D. N. Dikshit v. State or Bihar — 1989 DIGILAW 286 (PAT)

JUDGMENT Bhuvaneswar Prasad, J. - This application has come up for admission. It has been filed under section 482 of the Code of Criminal Procedure, 1973 (in short the 'Code'). It is directed against the order dated 19.5.1989 passed by the learned Sub-divisional Judicial Magistrate, Sikharana at Motihari, in Factory Case No. 17/89 (State v. Shri D. N. Dikshit and others) by which the learned Sub-divisional Judicial Magistrate has been pleased to take cognizance of the offence under section 92 of the Factories (Amendment) Act, 1987 (in short the 'Act') against the petitioner and others and has transferred the case for disposal to the court of Shri I. B. Mandai, Judicial Magistrate, 1st Class. 2. In this application, it has been stated that even if it is taken at its full face value, the complains petition does not disclose any offence at all and does not show even prima facie the complicity of the petitioner in the alleged offence. The complainant in the case is the Factories Inspector, Motihari. He is said to have inspected Barrah Factory Branch of M/s Champaran Sugar Company Limited in the presence of the General Manager, Accounts Officer and the Chief Engineer of the Factory. The Factory Inspector noted that apart from other violations the lifting machines and the lifting tackles were not examined by a competent person, once in a year as prescribed under the Act. It was not even inspected since last six years. He found that Shri S. C. Sharma, Chief Engineer of the Factory, was not a "competent person" recognized by the Chief Inspector of Factories, Bihar in accordance with Section 2 (Ga) of the Act. Accordingly he reported that it was a violation of sub-clause (iii) of Clause (a) of Sub-section (1) of Section 29 of the Act. 3. The Factory Inspector, in his complaint petition, further alleged that the petitioner being one of the Directors of Champaran Sugar Company Limited is the "occupier" of the Factory and, therefore, he had allegedly violated the provisions of law as contained in Section 29 of the Act and had thus committed an offence under Section 92 of the Act. In the detailed statement made in the complaint petition it was stated that the petitioner was one of the Directors of Champaran Sugar Company Limited and was for this reason the "occupier" of the Factory. In the detailed statement made in the complaint petition it was stated that the petitioner was one of the Directors of Champaran Sugar Company Limited and was for this reason the "occupier" of the Factory. It was submitted that the concept of a "competent person" in relation to the provisions of the Act was for the first time introduced in subsection (ii) (ka) of Section 2 of the Act which came into force on 1.12.1987. According to it a competent person will mean a person or any institution recognized as such by the Chief Inspector of Factories for carrying out the tests etc. as required to be done in a factory under the provisions of this Act. Since there was no such notification, no competent person was designated as such and, therefore, there could be no question of violation of the provisions of the Act for the alleged failure for having the requisite tests carried out by the competent person. 4. Section 2 (n) has been modified by the amending Act to provide that in case of company one of the Directors shall be deemed to be the occupier. This provision is not proper and is hit by Article 14 of the Constitution inasmuch as it is discriminatory and if gives unbridled power to the Factory Inspector to choose anyone of the Directors' to be the occupier and to lodge prosecution against him to the exclusion of other Directors. Hence any such prosecution must be held to be ab initio void and liable to be struck down. As per this provision any of the Directors can be singled out and chosen for the purpose of lodging the prosecution. Section 101 of the Act provides for exemption of occupier or Manager from liability in certain cases. In the present case, since the General Manager is already a co-accused there is automatically an exemption for the Director in terms of Section 101 of the Act. 5. In the instant case the Directors of the Company had by a resolution named S. K. Gupta, General Manager of Barrah Factory as the occupier of the Factory and have also made him responsible for ensuring compliance with all Central and State Legislations including the Factories Act. 5. In the instant case the Directors of the Company had by a resolution named S. K. Gupta, General Manager of Barrah Factory as the occupier of the Factory and have also made him responsible for ensuring compliance with all Central and State Legislations including the Factories Act. The Directors have also given power of attorney in favour of Shri S. P. Mishra, Additional President-cum-Technical Adviser of Champaran Sugar Company Limited for being in overall in-charge of the functions or Barrah Factory. From this it would appear that Shri S. K. Gupta was made the occupier of the factory for the purposes of the Act and there is no question of any body else being prosecuted for the alleged violation. The prosecution, therefore, has been wrongly directed against the petitioner who is a Director and for the time being Chairman of the Champaran Sugar Company Limited. He is entitled to exemption from prosecution in terms of Section 101 of the Factories Act. The law envisages only one occupier of the factory for the purposes of the Act and it is, therefore, not permissible to prosecute the petitioner also in addition to Shri S. K. Gupta, General Manager, who is admittedly the occupier of the factory. On these grounds, amongst others, it has been contended in this application that it be admitted and after calling upon the opposite party to show cause the impugned order dated 19.5.1989 passed by the learned Sub-divisional Magistrate, Motihari, in Factory Case No. 17/89 be quashed. 6. The learned counsel for the petitioner has been heard at length. He has submitted that the present petitioner does not come within the definition of "occupier" and, therefore, he cannot be prosecuted. In support of his contention, he has placed reliance on the case of John Donald Mackenzie v. The Chief Inspector of Factories, Bihar, Ranchi (A.I.R. 1962 S.C. 1351). In this case the meaning of "occupier" as defined in section 2(n) and section 100 of the Factories Act, 1948 had come up for determination before Hon'ble Supreme Court. It was held that the expression "occupier" as defined in section 2(n) of the Factories Act is not to be equated with 'owner'. It was further held that no doubt, the ultimate control over a factory must necessarily be with an owner unless the owner has completely transferred that control to another person. It was held that the expression "occupier" as defined in section 2(n) of the Factories Act is not to be equated with 'owner'. It was further held that no doubt, the ultimate control over a factory must necessarily be with an owner unless the owner has completely transferred that control to another person. Whether that was done in a particular case was a question of fact. Therefore, the Manager of the Factory who claimed to be an occupier of the factory must lay before the Chief Inspector of Factories the necessary materials for showing that the company had in some manner transferred the entire control over the factory to him. 7. Further the learned counsel for the petitioner has placed reliance on the case of Suresh Tulsidas Kilachand Vs. Collector of Bombay (1984 Lab. I. C. 1614) This was a case under Employees' State Insurance Act, 1948. Section 2 (17) of this Act had defined "Principal Employer". This definition referred to the occupier of the factory and under section 2 (15) of the Act it was expressly provided that the occupier of the factory will have the same meaning assigned to it as in the Factories Act, 1948. It was held by Bombay High Court in the said case that the Director of Company simply by virtue of being a Director is not "Principal employer" contemplated under section 2 (I7) of that Act. It was further held that he is not personally liable to pay employer's contribution under the Act. 8. The learned counsel for the petitioner has heavily relied on these two decisions to show that since the present petitioner is only a Director of the Company, he cannot be said to be the occupier within the meaning of Section 2 (n) of the Act, and, therefore, he is not liable to be prosecuted. Before I enter into the merits of these submissions I would like to briefly state that Annexure-2 is the complaint petition filed by the Factory Inspector in which the present petitioner has been described as the occupier of Champaran Sugar Company Limited Barrah Factory Branch and has been named as accused no. 1. It was alleged that being one of the Directors of the Company he is the occupier of the factory. It further appears that Shri S. K. Gupta, General Manager, has been named as accused as no. 1. It was alleged that being one of the Directors of the Company he is the occupier of the factory. It further appears that Shri S. K. Gupta, General Manager, has been named as accused as no. 2 in his capacity of the Manager of Barrah Factory Branch. A prayer has been made in the complaint petition for taking cognizance against these two persons under section 105 of the Act. Annexure-1 is the order dated 19.5.1989 passed by the learned Sub-divisional Judicial Magistrate, Sikrahana at Motihari. It appears that by this order the learned Magistrate had taken cognizance of the offence under section 92 of Factories (Amendment) Act, 1987 against both these accused persons on the basis of the complaint petition filed before him and has transferred the case to the court of the Judicial Magistrate, 1st Class for disposal. 9. Before proceeding any further I would like to mention here that the Factories Act, 1948 has undergone significant changes by the Amending Act, 1987. As amended section 2 (n) of the Act runs as follows : Section 2 (n)-"occupier" of a factory means the person who has ultimate control over the affairs of the factory: Provided that- x x x x x x (ii) in the case of a company, anyone of the directors shall be deemed to be the occupier". From this definition of the "occupier" it becomes clear that any Director of the Company by legal fiction shall be deemed to be the occupier thereof. It is well known that whenever a proviso is appended to a section it carves out for itself an exception to the general rule. No doubt, as per section 2 (n) of the Act "occupier" of a factory will mean the person who has ultimate control over the affairs of the factory. This lays down the general rule so far as the occupier is concerned. It has, however, been put to three exceptions as mentioned in provisos (i), (ii) and (iii) appended to this Section. While proviso (i) relates to a firm or other association of individuals, proviso (ii) is applicable to the cases of a company and proviso (iii) relates to the case of the factory owned or controlled by the Central Government or any state Government, or any local authority. There are other provisos also to this section with which we are not concerned. There are other provisos also to this section with which we are not concerned. From this it would appear that no doubt generally speaking the occupier of a factory will mean a person who has ultimate control over the affairs of the factory but in the case of a company, any of the Directors shall be deemed to be the occupier. Thus by a legal fiction the Director of a company has been designated as an occupier notwithstanding the definition of the occupier given in the first part of this subsection. Under this background it will not be very material to examine in relation to Annexures 4' and 5' as to who is the occupier within the meaning of section 2 (n) of the Act. Obviously that definition of the occupier is of no help to the petitioner inasmuch as the case relates to a company of which the petitioner happens to be one of the Directors and for the present the Chairman and Managing Director of the Company. 10. It has been contended before mo on behalf of the petitioner that this definition of "occupier" in the case of a company as given in section 2 (n) of the Act is arbitrary and violative of Article 14 of the Constitution of India. It has been pointed out that this gives a long rope to the Factory Inspector inasmuch as he can choose any of the Directors for prosecution and his choice may be arbitrary since there is no guideline in this definition to show as to which of the Directors has to be prosecuted. It is well known that whenever any official Act is performed the question of bonafide has to be presumed. It has to be presumed that all official Acts are done in a bonafide manner and that a person discharging any official duty does so in a bonafide manner. Malafide is a thing which has to be alleged and proved. Under this circumstance, I think that this classification as given in section 2 (n) of the Act is a reasonable classification and simply because as per this section a Director will be deemed to be occupier of the company; it cannot be said that this clause is arbitrary, discriminatory and violative of Article 14 of the Constitution of India. Hence I do not find any force in this contention of the learned counsel. Hence I do not find any force in this contention of the learned counsel. Moreover in a Criminal Misc. case this contention is not of much consequence as the vires of section 2 (n) cannot be determined in an application under section 482 of the Code. 11. My attention has also been drawn to Annexure 4' which is a Resolution passed by the Board of Directors of the company under the powers conferred by section 289 of the Companies Act, 1956. This shows that the Board of the Company in its meeting held on 19.9.1987 had nominated Shri S. K. Gupta, General Manager of the Factory as occupier of the factory. This nomination was made for the purpose of compliance with the provisions of the Factories Act, 1948 and the Rules made thereunder, Bihar Sugar-cane (Regulation of Supply & Purchase) Act. 1981 and the Rules made thereunder, Bihar Molasses (Control) Act, 1947 and the Bihar Molasses (Control) Rules, 1955 and all other Central and State Government enactments, Rules and Regulations framed thereunder as may be applicable to the factory now and from time to time. This nomination has been made effective from 1st October, 1987 and it further provided that Shri Gupta was vested with the powers mentioned in clauses (a) to (i). It need not be mentioned here that whenever the powers are categorised in different clauses it will mean that Shri Gupta was vested with only those powers which have been mentioned in these clauses. Though Annexure- 4' shows that Shri Gupta was designated as the occupier of the factory, this designation was made by virtue of the powers conferred on the Board by Section 289 of the Companies Act read with Article 122 of the Company's Articles of Association. 12. If, however, we look to the definition of the "occupier" as given in section 2 (n) of the Act it will mean a person who has ultimate control over the affairs of the factory and he will be the person designated, as occupier. In the present case in view of the fact that the powers given to Shri Gupta have been categorised under clauses (a) to (i) only this will mean that Shri Gupta was given the control over this factory only to the extent of the power vested under these. clauses. In the present case in view of the fact that the powers given to Shri Gupta have been categorised under clauses (a) to (i) only this will mean that Shri Gupta was given the control over this factory only to the extent of the power vested under these. clauses. From this it would follow that except for powers vested in Shri Gupta by clauses (a) to (i), Shri Gupta was not given the ultimate control over the affairs of the factory notwithstanding the fact that in Annexure-'4' there is a mention of the fact that Shri Gupta would be vested with ultimate control over the affairs of the Barrah Factory Branch and was nominated as occupier thereof. It may be mentioned here that earlier part of Annexure-'4' will show that Shri Gupta was vested with ultimate control over the affairs of Barrah Factory only with respect to the Acts and Rules mentioned therein together with all other Central and State Government enactments, Rules and Regulations framed thereunder. This also shows that Shri Gupta was not vested with ultimate control over the factory. Moreover, by fiction of law as stated earlier, amended section 2 (n) makes any of the Directors of the Company an occupier thereof and, therefore, both the. Directors as well as the General Manager, Shri Gupta may be prosecuted for the violation of the provisions of the Act. 13. My attention has also been drawn to Annexure which is a power of attorney executed by the Board of Directors of the Company vesting Shri S. P. Mishra, Additional President-cum-Technical Adviser with certain powers to discharge his duties. Here also the powers and duties have been enumerated from clause (i) to (xi). From this would naturally follow that except for these clauses the power of attorney granted to Shri S. P. Mishra will not vest him with power to take action in the residuary matters which have been left uncovered, since the power vested in Shri Mishra have been spelt out in clauses (i) to (xi) only. In this view of the matter also it cannot be said that Shri Mishra has ultimate control over the affairs of the factory and I do not find any force in the submissions to the contrary made by the learned counsel for the petitioner. 14. The learned counsel for the petitioner has placed reliance on the two cases mentioned above. In this view of the matter also it cannot be said that Shri Mishra has ultimate control over the affairs of the factory and I do not find any force in the submissions to the contrary made by the learned counsel for the petitioner. 14. The learned counsel for the petitioner has placed reliance on the two cases mentioned above. In the first case reported in A.I.R. 1962 S.C. 1351 (John Donald Mackenzie) (supra), it was held that occupier is not to be equated with 'owner'. In this case the meaning of the occupier as mentioned in sections 2 (n) and 100 of the Factories Act, 1948 was taken into consideration by the Hon'ble Supreme Court. In the said case the Manager of Factory had claimed to be the occupier and had applied for the renewal of the licence signed by him. Since he did not produce the necessary material before the Chief Inspector of Factories for showing that the Company had in some manner transferred the entire control over the Factory to him, it was held that his application for the renewal of licence was not in proper form and could not be acted upon. It may be noted here that since after decision of this case the Factories Act, 1948 has undergone significant changes and the definition of "occupier" as mentioned in section 2 (n) of the Act has also been changed by the Factories (Amendment) Act, 1987. I have already given above the definition of "occupier" as the amended provisions which includes the Director of a Company by way of exception to the general rule that the occupier would be a person who will have ultimate control over the affairs of the factory. It may be mentioned here that by this Amending Act section 100 of the Principal Act which finds mention in this judgment of the Hon'ble Supreme Court was completely omitted. Thus this decision is not of much help to the learned counsel for the petitioner inasmuch as per new definition of the 'occupier' mentioned in section 2 (n), (as amended) the Director of a Company has been designated by the legal fiction to be the occupier thereof, notwithstanding the fact that he is not in complete control over the affairs of the Factory. 15. The learned counsel for the petitioner has also placed reliance on the case of Suresh Tulsidas Kilachand Vs. 15. The learned counsel for the petitioner has also placed reliance on the case of Suresh Tulsidas Kilachand Vs. Collector of Bombay (supra) (1984 Lab. I. C. 1614). This was a case under Employees' State Insurance Act, 1948 in which the definition of principal employer was given in section 2 (17) of that Act. The definition of principal employer in this Act referred to "occupier of the factory" under section 2 (15) of the Act. It was expressly provided that the occupier of the factory shall have the same meaning as assigned to it in the Factories Act, 1948. It was observed by Bombay High Court that it is obvious on a plain reading of that definition of occupier given in section 2 (n) of the Factories Act, 1948 that for ascertaining whether a person is an occupier or not it has to be ascertained whether or not he has ultimate control over the Factory. This decision is also prior to Factories (Amendment) Act, 1987 by which the definition of "occupier" of the Factory has undergone some important changes. Under the new definition of "occupier" as given in amended section 2 (n) of the Act in the case of a company anyone of the Directors shall be deemed to be the occupier. This has been mentioned in the proviso to section 2 (n). It is well known that the proviso carves out for itself a particular area by way of exception to the general rule and, therefore, the definition of "occupier" as given in amended section 2 (n) of the Act has been so changed as to include the Director of the Company who will be deemed to be the occupier notwithstanding the fact that he is not in ultimate control over the affairs of the Factory. Therefore, this decision also is not of much help to the learned counsel for the petitioner. 16. Before concluding, however, I would like to mention section 101 of the Act. This section provides for the exemption of the occupier or Manager from liability in certain cases. Therefore, this decision also is not of much help to the learned counsel for the petitioner. 16. Before concluding, however, I would like to mention section 101 of the Act. This section provides for the exemption of the occupier or Manager from liability in certain cases. It lays down that when the occupier or Manager of a factory is charged with an offence punishable under this Act, he shall be entitled upon complaint duly made by him and on his giving him to the prosecutor not less than three days notice in writing of his intention so to do, to have any other person whom his charges as actual offender brought before the court at the time appointed for hearing the charge. Then on proving the circumstances mentioned in clauses (a), (b) of this section that other person shall be convicted of the offence and be liable to the punishment as if he were occupier or the manager of the factory and in that situation occupier or manager, as the case may be, shall be discharged from any liability under this Act in respect of such offence. 17. The provision of this section clearly lays down that it will be open to the present petitioner even at this stage or at the subsequent stage of the case to act in terms of this section and to get the actual offender brought before the Court at the time appointed for hearing of charges so the petitioner is left with an alternative as mentioned in section 101 of the Act. 18. From the detailed discussions made above, it appears that prima facie if the complaint petition is taken in ,its entirety and at its face value it certainly discloses the offences prima facie said to have been committed by the petitioner. Under these circumstances, I do not find that this application is fit for admission for the reasons stated above. 19. In the result, the application is rejected.