Child Workers Revisited

One of the burning issues on which the Supreme Court has passed a series of significant orders in its recent activist wave was child labour. Two detailed judgments dealt with this problem: M C Mehta vs State of Tamil Nadu and Bandhua Mukti Morcha vs Union of India. However, the impact of both these decisions at the ground level has been negligible.

The failure in this field is not as dramatic as the political issues dealt with by the court contemporaneously: no VIPs arrested and acquitted, no shake-up in the government, and no constitutional debates sparked off. Yet there are lessons to be learnt from the virtual non-implementation of these orders.

In the Mehta judgment, the court asked the employers to contribute Rs 20,000 per child worker and the government Rs 5,000 towards a child welfare fund. There are lakhs of child workers in the carpet, glass, fireworks, hotel and other industries. If the order had been implemented, there would have been a generous fund by now. The authorities, in fact, have not done anything substantial to identify the children and demand the contributions from their employers.

The court perhaps has not taken into account the enormity of the problem in enforcing its manifold directions. It was not just the collection of funds. The court directed the authorities to provide compulsory education to all children either by the industries themselves or in coordination with the state governments. Further, the court made periodical health check-ups and nutrient food compulsory.

However, in the four months after the Mehta judgment, there has been no perceptible change in the intensity of this social evil. The Bandhua Mukti Morcha judgment was delivered in February 1997. It dealt with children in the carpet weaving industries.

Though it was well-known that there was little progress in this realm, the court adopted the Mehta judgment directions in the Bandhua Mukti Morcha judgment in toto. It added: We reiterate the directions given in the Mehta judgment as feasible and inevitable. We respectfully agree with them and reiterate (sic) the need for their speedy implementation.

However the situation has not changed. According to a survey conducted by the regional labour commissioner, Calcutta, there is not a single child worker in the railways, mines, ports and petroleum industries. This is too good to be true. On the other hand, news reports of children being employed in hazardous and other industries are still frequent. State governments and officials charged with reporting to the Supreme Court periodically have not responded. The judicial activism against social evils threatens to go the way of the campaign against corruption in public life.

Tax on rent

There was a sharp difference of opinion among the high courts over the meaning of the word owner of a property for purposes of assessing income tax. The Supreme Court settled the issue last fortnight in Commissioner of Income Tax vs Podar Cement.

Normally, owner means a person who has got a valid title conveyed to him after complying with the requirements of laws such as the Transfer of Property Act and the Registration Act. However, the Supreme Court held that in the context of Section 22 of the IT Act (income from house property), owner is a person who is entitled to receive income from the property in his own right. This is because the object of the Act is to tax the income.

This judgment is of great significance as in recent times, various devices have been undertaken for transfer of property, like the power of attorney. As a result, there are situations in which the actual owner of an apartment or a holder of a power of attorney is not the legal owner of the property. In some cases, pending resolution of disputes, the legal as well as the beneficial owners are assessed to tax in respect of the same income.

This problem came to the apex court in various forms. In one typical case, one company possessed four flats in a Mumbai building. The title to the property had not been with the company because of some technical reasons. The company let out the flats to various persons.

The rental income from these flats was shown as income from other sources under Section 56 of the Act, maintaining that the company was not the legal owner of the property. On the other hand, the tax authorities felt that the rental income should be assessed under Section 22, as income from house property.

The high courts in the country have taken different views on this point. The tax authorities followed the rulings of the respective high courts in their regions, creating anomalies. Therefore, appeals came to the Supreme Court from the assessees as well as the tax authorities.

The high courts of Allahabad, Punjab & Haryana, Rajasthan, Calcutta and Patna took the view that the liability was on the person who receives or is entitled to receive the income from the property in his own right. The Supreme Court accepted the view of these high courts as correct.

But the high courts of Delhi, Bombay and Andhra Pradesh took the opposite view. According to them, unless there is a registered deed conveying the property, the person in possession cannot be considered the legal owner and therefore not called upon to tax under Section 22. However, the apex court did not accept this view.

Though it was well-known that there was little progress in this realm, the court adopted the Mehta judgment directions in the Bandhua Mukti Morcha judgment in toto.