iSTUDY MATERIAL

EXECUTIVE PROGRAMME

INDUSTRIAL, LABOURAND

GENERAL LAWS

MODULE IIPAPER 7

ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003tel 011-4534 1000, 4150 4444 fax +91-11-2462 6727email info@icsi.edu website www.icsi.edu

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THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

TIMING OF HEADQUARTERSMonday to Friday

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EXECUTIVE PROGRAMMEINDUSTRIAL, LABOUR AND GENERAL LAWS

The labour laws derive their origin, authority and strength from the provisions of the Constitution of India. Therelevance of the dignity of human labour and the need for protecting and safeguarding the interest of labour ashuman beings has been enshrined in Chapter-III (Articles 16, 19, 23 & 24) and Chapter IV (Articles 39, 41, 42,43, 43A & 54) of the Constitution of India keeping in line with Fundamental Rights and Directive Principles ofState Policy. Labour law reforms are an ongoing and continuous process and the Government has been introducingnew laws and amending the existing ones in response to the emerging needs of the workers in a constantlydynamic economic environment. The Employees Compensation Act, 1923 (earlier called the WorkmensCompensation Act, 1923) was amended w.e.f 18.01.2010. The Payment of Gratuity Act, 1972 was amendedthrough notification dated 31.12.2009 to cover teachers in educational institutions w.e.f. 04.04.1997 and enhancethe ceiling on gratuity from Rs.3.5 lakh to Rs.10 lakh w.e.f. 24.05.2010. The subject of General Laws is inherentlycomplicated and is subjected to constant refinement through new primary legislations, rules and regulationsmade thereunder and court decisions on specific legal issues.In the light of above developments, this study material has been prepared to provide an understanding of certainindustrial, labour and general legislations which have direct bearing on the functioning of companies. The studymaterial has been divided into two parts consisting of twenty five study lessons. Part A consists of Study Lessons1 to 19, whereas Part B consists of Study Lessons 20 to 25.This study material has been published to aid the students in preparing for the industrial, labour and generallaws paper of the CS Executive Programme. It is part of the education kit and takes the students step by stepthrough each phase of preparation stressing key concepts, pointers and procedures. Company Secretaryshipbeing a professional course, the examination standards are set very high, with emphasis on knowledge ofconcepts, applications, procedures and case laws, for which sole reliance on the contents of this study materialmay not be enough. Besides, as per the Company Secretaries Regulations, 1982, students are expected to beconversant with the amendments to the laws made upto six months preceding the date of examination. Thematerial may, therefore, be regarded as the basic material and must be read alongwith the original Bare Acts,Rules, Regulations, Case Law, as well as recommended readings given with each study lesson.As the area of industrial, labour and general laws undergoes frequent changes, it becomes necessary for everystudent to constantly update himself with the various legislative changes made as well as judicial pronouncementsrendered from time to time by referring to the Institutes journal Chartered Secretary as well as other law/professional journals.The legislative changes made upto July 2014 have been incorporated in the study material. However, it may sohappen that some developments might have taken place during the printing of the study material and its supplyto the students. The students are therefore, advised to refer to the e-bulletin and other publications for updationof the study material.In the event of any doubt, students may write to the Directorate of Academics and Professional Development inthe Institute for clarification at academics@icsi.edu. Although due care has been taken in publishing this studymaterial yet the possibility of errors, omissions and/or discrepancies cannot be ruled out. This publication isreleased with an understanding that the Institute shall not be responsible for any errors, omissions and/ordiscrepancies or any action taken in that behalf.Should there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged ifthe same are brought to its notice for issue of corrigendum in the e-bulletin.

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The Institute has decided that the examination for this paper under new syllabus will be held from December2014 session in the Optical Mark Recognition (OMR) format, whereby students are required to answer multiplechoice questions on OMR sheet by darkening the appropriate choice by HB pencil. One mark will be awardedfor each correct answer. There is NO NEGATIVE mark for incorrect answers.The specimen OMR sheet is appended at the end of the study material. There is practice test paper in the study toacquaint students with the pattern of examination. These are for practice purpose only, not to be sent to theinstitute.

vSYLLABUSPAPER 7: INDUSTRIAL, LABOUR AND GENERAL LAWS (100 Marks)

Level of Knowledge: Working KnowledgeObjective: To acquire knowledge and understanding of Industrial, Labour and General Laws.Contents:

Part A: Industrial and Labour Laws (70 Marks)1. Factories Act, 1948

Object and Scope Application and Major Provisions of the Act

2. Minimum Wages Act, 1948 Object and Scope Application and Major Provision of Minimum Wages Act

3. Payment of Wages Act, 1936 Object and Scope Application and Major Provisions of the Act

4. Equal Remuneration Act, 1976 Object and Scope Application and Major Provisions of the Act

5. Employees State Insurance Act, 1948 Object and Scope Application and Major Provisions of the Act

6. Employees Provident Funds and Miscellaneous Provisions Act, 1952 Object and Scope Application and Major Provisions of the Act

7. Payment of Bonus Act, 1965 Object and Scope Application and Major Provisions of Payment of Bonus Act

8. Payment of Gratuity Act, 1972 Object and Scope Application and Major Provisions of Payment of Gratuity Act

9. Workmens Compensation Act, 1923 Object and Scope Application and Major Provisions of the Act

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10. Contract Labour (Regulation and Abolition) Act, 1970 Object and Scope Application and Major Provisions of the Act

11. Maternity Benefit Act,1961 Object and Scope Application and Major Provisions of the Act

12. The Child Labour (Prohibition and Regulation) Act, 1986 Object and Scope Application and Major Provisions of the Act

13. Industrial Employment (Standing Orders) Act, 1946 Object and Scope Application and Major Provisions of the Act

14. Industrial Disputes Act, 1947 Object and Scope Application and Major Provisions of the Act

15. Indian Trade Union Act, 1926 Object and Scope Application and Major Provisions of the Act

16. The Labour Laws (Exemption from Furnishing Returns and Maintaining Register by CertainEstablishments) Act, 1988 Object and Scope Application and Major Provisions of the Act

17. Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 Object and Scope Application and Major Provisions of the Act

18. Apprentices Act, 1961 Object and Scope Application and Major Provisions of the Act

19. Labour Audit covering the above Acts and those Industry Specific Acts

Part B: General Laws (30 Marks)20. Constitution of India

Broad Framework of the Constitution of India: Fundamental Rights, Directive Principles of State Policy Ordinance Making Powers of the President and the Governors Legislative Powers of the Union and the States

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Freedom of Trade, Commerce and Intercourse Constitutional Provisions relating to State Monopoly Judiciary, Writ Jurisdiction of High Courts and the Supreme Court Different Types of Writs - Habeas Corpus, Mandamus, Prohibition, Quo Warranto and Certiorari Concept of Delegated Legislation

21. Interpretation of Statutes Need for Interpretation of a Statute General Principles of Interpretation Internal and External Aids to Interpretation Primary and Other Rules

22. An Overview of Law relating to Specific Relief; Limitation and Evidence23. Code of Civil Procedure

Elementary Knowledge of the Structure of Civil Courts, their Jurisdiction Basic Understanding of Certain Terms - Order, Judgment and Decree, Stay Of Suits, Res Judicata Suits by Companies, Minors Basic Understanding of Summary Proceedings, Appeals, Reference, Review and Revision

24. Indian Penal Code and Criminal Procedure Code Important Definitions and Salient Features, Mens Rea Cognizable and Non-Cognizable Offences, Bail, Continuing Offences, Searches, Limitation for taking Cognizance of Certain Offences

25. Right to Information Salient Features of the Right to Information (RTI) Act, 2005 Objective Public Authorities & their Obligations Designation of Public Information Officers (PIO) and their Duties Request for Obtaining Information Exemption from Disclosure Who is excluded Information Commissions (Central & State) and their Powers Appellate Authorities Penalties Jurisdiction of Courts Role of Central/State Governments

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LIST OF RECOMMENDED BOOKSPAPER 7 : INDUSTRIAL, LABOUR AND GENERAL LAWS

READINGS1. P.L. Malik : Industrial Law; Eastern Book Company; 34, Lalbagh, Lucknow.2. N.D. Kapoor : Handbook of Industrial Law; Sultan Chand & Sons, 23, Darya Ganj, New

Delhi 110002.3. S.S. Gulshan & : Economic, Labour and Industrial Laws; Sultan Chand & Sons, 23,

G.K. Kapoor Daryaganj, New Delhi- 2.4. P. L. Malik : Labour and Industrial Laws (Pocket Edition); Eastern Book Company,

34, Lalbagh, Lucknow-226 001.5. H.L. Kumar : Labour Laws; Universal Laws Publishing Co. Pvt. Ltd., G.T. Karnal Road,

Delhi 110033.6. Labour & Industrial : Universal Law Publishing Co. Pvt. Ltd., G.T. Karnal Road, Delhi 110033.

Laws (Legal Manual)7. Relevant Bare Acts.8. N.D. Kapoor & Rajni Abbi : General Laws and Procedures; Sultan Chand & Sons. New Delhi.9. Durga Das Basu : Constitution of India; Prentice Hall of India, New Delhi.

10. Taxmanns : General and Commercial Laws.11. A.M. Satalvad : Mulla on the Transfer of Property Act, 1882; N.M. Tripathi Private Ltd., Bombay.12. M.P. Tandon : Civil Procedure Code; Allahabad Law Agency, Allahabad.13. Dr. S.C. Banerjee : The Law of Specific Relief; Law Book Company, Allahabad.14. Ramaswamy Iyer : The Law of Torts; N.M. Tripathi, Private Ltd., Bombay.15. Dr. D.K. Singh (Ed.) : V.N. Shuklas the Constitution of India; Eastern Book Company, Lucknow.16. V.P. Sarathi : Elements of Law of Evidence, Eastern Book Company, Lucknow.17. V.G. Ramachandran : Law of Limitation; Eastern Book Company, Lucknow.18. G.P. Singh : Principles of Statutory Interpretation; Wadhwa Publishing Company, Nagpur.19. Eastern Book Company : Code of Criminal Procedure.20. R.V. Kelkar : Lectures on Criminal Procedure, 4th Edn., Revised by Dr. K.N.

Chandrasekharan Pillai, Eastern Book Company, Lucknow.21. B.M.Gandhi : Interpretation of Statutes; Eastern Book Company, 34, Lalbagh, Lucknow-

226 001.JOURNALS1. e-bulletin : Available on ICSI website - www.icsi.edu2. Chartered Secretary : The ICSI, New Delhi-110 003.

(Monthly)3. All India Reporter : All India Reporter Ltd., Congress Nagar, Nagpur.

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ARRANGEMENT OF STUDY LESSONSPART A

1. Factories Act, 19482. Minimum Wages Act, 19483. Payment of Wages Act, 19364. Equal Remuneration Act, 19765. Employees State Insurance Act, 19486. Employees Provident Funds and Miscellaneous Provisions Act, 19527. Payment of Bonus Act, 19658. Payment of Gratuity Act, 19729. Workmens Compensation Act, 192310. Contract Labour (Regulation and Abolition) Act, 197011. Maternity Benefit Act,196112. The Child Labour (Prohibition and Regulation) Act, 198613. Industrial Employment (Standing Orders) Act, 194614. Industrial Disputes Act, 194715. The Trade Union Act, 192616. The Labour Laws (Exemption from Furnishing Returns and Maintaining Register by Certain

Establishments) Act, 198817. Employment Exchanges(Compulsory Notification of Vacancies) Act, 195918. Apprentices Act, 196119. Audit under Labour Legislations

PART B20. Constitution of India21. Interpretation of Statutes22. An Overview of Law relating to Specific Relief; Limitation and Evidence23. Code of Civil Procedure24. Criminal Procedure Code25. Right to Information

TEST PAPERS

xCONTENTSPART A : INDUSTRIAL AND LABOUR LAWS (70 MARKS)

LESSON 1FACTORIES ACT, 1948

Learning Objective 1Object and Scope of the Act 2Important Definitions 2Statutory Agencies and their Powers for Enforcement of the Act 11Approval, Licensing and Registration of Factories 14Notice by Occupier 15General Duties of the Occupier 16General Duties of Manufacturers Etc. 16Measures to be taken by Factories for Health, Safety and Welfare of Workers 17Health 17Safety 21Welfare 26Special Provisions Relating to Hazardous Processes 29Working Hours of Adults 32Additional Provisions Regulating Employment of Women in a Factory 36Employment of Young Persons And Children 37Annual Leave with Wages 40Penalties and Procedures 43Compliances Under The Act 45Schedule 46LESSON ROUND UP 49SELF TEST QUESTIONS 50

LESSON 2MINIMUM WAGES ACT, 1948

Learning Objectives 51Object and Scope of the Legislation 52Important Definitions 52Fixation of Minimum Rates of Wages 54Revision of Minimum Wages 54

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PageManner of Fixation/Revision of Minimum Wages 54Minimum Rate of Wages 55Procedure for Fixing and Revising Minimum Wages 56Advisory Board 56Central Advisory Board 57Minimum Wage Whether to be Paid in Cash or Kind 57Payment of Minimum Wages is Obligatory on Employer 57Fixing Hours for a Normal Working Day 57Payment of Overtime 58Wages of a Worker who Works Less than Normal Working Day 58Minimum Time Rate Wages for Piece Work 58Maintenance of Registers and Records 59Authority and Claims 59Offences and Penalties 59Compliances Under The Act 60LESSON ROUND UP 60SELF TEST QUESTIONS 60

LESSON 3PAYMENT OF WAGES ACT, 1936

Learning Objectives 63Object and Scope 64Definitions 64Responsibility for payment of wages 65Wages to be paid in current coin or currency notes 66Deductions from the wages of an employee 66Maintenance of registers and records 67Claims arising out of deductions from wages or delay in payment of wages and penalty formalicious or vexatious claims 67LESSON ROUND UP 68SELF TEST QUESTION 69

LESSON 4EQUAL REMUNERATION ACT, 1976

Learning Objective 71Object and Scope 72

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PageDefinitions 72Act to have overriding effect 72Duty of employer to pay equal remuneration to men and women workers for same work or work of a similar nature 72Discrimination not to be made while recruiting men and women 73Authorities for hearing and deciding claims and complaints 73Maintenance of Registers 73Penalty 73LESSON ROUND UP 73SELF TEST QUESTIONS 74

LESSON 5EMPLOYEES STATE INSURANCE ACT, 1948

Learning Objectives 75Introduction 76Important Definitions 77Registration of Factories and Establishments Under this Act 82Employees State Insurance 82Administration of Employees State Insurance Scheme 82Employees State Insurance Corporation 82Wings of the Corporation 83Employees State Insurance Fund 83Contributions 84Employees Insurance Court (E.I. Court) 86Exemptions 86Compliances Under the Act 87LESSON ROUND UP 87SELF TEST QUESTIONS 88

LESSON 6EMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952

Learning Objectives 91Introduction 92Application of the Act 92Important Definitions 94Schemes Under the Act 96Employees Provident Fund Scheme 96

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Employees Pension Scheme 99Employees Deposit-Linked Insurance Scheme 100Determination of Moneys Due from Employers 101Employer not to Reduce Wages 102Transfer of Accounts 103Protection against Attachment 103Power to Exempt 104Compliances Under the Act 104LESSON ROUND UP 105SELF TEST QUESTIONS 105

LESSON 7PAYMENT OF BONUS ACT, 1965

Learning Objectives 107Object and Scope of the Act 108Application of the Act 108Act not to Apply to Certain Classes of Employees 109Important Definitions 110Calculation of Amount Payable as Bonus 112Computation of gross profits 113Deductions from gross profits 113Calculation of direct tax payable by the employer 113Computation of available surplus 114Eligibility for Bonus and its Payment 114Bonus Linked with Production or Productivity 118Power of Exemption 118Penalties 118Offences by Companies 118Compliances Under the Act 118LESSON ROUND UP 119SELF TEST QUESTIONS 120

LESSON 8PAYMENT OF GRATUITY ACT, 1972

Learning Objectives 121Introduction 122

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PageApplication of the Act 122Who is an Employee? 122Other Important Definitions 123When is Gratuity Payable? 125To Whom is Gratuity Payable? 126Exemptions 127Rights and Obligations of Employees 127Rights and Obligations of the Employer 127Recovery of Gratuity 128Protection of Gratuity 128Compliances Under the Act 129LESSON ROUND UP 130SELF TEST QUESTIONS 130

LESSON 9EMPLOYEES COMPENSATION ACT, 1923

Learning Objectives 133Object and Scope 134Definitions 134Disablement 136Employers Liability for Compensation 138Employers Liability When Contractor is Engaged 142Compensation 143Obligations and Responsibility of an Employer 146Notice and Claim 147Medical Examination 148Procedure in the Proceedings Before the Commissioner 149Appeals 153Penalties 154Special Provisions Relating to Masters and Seamen 155Special Provisions Relating to Captains and Other Members of Crew of Aircrafts 156Special Provisions Relating to Employees Aboard of Companies and Motor Vehicles 157Compliances Under the Act 157LESSON ROUND UP 160SELF TEST QUESTIONS 161

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PageLESSON 10

CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970

Learning Objectives 163Scope and Application 164Act not to Apply to Certain Establishments 164Important Definitions 164The Advisory Boards 166Registration of Establishments Employing Contract Labour 166Effect of Non-registration 167Prohibition of Employment of Contract Labour 167Appointment of Licensing Officer and Licensing of Contractors 169Welfare and Health of Contact Labour 170Rules Framed Under the Act by the Central Government on the Question of Wages 172Penalties and Procedure 172Inspectors 174Maintenance of Records and Registers 174Compliances Under the Act 175LESSON ROUND UP 175SELF TEST QUESTIONS 176

LESSON 11MATERNITY BENEFIT ACT, 1961

Learning Objectives 177Introduction 178Definition 178Employment of or work by women prohibited during certain periods 179Right to payment of maternity benefits 179Notice of claim for maternity benefit 179Nursing breaks 180Abstract of Act and rules there under to be exhibited 180Registers 180Penalty for contravention of Act by employer 180LESSON ROUND UP 180SELF TEST QUESTIONS 181

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PageLESSON 12

THE CHILD LABOUR (PROHIBITION AND REGULATION) ACT, 1986Learning Objective 183Object and Scope 184Definition 184Prohibition of employment of children in certain occupations and processes 184Occupations set forth in Part A of the Schedule 184Processes set forth Part B of the Schedule 185Regulation of Conditions of Work of Children 187Hours and Period of work 187Weekly holidays 187Notice to Inspector 187Maintenance of register 187Display of notice containing abstract of sections 3 and 14 188Penalties 188LESSON ROUND UP 188SELF TEST QUESTIONS 189

LESSON 13THE INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946

Learning Objectives 191Object and Scope of the Act 192Important Definitions 193Certification of Draft Standing Orders 194Appeals 195Date of Operation of Standing Orders 195Posting of Standing Orders 196Duration and Modification of Standing Orders 196Payment of Subsistence Allowance 196Interpretation of Standing Orders 197Temporary Application of Model Standing Orders 197The Schedule 197LESSON ROUND UP 198SELF TEST QUESTIONS 199

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PageLESSON 14

INDUSTRIAL DISPUTES ACT, 1947Learning Objectives 201Introduction 202Object and Significance of the Act 202Important Definitions 203Types of Strike and Their Legality 213Legality of Strike 214Dismissal, etc., of an Individual Workman to be Deemed to be an Industrial Dispute 223Authorities under the Act and their Duties 223Reference of Disputes 226Voluntary Reference of Disputes to Arbitration 230Procedure and Powers of Authorities 230Strikes and Lock-outs 232Justified and Unjustified Strikes 234Wages for Strike Period 235Dismissal of Workmen and Illegal Strike 236Justification of Lock-out and Wages for Lock-out Period 236Change in Conditions Of Service 237Unfair Labour Practices 241Penalties 241Schedules 242The First Schedule 242The Second Schedule 243The Third Schedule 244The Fourth Schedule 244The Fifth Schedule 245LESSON ROUND UP 246SELF TEST QUESTIONS 247

LESSON 15THE TRADE UNION ACT, 1926

Learning Objectives 249Introduction 250Definition 250Mode of registration 250

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PageApplication for registration 250Provisions contained in the rules of a Trade Union 251Certificate of Registration 251Incorporation of registered Trade Union 251Cancellation of registration 252Returns 252LESSON ROUND UP 252SELF TEST QUESTIONS 253

LESSON 16THE LABOUR LAWS (EXEMPTION FROM FURNISHING RETURNS AND MAINTAINING

REGISTER BY CERTAIN ESTABLISHMENTS) ACT, 1988Learning Objectives 255Definitions 256Exemption from returns and registers required under certain labour laws 256Penalty 256LESSON ROUND UP 256SELF TEST QUESTIONS 257

LESSON 17EMPLOYMENT EXCHANGES (COMPULSORY NOTIFICATION OF VACANCIES) ACT, 1959

Learning Objectives 259Definition 260Act not to apply in relation to certain vacancies 260Notification of vacancies to employment exchanges 260Employers to furnish information and returns in prescribed form 260Right of access to records or documents 261Penalties 261LESSON ROUND UP 261SELF TEST QUESTIONS 261

LESSON 18APPRENTICES ACT, 1961

Learning Objectives 263Object and Scope of the Act 264Definitions 264Qualification for being engaged as an apprentice 264

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PageContract of apprenticeship 265Obligations of employers 265Obligations of apprentices 265Apprentices are trainees and not workers 265Records and Returns 265Payment to apprentices 266Hours of work, overtime, leave and holidays 266Conduct and discipline 266Settlement of disputes 266Authorities under the Act 266Offences and penalties 267Offences by companies 267LESSON ROUND UP 267SELF TEST QUESTIONS 268

LESSON 19AUDIT UNDER LABOUR LEGISLATIONS

Learning Objective 269Introduction 270Scope of Labour Audit 270Methodology of Conduct of Labour Audit 270Benefits of Labour Audit 271Illustrative List of Legislations that may be brought under the ambit of Labour Audit 272LESSON ROUND UP 274SELF TEST QUESTIONS 274

PART B : GENERAL LAWS (30 MARKS)LESSON 20

CONSTITUTION OF INDIALearning Objectives 275Broad Framework of the Constitution 276Preamble 276Structure 276Peculiar Features of Indian Federalism 277Fundamental Rights 278The Concept of Fundamental Rights 278

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PageInclusion of Fundamental Rights in Part III of the Constitution 279Definition of State 279Test for instrumentality or agency of the State 280Justifiability of Fundamental Rights 281Right of equality 283Rights Relating to Freedom 288Scope and Limitations on the Freedoms 289Monopoly 293Protection in respect of conviction for offences 293Protection of life and personal liberty 294Article 21A: Right to Education 296Right against Exploitation 297Right to Freedom of Religion 297Cultural and Educational Rights [Rights of Minorities] 300Articles 31A, 31B and 31C relating to Property 301Right to Constitutional Remedies 303Amendability of the Fundamental Rights 304Directive Principles of State Policy 306Fundamental Duties 308Ordinance Making Powers 309Legislative Powers of the Union And The States 311Freedom of Trade, Commerce and Intercourse 320Constitutional Provisions Relating to State Monopoly 322The Judiciary 322Writ Jurisdiction of High Courts and Supreme Court 324Delegated Legislation 326LESSON ROUND UP 328SELF TEST QUESTIONS 329

LESSON 21INTERPRETATION OF STATUTES

Learning Objectives 331Introduction 332Need for and Object of Interpretation 332General Principles of Interpretation 333Presumptions 338

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PageInternal and External Aids in Interpretation 339LESSON ROUND UP 345SELF TEST QUESTIONS 346

LESSON 22AN OVERVIEW OF LAW RELATING TO SPECIFIC RELIEF, LIMITATION AND EVIDENCE

Learning Objectives 349LAW RELATING TO SPECIFIC RELIEF

SECTION IIntroduction 350Scope of the Act 350Who May Sue for Specific Performance 350Recovery of Possession of Movable and Immovable Property 355Persons against whom Specific Performance Available 357Persons against whom Specific Performance cannot be Enforced 357Discretion of the Court 359Rectification of Instruments 361Rescission of Contracts 362Cancellation of Instruments 363Declaratory Decrees 364Preventive Reliefs 365

LAW RELATING TO TORTSSECTION II

Introduction 368General Conditions of Liability for a Tort 369Kinds of Tortious Liability 370Torts or Wrongs to Personal Safety and Freedom 375Remedies in Torts 377Judicial Remedies 377Extra Judicial Remedies 377

LAW RELATING TO LIMITATIONSECTION III

Introduction 378Computation of the Period of Limitation for Different Types of Suits 378

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PageBar of Limitation 378Extension of Time in Certain Cases 379Continuous Running of Time 381Computation of Period of Limitation 381Effect of Acknowledgement on the Period of Limitation 383Effect of Payment on Account of Debt or of Interest on Legacy 383Computation of Time Mentioned in Instruments 383Acquisition of Ownership by Possession 384Limitation and Writs under the Constitution 384The Schedule 385Classification of Period of Limitation 398

LAW RELATING TO EVIDENCESECTION IV

Introduction 400Relevancy of Facts Connected with the Fact to be Proved 404Statements about the Facts to be Proved 407Opinion of Third Persons when Relevant 412Facts of which Evidence cannot be Given (Priviliged Communications) 413Oral, Documentary and Circumstantial Evidence 414Presumptions 417Estoppel 417LESSON ROUND UP 418SELF TEST QUESTIONS 419

LESSON 23CODE OF CIVIL PROCEDURE, 1908 (CPC)

Learning Objectives 421Introduction 422Aim and Scope of Civil Procedure Code, 1908 [C.P.C.] 422Scheme of the Code 422Some Important Terms 422Structure of Civil Courts 425Jurisdiction of Courts and Venue of Suits 425Stay of Suit (Doctrine Of Res Sub Judice) 426

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PagePlace of Suing (Territorial) 427Res Judicata 428Set-off Counter-claim and Equitable Set-off 431Temporary Injunctions and Interlocutory Orders 432Detention, Preservation, Inspection etc. of Subject-matter of Suit 432Institution of Suit 433Important Stages in Proceedings of a Suit 435Delivery of Summons by Court 435Appeals 441Reference, Review and Revision 442Suits by or Against a Corporation 443Suits by or Against Minors 444Summary Procedure 444LESSON ROUND UP 446SELF TEST QUESTIONS 447

LESSON 24CRIMINAL PROCEDURE CODE

Learning Objectives 449Introduction 450Important Definitions 450Classes of Criminal Courts 453Power of Courts 453Power of the Court to Pass Sentences 453Arrest of Persons 454Summons and Warrants 456Summons 456Warrant of Arrest 457Proclamation and Attachment 458Summons to Produce 458Search Warrant 458Security for Keeping the Peace and Good Behaviour and Proceedings for Maintenance of Public Order 459Preventive Action of the Police and their Powers to Investigate 461Information to the Police and their Powers to Investigate 461Powers of Magistrate 462Limitation for Taking Cognizance of Certain Offences 465

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PageSummary Trials 466LESSON ROUND UP 468SELF TEST QUESTIONS 469

LESSON 25RIGHT TO INFORMATION

Learning Objectives 471Introduction 472Right to Know 472The Right to Information Act, 2005 473Salient Features of the Act 473Objective 473Definitions 473Obligations of Public Authority 474Designation of Public Information Officers 475Request for Obtaining Information 475Duties of a PIO 476Exemption from Disclosure 476Rejection of Request 477Partial Disclosure Allowed 477Who is Excluded? 477Information Commissions 478Powers of Information Commissions 479Appellate Authorities 479Penalties 480Jurisdiction of Courts 480Role of Central/State Governments 480LESSON ROUND UP 481SELF TEST QUESTIONS 482

GLOSSARYLegal Terms/Maxims 483

TEST PAPERS

Practice Test Papers 490

SPECIMEN OMR ANSWER SHEET

Lesson 1 Factories Act, 1948 1

LESSON OUTLINE Learning objectives Object and scope of the Act Competent Person Prime mover Transmission Machinery Hazardous Process Factory Manufacturing Process What is not manufacturing process Statutory agencies and their powers Approval licensing and registration of

factories Power of inspector Notice by Occupier General duties of the occupier and

manufacturers Health, measures Safety measures Welfare measures Special Provisions relating to Hazardous

Processes Working hours of adults Annual Leave with wages Employment of women in a Factory Employment of young persons and

children Penalties and Procedures Compliances under the Act

LEARNING OBJECTIVESThere are several legislations which regulate theconditions of employment, work environment andother welfare requirements of certain specificindustries. The Factories Act, 1948 enacted toregulate the working conditions in factories.In the case of Ravi Shankar Sharma v. State ofRajasthan, AIR 1993 Raj 117, Court held thatFactories Act is a social legislation and itprovides for the health, safety, welfare and otheraspects of the workers in the factories. In short,the Act is meant to provide protection to theworkers from being exploited by the greedybusiness establishments and it also providesfor the improvement of working conditions withinthe factory premises. An adequate machineryof instructions and strict observance of thedirections are provided in the Act. Hence, abeneficial construction should be given and theprovisions of the Act should be so construed/interpreted so as to achieve its object i.e. thewelfare of the workers and their protection fromexploitation and unhygienic working conditionsin the factory premises.The Factories Act has been enacted primarilywith the object of protecting workers employedin factories against industrial and occupationalhazards. For that purpose, it seeks to imposeupon the owner or the occupier certainobligations to protect the workers and to securefor them employment in conditions conductiveto their health and safety.The objective of the study lesson is to familiarizethe students with the legal requirementsstipulated under the Act.

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Lesson 1Factories Act, 1948

Factories Act, 1948 is an Act to consolidate and amend the law regulating labour in factories.

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OBJECT AND SCOPE OF THE ACTThe main object of the Factories Act, 1948 is to ensure adequate safety measures and to promote the healthand welfare of the workers employed in factories. The Act also makes provisions regarding employment ofwomen and young persons (including children and adolescents), annual leave with wages etc.The Act extends to whole of India including Jammu & Kashmir and covers all manufacturing processes andestablishments falling within the definition of factory as defined under Section 2(m) of the Act. Unless otherwiseprovided it is also applicable to factories belonging to Central/State Governments. (Section 116)IMPORTANT DEFINITIONSAdultAdult means a person who has completed his eighteenth year of age. [Section 2(a)]AdolescentAdolescent means a person who has completed his fifteenth year of age but has not completed his eighteenthyear. [Section 2(b)]Calendar YearCalendar Year means the period of twelve months beginning with the first day of January in any year. [Section2(bb)]ChildChild means a person who has not completed his fifteenth year of age. [Section 2(c)]Competent PersonCompetent Person in relation to any provision of this Act, means a person or an institution recognised as suchby the Chief Inspector for the purposes of carrying out tests, examinations and inspections required to be donein a factory under the provisions of this Act having regard to

(i) the qualifications and experience of the person and facilities available at his disposal; or(ii) the qualifications and experience of the persons employed in such institution and facilities available

therein.With regard to the conduct of such tests, examinations and inspections and more than one person or institutioncan be recognised as a competent person in relation to a factory. [Section 2(ca)]

Test your knowledgeState whether the following statement is True or FalseAs per the Factories Act, 1948, Adolescent means a person who has completedhis 15th year of age but has not completed his 21st year.

True False

Correct answer: False

Lesson 1 Factories Act, 1948 3Hazardous ProcessHazardous Process means any process or activity in relation to an industry specified in the First Schedulewhere, unless special care is taken, raw materials used therein or the intermediate or finished products, byeproducts, wastes or effluents thereof would

(i) cause material impairment to the health of the persons engaged in or connected therewith, or(ii) result in the pollution of the general environment;

Provided that the State Government may, by notification in the Official Gazette amend the First Schedule by wayof addition, omission or variation of any industry specified in the said Schedule. [Section 2(cb)]Young PersonYoung Person means a person who is either a child or an adolescent. [Section 2(d)]DayDay means under Section 2(e), a period of twenty-four hours beginning at mid-night. [Section 2(e)]WeekWeek means a period of seven days beginning at mid-night on Saturday night or such other night as may beapproved in writing for a particular area by the Chief Inspector of Factories. [Section 2(f)]PowerPower means electrical energy or any other form of energy which is mechanically transmitted and is notgenerated by human or animal agency. [Section 2(g)]Prime MoverPrime Mover means any engine, motor or other appliance which generates or otherwise provides power.[Section 2(h)]Transmission MachineryTransmission Machinery means any shaft, wheel, drum, pulley, system of pulleys, coupling, clutch, driving beltor other appliance or device by which the motion of a prime-mover is transmitted to or received by any machineryor appliance. [Section 2(i)]MachineryThe term includes prime-movers, transmission machinery and all other appliances whereby power is generated,transformed, transmitted or applied. [Section 2(j)]FactoryFactory includes 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 ordinarilyso carried on; or

(ii) whereon twenty or more workers are working, or were working on a 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 isordinarily so carried on.

4 EP-IL&GLBut does not include a mine subject to the operation of the Mines Act, 1952 or a mobile unit belonging to thearmed forces of the Union or a railway running shed, or a hotel, restaurant or eating place. [Section 2(m)]Explanation I: For computing the number of workers for the purposes of this clause, all the workers in differentgroups and relays in a day shall be taken into account.Explanation II: For the purposes of this clause the mere fact that an Electronic Data Processing Unit or aComputer Unit is installed in any premises or part thereof, shall not be construed to make it a factory if nomanufacturing process is being carried on in such premises or part thereof.(i) Essential elements of a factory:

(1) There must be a premises.(2) There must be a manufacturing process which is being carried on or is so ordinarily carried on in any

part of such a premises.(3) There must be ten or more workers who are/were working in such a premises on any day of the last 12

months where the said manufacturing process is carried on with the aid of power. But where themanufacturing process is carried on without the aid of power, the required number of workers workingshould be twenty or more.

The following are not covered by the definition of factory:(i) Railway running sheds, (ii) mines, (iii) mobile units of armed forces, (iv) hotels, eating places or restaurants.

(ii) Meaning of words premises and precinctsThe word premises is a generic term meaning open land or land with building or building alone. The termprecincts is usually understood as a space enclosed by walls. Expression premises including precincts doesnot necessarily mean that the premises must always have precincts. It merely shows that there may be somepremises with precincts and some premises without precincts. The word including is not a term restricting themeaning of the word premises, but is a term which enlarges its scope. All the length of railway line would bephase wise factories (LAB IC 1999 SC 407). Company engaged in construction of railway line is factory. (LAB IC1999 SC 407).The Supreme Court in Ardeshir H. Bhiwandiwala v. State of Bombay, AIR 1962 S.C. 29, observed that thelegislature had no intention to discriminate between workers engaged in a manufacturing process in a buildingand those engaged in such a process on an open land and held that the salt works, in which the work done is ofconversion of sea water into crystals of salt, come within the meaning of the word premises.(iii) Manufacturing process is being carried on or ordinarily so carried onThe word ordinarily came up for interpretation in the case of Employers Association of Northern India v. Secretaryfor Labour U.P. Govt. The question was whether a sugar factory ceases to be a factory when no manufacturingprocess is carried on during the off-season. It was observed that the word ordinarily used in the definition offactory cannot be interpreted in the sense in which it is used in common parlance. It must be interpreted withreference to the intention and purposes of the Act. Therefore, seasonal factories or factories carrying on intermittentmanufacturing process, do not cease to be factories within the meaning of the Act.(iv) Ten or twenty workersThe third essential content of factory is that ten or more workers are employed in the premises using power andtwenty or more workers are employed in the premises not using power.Where seven workers were employed in a premises where the process of converting paddy into rice by mechanicalpower was carried on and in the same premises, three persons were temporarily employed for repairs of part ofthe machinery which had gone out of order but the manufacturing was going on, it was held that since three

Lesson 1 Factories Act, 1948 5temporary persons were workers, consequently there were ten workers working in the premises and the premisesis a factory (AIR 1959, AII. 794).According to explanation to Section 2(m), all the workers in different relays in a day shall be taken into accountwhile computing the number of workers.Bombay High Court held that the fact that manufacturing activity is carried on in one part of the premises and therest of the work is carried on in the other part of the premises cannot take the case out of the definition of theword factory which says that manufacturing process can be carried on in any part. The cutting of the woods orconverting the wood into planks is essentially a part of the manufacturing activity (Bharati Udyog v. RegionalDirector ESI Corpn., 1982 Lab. I.C. 1644).A workshop of Polytechnic Institution registered under the Factories Act imparting technical education andhaving power generating machines, was carrying on a trade in a systematic and organised mannerHeld, it willcome under the definition of factory as defined under Section 2(m) read with Section 2(k) (1981 Lab. I.C. NOC117).

Test your knowledgeWhich of the following are essential elements of a factory?(a) There must be premises(b) There must be a manufacturing process being carried on at the premises(c) There must be ten or more workers where the manufacturing process is being

carried on with the aid of power(d) There electronic data processing units are installed

Correct answer: (a), (b) and (c)

Manufacturing ProcessIt means any process for

(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up,demolishing, or otherwise, treating or adopting any article or substance with a view to its use, sale,transport, delivery or disposal; or

(ii) pumping oil, water or sewage or any other substance; or(iii) generating, transforming, 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. [Section 2(k)]

The definition is quite important and it has been the subject of judicial interpretation in large number of cases:(i) What is manufacturing processThe definition of manufacturing process is exhaustive. Under the present definition even transporting, washing,cleaning, oiling and packing which do not involve any transformation as such which is necessary to constitutemanufacturing process in its generic sense, are nonetheless treated as manufacturing process. The definition isartificially projected beyond the scope of natural meaning of what the words might convey thus covering very

6 EP-IL&GLvide range of activities. Madras High Court in the case of In re. Seshadrinatha Sarma, 1966 (2) LLJ 235, heldthat to constitute a manufacture there should not be essentially some kind of transformation of substance andthe article need not become commercially as another and different article from that at which it begins its existenceso long as there has been an indisputable transformation of substance by the use of machinery and transformedsubstance is commercially marketable.Division Bench of A.P. High Court held that to determine where certain premises is factory, it is necessary that itshould carry on manufacturing process and it does not require that the process should end in a substance beingmanufactured (Alkali Metals (P) Ltd. v. ESI Corpn., 1976 Lab.I.C.186). In another case it was observed thatmanufacturing process merely refers to particular business carried on and does not necessarily refer to theproduction of some article. The works of laundry and carpet beating were held to involve manufacturing process.A process employed for purpose of pumping water is manufacturing process. Each of the words in the definitionhas got independent meaning which itself constitutes manufacturing process.Following processes have been held to be manufacturing processes:

(1) Sun-cured tobacco leaves subjected to processes of moistening, stripping, breaking up, adaption, packing,with a view to transport to companys main factory for their use in manufacturing cigarette (V.P. GopalaRao v. Public Prosecutor, AIR 1970 S.C. 66).

(2) The operation of peeling, washing etc., of prawns for putting them in cold storage is a process with aview to the sale or use or disposal of the prawns (R.E.DSouza v. Krishnan Nair, 1968 F.J.R. 469).

(3) Stitching old gunny bags and making them fit for use.(4) In paper factory, bankas grass packed into bundles manually and despatched to the factory.(5) Work of garbling of pepper or curing ginger.(6) Process carried out in salt works in converting sea water into salt.(7) Conversion of latex into sheet rubber.(8) A process employed for the purpose of pumping water.(9) The work done on the bangles of cutting grooves in them which later would be filled with colouring, is

clearly a stage in ornamentation of the bangle with view to its subsequent use for sale.(10) Preparation of soap in soap works.(11) The making of bidies.(12) The raw film used in the preparation of movies is an article or a substance and when by the process of

tracing or adapting, after the sound are absorbed and the photos imprinted, it is rendered fit to bescreened in a cinema theatre, then such a change would come within the meaning of the term treatingor adapting any article or substance with a view to its use.

(13) Composing is a necessary part of printing process and hence it is a manufacturing process. It cannot besaid that the definition should be confined to the process by which impression is created on the paper andto no other process preceding or succeeding the marking of the impression on the paper to be printed.Everything that is necessary before or after complete process, would be included within the definition ofthe word manufacturing process. The definition takes in all acts which bring in not only some change inthe article or substance but also the act done for the protection and maintenance of such article by packing,oiling, washing, cleaning, etc. (P.Natrajan v. E.S.I. Corporation (1973) 26 FLR 19).

(14) Preparation of food and beverages and its sale to members of a club (CCI v.ESIC, 1992 LAB IC 2029 Bom.).(15) Receiving products in bulk, in packing and packing as per clients requirements (LLJ I 1998 Mad. 406).

Lesson 1 Factories Act, 1948 7(16) Construction of railway - use of raw materials like sleepers, bolts, loose rails etc. to adaptation of their

use for ultimately for laying down railway line (LAB IC 1999 SC 407; Lal Mohmd. v. Indian RailwayConstruction Co. Ltd.).

(ii) What is not a manufacturing processNo definite or precise test can be prescribed for determining the question whether a particular process is amanufacturing process. Each case must be judged on its own facts regard being had to the nature of theprocess employed, the eventual result achieved and the prevailing business and commercial notions of thepeople. In deciding whether a particular business is a manufacturing process or not, regard must be had to thecircumstances of each particular case. To constitute a manufacturing process, there must be some transformationi.e. article must become commercially known as something different from which it acquired its existence.Following processes are not manufacturing processes:

(1) Exhibition of films process.(2) Industrial school or Institute imparting training, producing cloth, not with a view to its sale.(3) Receiving of news from various sources on a reel in a teleprinter of a newspaper office, is not a

manufacturing process in as much as news is not the article or substance to which Section 2(k)(i) hasreferred.

(4) Any preliminary packing of raw material for delivering it to the factory (AIR 1969 Mad. 155).(5) Finished goods and packing thereof: F. Hare v. State AIR 1955, 2710.

Supreme Court has held that the process undertaken in zonal and sub-stationsand electricity generating stations, transforming and transmitting electricitygenerated at the power station does not fall within the definition of manufacturingprocess and could not be said to be factories (Workmen of Delhi ElectricSupply Undertaking v. Management of D.E.S.U., AIR 1973 S.C. 365).

WorkerWorker means a person employed directly or by or through any agency (including a contractor) with or withoutknowledge of the principal employer, whether for remuneration or not, in any manufacturing process, or in anyother kind or work incidental to, or connected with, the manufacturing process or the subject of the manufacturingprocess but does not include any member of the armed forces of the Union. [Section 2(1)]The definition contains following ingredients :(i) There should be an employed person(a) Meaning of the word employed: The concept of employment involves three ingredients, viz. employer,employee, and contract of employment. The employer is one who employs, i.e., one who engages the servicesof other persons. The employee is one who works for another for hire.

The employment is the contract of service between employer and employeewhereunder the employee agrees to serve the employer subject to his controland supervision. The prima facie test for determination of the relationshipbetween the employer and employee is the existence of the right of the employerto supervise and control the work done by the employee not only in the matterof directing what work the employee is to do but also the manner in which heshall do his work (Chintaman Rao v. State of M.P. AIR 1958 S.C. 388).

8 EP-IL&GLTherefore, supervision and control is the natural outcome when a person is employed by another person.Moreover, the employment referred to in the section is in connection with a manufacturing process that iscarried on in the factory which process normally calls for a large measure of coordination between varioussections inside a factory and between various individuals even within a section. The persons will have to beguided by those placed in supervisory capacity. A certain amount of control is thus necessarily present in sucha case.In Shankar Balaji Waje v. State of Maharashtra, AIR 1963 Bom. 236, the question arose whether bidi roller is aworker or not. The management simply says that the labourer is to produce bidies rolled in a certain form. Howthe labourer carried out the work is his own concern and is not controlled by the management, which is concernedonly with getting bidies rolled in a particular style with certain contents. The Supreme Court held that the bidiroller is not a worker. The whole conception of service does not fit in well with a servant who has full liberty toattend to his work according to his pleasure and not according to the orders of his master. Where the employerdid retain direction and control over the workers both in manner of the nature of the work as also its details theywill be held as workers.A day labourer, where there was no evidence to show that he was free to work for such period as he likes, freeto come and go whenever he chose and free to absent himself at his own sweet will, was held to be a worker.Similarly, women and girls employed in peeling, washing etc., of consignment of prawns brought on the premisesat any time of the day or night, without any specified hours of work and without any control over their attendanceor the nature, manner or quantum of their work and who after finishing the work go to other premises in thelocality where similar consignment of prawns are received, are not Workers (State of Kerala v. R.E.DSouza).(b) Whether relationship of master and servant necessary: The expression employed does not necessarilyinvolve the relationship of master and servant. There are conceivable cases in which where no such relationshipexists and yet such persons would be workers. The expression a person employed, according to Justice Vyas,means a person who is actually engaged or occupied in a manufacturing process, a person whose work isactually utilised in that process. The definition of worker is clearly enacted in terms of a person who is employedin and not in terms of person who is employed by. It is immaterial how or by whom he is employed so long as heis actually employed in a manufacturing process.(c) Piece-rate workersWhether workers:Piece-rate workers can be workers within the definition of workerin the Act, but they must be regular workers and not workers who come and work according to theirsweet will (Shankar Balaji Waje v. State of Maharashtra, AIR 1967 S.C. 517). In another case workmen hadto work at bidi factory when they liked. The payment was made on piece-rate according to the amount of workdone. Within the factory, they were free to work. But the control of the manner in which bidies were ready, by themethod of rejecting those which did not come up to the proper standards. In such a case it was exercised whichwas important (Birdhi Chand Sharma v. First Civil Judge, Nagpur, AIR 1961 SC 644). Therefore, whatevermethod may be adopted for the payment of wages , the important thing to see is whether the workers workunder supervision and control of the employer. It makes no difference whether the worker employed in themanufacturing process is paid time rate wages or piece rate wages.(d) The partners of a concern, even though they work on premises in the factory cannot be considered to beworkers within Section 2(1): (1958 (2) LLJ 252 SC).(e) An independent contractor: He is a person who is charged with work and has to produce a particular resultbut the manner in which the result is to achieved is left to him and as there is no control or supervision as to themanner in which he has to achieve the work, he is not a worker.(ii) Employment should be direct or through some agencyThe words directly or by or through any agency in the definition indicate that the employment is by the managementor by or through some kind of employment agency. In either case there is a contract of employment between the

Lesson 1 Factories Act, 1948 9management and the person employed. There should be a privity of contract between them and the management.Only such person can be classified as worker who works either directly or indirectly or through some agencyemployed for doing his works of any manufacturing process or cleaning, etc., with which the factory is concerned.It does not contemplate the case of a person who comes and that too without his intervention either directly, orindirectly, and does some work on the premises of factory.

Test your knowledgeState whether the following statement is True or FalsePiece-rate workers are considered workers as per the definition of Worker in theFactories Act, 1948.

True False

Correct answer: True

(iii) Employment should be in any manufacturing process etc.The definition of worker is fairly wide. It takes within its sweep not only persons employed in manufacturingprocess but also in cleaning any part of the machinery and premises used for manufacturing process. It goes farbeyond the direct connection with the manufacturing process by extending it to other kinds of work which mayeither be incidental to or connected with not only the manufacturing process itself but also the subject of themanufacturing process (Works Manager, Central Rly. Workshop Jhansi v. Vishwanath and others), the conceptof manufacturing process has already been discussed. The meaning of the expression employed in cleaningany part of machinery, etc. and employed in work incidental to..... process, are discussed below:(a) Employed in cleaning any part of machinery etc.: If a person is employed in cleaning any part of the machinerypremises which is used for manufacturing process, he will be held as worker.(b) Employed in work incidental to process: This clause is very important because it enlarges the scope of theterm, manufacturing process. Following illustrative cases will clarify the meaning of this clause:

(1) In Shinde v. Bombay Telephones, 1968 (11) LLJ 74, it was held that whether the workman standsoutside the factory premises or inside it, if his duties are connected with the business of the factory orconnected with the factory, he is really employed in the factory and in connection with the factory.

(2) InWorks Manager, Central Rly. Workshop Jhansi v. Vishwanath and others, it was held that the definitionof worker does not exclude those employees who are entrusted solely with clerical duties, if they otherwisefall within the definition of worker. Timekeepers employed to maintain attendance of the staff, job cardsparticularly of the various jobs under operation, and time- sheets of the staff engaged in production ofspare parts, repairs, etc.; and head time-keeper who supervise the work of the time-keepers, performwork which is incidental to or connected with the manufacturing process carried on in the factory andwould therefore, fall within the definition of the worker in the Act.

(3) Munim in a factory is a worker.(4) Workmen in canteen attached to a factory are employees.(5) A person employed by a gas manufacturing works as a coolie for excavating and digging trenches

outside the factory for laying pipes for transporting gas to consumers, cannot be held to be a worker(AIR 1961 Bomb. 184).

(6) Person employed to supply material to a mason engaged in construction of furnace will be deemed tobe employed by the factory to a work incidental to or connected with manufacturing process.

10 EP-IL&GL(7) In a soap-works, a carpenter preparing the packing cases is a worker because he might legitimately be

considered to be engaged in a kind of work incidental to or connected with the subject of the manufacturingprocess, viz., packaging of soap for being sent out for sale.

(8) In the case of Rohtas Industries Ltd. v. Ramlakhan Singh and others, A.I.R. 1971 SC 849, a person wasemployed in a paper factory. He was engaged in supervising and checking quality and weighment ofwaste papers and rags which are the basic raw material for the manufacture of paper. He used to dealwith receipts and maintain records of stock and pass the bill of the supplier of waste paper and rags. Heused to work in the precincts of the factory and in case of necessities had to work inside the factory. TheSupreme Court held that he was working in the factory premises or its precincts in connection with thework of the subject of the manufacturing process, namely the raw material.

(iv) Employment may be for remuneration or notA person who receives wages as remuneration for his services, a person who receives remuneration on piece-work basis, a person may be working as an apprentice, and a person who is a honorary worker, all come withinthe definition of a worker. Therefore to be a worker, it is immaterial whether a person is employed for wages orfor no wages.(v) Any member of the armed forces of the Union is excluded from the definition of worker(vi) Whether all employees are workers?Since the word employee has not been defined in the Act it follows that all the workers within the ambit of thedefinition under the Act would be employees, while all employees would not be workers (Harbanslal v. State ofKarnataka, (1976)1 Karnt.J.111). All persons employed in or in connection with a factory whether or not employedas workers are entitled to the benefits of the Act (Union of India v. G.M. Kokil, 1984 SCC (L&S) 631).Once it is established prima facie that premises in question is a factory within the meaning of the Act, theprovisions of Section 103 as to the presumption of employment are immediately attracted and onus to prove thecontrary shifts to the accused (Prafulbhai Patadia v. The State, 1976 (12) E.L.R. 329).OccupierSection 2(n) of the Act defines the term occupier as a person who has ultimate control over the affairs of thefactory:Provided that

(i) in the case of a firm or other association of individuals, any one of the individual partners or membersthereof shall be deemed to be the occupier;

(ii) in the case of a company, any one of the directors, shall be deemed to be the occupier;(iii) in the case of a factory owned or controlled by the Central Government or any State Government, or any

local authority, the person or persons appointed to manage the affairs of the factory by the CentralGovernment, the State Government or the local authority, as the case may be, shall be deemed to bethe occupier.

Provided further that in the case of a ship which is being repaired, or on which maintenance work is beingcarried out, in a dry dock which is available for hire

(1) the owner of the dock shall be deemed to be the occupier for the purposes of any matter provided for byor under (a) Sections 6, 7, 7A, 7B, 11 or 12; (b) Section 17 in so far as it relates to the providing themaintenance of sufficient and suitable lighting in or around the dock; (c) Sections 18, 19, 42, 46, 47 or49 in relation to the workers employed on such repair or maintenance;

(2) The owner of the ship or his agent or master or other officer-in-charge of the ship or any person who

Lesson 1 Factories Act, 1948 11contracts with such owner, agent or master or other officer-in-charge to carry out the repair or maintenancework shall be deemed to be occupier for the purposes of any matter provided for by or under Sections13, 14, 16 or 17 (save as otherwise provided in this proviso) or Chapter IV (except Section 27) orSections 43, 44, or 45, Chapter VI, VII, VIII or IX or Sections 108, 109 or 110, in relation to (a) theworkers employed directly by him, or by or through any agency, and (b) the machinery, plant or premisesin use for the purpose of carrying out such repair or maintenance work by such owner, agent, master orother officer-in-charge or person.

The important test whether a person is an occupier or not is the possession orvesting in of the ultimate control of the factory. The control should be an ultimateone, though it may be remote. There was a lot of controversy regardingOccupier in case of a company, as the Section 2(n)(ii), provides that any oneof the directors of the company shall be deemed to be occupier of the factory.However, the Supreme Court in the case of J.K. Industries Ltd. v.Chief Inspectorof Factories (1997) I-L.L.J. SC722, has held that only a member of Board of

Directors of the Company can be occupier of the factory of the Company. The ultimate control offactory owned by company vests in Board of Directors. Ultimate control which vests in Board ofDirectors cannot be vested in any one else. Company owing factory cannot nominate its employeesor officers except Director of the company as occupier of its factory.

Therefore an employee of company or factory cannot be occupier. Proviso (ii) to Section 2(n) does not travelbeyond scope of main provision and is not violative of Article 14 of Constitution of India. Proviso (ii) is not ultravires main provisions of Section 2(n). No conflict exists between main provisions of Section 2(n) and proviso (ii).Further, proviso (ii) to Section 2(n) read with Section 92, does not offend Article 21.Under Section 2(n)(iii), for the purpose of deciding who is an occupier of the factory, the test to be applied is whohas ultimate control over its affairs in a government company, in fact the ultimate control lies with governmentthough the company is separate legal entity by having right to manage its affairs. Persons appointed by centralgovernment to manage its affairs of factories (of government companies) were therefore deemed to be appointedas occupiers under the Act (IOC v. CIF, LLJ II SC 1998 604).Exemption of occupier or manager from liability in certain casesSection 101 provides exemptions from liability of occupier or manager. It permits an occupier or manager of afactory who is charged with an offence punishable under the Act to bring into the Court any other person whomhe charges actual offender and also proves to the satisfaction of the Court that:

(a) he has used due diligence to enforce the execution of this Act; and(b) that the offence in question was committed without his knowledge, consent or connivance, by the said

other person.The other person shall be convicted of the offence and shall be liable to the like punishment as if he were theoccupier or manager of the factory. In such a case occupier or manager of the factory is discharged from liability.The Section is an exception to principles of strict liability, but benefit of this would be available only when therequirements of this section are fully complied with and the court is fully satisfied about the proof of factscontemplated in (a) and (b) above.STATUTORY AGENCIES AND THEIR POWERS FOR ENFORCEMENT OF THE ACTThe State Governments assume the main responsibility for administration of the Act and its various provisionsby utilising the powers vested in them. Section 3 empowers the State Government to make rules for referencesto time of day where Indian Standard Time, being 5-1/2 hours ahead of Greenwich Mean-Time is not ordinarily

12 EP-IL&GLobserved. These rules may specify the area, define the local mean time ordinarily observed therein, and permitsuch time to be observed in all or any of the factories situated in the area.The State Government assumes power under Section 4 of the Act to declare different departments to be separatefactories or two or more factories to be single factory for the purposes of this Act. This power will be utilised bythe State Government either on its own or on an application made to it by the occupier. But no order could bemade on its own motion unless occupier is heard in this regard.In case of public emergency, Section 5 further empowers the State Government to exempt by notification anyfactory or class or description of factories from all or any of the provisions of this Act except Section 67 for suchperiod and subject to such conditions as it may think fit, however no such notification shall be made exceedinga period of three months at a time. Explanation to Section 5 defines public emergency as a situation wherebythe security of India or of any part of the territory thereof is threatened whether by war or external aggression orinternal disturbance.The State Governments carry out the administration of the Act through:

(i) Inspecting Staff(ii) Certifying Surgeons(iii) Welfare Officers(iv) Safety Officers.

(i) The Inspecting StaffAppointment: Section 8 empowers the State Government to appoint Inspectors, Additional Inspectors and ChiefInspectors, such persons who possess prescribed qualifications.Section 8(2) empowers the State Government to appoint any person to be a Chief Inspector. To assist him, thegovernment may appoint Additional, Joint or Deputy Chief Inspectors and such other officers as it thinks fit[Section 8(2A)].Every District Magistrate shall be an Inspector for his district.The State Government may appoint certain public officers, to be the Additional Inspectors for certain areasassigned to them [Section 8(5)].The appointment of Inspectors, Additional Inspectors and Chief Inspector can be made only by issuing a notificationin the Official Gazette.When in any area, there are more inspectors than one, the State Government may by notification in the OfficialGazette, declare the powers which such Inspectors shall respectively exercise and the Inspector to whom theprescribed notices are to be sent.Inspector appointed under the Act is an Inspector for all purposes of this Act. Assignment of local area to aninspector is within the discretion of the State Government.A Chief Inspector is appointed for the whole State. He shall in addition to the powers conferred on a ChiefInspector under this Act, exercise the powers of an Inspector throughout the State. Therefore, if a ChiefInspector files a complaint, the court can legally take congnizance of an offence. Even assignment of areasunder Section 8(6) does not militate in any way against the view that the Chief Inspector can file a complaintenabling the court to take congnizance. The Additional, Joint or Deputy Chief Inspectors or any other officerso appointed shall in addition to the powers of a Chief Inspector, exercise the powers of an Inspector throughoutthe State.

Lesson 1 Factories Act, 1948 13Test your knowledge

Which authorities carry out the administration of the Factories Act, 1948,under the supervision of the State Government?(a) Inspecting Staff(b) Certifying Surgeons(c) Labour Officers(d) Safety Officers

Correct answer: (a), (b) and (d)

Powers of InspectorsSection 9 describes the powers of the Inspectors subject to any rules made in this behalf for the purpose of theAct. An Inspector may exercise any of the following powers within the local limits for which he is appointed:

1. He can enter any place which is used or which, he has reasons to believe, is used as a factory.2. He can make examination of the premises, plant, machinery, article or substance. Inquire into any

accident or dangerous occurrence whether resulting in bodily injury, disability or not, and take on thespot or otherwise statements of any person which he may consider necessary for such inquiry.

3. Require the production of any prescribed register or any other document relating to the factory. Seize,or take copies of any register, record of other document or any portion thereof.

4. Take measurement and photographs and make such recordings as he considers necessary for thepurpose of any examination.

5. In case of any article or substance found in any premises, being an article or substance which appearsto him as having caused or is likely to cause danger to the health or safety of the workers, direct it tobe dismantled or subject it to any process or test (but not so as to damage or destroy it unless thesame is in the circumstances necessary, for carrying out the purposes of this Act) and take possessionof any such article or substance or a part thereof, and detain it for so long as is necessary for suchexamination.

Production of documentsThe Factories Act requires the maintenance of certain registers and records. Inspectors have been empoweredto ask for the production of any such documents maintained under law, and the non-compliance of this has beenmade an offence.(ii) Certifying SurgeonsSection 10 provides for the appointment of the Certifying Surgeons by the State Government for the purpose ofthis Act to perform such duties as given below within such local limits or for such factory or class or descriptionof factories as may be assigned to Certifying Surgeon:

(a) the examination and certification of young persons under this Act;(b) the examination of persons engaged in factories in such dangerous occupations or processes as may

be prescribed;(c) the exercising of such medical supervision as may be prescribed for any factory or class or description

of factories.

14 EP-IL&GL

(iii) Welfare OfficerSection 49 of the Act imposes statutory obligation upon the occupier of the factory of the appointment of WelfareOfficer/s wherein 500 or more workers are ordinarily employed. Duties, qualifications and conditions of servicemay be prescribed by the State Government.(iv) Safety OfficerSection 40-B empowers the State Government for directing a occupier of factory to employ such number ofSafety Officers as specified by it where more than 1,000 workers are employed or where manufacturing processinvolves risk of bodily injury, poisoning or disease or any other hazard to health of the persons employed therein.The duties, qualifications and working conditions may be prescribed by the State Government.APPROVAL, LICENSING AND REGISTRATION OF FACTORIESSection 6 empowers the State Government to make rules with regard to licensing and registration of factoriesunder the Act on following matters:

(i) submission of plans of any class or description of factories to the Chief Inspector or the StateGovernment;

(ii) obtaining previous permission of the State Government or the Chief Inspector, for the site on whichfactory is to be situated and for construction or extension of any factory or class or description of factories.However, replacement or addition of any plant or machinery within prescribed limits, shall not amount toextension of the factory, if it does not reduce the minimum safe working space or adversely affect theenvironmental conditions which is injurious to health;

(iii) considering applications for permission for the submission of plans and specifications;(iv) nature of plans and specifications and the authority certifying them;(v) registration and licensing of factories;(vi) fees payable for registration and licensing and for the renewal of licences;(vii) licence not to be granted or renewed unless notice specified under Section 7 has been given.

Automatic approvalIf an application is made for the approval of site for construction or extension of the factory and required plansand specifications have been submitted by registered post to the State Government or the Chief Inspector andif no reply is received within three months from the date on which it is sent the application stands automaticallyapproved [Section 6(2)]. Where the rules require the licensing authority to issue a licence on satisfaction of alllegal requirements/record reasons for refusal. Licence could not be refused only on a direction from Government(S. Kunju v. Kerala, (1985) 2 LLJ 106).Appeal against refusal to grant permissionIf the State Government or Chief Inspector do not grant permission to the site, construction or extension of afactory, or to the registration and licensing of a factory, the applicant may within 30 days of the date of suchrefusal appeal to:

(i) the Central Government against the order of the State Government;(ii) the State Government against the order of any other authority.

Lesson 1 Factories Act, 1948 15Test your knowledge

Choose the correct answerWhat is the minimum number of workers required in a factory for the mandatoryappointment of a Safety Officer?(a) More than 100(b) More than 500(c) Less than 750(d) More than 1,000

Correct answer: (d)

NOTICE BY OCCUPIERSection 7 imposes an obligation on the occupier of a factory to send a written notice, containing prescribedparticulars, to the Chief Inspector at least 15 days before an occupier begins to occupy or use a premises as afactory and at least 30 days before the date of resumption of work in case of seasonal factories, i.e. factoriesworking for less than 180 days in a year.Contents of noticeA notice must contain following particulars:

(1) The name and situation of the factory.(2) The name and address of the occupier.(3) The name and address of the owner of the premises or building (including the precincts, etc., thereof

referred to in Section 93).(4) The address at which communication relating to the factory should be sent.(5) The nature of manufacturing process to be carried on in the factory during next 12 months.(6) The total rated horse power installed or to be installed in the factory which shall not include the rated

horse power of any separate standby plant.(7) The name of the Manager of the factory for the purpose of this Act.(8) the number of workers likely to be employed in the factory.(9) Such other particulars as may be prescribed.

Notice where new manager is appointedWhenever a new manager is appointed, the occupier shall send to the Inspector a written notice and to the ChiefInspector a copy thereof, within seven days from the date on which such person takes over charge.When there is no manager occupier deemed as managerDuring a period for which no person has been designated as Manager of a factory or during which the persondesignated does not manage the factory any person found acting as manager, will be the manager for thepurposes of the Act. Where no such person is found the occupier should be deemed to be the manager of thefactory.

16 EP-IL&GL

GENERAL DUTIES OF THE OCCUPIERSection 7A is inserted by the Factories (Amendment) Act, 1987, as under:(1) Every occupier shall ensure, so far as is reasonably practicable, the health, safety and welfare of all workerswhile they are at work in the factory.(2) Without prejudice to the generality of the provisions of Sub-section (1) the matters to which such dutyextends shall include:

(a) The provision and maintenance of plant and systems of work in the factory that are safe and withoutrisks to health;

(b) the arrangement in the factory for ensuring safety and absence of risks to health in connection with theuse, handling, storage and transport of articles and substances;

(c) the provisions of such information, instruction, training and supervision as are necessary to ensure thehealth and safety of all workers at work;

(d) the maintenance of all places of work in the factory in a condition that is safe and without risks to healthand provisions and maintenance of such means of access to, and egress from, such places as are safeand without such risks;

(e) the provision, maintenance or monitoring of such working environment in the factory for the workers thatis safe, without risks to health and adequate as regards facilities and arrangements for their welfare atwork.

(3) Except in such cases as may be prescribed, every occupier shall prepare, and as often as may beappropriate revise, a written statement of his general policy with respect to the health and safety of theworkers at work and organisation and arrangements for the time being in force for carrying out that policy, andto bring the statement and any revision thereof to the notice of all the workers in such manner as may beprescribed.

Test your knowledgeChoose the correct answer:To which authority can appeals be made if the Chief Inspector does not grant alicense to a factory?(a) State Government(b) Central Government(c) State Licensing Appellate(d) Factories Commissioner

Correct answer: (a)

GENERAL DUTIES OF MANUFACTURERS ETC.Section 7B provides that every person who designs, manufactures, imports or supplies any article (includingplant and machinery) or use in any factory, shall observe the following:

(a) ensure, that the article is so designed and constructed as to be safe and without risks to the health of theworkers when properly used;

Lesson 1 Factories Act, 1948 17(b) carry out such tests and examination as may be considered necessary for the effective implementation

of the provisions of clause (a);(c) take such steps as may be necessary to ensure that adequate information will be available:

(i) in connection with the use of the article in any factory;(ii) about the use for which it is designed and tested; and(iii) about any condition necessary to ensure that the article, when put to such use, will be safe, and

without risks to the health of the workers.The Section further provides that where an article is designed or manufactured outside India, it shall be obligatoryon the part of the importer to see:

(a) that the article (including plant and machinery) conforms to the same standards if such article ismanufactured in India, or

(b) if the standards adopted in the country outside for the manufacture of such article is above the standardsadopted in India, that the article conforms to such standards.

For the above purpose, the concerned person may carry out or arrange for the carrying out of necessaryresearch with a view to the discovery and so far as is reasonably practicable, the elimination or minimisation ofany risk to the health or safety of workers to which design or article (including plant and machinery) may giverise.The section further provides that if research, testing, etc. has already been exercised or carried out, then nosuch research is required again.The above duties relate only to things done in the course of the business carried out by him, and to matterswithin his control.However, the person may get relief from the exercise of above duties if he gets an undertaking in writing by theuser of such article to take necessary steps that the article will be safe and without risk to the health of the workers.MEASURES TO BE TAKEN BY FACTORIES FOR HEALTH, SAFETY AND WELFARE OFWORKERSSuch measures are provided under Chapters III, IV and V of the Act which are as follows:A. HEALTHChapter III of the Act deals with the following aspects.(i) CleanlinessSection 11 ensures the cleanliness in the factory. It must be seen that a factory is kept clean and it is freefrom effluvia arising from any drain, privy or other nuisance. The Act has laid down following provisions in thisrespect :(1) All the accumulated dirt and refuse on floors, staircases and passages in the factory shall be removed dailyby sweeping or by any other effective method. Suitable arrangements should also be made for the disposal ofsuch dirt or refuse.(2) Once in every week, the floor should be thoroughly cleaned by washing with disinfectant or by some othereffective method [Section 11(1)(b)].(3) Effective method of drainage shall be made and maintained for removing water, to the extent possible, whichmay collect on the floor due to some manufacturing process.

18 EP-IL&GL(4) To ensure that interior walls and roofs, etc. are kept clean, it is laid down that:

(i) white wash or colour wash should be carried at least once in every period of 14 months;(ii) where surface has been painted or varnished, repair or revarnish should be carried out once in every

five years, if washable then once in every period of six months;(iii) where they are painted or varnished or where they have smooth impervious surface, it should be cleaned

once in every period of 14 months by such method as may be prescribed.(5) All doors, windows and other framework which are of wooden or metallic shall be kept painted or varnishedat least once in every period of five years.(6) The dates on which such processes are carried out shall be entered in the prescribed register.If the State Government finds that a particular factory cannot comply with the above requirements due to itsnature of manufacturing process, it may exempt the factory from the compliance of these provisions and suggestsome alternative method for keeping the factory clean. [Section 11(2)](ii) Disposal of waste and effluentsEvery occupier of a factory shall make effective arrangements for the treatment of wastes and effluents due tothe manufacturing process carried on in the factory so as to render them innocuous and for their disposal. Sucharrangements should be in accordance with the rules, if any, laid down by the State Government. If the StateGovernment has not laid down any rules in this respect, arrangements made by the occupier should be approvedby the prescribed authority if required by the State Government. (Section 12)(iii) Ventilation and temperatureSection 13 provides that every factory should make suitable and effective provisions for securing and maintaining(1) adequate ventilation by the circulation of fresh air; and (2) such a temperature as will secure to the workersreasonable conditions of comfort and prevent injury to health. What is reasonable temperature depends uponthe circumstances of each case. The State Government has been empowered to lay down the standard ofadequate ventilation and reasonable temperature for any factory or class or description of factories or partsthereof. It may direct that proper measuring instruments at such places and in such position as may be specifiedshall be provided and prescribed records shall be maintained.Measures to reduce excessively high temperature: To prevent excessive heating of any workroom followingmeasures shall be adopted:(i) Walls and roofs shall be of such materials and so designed that reasonable temperature does not exceed butkept as low as possible.(ii) Where the nature of work carried on in the factory generates excessively high temperature, following measuresshould be adopted to protect the workers:

(a) by separating such process from the workroom; or(b) insulating the hot parts; or(c) adopting any other effective method which will protect the workers.

The Chief Inspector is empowered to direct any factory to adopt such methods which will reduce the excessively hightemperature. In this regard, he can specify the measures which in his opinion should be adopted. (Section 13)(iv) Dust and fumeThere are certain manufacturing processes like chemical, textile or jute, etc., which generates lot of dust, fumeor other impurities. It is injurious to the health of workers employed in such manufacturing process.

Lesson 1 Factories Act, 1948 19Following measures should be adopted in this respect:

(1) Effective measures should be taken to prevent the inhalation and accumulation of dust, fumes etc., inthe work-rooms.

(2) Wherever necessary, an exhaust appliances should be fitted, as far as possible, to the point of origin ofdust fumes or other impurities. Such point shall also be enclosed as far as possible.

(3) In stationery internal combustion engine and exhaust should be connected into the open air.(4) In cases of other internal combustion engine, effective measures should be taken to prevent the

accumulation of fumes therefrom. (Section 14)It may be pointed that the evidence of actual injury to health is not necessary. If the dust or fume by reason ofmanufacturing process is given off in such quantity that it is injurious or offensive to the health of the workersemployed therein, the offence is committed under this Section.Lastly the offence committed is a continuing offence. If it is an offence on a particular date is does not cease tobe an offence on the next day and so on until the deficiency is rectified.(v) Artificial humidificationHumidity means the presence of moisture in the air. In certain industries like cotton, textile, cigarette, etc., higherdegree of humidity is required for carrying out the manufacturing process. For this purpose, humidity of the air isartificially increased. This increase or decrease in humidity adversely affects the health of workers.Section 15(1) empowers the State Government to make rules (i) prescribing the standards of humidification, (ii)regulating methods to be adopted for artificially increasing the humidity of the air, (iii) directing prescribed testsfor determining the humidity of the air to be correctly carried out, and recorded, and (iv) prescribing methods tobe adopted for securing adequate ventilation and cooling of the air in the work-room.Section 15(2) lays down that water used for artificial humidification should be either purified before use orobtained from a public supply or other source of drinking water.Where the water is not purified as stated above. Section 15(3) empowers the Inspector to order, in writing, themanager of the factory to carry out specified measures, before a specified date, for purification of the water.(vi) OvercrowdingOvercrowding in the work-room not only affect the workers in their efficient discharge of duties but their health also.Section 16 has been enacted with a view to provide sufficient air space to the workers.

(1) Section 16(1) prohibits the overcrowding in the work-rooms to the extent it is injurious to the health ofthe workers.

(2) Apart from this general prohibition Section 16(2) lays down minimum working space for each worker as14.2 cubic metres of space per worker in every workroom.

For calculating the work area, the space more than 4.2 metres above the level of the floor, will not be taken intoconsideration.Posting of notice: Section 16(3) empowers the Chief Inspector who may direct in writing the display of a noticein the work-room, specifying the maximum number of workers which can be employed in that room. Accordingto Section 108, notice should be in English and in a language understood by the majority of the workers. Itshould be displayed at some conspicuous and convenient place at or near, the enterance. It should be maintainedin clean and legible conditions.Exemptions : The chief Inspector may by order in writing, exempt any work-room from the provisions of thissection, subject to such conditions as he may think fit to impose, if he is satisfied that non-compliance of suchprovision will have no adverse effect on the health of the workers employed in such work-room.

20 EP-IL&GL(vii) LightingSection 17 of the Factories Act makes following provisions in this respect:

(1) every factory must provide and maintain sufficient and suitable lighting, natural, artificial or both, inevery part of the factory where workers are working or passing;

(2) all the glazed windows and sky lights should be kept clean on both sides;(3) effective provisions should be made for the prevention of glare from a source of light or by reflection

from a smooth or polished surface;(4) formation of shadows to such an extent causing eye-strain or the risk of accident to any worker, should

be prevented; and(5) the state government is empowered to lay down standard of sufficient and suitable lighting for factories

for any class or description of factories or for any manufacturing process.(viii) Drinking waterSection 18 makes following provisions with regard to drinking water.

(1) every factory should make effective arrangements for sufficient supply of drinking water for all workersin the factory;