John Donald Mackenzie And Anr. vs The Chief Inspector Of Factories

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 17 April, 1961

Coram: K. Subba Rao, Raghubar Dayal, J.R. Mudholkar

In this matter, the Supreme Court of India recorded that the appeal concerned John Donald Mackenzie and another versus the Chief Inspector of Factories, with the decision rendered on 17 April 1961. The judgment was authored by Justice J. R. Mudholkar, and the bench comprised Justices K. Subba Rao, Raghubar Dayal, and J. R. Mudholkar. The Court indicated that the appeal arose from the judgment of the Patna High Court, which had dismissed the petitioners’ petition filed under Articles 226 and 227 of the Constitution of India.

The first petitioner identified himself as the manager and occupier of the Bata Shoe Company’s factory located at Digha in Bihar, while the second petitioner was the Bata Shoe Company Private Limited, a corporate entity based in Calcutta. The Chief Inspector of Factories, stationed at Ranchi, issued a letter dated 6 September 1956 to the occupier of the Bata Shoe Company’s Digha factory, requesting renewal of the factory licence for the year 1957. The Inspector directed that an appropriate renewal application be filed within sixty days of the expiry of the previous licence, which terminated on 31 December 1956, and he referred the occupier to Rule 7 of the Bihar Factories Rules, 1950. At the conclusion of that letter, the Inspector added a note stating, “Note: There have been a lot of mistakes found in last years in the application for renewal and in the notice of occupation which created a lot of difficulties in renewing the licence by this office. Please be careful while filling up these informations.” Following receipt of the Inspector’s communication, the first petitioner, Mackenzie, signed and forwarded an application for licence renewal to the Chief Inspector. Upon reviewing the application, the Chief Inspector wrote a letter dated 20 November 1956, observing that Mackenzie appeared to be only the manager of the factory and emphasizing that both the renewal application and the notice of occupation required the signature of the occupier. The Inspector further cited Section 2(n) and Section 100 of the Factories Act, 1948, and explained, “In Section 100 the criterion for determining as to who was the occupier of a factory has been very clearly specified and in my opinion there should be no difficulty in understanding the same. In case there is any managing agency of the factory, the managing agents would be treated to be the occupier which means the directors of the firm of the managing agents. Also as provided in Sub‑section (2) of Section 100 in case of a company the directors or the shareholders are to be treated as the occupiers.” The Inspector then inquired whether Mackenzie was a director of the company and stated that if he was not, a fresh application signed by the occupier should be filed within fifteen days of receipt of the letter. Subsequently, one Chatterji, describing himself as Chief Secretary of the Bata Shoe Company, responded to the Chief Inspector’s letter on 22 November 1956, providing his reply as recorded in the proceedings.

In his reply, the respondent explained that the term “occupier” does not mean the owner of a factory; rather, it refers only to the individual who exercises control over the factory’s affairs. He further stated that the company operated several factories and that the Digha Branch Factory was under the supervision of Mr. J. D. Mackenzie, who, in the respondent’s view, possessed ultimate control of that factory. Accordingly, the respondent submitted that Mr. Mackenzie should be regarded as the “occupier” within the meaning of Section 2(n) of the Factories Act. On that basis, the respondent urged the Chief Inspector to renew the factory licence.

The Chief Inspector, in a letter dated 20 December 1956, reiterated his earlier interpretation of the statutory provisions and again instructed the factory to file a proper application for licence renewal. Treating the Chief Inspector’s communication as an order, the petitioners approached the Patna High Court seeking its annulment. The High Court considered several arguments presented on behalf of the petitioners and rejected them, leading the petitioners to appeal to this Court.

The sole issue raised before this Court is whether petitioner No. 1, Mr. Mackenzie, exercised ultimate control over the factory and therefore qualifies as the “occupier” under Section 2(n) of the Factories Act. That section defines an occupier as the person who has ultimate control of the factory’s affairs, and, when such affairs are delegated to a managing agent, the agent is deemed to be the occupier. While the Court agrees that “occupier” must not be equated with “owner,” it notes that ultimate control ordinarily resides with the owner unless the owner has expressly transferred that control to another individual. Determining whether such a transfer occurred in the present case is a factual question.

The petitioners, who asserted that Mr. Mackenzie was the factory’s manager and possessed ultimate control, were responsible for providing evidence to the Chief Inspector that the company had transferred full control to him. No such evidence was presented. The record of correspondence between the petitioners and the Chief Inspector shows that the company did not execute any document or pass any resolution granting Mr. Mackenzie ultimate control. The Chief Inspector’s letter of 20 November 1956 had specifically asked whether any managing agents had been appointed for the factory and whether Mr. Mackenzie was a director of the company. Chatterjee’s reply dated 22 November 1956 failed to answer either query.

In the record, a letter dated 22, 1956 was presented as a reply to the Chief Inspector’s correspondence of 20 November 1956. That reply, however, failed to address the two specific questions raised by the Chief Inspector—whether any managing agents had been appointed for the factory and whether Mackenzie was one of the directors. Because the reply did not supply the required information, the Chief Inspector of Factories was justified in refusing to act upon the application that had been signed by Mackenzie. He therefore correctly directed the factory to file a proper fresh application in order to obtain renewal of its licence.

Subsequently, the dispute was taken before the High Court. Even at that stage, the petitioners did not produce any document or any corporate resolution that would show that the ultimate control of the factory had been transferred to Mackenzie. No execution of a deed, nor any formal resolution of the company, was offered to establish such a transfer of control. In view of the absence of any evidence of a change in control, the High Court correctly dismissed the petition filed by the respondents. Accordingly, the appellate court affirmed the lower court’s decision, dismissed the appeal and ordered that the costs of the proceedings be borne by the appellants.