Board Resolution - Appointment of Occupier under Factories Act, 1948

An "occupier" of a factory means the person who has ultimate control over the affairs of the factory u/s2(n) of the factories Act, 1948. In the case of a company, any one of the directors shall be deemed to be the Occupier. Keeping this in view, companies have since been appointing one of the directors as Occupier of one or more of factories of the company.

Board Resolution - Sample Draft 

CERTIFY TRUE COPY OF THE RESOLUTION PASSED AT THE BOARD MEETING OF THE COMPANY HELD ON ............... AT THEIR REGISTERED OFFICE AT ...........................

RESOLVED FURTHER THAT Mr....................(Director) declare as occupier of factory under under Section 2(n) Factories Act, 1948 be and hereby authorize to execute the documents, to fix the seal of the company and to sign, do act, deed matters and things as may be necessary to give to the board of -----------Factory Name -------------- situated at ------------------------------------------Address------------------------------- 

RESOLVED FURTHER THAT as an occupier said -----------Factory Name & Address------------------, Mr----------------------------------, ------------------Designation -------- be & hereby entrusted with the following power & authorities :- 

To manage day to day affairs of the factory function including the function of Treasury 

All power & ultimate Control over the affairs of the factory 

RESOLVED FURTHER THAT a certified that a true copy of the forgoing resolution duly signed by ( Mr....................(Director) ................... Designation............... be forwarded to the Chief Inspector of the Factories for information & record.

Scope of Occupier

Who can be Occupier Section 2(n) of the Factories Act, 1948 defines the “occupier” in relation to factories. In case of a company, it includes any director of a company. There is no specific category of director who should be designated as occupier as defined in this section. It can therefore, be construed that any kind of director can be appointed as occupier.

The Factories Act, 1948 is a beneficial legislation. The aim and object of the Act is essentially to safeguard the interests of workers, stop their exploitation and take care of their safety, hygiene and welfare at their places of work. It casts various obligations, duties and responsibilities on the occupier of a factory. 

In J. K. Industries Ltd v Chief Inspector of Fisheries and Boilers 1996 (9) TMI 503 - SUPREME COURT OF INDIA, the Supreme Court observed that by the Amending Act, 1987, the legislature wanted to bring in a sense of responsibility in the minds of those w ho have the ultimate control over the affairs of the factory so that they take proper care for maintenance of the factories and the safety measures therein. 

The fear of penalty and punishment is bound to make the board of directors of the company more vigilant and responsive to the need to carry out various obligations and duties under the Act, particularly in regard to the safety and welfare of the workers. Proviso (ii) was introduced by the amending Act couched in a mandatory form - any one of the directors shall be deemed to be the occupier keeping in view the experience gained over the years as to how the directors of a company managed to escape their liability for various breaches and defaults committed in the factory by putting up another employee as a shield and nominating him as the occupier who would willingly suffer penalty and punishment. 

It was held that where the company owns or runs a factory, it is the company which is in the ultimate control of the affairs of the factory through its directors. 

Even where the resolution of the board says that an officer or employee other than one of the directors shall have ultimate control over the affairs of the factory, it would only be a camouflage or an artful circumvention because the ultimate control cannot be transferred from that of the company to one of its employees or officers, except where there is a complete transfer of the control of the affairs of the factory. 

An occupier of the factory in the case of a company must necessarily be any of its directors who shall be so notified for the purposes of the Factories Act. Such an occupier cannot be any other employee of the company or the factory. 

This interpretation of an `occupier' would apply to all provisions of the Act wherever the expression `occupier' is used, and not merely for the purposes of Section 7 or Section 7A of the Factories Act. 

The Supreme Court further held that proviso (ii) is not ultra vires the main provision of Section 2(n) and, as a matter of fact, there is no conflict at all between the main provision of Section 2(n) and proviso (ii) thereto. Both can be read harmoniously and when so read in the case of a company, the occupier of a factory owned by a company would mean any one of the directors of the company who has been notified / identified by the company to have ultimate control over the affairs of the factory. Further, where no such director has been identified, then, for the purposes of prosecution and punishment under the Act, the Inspector of Factories may initiate proceedings against anyone of the directors as the deemed occupier.

The Supreme Court further held that there is nothing unreasonable in fixing the liability on a director of a company and making him responsible for compliance with the provisions of the Act and the rules made there under and laying down that if there is contravention under the provisions of the Act or an offence is committed under the Act, the notified director and, in the absence of the notification, anyone of the directors of the company shall be prosecuted and shall be liable to be punished as the deemed occupier

Thus, the provision provides that any director can be considered or designated as ‘Occupier’. Such director can be any one of the directors. Additional director is also one of the directors and stands at an equal footing with other directors.