MD as Occupier: Factory Accident Liability in India

By Vikrant Rana and Rupin Chopra

Introduction

On 20 October 2026, a listed Indian subsidiary of a German auto-component group informed the stock exchanges that its Chief Executive Officer and Managing Director had been taken into custody on 19 October 2026 for investigation by the Talegaon MIDC Police Station, Pimpri Chinchwad Police Commissionerate, Pune, Maharashtra. The disclosure stated that the action was taken under the Bharatiya Nyaya Sanhita, 2023 and related to an accident on 9 June 2026 at the company’s Talegaon factory. It further stated that the investigation had been expanded to include the Managing Director because he was considered the “occupier” of the factory premises under applicable law.

The matter is at the investigation stage. No court has made any finding, and this note does not comment on the merits of the case or on any individual. Its purpose is narrower: to explain why occupier status is the pivot of factory safety liability in India, what the development signals for the boards of Indian companies and multinational groups operating in India, and which governance controls reduce the exposure.

Background

According to a report published on 9 June 2026, two workers died and others were injured after a gas leakage at a manufacturing plant in the Talegaon MIDC area of Maval taluka, Pune district, and the local police registered an accidental death case. The reports available to us on the October development describe a sudden discharge of carbon dioxide during a scheduled cylinder replacement at the factory. The exact cause remains a matter for the investigating authorities.

The Legal Frame: Why Occupier Status Matters

1. The OSH Code now governs factory safety

   The Ministry of Labour and Employment brought all provisions of the OSH Code into force on 21 November 2025 through S.O. 5321(E). Section 143 repealed the Factories Act, 1948 with effect from commencement, subject to the Code’s savings clause. The Occupational Safety, Health and Working Conditions (Central) Rules, 2026 were notified on 8 May 2026 through G.S.R. 345(E). Because the accident occurred on 9 June 2026, the OSH Code forms the principal central factory-safety framework. The precise provisions invoked in the present matter should nevertheless be confirmed from the FIR, remand papers and any proceedings initiated by the Inspector-cum-Facilitator.

2. Who is the occupier

   Section 2(1)(zs) of the OSH Code defines the “occupier” of a factory as the person who has ultimate control over its affairs. In the case of a company, the proviso deems any one of its directors, except an independent director within section 149(6) of the Companies Act, 2013, to be the occupier. The language requires the occupier of a company-owned factory to be a non-independent director. The Supreme Court’s interpretation of materially similar language under section 2(n) of the repealed Factories Act remains instructive: in J.K. Industries Ltd. v. Chief Inspector of Factories and Boilers, (1996) 6 SCC 665, the Court held that a company could nominate only one of its directors, and not another employee, as occupier. The statutory deeming rule does not make every non-independent director the named occupier at the same time; however, failure to identify a qualifying director can create wider exposure.

   The occupier is treated as the employer of a factory under section 2(1)(u), while sections 6 and 23 impose broad duties concerning worker safety, health and working conditions. Sections 10 and 11 require notice of specified accidents and dangerous occurrences. For factories involving a “hazardous process” as statutorily defined, sections 84 and 85 impose additional disclosure, emergency-planning, health-record, supervision and medical-examination duties. Whether the Talegaon activity or factory falls within the Code’s defined hazardous-process regime must be determined from the scheduled industry and the facts; the mere use or release of carbon dioxide does not, by itself, establish that classification. Sections 94 to 109 contain the relevant offence, penalty, accident-result and company-offence provisions, including the limited third-party defence in section 108.

3. Two tracks that run in parallel

   A fatal factory accident can generate two legally distinct tracks. First, the Inspector-cum-Facilitator may examine compliance with the OSH Code and applicable rules, including the general employer duties, accident-notification requirements and any factory-specific or hazardous-process duties. Secondly, the police may investigate offences under the Bharatiya Nyaya Sanhita, 2023. Section 106(1), which concerns causing death by a rash or negligent act not amounting to culpable homicide, may be relevant in a workplace-fatality case, but the company disclosure reviewed publicly did not identify the section actually invoked. Occupier status may explain why a director is examined under the regulatory framework, but it does not dispense with proof of the ingredients of a BNS offence or automatically create criminal liability under the BNS.

   The leading occupier authority is J.K. Industries Ltd. v. Chief Inspector of Factories and Boilers, (1996) 6 SCC 665, decided under the Factories Act, 1948. The Supreme Court held that, for a company-owned factory, the nominated occupier must be a director and cannot be another officer or employee. Indian Oil Corporation Ltd. v. Chief Inspector of Factories, (1998) 5 SCC 738, separately addressed the special rule for a government-controlled factory. These authorities concern statutory occupier identification; they do not establish guilt for a particular accident. Any reliance on earlier case law must also account for changes in the text and scheme of the OSH Code.

Key Observations

1. Personal exposure can follow the occupier role. The company and the director are separate legal persons, but the OSH Code places identified duties on the occupier and also contains a separate company-offence provision. Absence from the plant on the day of the accident is not, by itself, conclusive. Equally, designation as occupier does not automatically prove a BNS offence; criminal liability depends on the statutory ingredients, the person’s acts or omissions, causation and the evidence.
2. Process and contractor safety are board-level governance issues. The reported incident arose during scheduled cylinder-replacement work performed by service-provider personnel. The appropriate controls include contractor competence, isolation and permit-to-work systems, ventilation, emergency egress, rescue planning, supervision and verification of the fire-suppression system. The enhanced duties in sections 84 and 85 apply only if the statutory “hazardous process” threshold is met.
3. Disclosure must keep pace with verified facts. Regulation 30 read with Part A of Schedule III to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 requires listed entities to assess and disclose specified material events. An event involving the custody or arrest of a managing director requires prompt, accurate disclosure under the applicable Schedule III entry and the company’s materiality framework, without prejudging the investigation.

Reducing the Risk

The controls below are drawn from the structure of the Code and from general governance practice. They are not a substitute for a site specific compliance review.

Risk area	Recommended control	Accountable function
Occupier identity	Map every factory to one qualifying non-independent director as occupier, record the designation and authority by board resolution and statutory filings, and review it whenever the board or operating structure changes. Do not designate an independent director.	Board; Company Secretary
Board oversight	Make safety a standing agenda item with leading indicators such as near misses, permit to work breaches, overdue corrective actions and contractor incidents. Constitute the safety committee and safety officer roles the Code contemplates.	Board; Safety Committee
Hazardous processes	Maintain written procedures, isolation and lockout steps, permit-to-work controls, ventilation and rescue arrangements, and competence checks for compressed gas, gas-based suppression systems and cylinder changeover. Audit implementation at defined intervals.	Plant Head; EHS Head
Contractor workforce	Contractor selection on safety competence, site induction, supervision ratios and clear principal employer responsibility for contract workers inside the factory.	Plant Head; HR; Procurement
Incident response	A rehearsed protocol covering medical aid, notice of the accident to the authorities, scene and record preservation, a privileged internal investigation, and a single point of contact for police and the inspectorate.	General Counsel; EHS Head
Director readiness	Brief directors in advance on the occupier role, on what a police inquiry involves, and on the remedies available. Keep crisis counsel identified before an incident, not after it.	General Counsel; Board
Disclosure and continuity	Pre approved Regulation 30 assessment steps for events involving directors, a delegation matrix for periods of unavailability, and holding statements that match the facts.	Company Secretary; CFO
Insurance	Review directors and officers cover for investigation and defence costs, and the exclusions that apply to criminal proceedings and to fines.	CFO; Risk
Group alignment	Align foreign parent safety policy with Indian statutory duties, and tell nominee directors in plain terms what the occupier role can mean for them.	Group Legal; Regional Management

Frequently Asked Questions

Osh code faq

a

Who is the occupier of a factory under India’s OSH Code?

The occupier is the person who has ultimate control over the affairs of the factory. Under section 2(1)(zs) of the OSH Code, where the factory is owned by a company, any one director other than an independent director under section 149(6) of the Companies Act, 2013 is deemed to be the occupier.

a

Can a Managing Director be investigated for a factory accident in India?

Yes. Police may investigate a managing director where the evidence is said to disclose an offence under the Bharatiya Nyaya Sanhita, 2023, and the safety regulator may separately examine compliance under the OSH Code. Occupier status is relevant to statutory responsibility, but it does not by itself establish the ingredients of a criminal offence.

a

Are independent directors treated as occupiers?

No. Section 2(1)(zs) expressly excludes an independent director within the meaning of section 149(6) of the Companies Act, 2013 from the company-director deeming limb for occupier status.

a

What should a board do first after a fatal accident at a factory?

Provide emergency medical assistance, eliminate continuing danger, preserve the scene and relevant records, make the notices required under sections 10 and 11 and the applicable rules, notify insurers, constitute a legally supervised internal investigation, assess Regulation 30 disclosure, and ensure that directors and employees receive independent legal advice where their interests may diverge.

Conclusion

The Pune development is a timely reminder that factory safety in India involves individual statutory responsibility as well as corporate compliance. The OSH Code has been in force since 21 November 2025, and the Central Rules were notified on 8 May 2026. Boards should identify the qualifying director who is occupier, document genuine authority and reporting lines, test contractor and emergency controls, and rehearse the legal, regulatory and disclosure response. Those steps reduce risk, but they do not predetermine the outcome of the present investigation.

Sources

1. Press and wire reports of 9 June 2026 and of 20 and 21 October 2026 on the accident and the custody (list held in the internal source file, not for publication).
2. Commencement of the OSH Code and repeal of the Factories Act, 1948 with effect from 21 November 2025: https://www.scconline.com/blog/?p=367766
3. The Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), India Code: https://www.indiacode.nic.in/bitstream/123456789/22041/1/2020-37.pdf
4. Kerala High Court order involving the Managing Director of Kitex Garments (occupier question): https://www.livelaw.in/pdf_upload/sabu-m–413183.pdf

For your reference, please find the links below

Safety Management Plan
Work More, Earn More – The Factories (Amendment) Bill, 2016
India: Night Shift for women in Haryana
Factories Act, 1948
Payment of Gratuity Act, 1972