Priyanka Bhola and Pratibha Pal*
Introduction
The government's proposal to amend the Factories Act so as to include the ‘Hotel i ndustry' in the definition of ‘factory'1 has lead to a varied opinion. On one hand it would prove to be cumbersome for the employers and on the other hand it is beneficial and acts as a relief for the employees. The present article deals with the object of the Factories Act 1948, positive and contrary view of the Indian judiciary, and finally the conclusion.
Object
The Factories Act, 1948 is a social legislation which has been enacted for occupational safety, health and welfare of workers at work places2 . It is the duty of the State to protect the rights and liberties of the people at work places and provide them with a more disciplined working environment. Since the hotels use LPG for cooking process and large number of appliances are involved in the processes, the safety and health of workers employed in hotels need to be addressed to adequately. This can be achieved through making safety and health statute applicable to hotels also3 .
Keeping this view in mind the g overnment has extended the definition of factory so as to include the hotel industry within its ambit, though the legislative intent at the time of framing the Act was to exclude the hotels, restaurants and eating places from its definition.
It is to be noted here that the hotel industry is already governed by the ‘Shops and Establishments Act' and including it in the Factories Act would require the industry to fix proper shifts and pay overtime to the employees if they work for more than eight hours a day, apart from ensuring workers' health, safety and welfare facilities. The industry will also have to look into the issues of employment of young persons and annual leave with wages which is all a part of ‘Factories Act' with the inclusion. The Act also provides for a maximum punishment up to two years imprisonment or a fine of upto
Rs. one lakh or both which would require the employers to follow their obligations strictly. However, for the employees it is a welcome move because it would create a conducive work environment for them. Thus the issues are disputed on this point.
View of the Indian judiciary
The root of this decision lies in the case– G.L. Hotels Limited and Ors v. T.C. Sarin and Anr4 , where the Supreme Court has held that hotel is a factory. In this case the court has accepted the fact that cooking and preparing food is included in the definition of manufacturing process5 .
Whereas the High Court had accepted that hotel can be considered as the factory since the manufacturing process in the form of cooking and preparing food is carried on in the kitchen which is a part of the hotel or a part of the precinct of the hotel, and has relation with the activities in the other premises of the hotel.
The Supreme Court held: “ It should not be forgotten that the definition of certain premises as a factory or of certain activities as an industry etc. given in social welfare legislations like the present, are necessarily artificial. The object is to extend the welfare coverage to as large a section of the individuals as possible. Such definitions cannot be tested on the anvil of the common usage of the terms defined. The present is an illustration of the kind.”
But the Supreme Court accepted that though the conclusion reached by the High Court is correct looking to the welfare legislation, but agreed that the reasons given by the Court in support of the conclusions are not all valid.
Contrary view
The court has laid down several cases wherein it has held that ‘cooking in hotels should not be considered as manufacturing process'. In the case of Indian Hotels Co. Ltd. and Ors. v . ITO and Ors6 the court observed that in the case of a hotel business the foodstuff prepared by cooking or by any other process from raw materials such as cereals, pulses, vegetables, meat or the like cannot be regarded as commercially distinct commodity and it cannot be held that such foodstuff is manufactured or produced.
Further in the case of C.I.T., Kerala v. Casino Pvt. Ltd.7 it was held that manufacturing or processing of goods i.e., conversion of raw materials into food in hotel does not amount to manufacture, and a hotel, is only intended for trading and not for production or manufacture. The various items of foodstuffs and beverages produced in a hotel are intended for the trading and the conversion of the raw materials is only a process in trading.
Conclusion
If we look to the above judgments, it can be concluded that the interpretation of the word ‘manufacturing' in its literal sense, does not include cooking. Therefore, including hotels as factories in the Factories Act, and taking cooking as a manufacturing process will be a wide interpretation of the word. In the case of G. L. Hotels court has considered hotels as factories, only on the ground of maximizing the social welfare of the workers, though no specific reasoning has been laid down behind such a judgment. Thus this issue needs reconsideration before making such amendments.
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* National Law University, Bhopal
1 Earlier definition as given in the Factories Act, 1948, - Section 2(m) “factory” means 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 ordinarily so carried on, or (ii) whereon twenty 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 without the aid of power, or is ordinarily so carried on,- but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place.
2 Extract taken from “Hotel Industry included under Factories Act”, THE ECONOMIC TIMES, dated: 13 Jan, 2008, <http://economictimes.indiatimes.com/News/News_By_Industry/Services/Hotels__Restaurants/Hotel_Industry_included_under_Factories_Act_/articleshow
3 Extract taken from < http://dgfasli.nic.in/working_group/chap_4.htm>
4 (1993) 4 SCC 363.
5 Sec 2(k) “manufacturing process” means any process for- (i) 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.
6 (2000) 245 ITR 538 (SC).
7 (1973) 91 ITR 289.