New Delhi, March 3 (UNI) In a significant ruling, the Supreme Court on Monday held that activities such as washing, cleaning and dry-cleaning fall within the definition of a "manufacturing process" under the Factories Act, 1948, even if they do not create a new tangible product.
A bench comprising Justice BR Gavai and Justice KV Viswanathan ruled that a laundry business qualifies as a "factory" under Section 2(m) of the Factories Act, 1948 if it employs 10 or more workers and utilises power-operated machines for washing and cleaning clothes.
The apex court delivered this judgement while hearing an appeal filed by the State of Goa against a High Court decision that had quashed the order of the Judicial Magistrate First Class (JMFC), which had initiated proceedings against the respondent for violations of the Factories Act, 1948.
The High Court had ruled that dry cleaning did not qualify as a "manufacturing process," thereby exempting the respondent’s laundry business from being classified as a factory under the Act.
The State of Goa contended before the Supreme Court, that under Section 2(k) of the Act, the laundry business meets the criteria for a "manufacturing process," as washing and cleaning clothes involve treating articles for use or delivery.
Additionally, the State argued that since the respondent employed more than nine workers and used power-operated machinery for washing, the premises satisfied the definition of a "factory" under Section 2(m) of the Act.
Opposing this stance, the respondent contended that dry cleaning and washing clothes constituted a service rather than a manufacturing process and, therefore, should be regulated under the Shops and Establishments Act rather than the Factories Act.
The Supreme Court found merit in the State’s argument and held that the respondent’s laundry business indeed constitutes a "factory" under the Factories Act, 1948, and that the process of washing and cleaning clothes qualifies as a "manufacturing process."
Rejecting the respondent’s argument that washing and cleaning clothes do not create a new tangible product, the court clarified that under Section 2(k) of the Act, the definition of a "manufacturing process" includes any process that involves washing or cleaning with a view to its use, sale, transport, delivery, or disposal.
“The Factories Act, 1948, clearly defines ‘manufacturing process,’ and we find that ‘washing, cleaning’ and the activities carried out by the respondent for its use, delivery, or disposal are squarely covered. The contention that dry cleaning does not make any product usable, saleable, or worthy of delivery is devoid of merit and must be rejected,” the Court observed.
The judgment further emphasized: “The linen deposited with the launderer, after being washed and cleaned, is delivered to the customer for use. The ingredients of Section 2(k) are fully satisfied. There is nothing in the Factories Act, 1948, that contradicts this interpretation.
Therefore, we reject the findings of the High Court and hold that the activities carried out by the respondent fall under the definition of a ‘manufacturing process’ under Section 2(k), thereby bringing the respondent’s premises under the definition of a ‘factory’ under Section 2(m). Consequently, the complaint against the respondent should not have been quashed.”
The Supreme Court allowed the State's appeal and set aside the High Court’s order, thereby reinstating the JMFC’s order and initiating proceedings against the respondent for violations under the Factories Act, 1948. UNI SNG SSP