Cleaning, washing, dry cleaning clothes is 'manufacturing' under Factories Act: Supreme Court

The Supreme Court on Monday ruled that the laundry business, including cleaning, washing and dry cleaning of clothes, falls under the definition of 'manufacturing process' and a unit which engages in the said tasks qualifies as a 'factory' under the Factories Act, 1948. [The State of Goa & Another vs. Namita Tripathi].The Bench comprising Justices BR Gavai and KV Viswanathan observed that for an activity to qualify as a manufacturing process, neither is it necessary for a transformation to occur nor must a new article come into existence or be commercially recognized as a different product."It is clear on a plain reading of Section 2(k) of the Act of 1948 that ‘washing or cleaning’ of any article or substance with a view to its delivery is clearly covered by the phrase “manufacturing process”.... we have no doubt in our mind that the business of laundry carried on by the respondent involving cleaning and washing of clothes including dry cleaning would be squarely covered by the expression “manufacturing process”...the reasoning of the High Court that a transformation has to ensue and the new article must come into being and that it should be commercially known as another and different article is a totally erroneous finding," the Court said..The Court was hearing a plea by the State of Goa challenging the decision of the Bombay High Court which among other things held that dry cleaning of clothes does not constitute “manufacturing process”.The case stemmed from an inspection in May 2019, which was conducted at the premises of a business run by the respondent, Namita Tripathi, under the name White Cloud, which provided professional laundry services. The inspection revealed multiple violations under the Factories Act including the absence of factory-approved plans as required under Rule 3 of the Goa Factories Rules, 1985.Moreover, it was found that the premises were being operated as a factory without a valid license, violating Rule 4 read with Section 6 of the Factories Act. Further, the respondent had failed to register the factory and obtain a license, as required under Rule 6 read with Section 6 of the Act. The inspection report also noted that the premises had more than nine workers, lacked a muster roll and engaged in a manufacturing process involving washing and cleaning clothes..Following these findings, the authorities issued a notice in May 2019, demanding compliance within 15 days. In response, the respondent in May 2019, through a letter argued that laundry services do not constitute a "manufacturing process" under the Factories Act and claimed that the business fell under the Shops and Establishments Act instead. Despite further correspondence and a personal hearing, the authorities deemed the response unsatisfactory and proceeded with legal action. Consequently, the Judicial Magistrate First Class (JMFC)at Panaji issued process against the respondent on December 4, 2019 for violating Section 92 of the Factories Act..Challenging the summons and the criminal complaint, the respondent approached the Bombay High Court. The High Court ruled in favor of the respondent, stating that the order issuing process lacked reasoning and did not reflect an application of mind. It also held that laundry services, including dry cleaning, do not qualify as 'manufacturing process' under the Factories Act since the Act applies only when an activity transforms an item into a new marketable product, which was not the case in this instance.Consequently, the High Court quashed the complaint and the summons..Dissatisfied with the ruling, the State of Goa challenged the High Court’s decision before the Supreme Court.The Supreme Court held that the business of laundry, including dry cleaning, constitutes a 'manufacturing process' under Section 2(k) of the Factories Act. Consequently, the premises of the respondent, employing more than ten workers and using power, qualify as a 'factory' under Section 2(m) of the Act. "Hence, we reject the findings of the High Court and hold that the activity carried out which on facts is not disputed is clearly covered by the definition of “manufacturing process” under Section 2(k) which, in turn, would bring the premises in question of the respondent under the definition of “factory” under Section 2(m)," the Court said..It added that the High Court erred in holding that the dry cleaning process does not amount to a manufacturing process. The Court noted that social welfare legislations designed to benefit a large community of workers, should be interpreted in a manner that upholds and fulfills the legislative intent."Acts of this nature which are social welfare legislation and intended to benefit the large community of workers ought to be interpreted in a manner to give efficacy to legislative intent. This approach has been adopted in catena of judgments by this Court," the Bench said..Accordingly, it set aside the High Court's judgment and restored the complaint filed against the respondent for violating the provisions of the Factories Act.The case will now proceed before the Judicial Magistrate First Class (JMFC) in Panaji as per the law.Advocates Ruchira Gupta, Shishir Deshpande, Pooja Tripathi, Amit Kumar and Abhishek Verma appeared for the petitioner.Advocates Shivan Desai, Vibhuti Sushant Gupta, Jatin Ramaiya, Anirudh Sardesai and Narender Kumar Verma appeared for the respondent..[Read Judgment]