Does Packing and Repacking Count as Manufacturing Under the Factories Act? Let's Discuss Legal Implications

Hi, stating in brief the facts and query as under:

Company XYZ has two premises in Gurgaon: one is a warehouse (on a lease basis) and the other is an office space. The company has outsourced the manufacture of its products (essentially drugs and cosmetics) to a third party. However, the packing, branding, and labeling of the manufactured products in the company’s name are done at the warehouse.

For another business, products of various cosmetic brands are assorted into various packages/hamper of sorts. For this purpose, the company procures finished, ready-to-sell products from various brands. At the office premises, these products are then packed into various boxes, without modifying the individual products. These boxes are in the company’s name and are further sold to customers.

Queries

1) Will mere assortment/packing or repacking of goods amount to a 'manufacturing process' under the 'Factories Act'?

2) Will the warehouse and office premises fall within the definition of ‘factory’ under the ‘Factories Act’?

3) Will the Industrial Standing Orders Act be applicable to the warehouse and the office premises?

4) What are the labor law-related registrations that the warehouse and office premises have to take?

Definition of 'Manufacturing Process'

The definition of 'manufacturing process' includes packing, modifying, or adapting any article or substance with a view to its use, sale, transport, delivery, or disposal. So the operation is covered. The only question that remains is whether you have employed 10 or more persons and use power (even for lighting purposes), or otherwise, it is twenty or more workmen in such a premise.

Definition of a Factory

The definition of a factory is any premises where a manufacturing process is carried out and deploys the prescribed strength of workmen (as above). So such premises are considered a factory, even though outwardly it may not have any signs of being a factory (like a chimney or slanting roof).

Applicability of the Standing Orders Act

The Standing Orders Act is applicable if it meets the prescribed manpower strength as per the State Act.

Additional Information Needed

To answer the query, more information is needed.

Thank you for your insightful response.

Could you please shed light on whether simply assorting and repacking of finished products would amount to manufacturing? For example, Amazon only packs products but doesn't manufacture them. Would Amazon also fall within the definition of a factory?

Thank you.

Since 'packing' comes within the definition of 'manufacturing activity,' it could be considered a factory as per the Factories Act 1948. However, in a significant case, the Court held that although the laundry would render the hotel a factory under the Act, since that is not its primary or substantial activity, the hotel would not be classified as a factory. (This was probably in the Ritz Hotel matter in 2006/07).

Going by that logic, for Amazon or other such online distributors, packing or repacking is only an incidental activity and is not central to their business, so the aforementioned reasoning could apply.

But, in your case, as the packing, branding, and labeling of the manufactured products in the company's name is done at your warehouse, the interpretation that the place would come within the scope of the manufacturing process holds weight, and accordingly, the consequence would follow.