Supreme Court settles liability of Managing Director in Factories Act Violation: Subir Bose vs. Inspector of Factories (2019)

LEGAL ISSUE: Liability of a Managing Director for violations under the Factories Act, 1948. CASE TYPE: Criminal Law. Case Name: Shri Subir Bose vs. Inspector of Factories. Judgment Date: 24 September 2019

Introduction

Date of the Judgment: 24 September 2019. Citation: Not Available. Judges: Indu Malhotra, J., Sanjiv Khanna, J. Can a Managing Director be held liable for violations of the Factories Act, 1948, even when a factory is in the process of closing down? The Supreme Court of India addressed this question in a case involving a fire at a factory, ultimately allowing the Managing Director to plead guilty and pay a fine, considering his age and the circumstances. This judgment, delivered by a bench of Justices Indu Malhotra and Sanjiv Khanna, provides insights into the application of the Factories Act and the considerations for sentencing in such cases.

Case Background

The case revolves around a fire incident that occurred on April 28, 2006, at the factory premises of M/s. Berger Paints India Ltd. in Kundaim, Goa. At the time of the incident, the appellant, Mr. Subir Bose, was the Managing Director of the company and a resident of Kolkata. The fire resulted in minor injuries to one worker, Shri Tulsidas Dutta Palkar, who was treated and discharged on the same day. Following the incident, the Inspector of Factories filed a complaint against Mr. Bose, as the occupier, and Shri S.M. Lahiri, the Manager of the company, alleging violations of the Factories Act, 1948, and the Goa Factories Rules, 1945. The primary allegations were that the factory was operating without a proper license and that adequate measures were not taken to prevent explosions or ignition of inflammable substances, as required under Sections 37 and 38 of the Factories Act.

Timeline

Course of Proceedings

The Inspector of Factories, Altinho, Panaji, Goa, filed a private complaint on June 28, 2006, against the appellant, Mr. Subir Bose, and Shri S.M. Lahiri, the Manager of the Company, under Section 92 of the Factories Act, 1948. The Judicial Magistrate (First Class), Ponda, took cognizance of the offense. The appellant, Mr. Bose, contested the complaint, arguing that the factory was in the process of closure and that adequate measures were taken to prevent the fire. The appellant also referred to a closure report filed by the Police in FIR No. 110 of 2006 under Sections 285 and 336 of the Indian Penal Code, 1860, against the Factory Manager and other employees, which was accepted by the same Judicial Magistrate. However, the Supreme Court did not interfere with the order taking cognizance of the offense, but considered the appellant’s plea of guilt.

Legal Framework

The case primarily involves the interpretation and application of the following legal provisions:

• Section 92 of the Factories Act, 1948: This section deals with the general penalty for offenses under the Act. It states, “If in, or in respect of, any factory there is any contravention of any of the provisions of this Act or of any rules made thereunder or of any order in writing given thereunder, the occupier and manager of the factory shall each be guilty of an offence and shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to one lakh rupees or with both, and if the contravention is continued after conviction, with a further fine which may extend to one thousand rupees for each day on which the contravention is so continued.”
• Sections 37 and 38 of the Factories Act, 1948: These sections pertain to precautions against dangerous fumes and precautions against fire, respectively. These sections were allegedly violated by the company.

Arguments

The appellant, Mr. Subir Bose, argued that the factory was in the process of closing down its operations. He also contended that adequate measures were taken to prevent the fire. The appellant referred to the closure report filed by the police in FIR No. 110 of 2006, which stated that the case was unfit for filing a charge sheet and that no criminal charges were made out. The appellant also stated that he was willing to plead guilty and pay the maximum fine that can be imposed under Section 92 of the Factories Act, 1948, to bring the litigation to a close. He requested that the punishment of imprisonment not be imposed, considering his age (over 70 years) and the fact that the company had multiple factories and depots across India, and he was a permanent resident of Kolkata at the time of the incident. The appellant argued that relegating him to the trial court would be a futile exercise and would cause unnecessary delay.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues but addressed the following implicitly:

1. Whether the Managing Director of a company can be held liable for violations under Section 92 of the Factories Act, 1948, when the factory is in the process of closure.
2. Whether the Court can accept a plea of guilt and impose a fine in lieu of imprisonment, considering the age and circumstances of the accused.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court did not explicitly rely on any specific case laws or books in this judgment. However, it considered the following legal provisions:

• Section 92 of the Factories Act, 1948: This section was the primary basis for the complaint and the subsequent conviction.
• Sections 37 and 38 of the Factories Act, 1948: These sections were cited in the complaint as the basis for the alleged violations.

Judgment

The Supreme Court accepted the appellant’s prayer to accept his confession of guilt and convicted him under Section 92 of the Factories Act, 1948. The Court imposed a fine of Rs. 1,00,000/-, which was to be deposited with the trial court within four weeks from the date of the judgment. In case of failure to deposit the fine, the appellant would undergo simple imprisonment for a period of eight weeks. The Court noted that the worker who was injured was discharged on the same day, the incident was from 2006, the appellant was over 70 years of age, and the trial would take years to conclude. The Court clarified that this order was passed in the peculiar facts and circumstances of the case and was not to be treated as a precedent.

Section 92 of the Factories Act, 1948: The Court used this provision to convict the appellant upon his plea of guilt.

Sections 37 and 38 of the Factories Act, 1948: The Court noted that these provisions were allegedly violated, but did not delve into the merits of the allegations.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The appellant’s willingness to plead guilty and pay the maximum fine.
• The age of the appellant (over 70 years).
• The fact that the injured worker had sustained minor injuries and was discharged on the same day.
• The fact that the incident occurred in 2006 and the trial would take several years to conclude.

The Court’s decision was heavily influenced by the factual circumstances of the case, including the age of the appellant, the nature of the injuries, and the delay in the trial, rather than a strict interpretation of the law.

The Court considered the peculiar facts of the case and decided to accept the appellant’s plea of guilt. The court noted that the worker who was injured was discharged on the same day, the incident was from 2006, the appellant was over 70 years of age, and the trial would take years to conclude. The court further stated that “In these circumstances, in the interests of justice, we accept the appellant’s prayer to accept his confession of guilt, and, accordingly, convict him under Section 92 of the Factories Act with Fine of Rs.1,00,000/-.” The Court also noted that “The occurrence relates to the year 2006, the present appellant is now over 70 years of age, and the trial itself would take years before it is decided.” The Court also clarified that “As this order is passed in the peculiar facts and circumstances of this case, it is not to be treated as a precedent.”

Key Takeaways

• A Managing Director can be held liable for violations under the Factories Act, 1948, even if the factory is in the process of closing down.
• The Court can accept a plea of guilt and impose a fine in lieu of imprisonment, considering the age and circumstances of the accused.
• The peculiar facts and circumstances of each case are important in determining the appropriate punishment.
• The judgment emphasizes the importance of compliance with the Factories Act, 1948, even during the closure process.

Directions

The Supreme Court directed the appellant to deposit a fine of Rs. 1,00,000/- with the trial court within four weeks from the date of the judgment. In case of failure to deposit the fine, the appellant would undergo simple imprisonment for a period of eight weeks.

Development of Law

The ratio decidendi of this case is that in peculiar circumstances, especially when the accused is of advanced age, the court can accept a plea of guilt and impose a fine in lieu of imprisonment for violations under the Factories Act. This case does not change the previous position of law but clarifies that the courts can consider the peculiar facts of the case while deciding on the punishment.

Conclusion

The Supreme Court’s judgment in the case of Shri Subir Bose vs. Inspector of Factories highlights the liability of a Managing Director under the Factories Act, 1948, even when a factory is in the process of closing down. The Court accepted the appellant’s plea of guilt and imposed a fine of Rs. 1,00,000, considering his age, the minor nature of the injuries, and the delay in the trial. This judgment emphasizes the importance of compliance with the Factories Act, 1948, while also considering the specific circumstances of each case.

Category

Parent Category: Factories Act, 1948

Child Category: Section 92, Factories Act, 1948

Child Category: Section 37, Factories Act, 1948

Child Category: Section 38, Factories Act, 1948

Parent Category: Criminal Law

Child Category: Plea of Guilt

Child Category: Sentencing

FAQ

Q: Can a Managing Director be held liable under the Factories Act, 1948?
A: Yes, a Managing Director can be held liable for violations under the Factories Act, 1948, as they are considered an occupier of the factory.

Q: What happens if a factory is in the process of closing down?
A: Even if a factory is in the process of closing down, the occupier must ensure compliance with the Factories Act, 1948. Violations can still lead to penalties.

Q: What is Section 92 of the Factories Act, 1948?
A: Section 92 of the Factories Act, 1948, deals with the general penalty for offenses under the Act. It provides for imprisonment or fine or both for violations.

Q: Can a court impose a fine instead of imprisonment?
A: Yes, the court can impose a fine instead of imprisonment, especially in cases where the accused is of advanced age, the injuries are minor, and there is a delay in the trial.

Q: Is this judgment a precedent?
A: No, the Supreme Court clarified that this order was passed in the peculiar facts and circumstances of this case and was not to be treated as a precedent.