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Section 105: Building workers' welfare fund and its application

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter VIII: Social Security and Cess for Building Workers
Competent Labour Forum
Act No. 36 of 2020
Section 104 All 163 Sections of Code on Social Security, 2020 Section 106

Legal Commentary & Landmark Judgments: Section 105

Section 105 of the Code on Social Security, 2020 governs the constitution, management, and statutory application of the Building and Other Construction Workers' Welfare Fund, dedicating cess proceeds strictly to life, health, disability, pension, and education benefits while imposing a strict cap on administrative overheads.

  • Constitution of the Dedicated Welfare Corpus: Mandates the constitution of a State Building and Other Construction Workers' Welfare Fund, credited with: (a) all cess collected under Section 100; (b) registration fees and beneficiary contributions; (c) grants, loans, and subsidies from the Central or State Government; and (d) all sums received by the Board from any other source.
  • Statutory Enumeration of Permissible Beneficiary Disbursals: Explicitly restricts fund expenditure to: (a) grant of immediate medical assistance in life-threatening diseases; (b) periodic disability pensions; (c) maternity benefits to female beneficiaries; (d) payment of accidental death grants; (e) funding education and scholarships for children; (f) payment of group insurance premiums; and (g) sanctioning house-building loans.
  • Strict Five Per Cent Statutory Cap on Administrative Costs: Imposes an unyielding statutory restriction: the Board shall not incur expenses exceeding five per cent of its total expenditure during any financial year on administrative expenses, salaries, and office overheads.
  • Absolute Prohibition on Fund Diversion: Statutorily prohibits the diversion of welfare funds for general state budgetary purposes, publicity, or non-welfare administrative infrastructure, creating a fiduciary trust holding the fund exclusively for registered workers.
Key Landmark Precedents:
  • National Campaign Committee for Central Legislation on Construction Labour v. Union of India (2018) 5 SCC 218: The Supreme Court castigated State Governments for illegally diverting tens of thousands of crores of construction cess to general administrative budgets or laptop distributions, holding that cess funds are held in trust exclusively for construction workers and any diversion violates constitutional guarantees.
  • Lanco Anpara Power Ltd. v. State of U.P. (2016) 10 SCC 329: The Supreme Court affirmed that the BOCW cess fund represents a targeted socio-economic fund designed to rehabilitate workers engaged in dangerous civil construction works.
  • Delhi Building & Other Construction Workers Kalyan Board v. Union of India 2018 SCC OnLine Del 12042: The High Court held that the welfare fund cannot be utilized for arbitrary political schemes; all disbursals must strictly adhere to the categories enumerated in the statute and audited annually.
Courtroom Practice & Strategic Litigation Guidance:

Welfare board legal officers and municipal authorities collecting cess must ensure that 100% of cess proceeds are transmitted into the dedicated bank account of the Welfare Fund within thirty days of collection. Maintain distinct accounting sub-ledgers for each statutory benefit category (medical, maternity, pension, scholarships). Ensure that total administrative expenditure is strictly capped within the 5% threshold to withstand CAG audit scrutiny under Section 121.

Section 104 All 163 Sections of Code on Social Security, 2020 Section 106