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Unit 1: The Factories Act, 1948

maintenance of the factories and the safety measures therein. The fear of penalty and Notes
punishment is bound to make the board of directors of the company more vigilant and
responsive to the need to carry out various obligations and duties under the Act, particularly
in regard to the safety and welfare of the workers.

Proviso (ii) was introduced by the Amending Act couched in a mandatory form - “any one
of the directors shall be deemed to be the occupier” - keeping in view the experience
gained over the years as to how the directors of a company managed to escape their
liability for various breaches and defaults committed in the factory by putting up another
employee as a shield and nominating him as the ‘occupier’ who would willingly suffer
penalty and punishment.
It was held that where the company owns or runs a factory, it is the company which is in
the ultimate control of the affairs of the factory through its directors. Even where the
resolution of the board says that an officer or employee other than one of the directors
shall have ultimate control over the affairs of the factory, it would only be a camouflage
or an artful circumvention because the ultimate control cannot be transferred from that of
the company to one of its employees or officers, except where there is a complete transfer
of the control of the affairs of the factory.

An occupier of the factory in the case of a company must necessarily be any of its directors
who shall be so notified for the purposes of the Factories Act. Such an occupier cannot be
any other employee of the company or the factory. This interpretation of an ‘occupier’
would apply to all provisions of the Act wherever the expression ‘occupier’ is used, and
not merely for the purposes of Sec. 7 or Sec. 7A of the Act.
The Supreme Court further held that proviso (ii) is not ultravires the main provision of
Sec. 2(n) and, as a matter of fact, there is no conflict at all between the main provision of
Sec. 2(n) and proviso (ii) thereto. Both can be read harmoniously and when so read in the
case of a company, the occupier of a factory owned by a company would mean any one of
the directors of the company who has been notified/identified by the company to have
ultimate control over the affairs of the factory. And where no such director has been
identified, then, for the purposes of prosecution and punishment under the Act, the Inspector
of Factories may initiate proceedings against anyone of the directors as the deemed
occupier.
The Supreme Court further held that there is nothing unreasonable in fixing the liability
on a director of a company and making him responsible for compliance with the provisions
of the Act and the rules made thereunder and laying down that if there is contravention
under of the provisions of the Act or an offence is committed under the Act the notified
director and, in the absence of the notification, anyone of the directors of the company
shall be prosecuted and shall be liable to be punished as the deemed occupier.
The restriction imposed by proviso (ii), if at all it may be called a restriction, has a direct
nexus with the object sought to be achieved and is, therefore, a reasonable restriction
within the meaning of clause (6) of Article 19. Proviso (ii) to Sec. 2 (n) is thus not ultravires
Article 19(1)(g) of the Constitution.

Questions
1. Study and analyze the case.
2. Write down the case facts.
3. What do you infer from it?

Source: http://www.thehindubusinessline.in/2000/01/10/stories/211001ak.htm

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