The Supreme Court ruled that cleaning, washing, and dry cleaning of clothes are considered ‘manufacturing’ under the Factories Act. The Court explained that something does not need to change completely or become a new product to be called a manufacturing process. This decision gives a wider meaning to what activities are included under the Act. It may also affect labor rules and workplace laws in the service industry.
New Delhi: The Supreme Court ruled that the laundry business, which includes cleaning, washing, and dry cleaning of clothes, qualifies as a ‘manufacturing process’ under the Factories Act, 1948.
Justices BR Gavai and KV Viswanathan noted that for an activity to be classified as a manufacturing process, it is not necessary for a transformation to occur or for a new product to emerge that is commercially recognized as different.
The Court stated,
“It is clear from 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 that the business of laundry carried out by the respondent, which involves cleaning and washing clothes including dry cleaning, would be squarely covered by the expression ‘manufacturing process’… The High Court’s reasoning that a transformation must occur and a new article must come into being is a totally erroneous finding.”
This ruling came in response to a plea from the State of Goa challenging the Bombay High Court’s decision, which stated that dry cleaning did not constitute a “manufacturing process.”
The case originated from a May 2019 inspection of a business operated by Namita Tripathi, known as White Cloud, which provided laundry services.
The inspection uncovered multiple violations of the Factories Act, including the absence of factory-approved plans and operating without a valid license. It was also noted that the business employed more than nine workers and engaged in activities that constitute a manufacturing process.
Following these findings, authorities issued a compliance notice in May 2019. The respondent contended that laundry services do not fall under the Factories Act but rather under the Shops and Establishments Act.
However, after further correspondence and a hearing, the authorities deemed the response inadequate and proceeded with legal action.
The Judicial Magistrate First Class (JMFC) in Panaji subsequently issued a summons against the respondent for violating the Factories Act. The respondent challenged this in the Bombay High Court, which ruled in her favor, asserting that the order lacked reasoning and did not show an application of mind.
The High Court concluded that laundry services do not qualify as a manufacturing process, as it requires the transformation of an item into a new marketable product.
Dissatisfied with the High Court’s decision, the State of Goa appealed to the Supreme Court, which held that laundry services, including dry cleaning, do indeed constitute a ‘manufacturing process’ under Section 2(k) of the Factories Act.
The Court stated,
“Thus, we reject the findings of the High Court and hold that the activity carried out is clearly covered by the definition of ‘manufacturing process’ under Section 2(k), bringing the respondent’s premises under the definition of ‘factory’ under Section 2(m).”
The Court emphasized that social welfare legislation should be interpreted in a manner that upholds the legislative intent, stating,
“Acts of this nature, intended to benefit a large community of workers, ought to be interpreted to give efficacy to legislative intent.”
Consequently, the Supreme Court set aside the High Court’s judgment and reinstated the complaint 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 according to the law.
Case Title: The State of Goa & Another vs. Namita Tripathi