India: Defintion Of Factory- A Critical Analysis

Last Updated: 23 April 2013

Article by Sajana Bakshi1

According to the Black Law' Dictionary, Factory is a term that includes all buildings and premises wherein, or within the close or curtilage 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

According to Section 2(m) of Indian Factories 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 12 months and in any part of which is manufacturing process is being carried on with the aid of power as is ordinarily so carried on; or

ii. Whereon twenty or more workers are working or were working on any of the preceding 12 months and in any part of which a manufacturing process is being carried on without the aid of power pr is ordinarily so carried on.

A factory shall not include a mine subject to the operation of the Mines Act 1952 or a mobile unit belonging to the armed forces of the Union, a railway running shed or hotel, restaurant or eating places.

It can be inferred from above that the following ingredients are mandatory to constitute a premises as "Factory", which are as follows:-

i. If a 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 term "Precincts" in Oxford Dictionary is defined as Follows

i. the area within the walls or perceived boundaries of a particular building or place

ii. area in a town designated for specific or restricted use, especially one which is closed to traffic

Therefore from the general meaning of the term "precincts" it means any closed area surrounded bywalls or boundaries. Though the expression used above "premises including precincts" means "both premises with and premises without precincts. Where premises is a building it would included a precincts also, but where the premises are lands they would not have precincts. Thus both buildings and lands are covered by the above expression. It was held in State of Bombay vs. Ardeshir Hormosji Bhiwandiwala2 that lands in which the process of manufacturing salt is carried on is a factory.

In order that any premises may be held as a factory the following conditions must be fulfilled:-

i. a manufacturing process must be carried on in any part of the premises of the establishment

ii. where the manufacturing process is carried on with the aid of power ten or more workers must be working, where the 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 process3

There was a slate quarry extending over a large open space of about 300 acres. The work was carried on in the open air, shed was the only building. In the quarry more than 50 persons were employed for splitting the rock into slates and shaping them for sale. It was held that the quarry was not a factory for, if a place in which a manufacturing process is being carried on in open spaces it cannot constitute a factory.4 In Pragnarain Vs Crown5 it was held that factory means premises wherein anything is done towards the making or finishing of an article up to the stage when it is ready to be sold or in a suitable condition to be put in the market.

Factory is a premise where a manufacturing process is carried on. No, manufacturing process is held to take place either in the sub-stations or in the Zonal Stations of the Delhi Electric Supply Undertaking because the workmen employed therein gave no part in themanufacturing process.6 A gas main belonging to a gas company and situated about 400 yards out of the factory was held to be belonging to the precincts of the factory.7

In Ardeshir V State of Bombay8 it was held that the word "premises" is a generic term meaning open land or land with buildings or buildings alone. The expression "premises including precincts" does not necessarily mean that premises must always have precincts. Even building need not gave any precincts. The word 'including'; is not a term restricting the meaning to the word "premises" but it is a term which enlarges its scope. The use of the word including therefore does not indicate that the worked "premises" must be restricted to main building and be not taken to cover open land as well. Though some provisions of the Act are not applicable to salt works where the process of converting seawater into salt is carried on in the open. There is nothing in the Act which makes it uniformly compulsory for every occupier of a factory to comply with every requirement of the Act. An occupier is to comply wit such provisions of the Act which apply to the factory he is working. Hence the salt works would come within the meaning of the word "premises" used in the definition in Section 2(m).

It is pertinent to mention here with the exception of the law laid down in the Judgment of the Hon'ble High Court of Gujarat decided in 06.02.1973 in Simon Carves India Limited and Anr. Vs. The State of Gujarat9 that the work incidental, ancillary and in connection with the main activity of the company where 10 or more workers are working with the aid of power, the same may not fall under the provisions of the Factories Act, 1948. The Hon'ble Judge stated that "In order that the provisions of the Act are attracted it has to be shown that a manufacturing process with the aid of power was being carried on by engaging 10 or more workers in a fixed place as and by way of the main and predominant function of the company. If the company temporarily for the purpose of execution of the contract for construction carries on such manufacturing process at site temporarily provided by the owner for whom they are doing the job, it cannot be said that they are running a factory within the meaning of the Act. If a too literal construction is put on the term 'factory' as contended by the learned Advocate for theopponent, the same would not be in consonance with the object and purpose of the Act."

In Dr P.S.S Sundar Rao G.S Vs Inspector of Factories Vellore10 the question whether a laundry attached to the Christian Medical College and Hospital Vellore is a factory within the meaning of this Act. The Madras High Court held that the laundry run by the Hospital cannot be separated from the main institution. In order to ensure high degree of hygienic standard the Hospital is having its own laundry for washing linen used in the Hospital. Therefore, laundry is only subsidiary, minor or incidental establishment of the Hospital which is not a factory. One department of the Hospital established for the efficient functioning of the Hospital cannot therefore be disjoined from the main institution and termed as a factory. The paramount or the primary character of the main institution alone has to be taken into consideration and when the main institution is not a factory; a department thereof cannot become so even though a manufacturing process is carried on there.

Another necessity for premises to be regarded as a Factory is that a "Manufacturing Process" should be conducted within the premises. The Factory Act according to Section 2(k) defines manufacturing means any process for.

i. 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

ii. Pumping oil, water, sewage or any other substance; or

iii. Generating, transforming or transmitting power; or

iv. Composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; or

v. Constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or

vi. Preserving or storing any article in cold storage.

It was held in State Of Bomaby Vs Ali Saheb Kashim Tamboli11 that bidi making is a manufacturing process. The process of transforming and transmitting electrical energy are manufacturing process. Manufacturing process is carried on in sub-section of Electricity Board within the meaning of section 2(k) (iii) though there is no transmission of electrical energy. In Ardeshir Vs Bombay State salt was manufactured from sea water byapplying different processes which shows that it is due to human agency aided by natural forces, that salt is extracted from sea water. The process carried out in the salt worked comes within the definition of 'manufacturing process' in section 2(k) inasmuch as salt can be said to have been manufactured from sea water by the process of treatment and adaptation of sea water into salt.

In Gujrat Electricity Board vs state of Gujrat and Anr12, the court had to determine whether the conversion of high voltage into low voltage and distribution of electricity amounts to manufacturing process. It was held that 12 1984 II L.L.J 370(Guj) these activities are not covered by the expression 'manufacturing process" as envisaged under Section 2(k) of the Factories Act because these activities do not involve generation of power. Therefore any sub-station engaged in conversion or distribution of electricity is not a factory.

If a manufacturing process is not carried on within the premises it cannot be regarded as a factory. Therefore concluding that 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.


1 Legal Intern

2 (1956) I L.L.J 26

3 New Taj Mahal Café Ltd, Mangalore Vs Inspector if Factories, Mangalore,(1950) I L.L.J 273

4 Kent Vs Astelt, (1819) LR

5 QB 19 5 AIR 1928 Lah 78

6 Workmen, Delhi Electric Supply Undertaking Vs Management, AIR 1973 SC 365

7 Dolores Gas and Coal Co Ltd Case, (1950) 2 KB 878

8 AIR 1962 SC 29

9 1980CriLJ28310 1984 II L.L.J. 237(Mad) 11 1995 II L.L.J 182

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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