Greaves, Ltd., And Another v. State Of West Bengal And Another

1. The short point for consideration in the writ petition is whether any person other than a Director of a company can be said to be “occupier” of a factory within the meaning of S. 2(n) of the Factories Act.

2. The fact of the case, in short, is that the petitioner-company has a factory at plot Nos. B9 and B10 of the Falta Industrial Growth Centre, Sector III, Falta, Diamond Harbour and is known as Power Transmissions Unit 2, hereinafter referred to as “the said factory.” By resolution of the Board of Directors of the petitioner-company on 27 May, 1993 Sri A.B Ghosh was nominated as the occupier of the said factory having ultimate control over the affairs of the said factory. The petitioner submitted two applications for renewal of licence in respect of the said factory for the years 1993 and 1994 respectively, to which respondent 2 sent a reply intimating that “the forms for 1993 and 1994 have not been signed by occupier, i.e, by any of the Directors within the meaning of Factories (Amendment) Act, 1987” and requested them to rectify the irregularities immediately. The said refusal of respondent 2 to renew the licence has been challenged in this writ petition on the ground that Directors of a company are not always in a position to have ultimate control over any factory as they may have to operate from a distance and that under the law any person other than a Director can be “occupier” within the meaning of S. 2(n) of the Factories Act, S. 2(n) reads as follows:

“(n) ‘occupier’ of a factory means the person, who has ultimate control over the affairs of the factory,

Provided that—

(i) 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 occupier:

(ii) in the case of a company, any one of the Directors, shall be deemed to be the occupier ……..”

3. In the affidavit-in-opposition filed by respondent 2 it was alleged that there is no scope for nomination of a person other than one of the Directors of the company as the “occupier” of the factory by such a resolution. It was denied that Sri A.B Ghosh at all material times had ultimate control over the affairs of the said factory. It was further submitted that the petitioners were directed to submit a fresh nomination in accordance with law showing one of the Directors as “occupier” of the factory.

4. Heard learned counsel for the petitioners. None appeared for the respondents though affidavit-in-opposition has been filed.

5. In order to appreciate the argument of Sri Pradip Ghosh, learned advocate for the petitioner, the definition of the term “occupier” under S. 2(n) of the Factories Act has got to be looked into.

6. Learned counsel for the petitioners submitted that the substantive provision for determination of “occupier” of a factory being the personnel having actual control over the affairs of a company the deeming provision in proviso (ii) of that section cannot be the criterion for determination of the actual “occupier” of the factory. For this purpose he referred to the case of Kirloskar Pneumatic Company, Ltd. v. V.A More [1992 (2) L.L.N 979], where it was held, in Para. 7, at pages 982 and 983:

“… In the first instance the plain reading of the amended provisions of S. 2(n) of the Factories Act makes it clear that the Parliament never desired to wipe out the effect of the impact of decisions delivered prior to the amendment holding that the occupier need not necessarily be a Director of the company. The amendment deleted the provisions of S. 100 of the Factories Act, which, inter alia, provided that where the occupier of the factory is a company, then any one of the Directors thereof, may be prosecuted and punished for any offence for which the occupier of the factory is punishable. The Legislature did not delete the entire provisions of S. 2(n) but retained the portion which provided that occupier of a factory means the person who has ultimate control over the affairs of the factory. The Legislature then carved out exception by adding proviso to the substantive provisions of the definition. The proviso inter aila, prescribes that in case of a company any one of the Directors shall be deemed to be the occupier. The expression ‘shall be deemed to be the occupier’ clearly indicates that the legal fiction is created and such legal fiction can come into play only in cases where the substantive provision is not attracted. In other words the legal fiction will make any one of the Directors responsible as the occupier provided the company has not nominated an occupier under S. 2(n) of the Factories Act …..”

7. In the instant case also Sri A.B Ghosh was nominated by the resolution of the Board of Directors as the “occupier” of the said factory having ultimate control over the affairs of the said factory. Since the deeming provision can only come into play in the absence of compliance of substantive provision, i.e, where ultimate control over the affairs of a factory has not been made over to any person by any resolution to that effect that any one of the Directors of the factory can be said to be “occupier” of any factory by reason of his status as one of the Directors of such company. The deeming provision in any section cannot override the substantive portion thereof.

8. An analogous position may be created if any other view in this matter is taken. There may then be two persons having ultimate control over the affairs of the faetory, viz.:

(1) a nominated person; and

(2) one of the Directors.

Since the actual occupier should not be confused with the deeming occupier of the factory, that is one of the Directors, the insistence of respondent 2 for the deeming occupier when the substantive occupier by resolution was appointed was not justified being not in accordance with the provisions of law mentioned above. Reference may be made in the case of Wimco, Ltd. v. Union of India, (1995 (1) L.L.N 1228], where the same view was taken, namely, that a nominated occupier shall be an occupier for the purpose of S. 2(n) of the Factories Act, 1948. It, however, appears from an unreported judgment of the Allahabad High Court in the case Bhatia Metal Containers (Private), Ltd v. State of Uttar Pradesh [1989 (2) L.L.N 736], a copy of which has been annexed to the affidavit-in-opposition, being Annexure C to the said affidavit, that a Division Bench of the Allahabad High Court held that the company was not permitted to nominate any person other than a Director of, the company as an occupier of the factory within the meaning of S. 2(n) of the Factories Act, 1948. This judgment, in any case, does not show that it has considered the decision of the Supreme Court, in the case of Kirloskar Pneumatic Company, Ltd. [1992 (2) L.L.N 979] (vide supra). In view of the decision of the Supreme Court referred to above, I am not in a position to follow the unreported judgment of the Allahabad High Court on this point.

9. After careful consideration of the facts and circumstances of this case and the provisions of law in this matter, I am to hold that if any person is nominated and appointed by a resolution of the Board of Directors of a company as “occupier” he shall be the “occupier” of the factory within the meaning of S. 2(n) of the Factories Act, 1948. In absence of any such resolution one of the Directors of a company shall be deemed to be occupier of the factory.

10. The writ petition is accordingly allowed. The impugned letters, dated 7 September, 1993 and 27 January, 1994, being Annexures D and G to the writ petition are accordingly set aside. Respondent 2 is directed to renew the licence of the said factory of the petitioners forthwith.

11. The writ petition is finally disposed Of as above without any order as to costs.

12. All parties to act on a signed copy of the operative part of the judgment on the usual undertaking.

13. Order accordingly.