Supreme Court Holds Laundry Business Falls Under 'Manufacturing Process' Under Factories Act, 1948 By Abhishek Jat, Advocate

 

Supreme Court Holds Laundry Business Falls Under 'Manufacturing Process' Under Factories Act, 1948
By Abhishek Jat, Advocate

 

In a landmark judgment dated March 3, 2025, the Supreme Court of India has ruled that the laundry business, including washing and dry cleaning of clothes, falls under the definition of "manufacturing process" as per Section 2(k) of the Factories Act, 1948. The Court further held that premises where such processes are carried out, employing ten or more workers with the aid of power, qualify as a "factory" under Section 2(m) of the Act. This judgment has significant implications for businesses engaged in laundry services, as it brings them under the regulatory framework of the Factories Act, 1948, which mandates compliance with health, safety, and welfare standards for workers.

Background of the Case

The case arose from a complaint filed by the State of Goa against Namita Tripathi, the respondent, who operated a laundry business under the name "White Cloud." The complaint alleged that the respondent violated the provisions of the Factories Act, 1948, by operating a factory without the necessary approvals, licenses, and registrations. The Judicial Magistrate First Class (JMFC) in Panaji issued process against the respondent, which was subsequently quashed by the Bombay High Court. The High Court held that the laundry business did not constitute a "manufacturing process" under the Act, as it did not result in the creation of a new marketable commodity.

The State of Goa appealed to the Supreme Court, challenging the High Court's decision. The central question before the Supreme Court was whether the activities of washing and dry cleaning of clothes fall within the definition of "manufacturing process" under Section 2(k) of the Factories Act, 1948, and whether the premises where such activities are carried out qualify as a "factory" under Section 2(m) of the Act.

Key Legal Provisions

The Factories Act, 1948, is a social welfare legislation aimed at regulating labor conditions in factories, ensuring the health, safety, and welfare of workers. Section 2(k) of the Act defines "manufacturing process" as:

"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."

Section 2(m) defines a "factory" as:

"any premises where ten or more workers are employed with the aid of power, or twenty or more workers without the aid of power, and in any part of which a manufacturing process is being carried on."

Supreme Court's Analysis

The Supreme Court, in its judgment, emphasized that the Factories Act, 1948, is a beneficial legislation intended to protect workers from occupational hazards. The Court rejected the High Court's reasoning that a "manufacturing process" must result in the creation of a new marketable commodity. Instead, the Court held that the plain language of Section 2(k) clearly includes processes such as washing and cleaning, provided they are carried out with a view to the use, sale, transport, delivery, or disposal of the article.

The Court noted that the laundry business involves washing and cleaning clothes, which are then delivered to customers for use. This process, according to the Court, squarely falls within the definition of "manufacturing process" under Section 2(k). Consequently, the premises where such activities are carried out, employing ten or more workers with the aid of power, qualify as a "factory" under Section 2(m) of the Act.

The Court also clarified that the definition of "manufacture" under the Central Excise Act, 1944, which requires the creation of a new product, cannot be applied to the Factories Act, 1948. The Court emphasized that the two statutes serve different purposes and have distinct definitions.

Implications of the Judgment

This judgment has far-reaching implications for businesses engaged in laundry services. It brings such establishments under the purview of the Factories Act, 1948, requiring them to comply with the Act's provisions related to health, safety, and welfare of workers. This includes obtaining necessary licenses, maintaining proper working conditions, and ensuring compliance with labor laws.

The judgment also underscores the importance of interpreting social welfare legislation in a manner that advances its objectives. The Court reiterated that beneficial statutes like the Factories Act, 1948, must be construed liberally to ensure the protection of workers' rights.

Conclusion

The Supreme Court's decision in this case reaffirms the broad scope of the term "manufacturing process" under the Factories Act, 1948. By holding that laundry businesses fall within this definition, the Court has ensured that workers in such establishments are entitled to the protections afforded by the Act. This judgment serves as a reminder to businesses to comply with labor laws and prioritize the welfare of their employees.