Legal Trouble for Directors: Can They Be Held Responsible for Factory Violations?

Dear Sir,

Our company had not nominated any of its directors as an occupier. However, the factory inspector found some contraventions of acts and rules in the factory, leading to a complaint being filed against all six directors of the company. Is this legal? If not, please provide some judgment on the matter.

Definition of Occupier, as per the Factory Act, is, "In case of a company, any one of the Directors shall be deemed to be the occupier." [Ch:1, Sec.1-n-(ii)]. Sections 7 and 7-A of the said Act are very important regarding the role of the Occupier.

Jagdish Patel

Dear,

Under The Factories Act, 1948, one of the directors was to be appointed as the occupier of the company by the Board of Directors, but you have not fulfilled your duty. Therefore, you are held responsible for non-compliance under this Act by the Inspector of Factories. Actions taken by this inspector cannot be deemed unlawful.

Regards,

R.N.Khola

(Labour Law & Legal Consultants)

09810405361

It is the prime duty of the director(s) to nominate any one of the directors as "OCCUPIER" under the Factories Act. If not nominated, there will be 2 penal actions against the BOD: violation of rules under the Factories Act and if anything happens (like a fatal accident, etc.), the concerned Inspector of Factories can serve a legal notice to all directors.

The action initiated by the inspector of factories in your case is correct and within the purview of the law.

Dear Singh,

You have to face it and file your reply to him. Also, you have to amend and declare the occupier at the earliest. It is your prime duty. DO IT NOW.

Regards, R. Palaniswamy

There are two important aspects of the Factories Act, 1948:
a) Nomination of the Occupier
b) Nomination of the Manager.

We need to be careful in nominating the occupier and manager under this act. It is better to have a resolution passed in the board of Directors meeting that one of the Directors can be nominated as the Occupier under the Factories Act. Normally, they should be a person who will have authority and control over the operations of the particular factory/business.

The Manager could be the GM-HR or the Head-HR who is going to be taking care of the day-to-day operations of the business.

Better late than never. Do reply to the notice issued by the Inspector and comply with the requirements immediately.

Hi All,

I believe occupiers are required in factories and not in organizations. Please correct me if I am wrong. I do not have knowledge about this, but I want to learn.

Thanks,

BR Preeti

Dear Preeti,

If the organization in question is covered under The Factories Act, 1948, then there will be an occupier in that organization.

Regards,

R.N. Khola

(Labour Law & Legal Consultants)
09810405361

The legal provisions are crystal clear that only one of the directors can be prosecuted along with the Factory manager (Section 92). It does not admit any other interpretation. However, you can find support from the following case law:

1. Superintendent of Legal Affairs, West Bengal v. Madhablal Mehta 1974 (1) LLN 339 (Cal. HC)
2. Gupta S. V. State, 1976 LIC 1431 = 1976 (32) FJR 350
3. Harikrishna v. State of UP 1960 I LLJ 42 = 1959 AIR 794 (All)

Hi Prashant,

The case laws you refer to seem to be very old - before the law (Section 2-n) was amended in this regard in 1987, post Bhopal.

Jagdish Patel, PTRC