

such rate per mensem, as may be specified by the State  

Government, by notification in the Official Gazette and different  

rates of contribution may be specified for different classes of  

building workers:   

Provided that the Board may, if satisfied that a beneficiary is  

unable to pay his contribution due to any financial hardship,  

waive the payment of contribution for a period not exceeding  

three months at a time.   

(2) A beneficiary may authorise his employer to deduct his  

contribution from his monthly wages and to remit the same,  

within fifteen 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 is that under Section 17 the individual ceases  

to be a beneficiary. However, under the proviso, a person who is in default is allowed to  

deposit the arrears if there was sufficient ground to satisfy the secretary of the Board in  

regard to the non-payment of the contribution, upon which the registration is to stand  

restored.  Section 18 provides for the constitution of the State Welfare Boards. Section  

22 provides for the functions of the Board in the following terms:  

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

(a) provide immediate assistance to a beneficiary in case of  

accident;

21  

  (b) make payment of pension to the beneficiaries who have  

completed the age of sixty years;   

(c) sanction loans and advances to a beneficiary for  

construction of a house not exceeding such amount and on  

such terms and conditions as may be prescribed;  

(d) pay such amount in connection with premia for Group  

Insurance Scheme of the beneficiaries as may be prescribed;  

(e) give such financial assistance for the education of children  

of the beneficiaries as may be prescribed;   

(f) meet such medical expenses for treatment of major  

ailments of a beneficiary or, such dependent, as may be  

prescribed;   

(g) make payment of maternity benefit to the female  

beneficiaries; and   

(h) make provision and improvement of such other welfare  

measures and facilities as may be prescribed.   

(2) The Board may grant loan or subsidy to a local authority  

or an employer in aid of any scheme approved by the State  

Government for the purpose connected with the welfare of  

building workers in any establishment.   

(3) The Board may pay annually grants-in-aid to a local  

authority or to an employer who provides to the satisfaction of  

the Board welfare measures and facilities of the standard  

specified by the Board for the benefit of the building workers  

and the members of their family, so, however that the amount  

payable as grants-in-aid to any local authority or employer  

shall not exceed—   

(a) the amount spent in providing welfare measures and  

facilities as determined by the State Government or any  

person specified by it in this behalf, or   

(b) such amount as may be prescribed.   

whichever is less:  

Provided that no grant-in-aid shall be payable in respect of  

any such welfare measures and facilities where the amount  

spent thereon determined as aforesaid is less than the  

amount prescribed in this behalf.”  

Under Section 24, the statute has provided for the constitution of a welfare fund into which  

are credited (i) grants and loans made to the Board by the Central government; (ii)  

contributions made by the beneficiaries; and (iii) sums received by the Board from other

22  

sources as decided by the Central government.  The fund is applied, under sub-section  

(2) of Section 24 to meet the expenses of the Board in the discharge of its statutory  

functions; towards payment of salaries, allowances and remuneration and for meeting  

the expenses on objects and for purposes authorized by the Act. The Rules of 2009 have  

been framed in terms of the provisions governing the rule making power. Rule 43  

provides for the constitution of the welfare fund.  Rule 44 provides for the registration of  

building workers as beneficiaries. Rule 45 provides for contributions to the fund:  

“45. Contribution to the Fund.-(1) A beneficiary of the fund  

shall contribute to the fund at such rate per mensem as may  

be notified by the State Government under section 16 of the  

Act. This contribution shall be remitted in advance once in  

three months in any of the banks specified by the Board in the  

district in which the member resides.  

(2) If a beneficiary commits default in the payment of  

contribution continuously for a period of one year, he shall  

cease to be beneficiary of the Fund. However, with the  

permission of the Secretary or an officer authorized by him in  

this behalf the membership may be resumed on repayment of  

arrears of contribution with a fine of Rs 2 per month subject to  

the condition that such resumption shall not be allowed more  

than twice.”  

Rule 52 provides for the expenditure from the fund. Under Rule 58, the Board is  

empowered to notify schemes regarding benefits. The Board has been entrusted with  

specific functions which have been defined in Section 22.  These functions squarely fall  

within the definition of the expression ‘service’ within the meaning of Section 2(1)(o) of  

the Consumer Protection Act 1986. The expression ‘service’ has been defined in the  

widest possible terms to mean ‘service of any description which is made available to  

potential users’. The exception in Section 2(1)(o) is a service which is rendered free of

23  

charge. The workers who are registered under the provisions of the Act of 1996 are  

beneficiaries of the schemes made by the Board. 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. The fund into which the contributions by persons who are  

registered under the Act are remitted, comprises among other sources, the contributions  

made by the beneficiaries. The fund is applied inter alia for meeting the expenses  

incurred to fulfill the objects and purposes authorized by the legislation.  In view of the  

statutory scheme, the services which are rendered by the Board to the beneficiaries are  

not services which are provided free of charge so as to constitute an exclusion from the  

statutory definition contained in Section 2(1)(o) and Section 2(d)(ii) of the Consumer  

Protection Act 1986.  The true test is not whether the amount which has been contributed  

by the beneficiary is adequate to defray the entire cost of the expenditure envisaged  

under the scheme.  So long as the service which has been rendered is not rendered free  

of charge, any deficiency of service is amenable to the fora for redressal constituted  

under the Consumer Protection Act 1986. The Act does not require an enquiry into  

whether the cost of providing the service is entirely defrayed from the price which is paid  

for availing of the service. As we have seen from the definition contained in Section  

2(1)(d), a ‘consumer’ includes not only a person who has hired or availed of service but  

even a beneficiary of a service. The registered workers are clearly beneficiaries of the  

service provided by the Board in a statutory capacity.  

 14 As a matter of interpretation, the provisions contained in the Consumer Protection  

Act 1986 must be construed in a purposive manner. Parliament has provided a salutary

24  

remedy to consumers of both goods and services. Public authorities such as the  

appellants who have been constituted under an enactment of Parliament are entrusted  

with a solemn duty of providing welfare services to registered workers.  The workers who  

are registered with the Board make contributions on the basis of which they are entitled  

to avail of the services provided in terms of the schemes notified by the Board.  Public  

accountability is a significant consideration which underlies the provisions of the  

Consumer Protection Act 1986. The evolution of jurisprudence in relation to the  

enactment reflects the need to ensure a sense of public accountability by allowing  

consumers a redressal in the context of the discharge of non-sovereign functions which  

are not rendered free of charge. This test is duly met in the present case.    

 15 Consequently, and for the reasons that we have indicated, there is no reason to  

interfere with the ultimate decision of the State Commission to award the claim, subject  

to the modification of the rate of interest by the order of the National Commission.  The  

appeal shall accordingly stand dismissed.  There shall be no order as to costs.      

…………...…...….......………………........J.         [Dr Dhananjaya Y Chandrachud]  

…..…..…....…........……………….…........J.                                 [Ajay Rastogi]   

  New Delhi;  March 17, 2020.