MCD Factory License: An Overview

Factory Act 1948 came into force in the year 1940. Since then, it has served as India’s sole regulatory framework for production facilities. It mandates production-related facilities to be registered and comply with underlying conditions. We will delve into the conditions around the MCD factory license. This blog discusses the process, eligibility, and document requirements for the MCD factory license.

MCD Factory License falls under the Delhi Municipal Corporation (DMC) Act, 1957 and the Master Plant of Delhi.

Section 416 and 417 of the Delhi Municipal Corporation (DMC) Act, 1957 provide for the obtainment of prior approval of the commissioner in writing for;

• Business owners looking to set up an establishment or factory that employs electricity, steam, water or other mechanical power
• Entities intending to augment their present facility

Further, can secure a factory license  for confirmation;

• DDA/DSIDC/DI Built-up Auction/Allotted sheds
• Industrial area
• Household category
• Freehold plots
• Relocation Scheme
• Local  Commercial Category
• Subletting of leasehold plots and sheds

Eligibility Criteria for obtaining MCD Factory License

Factories in which ten or more labourers are employed with the aid of power for the manufacturing process and factories, which are engaging twenty or more labours without using power in the manufacturing procedure, need to be registered in Delhi under the Factories Act, 1948.

Any entrepreneur who wishes to reconstruct, extend, construct or take any building as a factory in Delhi needs to get plan approval and permission. After the establishment of the factory, the factory owner or the manager has to register the factory under the Delhi factories act, 1948.

Benefits of MCD Factory License

• Night shifts are permitted only to units having MCD factory licenses. Factory or trade must be located in an industrial area, and permission from the Commissioner of Municipal Corporation of Delhi is required.
• Factory or trade cannot initiate operation in Delhi until having prior permission of the Commissioner of Municipal Corporation of Delhi (MCD) under the DMC Act^[1].
• MCD Factory License will also shield the Delhi Municipal Corporation (DMC) Act from penalty provision. Section 416 and 417 of DMC the Act provide penalty provision for non-registration.

Checklist to Apply for the MCD Factory License

According to the DMC’s requirements, the applicant must comply with the following norms before applying for an MCD factory license.

• Production facility present in the confirming industrial region
• Tenancy Proof: Either rent agreement or property paper, as applicable
• NOC from Pollution Control Committee
• Invoices relating to the firefighting equipment.

Documents Required for MCD Factory License

Documents for DSIDC/DDA/Directorate of industries built-up auction/allotted sheds.-

1. Copy of the lease deed. If not achieved, copy of auction letter, possession letter, and NOC regarding trade.
2. Constitution of the firm, if any.
3. One copy of each of the site plans and critical plans.
4. Affidavit as prescribed (Download Annexure-5)
5. Copy of terms & conditions for allotment of the Shed.
6. A rough sketch shows the proposed installation and a list of machinery with a power load (HP) rating.
7. One copy of the manufacturing process for the applied trade.

Documents for Sub-letting of leasehold Plots/Sheds.-

1. Copy of rent receipt, license deed and rent agreement.
2. One copy of the site plan demarcating the proposed area of sub-letting and existing or amended area of the original licensee with measurements & duly signed by both parties.
3. One copy of each site plan and essential plan.
4. Constitution of the firm, if any.
5. Affidavit in the recommended proforma, Which is shown in Download Annexure – 5
6. Undertaking the prescribed proforma, Which is shown in Download Annexure – 7
7. NOC from the landlord/owner. (Download Annexure-6)
8. A rough sketch shows the proposed machinery installation and a list of proposed machinery with a power load (HP) rating.
9. One copy of the manufacturing process for the applied trade.

Documents for Local Commercial Category.-

1. Copy of Lease Deed. If not executed, Copy the auction letter and possession letter.
2. Proof of ownership/legal occupancy/tenancy.
3. Copy of terms & conditions for allotment of the premises by the Land Owning Agency.
4. One copy of each of the site plans and critical plans.
5. Constitution of the firm, if any.
6. Affidavit as prescribed, which is according to Download Annexure – 3
7. One copy of the premises plan with dimensions (blueprint)
8. One copy of the critical plan earmarking the salient features in the neighborhood site in question along with the Zonal Plan & Part Layout Plan indicating the location.
9. Affidavit regarding no unofficial construction having been carried out, which is according to Download Annexure – 5
10. A rough sketch shows the proposed machinery installation with a list of machinery with a power (HP) rating.
11. One copy of the manufacturing process for the applied trade.

Note: will issue municipal factory licenses for running factories only on the ground floor. However, in the case of approved flatted factories, we will give the licenses for all sanctioned floors.

Penalties

Contravention of the provisions of Section-416 of the DMC Act, 1957 would attract penalties as given in the Schedule 12th (Under Section 416), and at current, the same are:

• Establishment of the factory, etc., without permission of the Commissioner, MCD is punishable with a minimum fine of Rs. 5000/- (Rupees Five Thousand only) and an additional penalty of Rs.50/- per day for running the unit without approval.

Contravention of the provisions of Section-417 of the DMC Act, 1957 would attract penalties as given in the  Schedule 12th(Under Section 417), and at present, the same are:

• Carrying on a trade without a license will attract a penalty of Rs.1000/- (Rupees One Thousand only) and d additional fine of Rs.100/- per day for continuing the offense.

The provisions contained under sections 416/417 & 430 of the DMC Act 1957 regulate the Factory Licensing department. Section 416 of the DMC Act, 1957 places an obligation on the person desirous of establishing any factory or workshop in which it is intended to employ steam, electricity, water or other mechanical power to obtain the prior permission of Commissioner, SDMC in writing.

Conclusion

Registration of factories under the Factories Act, 1948 is a fundamental regulatory requirement. Every production facility that falls under the said legislation must be registered and follow the underlying norms to stay compliant.

Read our Article:What are the Documents Required for Factory License?