Supreme Court Rules on Factory Definition in Landmark Case Involving Laundry Services
New Delhi, March 3, 2025 – In a significant ruling, the Supreme Court of India has upheld the applicability of the Factories Act, 1948, to a professional laundry service, reaffirming that processes involving washing and cleaning qualify as a “manufacturing process” under the law. The judgment came in the case of The State of Goa & Anr. v. Namita Tripathi, where the apex court overturned the Bombay High Court’s order that had quashed criminal proceedings against the laundry service provider.
3/4/20252 min read
The dispute originated when the Inspectorate of Factories and Boilers, Goa, conducted an inspection at the premises of a professional laundry service operated by the respondent, Namita Tripathi, under the brand name White Cloud. The inspection, conducted on May 20, 2019, revealed multiple violations, including:
The absence of factory-approved plans.
Operation of the premises as a factory without a valid license.
Failure to submit an application for registration under the Factories Act, 1948.
Employment of more than nine workers at the central processing unit with the use of power-driven machinery.
Following these findings, the inspectorate issued a notice directing compliance, but the response from the laundry service contended that its activities did not constitute a “manufacturing process” under the Act.
Legal Battle and High Court Ruling
A complaint was filed, leading the Judicial Magistrate First Class (JMFC), Panaji, to issue summons against the respondent on December 4, 2019. However, the Bombay High Court at Goa quashed the summons and the complaint, ruling that “dry cleaning and laundry services” do not fall under the definition of a manufacturing process since they do not create a new marketable commodity. The court cited previous judgments, including those under the Employees' State Insurance Act, to justify its stance.
Supreme Court’s Analysis and Ruling
The Supreme Court, in its detailed judgment authored by Justice K.V. Viswanathan, categorically rejected the High Court’s interpretation, emphasizing that the Factories Act, 1948, is a welfare statute intended to protect workers in industrial settings.
The court analyzed the statutory definitions of “factory” and “manufacturing process” under Sections 2(m) and 2(k) of the Factories Act, 1948, which explicitly include “washing” and “cleaning” as part of manufacturing activities. The bench observed:
“On a plain reading, it is clear that any process involving washing or cleaning any article or substance with a view to its use, sale, transport, delivery, or disposal would be covered within the meaning of manufacturing process.”
The court also criticized the High Court for extrapolating the definition of “manufacture” under the Central Excise Act, which applies a different test related to commercial marketability. The ruling pointed out that while the concept of manufacturing under excise laws focuses on transformation into a new product, the Factories Act is designed to ensure worker safety and welfare.
Implications of the Judgment
The Supreme Court reinstated the complaint against the respondent and directed the JMFC, Panaji, to proceed with the trial in accordance with the law. This ruling has far-reaching consequences, particularly for service-oriented businesses that employ workers and use machinery. Key takeaways include:
Expanded Interpretation of “Factory”: Any establishment engaging in washing and cleaning activities with ten or more workers using power is a factory under the Act.
Increased Compliance Burden: Businesses in similar industries may now need to obtain factory licenses and adhere to regulatory provisions regarding worker safety and welfare.
Judicial Clarity: This judgment sets a precedent that administrative authorities and lower courts must follow, preventing misinterpretations that exclude certain industries from the Factories Act’s purview.
Conclusion
This Supreme Court decision reaffirms the expansive reach of labor welfare laws and underscores the judiciary’s role in upholding worker protections. Businesses engaged in service-oriented processes, such as dry cleaning and laundry, must now ensure compliance with the Factories Act to avoid legal consequences. With the reinstatement of the complaint, the case will now proceed before the JMFC, Panaji, where the respondent will face trial for alleged violations.
This ruling serves as a crucial reminder that any industry employing labor and machinery in a structured manner cannot evade statutory obligations merely by categorizing itself as a service provider rather than a manufacturer. As businesses navigate the evolving legal landscape, adherence to labor laws remains paramount.