State of Maharashtra v. Jamnabhai Purshottam Assar
Hidayatullah, J. The State of Maharashtra appeals against
the .iudgment and order of the High Court of Bombay dated
November 8, 1963 by which the High Court set aside the convic
tion of one Purshottamdas Ranchhoddas (since deceased and
repr~ented by his widow) and the fine imposed on him, under
s. 92 of the Factories Act, 1948 read with r. 3-A of the Bombay
Factories Rules, 1950. Only one question arises in this appeal
and it is the true construction of s. 85 of the Factories Act on
which different views have been expressed by the High Court and
the Court below.
Purshottamdas Ranchhoddas was a lessee from the Port Trust
Bombay of an open plot of land. He established a factory called
the Sunderdas Saw Mills. He closed down the factory on April 1.
1957. In July 1957, the ex-workers of the factory combined
together to form five partnerships and by agreements of leave and
licence, Purshottamdas Ranchhoddas gave in their use the premises
of the factory and the machinery installed there. He himself did
not join any of the five partnerships. The licensees were to pay
a fixed sum for the use of the premises and the machines. It
appears that some of the workers who were not taken in as part
ners complained that the closure of the factory was a sham. No
action was taken on this complaint and there is no finding in this
case that the closure of the factory. was unreal.
In the year 1959, a prosecution was started under s. 92 of the
Factories Act on the charge that the original licensee of the fac
tory had not given notice under s. 7 ( 1) of the start of the factory
and had not renewed the licence under r. 4 of the Bombay Facto
ries Rules, 1950. This ended in an acquittal since Government
had not declared these premises as a factory under s. 85 of the
Act, as. it could, if the workers (although not employed by the
owner) were working with the permission of or under an agree
ment with the owner. After such notification the premises are
deemed to be a factory and the owner of the premises is deemed
to be an occupier.
On September 29, 1960, a notification was issued under s. 85.
That notification specified the places where the five partnerships
were working as factory. On November 10, 1959, five separate
complaints were filed for failure to take out five licences. The
charge was that Purshottamdas Ranchhoddas was the owner of
the factory and hence an occupier and the workmen were work
ing under an agreement with him. The owner defended himself
by stating that he had no control over the five firms and he could
not enforce the provisions of the Factories Act. This defence
was not accepted. Purshottamdas Ranchhoddas was held to have
become an occupier by reason of the notification and, therefore,
to be compelled to take out a licence under r. 3-A of the Bombay
Factories Rules. He was fined Rs. 201/- for the first offence and
Rs. 25 /- for the subsequent offences. Purushottamdas Ran
chhoddas appealed but died during the pendency of the appeal.
As the sentence was one of fine the appeal was continued by his
legal representative urtder s. 431 of the Codo of Criminal Proce
dure. The Bombay High Court set aside the conviction and fine
and now the present appeal has been filed by the State of Maha
rashtra on special leave granted by this Court.
Under r. 3 of the Bombay Factories Rules, 1950 an applica
tion has tQ be made ·for the approval of a factory. Under r. 3A
. no occupier of a factory shall use any premises as a factory except
under a licence. obtained orrenewed in accordance with the provi
sions of the rules. Section 85 grants power to the State Go\>ern
ment to apply the Factories Act to certain premises which would
otherwise not come within its purview. The section reads :
S. 85 : "PtJwer to apply the Act to certain nremis
es ;-( 1) The State Government may, by notification
in the Official Gazette, declare that all or any of the
provisions of this Act shall apply to any place wherein
a manufacturing process is carried on with or without
the aid of power or is so ordinarily carried on notwith
standing that-
( i) the number of persons employed therein is less
than ten, if working with the aid of power and
less than twenty if working without the aid of
power, or
(ii) the persons working therein are not employed
by the owner thereof but are working with the
permission of, or under agreement with, such
owner:
'H
MAHARASHTRA v. JAMNABHAl (Hidayatullah, J.) 811
Provided that the manufacturing process is not
being carried on by the owner only with the aid
of his family.
( 2) After a place is so declared, it shall be deemed
to be a factory for the purposes of this Act, and the
owner shall be deemed to be the occupier, and any
person working therein, a worker.
Explanatio11.-For the purposes of this section,
"owner" shall include a lessee or mortgagee with pos
session of the premises."
The present matter is said to be governed by s. 85 ( 1 )(ii). It
is contended that in as much as a notification had issued, the
owner of the pemises (the present lessee of the premises namely
Purshottamdas Ranchhoddas) became an occupier and thus
liable for breach of the Factories Act and the Bombay Factories
Rules since the premises were not licensed. The High Court,
differing from the Presidency Magistrate, Mazgaon, held that
s. 85 (i)(ii) did not cover the present case. We think the High
Court was right. .
Under s. 2 ( n) of the Act an 'occupier' of a factory means the
person who has the ultimate control over the affairs of the factory.
If one goes by this definition, Purshottamdas Ranchhoddas was
not an occupier if he had not the ultimate control over the affairs
of the five partnership firms running the factory. But here the
Factories Act gives special powers to the State Government under
s. 85 quoted above. The notification of Government makes
applicable all or any of the provisions of the Act to a place of
manufacture notwithstanding that the persons working therein
are not employed by the owner of the place wherein the manu
facture is carried on provided the workers work with the permis
sion of or under agreement with the owner. The condition prece
dent for the notification is that the persons working therein (a)
work with permission of or (b) under agreement with the owner.
The section does not contemplate a case where the owner hands
over the factory on rent and the workers work without his permis
sion and not under agreement with him. In other words, if there
is no connection between the owner and the workmen in the sense
that they work without his permission and without an agreement
with him, there would be no question of the liability of the owner
as an occupier. In the present case the agreements show that
the premises were given over to partnership firms in return for
a periodic payment. The agreements show that the licensees of
the premises bound themselves to carry on the manufacturing
process on their own and Purshottamdas Ranchhoddas had no
control over them. The High Court has considered the clauses
and come to the conclusion that the partnerships were independent
812 SUPREME COURT REPORTS [1967) 3 S.C.R.
of the control of the owner and the workers cannot be said to be A.
working with his pennission or under agreement with him. They
had formed themselves into partnerships, taken on leave and
licence.the factory premises and started their own business. In
these circumstances, the conditions for the notification hardly
existed. ·
An attempt was made to prove from s. 93 that the definition Jl;
of an occupier cannot apply to circumstances arising under s. 85
because s. 93 makes special provision for the responsibility of the ,.
owner. A glance at. the provisions of s. 93 however discloses the
opposite. It is not necessary to consider all the clauses, some
of which may bind the owner but a clause like 93(3) (ii) clearly
shows that the owner is liable only when he has control. The c
clause reads :
" ( 3) Where in any premises, indep.endent or self.
contained, floors or flats are leased to different occu
piers for use as separate factories, the owner of the
premises shall be liable as if he were the occupier or
manager of a factory, of any contravention of the D
provisions of this Act I.respect of-
( i) ......... .
(ii) fencing of machinery and plant belonging to the
owner and not specifically entrusted to the cus-
tody or use of an occupier; ..
fhe difference between the owner of the premises and the occu
pier is at once visible. The liability of the occupier is patent
but the liability of owner arises only when the machinery and
plant is not specifically entrusted to the custody or use of an
occupier. In the present case, for example, the machinery and
plant has been so specifically entrusted to the custody or use of
the various partnerships and the owner of the premises cannot be
made liable.
As we said above the finding is not that the owner had indulg·
ed in a sham transaction. If the transactions are genuine and
the five partnerships have taken over the factory to work inde
pendently, no question of the liability of the owner under
s. 85(1)(ii) arises. It is possible that some obligations are still
on the owner under s. 93 but that is another matter. Purshottam
das Ranchhoddas could not be made liable for not taking out the
licence. The matter has been correctly approached by the High
Court und we see no reason to interfere. The appeal fails and
will be dismissed.
R.K.P.S. Appeal dismissed.
n