A) ABSTRACT / HEADNOTE

The State of Goa & Anr. v. Namita Tripathi raises the narrow but significant question whether a commercial laundry/dry-cleaning operation falls within the statutory definitions of “manufacturing process” and “factory” under the Factories Act, 1948, thereby attracting licensing, registration and penal consequences under the Act. Following an inspection of respondent’s premises (a central processing unit supported by collection centres) the inspector found more than nine workers employed, use of power-driven machinery, absence of approved plans, and lack of factory licence/registration under applicable Goa Factories Rules, 1985.

The JMFC issued process; the High Court quashed the complaint principally on the ground that washing/dry-cleaning did not amount to a manufacturing process (adopting reasoning akin to Central Excise jurisprudence requiring transformation into a new marketable commodity). The Supreme Court, applying the plain meaning of the statutory definition, the mischief and objects of the Act (a welfare statute), and binding interpretations which require liberal construction for social legislation, reversed the High Court.

The Court held that “washing, cleaning” are expressly included in Section 2(k) of the Factories Act, 1948 and that the respondent’s activities use of power, central processing unit and employment threshold brought the premises within Section 2(m). The High Court’s reliance on an exigent notion of transformation (from Central Excise law) was rejected as inapplicable. The complaint and the JMFC order issuing process were restored.

Keywords: Laundry business; Manufacturing process; Factory; Factories Act, 1948; Goa Factories Rules, 1985

B) CASE DETAILS 

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute originates in routine factory inspection of a commercial laundry “White Cloud” carrying out centralized washing/cleaning (with six collection centres and one central processing unit). The factory inspector observed over nine workers in the central unit and recorded use of powered machinery, absence of approved factory plans, failure to obtain licence and non-registration under state Rules. Inspector issued notices and finally a complaint under the Factories Act, 1948 leading to the JMFC issuing process.

The respondent disputed applicability predicated on the nature of the activity as a service rather than manufacture, arguing that washing/dry-cleaning does not create a new or marketable commodity and that the business is governed by Shops and Establishments law; reliance was placed on earlier ESIC/ High Court decisions which pre-dated the extension of the Factories Act definition or interpreted manufacture through the prism of Central Excise jurisprudence.

The High Court quashed the JMFC order on two principal bases:

(i) the JMFC’s order was cryptic and showed lack of application of mind,

(ii) the substantive contention that washing/dry-cleaning does not qualify as manufacturing process unless there is a transformation producing a new marketable commodity.

The respondent also pointed to prior inspections with no penal action and to registration under Shops law. Appellants (State/Inspector) challenged this conclusion before the Supreme Court, contending that Section 2(k) of the Factories Act, 1948 expressly includes washing and cleaning, and that the Act’s object as a welfare statute mandates a liberal, purposive construction to protect worker safety, health and welfare. The Supreme Court framed the controversy as one of statutory interpretation of defined terms and of judicial approach to welfare statutes versus tax/excise doctrines.

D) FACTS OF THE CASE

Inspection dated 20.05.2019 recorded that respondent’s premises operated a professional laundry; more than nine workers were engaged at the central processing unit; a muster roll for May 2019 was absent; powered machinery/equipment and total installed power were recorded; the inspector concluded the premises amounted to a factory under Section 2(m)(i). A covering letter dated 24.05.2019 requested compliance within 15 days. Respondent’s reply (30.05.2019) described White Cloud as six collection centres and one central processing unit employing 58 workers overall and 10 at the central unit; asserted that washing/dry-cleaning is a service with intangible output and contended non-applicability of manufacturing process. Respondent relied upon earlier judgments and registration under Shops and Establishments.

A personal hearing was given on 17.06.2019 by the Chief Inspector. The complainant gathered ESIC information showing ESIC coverage and code number for the unit. On 04.12.2019 JMFC issued process by noting prima facie case. High Court quashed proceedings in 06.09.2021, finding the JMFC order cryptic and holding that dry cleaning did not constitute manufacturing absent transformation into a new marketable commodity. State appealed.

E) LEGAL ISSUES RAISED

i. Whether the process of washing/cleaning/dry-cleaning falls within the statutory definition of “manufacturing process” in Section 2(k) of the Factories Act, 1948?
ii. If (i) is answered in the affirmative, whether respondent’s premises thereby qualify as a “factory” under Section 2(m)?
iii. Whether the High Court correctly applied principles of interpretation (importing Central Excise transformation test) in quashing the JMFC process?
iv. Whether the JMFC order was vitiated for being cryptic and showing no application of mind such that quashing was justified?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for Petitioner / Appellant submitted that:
i. Section 2(k) expressly includes washing and cleaning as part of “manufacturing process” and therefore the statutory language must be given its plain meaning.
ii. The Factories Act, 1948 is a welfare statute; interpreting it narrowly defeats legislative purpose to secure workers’ health, safety and welfare. Reliance placed on this Court’s precedents recognising beneficent construction.
iii. The factual threshold was satisfied: central processing unit used power and employed more than nine workers; absence of plans, registration and licence warranted complaint under s.92.
iv. The High Court erred in importing Central Excise jurisprudence (transformation/new commodity test) which is inapposite to the definitions expressly enacted in the Factories Act.
v. Quashing on the basis of the JMFC’s brief order would be futile since fresh exercise would lead to same conclusion; hence restoration of complaint was warranted.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondent submitted that:
i. Laundry/dry-cleaning is a service; it does not manufacture a tangible/marketable product and thus does not fall within manufacturing process.
ii. Precedents (e.g., Triplex Dry Cleaners and similar ESIC jurisprudence) held against applicability prior to statutory alignment; these authorities emphasise absence of transformation and commercial product.
iii. The JMFC order was cryptic and lacked application of mind; as such summary issuance of process deserved quashing.
iv. Registration under Shops and Establishments and prior inspections without penal action indicate regulatory understanding that activity is not a factory.

H) RELATED LEGAL PROVISIONS 

i. Section 2(k), Factories Act, 1948 — definition of “manufacturing process” (includes washing, cleaning with a view to use, sale, transport, delivery or disposal).
ii. Section 2(m), Factories Act, 1948 — definition of “factory” (threshold of workers + manufacturing process with aid of power).
iii. Section 6, Factories Act, 1948 — approval, licence and registration obligations (read with Rules rr.3,4,6 Goa).
iv. Section 92, Factories Act, 1948 — penalty for contravention.
v. Section 105, Factories Act, 1948 — cognizance of offences on complaint/inspector’s sanction.

I) JUDGEMENT

The Supreme Court unanimously allowed the State’s appeal. The Court undertook textual, contextual and purposive interpretation. Starting from the statutory text, the Court observed that Section 2(k) unambiguously includes washing and cleaning as manufacturing processes when performed with a view to its use, sale, transport, delivery or disposal. Applying the plain meaning rule the Court rejected the High Court’s requirement of a metamorphosis into a new marketable commodity. The Court analysed legislative history: the Factories Act, 1934 lacked explicit washing, cleaning phrases; the 1948 Act intentionally inserted them to widen coverage and remedy defects. The statutory object and amendments (1976, 1987) were emphasised to show the remedial/welfare thrust to protect worker health and safety across undertakings previously excluded.

The Court rejected importation of the Central Excise transformation test (requiring a different commercial identity) noting that Central Excise definitions serve different statutory ends (taxation/marketability) and cannot override express definitions enacted under the Factories Act. The Court reviewed relevant precedents cited by parties (including Balwant Rai Saluja v. Air India Ltd., S.M. Datta v. State of Gujarat, and Works Manager, Central Railway Workshop, Jhansi v. Vishwanath), and applied principles that welfare statutes demand liberal construction. The Court further noted that the respondent’s own representations (ESIC registration/code, admission of workers and power usage) corroborated the statutory test. On the procedural point that the JMFC order was terse, the Court declined to remit because its own conclusive statutory interpretation rendered remittal futile; restoration of complaint and continuation before JMFC was ordered to proceed in accordance with law.

a. RATIO DECIDENDI

The controlling ratio is that where a statute defines a term, courts must give effect to that definition in its ordinary grammatical sense unless repugnancy in subject/context arises. Because Section 2(k) of the Factories Act, 1948 expressly enumerates washing and cleaning within manufacturing process, such acts performed with a view to use, transport, delivery or disposal engage the definition. If the premises employ the requisite number of persons and use power (or meet the alternative threshold), they qualify as factory under Section 2(m). Thus, laundry operations—central processing using power and employing more than nine workers—fall within the Act and subject the occupier to statutory obligations and penalties. The High Court’s narrower test (requiring transformation into a new commodity) was inapposite and based on Central Excise analogies not relevant to the protective purpose of the Factories Act.

b. OBITER DICTA

The Court observed obiter that earlier ESIC/High Court holdings decided before the statutory alignment (pre-1989 insertion of Section 2(14AA) in ESIC Act) cannot govern post-amendment situations where Factories Act definitions directly apply. The Court also noted that registration under other statutes (e.g., Shops and Establishments) does not immunize an occupier from compliance with factory statutes where statutory criteria are met. Procedurally, while judicial orders should ideally manifest application of mind, courts must weigh the futility of remittal when statutory clarity and facts leave no room for doubt; the Court’s restoration was thus pragmatic.

c. GUIDELINES

i. Where a statute defines terms, apply the definition first; do not import tests from other statutes with different objects.
ii. Welfare statutes such as the Factories Act must receive liberal construction to effectuate health, safety and welfare objectives.
iii. For establishments engaged in processes expressly listed in Section 2(k) (including washing, cleaning), assess factual thresholds (worker count, use of power) to determine factory status.
iv. Administrative records (inspection report, installed power, muster roll, ESIC registration) are substantive materials for prima facie evaluation at complaint stage.
v. Cryptic orders at magistrate level should be avoided, but where appellate interpretation yields conclusive statutory application, remittal is unnecessary and may be refused.
vi. Prior regulatory practice or registration under other enactments does not exclude enforcement under the Factories Act when statutory elements are met.

J) CONCLUSION & COMMENTS

The judgment reaffirms statutory primacy: when legislature defines a term, courts must give effect to the definition to achieve the statute’s object. The decision curtails attempts to evade labour-protective regulation by characterizing industrial activity as mere service where the activity falls within express statutory language. Practically, laundries and similar centralized service units using power and exceeding worker thresholds must comply with registration, approval of plans and licensing under the Factories Act and State Rules; failure invites penal consequences under s.92.

The Court’s rejection of Central Excise transformation criteria underscores functional interpretation tied to object welfare and worker protection trump tax-driven tests of marketability. The ruling sends a clear regulatory signal to inspectors, occupiers and courts: statutory definitions in social legislation must be read broadly and enforced to secure workplace safety and welfare; procedural imperfections in lower court orders will not shield clearly non-compliant establishments from prosecution where the law and facts are unambiguous. The decision therefore strengthens the protective machinery of labour law and clarifies interpretive approach for analogous disputes.

K) REFERENCES

a. Important Cases Referred 

1. Balwant Rai Saluja & Anr. v. Air India Ltd. & Ors., [2014] 14 SCR 1512 : (2014) 9 SCC 407.

2. S.M. Datta v. State of Gujarat & Anr., [2001] Supp. 2 SCR 140 : (2001) 7 SCC 659.

3. Works Manager, Central Railway Workshop, Jhansi v. Vishwanath & Ors., [1970] 2 SCR 726 : (1969) 3 SCC 95.

4. Allahabad Bank & Anr. v. All India Allahabad Bank Retired Employees Association, [2010] 2 SCR 162 : (2010) 2 SCC 44.

5. Lanco Anpara Power Ltd. v. State of U.P. & Ors., [2016] 5 SCR 731 : (2016) 10 SCC 329.

6. Jeewanlal Ltd. & Ors. v. Appellate Authority under the Payment of Gratuity Act & Ors., [1985] 1 SCR 664 : (1984) 4 SCC 356.

7. Steel Authority of India Ltd. & Ors. v. National Union Waterfront Workers & Ors., [2001] Supp. 2 SCR 343 : (2001) 7 SCC 1.

8. Crane Betel Nut Powder Works v. Commr. of Customs & Central Excise, Tirupathi & Anr., [2007] 4 SCR 109 : (2007) 4 SCC 155.

9. Kores India Ltd., Chennai v. Commissioner of Central Excise, Chennai, [2004] Supp. 6 SCR 320 : (2005) 1 SCC 385.

10. Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors., 2025 SCC OnLine SC 181.

11. Employees’ State Insurance Corporation v. Triplex Dry Cleaners and Others, (1998) 1 SCC 196.

12. J.P. Lights India v. Regional Director E.S.I. Corporation, Bangalore, 2023 SCC OnLine SC 1271.

b. Important Statutes Referred

1. Factories Act, 1948 (ss.2(k), 2(m), 6, 92, 93, 105).

2. Goa Factories Rules, 1985 (rr.3,4,6).

3. Employees’ State Insurance Act (reference to s.2(14AA) insertion w.e.f. 20.10.1989)