Exercise 1: Legal Opinion on Labour Law and Sectoral Law Compliance In the bustling city

of Mumbai, Mr. Arjun Sharma, a seasoned entrepreneur with a passion for sustainable
solutions, stumbled upon a gap in the market for eco-friendly packaging materials. Inspired
by his vision to contribute to environmental conservation while meeting consumer demands,
Mr. Sharma embarked on a journey to establish a new manufacturing company in
Maharashtra, India.
After months of meticulous planning and extensive market research, Mr. Sharma, along with
his dedicated team of professionals, officially incorporated Innovative Creations Pvt. Ltd.
With its operations set to commence, the company has employed 200 workmen to manage its
manufacturing facilities. Upon learning about Innovative Creations Pvt. Ltd need for legal
guidance, you, as a seasoned legal consultant, are approached by Mr. Sharma. Draft a legal
opinion in response to the following queries raised. While preparing the opinion prepare a
table containing the list of applicable laws and reasons on why such law will applicable.

1. Given the establishment of Innovative Creations Pvt. Ltd. in the manufacturing

sector in Maharashtra with a workforce of 200 employees, what are the specific
labour laws that the company should comply with in consideration of Central &
State Legislations to ensure compliance with regulations regarding welfare of
workmen and their terms of employment?

Non-compliance with statutory and regulatory requirements is a significant problem in the

manufacturing industry in India. Here are some industry insights about non-compliance in
manufacturing companies in India:
Labour Laws: Non-compliance with labour laws is a common problem in the manufacturing
industry in India. Companies may violate labour laws by not providing minimum wages,
overtime payments, or social security benefits to workers.
Environmental Laws: Environmental non-compliance is another common problem in the
manufacturing industry in India. Companies may violate environmental laws by not obtaining
necessary environmental clearances, not complying with pollution control norms, or
improperly disposing of hazardous waste.
Intellectual Property Laws: Intellectual property non-compliance is also a problem in the
manufacturing industry in India. Companies may violate intellectual property laws by
producing counterfeit or infringing products.
Tax Laws: Non-compliance with tax laws is a significant problem in the manufacturing
industry in India. Companies may violate tax laws by not maintaining proper books of
accounts, not filing tax returns, or under-reporting income.
Safety Laws: Safety non-compliance is also a problem in the manufacturing industry in
India. Companies may violate safety laws by not providing a safe working environment, not
complying with safety norms, or not providing safety equipment to workers.
 2. In addition to labour laws, considering the nature of the business and the location of
Innovative Creations Pvt. Ltd. in Maharashtra, what are the other sectoral laws and
regulations that the company should diligently comply with to operate within legal
frameworks?
The Companies Act, 2013: The Companies Act, 2013 is the primary law that governs the
formation, management, and operation of companies in India. Manufacturing companies
must comply with various provisions of the Act, including maintaining statutory registers,
conducting annual general meetings, filing financial statements and annual returns, and
appointing auditors.
Goods and Services Tax (GST): GST is a comprehensive indirect tax that replaced various
indirect taxes in India. Manufacturing companies need to obtain a GST registration and
comply with the rules regarding tax invoicing, filing of returns, and payment of taxes. Failure
to comply with GST regulations can result in hefty penalties.
Income Tax Act: Manufacturing companies are also required to comply with the provisions
of the Income Tax Act, which governs the taxation of income earned in India. Companies
must maintain proper books of accounts, file income tax returns, and pay taxes on time. Non-
compliance with the Income Tax Act can result in legal action and penalties.
Labour Laws: Manufacturing companies must comply with various labour laws, including
the Industrial Disputes Act, Minimum Wages Act, Payment of Bonus Act, and Employees’
Provident Fund and Miscellaneous Provisions Act. These laws govern employment
conditions such as working hours, minimum wages, social security benefits, and dispute
resolution mechanisms.
Environmental Laws: Manufacturing companies must also comply with various
environmental laws, including the Water (Prevention and Control of Pollution) Act, 1974, Air
(Prevention and Control of Pollution) Act, 1981, and Hazardous Waste Management Rules,
2016. These laws require companies to obtain environmental clearances, comply with
pollution control norms, and properly dispose of hazardous waste.
Intellectual Property Laws: Manufacturing companies must also comply with the
provisions of intellectual property laws, including the Patents Act, Trademarks Act, and
Copyright Act. These laws govern the protection of intellectual property rights and require
companies to obtain necessary registrations and licenses for their products and services.
The Factory Act in India is a legislation that governs the functioning of factories in the
country. The act lays down rules and regulations to ensure the safety, health, and welfare of
workers employed in factories. Some of the important laws in the Factory Act in India are:
 Registration and Licensing: The Factory Act mandates that all factories employing
10 or more workers using power or 20 or more workers without the use of power must
register and obtain a license from the Chief Inspector of Factories.
 Working Hours: The act lays down the maximum number of working hours per day
and per week. It stipulates that no adult worker shall work for more than 9 hours per
day or 48 hours per week. Overtime should be paid for any work done beyond these
hours.
 Health and Safety: The Factory Act mandates that factories must maintain adequate
standards of sanitation and hygiene. It also requires factories to provide adequate
ventilation, lighting, and drinking water facilities. The act also mandates the provision
of safety measures like fire extinguishers, first aid kits, and protective gear for
workers.
 Welfare Provisions: The act mandates that factories must provide adequate welfare
facilities like canteens, restrooms, and crèches for women workers.
  Employment of Women and Children: The Factory Act prohibits the employment
of children below the age of 14 years in any factory. It also lays down rules for the
employment of women, stating that they should not be employed for work that
requires them to stand for long hours, or that is hazardous to their health.
 Leave Policy: The act stipulates that workers must be granted a minimum of one day
off per week. It also lays down rules for the grant of annual leave and sick leave.
 Inspections: The Factory Act provides for regular inspections of factories by
government inspectors to ensure compliance with the rules and regulations laid down
in the act. Inspectors have the power to issue directions to factories to rectify any non-
compliance.

Exercise 2: Mandatory Licences for Restaurants and Penalties of Non-Registration

Rajat Dalal is a passionate entrepreneur who has always dreamt of opening a restaurant
that caters to the growing demand for non-alcoholic dining experiences in India. After
extensive market research and planning, he decides to embark on his journey to open a
restaurant serving food and non-alcoholic beverages in the city of Pune. However,
before Rajat can officially open his restaurant, he needs to ensure that he obtains all the
necessary licences and permits required by law. He approaches you for legal advice.
Draft a legal opinion in response to the following queries raised:
1. List down 5 mandatory licences that will be applicable to Rajat’s restaurant for operating
a non-alcoholic restaurant?

For smoother business operations, it is necessary to identify the correct licenses required
to open and operate a restaurant in India. At present, depending on the format and
services offered, a restaurant business would require procuring of the following licenses,
registrations, and approvals: -

i. FSSAI License-FSSAI License is the first and most important license required to
start a food business in India. This license is granted by The Food Safety and Standards
Authority of India under Section 31 of Food Safety and Standards (FSS) Act, 2006. It can
be applied through the official portal of The Food Safety and Standards Authority of
India at ‘foodlicensing.fssai.gov.in’. The Statutory License Cost is Rs. 7,500/- per year;
and can be applied for a period of 1 to 5 years, at a time. In case of default, a penalty of
Rs. 1 Lakh - 10 Lakh may be levied under Section 48 of FSS Act, 2006.

ii. Health/ Trade License-Health/Trade License, issued by the appropriate municipal

corporation, permits the operation of businesses engaging in goods and services, which
affects the health of the general public. The License can be applied either on State’s
Municipal Corporation Website or Zonal Citizen’s Services Bureaus. The Statutory Cost
may vary depending on the State in which the application is made.

iii. GST Registration-GST number is mandatory to start any company in India, which
crosses the threshold limit for registration as laid down in the Act. Restaurants having
outlets in different States require separate GST registration for each State.
 iv. Fire Safety License-‘No Objection-Certificate’ is required from the State Fire
Department, followed by a registration in the said Department, to run a restaurant along-
with all the safety equipment based on the location of the restaurant. The Application is
available on the State Government Website.After having all the safety equipment in
place, the Chief Fire Officer is invited for inspection pursuant to which the NOC is
granted.

v. Shop and Establishment License-It is a mandatory License which permits the

running of a business in one’s respective State. It is governed under the Shop and
Establishment Act, 1954 that regulates the working hours, payments of staff, and
working conditions. The Certificate of registration is provided by chief inspector of Shop
and Establishment Act or by the inspector assigned to the area where the restaurants are
operated; applied either online or offline. The Statutory License depends upon the State
in which the Restaurant is situated. The Validity of the License is 5 years.

vi. Eating House License-Public restaurants, suppling food and beverages, require
‘Eating House License’ which can be applied online along-with submission of relevant
documents followed by a meeting with the Additional Commissioner of Police to the
State for verification of the application and the examination of the documents. It is
governed under the Police Act of different States.

2. What are the penalties for non-registration or non-compliance with licensing

requirements in India?

Sections under which penalties are issued

The provisions relating to offenses and penalties are specified under section 48. Penalties are
given from Sections 49-67 of the FSSAI Act.

Penalties for being non-compliant under the FSSAI:

Every business needs to be compliant with the laws and guidelines of the concerned authority
and government. The food business needs to be compliant as it has the health of humans on
its brink. The penalties under chapter 9 of the FSSAI act, there are the following sections
which include the following:

Section 50: Penalty for selling food not of the nature or substance, or quality demanded
Any person who sells to the purchaser’s prejudice any food which is not in compliance with
the provisions of this FSSAI Act or the regulations or of the nature or substance or quality
demanded by the purchaser shall be liable to a penalty not exceeding five lakh rupees.

They provided that the persons covered under sub-section (2) of section 31 shall, for such
non-compliance, be liable to a penalty not exceeding twenty-five thousand rupees.

Section 51: Penalty for sub-standard food

Any person who, whether by himself or by any other person on his behalf, manufactures for
sale or stores or sells or distributes or imports any sub-standard food article for human
consumption shall be liable to a penalty which may extend to five lakh rupees.

Section 52: Penalty for misbranded food

Any person who, whether by himself or by any other person on his behalf, manufactures for
sale or stores or sells or distributes or imports any article of food for human consumption
which is misbranded shall be liable to a penalty which may extend to three lakh rupees.

The Adjudicating Officer may issue a direction to the person found guilty of an offense under
this section for taking corrective action to rectify the mistake, or such article of food shall be
destroyed.

Section 53: Penalty for misleading advertisement

Under chapter 9 of the Food safety and standards act, 2006, if any person publishes or is a
part of a publication that advertises to falsely describes food and is possible to deceive or
trick as to the nature/substance/or quality of any food or provides a dishonest guarantee, is
liable to a penalty which may extend to ten lakh rupees.

Section 54: Penalty for food containing extraneous matter

Any person, whether by himself or by any other person on his behalf, manufactures for sale
or stores or sells or distributes or imports any article of food for human consumption
containing extraneous matter shall be liable to a penalty which may extend to one lakh
rupees.

Section 55: Failure to comply with the directions of FSO

If any food business operator or importer fails to comply with the requirements under the act
without any basic or reasonable ground is liable to a penalty which may extend to two lakh
rupees per the directions of the Food Safety Officer.

Section 56: Penalty for unhygienic or unsanitary processing or manufacturing of food

Any person who, whether by himself or by any other person on his behalf, manufactures or
processes any article of food for human consumption under unhygienic or unsanitary
conditions shall be liable to a penalty that may extend to one lakh rupees.

Section 57: Possessing Adulterant

If any person themself or through any other person on his behalf,
manufacture/process/imports/sells/or distributes any adulterant, is liable to the below-
mentioned penalty:

 A penalty not exceeding two lakh rupees if such adulterant is not injurious to health
 A fine not exceeding ten lakh rupees if such adulterant is injurious to health
The Food Safety and Standards Authority of India (FSSAI) has recommended stringent
punishment to curb food adulteration following the Supreme Court order. Those adulterating
food products could face life imprisonment and a penalty of up to Rs 10 lakh as per the
amendments proposed by the regulator FSSAI in its 2006 food safety and standards law.

Process for Checking Food Adulteration

The implementation and enforcement of the Food Safety and Standards Act, of 2006 rests
with State Governments. Random samples of food items are drawn by the State Food Safety
Officers and sent to the laboratories recognized by the FSSAI for analysis. In cases, where
samples are found to contain adulterants, action is taken as per the provision of the FSSAI
Act.

Powers of Food Safety Officer

A food safety officer is the authorized person to inspect the safety and security of food that is
being served in restaurants or street food stalls. In case the food inspected by an officer is not
fresh or had got spoilt, the FSSAI officer has all the rights to stop production of such food
and issue a warning in writing to the organizer. Further, Food Safety Officer can also search
or inspect any place with the help of the police force. Usually, the search is controlled or
managed by a search warrant issued under the penal code.

Section 58: Contravention of FSSAI Rules

If any person who violates or opposes the rules and regulations as stated under the FSSAI act
is liable to a penalty that may extend to two lakh rupees.

Section 59: Punishment for unsafe food

Any person who, whether by himself or by any other person on his behalf, manufactures for
sale or stores or sells or distributes or imports any article of food for human consumption
which is unsafe shall be punishable:

 Where such failure or contravention does not result in injury, with imprisonment for a
term which may extend to six months and also with a fine which may extend to one
lakh rupees;
 where such failure or contravention results in a non-grievous injury, with
imprisonment for a term which may extend to one year and also with a fine which
may extend to three lakh rupees;
 where such failure or contravention results in a grievous injury, with imprisonment
for a term which may extend to six years and also with a fine which may extend to
five lakh rupees;
 where such failure or contravention results in death, with imprisonment for a term
which shall not be less than seven years but may extend to imprisonment for life, and
with a fine which shall not be less than ten lakh Rupees.

Section 60: Punishment for interfering with seized items

If any person illegally or without the permission of the Food Safety Officer
holds/switches/transfers/or damages any such food/vehicle/package/labeling/or advertising
matter that has been confiscated, is punishable with imprisonment for a duration which may
extend to six months and also with fine which may extend to two lakh rupees.

Section 61: Punishment for false information

if any person gives in false details as required under the FSSAI act is punishable with
imprisonment for a duration which may extend to three months and a fine which may extend
to two lakh rupees.

Section 62: Punishment for obstructing or impersonating an FSO

If any person tries to or does threaten/excuse/resist/obstruct/intimidate/or assault the Food
Safety Officer (FSO) during his checks or hours of exercising inspection is punishable with
imprisonment for a term which may extend to three months and also with fine which may
extend to one lakh rupees.

Section 63: Punishment for carrying out a business without an FSSAI license
If any person or food business operator (except the persons exempted from licensing under
sub-section (2) of section 31 of this Act), himself or by any person on his behalf who is
required to obtain a license, manufacturers, sells, stores or distributes or imports any article of
food without a permit, shall be punishable with imprisonment for a term which may extend to
six months and also with a fine which may extend to five lakh rupees.

Section 64: Punishment for subsequent offenses

If any person is found guilty as per the law under the FSSAI act is again commits and is
convicted of the same is liable to the following penalty-

 FSSAI license being canceled

 An additional fine daily which may extend up to one lakh rupees, where the offense is
a continuing one
 twice the punishment, which might have been imposed on a first conviction, subject
to the sentence being maximum provided for the same offense

Section 65: Compensation in case injury or death of consumer

f any person themself or through any other person on his behalf,
manufacture/process/imports/sell/or distributes any article of food inducing injury to the
consumer or to his death, shall be lawful for the Adjudicating Officer or as the case may be,
the court to direct him to pay compensation to the victim or the legal representative of the
victim, a sum-

 not exceeding three lakh rupees in case of grievous injury

 not less than five lakh rupees in case of death
 not exceeding one lakh rupees in all other cases of injury
Note: The compensation is processed six months from the date of occurrence of the incident
and as early as possible. If the case reaches death, an interim relief shall be paid to the next of
kin within thirty days of the incident.

Section 66: Offences by Companies

Suppose a company has committed an offense under the FSSAI act. In that case, every person
in charge of the company when the offense was committed is held responsible and deemed
guilty of the crime and shall be liable to be proceeded against and punished accordingly.

Provided that where a company has different establishments or branches or different units in
any establishment or branch, the concerned Head or the person in charge of such
establishment, branch, or team nominated by the company as responsible for food safety shall
be liable for infringement in respect of such establishment, branch or unit:

Notwithstanding anything in sub-section (1), where a Company has committed an offense

under this Act, and it is proved that the offense has been committed with the consent or
connivance of or is attributable to any neglect on the part of an Manager, Secretary or other
Officer of the Company, such Director, Manager, Secretary or other Office shall also be
deemed to be guilty of that offense and shall be liable to be proceeded against and punished
accordingly.

Section 67: Imports of food in contravention of the FSSAI Act

If any person who imports any article of food which is in contravention of the provisions of
this FSSAI Act, rules and regulations made there under, shall, in addition to any penalty to
which he may be liable under the conditions of the Foreign Trade (Development and
Regulation) Act, 1992 (22 of 1992) and the Customs Act, 1962 (52 of 1962) be also liable
under the FSSSAI Act and shall be proceeded against accordingly.

Any such article of food shall be destroyed or returned to the importer if permitted by the
competent authority under the Foreign Trade (Development and Regulation) Act, 1992 (22 of
1992) of the Customs Act, 1962 (52 of 1962), or any other Act, as the case may be.
Section Offense Penalty

Persons covered Fine (Rs.) Imprisonment

50 Selling food, not Seller 5 Lakh

of the nature or
substances or
quality demanded

Penalty in case of Petty food business operator for non-compliance under

Section 50 shall not exceed Rs. 25000

51 Sub-standard food Manufacturer, 5 Lakhs

Seller, Storage,
Distributor,
Importer

52 Misbranded food Manufacturer, 3 Lakhs

Seller, Storage,
Distributor,
Importer

53 Misleading Publisher or any 10 Lakhs

advertisement: person involved
False description; in publishing
Or

54 Food contains Manufacturer, 1 Lakhs

extraneous matter Seller, Storage,
Distributor,
Importer

55 Failure to comply Food business 2 Lakhs

with the direction operators or
importers
56 Unhygienicor Manufacturer or 1 Lakhs
unsanitary: processor
Processing; or
Manufacture

57 Possessing Manufacturer, Adulterant is Life

adulterant Seller, Storage, not injurious imprisonment
Distributor, to health – 2
Importer lakh

Adulterant is
injurious to
health – 10
lakh

58 Contraventions for Any person 2 Lakh

which no specific
penalty is
provided

59 Punishment for Manufacturer, No injury – No injury – 6

unsafe food Seller, Storage, 1Lakh months
Distributor,
Importer
Non-Grievous Non-Grievous
injury – injury – 1 year
3Lakh
Grievous injury
Grievous – 6 years
injury – 5
Lakh

60 Punishment for Any person 2 Lakh Six months

interfering with
seized items

61 Punishment for Any person, as 2 Lakh Three months

false information per the
directions under
the FSSAI Act

62 Punishment for Any Person 1 Lakh Three months

 obstructing or
impersonating an
FSO

63 Punishment for Any Person, 5 Lakh Six months

carrying out a Food Business
business without a operator
license

64 Punishment for Any Person Fine on a

subsequent daily basis –
offenses 1Lakh

65 Compensation in Any Person 5 Lakh in

case of injury or case of death
death of a
consumer
3 lakh in case
of Grievous
injury

1 lakh in case
of all other
cases of
injury