Case Note & Summary
The Supreme Court of India was seized of a batch of writ petitions and appeals arising from directions issued by the Chief Inspector of Factories. The Chief Inspector had called upon the petitioners/appellants to file applications for renewal of registration/licence of their respective factories, signed by a director of the company in his capacity as occupier, and stated that a nominee of the Board of Directors other than a director could not make such an application as an occupier. The petitioners/appellants challenged this direction and also questioned the constitutional validity of proviso (ii) to Section 2(n) of the Factories Act, 1948 as amended by Act 20 of 1987, contending it violated Articles 14, 19(1)(g) and 21 of the Constitution of India. The basic question before the Court was whether, in the case of a company owning or running a factory, only a director of the company can be notified as the occupier within the meaning of proviso (ii) to Section 2(n), or whether the company can nominate any other employee who has ultimate control over the affairs of the factory by passing a resolution to that effect. The answer depended on the interpretation of Section 2(n) as amended. Before the 1987 amendment, Section 2(n) defined occupier as the person having ultimate control over the affairs of the factory, and Section 100 dealt with determination of occupier in certain cases, allowing a company to nominate a director for prosecution purposes. The 1987 amendment omitted Section 100 and inserted provisos to Section 2(n), including proviso (ii) which deems any one of the directors of a company to be the occupier. There was a sharp divergence of opinion among various High Courts. The Karnataka, Bombay, Orissa, Guwahati, Madras and Calcutta High Courts held that a company could nominate a person other than a director as occupier if that person had ultimate control over the factory, relying on the main definition and the phrase 'ultimate control over the affairs of the factory'. The Allahabad, Madhya Pradesh, Rajasthan and Patna High Courts, however, held that under proviso (ii) only a director of the company could be the occupier. The Supreme Court noted that the Factories Act, 1948 is a piece of social welfare legislation enacted primarily with the object of protecting workmen employed in factories against industrial and occupational hazards, and that the Act imposes stringent obligations on occupiers and managers to ensure health, safety and welfare. The provided text does not include the Court's final analysis or decision on the interpretation and constitutional validity of proviso (ii) to Section 2(n).
Headnote
A) Constitutional Law - Constitutional Validity of Proviso (ii) to Section 2(n) - Factories Act, 1948 - Proviso (ii) to Section 2(n) of the Factories Act, 1948 challenged as violative of Articles 14, 19(1)(g) and 21 of the Constitution of India - The batch of cases raised the constitutional validity of requiring a director of a company to be occupier, an issue not decided by any High Court, and was pending before the Supreme Court. B) Labour Law - Definition of Occupier - Factories Act, 1948, Section 2(n) - Occupier defined as person with ultimate control over affairs of factory; provisos deem specific persons as occupier in case of firm, company, government/local authority - Before the 1987 amendment, Section 100 provided for determination of occupier for prosecution and allowed company to nominate a director; the amendment omitted Section 100 and incorporated deeming provisions in Section 2(n). C) Statutory Interpretation - Interpretation of Proviso (ii) to Section 2(n) - Factories Act, 1948, Section 2(n) - Conflict among High Courts: some held any person with ultimate control can be occupier, others held only director can be occupier - Karnataka, Bombay, Orissa, Guwahati, Madras and Calcutta High Courts held that a company can nominate a person other than a director if that person has ultimate control over the factory; Allahabad, Madhya Pradesh, Rajasthan and Patna High Courts held that only a director can be occupier. D) Factories Act - Objectives - Factories Act, 1948 - Social welfare legislation to protect workmen from industrial and occupational hazards - The Act imposes obligations on occupier or manager to ensure health, safety and welfare of workers and secure safe working conditions.
Issue of Consideration
Whether in the case of a company owning or running a factory, only a director of the company can be notified as occupier within the meaning of proviso (ii) to Section 2(n) of the Factories Act, 1948, or whether the company can nominate any other employee having ultimate control over the affairs of the factory; and if only a director can be occupier, whether proviso (ii) to Section 2(n) is constitutionally valid under Articles 14, 19(1)(g) and 21 of the Constitution of India.
Law Points
- Occupier of a factory means person who has ultimate control over affairs of factory
- In case of a company any one director deemed occupier
- Before 1987 amendment Section 100 permitted company to nominate a director as occupier for prosecution
- Conflict among High Courts regarding whether only director can be occupier
- Ultimate control of factory is touchstone not ultimate control of company
- Factories Act is social welfare legislation protecting workmen from industrial hazards
