Respected Seniors, please tell me, does a car showroom cum service center fall under the Factory Act or the Shops & Establishment Act for Noida? Kindly provide me with all the necessary forms and formats as per the relevant act.
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Nadeem Ahmad
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From India, New Delhi
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20Regards,
Nadeem Ahmad
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From India, New Delhi
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If both are on the same premises, it is considered a factory if together they have 10 or more workers. If they are on different premises, the showroom will fall under the Shop & Commercial Establishment Act, and the service center will be a factory if it alone has 10 or more workers.
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Varghese Mathew
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From India, Thiruvananthapuram
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Varghese Mathew
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From India, Thiruvananthapuram
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To answer your query, we need to find out from you how many persons you have employed for your car showroom cum service center.
Definition of 'Factory' Under the Factories Act, 1948
I would like to quote Section 2(m) of the Factories Act, 1948, which defines 'Factory' as:
(i) Where ten 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 out with the aid of power, or
(ii) Where 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 out without the aid of power.
It was held by the Rajasthan High Court that "where an auto service station is run for cleaning, washing, and oiling of vehicles, it is considered a 'manufacturing process' within the meaning of Section 2(k) of the Act. If the requisite number of workers are employed, then the premises is a factory within the meaning of Section 2(m) of the Act, and under such circumstances, a license is necessary under Section 6 of the Factories Act. (Citation-1993 AIR 117(125) (Raj. HC),1993 Cri LJ)
Registration Requirements
If your car showroom is located on the same premises, then it shall be treated as part of the Factory; otherwise, you need to take registration under UP Shops & Establishments Rules.
In the light of the above explanation, you may take suitable action.
Regards,
BS Kalsi
Member Since Aug 2011
From India, Mumbai
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Definition of 'Factory' Under the Factories Act, 1948
I would like to quote Section 2(m) of the Factories Act, 1948, which defines 'Factory' as:
(i) Where ten 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 out with the aid of power, or
(ii) Where 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 out without the aid of power.
It was held by the Rajasthan High Court that "where an auto service station is run for cleaning, washing, and oiling of vehicles, it is considered a 'manufacturing process' within the meaning of Section 2(k) of the Act. If the requisite number of workers are employed, then the premises is a factory within the meaning of Section 2(m) of the Act, and under such circumstances, a license is necessary under Section 6 of the Factories Act. (Citation-1993 AIR 117(125) (Raj. HC),1993 Cri LJ)
Registration Requirements
If your car showroom is located on the same premises, then it shall be treated as part of the Factory; otherwise, you need to take registration under UP Shops & Establishments Rules.
In the light of the above explanation, you may take suitable action.
Regards,
BS Kalsi
Member Since Aug 2011
From India, Mumbai
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Definition of "Manufacturing Process"
The expression "manufacturing process" is defined in Clause (k) of Section 2 of the Factories Act. The said Clause (k) is as follows:
(k) 'manufacturing process' means any process for:
- (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery, or disposal, or
- (ii) pumping oil, water, sewage, or any other substance, or;
- (iii) generating, transforming, or transmitting power, or
- (iv) composing types for printing, printing by letterpress, lithography, photogravure, or other similar process or bookbinding; or
- (v) constructing, reconstructing, repairing, refitting, finishing, or breaking up ships or vessels; or
- (vi) preserving or storing any article in cold storage.
Thus, the different processes set out in Sub-clause (i) of Clause (k) of Section 2 must be with a view to the use, sale, transport, delivery, or disposal of the article or substances manufactured.
Definition of 'Factory' and 'Worker'
A 'factory' and 'manufacturing process' as given in the Act: Section 2(m) of the Act defines 'Factory' as under: "factory" means any premises including the precincts thereof:
- (i) ............
- (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.
The mere labor bestowed on an article, even if the labor is applied through machinery, will not make it a manufacture unless it has progressed so far that a transformation ensues, and the article becomes commercially known as another and different article from that as it had begun its existence.
The Factories Act, 1948, defines a worker by s. 2 (1) as meaning, a person employed, directly or through any "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." A factory is defined by s. 2(m) as meaning any premises including the precincts thereof wherein a specified number of workers on any day of the preceding twelve months is employed. By the combined operation of these definitions, persons employed in any manufacturing process or in cleaning any part of the machinery or part of the premises used for the manufacturing process or any other kind of work incidental to or connected with the manufacturing process or the subject of the manufacturing process are deemed to be workers in a factory.
More are discussed in the attachment.
Regards,
From India, Bangalore
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The expression "manufacturing process" is defined in Clause (k) of Section 2 of the Factories Act. The said Clause (k) is as follows:
(k) 'manufacturing process' means any process for:
- (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery, or disposal, or
- (ii) pumping oil, water, sewage, or any other substance, or;
- (iii) generating, transforming, or transmitting power, or
- (iv) composing types for printing, printing by letterpress, lithography, photogravure, or other similar process or bookbinding; or
- (v) constructing, reconstructing, repairing, refitting, finishing, or breaking up ships or vessels; or
- (vi) preserving or storing any article in cold storage.
Thus, the different processes set out in Sub-clause (i) of Clause (k) of Section 2 must be with a view to the use, sale, transport, delivery, or disposal of the article or substances manufactured.
Definition of 'Factory' and 'Worker'
A 'factory' and 'manufacturing process' as given in the Act: Section 2(m) of the Act defines 'Factory' as under: "factory" means any premises including the precincts thereof:
- (i) ............
- (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.
The mere labor bestowed on an article, even if the labor is applied through machinery, will not make it a manufacture unless it has progressed so far that a transformation ensues, and the article becomes commercially known as another and different article from that as it had begun its existence.
The Factories Act, 1948, defines a worker by s. 2 (1) as meaning, a person employed, directly or through any "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." A factory is defined by s. 2(m) as meaning any premises including the precincts thereof wherein a specified number of workers on any day of the preceding twelve months is employed. By the combined operation of these definitions, persons employed in any manufacturing process or in cleaning any part of the machinery or part of the premises used for the manufacturing process or any other kind of work incidental to or connected with the manufacturing process or the subject of the manufacturing process are deemed to be workers in a factory.
More are discussed in the attachment.
Regards,
From India, Bangalore
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it comes under shops and establishment act and show room is not a factory
From India, Hyderabad
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From India, Hyderabad
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Are you all sure that servicing vehicles comes under factories act ? There is nothing being manufactured. It is a pure serviced business, so how can it be a factory ?
From India, Mumbai
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From India, Mumbai
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Understanding the Factories Act
Please read section 2(k) of the Factories Act. It defines the activities constituting a manufacturing process. You will find activities such as washing, cleaning, pumping water, etc., as part of the manufacturing process. These activities are carried out in service stations with the aid of power. Therefore, a workplace is considered a factory if it employs 10 or more workers.
Regards,
Varghese Mathew
From India, Thiruvananthapuram
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Please read section 2(k) of the Factories Act. It defines the activities constituting a manufacturing process. You will find activities such as washing, cleaning, pumping water, etc., as part of the manufacturing process. These activities are carried out in service stations with the aid of power. Therefore, a workplace is considered a factory if it employs 10 or more workers.
Regards,
Varghese Mathew
From India, Thiruvananthapuram
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Employees State Insurance ... vs Bhag Singh on 19 May, 1988
This judgment is opposite of what you said. Please go through it in detail.
It specifically says somewhere in the middle that:
Similarly, the "manufacturing process" in sub-clause (I) of section 2(k) would only apply in a case where a new marketable commodity comes into being after the process, which can be used, sold, transported, delivered, or disposed of. As no new marketable commodity emerges after washing and cleaning of the cars, it will not fall within the meaning of sub-clause (I) of Section 2(k). In the decision reported in 1982 P.L.R. 600, the same learned Judge held that the business of dry-cleaners would not fall within the definition of "factory" on the grounds that whenever washing or cleaning is done by a dry-cleaner with a view to its use, no separate commercially different marketable commodity comes into being which could be used, sold, transported, delivered, or disposed of, and therefore, no manufacturing process can be said to be involved.
Another part states:
"As regards service stations for repairing motor cars, etc., the counsel for the Corporation wants it to be brought within the definition of 'manufacturing process' as per section 2(k)(i) of the Factories Act wherein the word 'repairing' has been used. But this word has to be read along with the words 'any article or substance with a view to its use, sale, transport, delivery, or disposal' coming thereafter. So, the process of repairing has to be with any of these views, which would be completely missing in the business carried out in this case."
From India, Mumbai
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This judgment is opposite of what you said. Please go through it in detail.
It specifically says somewhere in the middle that:
Similarly, the "manufacturing process" in sub-clause (I) of section 2(k) would only apply in a case where a new marketable commodity comes into being after the process, which can be used, sold, transported, delivered, or disposed of. As no new marketable commodity emerges after washing and cleaning of the cars, it will not fall within the meaning of sub-clause (I) of Section 2(k). In the decision reported in 1982 P.L.R. 600, the same learned Judge held that the business of dry-cleaners would not fall within the definition of "factory" on the grounds that whenever washing or cleaning is done by a dry-cleaner with a view to its use, no separate commercially different marketable commodity comes into being which could be used, sold, transported, delivered, or disposed of, and therefore, no manufacturing process can be said to be involved.
Another part states:
"As regards service stations for repairing motor cars, etc., the counsel for the Corporation wants it to be brought within the definition of 'manufacturing process' as per section 2(k)(i) of the Factories Act wherein the word 'repairing' has been used. But this word has to be read along with the words 'any article or substance with a view to its use, sale, transport, delivery, or disposal' coming thereafter. So, the process of repairing has to be with any of these views, which would be completely missing in the business carried out in this case."
From India, Mumbai
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I also find that the original Rajasthan HC and Mumbai HC have held different views on the matter. However, the case I have quoted has referred to both of them and stated why their views do not hold true. So now, what's the latest on the judgment? Has the SC made any judgment on this?
From India, Mumbai
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From India, Mumbai
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In this forum, very few discussions are interesting to read. This discussion is one of the interesting ones. Thanks to everyone who participated in this discussion.
Judgment Reference
Dear Saswata ji,
The judgment is attached herewith.
Regards.
From India, Mumbai
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Judgment Reference
Dear Saswata ji,
The judgment is attached herewith.
Regards.
From India, Mumbai
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Dear friends, if we delve deeper, there are numerous activities that fall under the classification of a "Factory" in different contexts and Acts. Some examples are listed in the attachment.
Regarding Software Companies and Factory Classification
Regarding the software company being classified as a Factory under the Factories Act and ESI, some expressed views are provided in the attachment, which are worth noting.
Regards.
From India, Bangalore
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Regarding Software Companies and Factory Classification
Regarding the software company being classified as a Factory under the Factories Act and ESI, some expressed views are provided in the attachment, which are worth noting.
Regards.
From India, Bangalore
Acknowledge(2)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Forms & Registers Andhra Pradesh Shops & Establishments Act 1988 & Rules 1990.xls
Maharashtra Shops And Establishments (Regulation Of Employment And Conditions Of Service) Act, 2.pdf