Asked September 27, 2016

Factories Act and case against occupier

  • 1 Answer

Under Factories Act in India: When there is an ongoing case against an occupier, what will happen if the occupier resigns from the company. Does he/she have to fight the case still himself/ herself? How will he/she get access to the documents of the erstwhile employer to defend himself/ herself? In the changed situation what happens if he/she blames the erstwhile company by producing proofs?

Answer 1

First of all, the occupier should be one of the directors of the company and have the ultimate control over the Factory as per Section 2(n)(ii) of the Factories Act, 1948. Here, the ultimate control means which would be the last and the final power to take decisions.[1] In this case, the person who is an occupier is one of the directors of the company. And even if the occupier has resigned from the post of the director, under Section 168 (2) of company Act, 2013, the director can be held liable even after his resignation for the offences which occurred during his period of employment.

He/she has to fight for himself/herself when the court lifts the Corporate Veil.  "Doctrine of Corporate Veil" means the court will see who is the person behind the mask or will lift the blanket and see who the person behind the Act is. Once, the occupier is found to be the person behind the act the case is filed against him. Therefore, the occupier will be the person who has to fight or defend the case for himself/herself after his/her resignation from the company.

Here, the occupier can have access to the documents which are helpful to defend the case as per the Civil procedure Code, Order V Rule 7, which says that person can call for the document which is required for the support of his/her case. In the present case, occupier can have the access to the documents which are required for the support of his/her case and if the occupier wants to proof the case he has to follow the procedure without any kind of the influence like influencing the employees of the company after the resignation as it is fiduciary duty towards the company. The Factories Act, 1948, Section 101, clearly provides for Exemption of occupier or manager from liability. So in the present case, if the occupier proves before the court that he has taken reasonable care in complying the laws under the Act, or that the said other person committed the offence in question without his knowledge or without any permission from him/her then automatically he can escape the liability. Then the employees or the workers will be made liable, who were in default of the Act. Once it is proved, the company can be made liable for the act of the employees.



[1] J.K.Industries Ltd.v.Chief Inspector of Factories and Boilers & Others,1996 (6) SCC 665

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