Supreme Court Clarifies Definition of ‘Manufacturing Process’ Under Factories Act in Laundry Service Case: State of Goa vs. Namita Tripathi (2025)

Introduction

Date of the Judgment: March 3, 2025

Citation: 2025 INSC 306

Judges: B.R. Gavai, J., K.V. Viswanathan, J.

Can a laundry service be considered a factory under the Factories Act, 1948? The Supreme Court of India recently addressed this question in a case involving the State of Goa and a laundry service owner, Namita Tripathi. The core issue revolved around whether the activities of a professional laundry service, specifically the washing and cleaning of clothes, constitute a “manufacturing process” as defined under the Factories Act, 1948, thereby making the laundry service a “factory” subject to the Act’s regulations.

The bench, comprising Justice B.R. Gavai and Justice K.V. Viswanathan, delivered a unanimous judgment. The judgment was authored by Justice K.V. Viswanathan.

Case Background

The case originated from an inspection conducted on May 20, 2019, at the premises of Namita Tripathi, who operated a professional laundry service. During the inspection, it was found that the laundry service did not possess the required factory-approved plans or a valid factory license, as mandated by the Goa Factories Rules, 1985, read with Section 6 of the Factories Act, 1948. The inspection report also noted that there were more than nine workers employed at the facility, and the business was engaged in cleaning and washing clothes using machinery.

Following the inspection, Tripathi was issued a notice to comply with the Factories Act, 1948. In response, on May 30, 2019, Tripathi argued that the laundry business was a service, not a manufacturing activity, and therefore, not subject to the Factories Act, 1948. Tripathi also referenced a similar inspection in 2005 where no further action was taken.

Dissatisfied with the response, the complainant obtained information from the Employees State Insurance Corporation (ESIC) indicating that the laundry service was indeed covered under the ESIC Act. Consequently, the appellants filed a complaint alleging violations of the Factories Act, 1948, specifically Section 92.

Timeline

Course of Proceedings

Aggrieved by the summons issued by the JMFC Panaji on December 4, 2019, Namita Tripathi approached the High Court of Bombay at Goa, seeking to quash the summons and the complaint. Tripathi argued that the order issuing summons was unreasoned and did not reflect an application of mind, and that dry cleaning of clothes does not constitute a “manufacturing process” under the Factories Act, 1948.

The High Court allowed Tripathi’s plea, quashing the order issuing process. The High Court held that the order issuing process did not reflect any application of mind and relied on precedents to conclude that dry cleaning does not fall within the definition of “manufacturing process” under the Factories Act, 1948.

The State of Goa, dissatisfied with the High Court’s decision, appealed to the Supreme Court of India.

Legal Framework

The Supreme Court focused on interpreting key provisions of the Factories Act, 1948, specifically Section 2(m) and Section 2(k). Section 2(m) defines “factory,” while Section 2(k) defines “manufacturing process.”

Section 2(m) of the Factories Act, 1948:

“2. Interpretation .—In this Act, unless there is anything repugnant in the subject or context ,- (m) “factory” means any premises including the precincts thereof— (i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on,— but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place;”

Section 2(k) of the Factories Act, 1948:

“(k) “manufacturing process” means any process for— (i) 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; or (ii) pumping oil, water, sewage or any other substance; or (iii) generating, transforming or transmitting power; or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; or (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or (vi) preserving or storing any article in cold storage;”

The court noted that any premises with ten or more workers engaged in a manufacturing process with the aid of power would be considered a factory. The definition of “manufacturing process” includes washing or cleaning any article with a view to its use, sale, transport, delivery, or disposal.

Arguments

Arguments by the Appellants (State of Goa)

• The laundry service falls under the definition of “factory” as it employs more than 9 workers and uses power for washing and cleaning clothes.

• The activity of washing and cleaning clothes constitutes a “manufacturing process” as defined under Section 2(k) of the Factories Act, 1948.

• The High Court erred in extrapolating the definition of “manufacture” from the Central Excise Act, 1944, which is different from the definition under the Factories Act, 1948.

Arguments by the Respondent (Namita Tripathi)

• The laundry business is a service, not a manufacturing activity, as the “product” of the business is intangible.

• Washing and dry cleaning do not constitute a “manufacturing process” under the Factories Act, 1948.

• The order issuing summons was unreasoned and did not reflect an application of mind by the Magistrate.

• Relied on previous inspection in 2005 where no action was taken.

Table of Submissions

Issues Framed by the Supreme Court

1. Was the High Court justified in quashing the process issued?

Treatment of the Issue by the Court

Authorities

The court considered several legal provisions and precedents to arrive at its decision:

• Factories Act, 1934: The court referred to the definition of “manufacturing process” under Section 2(g) of the Factories Act, 1934, to highlight that the words ‘washing, cleaning’ were specifically added in the Act of 1948 to bring more undertakings under its scope.
• Factories Act, 1948: The court analyzed Section 2(k) and Section 2(m) to determine whether the activities of the respondent fell within the definition of “manufacturing process” and “factory.”
• Central Excise Act, 1944: The court distinguished the definition of “manufacture” under the Central Excise Act, 1944, from the definition of “manufacturing process” under the Factories Act, 1948, emphasizing that the interpretation of the former cannot be applied to the latter.
• Employees State Insurance Corporation Act: The court discussed the definition of “factory” and “manufacturing process” under the ESIC Act, particularly the amendment introducing Section 2(14AA) which adopted the definition of “manufacturing process” from the Factories Act, 1948.
• Balwant Rai Saluja & Anr. v. Air India Ltd. & Ors., (2014) 9 SCC 407 (Supreme Court of India): The court cited this case to emphasize that the Factories Act, 1948, is a social legislation providing for the health, safety, and welfare of workers.
• S.M. Datta v. State of Gujarat & Anr., (2001) 7 SCC 659 (Supreme Court of India): This case was cited to reinforce the beneficial nature of the Factories Act, 1948, and the intent to ensure workers are aware of their daily work schedules.
• Works Manager, Central Railway Workshop, Jhansi v. Vishwanath & Ors., (1969) 3 SCC 95 (Supreme Court of India): The court referred to this case to highlight that welfare legislation should be interpreted liberally to achieve the legislative purpose.
• Allahabad Bank & Anr. v. All India Allahabad Bank Retired Employees Association, (2010) 2 SCC 44 (Supreme Court of India): This case was cited to emphasize that remedial statutes should receive a liberal construction to secure the relief contemplated by the statute.
• Lanco Anpara Power Ltd. v. State of U.P. & Ors., (2016) 10 SCC 329 (Supreme Court of India): The court referred to this case to reiterate that social legislation must be interpreted liberally to promote its objectives.
• Jeewanlal Ltd. & Ors. v. Appellate Authority under the Payment of Gratuity Act & Ors., (1984) 4 SCC 356 (Supreme Court of India): This case was cited to explain the plain meaning rule, stating that when the language of a statute is clear and unambiguous, the court must give effect to it.
• Steel Authority of India Ltd. & Ors. v. National Union Waterfront Workers & Ors., (2001) 7 SCC 1 (Supreme Court of India): The court referred to this case to apply the mischief rule, considering the state of the law before the enactment of the Factories Act, 1948, and the remedy provided by the statute.
• Crane Betel Nut Powder Works vs. Commr. of Customs & Central Excise, Tirupathi & Anr., (2007) 4 SCC 155 (Supreme Court of India): This case was cited to distinguish the features of manufacture under the Central Excise Act, 1944.
• Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors., 2025 SCC OnLine SC 181 (Supreme Court of India): The court referred to this case to emphasize that words in a statute should be understood in their natural, ordinary, and popular sense.
• J.P. Lights India v. Regional Director E.S.I. Corporation, Bangalore, 2023 SCC OnLine SC 1271 (Supreme Court of India): The court applied the amended Section 2(14 AA) of the ESIC Act to a case involving servicing of electrical goods, holding that it constitutes a “manufacturing process.”
• Employees’ State Insurance Corporation Vs. Triplex Dry Cleaners and Others, (1998) 1 SCC 196 (Supreme Court of India): The court distinguished this case, noting that it related to a period before the definition of “manufacturing process” under the Factories Act, 1948, was incorporated into the ESIC Act.
• Employees’ State Insurance Corporation, Jullundur Vs. Triplex Dry Cleaners and Others, (1982) ILR 2P&H 291 (Punjab and Haryana High Court): The court distinguished this case, noting that it was decided before Section 2(14AA) was introduced in the ESIC Act.
• Super Cleaners Vs. Employees State Insurance Corporation, 2006 SCC OnLine Bom 1660 (Bombay High Court): The court distinguished this case, noting that it stands similar to the situation in Triplex Dry Cleaners (Supra).

Table of Authorities Considered

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Factories Act, 1948 [CITATION]: The court heavily relied on the definitions provided in this Act, particularly Section 2(k) and Section 2(m), to determine whether the laundry service fell under its purview.
• Employees’ State Insurance Corporation Vs. Triplex Dry Cleaners and Others, (1998) 1 SCC 196 [CITATION]: The court distinguished this case, noting that it related to a period before the definition of “manufacturing process” under the Factories Act, 1948, was incorporated into the ESIC Act.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the clear and unambiguous language of Section 2(k) of the Factories Act, 1948, which defines “manufacturing process” to include washing and cleaning of articles with a view to their use, sale, transport, delivery, or disposal. The court also emphasized the welfare nature of the Factories Act, 1948, and the need for a liberal interpretation to protect the interests of workers.

Sentiment Analysis Ranking of Reasons

Fact:Law Ratio Analysis

Logical Reasoning

Key Takeaways

• Laundry services employing ten or more workers and using power for washing and cleaning clothes are considered “factories” under the Factories Act, 1948.
• The activity of washing and cleaning clothes constitutes a “manufacturing process” under Section 2(k) of the Factories Act, 1948.
• The definition of “manufacture” under the Central Excise Act, 1944, cannot be applied to interpret the term “manufacturing process” under the Factories Act, 1948.
• This judgment clarifies the scope of the Factories Act, 1948, and ensures that workers in laundry services are protected by its provisions.

Directions

The Supreme Court set aside the order of the High Court and restored the complaint filed by the appellants along with the order issuing process of 04.12.2019 to the file of the learned JMFC, Panaji, to be proceeded with in accordance with law.

Development of Law

The ratio decidendi of the case is that the activity of washing and cleaning clothes in a laundry service, employing ten or more workers and using power, falls under the definition of “manufacturing process” under Section 2(k) of the Factories Act, 1948, thereby bringing the laundry service under the purview of the Act.

This judgment clarifies and reinforces the scope of the Factories Act, 1948, ensuring that its provisions extend to laundry services, thereby protecting the rights and welfare of workers in this sector.

Conclusion

In conclusion, the Supreme Court’s judgment in State of Goa vs. Namita Tripathi clarifies that laundry services employing the requisite number of workers and using power are indeed covered under the Factories Act, 1948. This decision reinforces the welfare objectives of the Act and ensures that workers in laundry services are entitled to the protections and benefits it provides.