As per Sec 2(n) of the Factories Act, 1948 “occupier” of a factory means the person who has ultimate control over the affairs of the factory provided that –
- 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.
- in the case of a company, any one of the directors shall be deemed to be the occupier.
The proviso to section 2(n) was added by amendment Act 20 of 1987. The proviso (ii) states that “in case of a company, any one of the directors, shall be deemed to be the occupier;” Thus in Bharia Metal Containers Pvt. Ltd. V. State of UP 1990 (77) FJR 93, it was held the section 2(n) does not permit a company to nominate anybody else for the purposes of the Act other than one of the Directors of the company” However, in 1994 II C. L. R. 312, 1992 II CLR 575 stated that any person other than a director can be occupier within the meaning of section 2(n).
In ION Exchange India Ltd. v. Deputy Chief Inspector of factories, Salem, it was held that the owner can select any individual to be in extreme command over the undertakings of a factory. In case nobody else has been designated to be in extreme authority over the issues of the organization, the Director of an organization or any partner of a partnership is regarded to be the occupier.
The amendment of 1987 made significant changes in it and Sec. 100 of the Act was deleted. A stricter provision in Sec. 2(n) was introduced by incorporating the first proviso. A remote but ultimate control clothes a person with the position of occupier. That the legislature intended that the person having ultimate control over the affairs of the factory must be regarded as its occupier is evident from the first proviso. The proviso has been made in a mandatory form.
According to Factories Act 1948, the occupier is a person who has ultimate control over the affairs of the factory. The landmark case in this regard is JK Industries Ltd and others v. Chief Inspector of Factories and Boilers and others (Supreme Court, 1996), where in the Supreme Court The court went on to say that the word “ultimate” in common parlance means last or final. Therefore, 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.
Essentially, the law as declared by the Supreme Court was that a company cannot nominate any one of its employees or officers, except a director of the company, to whom the effective control can be vested, as the occupier of the factory. 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. Therefore, a company can nominate a person as a Manager to carry on the day-to-day affairs of the factory to assume responsibility for the liabilities if any arising, but the fact that the director designated as the occupier is ignorant about the management of the factory which has been entrusted to a manager or some other employee and is himself not responsible for the contravention does not absolve him of occupier’s primary liability.