1955 (9) TMI 81 - HC - Companies Law

Court sets aside Chief Inspector's order under Factories Act, 1948, grants fresh determination.

New Taj Mahal Cafe Ltd., Mangalore Versus Inspector of Factories, Mangalore

New Taj Mahal Cafe Ltd., Mangalore Versus Inspector of Factories, Mangalore - - Issues Involved:1. Whether the petitioner's restaurants are factories as defined under the Factories Act, 1948.2. Whether the provisions of the Factories Act, 1948 are repugnant to the Madras Shops and Establishments Act, 1947.3. Whether the statutory authorities correctly applied the definitions and provisions of the Factories Act, 1948.Issue-wise Detailed Analysis:1. Whether the petitioner's restaurants are factories as defined under the Factories Act, 1948:The petitioner company owns and operates eight restaurants in Mangalore. The core issue was whether these establishments qualify as factories under the Factories Act, 1948. According to Section 2(m) of the Factories Act, a 'factory' is defined as any premises where ten or more workers are employed and a manufacturing process is carried out with the aid of power, or where twenty or more workers are employed without the aid of power. The term 'worker' under Section 2(l) includes anyone employed in a manufacturing process or in activities incidental to it.The preparation of food in the kitchens of these restaurants was considered a manufacturing process as it involves 'making or altering or otherwise treating or adapting any article or substance with a view to its use, sale or disposal.' However, the statutory authorities failed to correctly apply the definitions and provisions of the Factories Act. They did not ascertain whether the employees met the definition of 'workers' under Section 2(l) and whether the manufacturing process was carried out with or without the aid of power.2. Whether the provisions of the Factories Act, 1948 are repugnant to the Madras Shops and Establishments Act, 1947:The petitioner argued that the Factories Act, 1948, was repugnant to the Madras Shops and Establishments Act, 1947, and therefore, the provisions of the Factories Act should be void under Section 107 of the Government of India Act, 1935. The court, however, noted that the presumption is in favor of the validity of the impugned Act. It was established that an establishment could be both a restaurant under the Madras Act and a factory under the Factories Act. The court did not find any inherent conflict between the two statutes that would render the Factories Act unenforceable.3. Whether the statutory authorities correctly applied the definitions and provisions of the Factories Act, 1948:The statutory authorities, including the Inspector and Chief Inspector of Factories, were found to have inadequately applied the provisions of the Factories Act. They counted the total number of persons employed in each establishment without determining whether each employee met the definition of 'worker' under Section 2(l). They also failed to ascertain whether the manufacturing process was carried out with or without the aid of power. For instance, the use of a refrigerator (Frigidaire) in one of the restaurants was not sufficient to classify it as a factory unless it was used in a manufacturing process.The court emphasized that merely using a refrigerator for storage does not constitute a manufacturing process. The authorities needed to determine whether the refrigerator was used for treating or adapting any article for sale, which would then qualify as a manufacturing process under Section 2(k).Conclusion:The court concluded that the statutory authorities had not correctly applied the definitions and provisions of the Factories Act, 1948. It issued a writ of certiorari to set aside the order of the Chief Inspector of Factories, which had classified the Central Coffee House and Lodging as a factory. The court also allowed for the determination afresh of whether the remaining seven establishments were factories under the Factories Act. The petition was allowed to this extent, with no order as to costs.