Factories Act, 1948 – CMA Inter Law and Ethics Study Material

Factories Act, 1948 – CMA Inter Business Laws and Ethics Study Material is designed strictly as per the latest syllabus and exam pattern.

Factories Act, 1948 – CMA Inter Law and Ethics Study Material

Short Notes

Question 1.
Write short note on the following term:
Cleanliness of factory (Dec 2017, 5 marks)
Answer:
Section 11 of the Act provides every factory shall be kept clean and free from effluvia arising from any drain, privy or other nuisance, and in particular-

• removal of accumulated dirt and refuse on floors, benches of workroom, stair cases and passages and effective disposal of the same;
• cleaning of the floor of every workroom – once in every week by washing with disinfectant or by some other effective method;
• providing effective drainage for removing water to the extent possible;
• to ensure that interior walls and roofs etc., are kept clean the following is to be complied with whitewash or colour wash should be carried out at least once in every period of 14 months;
• where surface has been painted or varnished, repair or re-varnish should be carried out once in every five years, if washable then once in every period of six months;
• where they are painted or varnished or where they have smooth impervious surfaces, it should be cleaned once in every period of 14 months by such method as may be prescribed.
• all doors, windows and other frameworks which are of wooden or metallic shall be kept painted or varnished at least once in every period of five years,
• The dates on which such processes are carried out shall be entered in the prescribed register.

Question 2.
Write short note on out of the following term:
Manufacturing process under the Factories Act 1948. (June 2018, 5 marks)
Answer:
manufacturing process under the Factories Act, 1948:“Manufacturing Process” means Process for:

• Making, altering, repairing, oiling, washing, cleaning, ornamenting, finishing, packiñg, breaking up, or otherwise treating or adapting any article or substance with a view to its use, sale transport, delivery or disposal, or
• Pumping oil, water, sewage or any other substance or,
• Generating, transforming or transmitting, power, or
• Composing types for printing the letterpress, lithography, photographing, or other similar process or book binding, or
• Constructing, reconstructing, repairing, refitting, or breaking up of ships or vessels; or
• Preserving or Storing any articles in cold storage;

In this regard it becomes necessary to discuss some special circumstances that came up in some court cases:
1. Preparation of food with aid of various electrical appliances in kitchen of a hotel is a manufacturing process: As decided in the case of “Poona Industrial Hotel vs. IC. Sarin, 1980, Lab l.C. 100.

2. Selling of petrol or diesel by a petrol dealer or repairing of motor vehicle will not come within the term “manufacturing process, as noted in the case of: “National Service Centre and Petrol Pump Vs. E.S.I Corporation, 1983 lab I.C. 412 (P. & H.).

3. The work of mere packing cannot be catled as a manufacturing process; (ref. A.l.R. 1955 NUC 27101.

4. The business of sale of diesel oil, motor spirit, lubricant, servicing of cars and lorries, repairing vehicles, and charging batteries with the aid of power, by employing more than 20 workers /labourers amount to manufacturing process, as noted in the case of ‘’Baranagar Service Station Vs. E.S.I Corporation (1987) 1 L.L.N 912 (Cal.) (Divisional Bench). & Lab I.C. 302.

5. Decorticating groundnuts in electric mill is a manufacturing process (A.I.R. 1959 Madras 30).

6. Breaking up of boulders is a manufacturing process – as decided in case of “Larsen & Toubro Vs. State of Crissa, 1992 Lab IC. 1513 (Crissa Divisional Bench).

7. Transportation of goods on contract basis from one place to another by road with the assistance of transport carriers is not a manufacturing process as decided in the case of Regional Director, E.SI.C Vs. Jaihind Roadways, Bangalore (2001 ),1 L.L.J 1187 (Kamataka).

8. Reading the definition of ‘Manufacturing Process’ in the light of Supreme Court in ‘Workmen”, Delhi Electricity Supply Undertaking Vs. management, (1974) 3 S.C.C. 108, the word ‘or’ ¡n Section 2(k) (iii) must be read as ‘and’.

Question 3.
Write short flotes on the following terms:
(d) Annual Leave under the Factories Act, 1948 (June 2019, 5 marks)
Answer:
Annual leave:
Section 79 of The Factories Act, 1948 Provides that every worker who has worked for a period 240 days or more in a factory during a calendar year shall be allowed leave with wages for a number lays calculated at the rate of-

• if an adult, one day for every 20 days of work performed by him during the previous calendar rear
• if a child, one day for every 15 days of work performed by him during the previous calendar year
• The following shall be deemed to be days on which the worker has worked for the purpose of computation of the period off 240 days or more-
• any days of layoff, by agreement or contract or as permissible under the standing orders
• in the case of a female worker, maternity leave for any number of days not exceeding 12 weeks and the leave earned
• In the year prior to that in which the leave is enjoyed.

But the above shall not be entitled for a worker to earn leave. The leave admissible shall be exclusive of all holidays whether occurring during or at either end of the period of leave.
In calculating the leave fraction of leave of half a day or more shall be treated as one full day leave and fraction of less than half a day shall be omitted.

Question 4.
Write Short Notes on Hazardous Process. (Dec 2021, 3 marks)
Answer:
Hazardous Process
Section 2 (CB) of the Factories Act, 1948 defines the expression ‘hazardous process’ as any process or activity in relation to an industry specified in the First Schedule where, unless special care is taken, raw materials used therein orthe intermediate or finished products, bye products, wastes, or effluents thereof would

• Cause material impairment to the health of the persons engaged in or connected therewith, or
• Result in the pollution of the general environment.
• The State Government may, by notification in the Official Gazette, amend the First Schedule by way of addition, omission or variation of any industry, specified in the said Schedule.

Descriptive Questions

Question 5.
(c) Are there any provisions in the Factories Act for protection of eyes of Workmen? (Dec 2012, 2 marks)
(e) (i) Who is ‘Occupier’ (Factories Act)
(ii) State the Duty of the Occupier when a new manager is appointed in the factory. (Dec 2012,2 + 2 = 4 marks)
Answer:
(c) Yes, State Govt. by rules require that effective screens or suitable goggles shall be provided for the protection of eyes of persons employed on or in the immediate vicinity of manufacturing process which involves:

1. Risk of injury to the eyes from particles or fragments thrown off in the course of process or
2. Risk to the eyes by reason of exposure to excessive light.

(e)

• Occupier has been defined in the Factories Act in Section 2(n) as the person who has ultimate control over the affairs of the factory.
• It is also stated further that in case of firm or other association of individuals, any one of the partners or members thereof shall be deemed to be the ‘occupier’.

The Section 2 further states that in case of a company, any of the directors shall be deemed to be the occupier’. The Supreme Court resolved in JK Industries vs Chief Inspector of Factories in 1997 that only a member of Board of Directors of the company can be a occupier’ of the factory of the company. The ultimate control of the factory vests with the BOD of the company and not on anyone else.

Any company which owns a factory cannot nominate its employee or its officer except the director of the company as the occupier of its factory.

(ii) When the new manager is appointed, it is the duty of the occupier to inform the inspector and chief inspector in writing regarding the appointment within seven days of the appointment.

Question 6.
Comment on the following based on legal provisions:
Factories Act, 1948 is applicable to all the factories wherein 50 or more workers are working. (June 2013, 2 marks)
Answer:
Factories Act, 1948 is applicable to factory which is defined as: Factory:
means any premises including its precincts (means zone, sector, ground, division, area. Precinct means any area enclosed by wall.)
where

• Ten or more workers are working or were working on any day ot the preceding twelve months, in a manufacturing process which is carried on with the help of power Or
• twenty or more workers are working or were working in any day of the preceding twelve months, in a manufacturing process which is carried on without the help of power.

Question 7.
As per Factories Act, adequate shelters, rest rooms, and lunch rooms are mandatory in all the factories. Do you agree? Give correct answer. (June 2013, 2 marks)
Answer:
The occupier is required to provide suitable shelters or rest rooms and a suitable lunch rooms with provision of drinking water, in his factory if more than one hundred and fifty workers are ordinarily employed in it.

Question 8.
Does a laundry attached to the hospital (main Institution) used for washing linen used in the hospital is factory within the meaning of the Factories Act, 1948? (June 2014, 3 marks)
Answer:
When hospital is not a factory, it is obvious that any department of hospital cannot be treated as factory.
In Dr. PSS Sundar Rao, GS y Inspect or of Factories Vellore 1984 LLJ 237 Mad, the question was whether a laundry attached to the Christian Medical College and Hospital, Vellore is Factory within the meaning of this Act.
The Madras High Court held that the laundry run by the hospital cannot be separated from the main Institution. In order to ensure high degree of hygienic standard the Hospital is having its own laundry for washing the linen used in the hospital.

Therefore, laundry is only subsidiary, minor or incidental establishment of the hospital which is not a factory.

One department of the Hospital established for the efficient functioning of the Hospital cannot be therefore be disjoined from the main Institution and termed to be a factory.

The paramount or the primary character of the main Institution alone has to be taken into consideration and when the main Institution is not a factory; a department thereof cannot become so, even though a manufacturing process is carried on there.

Question 9.
Answer the question:
(iii) Explain the right of workers to warn about imminent danger under the Factories Act, 1948. (June 2015, 3 marks)
Answer:
As per Section 41 H of the Factories Act, 1948, it is the right of workers to warn about imminent danger
1. Where the workers employed in any factory engaged in a hazardous process have reasonable apprehension that there is a likelihood of imminent danger to their lives or health due to any accident, they may bring the same to the notice of the occupier, agent, manager or any other person who is in charge of the factory or the process concerned directly or through their representatives in the safety committee and simultaneously bring the same to the notice of the Inspector.

2. It shall be the duty of such occupier, agent, manager or the person in-charge of the factory or process to take immediate remedial action if he is satisfied about the existence of such imminent danger and send a report forthwith the action taken to the nearest Inspector.

3. If the occupier, agent manager or the person in charge referred to in sub-section (2) is not satisfied about th existence of any imminent danger as apprehended by the workers, he shall, nevertheless, refer the matter forthwith to the nearest Inspector whose decision on the question of the existence of such imminent danger shall be final.

Question 10.
Answer the question:
Employees of an electricity generation station claimed that their unit is covered under the definition of ‘factor considering the process of transforming and transmission of electricity generated at the power station as a ‘manufacturing process’. Will their claim succeed under Factories Act, 1948. (Dec 2016, 6 marks)
Answer:
As per Section 2(k) of the Factories Act, 1948, manufacturing process means any process for:

• Making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to Its use, sale, transport, delivery or disposal, or
• Pumping oil, water, sewage or any other substance; or;
• Generating, transforming or transmitting power; or
• Composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding;
• Constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels;
• Preserving or storing any article in cold storage; Process is undertaken at electricity generating station, Sub-station is transferring and transmitting electricity is not a manufacturing process and are not thus factory- [Delhi Electricity Supply Undertaking vs. Management of DESU, AIR(1973)SCC 365].

Question 11.
What are the responsibilities of an occupier in a factory? (June 2017, 5 marks)
Anew:
Responsibility of the occupier.
The occupier has to follow the procedure:

• to lay down a detailed policy with respect to the health and safety of the workers;
• to disclose all the information regarding dangers including health hazards and the measures to overcome such hazards arising from the exposure to or handling of the materials or substances in the manufacture, transportation, storage and other processes to the workers employed in the factory;
• to draw up an onsite emergency plan and detailed disaster control measures for the factory and make known to the workers and to the general public long in the vicinity of the factory, the safety measures required to be taken in the event of accident taking place.
• to lay down measures for the handling usage, transportation, and storage of hazardous substances inside the factory premises and the disposal of such substances outside the factory premises and publicize them in the manner prescribed among the workers and the general public living in the vicinity.

Section 41 C provides that the occupier is having specific responsibilities in relation to hazardous processes. He has to maintain the health records of the employees. He is to appoint experienced persons who possess specified qualifications in handling hazardous substances and competent to supervise such handling within the factory.

Question 12.
Critically examine the duties of certified surgeons under the Factories Act, 1948. (June 2018, 8 marks)
Answer:
Section 10 under the Factories Act, 1948 provides that the State Government may appoint qualified medical practitioners to be certifying surgeons for the purposes of this Act within such local limits or for such factory or class or description of factories as it may assign to them respectively. The duties of certified surgeons are as follows-

• the examination and certification of young persons;
• the examination of person engaged in factories in such dangerous occupations or processes as may be prescribed;
• the exercising of such medical supervision as may be prescribed for any factory or class or description of factories, where –

cases of illness have occurred which it is reasonable to believe are due to the nature of the manufacturing process carried on, or other conditions of work prevailing, therein;

by reason of any change in the manufacturing process carried on or in the substances used therein or by reason of the adoption of any new manufacturing process or of any new substance for use in a manufacturing process, there is a likelihood of injury to the health of workers employed in that manufacturing process;
young persons are, or are about to be, employed in any work which is likely to cause injury to their health.

Question 13.
Discuss the welfare measures to be taken in a factory for the workmen employed therein as per the Factories Act, 1948. (Dec 2019, 8 marks)
Answer:
The following are the welfare measures prescribed in the Factories Act, 1948 to be provided by the factory to their workmen:
1. Washing facilities
As per Section 42 provides that in every factory adequate and suitable facilities for washing shall be provided and maintained for the use of the workers. Separate and adequately screened facilities shall be provided for the use of male and female workers.

2. Facilities for storing and drying clothing
Section 43 provides that the State Government may, in respect of any factory or class or description of factories, make rules requiring the provision therein of suitable places for keeping clothing not worn during working hours and for the drying of wet clothing.

3. Facilities for sitting
Section 44 provides that suitable arrangements for sitting shall be provided and maintained for all workers obliged to work in a standing position, in order that they make take advantage of any opportunities for rest which may occur in the course of their work.

4. First aid appliances
Section 45 provides that first aid appliances shall be provided and maintained so as to be readily accessible during all working hours or cupboards equipped with the prescribed contents and the number of such boxes or cupboards to be provided and maintained shall not be less than for every 150 workers at any one time in the factory.

5. Canteens
Section 46 provides that if more than 250 workers are employed in a factory a canteen or canteens shall be provided and maintained by the occupier for the user of the workers. The items of expenditure in the running of the canteen which are not to be taken into account in fixing the cost of foodstuffs shall be borne by the employer.

6. Shelters, rest rooms, and lunch rooms
Section 47 provides that if more than 150 workers are employed adequate and suitable shelters or rest rooms and a suitable lunch room with provision for drinking water shall be provided and maintained for the use of the workers.

7. Creches
Section 48 provides that if more than 30 women workers are employed there shall be provided and maintained a suitable room for the use of children under the age of 6 years of such women. The same shall be adequately ventilated and shall be maintained in clean and sanitary conditions and under the charge of women trained in the care of children and infants.

8. Welfare Officers
Section 49 provides that if 500 or more than workers are employed in a factory, the occupier shall employ in the factory such number of welfare officers as may be prescribed.

Question 14.
Discuss the different powers that can be exercised by an inspector under the Factories Act. (Dec 2021, 7 marks)
Answer:
As per section 8 of the Factories Act, 1948 provides that the government may appoint a person possessing the prescribed qualifications to be inspector for the purpose of this Act and may also assign local limits as may be think fit by the said government.
As per Section 9 of the Factories Act, 1948 the following powers can be exercised by the inspector:

• He may enter to any place which is used, or which has reason to believe is used as a factory,
• He can examine the premises, plant, machinery, article or substance,
• He may inquire into any accident or dangerous occurrence whether resulting in bodily injury, disability or not take on the spot statements of any person which he may consider necessary for such inquiry,
• He can require the production of any document relating to factory,
• He may seize or take copies of any register, record or other documents of any portion thereof as he may consider necessary,
• He can take possession of any article or substance or part thereof and detain it for so long as is necessary for suct examination
• He can exercise any such other powers as may be prescribed.

Question 15.
Discuss the powers of an inspector appointed by the State Government as prescribed in the Factories Act, 1948. (Dec 2022, 9 marks)

Practical Questions

Question 16.
Answer the question:
ABC Ltd. carrying manufacturing activities with aid of power and with eight workers for last two years ending on 31.03.2014. Three more workers were appointed on 01.04.2014, two workmen left the company on 30.04.2014. Thereafter no workman was employed nor any workmen left. Mr. Basant, one of the workmen demanded that Factories Act, 1948 shall be applicable to this company but the management denied. Give your opinion. (Dec 2015,3 marks)
Answer:
According to Sec. 2 (m) of the Factories Act, 1948, ‘factory’ means any premises including the precincts thereof:

• Where in 10 or more workers are working or were working on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or
• Where in 20 or more workers are working or were working on. any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on. In the given case, during the period 01.04.2014 to 30.04.2014, there were 11 workers carrying manufacturing activities with aid of power. So, the Factories Act, 1948 is applicable on ABC Ltd. Mr. Basant is correct.

Repeatedly Asked Questions
Question	Frequency
1. Discuss the powers of an inspector appointed by the State Government as prescribed in the Factories Act, 1948. 21 – Dec, 22 – Dec	2 Times

Factories Act, 1948 CMA Inter Law, and Ethics Notes

1. Objective and Scope of Factories Act, 1948

• An Act to consolidate and amend the laws regulating labour an factories.
• Applies to whole of India including Jammu & Kashmir.
• Objective of the Act is to ensure safety measures and promote health and welfare of factory workers.

2. What is Factory as per the Act

• Factory includes any premises including the precincts thereof, where or 10 or more workers are working for any of the day in the preceding 1 months to carry any manufacturing process with the aid of power OR 20 or more in case the manufacturing process is carried without power.
• Excludes mines, unit of armed forces, railway running shed, hotel, restaurants or eating places.
  Premises including precincts enlarges the scope.
• Factory includes all the length of railway line, company engaged in construction of railway line.
• Open land engaged in the conversion of seawater into crystals of salt will be regarded as Factory.
• Seasonal factories like sugarcane etc. will continue to remain as factory during the off-season.

3. What is manufacturing process as per the Act
The term manufacturing process mean’s any process for

• Making, altering, repairing, oiling, ornamenting, fishing, packing, washing, clearing, breaking, demolishing or otherwise treating any article with a view to use, for sale, disposal or delivery;
• Generating, transforming, transmitting powers
• Pumping oil, water or sewage
• Printing, composing types for printing or bookbinding
• Repairing, constructing, fishing, etc of vessels or ships
• Preserving or storing in cold storage.

Includes the following:

• Laundry
• Carpet beating
• Process involved for pumping water
• Stitching bags
• Conversion of latex into rubber
• Conversion of seawater into salt
• Tracing and adapting on raw film
• Packing and packaging into smaller units
• Processes like moistening, stripping, breaking up, adaption, and packing of tobacco for use in manufacture of cigarettes

Excludes the following:

• Transforming and transmitting electricity
• Training Institute
• Exhibition of film

4. What is worker as per Factories Act, 1948 As per Sec. 2(1) of Factories Act, 1948, the definition of worker has following ingredients:
Person should be employed:

• There should exist an employer-employee relationship
• Employers not just to control what work to be done but also the manner in which the same shall be done.
• Relationship of master and servant not necessary.
• Piece-rated workers who work on regular basis shall be treated as ‘workers’.
• Partner or independent contractor cannot be regarded as worker.

Employment to be direct or through some agency:

• Employment should be directly by the management or through employment agency.
• There should exist a privity of contract.

Employment should be in some manufacturing process:
Includes in its purview people directly involved in manufacturing process but also incidental to manufacturing process.

Includes:

• People working in canteen
• Munim in a factory.

Employment may be for remuneration or not

• Includes
• Apprentice
• Honorary worker
• Person employed on price work basis
• Person employed for no wages.

5. Enforcement of Factories Act, 1948
State Government is responsible for enforcement of the Act.
State Government carries administration of the Act through:

• Inspecting Staff
• Certifying Surgeons
• Welfare Officers
• Safety Officers
• Welfare officer to be appointed wherein 500 or more workers are employed
• Safety officer to be appointed wherein 1000 or more workers are employed

6. Occupier & his Role under the Factories Act, 1948
Occupier as per Section 2(n) means a person who has the ultimate control over the affairs of the factory. Occupier of the factory needs to give a notice to Chief Inspector:

• 30 days before date of resumption of seasonal factories
• 15 days before date of use of premises by occupier

Where new manager is appointed, occupier to intimate within:
7 days of appointment

Contents of Notice:

• Name and address of factory
• Name and address of occupier
• Name and address of owner
• Name of manager
• Address of communication
• Number of Workers
• Nature of manufacturing work
• Total power installed

Occupiers should ensure worker’s:

• Health
• Safety and
• Welfare
• He should make a written statement of the policy adopted by him with respect to the aforesaid points (health, etc.) and even make the workers aware about the same.

He shall provide:

• Proper maintenance of the plants so as to ensure that they are safe.
• Safety arrangement with regards to use, handling, and transportation of substances.
• Training and supervision.
• Safe access to all places of work in the factory.
• Adequate facilities and arrangements for welfare of the workers in the factory.

7. Working hours as per Factories Act, 1948

• Adult worker to work for 48 hours a week.
• Cannot be made to work for more than 9 hours a day.
• In case of work exceeding 9 hours, overtime at twice the normal rate needs to be given.
• Needs to be given at least half an hour break after continuous 5 hours of work.
• There shall be one holiday every week.
• No adult worker shall work for consecutively 10 days.
• Child who has not completed 14 years of age shall not be employed in factory.
• Where a worker has worked for 240 days, adult worker shall be entitled to leave for 20 days.