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  • Sec. 2(m)(ii) of the Factories Act, 1948.
  • Sec. 2(k)(i) of the Factories Act,
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Citation Codes
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citation codes
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  • Sec. 2(m)(ii) of the Factories Act, 1948.
  • Sec. 2(k)(i) of the Factories Act,
Smart Summary

Factual and Procedural Background

The special appeal challenges an order by A.P. Srivastava, J., dismissing Civil Miscellaneous Writ Petition No. 714 of 1962. The writ petition was filed by Shree Gopal Paper Mills Limited, a paper manufacturer located at Yamuna Nagar, Punjab. The petitioner procures raw material in the form of ‘bankas’ grass from Nepalese forests. This raw material is transported to various railheads, including Nepalganj Road in Bahraich district, where it is compressed into bales using manual baling presses before being loaded onto railway wagons for transport to the paper mills.

The Inspector of Factories, Uttar Pradesh, issued notices to the petitioner asserting that the operations at Nepalganj Road constituted a “manufacturing process” under Section 2(m)(ii) of the Factories Act, 1948, thereby classifying the depot as a factory. The petitioner sought to quash these notices, contending that the baling operation did not amount to a manufacturing process. The Single Judge dismissed the petition, holding that packing the grass at the depot fell within the definition of “manufacturing process” under Section 2(k)(i) of the Act.

Legal Issues Presented

  1. Whether the baling (packing) of raw material (bankas grass) at Nepalganj Road Depot constitutes a “manufacturing process” under Section 2(k)(i) of the Factories Act, 1948, thereby making the depot a factory under Section 2(m)(ii) of the Act.

Arguments of the Parties

Petitioner’s Arguments

  • The operation of baling the grass at Nepalganj Road is not a “manufacturing process” within the meaning of the Factories Act.
  • The packing in question is of raw material, not a finished article, and is done solely to facilitate transport, not to make the article fit or convenient for sale.

Respondent’s Arguments

  • The packing of the grass at Nepalganj Road Depot falls within the definition of “manufacturing process” under Section 2(k)(i) as it involves packing an article or substance with a view to its transport and use.
  • Consequently, the depot qualifies as a factory and requires a licence under the Factories Act.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Ex. Hare v. State, I.L.R 1955 All. 683 Held that re-packing of already packed finished goods does not constitute “packing” under Section 2(k)(i) of the Factories Act. Used to support the interpretation that “packing” in the Act refers to packing of finished manufactured articles and not preliminary packing of raw materials.

Court's Reasoning and Analysis

The court examined the definition of “manufacturing process” under Section 2(k)(i) of the Factories Act, which includes “packing” among various processes. While at first glance the baling of grass at Nepalganj Road Depot appeared to fall within this definition, the court undertook a detailed textual and purposive analysis.

The court reasoned that the term “packing” in the section is not intended to cover all forms of packing in the broadest sense, such as preliminary bundling or baling of raw materials before they reach the factory. Instead, it refers to the packing of finished manufactured articles to facilitate their sale or transport for sale, effectively the last step in the manufacturing process.

The court drew support from the precedent in Ex. Hare v. State, where re-packing of finished goods was held not to amount to “packing” under the Act. It emphasized that the baling at Nepalganj Road was purely to reduce volume for rail transport and had no connection to the manufacturing process of converting grass into paper. Moreover, the plain language of the Act and the sequence of processes listed indicated that packing follows finishing, reinforcing that packing raw materials is not within the scope of manufacturing process.

Accordingly, the court concluded that the Inspector of Factories erred in treating the Nepalganj Road Depot as a factory requiring a licence.

Holding and Implications

The appeal is allowed.

The court set aside the order of the learned Single Judge and issued a mandamus directing the Inspector of Factories to withdraw the impugned notices requiring the petitioner to obtain a factory licence for the Nepalganj Road Depot. The direct effect is that the baling operation at the depot is not a manufacturing process under the Factories Act, and thus the depot is not a factory for licensing purposes. No broader precedent beyond the facts was established.

    Shree Gopal Paper Mills Ltd. v. Inspector Of Factories, U.P .

    Broome, J.:— This special appeal is directed against an older of A.P Srivastava, J., dismissing Civil Miscellaneous Writ petition No. 714 of 1962.

    2. The writ petition was filed by the Shree Gopal Paper Mills Limited, which manufactures paper at Yamuna Nagar in the Punjab. Raw material for this paper manufacture is obtained in the shape of ‘bankas’ glass from the forests of Nepal. The grass is brought to various rail heads, including Nepalganj Road in the district of Bahraich, where it is compressed into bales with the said manually operated baling presses and is then loaded on railway wagons, to be transported to the paper mills at Yamuna Nagar.

    3. The Inspector of Factories, U.P, has issued a series of notices to the petitioner, asserting that a “manufacturing process” is being carried on at the Nepalganj Road Depot, and that consequently this depot constitutes a factory within the meaning of Sec. 2(m)(ii) of the Factories Act, 1948. The petitioner has accordingly been required to take out a licence for operating a factory at the place in question.

    4. The petitioner sought to have these notices quashed on the ground that the operation of baling the grass carried out at Nepalganj Road did not constitute a “manufacturing process”, so as to make the depot a factory within the meaning of the Act. The learned Single Judge, however, has held that the packing of the grass for the purpose of transport by rail comes within the definition of manufacturing process given in Sec. 2(k)(i) of the Factories Act, which runs as follows:—

    “(k) Manufacturing process means any process for—

    (i) making, altering, repairing, ornaments, 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.”

    5. He has pointed out that ‘bankas’ grass is undoubtedly an article or substance, that this grass is admittedly packed at the Nepalganj Road Depot, and that the packing is done with a view to the transport and use of the grass.

    6. At first sight, it is true, the process carried out at the petitioner's Nepalganj Road Depot would seem to come within the above-quoted definition of “manufacturing process” given in Sec. 2(k)(i) of the Act, since it is the packing of an article or substance with a view to its use or transport. But a clear examination of the wording of this section leads us to conclude that the word “packing” used therein is not meant to cover a case like the present.

    7. Packing, in the widest sense, means any kind of wrapping up or tying up of goods. But we are satisfied that the packing referred to in Sec. 2(k)(i) is not meant to be interpreted so widely. In Ex. Hare v. State I.L.R 1955 All. 683. for example, it has been held not to cover the re-packing in large packing cases of cigarettes that have already been packed in cartons or tins; the argument being that for packing to constitute the kind of packing referred to in Sec. 2(k)(i), the article packed must be an article that is the subject of a manufacturing process, not a finished article that has already been packed and has already reached the stage of being saleable to customers without any further addition.

    8. It seems to us that the packing that is aimed at in Sec. 2(k)(i) is the packing of the finished manufactured article, which is done to facilitate or make possible its sale or transport for sale to customers. This form of packing is in effect the last operation in the series of operations that taken together constitute the manufacture of the article for sale. In the present case, however, the packing is not of a finished article but of the raw material; and this packing i.e the baling of the grass, has nothing to do with making the article fit or convenient for sale. Many kinds of raw material have to be packed for delivery to the factory by being placed in sacks, baskets or packing cases or by being tied into bundles; but we do not think it was the Legislature's intention that such preliminary packing of the raw material should be treated as a ‘manufacturing process”. It is significant that in the list of processes set forth in Sec. 2(k)(i), ‘packing’ comes immediately after ‘finishing’: a circumstance which lends support to the contention that the packing referred to is the process undertaken after the article has been manufactured and finished.

    9. It is important to note, moreover, that the mere transport of the raw material to the factory is not in itself a ‘manufacturing process’, as defined in the section, for it finds no place in the list of processes set forth therein. And it is difficult to believe that the packing that is only incidental to such transport of raw material was meant to be covered by the definition. In the present case the baling of the grass has nothing whatsoever to do with the processes whereby the grass is converted into paper, but is resorted to in order to reduce the volume purely for the purposes of rail transport; for if the grass were to be placed in the wagons loose and uncompressed, it would take up much more room and the freight charges would be enhanced. We are satisfied that baling or packing of this kind, which is carried out in respect of the raw materials before they reach the factory and which does not in any way facilitate the actual manufacturing process for which the raw materials are intended, is not ‘packing’ in the sense that this word is used in Sec. 2(k)(i) of the Factories Act and does not constitute a ‘manufacturing process’ as defined therein.

    10. We therefore held that the Inspector of Factories was not justified in treating the petitioner's Nepalganj Road Depot as a factory and in asking the petitioner to take out a licence in respect thereof. This special appeal is accordingly allowed, the order of the learned Single Judge is set aside and a mandamus is granted directing the Inspector of Factories to withdraw the impugned notices dated 13-3-1961, 6-5-1961, 28-10-1961 and 30-11-1961.

    Appeal allowed.

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    Shree Gopal Paper Mills Ltd. v. Inspector Of Factories, U.P .
    (Jan 5, 1968)