Week 11 Class 1.pptx FACTORIES ACT 1948 W11C1

2 (l) “worker” means a person:
-employed, directly or by or through any agency including a contractor with or without the knowledge of the principal employer,
-whether for remuneration or not,
-in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the Union;

1. FACTORIES ACT 1948 W11C1

2. DEFINITIONS 2 (l) “worker” means a person: employed, directly or by or through any agency including a contractor with or without the knowledge of the principal employer, whether for remuneration or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the Union;  

3. 2 (m) “factory” means any premises including the precincts thereof— Whereon 10 or more workers are working, or were working on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on with the aid of powe r, or is ordinarily so carried on, or whereon 20 or more workers are working, or were working on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on without the aid of power , or is ordinarily so carried on,— but does not include a mine or a mobile unit belonging to the armed forces of the Union, railway running shed or a hotel, restaurant or eating place. Explanation I—For computing the number of workers for the purposes of this clause all the workers in different groups and relays in a day shall be taken into account; Explanation II.—For the purposes of this clause, the mere fact that an Electronic Data Processing Unit or a Computer Unit is installed in any premises or part thereof, shall not be construed to make it a factory if no manufacturing process is being carried on in such premises or part thereof;

4. 2(k) “manufacturing process” means any process for — making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal; or pumping oil, water, sewage or any other substance; or generating, transforming or transmitting power; or composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; or constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or preserving or storing any article in cold storage;

5. 2(n) “occupier” of a factory means the person who has ultimate control over the affairs of the factory Provided that— in the case of a firm or other association of individuals, any one of the individual partners or members thereof shall be deemed to be the occupier; in the case of a company, any one of the directors shall be deemed to be the occupier; in the case of a factory owned or controlled by the Central Government or any State Government, or any local authority, the person or persons appointed to manage the affairs of the factory by the Central Government, the Stale Government or the local authority, as the case may be, shall be deemed to be the occupier:

6. State of Bombay v Ardeshir Hormosji Bhiwandiwala (1956) 2 LLJ 26 Bom (Definition) Facts: respondent was charged for having breached section 6 of the Factories Act – as the occupier the respondent had failed to apply for registration and grant of licence. The case focuses on the interpretation of sections 2(k) and 2(m). The respondent is the occupier of the Wadia Mahal Salt Works at Wadala where the salt is made. Question – 1. is the sit of the salt works ‘premises’ under section 2(m) 2. Does the sale of salt as a result of a manufacturing process fall under 2(k)(1) Lower court held: The magistrate in the lower courts had held that there was no human agency involved in the preparation of salt by solar evaporation of sea water. Thus, there was no manufacturing process, and the works were not a factory. For ‘premises’ the magistrate had held that the land where salt was produced was not analogous to a factory, because the salt farm was roughly 250 acres in size. It had no fencing and no boundary walls. It was more like an agricultural farm than a factory. There was no building except for one shed. The salt pans were separated by sea water. Therefore it was not a factory, which under section 2(m), needed buildings or enclosures encircled by walls. It would not include open land.

7. Held: PREMISES ‘premises’ under the Bombay Rent Control Act 1947 is any land not being used for agricultural purposes, and any building or part of a building being let separately. The object of the Act is to prevent the landlord from charging excessive or unreasonable rent in respect of his building or land and thus make profit which the Legislature thought would not be a just and fair profit. Here, analogously - it may justly be said that the occupier of a factory, whether the factory is situated in a building or upon an open land, would not be immune from a tendency of making an unreasonable profit for himself by taking excessive work from the workers by refusing them holidays etc. The intention of the legislature would have been to include land as well, it would have been mindful of human failing, and would have intended to promote worker welfare by requiring the employer to pay adequate attention to the health, safety and protection of his workers. Since factories Act does not include the definition of ‘premises’ it is justified to derive the meaning from the Bombay Act. Would not have been the intention of the legislature to discriminate between workers who are engaged in a manufacturing process in a building and those who are engaged in such a process on lands. Such a discrimination would be iniquitous and unfair.

8. 6. For example, section 17 of the FA requires the occupier to provide and maintain sufficient lighting in the factory. The salt pan workers sometimes work in the day and sometimes in the night. It would be necessary for their safety and convenience to have lighting at night. 7. When working during the day, the sunlight reflecting on the salt pans cause a considerable glare. The occupier should be obligated under section 17 to take measures to protect the workers’ eyes. Similarly there is a bar on causing workers to carry excessive weights (section 34). 8. Looking at other provisions of the Act, the court concluded the legislature would have intended for the provisions of the FA to be applicable to workers inside and outside buildings in the interests of justice, fairness and humanity. 9. Thus, the court concluded, based on the scheme of the FA, that the term ‘premises’ should be construed so as to include lands. 10. Object of the FA - to regulate labour and the provisions of the Act clearly show that the said regulation was intended for the benefit and welfare of the workers.

9. 11. Since a manufacturing process of making salt is done on the site of these salt works, since as many as 47 workers are employed in that process, since the salt which is made on this land where the salt works are situated is an article of commercial use and since the occupier is making a profit by the manufacture and sale of this salt, the salt works are to be considered a factory. 12. Looking at the definition of factory under the 1911 Act and the 1948 Act: 1911 Act: Factory means any premises wherein or within the precincts of which on any one day in the year not less than twenty persons are simultaneously employed and steam, water or other mechanical power or electrical power is used in aid of any manufacturing process.” 1948 Act: “Factory means any premises including the precincts thereof ( i ) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part off which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952, or a railway running shed”. in the Factories Act of 1948 the words “premises wherein, or within the precincts of which” were removed and in their place the words “Premises including the precincts thereof, whereon” were substituted.

10. Purpose of substitution: the purpose was clearly to include lands in the interpretation of the word ‘premises’. The word ‘whereon’ in sub-cl. ( i ) of cl. (m) of S. 2 would be singularly inappropriate if the premises meant were only building. “And in any part of which” is consistent with the premises being inclusive of lands. A manufacturing process may be carried on in any part of the land upon which a factory may be situated. the expression “premises including precincts” merely shows that there may be some premises with precincts and some premises without precincts. Where premises are buildings, they would include precincts. Where premises are lands, they would have no precincts and there would be nothing to be included. It is of course clear that the large majority of the provisions of Chaps. III, IV and V would not apply to factories where a manufacturing process is carried on, on an open land; but then it only means that where a factory is situated on an open land, it will not be necessary for the occupier to comply with such of the provisions of the Act with which it is not feasible to comply. If not practicable to comply with a provision, the occupier would not be liable for non compliance. . Where there are factories of more kinds than one, for instance, some situated in buildings and some situated on open lands, it is not necessary and indeed it may not be possible — that all the provisions of the Act must apply to every kind of factory. Thus ‘premises’ in 2(m) of the FA 1948 means not only buildings but also lands.

11. MANUFACTURING PROCESS Respondent contended that what is done on these salt works is that a sheet of salt water is concerted into a bed of salt by evaporation due to exposure to the rays of the Sun. There is no intervention of human agency and so no manufacturing process. The salt is made through nature – the seawater, heat of the sun and gravitation pull leading to the tides. W hen the tide is low, a pump has to be worked to draw the seawater into the reservoir. This happens twice or thrice a month. For the rest of the days, that is ordinarily, the tidal water flows into the reservoir and the tide is also a natural phenomenon. Court noted that 47 workmen work at the salt works. these workmen do not add anything to, nor subtract anything from, the sea-water which produces salt from that water, but they do treat the sea-water in a particular way. This is not in the nature of chemical treatment but the words ‘treating’ in 2(k)( i ) include any treatment of an article with a view to its use, sale, etc. the workmen employed on these salt works are dealing with the sea-water in a particular manner and but for the dealing with it in that manner, salt as made on these works would not be made. Workmen's dealing with the sea-water in a particular manner is the treatment, within the meaning of the expression ‘otherwise treating’, which the workmen are giving to the water. They are separating the sea-water from the sea, without which separation the salt as produced on these works would not be produced. This separation of the sea water from the sea is also a treatment of the sea-water, given to it with a view to make its product an article of use, sale, transport etc. within the meaning of 2(k)( i ).

12. 4. Nobody considers sea-water as such an article of use sale, transport, delivery or disposal, in other words, an article of commercial use. Separation of the sea-water from the sea is the first step in making the product of the said water an article of use, sale etc.; and this very first step is dependent upon human agency. 5. It is true that ordinarily the sea-water flows by gravitational force — a natural force — into the reservoir. But there must be a reservoir before the water could flow into it. From the reservoir the water flows into tapavanis and thence into the crystallisation pans. But before the water could flow in that manner, there must be tapavanis and crystallisation pans. It is the workman who makes and prepares the reservoir, the tapavanis and crystallisation pans. The scraping out of the salt for the purpose of grading the salt into crystals of various sizes, packing of it into gunny bags with a view to its transport, delivery or disposal are all done by the workmen. In these circumstances, upon a proper construction of cl. (k), we must hold that a manufacturing process is being carried on upon these salt works. Thus, the respondent was held to be the occupier and was guilty of failing to obtain a license for working the salt works.

13. V.P. Gopala Rao V. Public Prosecutor, Andhra Pradesh, AIR 1970 SC 66 (Definition) Facts: M/s Golden Tobacco Pvt Ltd has its head office and main factory at Bombay where they manufacture cigarettes. The appellant is the occupier-manager of the company’s premises in AP where the sun-cured tobacco purchased from local producers is collected, processed and stored, and then transported to the company factory in Bombay. The appellant was prosecuted and tried for contravening section 6(1) of the FA 1984 and rules 3 and 5(3) of the AP Factory Rules 1950 f or operating the factory without obtaining a licence . The appellant claimed it was not a factory and so he did not need a license or permission for approving the plans of the building. In the lower courts, the appellant wa s held liable. Question: whether the company premises in AP constitute a factory. Section 2(m) defines factory as any premises including the precincts thereof whereon 20 or more workers are working on any day of the preceding 12 months, and I any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on” More than 20 persons were working here. Questions are: Whether the persons were workers Whether a manufacturing process was being carried out therein.

14. Held: The materials on record show that at the premises, the sun-cured tobacco leaves bought from the growers were subjected to the processes of moistening, stripping and packing. The leaves were moistened so they could be handled without breakage. This was done for 10-14 days by sprinkling water on stacks of tobacco and shifting the top and bottom layers. The stalks were stripped from the leaves, and the leaves were separated to remove spoilt ones. They were then tied in bundles and stored at the premises. Gunny bags were exported to the factory at Bombay to be used to manufacture cigarettes. Here, the manufacturing process under 2(k) was being carried on . Definition under 2(k) is wide. All the processes or moistening, stripping, breaking, packing, bundling – were manufacturing process under 2(k). But in a different case, merely sorting, drying, packing and re-packing potatoes was not considered a manufacturing process as it was done for cold storage only and not for the purposes mentioned in 2(k)( i ). Were the persons working on the premises ‘workers’? The appellant contended that the persons working there are employed by independent contractors and are not workers. Worker under 2(l) means a person employed directly or through any agency, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process.

15. The court has in the past given a restricted meaning to the words “directly or through an agency” in section 2(l) and held that a worker was a person employed by the management and that there must be a contract of service and a relationship of master and servant between them. Independent contractors and coolies engaged by them were not workers. Master servant relationship is a fact based question characterized by a contract of service. Indicia of master servant relationship – 1) master’s power of selection of his servant 2) payment of wages or other remuneration 3) master’s right to control the method of doing the work 4) the master’s right of suspension or dismissal. The critical test for a master servant relationship is the power of Superintendence and control over the method of doing work. There is no abstract a priori test of the work control required for establishing a contract of service. The nature and extent of control varied based on the industry . For example, when the operation was of a simple nature, ‘control’ was not met simply by retaining the power to reject bidis which did not meet a standard. Here, the prosecution relied on evidence: 1) returns under the provident fund scheme for about 200 persons and recoveries from their wages and company contributions to their PF. At the top of each return, it stated that the employees were contract employees but the court said this was not of much help because the provident fund Act required the employer to make payments on behalf of employees and also persons employes by or through a contractor.

16. 2) the assistant inspector of factories reported that he found 120 workmen working in the factory in December 1965, who were stripping stalks from tobacco leaves. The work of stripping was done under the supervision of the management’s clerk, and he would collect the tobacco at the end of the day, note the quantity of work done by each worker. The court held that the prosecution had discharged the burden of showing more than 20 people worked in the premises everyday. There is evidence to show that the stripping of stalks was done under the supervision of the management. The workers were not persons employed by independent contractors. Thus, more than 20 workmen worked at the premises. It was a factory under the FA.

17. Lal Mohammad V. Indian Railway Construction Co. Ltd., AIR 1999 SC 355 (Definition) Facts: R`1 is a construction company owned by the GOI. It is carrying on various construction projects through the country and abroad. When the petitioners were employed there, R1 and R2(regional manager) were monitoring a project of construction of a railway line in UP. the petitioner workmen claimed R1 offered them employment for a railway project on dates between 1983 and 1985, and they were assigned jobs for it as clerks, account clerks, store clerks, store cashiers, non technical supervisors, site supervisors etc. The petitioner claimed that they were working in the service of R1. they were trained initially and then appointed on an ad hoc basis but later they were wrongfully not placed on regular employment and worked until 1993 like regular employees. In 1993 they were given retrenchment notices because the project was essentially over. The workmen challenged the notices before the HC claiming they were no longer workmen for a project but for the company. The retrenchment was also unlawful because the company made a call fo r new recruitment. Further, the retrenchments were violative of articles 14, 16, and 21 since the company was a government one. HC single judge bench held that they were initially employed on an ad hoc basis but later their services were regularized and they were absorbed in the services of the company on a permanent basis. Even if the project had come to an end they could have been transferred elsewhere in the country. Further, section 25N of the ID Act relating to retrenchment of workers in a factory was applicable because the project was a ‘factory’ under 2(m) FA (need 3 months notice and prior permission of the government to retrench).

18. The common order of the single judge of the HC was appealed and the division bench allowed th e appeal, holding: 25N did not apply because the construction company was not a factory. Issues: Whether this railway line of 54 kms was a ‘factory’ under the Factories Act, 1948?

19. HELD: If more than 100 workmen are employed in an industrial establishment, then the provisions of Chapter VB of the IDA becomes applicable and 25N would be applicable. For it to be an industrial establishment under IDA, it should meet the definition of factory under section 2(m) of the FA. Was the respondent company a factory when it engaged itself in laying a railway track over an area of 54 km a year? The Rihand Nagar project was an undertaking dealing with the construction of a railway line over 54 km long. Consideration of this aspect of whether it was a factory will require fulfilment of twin conditions, namely, 1. whether the project was having any 'premises' where the work was being carried on by these workmen; 2. whether the work which was carried on by them amounted to a 'manufacturing process’.

20. PREMISES - In the Ardeshir case, the court held that ‘premises’ had gradually acquired a popular meaning – to include buildings and open land with or without buildings. When a railway line is to be constructed over 54 km, it does not happen overnight. It is in a phased manner. Many staff and workers are needed to lay the line, and there will be space around the site where tools, bolts, rails etc are stored. All of this has to be laid and fixed at a site for the tracks to be ready. So construction of a railway line would imply a fixed site on which construction activity occurs in a phased manner. Every time the construction activity is carried out, it would be necessary to happen on a fixed site where the workmen would lay the tracks. So even though the railway line is 54 km long the entirety of that land would be a factory at any given point of time, as the entire track will be laid out in a phased manner. When the tracks are laid, then the work is complete and it ceases to be a factory. But as long as construction work is ongoing, it remains a factory. This is distinguishable from a case where lines are already laid and electricity is being transmitted through them. In that case, it is not a factory. But here the lines are being laid, and as long as that construction is ongoing, it is a factory.

21. MANUFACTURING PROCESS -defined under section 2(k) The materials bought by the respondent company were being used up to construct the line It amounted to ‘adapting any article or substance with a view to its use’. This is a definition of a manufacturing process. Although the respondent had objected on the grounds that the ultimate product was embedded in the earth and thus could not be ‘sold, transported, delivered or disposed of like movable property’, it is not necessary that the end product result in a moveable final product or commodity for it to be a manufacturing process.