Coverage Of Petrol Pumps Under Factories Act,1948 - PDF Download

Dear all,

Greetings of the day. In my opinion and in the light of the definition of "Manufacturing process," petrol pumps fall within the definition of factories. Even power distribution is also considered a factory, as the power is generated by someone and somewhere and is distributed by Electricity Boards, etc.

Regards.

Dear Members,

I am grateful to the CiteHR members for wholeheartedly participating in the discussion and dissemination of their experience and knowledge. Similarly, during my search on the internet, I came across a judgment reported in Labour Law Reporter, page no. 1066, Supreme Court of India, October 2009, where it has been held that in M/S Qazi Noorul H.H.H Petrol Pump and Another vs. Deputy Director, E.S.I. Corporation, that "Pumping oil is a manufacturing process."

A copy of the extract is attached for the members' perusal.

BS Kalsi

Dear Members,

Due to some error on the linked page, I am sorry I have not been able to upload the judgment despite my best efforts. I shall seek someone's assistance and try again.

BS Kalsi

Dear Mr.kalsi

It is a great and interesting discussion on the vexatious question whether pumping oil falls within the definition of manufacturing process under Sec.2(k) of the Factories Act. There are indeed valuable contributions from all learned members each of which has it’s own merit and substance. I can’t but agree with them. The question nevertheless is baffling as Mr.Umakantan has rightly said. Yes it is puzzling to accept the process of pumping oil as a manufacturing process because it defies the normal understanding of manufacturing process that is etched even in prudent minds and for all purposes the petrol pump after all engages in the sale of petrol and should qualify to be a shop.

We normally associate the idea of manufacturing process with any process which either transforms or converts a substance into a different article/substance that is marketable. However the case of Baranagar Service Station V.ESIC 1987(54) FLR 635(Cal.DB) has dispelled this notion by holding that manufacturing process need not cause any transformation of an existing substance or result in the emergence of new product. For example washing and cleaning are also included in the definition of manufacturing process though they do not result in the emergence of a new product.

Then the question that arises is whether the process of pumping oil in order to be a manufacturing process shall be linked to pumping oil from a refinery or any processing unit. This question was addressed exactly by the case of ESIC v. Bhag Singh 1988 II LLN 417.Repelling the same view in the said case, the Hon’ble Punjab & Haryana High Court held that the expression ‘manufacturing process’ shall not be understood in a narrow and restricted sense of bringing out a different product. Even if a process brings out a special result in the goods or substance, it falls within the definition of manufacturing process. The court cites the example of washing or cleaning or oiling which are included as manufacturing process. Though these processes do not make a new car out of the ones that are brought to the service station for the said purposes, they nevertheless bring out a special result in the vehicle namely a lubricated and cleanse vehicle and pumping oil too shall similarly be understood as bringing out special result in the car that is brought for filling fuel.

Thus the above case law together with Quazi Nurul petrol Pump furnished by learned member Mr.Harsh Kumar Mehta may largely address your query. Though the cases cited were under ESI Act , they are nevertheless relevant to the subject under discussion since the definition of manufacturing process under Sec.2(14 AA) of ESI Act is pari materia with that under Factories Act

The courts have given such plain and liberal meaning to the manufacturing process under Factories Act keeping in view the social objectives of the factories Act namely the health and safety of workers employed at work places. Therefore the meaning of manufacturing process needs to be understood in the sense the legislature gave it but not in the ordinary sense of the meaning.

B.Saikumar

In-House HR & IR Advisor

navi Mumbai

Please see the definition of Factory under sec 2(m) of The Factories Act. By an amendment to it w.e.f. 26.10.1976, the following are excluded from the definition of a factory:

1. mobile unit attached to the armed forces of the union,
2. Railway running shed,
3. hotel, restaurant, or eating place.

Though hotels, etc., are not considered factories under the Factories Act due to the above exclusions, they are classified as factories under the ESI Act because in the definition of a factory in the ESI Act, they are not excluded (sec 2(12) of ESI Act).

Varghese Mathew

Dear BS Kalsi ji,

The aforementioned judgment has already been uploaded this morning in this thread by our esteemed member, Harsh Kumar ji.

I feel petrol pumps do not come under the Factory Act because they are only selling points; there is no repair process or productive activity.

Dear all friends,

With the views put forward and the arguments advanced by Harsh Kumar and Loginmiracle about the classification of retail outlets mechanically distributing petroleum products as "factories" under cross-reference to various cognate definitions in different statutes associated with the subject matter as per the ratio decidendi of the decisions of the Apex Court and various High Courts, bring the present discussion to its finality. The well-thought-out and convincingly drafted explanation by Saikumar adds beauty to the finality.

As we are all well-aware, all our labor laws could be brought under the following classifications - (1) Laws relating to a particular type of establishments, (2) Laws relating to service conditions, (3) Laws relating to Industrial Relations, (4) Monetary Labor Laws, and (5) Laws relating to the social security of labor.

So, my reply to Mr. Korgaonkar is: Unless and until there is a direct judicial decision on the classificatory aspect arising out of any two establishment-oriented Laws, these petroleum retail outlets or petrol bunks, as commonly called, are "factories" because of the supremacy of the law declared by the Supreme Court as per Article 141 of our Constitution.