Introduction:
The Supreme Court of India, in The State of Goa & Anr. v. Namita Tripathi (2025 INSC 306), dealt with a critical issue concerning the applicability of the Factories Act, 1948, to laundry services. The case arose from a dispute over whether a professional laundry service, operating under the name “White Cloud,” constituted a factory under the Act of 1948. The decision clarifies the interpretation of “manufacturing process” and reinforces the welfare objectives of labor laws.
Factual Background:
The dispute originated when an inspection was conducted on May 20, 2019, at the premises of “White Cloud,” which operated multiple collection centers and a central processing unit. The inspection report noted violations under the Goa Factories Rules, 1985, including the absence of factory-approved plans, an unregistered premise, and employment of more than ten workers without a valid factory license.
The business owners contended that their laundry service did not constitute a “manufacturing process” under Section 2(k) of the Factories Act, 1948, arguing that laundry services are intangible and do not create a new marketable product. The Judicial Magistrate First Class (JMFC) at Panaji issued process against the respondent, but the Bombay High Court at Goa quashed the complaint, ruling that dry cleaning does not fall under “manufacturing process.” This decision was challenged before the Supreme Court.
Key Legal Issues
- Does dry cleaning and laundry service qualify as a “manufacturing process” under Section 2(k) of the Factories Act, 1948?
- Does the Act of 1948 apply to establishments engaging in laundry services that employ more than ten workers?
- Was the High Court justified in quashing the complaint and process issued by the JMFC?
Arguments Presented
Arguments by the Appellant (State of Goa)
- The respondent employed more than ten workers and used power-operated machinery, satisfying the statutory definition of a “factory.”
- Section 2(k) explicitly includes “washing” and “cleaning” within the definition of “manufacturing process.”
- The High Court erred in importing interpretations from the Central Excise Act, 1944, which has a distinct definition of “manufacture.”
- The Factories Act, 1948, is a social welfare legislation intended to protect workers in various industries, including service sectors like laundry businesses.
Arguments by the Respondent (Namita Tripathi)
- Dry cleaning is a “service” and does not involve the creation of a new commercial product.
- The premises were registered under the Shops and Establishments Act, which is distinct from the Factories Act.
- The High Court rightly applied the reasoning in Employees’ State Insurance Corporation, Jullundur v. Triplex Dry Cleaners & Others (1982), which held that dry cleaning does not constitute “manufacturing.”
Supreme Court’s Reasoning and Decision
1. Interpretation of “Manufacturing Process”
The Supreme Court held that Section 2(k) of the Factories Act, 1948, includes “washing” and “cleaning” as part of a “manufacturing process.” The Court observed:
- The phrase “washing, cleaning… with a view to its use, sale, transport, delivery, or disposal” clearly applies to commercial laundry operations.
- The inclusion of “washing” and “cleaning” in the 1948 Act, absent in the 1934 Act, signified legislative intent to broaden its scope.
- The High Court’s reliance on Triplex Dry Cleaners was misplaced as it predated the 1989 amendment to the Employees’ State Insurance Act (ESIC), which later adopted the Factories Act’s definition of “manufacturing process.”
2. The Welfare Purpose of the Factories Act, 1948
- The Act aims to protect workers from occupational hazards and unsafe working conditions.
- Excluding laundry workers from legal safeguards would be contrary to the Act’s social welfare objectives.
- The Court emphasized that beneficial legislations must be interpreted broadly to fulfill their purpose (Balwant Rai Saluja v. Air India Ltd., 2014 9 SCC 407).
3. Rejection of High Court’s Reasoning
- The Court found that the High Court erred in requiring “manufacturing” to involve a transformation into a distinct new product.
- The Factories Act and the Central Excise Act serve different purposes; applying excise law principles to labor welfare laws was incorrect.
- The respondent’s premises met the statutory definition of a “factory” as it employed more than ten workers and used power-operated machinery.
Final Verdict
The Supreme Court set aside the High Court’s decision and restored the JMFC’s order issuing process against the respondent. The Court directed that the complaint be proceeded with in accordance with the law.
Implications and Significance:
This judgment has far-reaching consequences for businesses engaged in laundry services and similar service industries:
- Expansion of the Factories Act’s Scope: Laundry businesses employing more than ten workers with power-operated machinery must comply with the Act’s provisions.
- Reinforcement of Worker Protections: The decision ensures that employees in commercial laundry units receive statutory protections related to health, safety, and welfare.
- Judicial Clarification on “Manufacturing Process”: The ruling settles conflicting interpretations and provides clarity on the legislative intent behind the Factories Act, 1948.
Conclusion :
The Supreme Court’s judgment in The State of Goa & Anr. v. Namita Tripathi reinforces the expansive interpretation of “manufacturing process” under the Factories Act, 1948. The ruling ensures that workers engaged in commercial laundry services are covered by the protective provisions of labor law, emphasizing the welfare-oriented nature of the Act. This decision sets a precedent for similar businesses and provides legal clarity on the scope of industrial regulations in service-based enterprises.
References
- The State of Goa & Anr. v. Namita Tripathi, 2025 INSC 306.
- Balwant Rai Saluja v. Air India Ltd., (2014) 9 SCC 407.
- Employees’ State Insurance Corporation, Jullundur v. Triplex Dry Cleaners & Others, (1982) ILR 2 P&H 291.
- Shafin Jahan v. Asokan K.M., (2018) 16 SCC 368.
- Lanco Anpara Power Ltd. v. State of U.P., (2016) 10 SCC 329.
- Jeewanlal Ltd. v. Appellate Authority under the Payment of Gratuity Act, (1984) 4 SCC 356.