OCCUPIER UNDER THE FACTORIES ACT, 1948

[Dr. Sanjiv Agarwal]

Definition of Occupier

Section 2(n) of the Factories Act, 1948 defines “Occupier” as follows:

"Occupier" of a factory means the person who has ultimate control over the affairs of the factory

Provided that-

1. in the case of a firm or other association of individuals, any one of the individual partners or members thereof shall be deemed to be the occupier;
2. in the case of a company, any one of the directors shall be deemed to be the occupier;
3. in the case of a factory owned or controlled by the Central Government or any State Government, or any local authority, the person or persons appointed to manage the affairs of the factory by the Central Government, the State Government or the local authority, as the case may be, shall be deemed to be the occupier.  Provided further that in the case of a ship which is being repaired, or on which maintenance work is being carried out, in a dry dock which is available for hire,-

1. the owner of the dock shall be deemed to be the occupier for the purposes of any matter provided for by or under-

1. section 6, section 7, section 7A, section 7B section 11 or section 12;
2. section 17, in so far as it relates to the providing and maintenance of sufficient and suitable lighting in or around the dock;
3. section 18, section 19, section 42, section 46, section 47 or section 49, in relation to the workers employed on such repair or maintenance;

2. the owner of the ship or his agent or master or other officer- in- charge of the ship or any person who contracts with such owner, agent or master or other officer- in- charge to carry out the repair or maintenance work shall be deemed to be the occupier for the purposes of any matter provided for by or under section 13, section 14, section 16 or section 17 (save as otherwise provided in this proviso) or Chapter IV (except section 27) or section 43, section 44 or section 45, Chapter VI, Chapter VII, Chapter VIII or Chapter IX or section 108, section 109 or section 110, in relation to-

1. the workers employed directly by him, or by or through any agency; and
2. the machinery, plant or premises in use for the purpose of carrying out such repair or maintenance work by such owner, agent, master or other officer- in- charge or person".

Scope of Occupier / who can be Occupier 

Section 2(n) of the Factories Act, 1948 defines the “occupier” in relation to factories. In case of a company, it includes any director of a company. There is no specific category of director who should   be designated as occupier as defined in this section. It can therefore, be construed that any kind of director can be appointed as occupier.

The Factories Act, 1948 is a beneficial legislation. The aim and object of the Act is essentially to safeguard the interests of workers, stop their exploitation and take care of their safety, hygiene and welfare at their places of work. It casts various obligations, duties and responsibilities on the occupier of a factory.

In J. K. Industries Ltd v Chief Inspector of Fisheries and Boilers 1996 (9) TMI 503 - SUPREME COURT OF INDIA, the Supreme Court observed that by the Amending Act, 1987, the legislature wanted to bring in a sense of responsibility in the minds of those w ho have the ultimate control over the affairs of the factory so that they take proper care for maintenance of the factories and the safety measures therein. The fear of penalty and 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 Section 7 or Section 7A of the Factories Act.

The Supreme Court further held that proviso (ii) is not ultra vires the main provision of Section 2(n) and, as a matter of fact, there is no conflict at all between the main provision of Section 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. Further, 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. taxmanagementindia.com

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 there under and laying down that if there is contravention under 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.

Any Director can be Occupier

Thus, the provision provides that any director can be considered or designated as ‘Occupier’. Such director can be any one of the directors. Additional director is also one of the directors and stands at an equal footing with other directors.