M/s. Bhikuse Yamasa Kshatriya (P) Ltd. vs Union of India and Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Writ Petition No. 145 of 1962

Decision Date: 8 February 1963

Coram: J.C. Shah, P.B. Gajendragadkar, K.N. Wanchoo, M. Hidayatullah, K.C. Das Gupta

The petition was filed by M/s Bhikuse Yamasa Kshatriya (P) Ltd. and another petitioner against the Union of India and a second respondent. The matter was argued before the Supreme Court of India on 8 February 1963. The bench that heard the case comprised Justice J.C. Shah, Justice P.B. Gajendragadkar, Justice K.N. Wanchoo, Justice M. Hidayatullah and Justice K.C. Das Gupta. The judgment was recorded under the citation 1963 AIR 1591 and 1964 SCR (1) 860, with subsequent citations including R 1964 SC 1260, R 1966 SC 370, RF 1974 SC 1832 and R 1974 SC 2349. The issues examined concerned the validity of section 85 of the Factories Act, 1948 and a government notification issued under that provision which deemed bidi rollers in certain places to be workers for the purposes of the Act. The petitioners contended that the section and the notification infringed their fundamental rights guaranteed by Articles 14 and 19(1)(g) of the Constitution of India.

The factual background revealed that bidi rollers had formerly been granted weekly holidays and wages in lieu of those holidays. After a prior decision of this Court, owners of bidi‑making establishments in the State of Maharashtra ceased to provide those benefits, leading to considerable unrest among the workers. In response, the State Government issued a notification under section 85 of the Factories Act, declaring bidi rollers at the locations listed in the Schedule to be “deemed workers” and thereby extending to them the benefits applicable to workers under the Act. The petitioners challenged the constitutionality of both the statutory provision and the specific notification, arguing that the selection of certain bidi‑manufacturing sites out of the many existing ones was arbitrary and that imposing obligations such as granting annual leave with wages amounted to an unreasonable restriction on the owners’ right to conduct business. The Court held that section 85, which empowers a State Government to apply all or any provisions of the Factories Act to any place where a manufacturing process is carried out, does not, by its terms, create discrimination that would offend Article 14. Moreover, the provision does not authorize the imposition of unreasonable restrictions on the fundamental right of a factory owner to pursue his enterprise. The notification could not be attacked merely because the State selected some of the 861 bidi‑manufacturing locations for the application of the Act. Even the requirement to grant annual leave with wages to the deemed workers was found to be a permissible and reasonable condition. The Court therefore concluded that the statutory provision and the notification issued thereunder were valid and did not violate the challenged constitutional rights.

The Court explained that Section 85 of the Factories Act enables the State Government to extend either all or selected provisions of the Act to any place where a manufacturing process is carried out, whether or not the place employs the number of persons required for a “factory” under the definition, and whether the persons working there are employed directly by the owner or are working with the owner’s permission or under an agreement. If a notification issued under Section 85 brings Section 79 into force, the benefits of Section 79 will apply only to those persons who work in the establishment for the full period prescribed under Sections 61, 66(1) and 71 of the Factories Act as determined by the employer. A “deemed worker”, who receives payment solely for work performed and who has no obligation to attend at a fixed time, may claim annual leave with wages only if he satisfies the conditions applicable to workers as defined in Section 2(1) of the Act. The privilege of working for a shorter period than that prescribed for regular factory workers does not, by itself, enable a “deemed worker” who works fewer than the prescribed hours to claim the benefits of Section 79. Nevertheless, that privilege will not deprive a person of the benefit of Section 79 if he meets the conditions relating to the duration of work. The fact that a “deemed worker” in an establishment to which Section 79 has been extended by notification is not bound by the owner to attend at fixed times does not mean that he can never satisfy the attendance conditions required for earning leave with wages. If a “deemed worker” attends the establishment for the full duration fixed as factory hours and works for at least 240 days in a calendar year, he becomes entitled to the benefits under Sections 75 and 80 of the Act. The Court further noted that the Factories Act was enacted primarily to consolidate and amend labour law relating to factories, with the objective of protecting workers employed in factories from industrial and occupational hazards. To achieve this purpose, the Act imposes obligations on the owner or occupier to safeguard workers, whether they are unwary or negligent, and to provide employment in conditions conducive to their health and safety. The Court cited the authorities State v. Alisaheb Kashim Tamboli, I.L.R. 1955 Bom. 642; Shankar Balaji Waji v. State of Maharashtra, [1962] Supp. 1 S.C.R. 249; Ram Chandra v. State (1956) I.L.R. 35 Pat. 877; and M/s Bhikusa Yamasa Kshatriya v. Sangamner Akola.

The bench cited the decision of Taluka Bidi Kamgar Union, reported in the 1963 Supplement to the Supreme Court Reporter at page 524. It also referred to Bridhichand Sharma v. The First Civil Judge, Nagpur, reported in the 1961 third volume of the Supreme Court Reporter at page 161. The judgment was delivered in the original jurisdiction in response to Writ Petition number 145 of 1962, filed under Article 32 of the Constitution of India seeking enforcement of fundamental rights. Counsel for the petitioners comprised G.S. Pathak, J. B. Dadachanji and O. C. Mathur, who represented the two petitioners before the Court. Counsel for the respondents included C. K. Daphtary, Solicitor‑General of India, together with N. S. Bindra and R. H. Dhebar. The judgment was pronounced on February 8, 1963, and was delivered by Justice Shah. The first petitioner is a private limited company incorporated under the Indian Companies Act of 1913 and the second petitioner is a director of that company. The company operates twenty‑three bidi manufacturing establishments in the districts of Nashik, Poona and Ahmednagar in Maharashtra, most of which are entered in the register of factories maintained by the Chief Inspector of Factories under the Factories Act, 1948. Craftsmen known as rollers attend these premises and prepare bidis using material supplied by the company. They are paid a fixed tariff for each bidi they produce, and although the factories operate for the prescribed hours, the rollers are not required to be present for any fixed period. This method of work has been observed to be the customary practice in bidi establishments throughout the Maharashtra region. The Bombay High Court held that the bidi establishments qualified as factories under the statutory definition. It further concluded that the rollers working therein were ‘workers’ within the meaning of the Factories Act, 1948, as illustrated in State v. Alisaheb Kashim Tamboli. The Court observed that the term ‘employed’ in Section 2(1) does not necessarily require a master‑servant relationship. Consequently, owners must comply with the Act and provide the benefits to rollers, even though they were paid only for the bidis produced and did not observe uniform hours of attendance. In Shankar Balaji Waje v. State of Maharashtra, with Justice Subba Rao dissenting, the Supreme Court held that workers in a bidi manufacturing establishment whose attendance showed certain characteristics were not employed within the meaning of Section 2(1). Therefore, those workers could not claim the privileges under Sections 79 and 80 of the Factories Act. The Court noted three features: there was no service contract between the owner and the roller, and the roller was not bound to fixed hours or a fixed period of work. Additionally, the roller was free to enter and leave the factory at any time he chose.

It was observed that the bidi roller could be absent from work on any day of his choosing, and when his absence was expected to exceed ten days he would inform the owner not to obtain permission or leave, but merely to assure the owner that he did not intend to abandon his work at the factory; the citation for this observation was recorded as (1) T.L.R. 1955 Bom. 624. (2) [1962] Supp. 1 S.C.R. 249. The Court noted that there was no actual supervision of the work performed by the bidi roller within the factory premises. The roller received payment at fixed rates based solely on the number of bidis he turned out, and there was no stipulation requiring him to produce any minimum quantity of bidis in a day. Bidi leaves were supplied to the rollers for the purpose of taking them home and cutting them, while tobacco was supplied at the factory; nevertheless the rollers were not bound to roll bidis only inside the factory, and they could remove the materials from the premises after obtaining the owner’s permission. At the close of each day the finished bidis were delivered to the owner, and any bidis that did not meet the required standard were rejected. The Court further recorded that the rollers’ attendance was not formally noted, although the days on which a roller worked could be ascertained from the work register kept at the establishment. Based on these facts, the Court held that the bidi roller could not be said to be “employed” by the owner and therefore could not be classified as a worker, because there was no contract of employment under which the roller agreed to serve the employer subject to the employer’s control and supervision. Following the pronouncement of this judgment, owners of bidi‑making establishments in the State of Maharashtra began to deny the rollers the benefits of weekly holidays and wages in lieu of holidays that had previously been accorded to them, and they also refused the inspectors appointed under the Factories Act access to their establishments. The records showed that more than thirty‑five thousand bidi rollers were borne on the payrolls of bidi‑making establishments as reflected in the register maintained by the Chief Inspector of Factories, while many other bidi‑making establishments were not entered in the Chief Inspector’s register. This situation created grave unrest among the bidi rollers, who were aggrieved by the denial of benefits they had previously enjoyed. In order to protect the bidi rollers from exploitation by the owners of bidi‑making establishments and from deprivation of the benefits they were entitled to, the Government of Maharashtra issued a Notification exercised under the powers conferred by section 85 of the Factories Act, 1948. The Notification declared that all provisions of the Act would apply to the places specified in column 2 of the appended Schedule wherever a manufacturing process was carried on with or without the aid of power, or was ordinarily carried on in the establishments listed in column 3 of the Schedule, notwithstanding that the persons working therein were not employed by the owner but were working with the permission of or under agreement with the owner, provided that the manufacturing process was not being carried on by the owner solely with the aid of his family.

In the notification issued by the Government of Maharashtra, the wording was that the provisions of the Factories Act would apply to places where persons were working with the permission of, or under agreement with, the owner, provided that the manufacturing process was not being carried on by the owner only with the aid of his family. A Schedule was annexed to the notification; the Schedule listed many of the company’s establishments together with the districts and the names of the establishments. By virtue of the notification, the bidi rollers who worked in the establishments specified in the Schedule were treated as “deemed workers,” and consequently they became entitled to the benefits that the Factories Act confers on workers. The petitioners challenged, through this petition, the validity of section 85 of the Factories Act and of the notification made under the authority conferred by that section. Their plea was that the provisions of the section and the notification issued thereunder infringed the petitioners’ fundamental rights under Articles 14 and 19(1)(g) of the Constitution. The Act defines “factory” in section 2(in) as any premises, including the precincts thereof, where (i) more than ten workers have been employed on any day of the preceding twelve months and a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) twenty or more workers have been employed on any day of the preceding twelve months and a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on, subject to the exclusion of a mine governed by the Mines Act, 1952, and a railway running shed. “Worker” is defined in section 2(1) as a person employed, directly or through any agency, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process.

Premises on which a manufacturing process is carried on but where the number of workers is less than the minimum prescribed in the definition do not fall within the definition of “factory.” Moreover, a person can be deemed a “worker” only if he is employed in a manufacturing process, in cleaning machinery used for the process, or in work incidental to or connected with the process. To bring the provisions of the Factories Act into play—provisions that grant certain benefits and privileges to workers and impose obligations on owners—there must be a manufacturing process in operation at the premises, and the number of persons engaged in that process, or in cleaning the machinery, or in work incidental to it, must not be less than the threshold specified in section 2(in). Only when those conditions are satisfied can the individuals engaged in the activities be classified as workers for the purposes of the Act.

In this case, the Court explained that a person must be employed, whether by a contract of service for wages or not, and directly or indirectly, for the term “worker” in section 2(1) of the Factories Act to apply. The Court clarified that a person working in a factory without a contract of service could not be regarded as a worker within the meaning of that provision. Section 85 of the Factories Act, which appears in Chapter IX, was then set out. The provision stated that the State Government could, by publishing a notification in the Official Gazette, declare that all or any of the Act’s provisions would apply to any place where a manufacturing process was carried on, with or without the aid of power, even if the number of persons employed there was less than ten when power was used or less than twenty when power was not used, or even if the persons working there were not employed by the owner but were working with the owner’s permission or under an agreement, provided that the manufacturing process was not being carried on solely by the owner’s family. The Court noted that once such a place was declared, it would be deemed a factory for the purposes of the Act, the owner would be deemed the occupier, and every person working there would be deemed a worker. The Court observed that the object of this section was to give the State the authority to extend the Act’s provisions to establishments that would otherwise not qualify as factories, and to ensure that persons working in such places received the benefits intended for workers, even if they did not meet the strict definition of worker under the Act. The Court further explained that the section authorised the State Government to make any or all of the Act’s provisions applicable to any place where a manufacturing process was carried on, regardless of the number of employees or the nature of their employment relationship with the owner. On the question of a State Government notification, the Court reiterated that the designated place would be treated as a factory, the owner as an occupier, and the persons working there as workers. The petitioners contended that section 85 was invalid because it imposed unreasonable restrictions on the owner’s fundamental right to conduct business and allowed the State Government, by means of a notification, to arbitrarily discriminate among owners of similarly situated establishments. They argued that the Act gave an unguided and unchecked power to select places to be deemed factories, thereby imposing the obligations of the Factories Act on the owners of those places without adequate safeguards.

To understand how section 85 of the Factories Act affected the petitioners, the Court first gave a brief history of factory legislation in India, especially concerning bidi‑making establishments. The Indian Legislature had enacted the Factories Act 15 of 1881 as the earliest law dealing with factories. That Act covered only a narrow range of establishments, and it was subsequently replaced by the Factories Act 11 of 1891, which in turn was followed by the Factories Act 12 of 1911. Over the years various amendments were made to the 1911 Act. In 1929 the Government appointed a Royal Commission of Labour in India to conduct a detailed inquiry into labour problems. The Commission examined conditions in many industries, including the bidi‑making industry, and submitted a report in June 1931 containing a number of recommendations for amending the Factories Act 1911. The Commission emphasized the need for a power to extend the Act’s provisions to industries that were not covered by the definition of “factory,” and it discussed the bidi‑making sector in particular. While describing the conditions prevailing in bidi manufactories, the Commission observed:

“Every type of building is used, but small workshops predominate and it is here that the graver problems mainly arise. Many of these places are small air‑less boxes, often without any windows, where the workers are crowded so densely on the ground that there is barely room to squeeze between them. Others are dark semi‑basements with damp mud floors unsuitable for manufacturing processes, particularly in an industry where workers sit or squat on the floor throughout the working day. Sanitary conveniences and adequate arrangements for removal of refuse are generally absent. Payment is almost universally made by piece‑rate, the hours are frequently unregulated by the employer and many smaller workshops are open day and night. Regular intervals for meals and weekly holidays are generally non‑existent. In the case of adults these matters are automatically regulated by individual circumstances, the worker coming and going as he pleases and often, indeed, working in more than one place in the course of the week. Nevertheless in the case of full‑time workers, i.e., those not using bidi‑making as a supplementary source of income, the hours are too frequently unduly long, the length of the working day being determined by the worker’s own poverty and the comparatively low yield of the piece‑rates paid.”

The Commission recommended that a separate Act should initially apply to all places without power machinery that employed fifty or more persons at any time during the year, and it suggested that provincial governments could be authorised to extend any provision of the Act to factories employing fewer than the prescribed number when, in their opinion, conditions justified such action. Instead of adopting those specific recommendations, the Legislature enacted a comprehensive measure, the Factories Act 25 of 1934, which amended and consolidated all earlier factory legislation. The primary objectives of the 1934 Act were to reduce working hours, improve working conditions in factories, provide for adequate inspection, and ensure strict compliance with the Act. However, places where the manufacturing process was carried out without the aid of power were excluded from the definition of “factory” under section 2(j).

In this portion of the judgment, the Court described how the earlier legislation excluded places where manufacturing was done without power from the definition of “factory” in section 2(j). It noted that the Legislature, by enactment of Act 16 of 1941, amended section 5 and empowered the Provincial Government, through a notification in the Official Gazette, to declare that any of the provisions applicable to factories could also apply to any place where a manufacturing process was carried on, whether with or without power, provided that ten or more persons were employed there. The Court then turned to the fact that the Government of India had constituted a Labour Investigation Committee in February 1944 to examine employment conditions across various industries. The Committee investigated the conditions of workers in the bidi, cigar and cigarette sectors and reported that the situation described by the earlier Royal Commission on bidi working conditions remained largely unchanged. The Committee’s observations, quoted by the Court, stated: “The prominent features of the bidi and cigar industries are long hours and insanitary conditions of work and employment of child labour. Women are also employed in large numbers in this industry…The bidi and cigar labour, however, satisfies many of the criteria of sweated labour, such as sub‑contract system, long hours, insanitary working conditions, home work (in bidis), employment of women and children, irregularity of employment, low wages, and lack of bargaining power.” The Committee further reported, with particular reference to Bombay, that workshops were located immediately behind pan shops and were characterised by deplorable sanitation, light and ventilation. They were described as dark, dingy spaces with few or no windows, unsanitary approaches, and workers—men, women and sometimes children—packed together with almost no room to move. Tobacco bags and finished bidis were seen piled in corners, most workshops lacked lavatories, and eating areas were in terrible condition. Some workshops had low wooden ceilings under which workers performed their tasks, and these areas were often inaccessible by staircases, forcing workers to climb with great difficulty. Based on these findings, the Committee concluded that immediate attention was required to address unhealthy working conditions, excessive hours, employment of women and children, wage deductions and the subcontracting system. It recommended abolishing the out‑work system and promoting the establishment of larger factories in the bidi and cigar trades if protective labour legislation was to be effective. The Court observed that extending factory legislation to safeguard bidi rollers was therefore an urgent necessity. It noted that the Factories Act, 1948 had enlarged the definition of “factory.” Nevertheless, the bidi‑making industry continued to be dispersed in numerous small units over a wide area, with working conditions varying widely among those units.

The Court observed that no legislation applicable exclusively to establishments manufacturing bidis had been enacted, but establishments in which the number of persons employed exceeded the number specified in clause (in) of section 2 were nonetheless registered under the Factories Act. It admitted that even after such registration a number of establishments remained outside the operation of the Factories Act; however, the enactment of the Minimum Wages Act and the fixation of minimum wages by various States led to some improvement in the condition of bidi rollers. The Court noted that section 85 of the Factories Act, 1948 reserved power to make the Act applicable to any place where bidi manufacture was carried on, but that power did not appear to have been exercised. The reason, according to the Court, was that larger establishments involved in bidi‑making were considered to be covered by the Factories Act, based on an assumption that the expression “employed” in section 2(1) of the Act included mere engagement or occupation in a manufacturing process even where no contract created a master‑servant relationship, as discussed in State v. Alisaheb Kashim Tamboli (1) and Ram Chandra Prasad v. State of Bihar (2). The Court then recited the preamble of the Factories Act, stating that the Act was enacted to consolidate and amend the law regulating labour in factories, and that its primary object was to protect workers employed in factories against industrial and occupational hazards. Accordingly, the Act sought to impose on owners or occupiers certain obligations to protect both unwary and negligent workers and to secure employment in conditions conducive to health and safety. The Act required that workers labor in healthy and sanitary conditions and provided that necessary precautions be taken for safety and prevention of accidents. Incidental provisions were made to secure information needed to achieve these objectives, empowering State Governments to appoint inspectors, call for reports, and inspect prescribed registers to maintain effective supervision. The duty of the employer, the Court explained, extended to securing health and safety through provision of adequate plant, machinery and appliances, supervision of workers, provision of healthy and safe premises, establishment of proper working systems, and giving reasonable instructions. Detailed provisions were therefore contained in various chapters of the Act, imposing obligations on owners of factories to maintain inspecting staff and to ensure health, cleanliness, prevention of overcrowding, and amenities such as lighting and drinking water, as reflected in the cited authorities (1) I.L.R. 1955 Bom. 642 and (2) I.L.R. 1956 I.L.R. 35. Patna 877. Additional provisions addressed safety and welfare of workers, including restrictions on working hours, employment of young persons and females, and grant of annual leave with wages. The Court further noted that employment in a manufacturing process had at one time been regarded merely as a matter of contract between employer and employee, without State intervention.

In earlier law, the relationship between an employer and an employee was treated as a private contract, and the State did not impose any duties on the employer. Over time, however, the State came to recognize that it has an important role in preventing the exploitation of labour and in ensuring that workers receive proper safeguards for their health and safety. The Court observed that the Factories Act clearly places many obligations on employers so that workers obtain adequate protection for their physical well‑being. The Court further noted that, in the modern view of industrial relations, these obligations cannot be described as unreasonable. The Court explained that extending the benefits of the Factories Act to premises and workers who are not strictly covered by the Act is meant to achieve the same protective purpose. By permitting restrictions that help workers who, in the State’s view, need some or all of the protections granted by the Act but who fall outside its ordinary scope, the Legislature is simply trying to fulfil the object of the Act. In effect, the legislation authorises the extension of the Act’s benefits to persons who, because of administrative or other difficulties, were not originally included. The Court held that provisions made for “deemed workers” are therefore reasonable under Article 19(1)(g) of the Constitution. The Court pointed out that the Factories Act primarily applies to establishments where ten or more persons work when power is used, and where twenty or more persons work when no power is used, which leaves small establishments outside its regular operation. The Court inferred that the Legislature likely believed that applying the full suite of Act requirements uniformly to every establishment, including very small ones, would create a heavy administrative burden for the government and cause hardships that are not proportionate to the benefits obtained. Nevertheless, to prevent avoidance of the Act’s safeguards and to provide adequate protection to persons employed in manufacturing settings where the need is felt, the Legislature empowered State Governments, by way of notification, to declare any place that does not meet the technical definition of “factory” to be a factory and to make any or all provisions of the Act applicable to that place. Similarly, while the Act mainly governs the master‑servant relationship in factories and does not intend to interfere with the general freedom of contract, the Legislature again authorised State Governments to issue notifications that apply the Act’s provisions to establishments where persons work with the permission or under an agreement of the owners, even though they are not formal employees. The Court concluded that the exclusion from the definitions of “factory” and “worker” originates from the legislative intent to provide flexibility and to extend protection where necessary, rather than to grant special privileges to any class of owners.

The Court explained that the provision was not intended to give any class of owners special privileges. It observed that the policy underlying section 85, which authorised the State Government to extend the benefits of the Act, was apparent on its face. The section was designed to provide for the health and safety of persons engaged in hazardous work, and for that purpose the Legislature had entrusted State Governments with the authority to extend the provisions of the Act to establishments that did not fall expressly within its ordinary regulatory ambit when, in the opinion of the State, regulation was necessary in view of the prevailing circumstances. The Court stressed that the power to extend the regulatory provisions was not meant to be an arbitrary authority allowing the Government to pick and choose between similarly situated establishments. Rather, the power was granted to secure protection for persons employed in industrial occupations under special circumstances that might arise in a particular industry, locality or establishment, where conditions justified the extension of protection.

The Court noted that the conditions of small establishments varied widely across different parts of the country. In some industries or establishments, control under the Factories Act might not be necessary, whereas in other cases the need for regulation could be felt acutely. To accomplish the object underlying the Act, the Legislature had therefore given the State Government the discretion to decide, with reference to local conditions, whether it was desirable to make the provisions of the Act, or any part of them, applicable to an establishment that did not meet the definition of “factory,” or to workers in a factory who were excluded from the benefits of the Act because of the definition of “employment.”

The Court then referred to the decision in M S Bhikusa Yamasa Kshatriya v. Sangamner Akola Taluka Bidi Kamgar Union, where it had considered the validity of certain provisions of the Minimum Wages Act. In that case, the Court had observed that the object and policy of the Legislature were evident from the face of the enactment. The legislation aimed to prevent exploitation of workers by fixing minimum wages that employers must pay. The Legislature had clearly intended to apply the Act to those industries or localities where, because of factors such as unorganized labour or the absence of a machinery for wage regulation, the wages paid were inadequate in relation to the general level of wages and the subsistence needs of workers. The Court reiterated that, to achieve the purpose of that enactment, the appropriate Government had been given the power to decide, based on local conditions, whether it was desirable to fix minimum wages for any scheduled trade or industry in any locality, and, if so, to determine the rates at which the wages should be fixed for that industry in that locality.

The Court observed that by assigning the authority to determine minimum wages for any industry in any locality to the appropriate Government, the Legislature did not relinquish its own power nor did it grant the State Government an unchecked authority. The delegation was intended to enable the Government, which possessed the necessary resources and expertise, to apply the Act effectively in accordance with local conditions. The Court explained that selective application of a law, when sanctioned, ordinarily results in a permissible classification. While Article 14 forbids arbitrary class legislation, it does not prohibit reasonable classification made for legislative purposes. When the basis of such classification is either expressly stated or clearly implied, the delegation of detailed implementation to a competent body, guided by the objectives of the statute and its inherent principles, does not render the legislation unconstitutional. In other words, a statute may leave the task of selecting and classifying persons, objects, transactions, localities, or matters for special treatment to a responsible authority, provided that it also sets out the policy principles that must guide that authority. Under this reasoning, the Court held that the statute would not be struck down as violating Article 14. The Court further indicated that the same principle applied to the petitioners’ claim of discrimination, concluding that the legislation’s classification scheme was lawful and consistent with constitutional requirements.

The Court then turned to Section 85 of the Factories Act, which authorises the selective application of the Act’s beneficial provisions to workers who would otherwise be excluded. This power, the Court noted, was intended to further the purpose of the Act and was vested in an authority equipped to conduct the necessary inquiries to determine whether extending the benefits served the interests of workers and the public at large. Accordingly, the provision could not be characterised as discriminatory. Although a statute that permits executive action is not ultra vires, the Court cautioned that the executive’s selection may become ultra vires if it infringes a fundamental right. In the present case, the Court examined the affidavit of Mr V N Pimenta, Under‑Secretary to the Government of Maharashtra in the Industries and Labour Department, which clearly set out the basis for the factories listed in the Schedule of the impugned Notification issued under Section 85(1). Paragraph 7 of his affidavit stated: “On careful consideration of the facts of this (Shankar Balaji Waje’s) case, the Government of Maharashtra was of the view that for the purpose of protecting the bidi rollers against any arbitrary treatment by the bidi manufacturers, and to maintain the protection given to them under the Factories Act which they had hitherto obtained prior to the decision of this Hon’ble Court in the case of Shankar Balaji Waje, a Notification under Section 85 of the Factories Act, 1948 should be issued.” Accordingly, the Government issued the Notification. Mr Pimenta further explained that other bidi‑manufacturing establishments, although potentially covered by the Act, were omitted from the Notification because they were not listed on the register of factories maintained by the Chief Inspector of Factories, owing to the owners’ failure to register them. He added that the Government was conducting inquiries regarding those factories and would decide, based on the findings, whether to amend the Notification under Section 85. The purpose of the Notification, he affirmed, was to preserve industrial peace and harmony, and there was no evidence on record to contradict these statements.

The affidavit of the Under Secretary of the Maharashtra Industries and Labour Department stated that the impugned notification listed only those factories that were recorded on the register of factories maintained by the Chief Inspector of Factories. The affidavit further explained that, although other bidi‑manufacturing establishments existed which fell within the scope of the Factories Act, they were excluded from the notification because they were not entered on the official register. The omission of those establishments from the register was attributed to the owners’ failure to register them. The affidavit indicated that the State Government was conducting inquiries concerning the unregistered factories and that, depending on the results of those inquiries, the government might amend the notification under section 85 of the Factories Act to bring additional factories within the Act’s purview. It was also affirmed that the primary purpose of issuing the notification was to preserve industrial peace and harmony. The record contained no evidence that contradicted any of these statements.

Prior to the issuance of the impugned notification, the Bombay High Court and other High Courts had held that bidi workers, even though they were not classified as servants of the factory owners, were nevertheless engaged in a manufacturing process and therefore entitled to the benefits provided by the Factories Act. The Supreme Court, in Shankar Balagi Waje’s case (1962 Supp. 1 S.C.R. 249), clarified the legal position, which led to considerable unrest among bidi rollers. In response to that unrest, the State Government felt compelled to intervene to protect bidi rollers from losing benefits that had been granted to them for a considerable period. Consequently, the government initially applied the provisions of the Factories Act by issuing a notification under section 85(1) that covered all establishments included in the list maintained by the Chief Inspector of Factories. At the same time, the government launched an inquiry aimed at identifying additional factories that were not on the list.

The court observed that the inclusion of bidi‑manufacturing units that were registered with the Chief Inspector of Factories constituted a rational basis for classification. The fact that other factories engaged in the same business were not immediately covered by the Act did not, in the court’s view, render the notification irrational. The selective application of the law, based on an objective criterion such as inclusion in the Chief Inspector’s register, was considered a legitimate exercise of the State’s statutory authority, especially in view of the emergency circumstances created by the industrial unrest. The affidavit further revealed that the Government of Maharashtra continued to hold inquiries into other factories that might properly fall within the scope of the Act but were not yet listed, indicating an ongoing process to possibly extend the notification’s coverage once sufficient information was obtained.

Because the owners of bidi establishments that were not included in the list of the Chief Inspector of Factories were excluded, the Court observed that this exclusion was not made “with an evil eye or uneven hand.” Instead, the Court found that the exclusion resulted from a perceived necessity to address a situation that had caused great hardship to a large number of workers and that required immediate correction in order to preserve industrial peace.

The respondents argued that applying every provision of the Factories Act without first examining whether each individual provision should be extended violated Article 19 of the Constitution. They submitted that sections seventy‑nine and eighty of the Act were intended only for factories that employed persons who worked under contracts of service with the owner. Accordingly, those provisions would be wholly inapplicable to persons who worked under contracts that were not contracts of service, who had no obligation to attend the factory for a fixed duration during working hours or for a fixed number of days in a year. Extending the benefits of those provisions to such persons, the respondents contended, would amount to imposing unreasonable restrictions on the factory owner.

Section seventy‑nine, subsection one, provides for granting annual leave with wages to every worker who has worked at least two hundred and forty days in a factory during a calendar year. Section eighty is consequential upon section seventy‑nine; it requires that a worker be paid for the leave at a rate equal to the daily average wage of his total full‑time earnings for the days worked in the month immediately preceding the leave, excluding overtime and bonus but including dearness allowance and the cash equivalent of the advantage accruing through the concessional sale of food grains and other articles. The Court noted that section seventy‑nine clearly applies to workers who work for the full period of employment during factory hours and for the prescribed number of days. At first glance, it might appear inappropriate to extend the benefit of annual leave with wages to persons who do not work for the hours fixed for the establishment by means of a notification under subsection eighty‑five of one.

However, the Court held that if section seventy‑nine is made applicable by a notification under subsection eighty‑five, it would apply only to those workers who actually work in the factory for the full period prescribed under sections sixty‑one, seventy‑one and sixty‑six, subsection one, of the Factories Act, and who satisfy the minimum number of qualifying days. A “deemed worker” who receives payment only for the work he performs and who is under no obligation to attend the factory at any fixed time may be entitled to the benefit of annual leave with wages only if he fulfills the working conditions applicable to workers as defined in section two, subsection one, of the Act.

In the present matter the Court explained that a person who works for a shorter time than that prescribed for regular factory workers cannot rely on that reduced period to assist a deemed worker in claiming benefits under section 79, even if the individual also works fewer than the prescribed hours. However, the Court clarified that this limitation does not deprive a worker of the benefits of section 79 provided that he satisfies the conditions relating to the duration of work. The Court further observed that a deemed worker in a factory to which section 79 has been extended by a notification under section 85 may, by virtue of his contract or other arrangement, not be obligated to attend the specific times fixed by the factory owner. This lack of a fixed attendance requirement does not permanently prevent him from meeting the attendance conditions necessary to earn leave with wages. Accordingly, if a deemed worker attends the factory for the full duration defined as factory hours and works for at least 240 days in a calendar year, he becomes entitled to the benefits contemplated in sections 79 and 80 of the Act. The Court referred to the observations made in Shankar Balaji Waje’s case, wherein it was noted that Pandurang was not bound to work for the period displayed in the factory and therefore “his days of work for the purpose of section 79 could not be calculated.” The Court held that this observation is not inconsistent with its present view. In the Waje case no notification under section 85 had been issued by the State Government, and the issue before that Court was whether, considering the conditions governing his attendance, Pandurang could be regarded as a worker. The current Court emphasized that the earlier observation was not intended to imply that, had a notification under section 85 been issued and the workers concerned had worked the full displayed period for more than 240 days in the preceding year, they would still have been denied annual leave with wages. The Court reiterated that the right to leave with wages arises for a worker or deemed worker under section 79 only when the individual has worked during the full period of factory employment for the prescribed number of days in the previous year. The use of the word “days” in section 79 is interpreted to mean work for the full period of work displayed in the factory under the relevant provisions of the Factories Act. Any work performed for a period shorter than the displayed period cannot be counted as a “day” within the meaning of section 79. The Court also noted the decision in Bridhichand Sharma v. First Civil Judge, Nagpur, where it examined whether rollers in a bidi factory, who were required to work within factory hours but not for the entire period, were entitled to the benefit of section 79. After considering all circumstances, the Court concluded that the bidi rollers, being employed in the factory, satisfied the conditions necessary for entitlement under section 79.

The Court observed that the individuals in question qualified as workers within the meaning of section 2(1) of the Factories Act and therefore were entitled to the benefits provided under that provision. It further noted that the leave entitlement created by section 79 arose as a matter of right once a worker had attended work for the minimum number of days prescribed by the Act. The Court held that, after satisfying this attendance requirement, a worker’s right to leave could not be defeated by any subsequent absence that exceeded the period specified in section 79. This situation was not covered by any notification issued under section 85. Based on the evidence before it, the Court found that the persons employed in the factory were “employed” within the meaning of the Act and that, should they fulfil the conditions of section 79—including the total number of days of work required—they would be eligible for leave with pay. The Court emphasized that, for the purpose of qualifying for such leave, the attendance had to correspond to the full period prescribed by the factory owner.

The Court reiterated that the Factories Act primarily governs workers who are strictly defined as being employed in any manufacturing process carried out in a factory. However, the Act also permits the State Government, by means of a notification, to extend all or any of its provisions to any place where a manufacturing process is conducted. When such a notification is issued, the designated place becomes “deemed” to be a factory, the owner is deemed to be an occupier, and the persons working there are deemed to be workers, irrespective of whether they are directly employed by the owner or are working there with the owner’s permission or under an agreement, as noted in the cited decision (1) [1961] 3 S.C.R. 161. The Court reasoned that if imposing liability on the owner to provide the statutory benefits to strictly defined workers does not infringe the owner’s fundamental right to conduct his business, then imposing a similar obligation on the owner for “deemed” workers who meet the requirements of section 79 cannot be considered an infringement of that right, given the object of the statute. Consequently, by requiring the provision of annual leave with wages to deemed workers under sections 79 and 80 in the same manner and to the same extent as to strictly defined workers under section 2(1), no unreasonable restriction was placed on the occupier or owner of the factory. In conclusion, the Court held that section 85, which empowers the State Government to issue a notification applying the Act’s provisions to any place where manufacturing occurs—thereby deeming the place a factory and the persons working there as workers—does not, by itself, constitute discrimination prohibited by Article 14 of the Constitution, nor does it authorize an unreasonable restriction on the owner’s fundamental right to carry on his business.

In this case, the Court observed that the notification challenged by the petitioner had been issued under section 85(1) of the Act. The Court held that the notification could not be attacked on the basis that the State had selectively applied the provisions of the Act to only certain locations where bidi manufacturing processes were carried out. The Court further stated that the notification, as it sought to apply the Act’s provisions requiring the owner or occupier of a factory to provide annual leave with wages, did not impose any unreasonable restriction. Accordingly, the Court concluded that the petition failed and ordered that it be dismissed, directing the petitioners to pay costs in two sets as well as the hearing fee. The Court examined whether the selective application of the notification could be characterized as arbitrary or discriminatory, and found no indication of such conduct by the State. It emphasized that the statutory power under section 85(1) permits the State to specify the places to which the Act’s provisions will apply, without violating constitutional equality principles. The requirement to grant annual leave with wages, as imposed by the Act, is a benefit conferred upon workers and does not constitute an impermissible burden on the factory owner. Consequently, the notification's effect of extending this benefit to all persons engaged in bidi manufacturing was regarded as a permissible exercise of legislative authority.