Dear All
Question: Can a CEO (Occupier) of a foreign company claim ignorance of law and show HR Head and escape from lapses, particularly Factories Act?
In such a situation, is HR HEAD even though he has left the company, responsible for such omissions and lapses and will be answerable to Court of Law at any stage?

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Dear Mr. K Ramachandra
As a matter of fact, Ignorance of Law is not an excuse.
Once an employee (eventhough he is Head or CEO), got relieved (either retirement or resignation) from the Office, then he cannot be called for any legal obligations. Even in Government Organisations and in Government Offices if any case is pending against the employee it should be cleared before relieving the employee.

From India, Kumbakonam

One more thing I would like to tell you sir, that If an employer eventhough he is an Foreign employer, before starting a factory they must be well acquainted with the rules and regulations of the country in question where they are planning to open a factory.
Hence the employer cannot escape by saying that he was not aware of the rules and regulations by which, his factory is being governed by.

From India, Kumbakonam

Dear Mr. K.Ramachandra

Under the Factories Act, 1948, an Occupier has been defined as a person who has ultimate control over the affairs of the factory.

Before 1987, the liberal provisions in the Act allowed a designation of any employee managing the affairs of the factory as an occupier of the factory. After the Bhopal gas tragedy in 1987, Occupier was redefined, deeming mandatorily that any one of the directors of a company running a factory would be the Occupier of such factory.

In a landmark case was JK Industries Ltd and others v. Chief Inspector of Factories and Boilers and others, 1996, the Supreme Court noted that where a company owns or runs a factory, it is the company that has ultimate control over the affairs of the factory and would therefore be the Occupier.

Section 92 of the Act, provides for strict liability on the Occupier for non-compliance under the Act and also provides for joint liability/punishment of the occupier and the Manager for offences under the Act.

The fact that a director designated as the occupier is ignorant about the management of the factory which has been entrusted to a Manager and is himself not responsible for the contravention does not absolve him of his liability.



From India, Pune

Dear M/s.Bhaskar and Kamal
Thank you for your inputs. Also thanks to Mr Kamal for a detailed reply. I am raising this issue in the background of a live case known to me wherein a Manager (HR Head) who has left the company is fixed in a case wherein the company had allowed excess OT to its workers than the prescribed limit as per Factories Act. In the background of Mr Kamal's point, that the Act provides for joint liability/punishment of the occupier and the Mananger for offenses, I am inclined to know whether the Manager who has left the company can still be called back by the Court of Law to give explanation in favour of Ex.Employer and whether he can be punished. The company has fixed the Ex.HR Head for these lapses in the guise that the Occupier is a Foreigner and had appointed him to take care of these provisions.
I would also request Mr Kamal, to post, JK Industries case and the conclusions in this case.


Dear Mr. Ramchandra,

The law as declared by the Supreme Court in 1996 was that a company cannot nominate any one of its employees or officers, except a director of the company, as the occupier of the factory.

The word 'ultimate control over the affairs of the factory' was discussed and explained in detail.

The Court said that the word “ultimate” in common parlance means last or final. There is a vast difference between a person having ultimate control of the affairs of a factory and one who has immediate or day-to-day control over the affairs of the factory. The manager or any other employee, of whatever status, can be nominated by the board of directors of the owner company to have immediate or day-to-day or even supervisory control over the affairs of the factory. However, the ultimate control over the affairs of the factory will always be with the board of directors of the company and cannot be vested in any other person, without completely transferring the control over the factory to the other person.

So I dont think that the Occupier can escape the liability just because he is a foreigner.

As far as the liability of the Manager is concerned who has left the job, I am not sure whether he has to share the laibilty and punishment with the Occupier.

But at the same time if you see the case from other angle then no Manager will get punishment if resigning or leaving a job will absolve him of his past liability.



From India, Pune

Dear all!!!! From the brief description, the facts are not clear. But, as stated, the CEO is the occupier, however being a foreigner does not put him above law. He is still answerable for the lapses. It is not clear whether the EX HR Head was nominated as Factory Manager. Presuming to be so, the Factory Manager alone cannot be proceeded against.Primarily it is the Factory Occupier who is responsible for due compliance. (Section 7A) Under Section 101 of the Factories Act, the Occupier or the Factory Manager can claim exemption by pointing out the actual offender and brining him to book by apprising the prosecutor of the factual situation that caused the accident. However this application for exemption would depend on the court's satisfaction that the Occupier/Factory Manager has used due diligence in executing the provisions of the Act and the other person to whom the blame is getting attached has acted on his own without the knowledge, consent or connivance of the actual Occupier. I wonder whether the foreigner CEO is banking upon this provision. But at any case such shifting of blame can be done only with the authority of the Court trying the offence. It cannot be at the choice of the CEO!!!!! Regards KK
From India, Bhopal

Dear Kamal & Ramchandra
Thanks for your very useful comments. Here I would like to mention some clarification about definition of an Occupier.
Occupier: The terms “occupier” has been defined under Section 2 (n) of the Factories Act 1948 as under “Occupier” of a factory means the person who has the ultimate control over the affairs of the factory provided that.
    • In the case of a firm or other association of individual any one of the individual partners or member is deemed to be the occupier.
    • In the case company, any one of the direction is deemed to be occupier.
    • In the case of factory controlled, owned by the Central Government or any State Government or any local authority, the person or person appointed to manage the affairs of the factory are deemed to be occupier.
    • In the case of ship which is being repaired, or on which maintenance work is being carried out or in a dry dock which is available for hire, the owner of the dock is deemed to be occupier.
    • The owner of the ship or his agent or master to carry out the repairs or maintenance work is deemed to be occupier.
A remote but ultimate control clothes a person with the position of occupier
The term “Occupier” in general means a person who occupies the factory either by himself or by his agent, he may be an owner, a lessee or mere licensee but he must have a right to occupy the property and dictate the terms of management.

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From India, Mumbai

The discussions are going on in right direction. One thing more I would like to mention that if violation of law has been done ignorantly without intention to do so, the benefits of doubt goes in favor of the accused and they may be excused with less amount of punishment. But when it is established that it has been done deliberately, he may get more punishment.
From India, Calcutta

The hr manager is not liable in labour court of departmental proceedings. It's the factory manager and occupier who is liable. The exception would probably be a person who deliberately violated the act and hid details from him employer. Like through forged documents, misreporting, etc.

The doctrin of "respondent superior" applies. The occupier is liable for acts of his subordinates as he is supposed to monitor and keep track. The concept of due diligence stated earlier is just that - actual due diligence. The occupier will be excused only if he exercised due diligence and it was not possible for him to find out the facts in normal course. Lack of knowledge of law is not covered under this clause.

At best, the occupier may have a separate civil remedy against the hr manager for hisnfailure to warn him or for misleading the company or not reporting it to the board. But we all know how useless that action will be.

The court is free to call back any retired employee to the court for answering questions. So can the labour department in it's investigation. In such case, the company will have to pay for his travel and stay is he has shifted to a different city.

From India, Mumbai

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