A) ABSTRACT / HEADNOTE

The appeal concerns whether a Professional Laundry Service operating a central processing unit falls within the scope of “manufacturing process” and hence a “factory” under the Factories Act, 1948, where more than nine workers were employed and power was used. The Inspector’s report recorded absence of approved plans, licence and registration under the Goa Factories Rules, 1985, and the JMFC issued process under Section 92 of the Act. The High Court quashed the summons, relying on authority which confined “manufacturing” to processes that produce a transformed or commercially different product.

The State appealed. The Supreme Court applied the plain meaning of Section 2(k) (which explicitly includes “washing, cleaning”) and the welfare purpose of the Act, rejected the High Court’s reliance on Central Excise/old ESIC interpretations requiring transformation, and held that cleaning and washing undertaken with a view to use, delivery or disposal are covered. The Court therefore reinstated the complaint and process.

This analysis examines statutory language, legislative purpose, precedent interplay (including Triplex Dry Cleaners line), interpretive canons (plain meaning, mischief rule and beneficial construction), procedural challenge on the cryptic order, and consequences for regulatory enforcement.

Keywords: Factories Act 1948, manufacturing process, washing and cleaning, factory license, beneficial legislation

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arose from a statutory inspection of a launderer’s central processing unit where more than nine persons worked and electrical power was used. Inspectors concluded the unit performed “manufacturing process” as defined in Section 2(k) specifically washing and cleaning and that the occupier lacked approved plans, registration and licence mandated under Section 6 and corresponding Goa Rules. The occupier defended on the ground that laundry is a service and that dry-cleaning/washing does not produce a transformed product; relying on pre-1989 ESIC/High Court authorities treating dry-cleaning as non-manufacturing.

The JMFC issued process; the High Court quashed it as lacking reasoned application of mind and adopting a narrow transformation test. The State appealed to the Supreme Court which framed the issue as statutory interpretation of “manufacturing process” in light of legislative history, the welfare object of the Act and later incorporations into ESIC law.

The Court emphasized interpretive canons for social welfare statutes and held that the 1948 Act’s express inclusion of washing, cleaning settles the matter in favour of coverage where statutory ingredients are met (worker threshold and aid of power). The Court also considered but declined to remit the matter on procedural grounds because the legal question disposed the challenge.

D) FACTS OF THE CASE

An inspection on 20.05.2019 at respondent’s premises (operating as “White Cloud” with collection centres and one central unit) recorded: 58 employees across centres, 10 workers at central unit, use of machinery and installed power, absence of approved plans and factory licence, and non-submission of registration application. An inspection report communicated compliance directions; a reply dated 30.05.2019 contended laundry was a service and prior inspections (2005) had produced no action; it annexed authorities contending non-applicability of the Factories Act.

A hearing was afforded; ESIC records later showed coverage under Section 2(12) of ESIC (ESIC code provided). Complaint was filed invoking Section 92 offences; JMFC on 04.12.2019 recorded prima facie case and issued process. High Court quashed process (09.06.2021) applying a transformation/marketable product test. Supreme Court allowed State’s appeal and restored the complaint for trial.

E) LEGAL ISSUES RAISED

i. Whether washing/cleaning carried out by a laundry constitutes “manufacturing process” under Section 2(k) of the Factories Act, 1948?
ii. Whether premises carrying such process and employing requisite workers with power qualify as a “factory” under Section 2(m)?
iii. Whether the High Court’s reasoning (requiring transformation into a new marketable commodity) correctly interprets the statutory definition?
iv. Whether the summons/order of the JMFC is vitiated for want of application of mind (cryptic order) sufficient to quash proceedings?

F) PETITIONER / APPELLANT’S ARGUMENTS

The State argued that the statutory text of Section 2(k) expressly includes “washing, cleaning” and therefore the plain meaning must be given effect; relying on welfare character of the Act and precedents endorsing beneficial construction (e.g., Balwant Rai Saluja v. Air India Ltd.). The State submitted that where the statutory ingredients (process, worker threshold, aid of power) exist, the premises become a factory and failure to comply with registration/licence attracts liability under Section 92. The State also contended that reliance on Central Excise notions of “manufacture” is misplaced as definitions differ.

G) RESPONDENT’S ARGUMENTS

The respondent contended laundry is a service whose end is intangible; dry-cleaning does not create a commercially new commodity and therefore does not fall within manufacturing process. Reliance was placed on pre-1989 ESIC jurisprudence (Triplex Dry Cleaners line) and on the proposition that mere application of labour/machinery without transformation cannot be manufacturing. Procedurally, respondent argued the JMFC’s order was cryptic and without application of mind.

H) RELATED LEGAL PROVISIONS 

i. Section 2(k) — definition of “manufacturing process” (expressly including washing, cleaning).
ii. Section 2(m) — definition of “factory” (worker thresholds and aid of power).
iii. Section 6 — approval, licensing and registration obligations.
iv. Section 92 — general penalty for offences by occupier/manager.
v. Section 105 — cognizance restricted to complaint by inspector / previous sanction rules.

J) JUDGEMENT

The Court emphasised statutory primacy: when Parliament defines a term (here “manufacturing process”) the defined words control and must be applied unless “repugnant in the subject or context.” The 1948 Act’s explicit insertion of “washing, cleaning” (absent in the 1934 Act) evidences legislative intent to bring within the Act undertakings previously excluded. Applying the plain meaning rule and canons appropriate for beneficial social legislation, the Court rejected High Court’s extrapolation requiring transformation into a new marketable commodity.

The decision explained that Central Excise jurisprudence (concerned with taxable manufacture and requiring change in essential character) is a distinct inquiry and cannot be transposed to the Factories Act. The Court relied on welfare precedents (e.g., Works Manager, Central Railway Workshop, Jhansi; Jeewanlal Ltd.; Allahabad Bank; Lanco Anpara) to apply a liberal construction favoring workers’ protection.

Having found that washing and cleaning with a view to use, delivery or disposal fall within Section 2(k), and that more than nine workers and use of power were present, the premises qualified as a factory under Section 2(m). On procedural crypticism of the JMFC order, the Court observed that even if the order could have been fuller, remittal would be futile because the legal question disposed the matter; consequently the complaint and process were restored for trial.

a. RATIO DECIDENDI

The dispositive rule: where the statutory definition (Section 2(k)) expressly includes washing and cleaning, the conduct of such processes with requisite worker thresholds and use of power constitutes a manufacturing process and the premises are a factory under Section 2(m). The plain language and welfare purpose control interpretation; extrinsic tests from other statutes (Central Excise) are inapposite.

b. OBITER DICTA 

The Court critically noted that pre-1989 ESIC decisions (e.g., Triplex Dry Cleaners) related to an earlier statutory regime lacking the Factories Act definition; hence they cannot govern post-1989 situations where ESIC adopts Factories Act meaning. The judgment also cautioned courts against importing the transformation/marketability test from taxation jurisprudence into labour welfare statutes.

c. GUIDELINES

i. Inspectors and trial courts should apply Section 2(k)’s plain language; absence of approved plans/licence where statutory ingredients exist attracts prosecution under Section 92.
ii. Post-1989 ESIC cases must treat ESIC’s Section 2(14AA) as assimilating Factories Act definition.
iii. Beneficial statutes are to be given liberal construction; avoid technical narrowing that undermines worker protection.
iv. If a magistrate’s order on process is cryptic but the legal question is determinative, appellate courts may restore the complaint rather than remit where remand would be futile.

I) CONCLUSION & COMMENTS

The judgment firmly prioritises statutory text and legislative purpose over imported semantic tests. For regulatory authorities the decision reinforces enforcement reach: establishments providing large-scale laundry/cleaning services using power and employing requisite workers must comply with registration, licensing and plan approval obligations; non-compliance can attract criminal proceedings under Section 92. For practitioners, the ruling underscores careful drafting of defences that otherwise rely on inapposite commercial/tax tests.

The Court’s approach also clarifies interplay with ESIC: once ESIC adopts the Factories Act definition, pre-1989 cases lose traction for subsequent periods. Procedurally, while courts expect reasoned magistrate orders, the Supreme Court will not allow form over substance to defeat enforcement where the statutory ingredients are demonstrable.

J) REFERENCES

a. Important Cases Referred

• Balwant Rai Saluja & Anr. v. Air India Ltd. & Ors., (2014) 9 SCC 407.

• S.M. Datta v. State of Gujarat & Anr., (2001) 7 SCC 659.

• Works Manager, Central Railway Workshop, Jhansi v. Vishwanath & Ors., (1969) 3 SCC 95.

• Allahabad Bank & Anr. v. All India Allahabad Bank Retired Employees Association, (2010) 2 SCC 44.

• Lanco Anpara Power Ltd. v. State of U.P. & Ors., (2016) 10 SCC 329.

• Jeewanlal Ltd. & Ors. v. Appellate Authority under the Payment of Gratuity Act & Ors., (1984) 4 SCC 356.

• Steel Authority of India Ltd. & Ors. v. National Union Waterfront Workers & Ors., (2001) 7 SCC 1.

• Crane Betel Nut Powder Works v. Commr. of Customs & Central Excise, Tirupathi & Anr., (2007) 4 SCC 155.

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

• J.P. Lights India v. Regional Director E.S.I. Corporation, Bangalore, 2023 SCC OnLine SC 1271.
  (All citations as set out in the judgment file.)

b. Important Statutes Referred

• Factories Act, 1948 (Sections 2(k), 2(m), 6, 7, 7A, 7B, 8, 9, 11–19, 21–23, 38, 40, 40A, 51–63, 67–73, 92, 93, 105).

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

• Employees’ State Insurance Act (Section 2(12), 2(14AA) as amended).