Navigating Factory Licensing: Does Company X Need a License for Conveyor Operations?

Dear sirs,

We are a registered company "X" under the Companies Act 1956 and have a license agreement with one of the port trusts for the mechanization, operation, and maintenance of the conveyor system, providing services to the manufacturing unit "Y" to transport their cargo from the plant area to the port area. Company X has a cargo handling agreement with Company "Y" for transporting their cargo at a mutually agreed price.

Registrations of Company X

The registrations of company "X" are as follows:

1. Company X holds a contract labor license under the CLRA Act 1970 for engaging 70 contract laborers for the operation and maintenance of the mechanization of the conveyor system.
2. Company "Y" is a consortium member of Company X with a minor shareholding.
3. 3.2 km of conveyors fall within the factory premises of Company "Y," which is covered under the factory license.
4. 3.00 km of conveyors are outside the factory boundary on port ROW land, for which neither "X" nor "Y" has obtained a factory license.
5. 3.00 km of conveyors are within the port limits, falling under the Dock Safety Rules and Regulations Act.

Query

- Is Company X required to obtain a factory license for the 3.00 km outside the factory boundary?
- What are the rules regarding a service provider like X having a conveyor system for transporting Y company's cargo?

We await your valuable legal opinion.

Irrespective of the registration of that area by 'X' or 'Y' company, the workers engaged in that area would be deemed to be engaged in the "manufacturing process" and would be covered under the definition of "worker" under the Factories Act 1948, entitling them to all the benefits available for workers.

- S. K. Mittal
[Phone Number Removed For Privacy-Reasons]

Factory License Requirements

The factory license is to be obtained by the owner thereof. Here, the owner of the conveyor belt is normally Company Y, and as a service provider, you are not required to obtain a factory license.

Review of Agreement

For a detailed examination, the agreement between Company X and Y should be reviewed with reference to the applicable State Rules as per Section 6 of the Factories Act 1948.

Dear friend, In short, Company X is a contractor for the operation, maintenance, and mechanization of the conveyor system within the factory premises and outside the stretch belonging to Company Y. Therefore, it is necessary that you have obtained a contractor's license under the CLRA Act, 1970. Even if the conveyor stretch is outside the area registered under the Factories Act, 1948, it also falls under the Act. It is the responsibility of Company Y, who is the owner of the system.