The owner of a factory is not liable for failing to take out a license under Rule 3-A of the Bombay Factories Rules, 1950, if the workers are not working with his permission or under an agreement with him.

Judgment

HIDAYATULLAH, J.:- The State of Maharashtra appeals against the judgment and order of the High Court of Bombay dated November 8, 1963 by which the High Court set aside the conviction of one Purshottamdas Ranchhoddas (since deceased and represented by his widow) and the fine imposed on him, under Section 92 of the Factories Act, 1948 read with Rule 3-A of the Bombay Factories Rules, 1950. Only one question arises in this appeal and it is the true construction of Section 85 of the Factories Act on which different views have been expressed by the High Court and the Court below.

2. Purshottamdas Ranchhoddas was a lessee from the Port Trust Bombay of an open plot of land. He established a factory called the Sunderdas Saw Mills. He closed down the factory on April l, 1957. In July 1957, the ex-workers of the factory combined together to form five partnerships and by agreements of leave and licence, Purshottamdas Ranchhoddas gave in their use the premises of the factory and the machinery installed there. He himself did not join any of the five partnerships. The licensees were to pay a fixed sum for the use of the premises and the machines. It appears that some of the workers who were not taken in as partners complained that the closure of the factory was a sham. No action was taken on this complaint and there is no finding in this case that the closure of the factory was unreal.

3. In the year 1959, a prosecution was started under Section 92 of the Factories Act on the charge that the original licensee of the factory had not given notice under Section 7(1) of the start of the factory and had not renewed the licence under Rule 4 of the Bombay Factories Rules 1950. This ended in an acquittal since Government had not declared these premises as a factory under Section 85 of the Act, as it could, if the workers (although not employed by the owner) were working with the permission of or under an agreement with the owner. After notification the premises are deemed to be a factory and the owner of the premises is deemed to be an occupier.

4. On September 29, 1960, a notification was issued under Section 85. That notification specified the places where the five partnerships were working as factory. On November 10, 1959, five separate complaints were filed for failure to take out five licenses. The charge was that Purshottamdas Ranchhoddas was the owner of the factory and hence an occupier and the workmen were working under an agreement with him. The owner defended himself by stating that he had no control over the five firms and he could not enforce the provisions of the Factories Act. This defence was not accepted. Purshottamdas Ranchhoddas was held to notification and, therefore, to be compelled to take out a licence under Rule 3-A of the Bombay Factories Rules. He was fined Rs. 201 for the first offence and Rs. 25 for the subsequent offences. Purshottamdas Ranchhoddas appealed but died during the pendency of the appeal. As the sentence was one of fine the appeal was continued by his legal representative under Section 431 of the Code of Criminal Procedure. The Bombay High Court set aside the conviction and fine and now the present appeal has been filed by the State of Maharashtra on special leave granted by this Court.

5. Under Rule 3 of the Bombay Factories Rules, 1950 an application has to he made for the approval of a factory. Under Rule 3-A no occupier of a factory shall use any premises as a factory except under a licence obtained or renewed in accordance with the provisions of the rules. Section 85 grants power to the State Government to apply the Factories Act to certain premises which would otherwise not come within its purview. The section reads :

Section 85: "Power to apply the Act to certain premises. - (1) The State Government may, by notification in the Official Gazatte, declare that all or any of the provisions of this Act shall apply to any place wherein a manufacturing process is carried on with or without the aid of powe