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Factory in The Factories act,1948

Analysi of key components of what constitutes in the definition of factory , discussion on exceptions.

Author Name:   Shastree

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Premature pregnancy is
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Analysi of key components of what constitutes in the de nition of

factory , discussion on exceptions.

An illustrative analysis of the de nition of ‘Factory’ in The Factories

Act, 1948
The definition of ‘Factory’ is given in section 2(m) of the Factories Act,1948. Section
2(m) defines the term ‘Factory’ as: - ‘Factory’ means: any premises or precincts
thereof –

(i) 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 power, or is ordinarily so carried on; or

(ii) whereon twenty or more workers are working, or 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 Top
include (i) a mine subject to the operation of the Mines Act 1952, or (ii) a mobile
unit belonging to the armed forces of the Union of India, (iii) a railway running
shed, or (iv) a hotel , (v) a restaurant, (vi) eating place., (vii) poly house or (viii) Green
house engaged in the activity of floriculture or pomology or high value crops.

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 purpose of this clause, the mere fact that an electronic Data
Processing Unit or a computer Unit is installed in any premises or a part thereof,
shall not be construed to make it a factory if no manufacturing process is being
carried out in such premises or a part thereof.

Explanation III: For the purpose of this clause, the term, “ High Value Crops”, shall
mean and include – (i) Plantation of fruits , vegetables, flowers in a green house or
shed-net house;(ii) Plantation of exotic fruits, flowers and vegetables, (iii) Plantation
of crops for the use of bio-technology, (iv) plantation of medicinal and aromatic
plants and processing industry; (v) Production of mushroom and processing
industry; (vi) Production of fruits by micro drip irrigation by use of plastic and
mulching; (vii) Nurseries and processing industries where vegetables are produced
in green house; (viii) Nursery of ornamental plants.

In addition to the above stated definition of Factory; the section 85 of Chapter IX of

the Factories Act, 1948, extends the application of the term factory; the Section 85
titled “Power to apply the Act to certain premises”. This section is contained in
Chapter IX which is titled, “special provisions”.

Section 85 states that,

(1) The State Government may, by notification in the official gazette declare that all
or any of the provisions of the act shall apply to any place wherein a
manufacturing process is carried with or without the aid of power or so is
ordinarily carried on , notwithstanding that – (i) the number of persons employed
therein is than 10, if working with the aid of power and less than 20 without the aid
of power , or (ii) the persons working therein are not employed by the owner
thereof but are working with the permission of, or under agreement with, such
owner: provided that the manufacturing process is not being carried on only with
the aid of his family,

(2) After a place is so declared, it shall be deemed to be a factory for the purpose
of this Act, and the owner shall be deemed to be the occupier, and any person
working therein, a worker.

Explanation: For the purpose of this section “Owner” shall include a lesser or Top
mortgagee with possession of the premises.
According to Black’s Law dictionary, factory is a term that includes all buildings and
premises wherein, or within the cartilage of which, steam, water, or any
mechanical power is used to move or work any machinery employed in preparing ,
manufacturing, or finishing cotton, wool, hair, silk, flax, hemp, jute or tow.

This definition seems to be confined to defining expanse of term only to textile and
its related industry. Further referring to the definition stated in section 2(m) of the
Factories Act,1948, which is discussed earlier, it can be inferred, that the following
ingredients are mandatory to constitute a premises as “ factory” which are as
follows: -

(i) If the premises is using power or working without the aid of power , the number
of workers required to constitute a factory differ as follows –
(a) with the aid of power – 10 or more workers,

(b) without the aid of power – 20 or more workers.

(ii) A manufacturing process should be carried on,
(iii) Work should be carried on in precincts.

The case law of K.V.V.Sharma AIR , 1953, Mad 269, stated precincts as; “a space
enclosed by walls or fences. A place solely used for some purpose other than the
manufacturing process carried on in a factory or a workshop does not constitute a
factory.”

In the case of Ardeshir vs State of Bombay , AIR 1962, S.C.29, it was held that the
word ‘premises’ is a generic term meaning open land or land with buildings or
building alone. The expression, “premises including precincts” does not necessarily
mean that the premises must always have precincts. Even buildings need not have
any precincts. The word ’including’ is not a term restricting the meaning of the
word ‘premises’ but is a term which enlarges its scope. The use of the word
‘including’, therefore doesnot indicate that the word ‘premises’ must be restricted
to main building and not to be taken to cover open land as well. Though some of
the provisions of the Act cannot be applicable to salt works where the process of
converting sea water into salt is carried on in the open, there is nothing in the Act
which makes it uniformly compulsory for every occupier of the factory to comply
with every requirement of the Act. An occupier needs to comply with such
provisions of the Act which applies to the factory he is working, hence, salt works
should come within the meaning of the word ‘premises’ used in the definition in
section 2(m). For any premises to be called a factory, the following conditions must
be fulfilled:-

(1) As decided in the case of ‘Workmen, Delhi electricity Supply Undertaking /vs/ Top
Management, AIR 1973 SC 365; “Factory” is a premise where manufacturing
process is carried on ” No manufacturing process was held to take place either in
process is carried on. . No manufacturing process was held to take place either in
the sub-stations or in the zonal stations of the Delhi Electricity Supply Undertaking,
because the workmen employed therein have no part in any manufacturing
process”.

(2) As decided in the case of “New Taj Mahal Cafe ltd Mangalore /vs/ Inspector of
Factories, Mangalore,(1950) I.LLJ,273. that, “In order that any premises may be held
as a factory , the following conditions must be fulfilled :-

(a) a manufacturing process must be carried on in any part of the premise of the
establishment and ,

(b) where a manufacturing process is carried on with the aid of power, ten or more
workers must be working and where manufacturing process is carried on without
the aid of power, twenty or more workers must be working in that establishment.
But, the mere fact that the power is used in the premises is not sufficient, but
power must be used in the aid of manufacturing process.

An important necessity for any premises to be regarded as a ‘factory’ is, that a

“manufacturing process” should be conducted within the premises. In the factories
Act,1948, according to section 2(k) defines manufacturing process as:-
“Manufacturing process” means process for –(i) Making, altering, repairing, oiling,
washing, cleaning, ornamenting, finishing, packing, breaking up, or otherwise
treating or adapting any article or substance with a view to its use, sale transport,
delivery or disposal, or

(ii) Pumping oil, water, sewage or any other substance or,

(iii) Generating, transforming or transmitting, power, or

(iv) Composing types for printing the letter press, lithography, photogravure, or
other similar process or book binding, or

(v) Constructing, re-constructing, repairing, refitting, or breaking up of ships or

vessels ; or

(vi) Preserving or storing any articles in cold storage;

In this regard it becomes necessary to discuss some special circumstances that

came up in some court cases :

(1) Preparation of food with aid of various electrical appliances in kitchen of a hotel
is a manufacturing process: As decided in the case of “Poona Industrial Hotel /v/s
I.C. Sarin , 1980, Lab IC 100.

(2) Selling of petrol or diesel by a petrol dealer or repairing of motor vehicle will not
come within the term “manufacturing process”, as noted in the case of : “ National
Service Centre and Petrol Pump /vs/ E.S.I Corporation , 1983 labI.C. 412(P&H) .

(3) The work of mere packing cannot be called as a manufacturing process; {ref-AIR
1955 NUC 2710}.

(4) The business of sale of diesel oil, motor spirit, lubricant, servicing of cars and
lorries, repairing vehicles and charging batteries with the aid of power, by
employing more than 20 workers / labourers amount to manufacturing process, as
noted in the case of “Baranagar Service Station /vs/ E.S.I Corporation (1987) 1 L.L.N
912(Cal)(Divisional Bench).& Lab I.C. 302. Top

(5) Decorticating groundnuts in electric mill is a manufacturing process (AIR 1959

 (5) Decorticating groundnuts in electric mill is a manufacturing process (AIR 1959
Madras 30).

(6) Breaking up of boulders is a manufacturing process – as decided in case of

“Larsen & Toubro /vs/ state of Orissa , 1992 Lab IC 1513 (Orissa- Divisional Bench).

(7) Transportation of goods on contract basis from one place to another by road
with the assistance of transport carriers is not a manufacturing process- as
decided in the case of regional Director E.S.I.C /vs/ Jaihind Roadways,
Bangalore(2001),1 L.L.J 1187(Karnataka).

(8) Reading the definition of ‘Manufacturing process’ in the light of Supreme Court
in “Workmen”, Delhi Electricity Supply Undertaking /vs/ management”, (1974) 3 SCC
108, the word ‘or’ in section 2(k) (iii) must be read as ‘and’.

In other words, to satisfy the definition of “manufacturing process”, there should

be a process of generating, transmitting, and transforming of power. So a sub-
station where only transforming and transmitting of power is done is not covered.
A contradictory judgement was passed by Bombay High Court and it has laid down
in the definition of “manufacturing process’, that , in this definition , each of the
words have got independent meaning which itself constitutes the manufacturing
process.

Therefore we can conclude from these cases & definition that if a manufacturing
process is not carried on within the premises it cannot be regarded as a factory,
and to regard an establishment or premises as a factory, it should fulfill certain
conditions as mentioned above and mainly manufacturing process should be
carried on.

The author can be reached at: shastree85@legalserviceindia.com

ISBN No: 978-81-928510-1-3

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Author Bio:   Name: Aniruddh Shastree Resource consultant, recruiter, assisting in

client acquisition. Masters from I.L.S.Law College & MBA(HR).

Email:   Shastree85@legalserviceindia.com Website:   
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