Kiran Raj

The Supreme Court set aside an order of the High Court of Bombay at Goa that had quashed criminal proceedings initiated against the respondent under the Factories Act, 1948. The bench, comprising Justice B.R. Gavai and Justice K.V. Viswanathan, restored the complaint and the order issuing process, stating that the activity carried out by the respondent constituted a manufacturing process under Section 2(k) of the Act.

The case arose from an inspection conducted on May 20, 2019, at the premises of the respondent, who operated a professional laundry service under the name White Cloud. During the inspection, officials found that the premises were being used as a factory without obtaining necessary approvals and licenses under the Goa Factories Rules, 1985, and the Factories Act, 1948. The inspection report recorded that more than nine workers were employed at the facility and that machinery was used for washing and cleaning clothes.

The respondent was issued a letter dated May 24, 2019, directing compliance within 15 days. In response, a letter dated May 30, 2019, was sent on behalf of the respondent stating that the business was a professional laundry service with six collection centers and a central processing unit employing 58 workers, including 10 at the processing facility. The respondent argued that dry cleaning did not amount to a manufacturing process as it did not result in the creation of a new marketable commodity and that the business was registered under the Shops and Establishments Act.

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A personal hearing was conducted on June 17, 2019, by the Chief Inspector, Inspectorate of Factories and Boilers. Subsequent correspondence with the respondent followed, and the authorities obtained confirmation from the Regional Director of the Employees’ State Insurance Corporation (ESIC) that the respondent’s unit was covered under Section 2(12) of the Employees’ State Insurance Act. As no satisfactory compliance was received, a complaint was filed against the respondent for violations of the Factories Act, 1948.

On December 4, 2019, the Judicial Magistrate First Class (JMFC), Panaji, issued process against the respondent, recording: "The material on record makes out a prima facie case against the accused. Hence, issue process."

The respondent moved the High Court of Bombay at Goa, seeking to quash the summons and complaint, arguing that the order issuing process lacked reasoning and that dry cleaning did not fall under the definition of a manufacturing process. By judgment dated September 6, 2021, the High Court quashed the complaint, holding that washing and cleaning would constitute a manufacturing process only if the activity resulted in the creation of a new marketable product. The High Court relied on previous decisions, including Employees’ State Insurance Corporation, Jullundur v. Triplex Dry Cleaners & Ors., to support this conclusion. The High Court observed: "Whenever any washing or cleaning is done of any article or substance with a view to its use, that is, of use in such a way that a new marketable commodity would come into being known commercially for being used as such or for selling the same and so on, then the process would certainly come within the definition of manufacturing process. To constitute or manufacture there must be a transformation. Mere labour bestowed on an article even if the labour is applied through machinery, will not make it a manufacture, unless it has progressed so far that transformation ensues and the article becomes commercially known as another and different article from that as which it begins its existence."

The Supreme Court examined whether the High Court was justified in quashing the order issuing process. The Court recorded: "A perusal of the definition of ‘factory’ in the Act of 1948 would reveal that any premises including the precincts thereof where ten or more workers are working and in any part of which a manufacturing process is being carried on with the aid of power would be covered therein." The Court observed that the definition of a manufacturing process included "washing, cleaning, and treating or adapting any article or substance with a view to its use, sale, transport, delivery, or disposal."

The Court stated that the High Court had relied on an incorrect interpretation by extrapolating the definition of manufacture from the Central Excise Act, 1944, which is distinct from the definition under the Factories Act, 1948. The judgment noted: "The High Court has extrapolated the definition of ‘manufacture’ as used in the Central Excise Act, 1944, which is distinct from the definition under the Factories Act, 1948. The plain language of Section 2(k) clearly includes washing and cleaning, and there is no requirement for the creation of a new commercial product."

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The Court also referred to the amendments in the Factories Act, 1948, that specifically included washing and cleaning in the definition of manufacturing process, highlighting that this was absent in the Factories Act, 1934. The judgment recorded: "It is very clear that Section 2(g) of the 1934 Act did not have the words ‘washing, cleaning’ and they have been specifically brought in the Act of 1948 with a clear object of bringing into the fold of the Act undertakings excluded from the scope of the 1934 Act."

Regarding the argument that the order issuing process lacked reasoning, the Court held that in light of its findings, remanding the matter for fresh consideration would serve no purpose. The judgment stated: "We may have been inclined to consider this submission except that in view of the categorical findings rendered by us hereinabove any exercise of remitting the complaint and asking the Magistrate to exercise his powers afresh, would be futile."

The Supreme Court allowed the appeal, set aside the High Court’s order, and restored the complaint along with the order issuing process. The Court directed that the matter be proceeded with in accordance with the law before the Judicial Magistrate First Class, Panaji.

Case Title: The State of Goa & Anr. v. Namita Tripathi

Neutral Citation: INSC 2025 306

Case No: Special Leave Petition (Crl.) No. 1959 of 2022

Bench: Justice B.R. Gavai, Justice K.V. Viswanathan

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