V. P. Gopala Rao v Public Prosecutor, Andhra Pradesh (1969)

Whether premises are a "factory" decides whether the whole of the Factories Act — licensing, safety, health, welfare, working hours — applies. Section 2(m) needs two things: a manufacturing process, and twenty or more workers (where power is used). The defence here attacked both: that no manufacturing process was carried on, and that the people working were employed by independent contractors.

This case answers both objections against the employer. It shows how wide "manufacturing process" is — moistening, stripping and packing raw tobacco leaf qualify — and it shows how the master-and-servant question is decided on evidence of supervision, with the onus shifting once the prosecution makes out a prima facie case.

Golden Tobacco Co. Pvt. Ltd. had its head office and main cigarette factory at Bombay. At its premises at Eluru, Andhra Pradesh, sun-cured country tobacco bought from local growers was collected, processed and stored, and then sent to Bombay for making cigarettes. The appellant was the occupier-cum-manager at Eluru.

At Eluru the leaves were moistened for 10 to 14 days by sprinkling water on stacks and shifting the top and bottom layers, so that they could be handled without breakage; the stalks were stripped from the leaves; wholly spoilt (Thukku) and partly spoilt (Pagu) leaves were separated; the leaves were tied in bundles and stored, and from time to time packed in gunny bags and sent to Bombay.

The appellant was prosecuted for running a factory without a licence from the Chief Inspector of Factories and without prior approval of the building plans. The Assistant Inspector of Factories found 120 workmen at work on 20 December 1965; the appellant did not dispute that number. Provident fund returns for July–December 1966 showed about 200 persons employed each month, described on the returns as "contract employees".

The Magistrate at Eluru acquitted. The Andhra Pradesh High Court allowed the State's appeal, convicted the appellant under s. 92 and fined him Rs. 50 on each count. He appealed by special leave.

1. Was any manufacturing process within s. 2(k)(i) carried on in the Eluru premises?
2. Were the persons working there workers within s. 2(l), or employees of independent contractors?
3. Consequently, were the premises a factory under s. 2(m)?

It was not disputed that more than 20 persons worked there.

The appeal was dismissed. The Eluru premises were a factory and the conviction stood.

Manufacturing process

The Court quoted s. 2(k)(i): any process for "making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal." It observed: "The definition is widely worded."

Applying it step by step: "The moistening was an adaptation of the tobacco leaves. The stalks were stripped by breaking them up. The leaves were packed by bundling them up and putting them into gunny bags." These were done with a view to use and transport, so: "All these processes are manufacturing processes within s. 2 (k) (i)."

The Court added that "The reported cases are of little help in deciding whether a particular process is a manufacturing process as defined in s. 2 (k) (i)." It noted State of Kerala v V. M. Patel, where garbling pepper (winnowing, cleaning, washing and drying) and curing ginger (dipping in lime and drying) were held to be manufacturing processes; and distinguished Col. Sardar C. S. Angre v State, where sorting, drying and packing potatoes was held not to be a manufacturing process because it was done only for cold storage and not for any purpose named in s. 2(k)(i).

Workers

Section 2(l) covers a person employed "directly or through any agency". The Court recalled that Chintaman Rao v State of Madhya Pradesh read this narrowly: there must be a contract of service and a relationship of master and servant with the management.

"It is a question of fact in each case whether the relationship of master and servant exists between the management and the workmen." The Court set out the four indicia of a contract of service from Short v J. W. Henderson Ltd — selection, payment of wages, control of the method of work, and suspension or dismissal — and relied on Dharangadhara Chemical Works v State of Saurashtra that the critical test is the master's right of superintendence and control over the method of doing the work.

But "There is no abstract a priori test of the work control required for establishing a contract of service." Following Bridhichand Sharma, the fact that workmen have to work in the factory implies some supervision, and where the work is simple, control can be exercised at the end of the day by rejecting bad work.

The provident fund returns did not help either way, because "employee" under the Employees' Provident Funds Act includes persons employed through a contractor.

On the evidence: the inspector saw stalk-stripping done under the supervision of the management's clerk, who collected the stripped tobacco at the end of the day and recorded each worker's output. "The onus of proving that the workmen were employed by the management was on the prosecution. We think that the prosecution has discharged this onus." There was no evidence that the other work was not similarly supervised; the appellant led no rebutting evidence; and the suggestion of independent contractors "is not borne out by the materials on the record."

Conclusion: "We hold that the persons employed are workers as defined in s. 2(1). The High Court rightly held that the company's premises at Eluru were a factory."

"Manufacturing process" in s. 2(k)(i) of the Factories Act is widely worded and covers treating or adapting, breaking up and packing an article with a view to its use or transport; the moistening, stripping and bundling of raw tobacco leaf for dispatch to a cigarette factory is a manufacturing process. Whether persons are "workers" depends on whether a master-and-servant relationship exists, a question of fact turning mainly on the management's right to supervise and control the work; there is no abstract test, and once the prosecution shows prima facie supervision by the management, an unsupported plea that the workers were engaged by independent contractors fails.

• Direct question: Define "manufacturing process" under the Factories Act 1948 and illustrate with case law. Quote the s. 2(k)(i) verbs, then show how moistening = adapting, stripping = breaking up, bundling and bagging = packing. Contrast pepper and ginger (V. M. Patel: manufacturing) with potatoes for cold storage (Angre: not).
• Direct question: Who is a "worker" under s. 2(l)? Are contract labourers covered? Use the control test (Dharangadhara), the four indicia (Short v Henderson), and this case's point that there is no abstract test and supervision may be exercised by checking output at day's end.
• Problem question: a warehouse where a company's raw produce is cleaned, sorted and packed by 50 people said to be a contractor's men, with no licence. Apply both limbs of s. 2(m) as this case does, and note the onus: prima facie evidence of management supervision shifts the burden to the occupier.
• Remember the purpose limb: the process must be "with a view to" use, sale, transport, delivery or disposal — the ground on which the potato case went the other way.