Non-compliance of provisions of Section 63 held punishable u/s 92.

Subba Rao, J.- This appeal by Special Leave is directed against the Order of the High Court of Judicature at Nagpur and raises the question of construction of some of the provisions of the Factories Act (LXIII of 1948) (hereinafter referred to as the Act). Before posing the questions raised it would be convenient and useful at the outset to state the facts either found by the High Court or admitted by the parties.

Messrs. Brijlal Manilal & Company is a bidi factory situated in Sagar. The first Appellant, Chintamanrao, is the Managing Partner of the firm while the second appellant, Kantilal, is its active Manager. The Company manufactures bidis. The process of manufacture, so far as is relevant to the question raised, is carried out in two stages.

The first stage: The management enters into a contract with independent contractors, known as Sattedars, for the supply of bid is locally. The documents embodying the terms of the contract entered into by the Sattedars were not produced in the case. But the terms of the contract are not in dispute. The Management supplies tobacco to the Sattedars and in some cases bidi leaves. Some of the Sattedars maintain a small factory where they get bidis manufactured by engaging coolies. Others give tobacco and bidi leaves to outsiders who prepare bidis in their houses. After bidis are rolled in, the Sattedars collect the bidis so manufactured and take them to the factory directly or through coolies where they are sorted and checked by the workers in the factory. The selected or approved bidis are separately packed in bundles of 10 and 25 and taken by the Sattedars or the coolies in gauze trays to tandul and left there. The rejected bidis, commonly known as ‘chhant’ are again rebundled by the Sattedars and delivered to the factory. The management pays the Sattedars the cost of the manufacture of bidis after deducting therefrom the cost of tobacco supplied to them. Thereafter the second stage of the process of the manufacture begins in the factory. It is carried out exclusively by the labourers employed in the factory. It consists of warming of bidis to give taste, wrapping them in tissue papers, labelling and finally bundling them in the ‘Pudas’. The finished product is then marketed. From the aforesaid description of the dual process of manufacture of bidis it is manifest that a Sattedar is only an independent contractor, who undertakes to do a specific job of work, i.e., the supply of bidis, directly or indirectly through his coolies, by manufacturing them either in his own factory or by entrusting the work to third parties at a price to be paid by the management after delivery and approval. He (Sattedar) or his coolies neither work in the appellant's factory nor are they subject to the supervision or control of the appellants. The coolies or the third parties, to whom the work of making of bidis is entrusted by the Sattedars are employee by the Sattedars and are paid by them. None of them works in the factory though they bring bidis to the factory for delivery in accordance with the terms of the contract. It may also be pointed out that the factory employs workers who are under the’ direct control and supervision of the factory management and who attend to the second part of the process of manufacture described above.

On December 9, 1952, Sri B.V. Desai, the Inspector of Factories, Madhya Pradesh, Napur, visited the factory at 5-30 p.m. At the time of his inspection he found the following persons in the factory:

1. Pirbaksha, son of Amir.

2. Abdul Sagir, son of Sk. Alam.

3. Deviprasad, son of Uddam.

4. Ramshankar, son of Mulchand.

5. Gopal, son of Mulchand.

6. Nirpat, son of Bhagirath.

7. Ramchand, son of Gyan.

8. Gotiram, son of Lila.

9. Basodi, son of Gulu.

Of the aforesaid persons, Deviprasad, Nirpat and Gotiram are Sattedars and the rest are coolies employed by the Sattedars. The Inspector found the first seven persons sorting out bidis and packing them into bundles of 10 and 25 in the prem