Manoj Jain, who ran the factory, was arrested. A probe revealed it was a factory of "cold firecrackers" used in stage shows and Holi celebrations, said Rajneesh Gupta, Deputy Commissioner of Police (Rohini).
Firecracker packages found at the site suggest the same, he said.
Jain had rented the factory from January 1, the DCP said.
Police said Jain was out of Delhi and was apprehended yesterday while returning from the airport.
During interrogation, he revealed that he was paying Rs 25,000 as rent for the premises.
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The case was today transferred to the Crime Branch that will look into the rent agreement.
Locals in Bawana alleged that the facility was flouting norms and crackers were being manufactured illegally. They claimed that workers came in two shifts and were made to work with the doors locked.
However, the claim was dismissed by Delhi Fire Services.
One of the injured labourers told police that the firecrackers used to be brought from outside and were only packed at the unit.
Police said an FIR had been under IPC sections relating to culpable homicide not amounting to murder, and negligent conduct with respect to fire or combustible material. The maximum punishment under the sections is 10 years.