Is Irrigation Department a factory? Will it be governed by Industrial Disputes Act? Supreme Court analyses

Supreme Court: The Division Bench comprising of Ajay Rastogi and Abhay S. Oka*, JJ., held that Irrigation Department was not a factory within the meaning of Factories Act, 1948 as there was no indulgence in manufacturing process in the Department. The Bench expressed,

“Even assuming that some of the employees may be doing the work of pumping of water, that is not sufficient to hold that Irrigation Department of the first appellant is carrying on manufacturing process.”

Factual Contours

Originally, the State had challenged the award made by the Labour Court by which the State was directed to reinstate the respondent in Rajghat Canal Project of the Irrigation Department. The respondent was initially appointed as a daily wage employee on the post of Helper in the Irrigation Department of the first appellant. However, his employment was terminated again after reinstating him in the year 2004.

Findings of Courts Below

The Labour Court held that Chapter VB of the Industrial Disputes Act, 1947 was applicable to the Irrigation Department and as compliance with section 25N of the ID Act was not made, the respondent was entitled to reinstatement.

Observing that Irrigation Department is responsible for creation and maintenance of irrigation potential through construction of Water Resources Department, it also looks after the calamity management work and is involve in pumping water and sewage, the High Court held that the Department was governed by section 2(k)(ii) of the Factories Act as the  Irrigation Department was also involved in the activity of pumping of water and sewage, i.e. manufacturing process as defined under the said section.

Irrigation Department whether Industrial Establishment or not?

The State contended that Irrigation Department was not an Industrial Establishment within the meaning of Section 25L of the ID Act and Chapter VB would have no application. The State argued, though the Irrigation Department might have more than hundred workers, it was not a factory within the meaning Section 2(m) of the Factories Act, 1948 as it was not carrying on manufacturing process.

Analysis and Findings

Though there was no dispute that the Irrigation Department satisfied the test of having not less than hundred workmen employed on an average; however, the question before the Court was whether the Irrigation Department was an Industrial Establishment as defined in Section 25L of ID Act.

Section 25L of the ID Act reads as:

“(a) “industrial establishment” means—

 (i) a factory as defined in clause (m) of section 2 of the Factories Act, 1948 (63 of 1948);”

It was the case of the respondent that the Irrigation Department of the first appellant was an Industrial Establishment as it was a Factory as defined in Section 2(m) (ii) of the Factories Act, which states, a Factory is:

“ (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…”

However, as the definition suggested, an establishment cannot be termed as a factory unless it is carrying on manufacturing process. The manufacturing process is defined under Section 2(k)(ii) of the Factories Act, which reads thus:

“‘Manufacturing process’ means any process for— (ii) pumping oil, water, sewage or any other substance;”

In the above backdrop, the Bench was of the view that even assuming that some of the employees may be doing the work of pumping of water, that was not sufficient to hold that Irrigation Department of the first appellant was carrying on manufacturing process. The Bench emphasised,

“Overall activities and functions of the Irrigation Department would have to be considered while deciding the question whether it is carrying on manufacturing activities.”

The Bench added,

 “Few employees of the Irrigation Department out of several may be incidentally operating pumps. But the test is what are the predominant functions and activities of the said Department.

Verdict

The Bench held that even if the activity of operation of pumps was carried on by few employees, the Irrigation department did not carry on manufacturing process, hence, it was not a factory within the meaning of clause (m) of section 2 of the Factories Act. Accordingly, the Bench rejected the reasoning of the High Court that the Irrigation Department was an Industrial Establishment within the meaning of Section 25L and Chapter VB would have application in the case.

Hence, the appeal was allowed. The impugned judgments and orders were set aside and the termination of employment of the respondent was held to be legal and valid.

[State of M.P. v. Somdutt Sharma, 2021 SCC OnLine SC 829, decided on 29-09-2021]

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Report by: Kamini Sharma, Editorial Assistant, EBC Publishing Pvt. Ltd. 

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Appearance by:

For the State of M.P.: Mukul Singh, Deputy Advocate General

For the Respondent: Prashant Shukla, Advocate


*Judgment by: Justice Abhay S. Oka

 

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