Supreme Court Upholds Conviction of Occupier-Cum-Manager for Operating Tobacco Processing Unit Without Licence Under Factories Act. Moistening, Stripping, and Packing of Tobacco Leaves Held to Be Manufacturing Process; Persons Employed Through Agency Deemed Workers Under Section 2(1).

Case Note & Summary

The case arose from a prosecution under the Factories Act, 1948, against the appellant, V. P. Gopala Rao, who was the occupier-cum-manager of a tobacco processing establishment at Eluru, owned by M/s. Golden Tobacco Co., Private Ltd. The company's main factory at Bombay manufactured cigarettes, while the Eluru premises were used for collecting, processing, and storing sun‑cured country tobacco purchased from local growers. The appellant was prosecuted for contravening Section 6(1) of the Factories Act, 1948, and Rules 3 and 5(3) of the Andhra Pradesh Factory Rules, 1950, namely, operating a factory without obtaining a licence from the Chief Inspector of Factories and without his previous permission approving the building plans. The trial court (2nd Addl. Munsif Magistrate, Eluru) acquitted the appellant, accepting his defence that the premises did not constitute a factory, that no manufacturing process was carried on there, and that the persons working on the premises were not workers because they were employed by independent contractors. On appeal by the Public Prosecutor, the Andhra Pradesh High Court reversed the acquittal, convicted the appellant under Section 92 of the Act, and sentenced him to pay a fine of Rs. 50 under each count. The appellant then obtained special leave to appeal to the Supreme Court. The Supreme Court had to determine whether the Eluru premises fell within the definition of “factory” under Section 2(m) of the Factories Act, 1948, which requires that twenty or more workers work there and that a manufacturing process is carried on with the aid of power. It was undisputed that more than twenty persons worked on the premises. The main issues were (i) whether the processes of moistening, stripping, and packing tobacco leaves amounted to a manufacturing process under Section 2(k)(i); and (ii) whether the persons doing that work were “workers” as defined in Section 2(1). The Court observed that the tobacco leaves, after being bought from growers, were moistened by sprinkling water and shifting layers over 10 to 14 days so they could be handled without breakage; stalks were stripped from the leaves (Thukku and Pagu leaves were separated); the leaves were tied in bundles and stored; and from time to time they were packed in gunny bags and sent to the Bombay factory for cigarette manufacture. Construing Section 2(k)(i), which defines “manufacturing process” as any process for 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, the Court held that the moistening adapted the leaves, stripping broke them up, and packing bundled them with a view to use and transport. It noted that the definition was widely worded and that all these operations fell within it. The appellant had cited cases such as State of Kerala v. V. M. Patel and Col. Sardar C. S. Angre v. The State, but the Court distinguished the latter on the ground that sorting and drying potatoes for cold storage was not for any of the purposes listed in Section 2(k)(i). On the second issue, the Court analysed Section 2(1), which defines “worker” as a person employed, directly or through any agency, whether for wages or not, in any manufacturing process or in work incidental to or connected with it. Referring to Sri Chintaman Rao v. State of Madhya Pradesh, the Court reiterated that there must be a contract of service and a relationship of master and servant, and that the critical test was the master’s right of superintendence and control of the method of doing the work. The prosecution had led evidence (the testimony of the Assistant Inspector of Factories and the Provident Fund Inspector, along with returns submitted to the Provident Fund Commissioner) showing that stripping was done under the supervision of the management, thereby establishing a prima facie case of master‑servant relationship. The appellant did not produce any rebutting evidence; a suggestion in cross‑examination that the workmen were employed by independent contractors was not supported by the record. The Court therefore concluded that the persons were workers within the meaning of Section 2(1). Consequently, the Eluru premises were a factory under Section 2(m), and the appellant was rightly convicted. The Supreme Court dismissed the appeal and upheld the conviction and sentence imposed by the High Court.

Headnote

Issue of Consideration

Final Decision

The Supreme Court dismissed the appeal and upheld the conviction under Section 92 of the Factories Act, 1948, for contravention of Section 6(1) and Rules 3 and 5(3) of the Andhra Pradesh Factory Rules, 1950, confirming the fine of Rs. 50 under each count.

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