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LABOUR LAW- II

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY

Research Paper on the Topic of

CASE ANALYSIS ON FACTORIES ACT, 1948

Submitted to: Submitted by:

Dr. Kavita Solanki Prajjwal Singh Chauhan
Faculty of Law 03516503520
GGSIPU, USLLS, New Delhi. BBA-LLB(8th Semester)

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INDEX

Serial No. Cases Page No.

Kalyaneshwari v. Union Of India

1 4-6
And Others, AIR 1996 SC 1723

2 Union Of India And Another v.

G.M Kokil And Others, 1984 6-8

AIR SC 1022

3 Buddhi Nath Chaudhary And

Others v. Abahi Kumar And 8-9

Others, 2001 AIR SC 1176

4 Mohan Singh And Others v.

Chairman, Railway Board And 9-10

Others, 2015 AIR SC 3027

5 Lanco Anpara Power Limited (S)

v. State Of Uttar Pradesh & Ors., 10-12

2016 SCC ONLINE SC 1153

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6 Gujarat Mazdoor Sabha And

Another v. State Of Gujarat, 12-15

2020 SCC ONLINE SC 798

7 Prem Singh v. State Of Uttar

Pradesh And Others, 2019 SCC 15-16

ONLINE SC 1134

8 L.N Gadodia And Sons And

Another v. Regional Provident

16-18
Fund Commissioner, 2012 AIR

SC 273

9 State Of Maharashtra And

Another v. Sarva Shramik Sangh,

18-20
Sangli And Others, 2014 AIR SC

61

10 Balwant Rai Saluja And Another

v. Air India Limited And Others, 20-21

2015 AIR SC 375

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CASE ANALYSIS ON FACTORIES ACT, 1948

1. Kalyaneshwari v. Union Of India And Others, AIR 1996 SC

1723

Facts: The petitioner, Kalyaneshwari, a registered society, filed a

petition under Article 32 of the Constitution of India, seeking a writ of
mandamus to direct the Union of India and other respondent States to
ban all uses of asbestos and to constitute a committee of eminent
specialists to frame a scheme for identification and certification of
workers/victims suffering from asbestos-related diseases or cancer. The
petitioner also sought the respective Governments to identify the
workers/victims and provide them with due treatment, as well as to
prevent harmful effects of asbestos in factories and establishments
where such activity is being carried out. The petitioner alleged that
developed countries have drastically reduced the manufacture of
asbestos, whereas in India, use of asbestos was permitted
indiscriminately. The petitioner claimed to have already documented
over 500 victims suffering from asbestos-related diseases in five states.
The respondents objected to the petition, stating that it was an abuse of
the process of the court and had been instituted at the behest of a business
rival. Several States, Union Territories, and the Union of India filed
separate affidavits.

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Issues: Whether the petition was an abuse of the process of the court?

Whether the Court should issue directions to ban all mining and
manufacturing activities of asbestos?

Whether the Court should constitute a committee of eminent specialists

to frame a scheme for identification and certification of workers/victims
suffering from asbestosrelated diseases or cancer?

Whether the Court should direct the respective Governments to identify

the workers/ victims and provide them with due treatment, as well as to
prevent harmful effects of asbestos in factories and establishments
where such activity is being carried out?

Ruling & Reasoning: The Court held that the petition lacked bona fides
and was an abuse of the process of law. The Court also noted that there
was no law enacted so far which required banning of any activity in
regard to asbestos at the stage of mining, manufacture, or production.
The Court, however, issued directions to strike a balance between the
health hazards caused by this activity on the one hand and the ground
reality that a large number of families, all over the country, are
dependent for their livelihood on this activity, on the other. The Court
directed the respective Governments to take measures to prevent
hazardous impact of use of asbestos and to promote the use of alternative
materials. The Court also directed the Union of India and other
respondent States to constitute a committee of eminent specialists to
frame a scheme for identification and certification of workers/victims

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suffering from asbestos-related diseases or cancer. The Court held that

every litigant who approaches the Court owes a duty to approach the
Court with clean hands and disclose complete facts. The Court found
that the petition lacked bona fides and was intended to settle business
rivalry or was aimed at taking over of a company or augmenting the
business of another interested company at the cost of closing business of
other units in the garb of PIL. The Court noted that public interest
litigation is a weapon, which has to be used with great care and
circumspection and should not be used for suspicious products of
mischief. The Court also noted that there was no law banning the use of
asbestos in various manufacturing processes despite its adverse effects
on human health. The Court held that better supervision and regulatory
control rather than banning of the activity was required. The Court issued
directions to strike a balance between the health hazards caused by this
activity and the ground reality that a large number of families are
dependent on this activity for their livelihood.

Conclusion: The petition was dismissed as an abuse of the process of

law. The Court issued directions to the respective Governments to take
measures to prevent hazardous impact of use of asbestos and to promote
the use of alternative materials. The Court also directed the Union of
India and other respondent States to constitute a committee of eminent
specialists to frame a scheme for identification and certification of
workers/victims suffering from asbestos-related diseases or cancer.

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2. Union Of India And Another v. G.M Kokil And Others, 1984

AIR SC 1022

Facts: The India Security Press, Nasik is a large establishment of the

Central Government. The respondents are employees working in the
factory of the Press. The question at issue is whether the respondents are
entitled to overtime wages at twice the normal rate of their wages under
Section 59 of the Factories Act , 1948 read with Section 70 of the
Bombay Shops and Establishments Act , 1948.

Issues: Whether the respondents who are employees working in the

factory of India Security Press, Nasik are entitled to overtime wages at
twice the normal rate of their wages under Section 59 of the Factories
Act , 1948 read with Section 70 of the Bombay Shops and
Establishments Act , 1948.

Ruling & Reasoning: The Labour Court held that the respondents were
entitled to claim overtime wages under Section 59 of the Factories Act
, 1948 read with Section 70 of the Bombay Shops and Establishments
Act , 1948. The Court found that all respondents, other than those who
were holding the posts of Senior Supervisors and Supervisors, were
industrial employees i.e workmen under the Industrial Disputes Act .
The Court dismissed the appeal. Counsel for the appellants contended
that the respondents were not entitled to the benefit of Section 59 of the
Factories Act , 1948 read with Section 70 of the Bombay Shops and
Establishments Act , 1948 as they were not ‘workers’ within the meaning
of Section 2(1) of the Factories Act . The Labour Court held that the non
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obstante clause in Section 64 of the Factories Act , 1948 read with Rule
100 itself would not apply to the respondents and they would be entitled
to claim overtime wages under Section 59 of that Act read with Section
70 of the Bombay Shops and Establishments Act , 1948. The Labour
Court also found that all respondents, other than those who were holding
the posts of Senior Supervisors and Supervisors, were industrial
employees i.e workmen under the Industrial Disputes Act . The Court
held that it was not possible for it to interfere with such a finding of fact
recorded by the Labour Court.

Conclusion: The appeal was dismissed but there was no order as to

costs.

3. Buddhi Nath Chaudhary And Others v. Abahi Kumar And

Others, 2001 AIR SC 1176

Facts: In these cases, the appellants were selected by the Bihar Public
Service Commission (hereinafter referred to as “the Commission”) for
appointment as Motor Vehicle Inspectors pursuant to an advertisement
issued by the Commission on 12-5-1989. During the selection process,
a new rule was introduced in the recruitment rules, requiring the person
to be selected as a Motor Vehicle Inspector to possess a driving licence.
Some of the candidates who were not selected challenged the
appointments of the selected candidates in several writ petitions,
claiming that the selected candidates did not possess the necessary
qualification or experience in appointment in an appropriate automobile

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institution registered under the Factories Act , 1948, or they did not
possess a driving licence.

Issues: Whether the appointments of the selected candidates as Motor

Vehicle Inspectors should be challenged based on their lack of necessary
qualification or experience in an appropriate automobile institution
registered under the Factories Act , 1948, or their lack of a driving
licence.

Ruling & Reasoning: The High Court ordered a new exercise to be

conducted to address the qualifications and driving licence requirements.
However, it is argued that this would lead to anomalous results.
Therefore, the appeals are allowed and the order of the High Court is set
aside. The writ petitions are dismissed.

Conclusion: In conclusion, the appeals are allowed, and the order of the
High Court is set aside. The writ petitions challenging the appointments
of the selected candidates as Motor Vehicle Inspectors are dismissed.

4. Mohan Singh And Others v. Chairman, Railway Board And

Others, 2015 AIR SC 3027

Facts: The subject Canteen has been running within the precincts of the
Divisional Railway Manager (DRM), Moradabad since 1940 and has
been catering to more than 100 employees since its establishment. The
Respondent Railways formally took over the subject Canteen with effect
from 18.01.1972. The proposal for the approval of the subject Canteen
as a ‘Recognized Canteen’ was rejected by the Railway Board on

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9.9.2002. The Division Bench of the High Court of New Delhi held that
the subject Canteen is a ‘Non Recognized and Non Statutory’ canteen
and the workers engaged in these canteens are not entitled to claim the
status of the railway servants.

Issues: Whether the existing canteen at Moradabad Division of the

Northern Railway is located in a ‘Factory’ within the meaning of
Section 46 of the Factories Act , 1948?

Whether the services of the staff employed in the subject Canteen ought
to be Regularized?

Ruling & Reasoning: Section 46 of the Factories Act , 1948 provides

for setting up of a 'Statutory Canteen’. The employees in the statutory
canteens of the Railways will have to be treated as Railway servants.
However, the Appellants were not appointed as per the regular
recruitment procedure. The subject Canteen does not qualify as a
‘Recognized Canteen’ and the workers engaged in the canteen are not
entitled to claim the status of the railway servants. For a canteen to
qualify as a ‘Recognized Canteen’ it is imperative to obtain the approval
of the Railway Board. Since the proposal for approval had been rejected
by the Railway Board, it follows that the subject Canteen does not
qualify as a 'Recognized Canteen'. The employees in the statutory
canteens of the Railways will have to be treated as Railway servants.
However, the Appellants were not appointed as per the regular
recruitment procedure.

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Conclusion: The existing canteen at Moradabad Division of the

Northern Railway is not located in a ‘Factory’ within the meaning of
Section 46 of the Factories Act , 1948. The services of the staff
employed in the subject Canteen are not entitled to be regularized. The
Appellants were not appointed as per the regular recruitment procedure.

5. Lanco Anpara Power Limited (S) v. State Of Uttar Pradesh &

Ors., 2016 SCC ONLINE SC 1153

Facts: The appellants challenged the orders passed by different High

Courts, which issued show cause notices to the appellants under the
provisions of Building And Other Construction Workers (Regulation of
Employment and Conditions of Service) Act , 1996 and Buildings And
Other Construction Workers Welfare Cess Act , 1996. The appellants
argued that the provisions of BOCW Act or Welfare Cess Act were not
applicable to them because they were registered under the Factories Act
, 1948. The High Courts were unanimous in their approach and reached
the same conclusion.

Issues: Whether the provisions of BOCW Act or Welfare Cess Act are
applicable to the appellants who are registered under the Factories Act
, 1948?

Ruling & Reasoning: The Court dismissed all the appeals and writ
petitions filed before it, as well as those which were the subject matter
of the transfer petition and transfer cases, with costs. The Court held that
the provisions of BOCW Act and Welfare Cess Act are applicable to

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the appellants who are registered under the Factories Act , 1948, and
that the welfare measures provided for such workers under these Acts
cannot be denied. However, the Court made it clear that the appellants
can still challenge the calculation of cess before the adjudicating
authorities. The Court observed that the BOCW Act and Welfare Cess
Act are pieces of social security legislation to provide for certain
benefits to the construction workers. The Court also noted that the
Factories Act is not applicable to construction workers. Therefore, the
welfare measures specifically provided for such workers under the
BOCW Act and Welfare Cess Act cannot be denied. The Court further
held that the law is not “a brooding omnipotence in the sky” but a
pragmatic instrument of social order, and that welfare statutes must
receive a broad interpretation. The Court also applied the principle of
purposive interpretation and held that the literal interpretation of the
exclusion clause would defeat the very purpose of these Acts.

Conclusion: The Court dismissed all the appeals and writ petitions filed
before it, as well as those which were the subject matter of the transfer
petition and transfer cases, with costs. The Court also made it clear that
the appellants can still challenge the calculation of cess before the
adjudicating authorities.

6. Gujarat Mazdoor Sabha And Another v. State Of Gujarat,

2020 SCC ONLINE SC 798

Facts: Invoking its powers under Section 5 of the Factories Act , 1948
(“the Factories Act ”), the State of Gujarat has exempted factories from
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observing some of the obligations which employers have to fulfil

towards the workmen employed by them. A nationwide lockdown was
declared by the Central Government from 24-3-2020 to prevent the
spread of the Covid-19 Pandemic. The lockdown was extended on
several occasions, among them for the second time on 14-4-2020. The
stated aim of the notification was to provide “certain relaxations for
industrial and commercial activities” from 20-4-2020 till 19-7-2020.
Similar in content, the new notification extended the exemption granted
to factories from 20-7-2020 till 19-10-2020. The notifications have been
issued under Section 5 of the Factories Act to ensure the maintenance
of minimum production levels in factories . Under the notifications,
workers are only allowed to work for three additional hours than the
normal work day.

Issues: Whether the Covid-19 Pandemic and the nationwide lockdown

qualify as a “public Emergency” as defined in Section 5 of the Factories
Act ?

Whether the notifications issued under Section 5 of the Factories Act

are ultra vires the Factories Act ?

Whether the notifications are in violation of Articles 14, 21 and 23 of the

Constitution?

Ruling & Reasoning: The Court held that the notifications issued under
Section 5 of the Factories Act are ultra vires the Factories Act . Section
5 of the Factories Act could not have been invoked to issue a blanket

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notification that exempted all factories from complying with humane

working conditions and adequate compensation for overtime, as a
response to a pandemic that did not result in an “internal disturbance” of
a nature that posed a “grave emergency” whereby the security of India
is threatened. In any event, no factory/classes of factories could have
been exempted from compliance with provisions of the Factories Act ,
unless an “internal disturbance” causes a grave emergency that threatens
the security of the State, so as to constitute a “public emergency” within
the meaning of Section 5 of the Factories Act . As a consequence of this
judgment, and in the interest of doing complete justice under Article 142
of the Constitution, we direct that overtime wages shall be paid in
accordance with the provisions of Section 59 of the Factories Act to all
eligible workers who have been working since the issuance of the
notifications. The Court observed that the Factories Act is an integral
element of the vision of State policy which seeks to uphold Articles 38,
39, 42, and 43 of the Constitution. It does so by attempting to neutralise
the excesses in the skewed power dynamics between the managements
of factories and their workmen by ensuring decent working conditions,
dignity at work and a living wage. The notifications in question, besides
specifically exempting all factories from the applicability of Sections
51, 54, 55 and 56, effectively override Section 59 of the Factories Act .
The notifications, putatively, are a response to the Covid-19 Pandemic
and exempt all factories from the provisions of Sections 51, 54, 55 and
56 which are broadly concerned with worker productivity and fair
remuneration, prescribes working hours, mandatory days of rest,
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intervals between stretches of work and adequate compensation for

overtime. The Court held that Section 5 of the Factories Act provides
for the power of exemption from certain provisions of the Act due to the
occurrence of a public emergency. The respondent has in exercise of its
powers under Section 5 of the Factories Act issued the impugned
notifications purportedly to provide a fillip to industrial and commercial
activities. The exercise of powers under Section 5 of the Factories Act
is challenged as ultra vires the Factories Act . The Union Government
has taken recourse to the provisions of the Disaster Management Act ,
2005. The respondent’s purpose in invoking the emergency powers
under the Factories Act is to counter the effects of the economic
slowdown caused by the lockdown. The Court held that the principle of
paying for overtime work at double the rate of wage is a bulwark against
the severe inequity that may otherwise pervade a relationship between
workers and the management. The notifications, in denying humane
working conditions and overtime wages provided by law, are an affront
to the workers’ right to life and right against forced labour that are
secured by Articles 21 and 23 of the Constitution.

Conclusion: The Court held that the notifications issued under Section
5 of the Factories Act are ultra vires the Factories Act . As a
consequence of this judgment, overtime wages shall be paid in
accordance with the provisions of Section 59 of the Factories Act to all
eligible workers who have been working since the issuance of the
notifications.

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7. Prem Singh v. State Of Uttar Pradesh And Others, 2019 SCC

ONLINE SC 1134

Facts: The petitioner filed a writ petition in the High Court to count the
period spent in the workcharged establishment as qualifying service
under the Rules of 1965. The High Court held that the work-charged
service cannot be counted for reckoning the period of “qualifying
service”.

Issues: The issue in this case is whether Rule 3(8) of the U.P. Retirement
Benefit Rules, 1961 and Regulation 370 of the Civil Services
Regulations of Uttar Pradesh should be struck down based on previous
court decisions.

Ruling & Reasoning: The Court held that Rule 3.17(ii) of the Punjab
Civil Services Rules, which excludes the period of service in a work-
charged establishment from calculating qualifying service, is violative
of Article 14 of the Constitution. The Court also found that the rule
enables the government to discriminate between similarly situated
employees. Therefore, the Court struck down the rule as
unconstitutional. Reasoning: The Court reasoned that the distinction
made between employees in temporary or officiating service and
employees in work-charged service under Rule 3.17(ii) of the Punjab
Civil Services Rules is arbitrary and violates Article 14 of the
Constitution. The Court held that the period of work-charged service
should be reckoned for the computation of qualifying service for the
grant of pension.
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Conclusion: The Court allowed the appeals filed by the employees and
dismissed the appeals filed by the State. The Court ordered that the
arrears of pension be confined to three years before the date of the order
and that the admissible benefits be paid accordingly within three months.

8. L.N Gadodia And Sons And Another v. Regional Provident

Fund Commissioner, 2012 AIR SC 273

Facts: Petitioner 1 and Petitioner 2, M/s Delhi Farming and Construction

(P) Ltd., are sister concerns. The office of the respondent wrote to them
on 11-6-1990, calling upon them to comply with the provisions of the
Provident Funds Act . The petitioner filed an application, disputing the
clubbing of the two concerns for the purposes of their coverage under
the Act . Shri R.G Gadodia and Shri T.P Gadodia were no longer
directors in either of the two companies, and only Smt Sudha Gadodia
was the Director in both the companies. The enforcement officer pointed
out that at the time of inspection, employees were being swapped
between the two companies. He held that both the units belonged to one
establishment and they have to be clubbed together for the purposes of
application of the Provident Funds Act . He allowed the appeal and held
that clubbing was not possible In the facts of the case, and set aside the
order of the first respondent. The present special leave petition has been
filed to challenge this judgment and order dated 20-12-2007.

Issues: Whether the two entities are separate establishments for the
purpose of coverage under the Provident Funds Act?

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Ruling& Reasoning: The learned Single Judge was required to set aside
the order of the Appellate Tribunal in view of his conclusion that the
order was contrary to the facts and the law, and was perverse. The
Division Bench confirmed the order passed by the learned Single Judge.
The petition is dismissed, and the officer concerned of the respondent
will now proceed for the determination and recovery of the provident
fund dues from the petitioners in accordance with law.

Conclusion: The Provident Funds Act requires a compulsory

contribution to the fund and is independently managed by the Provident
Fund Commissioner. Section 6 of the Provident Funds Act requires both
entities to contribute to the fund an amount equivalent to 10% of the
basic wage and dearness allowance (and retaining allowance, if any) per
month. The two entities were held to be separate for the purposes of
coverage under the Provident Funds Act . Separate registration under the
Factories Act , the Sales Tax Act , and the ESI Act were held to be of
no relevance, and the two units were held to be one establishment for the
purpose of the Provident Funds Act . The two companies are family
concerns of the Gadodia family. The material on record, however, leads
to only one pointer that the two entities are parts of the same
establishment and in which case they get covered under the Provident
Funds Act . The term “factory” is defined under Section 2(g) of the Act
, however, there is no definition of an “establishment” or a “commercial
establishment” in the statute. They would, therefore, fall within the
definition of “commercial establishment” and consequently, under the

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definition of “establishment”. The petitioners have contended that the

two entities are two separate establishments. The test has to be the one
as laid down in Associated Cement Companies Ltd. which has been
explained in Pratap Press. In the facts and circumstances of the present
case, the Provident Fund Commissioner was therefore justified in
drawing the inference of integrity of finance, management, and
workforce in the two petitioners on the basis of the material on record.

9. State Of Maharashtra And Another v. Sarva Shramik Sangh,

Sangli And Others, 2014 AIR SC 61

Facts: The writ petition was filed by the respondents to challenge the
award dated 21-5-1992 rendered by the Labour Court, Sangli, in a group
reference under the Industrial Disputes Act , 1947 (“the ID Act ”, for
short). The learned Single Judge allowed the writ petition and the
Division Bench upheld the decision. The workmen were employed by
the Corporation and were served notice of termination w.e.f 30-6-1985.
They sought reference of the industrial dispute under the ID Act . The
Labour Court held that there was a violation of Section 25-F of the ID
Act and directed compensation to be given to the workmen. The
workmen were entitled to reinstatement with continuity of service and
25% back wages. Some workmen reached the age of superannuation
during the proceedings.

Issues: Whether the termination of services was illegal and whether the
workmen are entitled to compensation and reinstatement.

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Ruling & Reasoning: The Court dismissed the special leave petition on
the ground of delay and held that the appellants are bound by the decision
in the case of 10 workmen. The Court also stated that the law does not
permit contradictory and inconsistent orders in the same case. The Court
considered the interpretation of the concept of "industry" in a pending
case and held that the determination of the present pending industrial
dispute cannot be kept undecided until the judgment of the larger Bench
is received. The Court directed that termination of services should
normally be the last resort and noted that the Labour Court had directed
the State Government to consider the absorption of the workmen. The
Court awarded 25% back wages to the workmen. The Court held that the
claim for higher back wages cannot be entertained. All workmen will be
entitled to 25% back wages over and above the last drawn wages they
have received under Section 17-B of the ID Act . There shall not be any
order of reinstatement. The appellants are to file a compliance report in
the Labour Court at Sangli.

Conclusion: The Court dismissed the appeal and upheld the award of
25% back wages to the workmen.

10. Balwant Rai Saluja And Another v. Air India Limited

And Others, 2015 AIR SC 375

Facts: Air India Limited was established under the Air Corporations Act
, 1953. By virtue of Section 3 of the Air Corporations (Transfer of
Undertakings and Repeal) Act , 1994, Air India has vested in Indian
Airlines Limited. It has a Ground Services Department at Indira Gandhi
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International Airport, Delhi. Respondent 2 is Hotel Corporation of India,

a government company wholly-owned by Air India. The Corporation
controls the composition of the Board of Directors and appoints
Directors in consultation with the Government of India. Section 46 of
the Factories Act , 1948 confers power on the State Government to make
rules requiring a specified factory where more than 250 workers are
ordinarily employed, to provide and maintain a canteen for the use of the
workers. In exercise of the aforesaid power, Rules 65 to 71 have been
incorporated in the Delhi Factories Rules, 1950. The workmen claimed
they were employed by Air India on a casual basis in the Canteen and
their employment was through Chef Air, a unit of the Corporation. Air
India denied that the Canteen in question is a statutory canteen and was
employing more than 250 workers. The Division Bench of the High
Court analysed the facts and concluded that the Corporation is a separate
entity and not a part of Air India as found by the Tribunal.

Issues: Whether the Corporation is a separate legal entity from Air

India?

Whether the workmen are entitled to be treated as employees of Air

India?

Whether the termination of services of the workmen is in contravention

of Section 33(2)(b) of the Industrial Disputes Act , 1947?

Whether the workmen are entitled to the same service conditions as

Class IV employees of LIC?

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Whether the workmen are entitled to regularisation on the rolls of Air

India?

Ruling & Reasoning: The Court held that the Corporation is a separate
legal entity from Air India. The obligation to run the Canteen is with the
Corporation and, hence, Air India cannot be treated as its principal
employer. The Court also held that the termination of services of the
workmen is in contravention of Section 33(2)(b) of the Industrial
Disputes Act , 1947. The workmen are entitled to the same service
conditions as Class IV employees of LIC. The Court further held that the
workmen are entitled to regularisation on the rolls of Air India.

Conclusion: The Court allowed the appeals of the workmen concerned

and ordered their reinstatement to their posts with the all the
consequential benefits workmen and concerned full back wages.

____________________________________________________

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