Section 630

WRONGFUL WITHHOLDING OF COMPANY’S PROPERTY

[1984] 56 COMP. CAS. 329 (BOM.)

HIGH COURT OF BOMBAY

Govind T.Jagtiani

Sirajuddin S.Kazi

KHANDE, J.

Criminal Application No. 1197 of 1982

MARCH 24,1983

A.G. Noorani with Mahesh Jethmalani and Thaku Ajwani for the petitioner-accused.

K.M. Desai with A.M. Desai, N.K. Thakore and V.V. Joshi, J.A. Barday, for the respondent.

JUDGMENT

This application is filed under s. 482 of the Cr. PC, 1973, for quashing an order dated May 19, 1982, passed by the learned Metropolitan Magistrate, 14th Court, Giraum, Bombay, issuing process against the petitioner-accused on a complaint dated May 14, 1982, ifiled by respondent No.' 1-complainant on behalf of the Indian Oil Corporation (hereinafter referred to as "the Corporation").

The complaint filed by respondent No. 1 in the Metropolitan Magistrate's Court states that the petitioner was working as an officer on special duty in the Aviation Department of the Western Region of the Corporation. He had been employed by the Corporation, since May, 1962, under a letter of appointment issued by the Corporation. His services were covered by the rules and regulations of the Corporation, which were then in force and as amended from time to time.

A lease dated April 4, 1962, was executed between the Corporation and one Smt. Sheila B. Tolani in respect of flat No. 401 situate at Prabhu Kunj, Peddar Road, Bombay, on a monthly fee of Rs. 800 on the terms and conditions mentioned in the said lease. It is the contention of respondent No. 1 that the said lease was for a period of two years and even thereafter the Corporation continued in possession of the said flat and continued to pay the rent. Respondent No. 1 alleged that the Corporation had acquired the said flat for housing the officials and employees of the Corporation by allotment of the said flat according to their eligibility.

Respondent No. 1 alleges that where the Corporation leased flats, the lease fees or rental was always paid directly by the Corporation to the owners of the flats and only 10 per cent, of the basic pay of such allottees was deducted from their salary. In all such cases, the Corporation continued to be the owner or the lessee of the said flats irrespective of the allottees or employees occupying the same. The petitioner was accordingly allotted the flat and he was put in possession thereof on behalf of the Corporation.

The petitioner continued to be in possession of the said flat since 1962 till his retirement dated February 28, 1982, as an allottee of the Corporation. As per the rules applicable to the allottees, the petitioner was bound and liable to vacate the said flat within two months from the date thereof and to hand over vacant possession of the said flat allotted to him on his retirement. The petitioner, however, failed and neglected to hand over the said flat and continued to occupy the same wrongfully, and withheld the same. It appears that the Corporation from time to time called upon the petitioner orally and in writting to hand over the said flat. The petitioner, however, did not accede to the request of the Corporation, and continued to wrongfully withhold the said flat. Ultimately, the Corporation by its advocate's notice dated May 6, 1982, called upon the petitioner to hand over the flat to the Corporation. The petitioner, however, has not complied with the said notice and has not handed over the flat to the Corporation. According to respondent No. 1, the petitioner has committed an offence under section 630 of the Companies Act, 1956, and, therefore, he is liable to be prosecuted and convicted in accordance with law.

The learned Metropolitan Magistrate took cognizance of the complaint and issued process against the petitioner. The legality and correctness of the said order of issuing the process against the petitioner is challenged in this petition.

Shri A.G. Noorani, learned counsel appearing in support of this petition, raised three contentions, namely, (1) that in view of the provisions of s. 15 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (hereinafter referred to as "the Act"), the learned Metropolitan Magistrate had no jurisdiction to take cognizance of the complaint and. issue process against the petitioner; (2) that s. 630 of the Companies Act applies only to the existing employees or officers of a company and it will not apply to an ex-employee or officer who has either resigned or retired from the service of the company ; and (3) that the said s. 630 is ultra vires art. 14 of the Constitution as it discriminates between employees of the company and other employees. It must be mentioned here that in the course of the arguments Shri Noorani wanted to challenge the legislative competency of Parliament to enact the said section. Since the point is not raised in this petition, I did not allow Shri Noorani to raise any new point which is not taken up or set out in this petition. Now, I proceed to consider each of the contentions raised in this petition by learned counsel.

It is contended by Shri Noorani that in view of the definition of "Public premises" given in cl. 2(i) of s. 2(e) of the Act, the learned Metropolitan Magistrate has no jurisdiction to take cognizance of the complaint or issue process on such complaint in view of the provisions of s. 15 of the Act. Section 15 of the Act bars jurisdiction of other courts to entertain any suit or proceeding in respect of matters covered by that section. Section 4 of. the Act lays down that if the estate officer is of opinion that any persons are in unauthorised occupation of any public premises and that they should be evicted, the estate officer shall issue in the manner provided a notice in writing calling upon all persons concerned to show cause why an order of eviction should not be made. The notice shall specify the ground on which the order of eviction is proposed to be made. Sub-s. (4) of s. 4 lays down that where the estate officer knows or has reason to believe that any persons are in occupation of the public premises, then, without prejudice to the provision of sub-s. (3), he shall cause a copy of the notice to be served on every such person by post or by delivering or tendering it to that person or in such ether manner as may be prescribed. Section 5 of the Act lays down that if, after considering the cause, if any, shown by any person in pursuance of a notice under s. 4 and any evidence produced by him in support of the same and after personal hearing, if any, given under cl. (b) of sub-s. (2) of s. 4, the estate officer is satisfied that the public premises are in unauthorised occupation, the estate officer may make an order of eviction, for reasons to be recorded therein, directing that the public premises shall be vacated, on such date as may be specified in the order, by all persons who may be in occupation thereof, and cause a copy of the order to be affixed on the outer door or some other conspicuous part of the public premises. The procedure laid down by s. 4 is to be followed by the estate officer, and s. 5 empowers him to pass an order of eviction, alter hearing the parties, in respect of the public premises. As stated above, s. 15 of the Act ousts the jurisdiction of all courts to entertain any application for eviction in respect of unauthorised occupation of a person from public premises.

What is contended by Shri Noorani, learned counsel appearing for the petitioner, is that the learned Metropolitan Magistrate had no jurisdiction to entertain the complaint for eviction of the petitioner from the premises. Since a special statute is enacted for the purpose of eviction of persons and in view of the clear ouster of jurisdiction of the court, the complaint filed by respondent No. 1 will not be maintainable in the court of the Metropolitan Magistrate. It is further contended by Shri Noorani that by s. 15 of the Act not only the jurisdiction of the civil courts is ousted but also of the criminal courts. Emphasis is laid on the words "suit or proceedings in respect of the eviction of any person" in s. 15. It is argued that the word "proceedings" should be construed to mean criminal proceedings also, and it is in view of the said submission, the complaint filed by respondent No. 1 is not maintainable and is liable to be quashed. Shri K.M. Desai, learned counsel appearing on behalf of respondent No. 1, pointed out that s. 11 of the Act specifically deals with cognizable offences. The said section lays down that if any person who has been evicted from any public premises under the Act again occupies the premises without authority for such occupation, he shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both. Sub-section (2) of the said section 11 vests jurisdiction to entertain such complaint by a magistrate. The said subsection lays down that any magistrate convicting a person under sub-s. (1) may order for evicting that person summarily and he shall be liable to such eviction without prejudice to any other action that may be taken against him under the Act. Shri Desai submitted that so far as the offences are concerned, under s. 11 the jurisdiction is vested in the magistrate to deal with offences and penalties of any person who has committed such offence or offences. Accordingly, Shri Desai submitted that the word "proceedings" used in s. 15 of the Act cannot be construed with reference to a suit and not to criminal proceedings filed before a magistrate.

I am unable to persuade myself to accept the submission of Shri Noorani that the word "proceedings" used in s. 15 of the Act means and includes criminal proceedings. A well-settled rule of construction of a statute is that it should be construed harmoniously so that any other provision of an Act does not become nugatory or redundant. If the word "proceedings" in the said s. 15 is construed to include criminal proceedings, in my view, s. 11 will come nugatory and redundant. Offences and penalties are covered by s. 11, and, therefore, the jurisdiction is vested in the magistrate to entertain an application and record the conviction and pass sentence according to the said provisions.

Section 15 of the Act deals with an order of eviction against the person who is in unauthorised occupation of public premises. It does not deal with any offences and penalties. Therefore, it will not be proper to construe the word "proceedings" used in s. 15 to mean criminal proceedings also. In view of this construction of the said section, it must be held that there is no ouster of jurisdiction of a criminal court to entertain the complaint filed by respondent No. 1, in the Court of the Metropolitan Magistrate at Bombay.

As stated above, s. 15 of the Act ousts the jurisdiction of courts in respect of eviction of any person who is in unauthorised occupation of any public premises save and except as specified in that section.

The present complaint filed against the petitioner is under s. 630 of the Companies Act. The said section does not deal with an order of eviction from public premises. The section lays down that if any officer or employee of a company wrongfully obtains possession of any property of a company, or, having any such property in his possession, wrongfully withholds it, or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the said Act, such a person shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees. The offence covered by s. 630 is the wrongful withholding of the property of a company by an officer or employee of the company. Subsection (2) of the said section further lays down that the court trying the offence may also order such officer or employee to deliver up or refund within the time to be fixed by the court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years. Subsection (2) of s. 630 thus empowers the magistrate trying the offence to pass an order to deliver up or refund the property within the time to be fixed by the court. For defiance of the said order, the magistrate is further empowered to pass a sentence to suffer imprisonment for a term which may extend to two years. A plain reading of s. 630 clearly indicates that if an officer or employee wrongfully withholds any property belonging to a company, it is an offence punishable with a fine of Rs. 1,000. Sub-section (2) of the said section further directs the court trying the offence to pass an order directing such officer or employee to deliver up or refund, within the time to be fixed by the court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied. The said sub-section further makes it clear that disobedience of the order of the court is made punishable, and a sentence to suffer imprisonment for a term of two years is provided. Although there is an order of eviction from the property within the time to be fixed by the court and an officer or employee may not obey the order of the court, in such eventuality the court can pass an order of imprisonment for a term of two years. It is only the disobedience of the order of the court that is made an offence wherein imprisonment is prescribed for a period of two years. An officer or employee of a company may not vacate the premises as directed by the court and may undergo imprisonment for a period of two years, allowing his family members to enjoy the property. In such eventuality, there cannot be any order of eviction from the property of the company under s. 630. The two enact ments referred to above meet with different situations. They cannot be read together. In one Act there is a power in the court to pass an order of eviction in respect of public premises, and in the other Act if an officer or employee of the company wrongfully obtains possession of any property of the company or having such property in his possession wrong fully withholds or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the said Act, such person shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees. It is in this view of the matter it cannot be said that the action or a complaint under s. 630 is identical with the jurisdiction or power of a court envisaged by s. 5 of the Act. It is on this ground also the contention raised by the learned counsel for the petitioners cannot be sustained. The present complaint is filed under s. 630 in respect of offences different from the offences envisaged by the provisions of the said Act. It is, there fore, the contention that the complaint filed by respondent No. 1 is not maintainable cannot be accepted.

It is then argued by Shri Noorani that the provisions of s. 630 of the Companies Act applies only to existing officers and the employees of the Company and would not be applicable to ex-employees or ex-officers. Admittedly, the petitioner on the date of filing of the complaint was lot in the employment of the Corporation, since he retired on February 28, 1982. Reliance is placed by Shri Noorani on the definition of the term"officer" given in s. 2(30) of the Companies Act, and it is contended that the said definition is an inclusive definition and it includes all those officers who are holding the post of officer in the Corporation. According to Shri Noorani, in section 630, wherever the word "officer" has been used, it should be treated as an existing officer of the company or who holds an officer's post in the said company. It is submitted that the company could file a complaint under s. 630 against officers and employees of the company who are actually working in the company. An ex-employee as an officer cannot be prosecuted even if he wrongfully withholds any property of the company. Shri Noorani tried to persuade me to take a different view, as is taken by Kotwal J. in his judgment dated September 11, 1980, in Criminal Revision Application No. 494 of 1980, Harkishin Lakhimal Gidwani v. Achyut Kashinath Wagh [1982] 52 Comp Cas 1 (Bom.). In the said case, a question directly arose as to whether the provisions of s. 630 of the Companies Act would apply to the present employees or the ex-employees. After going through the judgment, I am in respectful agreement with the view taken by Kotwal J. in the said case. It is held that the features and deductions which flow logically and inescapably on an analysis of s. 630 are that: (i) Clause (a) of the section is self-contained and independent of cl. (b) with the capacity of creating penal liability embracing the case of an existing employee or officer of the company, (ii) Clause (b) is equally independent and distinct from cl. (a) as regards penal consequences squarely covering the case of a past employee or officer, (iii) The entitlement of an officer to the property of the company is contingent on the right and capacity of the officer by virtue of his employment which is transformed into the actual possession of the property and the duration of such right would be co-terminus with the terms of employment. Therefore, the capacity, right to possession and duration of it being features integrally blended with the termination of the employment, the capacity and the corresponding right are extinguished with the obligation to hand over the property back to the company. If the property is held back, the retained possession would amount to wrongful withholding of the property of the company. While the existence of the capacity, right and possession would be during employment, the withholding may be even after the termination of the employment and though the possession as it precedes the act of retention or withholding may be rightful in the past affording an opportunity to withhold, the withholding may be wrongful in the present case. Kotwal J. also considered the legislative intent of the said provision and observed that the Legislature has employed deliberately the word "or" which joins cls. (a) and (b) of s. 630(1) of the Companies Act and the commencing words of cl. (b), namely,"having any such property in his possession", make it manifest that the Legislature itself contemplated a situation where the property might be in the possession of a person not necessarily co-terminus with the possession under cl. (a), which is in the present tense, and the use of the words "any such property" in sub-s. (2) of s. 630 as under cl. (b) of s. 630(1) also furnishes a clue, pre-qualifying the existence of three further contingencies of wrongful obtainment, wrongful withholding and knowingly misapplication and this is merely to tag a label or characterise the property as belonging to the company. With great respect, I entirely agree with the view taken by Kotwal J. and, accordingly, I need not elaborate this point any further.

This takes me to the last submission made by Shri Noorani that s. 630 of the Companies Act is ultra vires art. 14 of the Constitution. Ground No. 4 specifically taken in the petition is as follows:

"The petitioner respectfully submits that s. 630 of the Companies Act is ultra vires art. 14 of the Constitution of India. The section discriminates between employees of companies on the one hand and employees of private individuals, sole proprietorship concerns and partnerships on the other. The employees of the latter category face no risk of prosecution for an offence similar to that under s. 630 of the Companies Act which penalises employees of the companies. Further, the said discrimination is not a reasonable criteria for differentiation reasonably connected with the objects of the Companies Act."

This is the only statement or objection taken up in the petition. Shri Noorani strongly relied upon the principles which ought to be followed in determining the validity of the classification in the cases set out in paragraph 73 of the judgment in Special Courts Bill 1978, In re, AIR 1979 SC 478, and contended that on the basis of the said principles, s. 630 of the Companies Act can be held to be ultra vires art. 14 of the Constitution. In the first place, it must be stated that the principle of equality does not mean that every law must have universal application for all persons who are not, by nature, attainment or circumstanced in the same position as varying needs of different classes of person often require different treatment. It is not open to charge of denial of equal protection on the ground that the Act has no application to other persons. It is well settled that the class legislation cannot be valid under art. 14 of the Constitution, but a classification on reasonable grounds is permissible. The classification must be a reasonable and rational classification. The Supreme Court in numerous cases has laid down the twin test to be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others, and (2) that that differentia must have a rational relation to the object sought to be achieved by the Act. There is nothing in the petition challenging the classification made by s. 630. What is contended is that the section discriminates between the employees of companies on the one hand and the employees of private individuals, sole proprietorship concerns and partnerships on the other. The employees of the latter category face no risk of prosecution for offences similar to those under s. 630 which penalises employees of a company. I am unable to appreciate as to how the classification, namely, officers and employees of a company, is not founded on an intelligible differentia which distinguishes those that are put together from others. The Companies Act, 1956, deals with company's affairs incorporated under the said Act. A classification is made in respect of officers and employees of the company. By no stretch of imagination the said s. 630 could have conceived of officers and employees of other private individuals or sole proprietorship concerns and partnerships. Those who are charged with the duty to protect and manage the affairs of the company are grouped together for their treatment in the statute, in case they commit breach of the conditions of the said section. That cannot be the case of other employees. As stated above, the principle of equality of law and equal protection of law does not mean that every law must have a universal application for all persons who are not, by nature, attainment or circumstanced in service in the same position or situate in similar circumstances. In paragraph 73(4) of the judgment of the Supreme Court in the said case of Special Courts Bill, 1978, AIR 1979 SC 478, it is observed by the Supreme Court that the principle underlying the guarantee of art. 14 is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of different of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another if as regards the subject-matter of the legislation their position is substantially the same. It is further observed by the Supreme Court in paragraph 73(5) that by the process of classification, the State has the power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject. This power, no doubt, in some degree is likely to produce some inequality ; but if a law deals with the liberties of a number of well-defined classes, it is not open to the charge of denial of equal protection on the ground that it has no application to other persons. Classification thus means segregation in classes which have a systematic relation, usually found in common properties and characteristics. It postulates a rational basis and does not mean herding together of certain persons and classes arbitrarily.

In view of these clear observations, it is not possible to hold that the proposition that the officers and employees of the company, classified together for the purpose of treatment under s. 630 of the Companies Act, is not founded on an intelligible differentia which distinguishes them from others. The second thing that has to be seen is as to whether the Companies Act has a rational relation to the objects sought to be achieved by the Act. Now, it is very clear that the object of the Companies Act, and particularly the provisions of s. 630, has a direct nexus with the object to be achieved under the Companies Act. The object of the Companies Act is to control the management and protect the property of a company. The intent of s. 630 of the Companies Act appears to be to control the administration and protect the property of the company. If officers and employees of the company wrongfully withhold the properties belonging to the company, then there is nothing illegal to provide such a provision to protect the properties of the company. The object is very obvious that, in case the officers and employees obtain wrongful possession of movable or immovable properties of the company, then the company must resort to a legal remedy as provided by the Act. Having regard to the said provision, it is clear that there is a rational relation to the objects sought to be achieved by the Act. In my view, the principles laid down in the case of Special Courts Bill, 1978, AIR 1979 SC 478, do not in any way help the petitioner. Therefore, the challenge to s. 630 is not sustainable and, accordingly, the said section cannot be held to be ultra vires art. 14 of the Constitution, and, accordingly, the contention cannot be sustained. It is in this view of the matter that the application must fail.

In the result, the application is dismissed and the rule is discharged. The learned Metropolitan Magistrate, 14th Court, Girgaum, Bombay, is directed to expedite the hearing of this case as early as possible and dispose of the matter in accordance with law as expeditiously as possible.

At this stage, Shri Noorani, learned counsel for the petitioner-accused, orally requests for leave to appeal to the Supreme Court, which is hereby rejected.

Shri Noorani prayed for stay of the operation of this order for a period of 15 days. The operation of the order need not be stayed but the learned Metropolitan Magistrate shall not start trial of the proceedings for 15 days from today.

[1986] 59 COMP. CAS. 417 (BOM.)

HIGH COURT OF BOMBAY

Krishan Avtar Bahadur

Col. Irwin Extross

A.D. TATED, J.

CRIMINAL APPLICATION NO. 413 OF 1983

NOVEMBER 6, 1984

Mahesh Jethmalani and Thaku Ajwani for the Petitioner (accused).

V.P. Vashi, H.R. Desai and M.D. Gangakhedkar for the Respondent.

JUDGMENT

The petitioner in this petition, who is the accused in Criminal Case No. 63/8 of 1981 pending in the Court of the Metropolitan Magistrate, 14th Court, Girgaum, Bombay, was prosecuted for an offence under section 630 of the Companies Act, 1956, filed this petition under section 482, Cr PC, for quashing the criminal proceedings and in the alternative for staying the criminal proceedings pending the decision in Suit No. 276 of 1972 filed by the petitioner on the original side of this court and also in the alternative for staying further proceedings of the criminal court pending the hearing and final disposal of Suit No. 3315 of 1981 filed by the petitioner in the Court of Small Causes at Bombay for a declaration that he is a tenant of the premises occupied by him.

The petitioner-accused was in the employment of respondent No. 1 company (hereinafter referred to as "the company") from June, 1962, to June 30, 1981, when his services were terminated. While the petitioner was in the employment of the company, the company entrusted and allotted to him Flat No. 43 in a building known as "Sherman" situate at Narayan Dabholkar Road, Malabar Hill, Bombay 400 006, which the company had taken on lease from one J.R. Dalal at a monthly rent of Rs. 750 which was subsequently raised to Rs. 1,125. The said flat was acquired by the company for the purpose of accommodating its officers and for their residential accommodation during the period of their employment. The company had allotted the said flat to the petitioner for his occupation during the period of his employment. The company by its letter dated June 30, 1981, terminated the services of the petitioner. The company called upon the petitioner to vacate and hand over vacant possession of the flat, and warned him that in case he did not vacate the flat, appropriate proceedings would be taken against him. The petitioner instead of vacating the flat filed a suit in the Court of Small Causes at Bombay, being R.A. Declaratory Suit No. 3315 of 1981, against the company and the owner, J. R. Dalal. In that suit, he contended that he was a monthly tenant of the company and that his services were wrongfully and illegally terminated. He also contended that in March-April, 1977, J.R. Dalal had agreed to sell the said flat to him. As the petitioner did not vacate the flat and, according to the company, he was wrongfully withholding the company's property, respondent No. 1 complainant—the administrative officer of the company—filed a complaint against the petitioner for the offence under section 630 of the Companies Act, 1956. The present petition is for quashing the criminal proceedings on the ground that section 630 of the Companies Act is ultra vires the legislative competence of Parliament and in the alternative for stay of the proceedings pending the declaratory suit filed by the petitioner in the Court of Small Causes at Bombay.

The main point for consideration in this case is whether section 630 of the Companies Act, 1956, is ultra vires the legislative competence of Parliament inasmuch as it is made applicable to the immovable property of a company.

The learned counsel for the petitioner-accused contends that it is not within the legislative competence of Parliament to legislate in respect of immovable property of a company situate within a State. According to him, the relevant entry for legislation regarding the houses, buildings and immovable property of a company is entry 18 appearing in List II—State List of the Seventh Schedule to the Constitution. He submits that the land mentioned in entry 18 includes buildings and, therefore, it was the State Legislature alone which could legislate with respect to the buildings owned by a company. According to him, entries 43 and 44 appearing in List I— Union List of Seventh Schedule to the Constitution do not empower Parliament to legislate in respect of the immovable property owned by a company. In support of his contention, he placed reliance on the decision of this court in Elliot Wand and Hill (P.) Ltd. v. Life Insurance Corporation [1981] Bom CR 590. In that case, a single judge of this court held that the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, was outside the legislative competence of Parliament. He held that the word "land" appearing in entry 18 in List II—State List of the Seventh Schedule to the Constitution—included houses and buildings and that it was the State Legislature alone which was competent to legislate in that respect, and, therefore, it was the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, which was applicable to the premises occupied by the petitioners in that case and not the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. The learned counsel specifically referred to paragraphs 73 to 75 appearing at pages 621 and 622 of the said decision. The said paragraphs read as follows:

"Mr. Seervai further argued that the 'transfer of property' must, therefore, mean transfer of every kind of property, movable and immovable, corporeal and incorporeal, tangible and intangible. It is a general entry covering transfer of every kind of property. The entry 'land' which includes the relation of landlord and tenant and the collection of rent falls in the entry 'land', but this does not deprive the entry 'transfer of property' of its content. The element of transfer involved in the relation of landlord and tenant and the collection of rent is a small part of the law of transfer. Every kind of property other than land and/or land and buildings will fall within the entry 'transfer of property'. Land and lands and buildings cover a special area of property, whereas transfer of property generally covers every other kind of property. The special entry 'land' must prevail over the general entry 'transfer of property'.

Mr. Seervai submitted that, in the circumstances, the State Rent Act fell under the entry 'land' in List II; and he submitted further that the impugned Act in so far as it applies to companies and corporations in the States is outside the legislative competence of Parliament, whether under entry 32, List I, Schedule 7, or under any entry in List III. I accept Mr. Seervai's contention.

The sum total of this discussion is that the State Rent Act (for areas other than cantonments) falls under the entry 'land', (List II). The impugned Act in so far as it applies to companies and corporations in the States is outside the legislative competence of Parliament, whether under entry 32, List I, Schedule 7, or under any entry in List III. That in view of the fact that it is an accepted position that' Parliament has powers to enact the impugned Act in Union territories and also for the property of the Union and revenue therefrom subject as regards property situate in State subject to legislation by the State same in so far as Parliament by law otherwise provides' (and the impugned Act otherwise provides), there is no mandate to roam at will and strike down the Act in its entirety. It would only be necessary to injunct the companies and corporations in the State from implementing or acting upon the provisions of this Act and more particularly in respect of the premises in question."

The learned counsel contends that in view of the above decision of this court, Parliament was not competent to legislate in respect of the immovable property owned by the corporations and the companies situated in the States. On the same reasoning, he contends that the word 'property" appearing in section 630 of the Companies Act, 1956, cannot be applied to immovable property, that is, buildings and houses owned by the companies. The learned counsel for respondent No. 1—complainant— on the other hand contends that Parliament is competent to legislate in respect of the companies and their affairs under entries 43 and 44 appearing in List I—Union List of the Seventh Schedule to the Constitution. According to him, the pith and substance of the legislation has to be taken into consideration and the provisions of the Companies Act cannot be struck down for want of legislative competence in case they slightly transgress the area. He submits that section 630 of the Companies Act is in respect of affairs of a company. It provides penalty for wrongful withholding of property by the employees of a company and, taking into consideration the pith and substance of the legislation, it cannot be said to be beyond the legislative competence of Parliament.

Section 630 of the Companies Act, 1956, reads as follows:

"Penalty for wrongful withholding of property.—(1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully with holds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

(2) The court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years."

A reading of the impugned provisions of section 630 of the Companies Act clearly indicates that it is in respect of the affairs of a company and it regulates the conduct of the officers and employees of the company inasmuch as it provides penalty for the officers and employees of the company who wrongfully obtain possession of any property of the company or who, having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the said Act. The provisions are obviously for safeguarding the property of a company, whether movable or immovable, by wrongful use thereof by the officers or employees of the company.

Their Lordships of the Supreme Court in Harakchand Ratanchand Banthia v. Union of India, AIR 1970 SC 1453, considered the provisions of article 246 of the Constitution and laid down the general principles regarding interpretation of legislative lists. At pages 1459 and 1460 of the report, their Lordships state the law as follows:

"It is well settled that the entries in the three lists are only legislative heads or fields of legislation and they demarcate the area over which the appropriate Legislature can operate. The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of subjects to the lists is not by way of scientific or logical definition but is a mere enumeration of broad and comprehensive categories."

The Gujarat High Court in the case of Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, AIR 1968 Guj 124, considered the scope of article 246 of the Constitution and also laid down how the entries in the three Lists should be reconciled in case there is any conflict or overlapping. At page 139 of the report, it is observed :

"Article 246, in our judgment, has nothing to do with the question of interpreting the Union or the State entries. That article has been enacted with a view to fix the subject-matters of legislation. The article fixes the fields within which Parliament and the State Legislatures are to operate. The clause ' Notwithstanding anything in clauses (2) and (3)' used in clause (1) and ' notwithstanding anything in clause (3)' used in clause (2) and ' subject to clauses (1) and (2)' used in clause (3) have been introduced with a view to emphasise that in case there is any conflict in regard to the subject-matters of legislation, that is, if there are matters which fall in both the Parliamentary and the State fields, then (subject to the doctrine of pith and substance, enunciated by courts of law), the State legislative authority must yield place to the parliamentary legislative authority. Ours is a federal Constitution and it is now well-recognised that both Parliament and the State Legislatures have full, independent and plenary powers in their own fields. It is equally well-recognised that the first duty of court when interpreting any entry in the respective list, is to interpret that entry in its plain, natural and grammatical meaning and to read it in its fullest and widest amplitude. This is the first task which is to be performed. If, on interpreting the entries in the aforesaid manner, any conflict is found between the two sets of entries respectively falling in the two different lists, then an attempt must be made to reconcile the two entries, so as to make one consistent with the other. In attempting to do so, sometimes the amplitude of the legislative power of Parliament, and sometimes that of the State Legislatures, may have to be curtailed. In considering the question as to whether there is any such conflict in a given case, the impugned piece of legislation must be considered on the principle of pith and subtance. If, after making an effort in the said direction, the court finds that still a conflict persists in the legislative powers of Parliament and the State Legislatures, then article 246 comes into operation and the power of the State Legislature must yield to the legislative power of Parliament. We cannot do better than quote a passage from the judgment of the Supreme Court in Calcutta Gas Co. (Proprietary) Ltd. v. State of West Bengal, AIR 1969 SC 1044, at page 1049 on this subject which, in our judgment, constitutes a lodestar in interpreting rival entries and testing the validity of any impugned legislation :

"The power to legislate is given to the appropriate legislatures by article 246 of the Constitution. The entries in the three Lists are only legislative heads or fields of legislation; they demarcate the area over which the appropriate Legislatures can operate. It is also well-settled that widest amplitude should be given to the language of the entries. But some of the entries in the different Lists or in the same Lists may overlap and sometimes may also appear to be in direct conflict with each other. It is then the duty of this court to reconcile the entries and bring about harmony between them."

We are bound to follow the above principles in interpreting the two rival entries."

It is necessary to consider the competence of Parliament to enact the provisions of section 630 of the Companies Act, 1956, bearing in mind the provisions of article 246 of the Constitution and the well-settled principles of interpretation of the entries in the three Lists appearing in the Seventh Schedule to the Constitution. I am told that the decision of the single judge of this court in Elliot Wand and Hill P. Ltd. v. LIC [1981] Bom CR 590, relied on by the learned counsel for the petitioner-accused, has been challenged by preferring an appeal, and the appeal is pending. Apart from this, the decision in that case and the passages relied on by the learned counsel and reproduced above are of no help for deciding the point for consideration in this case. In that case, the vires of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, were challenged. In the present case, the challenge is to the provisions of section 630 of the Companies Act, 1956, as far as they apply to immovable property. It is not disputed that Parliament is competent to legislate in the matter of companies under entries 43 and 44 appearing in List I—Union List of the Seventh Schedule to the Constitution. As per entry 95 of the said List, Parliament can legislate in respect of the offences against laws with respect to any of the matters in that list. Section 630 of the Companies Act reproduced above provides penalty for the wrongful withholding of property by any officer or employee of a company. The powers of Parliament to legislate in respect of the affairs of a company relating to immovable property are in no way curtailed by entry 18 appearing in List II—State List of the Seventh Schedule to the Constitution. Consequently, I reject the contention of the learned counsel for the petitioner-accused that the provisions of section 630 of the Companies Act, so far as they relate to immovable property, are ultra vires the legislative competence of Parliament.

The learned counsel for the petitioner-accused next contended that as the petitioner filed a declaratory suit in the Court of Small Causes at Bombay, seeking a declaration that he is a tenant of the premises, it is necessary to stay the proceedings before the learned Metropolitan Magistrate till the decision of the suit. It was also argued by the learned counsel that in view of the provisions of section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, it was within the exclusive jurisdiction of the Court of Small Causes at Bombay to decide the dispute between landlord and tenant regarding the tenancy claimed by the petitioner and, as such, the criminal court has no jurisdiction to entertain the criminal proceedings against the petitioner. The learned counsel for respondent No. 1 (complainant) referred to the decision of a single judge of this court in Dr. Suresh Venkatrao Nerlekar v. Sharanghadar Pandurang Nadkarni [1982] 1 Bom CR 867. In that case also, there was prosecution of an ex-employee of the company, the Modern Mills Ltd., for the offence under section 630(1)(b) of the Companies Act, 1956, as the accused therein did not vacate the premises belonging to the company which he had occupied during his employment. In that case also, the accused had filed a declaratory suit in the Court of Small Causes at Bombay and the criminal proceedings were sought to be stayed on the ground that the issue of tenancy was identical and common to the civil court and criminal court. That contention was not accepted and the learned judge referred to the Division Bench decision in Kishindas Tekchand v. State, AIR 1956 Bom 423. In that case, it was held (headnote):

"The court is not justified in directing criminal proceedings to be stayed on the bare theoretical ground that question of tenancy can be more appropriately dealt with by the civil court, specially when it is clear from the applicant's conduct that he is not serious about prosecuting his suit and is obviously playing for time."

It is not necessary to dwell much on this point. The matter has been fully considered in the case of Dr. Suresh Venkatrao Nerlekar [1982] 1 Bom CR 867. Following the said decision of this court, I find it neither expedient nor necessary to stay the criminal proceedings pending the decision of the declaratory suit filed by the petitioner.

The contention of the learned counsel for the petitioner-accused that as there is a dispute between the parties as to whether the petitioner is a tenant and is entitled to the protection of the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, and the Court of Small Causes at Bombay has the exclusive jurisdiction to decide the point, the criminal court had no jurisdiction to entertain and continue the proceedings under section 630 of the Companies Act, 1956, cannot be accepted. The plea of tenancy is not at all open on the facts of this case. The flat in question belonging to the company was occupied by the petitioner during the term of his employment with the company and he was entitled to occupy it only during his employment with the company. After the termination of his services with the company, he could not claim to continue to occupy the premises on the ground that he was a tenant thereof. While considering whether the plea of tenancy is a bona fide plea, it is always necessary to examine and consider the transaction on the basis of which the plea of tenancy is based, and if on those facts no plea of tenancy can be raised, such a plea cannot be entertained. Consequently, I reject the contention of the learned counsel for the petitioner-accused that the criminal court has no jurisdiction to entertain the complaint under section 630 of the Companies Act, as the petitioner claims to be a tenant thereof.

The learned counsel for respondent No. 1 (complainant) submitted that the petitioner-accused had earlier filed a similar application under section 482, Cr PC, for quashing the criminal proceedings, being Case No. 63/3 of 1981, pending in the court of the Metropolitan Magistrate, 14th Court, Girgaum, Bombay, and he withdrew the said petition when it came up for hearing and, thereafter, filed the present petition in respect of the same subject-matter. He pointed out that in paragraph 4 of the petition, the petitioner stated that no other application had been filed on behalf of the petitioner either in this court or in any other court with respect to the subject-matter of this petition. According to the learned counsel, it was an incorrect statement and the petitioner suppressed true facts by not mentioning that he had earlier filed a petition with respect to the same subject-matter and he had withdrawn it. The learned counsel contends that the petitioner who either makes false statements or suppresses true facts is not entitled to any relief in the extraordinary jurisdiction of this court under section 482, Cr PC. The learned counsel for the petitioner-accused on the other hand contends that the petitioner has not made incorrect statements and also did not suppress anything which disentitled him to claim the reliefs which he has sought in the present petition. He submits that the earlier petition under section 482, Cr PC, was on other grounds similar to the grounds in the case of Govind T. Jagtiani v. Sira-juddin S. Kazi, Senior Administrative Officer, Indian Oil Corporation, Bombay, (Criminal Application No. 1197 of 1982), which was decided by this court on March 24, 1983—[1984] 56 Comp Cas 329 (Bom). He submitted that as the similar petition of Govind Jagtiani was dismissed by this court on March 24, 1983, he withdrew the earlier petition under section 482, Cr PC, and filed the present petition on a new ground challenging the legislative competence of Parliament to legislate section 630 of the Companies Act, 1956, in respect of immovable property of a company. He submitted that as the present petition was based on new grounds, it was not necessary for the petitioner to make mention of the petition filed by him earlier under section 482, Cr PC, and withdrawn by him. I am unable to agree with the learned counsel for the petitioner-accused. The petitioner had earlier filed a petition under section 482, Cr PC, for quashing the criminal case pending against him in the court of the learned Metropolitan Magistrate, and he withdrew that petition and filed the present petition under the same provision, that is, section 482, Cr PC, for quashing the proceedings of the same criminal case. Therefore, the subject-matter of this petition and the earlier petition filed is the same, though in the present petition, the petitioner has raised a ground which he had not raised in the earlier petition. I fully agree with the learned counsel for respondent No. 1-complainant that the petitioner should have mentioned in the petition the fact of filing of the earlier petition and the withdrawal thereof. In this connection, a reference may be made to the decision of the Nagpur High Court in Zikar v. Government of Madhya Pradesh, AIR 1951 Nag 16. In that decision, their Lordships of the Nagpur High Court referred to the ruling laid down in King v. General Commissioners for the Purposes of the the Income Tax Acts for the District of Kensington : Ex parte Princess Edmond De Polignac, [1917] I KB 486, where Viscount Reading C.J., with whom Rindley and Low JJ. agreed, stated the ruling thus (pp 17 & 18):

"Where an ex parte application has been made to this court for a rule nisi or other process, if the court comes to the conclusion that the affidavit in support of the application was not candid and did not fairly state the facts, but stated them in such a way as to mislead the court as to the true facts, the court ought, for its own protection and to prevent an abuse of its process, to refuse to proceed any further with the examination of the merits. This is a power inherent in the court, but one which should be used only in cases which bring conviction to the mind of the court that it had been deceived. Before coming to this conclusion, a careful examination will be made of the facts as they are and as they have been stated in the applicant's affidavit, and everything will be heard that can be urged to influence the view of the court when it reads the affidavit and knows the true facts. But if the result of this examination and hearing is to leave no doubt that the court has been deceived, then it will refuse to hear anything further from the applicant in a proceeding which has only been set in motion by means of a misleading affidavit."

It was contended in that case that the ruling reproduced above could have no application to proceedings under article 226 of the Constitution. Rejecting that contention, their Lordships of the Nagpur High Court, at page 21 of the report, observed as follows:

"Under that article (that is, article 226 of the Constitution of India) the court had been empowered to issue directions, orders or writs, to any person or authority including in appropriate cases to any Government. The court, therefore, exercises vast powers of correction, prohibition and direction. What the Constitution provides is a special speedy remedy for the enforcement of the fundamental rights and for any other purpose. But a person is not entitled to such a remedy as a matter of course. The very nature of the remedy requires that those who seek it must approach the court in perfect good faith and place all the material facts before the court. Otherwise the court might be misled to pass orders the consequences of which may be far reaching and even irreparable. What acts are material in a particular case would necessarily depend on the nature of the order, direction or writ sought. Where, as here, the court has reason to be satisfied that there has been a deliberate concealment of facts so as to deceive it, the court will decline to consider the merits and reject the application. The rule stated by Viscount Reading C. J. is very salutary. Having regard to all the circumstances in which the affidavit was made, we deem it necessary to adopt that rule and give effect to it. .........It may be as well to add that the reason for the adoption of the rule is not to arm an applicant's opponent with a weapon of technicality against the former but to provide an essential safeguard against abuse of the process of the court."

The petitioner who approaches this court invoking the extraordinary jurisdiction under section 482, Cr PC, and article 227 of the Constitution must be very careful about the correctness of the facts mentioned in the petition and the affidavit, if any, and he should not suppress any important fact having a bearing on the question involved in the petition. If the petitioner had already filed a petition on the same subject-matter for the same reliefs and for one reason or the other withdrew it, he must faithfully mention those facts in the petition. Those facts are necessary for the court to decide whether the subsequent petition on the same subject for the same reliefs should or should not be entertained. Though I find that the petitioner should have mentioned the fact of his having filed a similar petition earlier and withdrawal thereof in this petition, I do not think that the said default on the part of the petitioner should be visited with the dismissal of the petition on that ground. I have earlier found that the petition is not maintainable on merits.

In the result, the petition is dismissed and the rule is discharged. The petitioner accused shall pay the costs of respondent No. 1, complainant, and bear his own. The costs are quantified at Rs. 500.

[1991] 70 COMP. CAS. 368 (BOM)

HIGH COURT OF BOMBAY

Abdul Quayaum Ansari

State of Maharashtra

A.C. AGARWAL J.

CRIMINAL WRIT PETITION NO. 740 OF 1989

MARCH 16, 1990

R.Z. Moray, S. Radhakrishna for the Petitioner.

Smt. S.S. Keluskar and P.B. Sawant for the Respondent.

JUDGMENT

A.C. Agarwal J. —This petition raises a question in regard to the scope and ambit of section 630 of the Companies Act, 1956. It was held by this court that the term "officer or employee of a company" as used in section 630 applies not only to the existing officers or employees but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property, or (b) having obtained such property during the course of his employment, withholds the same after the termination of his employment. The Calcutta High Court disagreed with the view and held that it refers only to existing officers and employees of a company. It also held that the words "any such property" in section 630(1)(b) relates to property specified in clause (a), i.e., property of the company wrongfully taken possession of by a present officer or employee of the company. The Supreme Court in the case of Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1988] 63 Comp Cas 1 ; AIR 1987 SC 2245, disagreed with the view of the Calcutta High Court.

The question that arises for determination in the present petition is an extension to the question that arose for consideration in the cases before the Calcutta High Court, this court and the Supreme Court and the question is whether the term "officer or employee of a company" in section 630 would include also the heirs and legal representatives of the deceased' officer or employee of a company who continue to withhold the property of a company. The facts giving rise to this question are as follows :

The late Abdul Aziz Ansari who was in the employment of the complainant, second respondent company, died in the year 1987, leaving behind him his son, the petitioner who was original accused No. 1, accused Nos. 2 and 3, his other sons, and the original accused No. 4, his widow. The deceased, Abdul A. Ansari, was in the employment of the second respondent company during the period 1944 to 1974. He retired from service in the year 1974. During the term of his employment, the second respondent company had provided him accommodation being residential cottage at Siraj Cottage, 1st floor, Kurla, Bombay-400070. After his retirement and on his request, he was allowed to continue to stay in the said cottage for a period of two years. In or about 1979, Iqbal Ansari, aecused No. 3,. son of Aziz A. Ansari, was employed in the second respondent company. He served till 1986, whereafter he resigned of his own. In view of his employment with the second respondent, he was allowed to continue to reside in the aforesaid cottage. Even after the said Iqbal Ansari resigned, the flat was not handed over to the second respondent company. Since the petitioner and the other co-accused failed and neglected to hand over possession of the said cottage, on March 17, 1988, the second respondent filed the present complaint alleging offences under sections 406, 408, Indian Penal Code, and section 630 of the Companies Act. The second respondent impleaded accused Nos. 1 to 3, the sons of late Aziz A. Ansari, and accused No. 4, his widow. On March 17, 1988, the learned Additional Chief Metropolitan Magistrate, Ballard Pier, Bombay, issued process against the accused under section 447, Indian Penal Code, and under section 630 of the Companies Act. Taking exception to the same, the petitioner who is accused No. 1, preferred the present petition for quashing the aforesaid prosecution. It may be mentioned that prior to the filing of the present petition, the accused had applied to the trial court for stay of further proceedings pending Civil Suit No. 3491 of 1988, filed by them in the Court of Small Causes, but that prayer was rejected on April 11, 1989.

Shri Moray, learned counsel appearing for the petitioner, submitted that on a proper construction of section 630 of the Companies Act, 1956, the heirs and legal representatives of an officer or employee or of an ex-officer or an ex-employee of a company cannot be included within the provisions of section 630 of the Companies Act. According to him, section 630 is a penal provision and a strict construction will have to be given to the said provisions. Section 630 provides for offences punishable with imprisonment which may extend to two years. Hence, an extended meaning to the term "officer or employee of a company" cannot justifiably be given in section 630 of the Companies Act. He further submitted that the present prosecution is barred by the law of limitation. He pointed out that the late Aziz A. Ansari had retired as far back as in April, 1974. The period of limitation for filing the instant complaint under section 468(2)(c) of the Code of Criminal Procedure was three years. Hence, the present complaint filed in the year 1988 was hopelessly time-barred. Lastly, he contended that there was a bona fide civil dispute pending in Suit No. 3491 of 1988, filed by the accused and it would be in the interest of justice that the present prosecution be stayed pending the disposal of the said suit.

In my judgment, there is no merit in any of the aforesaid contentions. It has to be noticed that section 630 of the Companies Act, 1956, is not a pure penal provision prescribing punishment. It is a quasi-criminal proceeding. It is apparent that the object of the provision is to provide for speedy recovery of the property of the company. It is common knowledge that both in the public as well as in the private sector, companies are required to provide residential accommodation to their officers and employees as a condition of their service to attract better talent and have of necessity to purchase residential flats in multi-storeyed buildings in large cities and towns for the use of their officers and employees during the course of their employment. It is also common knowledge that many employees who have been provided accommodation by the company as a perquisite or as a condition of service fail to vacate and deliver back possession to the company after they ceased to be in the employment. They adopt diverse proceedings to delay or defeat the claim of the company. This undoubtedly is on account of the paucity of accommodation in such towns and cities. It is obvious that the main object of enacting section 630 is to ensure the speedy recovery of its property by the company. That is the main crux of the provision. The provision no doubt provides for penalty of imprisonment in default of the officer or employee delivering the property to the company despite the order of the court. The main thrust, however, in the provision is to secure possession of the property to the company by making a provision for imprisonment in case of default despite an order in that behalf. The provision imposes a fine for withholding the company's property and the penalty of imprisonment is provided only in default of handing over the property despite the order of court.

The question that has arisen in the present case is whether the provisions of section 630 of the Companies Act can be made applicable also to the heirs and legal representatives of the officer or employee in whose charge the property of the company has been left by the deceased employee. In my judgment, on a proper construction of the said provision, the said heirs and legal representatives would be included in the term "officer or employee of a company". An employee who is allotted a residential accommodation by the company does not occupy it alone, but occupies it along with the members of his family. If section 630 obliges an officer or an employee to return the property of the company, I see no reason why after his death, his heirs and legal representatives who continue to be in possession of the property of the company by virtue of they being the heirs and legal representatives of the officer or employee should be absolved of their liability to return the property to the company. Take a case where a company were to prosecute its ex-officer or ex-employee under section 630 of the Companies Act. If the said officer or employee, during the pendency of the prosecution, dies, can it reasonably be held that the prosecution under section 630 would abate ? I should think not. If the property of the company which was wrongly held by its officer or employee is in the possession of his heirs and legal representatives they are as much in wrongful possession of such property in their capacity as the heirs and legal representatives as the deceased officer or employee. In my judgment, such heirs and legal representatives are as much liable to return the property to the company as the officer or employee are liable. Extending the same principle a little further, even if the officer or the employee dies before the institution of the complaint, I see no reason why the provisions of section 630 cannot be made applicable to the heirs and legal representatives who have come in possession or continue in possession of the company's property after the death of the officer or employee. In my view, such heirs and legal representatives would be bound to return the property back to the company and in default, they would be liable for prosecution and punishment under section 630 of the Companies Act.

Shri Moray relied upon the case of Beharilal Gupta v. Binod Mills Ltd. [1988] 64 Comp Cas 117 ; [1987] 3 Comp LJ 246. The High Court of Madhya Pradesh in the aforesaid case held that the provision embodied in section 630 do not contemplate criminal proceedings against relatives of an erstwhile director. Consequent upon the said finding, the High Court in its inherent power under section 482, Criminal Procedure Code, dropped the criminal prosecution lodged against the relatives of the erstwhile directors. I have considered the ratio laid down in the aforesaid case, but have been unable to persuade myself to concur with the view expressed. Section 630 has to be interpreted in a manner as not to defeat the very purpose and object for which it is enacted. Persons found aiding and abetting the offence under the said provisions must be held liable for prosecution in the same fashion as the officer or the employee himself. For the reasons already indicated, I disagree with the view expressed by the High Court of Madhya Pradesh and hold that the provisions of section 630 of the Companies Act apply not only to the officers or employees, but also to the heirs and legal representatives of the deceased officer or employee who have come in possession or have continued to be in possession of the company's property after the death of the officer or employee. For the aforesaid reasons, the first contention advanced by Shri Moray will have to be rejected.

In regard to the next contention raised by Shir Moray, it has to be observed that this contention has not been raised in the present petition. The issue regarding limitation is a mixed question of fact and law. The averments in the complaint indicate that Shri Iqbal Ansari, accused No, 3, was in the employment of the second respondent company during the period 1979 to 1986. It has been recited in the complaint that at his request, the accused were allowed to reside even after the retirement of the said Iqbal Ansari for a further period of 12 months after his retirement, i.e., till about December, 1987. It, therefore, cannot be held particularly at this stage that the present complaint which was filed on March 17, 1988, is barred by limitation. Hence, the second contention of Shri Moray is also rejected.

The last contention of Shri Moray is regarding the pendency of a bona fide civil dispute in Civil Suit No. 3491 of 1988, pending in the Court of Small Causes. It has to be observed that this suit has been filed after the filing of the present complaint. It is now well-established that a criminal complaint once lodged should be expeditiously disposed of and the same can be stayed only if the special facts and circumstances of the case so warrant. I do not find any special facts or circumstances in the present case to stay the present criminal prosecution pending the suit. It is well-known that civil suits take years before decisions are given. To stay the present complaint under section 630 of the Companies Act would be to defeat the very object of the said provision. It may be that the suit has been directed to be disposed of expeditiously prior to the end of the year. That, however, may not be an answer to the malady of the second respondent company as appeals and writ petitions are known to take several years before they are finally decided.

In the result, I find the present petition devoid of any merit and the same is dismissed.

Rule discharged.

[1991] 70 COMP. CAS. 368 (BOM)

HIGH COURT OF BOMBAY

Abdul Quayaum Ansari

State of Maharashtra

A.C. AGARWAL J.

CRIMINAL WRIT PETITION NO. 740 OF 1989

MARCH 16, 1990

R.Z. Moray, S. Radhakrishna for the Petitioner.

Smt. S.S. Keluskar and P.B. Sawant for the Respondent.

JUDGMENT

In the result, I find the present petition devoid of any merit and the same is dismissed.

Rule discharged.

[1982] 52 COMP. CAS. 1 (BOM)

HIGH COURT OF BOMBAY

Harkishin Lakhimal Gidwani

Achyut Kashinath Wagh

V. S. KOTWAL,J.

CRIMINAL REVISION NO. 494 OF 1980

SEPTEMBER 11, 1980

P. R. Vakil and B. Wadhwa for the petitioner.

N. A. Modi , A. Virjee and D. R. Zaiwala for Respondent.

H. A. Solkar (Public Prosecutor) for the State.

JUDGMENT

Kotwal, J.—This proceeding depicts rather a lamentable picture when a systematic attempt is being made to linger on the proceeding which otherwise requires an immediate attention and it also has an equally disturbing feature that a responsible officer of a company wants to take an absolutely unjustified advantage of the situation resting his claim on the niceties of technicalities.

The three terminii which figure prominently in this proceeding are: (i) the company, (ii) the premises, and (iii) the employee of the company. The company is known as the English Electric Co. of India Ltd., a public limited company incorporated under the Companies Act, 1956, having its registered office at Calcutta and branch office functioning at Veer Nariman Road, Bombay-20 (shortly called as "the company"). The premises in question comprise of a flat approximately 3,500 sq. ft. in area located at Mayfair Gardens, Little Gibbs Road, Bombay, and the third terminus is the petitioner who was at one time in the employment of the said company in its branch office at Bombay. The proceeding revolves around these three terminii.

The petitioner was appointed as the manager of the Bombay branch of the company some time in the year 1963. In his capacity as such, that is the manager of the company, he was allowed to enter into and use the said flat situate at Little Gibbs Road, Bombay, on and from 16th November, 1963, with a clear stipulation under the service conditions that he was to remain on the said flat only as long as he continued to be in the employment of the company, whereafter, he was enjoined to hand over vacant possession of the same to the company. The company at all relevant times and continues to be the lessee of the said premises which are owned by the New India Asssurance Co. The company has been regularly paying all the rental charges and permitted increases to the tune of Rs. 1,157.80 per month and some other amounts were also paid to the petitioner by way of servants' allowance. The petitioner continued to be serving the company in that capacity up to 30th June, 1978, on which date he retired from the service on attaining the age of 58 years. Thus, by 30th June, 1978, he was enjoined to vacate the said flat which was in his possession and to hand over vacant and peaceful possession thereof to the company. However, the petitioner took a very adamant attitude and put forth an excuse or a pretext and declined to vacate the premises. It appears, in the meantime, that by way of concession and only on humanitarian ground, the petitioner was allowed to remain on the premises for a short period so as to enable him to make arrangements for alternative accommodation and even then, this humanitarian and charitable consideration by the company was reciprocated by the petitioner in a most uncharitable and unfair manner by declining to vacate the premises on any count and at any time. There ensued some correspondence between the parties to which incidentally reference would be made at the proper juncture, when even after giving ultimatum to him, the petitioner stuck to his attitude and declined to vacate the premises, that the company was ultimately obliged to knock the doors of the court of law by filing a complaint in the Court of the Metropolitan Magistrate, 14th Court, Girgaon, which is the subject-matter of Criminal Case No. 11/S of 1979, under s. 630 of the Companies Act, 1956 (shortly called as "the Act") on 18th December, 1978.

The learned Magistrate after taking cognizance of the said complaint and after observing the required formalities, issued process under s. 204, Cr. PC, for the offence under s. 630 of the Act, in response to which the petitioner-accused appeared in the court. The trial merrily lingered on for some time without there being any progress though the matter did require some urgent attention.

However, it is after a considerable lapse of time that on 23rd May, 1980, the petitioner for the first time moved the trial court by an application praying for a discharge on the ground that no prima facie case has been made out. The learned Magistrate negatived the contention mainly on two counts, namely, that the case was a summons triable proceeding and, as such, there was no question of discharge of the accused. On the second count, it was held that prima facie, s. 630 of the Act would be squarely applicable to the facts of the present case. In keeping with these findings, the said application of the petitioner was dismissed by the learned Magistrate on 27th June, 1980.

It is this order that is being impugned in this proceeding on behalf of the petitioner. It may be mentioned at this juncture itself that the revisional jurisdiction of this court is sought to be invoked by the petitioner as the petition is filed as a criminal revision application and the prayer made therein is that the complaint be dismissed. It is only during the course of the hearing of the matter that Shri Vakil, the learned counsel for the petitioner, made an oral motion that this should be treated in addition as a proceeding under s. 482, Cr PC, invoking the inherent powers of this court. However, no formal amendment was made, much less, any statement was added in the petition even thereafter at any time. By itself, it would be enough not to accede to the request of the learned counsel, but, however, as the interest of justice is more paramount, I allowed the learned counsel for the petitioner to advance his submissions on that footing also when the ultimate prayer for quashing of the proceeding was made by the learned counsel.

It is pertinent to note and observe that the fact is not disputed about the petitioner being in possession of the flat and continues to be in such possession, wherein he was inducted only by virtue of his capacity as the manager of the company's branch office in Bombay and further in spite of the company's requests and persistent demands, possession of the said premises has not been given by the petitioner, who still continues to reside in the said premises even after his retirement which was on 30th June, 1978. It may also be incidentally observed that the company has to incur quite a substantial amount towards this flat and the more pertinent feature is that the company is required to allot the flat either to the successor of the petitioner or any other officer of the company.

Shri Vakil, the learned counsel for the petitioner, has strenuously submitted that this is a fit case either for dismissing the complaint or for quashing the proceeding under the inherent powers of this court. According to the learned counsel, notwithstanding the admitted position about the flat in question being in the continued possession of the petitioner, no prima facie case has been made out to proceed against the petitioner and that the issue of the process and continuation of the proceeding would amount to an abuse of process of law. Shri Vakil further submitted almost as a primary weapon in his armoury of contentions that, inasmuch as the petitioner ceased to be in the employment of the company, at the relevant time and at least on the date when the complaint was filed in the court, his client could not come within the clutches of the mischief as contemplated by s. 630 of the Act and further elaborated that the said provision will apply only to an existing officer or employee of the company and not to a past or ex-employee. He further submitted that the company may pursue the normal remedy for eviction if they so desire. An attempt was also made to submit that the recitals in the complaint indicate that the petitioner was allowed to continue in the premises on account of which the complexion is likely to be changed as it cannot be said that in that event the premises were wrongfully withheld by the petitioner.

Shri Modi, the learned counsel on behalf of the respondent-complainant, came out with equal force and clarity, repelling the contentions of the other side. He submitted that it is apparent even from a plain reading of the provisions of s. 630 of the Act that it would cover the situation as at hand, meaning thereby that if the company's flat is allotted to its officer while he is in service with an obligation to vacate the same on his going out of the company's employment and if he withholds the same even thereafter, then, he would certainly be liable under cl. (b) notwithstanding that on the date of the complaint or the demand he may be out of employment. He also submitted that in fact in the instant case, even assuming otherwise, the company had demanded possession of the flat on the eve of the petitioner's retirement from service or at any rate synchronising with the moment of his retirement and, as such, there can be no hurdle in his way. He also submitted that the correspondence ensued between the parties would completely destroy the petitioner's claim that any fresh agreement was entered into between the parties under which his stay on the premises was extended. He also submitted that the course of events in the trial court when after a lapse of time the accused asked for a discharge obviously indicates the inner desire entertained by the petitioner any how to prolong the matter so as to postpone the evil day. He has also taken me through the various provisions to substantiate his claim.

As stated at the threshold, the main bone of contention revolves around the interpretation of s. 630 of the Companies Act and once that hurdle is crossed, then, there is hardly any difficulty in arriving at a just conclusion of this proceeding. To recapitulate, the petitioner got possession of the flat in November, 1963, and he retired on 30th June, 1978, and, thereafter, he has continued to stay in the flat completely declining to hand over possession. Admittedly, in the year 1963, not only he was in the employment of the company but he was inducted in the premises only by virtue of his capacity as the manager of the company and to that event was annexed a stipulation that he would be enjoined to peacefully vacate the premises immediately on his retirement or his going out of service on any other count. The petitioner does not claim any right on his own to the said flat and the recitals in the complaint are clear that such conduct on the part of the petitioner would amount to wrongful withholding whereunder obviously a wrongful loss is being caused to the company who have been and are spending large amounts on the said flat and are further handicapped by not getting its possession so as to accommodate another officer, and causing wrongful gain to the petitioner when he is withholding the same without even any semblance of right. In that context, the more germane question that crops up for consideration is whether the said provisions of the Act would embrace a situation as in the instant case vis-a-vis an officer or an employee of the company who is out of employment at the material time though he may have obtained possession during the course of his employment. For a proper understanding and appreciation of the controversy in that behalf, it would not be out of place to reproduce the provisions of s. 630 of the Act as :

"630. (1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company ;

(b) having any such property in his possession, wrongfully with holds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

(2) The court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the court, any such property wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years. "

This section corresponds to s. 282A of the old Act which does not contain much of variations and I will have an occasion to refer to that part also. Relying on these provisions contained in s. 630 of the Act, Shri Vakil, the learned counsel for the petitioner, has very strenuously submitted that a harmonious reading of all the clauses contained therein must lead to the only conclusion that those will apply only to an officer or employee of the company whose capacity as such continues to exist and would not apply to a past officer or ex-employee and he has also submitted that the legislative intent is reflected in the deliberate employment of certain terminologies not only in this provision but also in other provisions which by a simple process of contrast, the legislative intent can be brought on the forefront.The learned counsel submitted that whenever the Legislature wanted to embrace in the clutches of the said provision not only an officer or employee but also a past officer or an ex-employee, the Legislature did not hesitate to clarify that position in that provision itself and, therefore, contends the learned counsel, that by virtue of this contrast, it becomes manifest that the non-employment of the words "ex or past officer or past employee of the company", would make it clear that this provision would apply only to the existing officer or employee of the company. The learned counsel also submitted further that as the provision contained not implicitly but in express terms a penal consequence, then a strict construction is called for and it was the further plank of his submission that if at all a doubt exists then in respect of a penal statute or penal provision, it must be resolved in favour of the accused. He has also relied on the terminology "any such property" as contained in cl. (b) of the said provision, on the basis of which a superstructure was sought to be built by the learned counsel which, with due respect to the learned counsel, has absolutely no basis. The learned counsel in substance submitted that though cls. (a) and (b) of subs. (1) of s. 630 of the Act are joined by the word "or", it should in reality be read as "and". This was obviously to land into a further argument that the terminology used in cl, (b) must be read in consonance with that used in cl. (a). To clarify this submission, the learned counsel contended that under cl. (a) a situation is envisaged when an officer or employee will come into the purview of this provision if he wrongfully obtains possession of any property of the company. This, according to the learned counsel, is one of the contingencies and not in its entirety. The further plank of his submission is more relevant to be considered as it was harped upon time and again. The learned counsel submitted that the phraseology "any such property" in cl. (b) would mean the property as described in cl. (a) and on the basis of this, the learned counsel wanted to read cl. (b) as : "Having obtained possession of any property wrongfully" and it is in this manner that the term "any such property" was sought to be equated with the said term contained in cl. (a). The learned counsel also tried to rely on sub-cl. (2) of the said provision to bolster up his proposition.

Shri Modi, the learned counsel for the respondent, has with equal ability and force placed the other part of the coin which according to him is not only extremely harmonious but is the only natural consequence which must flow logically out of a plain reading of the provision. Shri Modi submitted that the phrase "any such property" used in cl. (b) refers to the last part of cl. (a) which characterises or describes the property and a combined reading of the said clauses would mean that what is contemplated by the term "any such property" in cl. (b), is tantamount to say, and is equated with the character of the property, that is to say, the property of the company. According to him, a distorted version of this provision was sought to be made on behalf of the petitioner which not only does not flow naturally and logically, but is so distortive that even at the cost of making violence to the language of the provision, the same cannot be harmonious with the words and phraseology used therein. Shri Modi, therefore, submitted that even without going into the legislative intent as the matter stands, as it is entirely free from doubt, and admitting of no other inference, a logical interpretation must be made with the resultant consequence that two contingencies are envisaged by the said provision which are separated by cls. (a) and (b) and this separation is brought to the forefront by the deliberate user of the word "or" and non-user of the word "and". The learned counsel, therefore, submitted that cl. (a) embraces a situation where an officer or employee obtains possession of the property of the company in a wrongful manner and that by itself is an offence and is also complete in itself. It is the second contingency that is embraced by cl. (b) which may be de hors of cl. (a) in so far as the words "wrongfully obtains" are concerned and the actual assistance that is required to be borrowed from cl. (a) would be restricted only to the last clause or phrase, namely, "any property of the company". The learned counsel, therefore, submits that the term "any such property" used in cl. (b) precisely is to be equated with the term "any property of the company" in cl. (a) and Shri Modi, therefore, submitted that this only characterised and identified the property and to accept the interpretation suggested by Shri Vakil would have practically disastrous results.

Before going to the other irregularities vis-a-vis the recognised canons of interpretation of statutes, it would be desirable and essential to solve this riddle—iff of course it can be so solved by a plain reading of the section —and if one is able to arrive at a firm conclusion without distorting the phraseology used or even without going into the legislative intent, then, that meaning which logically flows must be attached to the said phraseology and which, in turn, would mean that they would have been the only legislative intent apparent on the face of the record. It would, therefore, be in the fitness of things to have a marshalling of the said provision in its proper perspective.

The qualifying sentence which governs both the clauses relates to an employee or officer of the company. This means that it indicates the person who can commit the mischief as contemplated by the said two clauses. As per cl. (a) it envisages the possession of a property. Further, the said property is characterised in terms labelling it as the property of the company and, lastly, the mode of obtaining the said possession is qualified by the first word, meaning thereby that it must have been obtained wrongfully. The dictionary meaning of the word "wrongfully" is to the effect that it has a meaning contrary to law and justice and it is in contrast with the word "unlawfully" and it has been observed that the said word "wrongfully" has a much broader and stronger meaning than the word "unlawfully". A wrongful act is also defined as any act which in the ordinary course will infringe upon the rights of another to his damage. Therefore, a conjoint reading of cl. (a) would mean that an officer or employee of the company would make himself liable under this provision if he wrongfully obtains possession of any property of the company. The reading of this sentence by itself is complete even if one dissects the clause which includes the noun and the verb, meaning thereby that the person is identified, the property is characterised and the act is also clarified. It is also important to note that the terminology is used in the present tense and, therefore, contemplates a situation were an officer or employee of the company wrongfully obtains such possession of the property of the, company.

As stated earlier, the Legislature has deliberately employed the word "or" which joins the two cls. (a) and (b) and its purpose is reflected in clear terms if one marshalls the provisions contained in cl. (b) and it would leave no manner of doubt that apart from the purpose, this clause also embraces a situation which may be different from the one contemplated by cl. (a). To start with, the commencing words are rather eloquent which read as under :—"having any such property in his possession," it is manifest that a situation is contemplated by the Legislature itself that the property might be in the possession of a person which may mean not necessarily co-terminus with the possession contemplated by cl. (a) which is in the present tense. To put in other words, cl. (b) envisages that possession might have been obtained in the past and not necessarily on the day in question which is obviously in contrast with the phraseology used in clause (a). A separate entity or existence of cl. (b) is again made manifest by a further reading of the said clause which contemplates that after having possession of such property, a further act is done by the officer, then only he will come within the clutches of the said clause and the said further act consists of two items : (1) wrongfully withholding of the property, or (2) application of the same knowingly to purposes other than those expressed or directed in the articles and authorised by the Act. Therefore, again a conjoint reading of the entire phraseology would mean in no uncertain terms that it embraces a situation where the property possession of which has been obtained in the past, still can be the subject-matter of an offence on account of certain overt act perpetrated by the officer if he wilfully withholds the said possession or knowingly misapplies it. This is obviously in contrast to cl. (a) which speaks at the bare minimum that if possession of the property is wrongfully obtained then also an offence can be said to have been committed. It is in this context that the user of the word "or" connecting the two clauses is very eloquent.

As stated earlier, Shri Vakil wants us to equate the terms "any such property" in cl. (b) with the phraseology "wrongfully obtained possession" employed in cl. (a). If this interpretation is upheld, then cl. (b) would read as:

"Having any such property in his possession and that possession is wrongfully obtained and then wrongfully withholds it or knowingly applies to purposes other than those expressed in the articles......"

In the first instance, there will have to be the user of the term "in possession" more than once. However, making some charitable allowance in favour of the interpretation suggested by Shri Vakil, to put it at the minimum, the entire cl. (b) would read as :

"If any officer or employee of the company having any property of the company in his possession which was wrongfully obtained, wrongfully withholds it or knowingly misapplies it to purposes other than those expressed in the articles......"

Even on a plain reading, the irrational dent and the hollowness of the said claim can be exposed. Apart from involvement of making extreme violence to the language of the provision, even the resultant phraseology makes an absolutely irrational and illogical reading. That reading would mean that the property has, at the inception, got to be obtained wrongfully and having obtained such wrongful possession of the property of the company, there should have been a further wrongful withholding of the said property or its knowingly misapplication against the directions contained in the articles. In my opinion, such a proposition, for manifestly obvious reasons, cannot be accepted even for a moment.

As against this, Shri Modi is justified in submitting that it is the last phrase of cl. (a), namely, "any property of the company" which would be embraced by the term "such property" employed in cl. (b), and if that submission is accepted then, in my opinion, the entire, so-called riddle is solved in a most simple manner and cl. (b) in its entirety would read as :

"If any officer or employee of the company having any property of the company in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act, he shall on the complaint by the company be punishable......"

Really speaking, in my opinion, it hardly requires any further comments as the submission made by Shri Vakil vis-a-vis the interpretation of this clause is not only brittle but has absolutely no foundation. It is rightly contended by Shri Modi that there will have to be user of the word "wrongfully" twice in cl. (b), first applying to the obtaining of the possession wrongfully and, secondly, to the withholding of the said property wrongfully. This would mean that withholding of the possession of the property in a wrongful manner would be covered by cl. (b) only in one contingency, namely, that, if the possession was initially obtained wrongfully. The illogical consequence of this would be that if at the inception the possession was obtained rightfully and if there is subsequently wrongful withholding thereof, then cl. (b) would not be attracted. This, on the face of it, is untenable, apart from the legislative intent.

Apart from this, a very formidable clue is reflected in sub-s. (2) which, in my opinion, furnishes the perfect key to the riddle. To recapitulate, it is desirable to quote sub-s. (2) in its entirety to understand this proposition, which reads as under :

"(2) The court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years."

In this sub-section also the phrase "any such property" has been utilised and the most important feature is that this qualifying term "any such property" governs all the three clauses which are specifically mentioned as: (1) wrongfully obtained, (2) wrongfully withheld, and (3) knowingly misapplied. It is thus clear that the terminology "any such property" pre-qualifies the existence of three further terms and also governs all the three contingencies and the legislative intent is made manifestly clear by the user of this terminology. This in fact supports the submission of Shri Modi that by the user of the phrase "any such property" what has been done by the Legislature is merely to tag a label or characterise the property as belonging to the company and the interpretation should go thus far and no further. A plain reading of sub-s. (2) would, therefore, indicate that the court can take the action stipulated therein if any property of the company is wrongfully obtained or wrongfully withheld or knowingly misapplied. There is another angle to look at this, which would again expose the hollowness of the claim made by Shri Vakil. If the term "any such property" used in cl. (b) of sub-s. (1) of s. 630 of the Act is to be interpreted in the manner in which he wants us to do, then, there is no escape from the conclusion that the same interpretation will have to be put on the said term used in sub-s. (2) as it is part and parcel of the same section, namely, s. 630, in which event, the result would be manifestly irrational, illogical and untenable. In the first instance, the term "wrongfully obtained" would have not only become redundant and unnecessary, but would have been altogether absent, as it would be included in the term "any such property", and, consequently, the said sub-section would have referred only to the other two categories, viz., "wrongfully withheld" or "knowingly misapplied". On the contrary, the user of both the terms "any such property" and "wrongfully obtained" would strongly indicate that both are independent of each other and not mutually inclusive or overlapping. This would be a further pointer to hold that the first term characterises and specifies the property as being of the company, whereas the latter term suggests a mode of obtaining its possession. As said earlier, the term "any such property" governs all the three categories and is not restricted to only one, viz., "wrongfully obtained", and therefore, the plain and the most harmonious blending of the said provisions of sub-s. (2) would, in so far as is relevant, read as: "any property of the company, which is either, (a) wrongfully obtained, or (b) wrongfully withhheld, or (c) knowingly misapplied......" It would also be relevant to observe that the character of the property as being that of the company is specified at the threshold and the same is impliedly described and specified by carrying forward in the same strain in the following clauses of the said provisions considered as a whole, and, as such, it was not necessary to again clarify, describe or re-enunciate the same, but it could well be represented by the concentrated or compact term as "such property" which is in consonance with the normal legislative drafting practice.

Having regard to all these provisions and features, in my opinion, if any employee or officer while in continuation of his service, wrongfully obtains possession of any property of the company, he comes within the clutches of cl. (a) of the said provision. An officer or employee who is already in possession of the property of the company, does a further act of wrongfully withholding the same or knowingly misapplying the same, then, he is covered by the ambit of cl. (b), and this would, as a logical corollary, mean that the contingency under cl. (b) may arise that a person may come into possession of the property of the company in a rightful manner in which event, he cannot be governed by cl. (a), but, he will not go unpunished as the Legislature has taken care of this situation if it is found that having come into possession, may be even in a rightful manner some time in the past, if he wrongfully withholds the said possession, then, he is governed by the provision contained in cl. (b). This would again further reinforce my observation that cl. (a) may apply to an officer of the company who continues to be in service because it is in that capacity only that he could obtain possession of the property of the company, as, normally, once he is out of service, he may not be able to lay his hand on any property of the company, much less, to obtain its possession even by wrongful means. If, therefore, he is put in possession in a rightful manner, only by virtue of his capacity as an officer of the company during the continuation of his service, and if, thereafter, he wrongfully withholds the said property, then, he would be squarely covered under cl. (b) and, in my opinion, it is this contingency that would cover a case under cl. (b) not only of an existing officer or employee but, even a past employee or past officer of the company. It is in this context that one has got to bear in mind the distinction in two items, namely, the present tense and the past tense of securing possession in cls. (a) and, (b) and secondly, the mode of committing mischief, as, under cl. (a), wrongfully obtaining the possession is the subject-matter, whereas, in cl. (b) it pales into the background and what is brought to the forefront is the wrongful withholding of the property, which impliedly indicates that before withholding of such property in a wrongful manner, such a person may have lawfully come into possession thereof and it also indicates the point of time when such possession can be tagged vis-a-vis the officer of the company. To put it in another form, in cl. (a) there should be obtaining of the possession which normally would be tagged to the officer of the company during the continuation of his service, whereas, in cl. (b), the possession might have been obtained by the officer during the continuation of his service, which is the normal mode of obtaining possession, yet, he can commit an offence if, thereafter, he withholds the possession and this magnifies two aspects in that perspective, namely, that it indicates the point of time, that is, possession might be in the past though the withholding may be at the relevant time which, in turn, means that possession might be during the continuation of the service though the withholding might not necessarily be during the continuation of service, but after discontinuation of the service. In fact, it is this contingency which was more clear to the Legislature at the relevant time and it is precisely the same reason for which cl. (b) has been enacted. In my opinion, therefore, there is absolutely no escape from the conclusion that a past officer or a past employee of the company who rightfully obtains possession of a property by virtue of his capacity as such officer, during the continuation of his service, can commit the mischief of withholding the said property and such withholding can obviously be wrongful if he, without any semblance of right, declines to hand over possession to the company and that is how the property is deemed to have been wrongfully withheld. The term "withholding" is also pregnant with a further implication that he must be in possession initially and then only the question of withholding arises. The interpretation sought to be made by Shri Vakil is really founded on a misconceived notion or a confusion which arises on account of the fact that obtaining possession and withholding possession are sought to be confused. It is, therefore, manifest, in my opinion, without even going into the legislative intent, on a plain and rational reading of the entire provision that a contingency as propagated by Shri Modi on behalf of the complainant is fully and squarely covered by cl. (b) of sub-s. (1) of s. 630 of the Act, which conclusion appears to be absolutely inescapable.

In this context, it is worth noting the provisions contained in s. 441 of the Indian Penal Code, which also furnishes a guideline. Criminal trespass has been defined in s. 441 as:

"441. Whoever enters into or upon property in the possession of another with intent to commit an offence or to intimidate, insult or annoy any person in possession of such property,

or having lawfully entered into or upon such property, unlawfully remains there with intent thereby to intimidate, insult or annoy any such person, or with intent to commit an offence,

is said to commit ' criminal trespass '."

Even a cursory reading of the two clauses of the said section would bring to the forefront a very close nexus in the matter of interpretation which was sought to be placed by Shri Modi on behalf of the company. A person may commit criminal trespass if he enters upon the property in the possession of another with a particular object either to commit the offence or to intimidate, insult or annoy such person, and such an offence can be " equally committed if a person at the inception has lawfully entered into possession of the property of another though, thereafter, he remains in the said property unlawfully with a particular intention to intimidate, insult or annoy that person. It is clear that at the inception, the entering into the property may be unlawful if it is accompanied by a certain intent. However, a second contingency is also contemplated under which a person may lawfully, enter into the property and still he may continue to remain therein if it is annexed by the requisite intention and in both the contingencies, the offence would be committed. It would thus indicate that both such situations may arise logically and apart from that it also indicates another aspect, namely, that, in the said provision also, the terminology "such property" has been utilised. Even a plain reading of the two clauses would make it clear that what was sought to be conveyed by the said terminology "such property" was only that the property was of a particular person. This would again indicate that in a similar situation, such terminology is the only inevitable terminology which is used. Though on the basis of the reading of the provision of s. 630 of the Act itself, I am holding in favour of the interpretation suggested by Shri Modi, reference to s. 441, IPC, is made to a limited extent.

This would again be enough to pull down the curtain on the entire controversy. However, certain facets can be incorporated in this context which may not be redundant and which would be essential for further reinforcing the conclusion which I have arrived at. As I have stated earlier, even without going into the legislative intent and even without referring to the well-settled canons of interpretation of statutes, on a plain reading of the said provision, I am firm in my opinion that the situation in which the petitioner has landed himself is clearly covered notwithstanding the fact that, at the relevant time, the petitioner ceased to be in the employment of the company. However, if any further support is necessary, then, it can be obtained on the basis of several other features which have been rightly canvassed by Shri Modi on behalf of the company to which at least a cursory and incidental reference has become inevitable.

It cannot be ignored that if the interpretation sought to be placed by Shri Vakil is to be accepted apart from the most irrational reading of the provision, the consequence would be not only disastrous but almost preposterous. This would incorporate a fraud even openly and on great dimensions. Thus, a very shrewd officer who has an evil design and scheme in his mind which is hatched for some time can translate the said design into action in a very intellectual manner without coming into the clutches of the provisions of law. Thus, if an officer is inducted into the premises only because he was entitled to the same by virtue of his capacity as an officer with a clear stipulation that his possession was to co-terminate with the date of his retirement or discontinuance from service or severing ties with the company in any manner such an officer hardly a month prior to the date of his retirement may skillfully withdraw from the company in a permissible manner or in a lawful process and thereafter when the company indicates its desire for getting the flat back, he may come out with a specious plea that he is no more in the employment of the company and thereby compelling the company to run down from one court to another which would consume years together and during which time as a conqueror, this officer can continue to stay in the flat even under the nose of the officials of the company. The same criticism would apply with equal force to the contingency when the officer retires in due course and then refuses to vacate the premises. In either of the cases, there would be a triumphant expression on his face, a trump-card in his packet and treachery in his design. In my opinion, this can hardly be the intention of the Legislature and such a narrow interpretation which was sought to be placed would logically lead to this illogical conclusion.

With some utility, I may quote the term "withholding" as denned in law dictionary, as :

"The word has a definite signification and does not import the fraudulent obtaining of money or other property from a person, but the retention of the money or other property to which that person is entitled, before it reaches that person's hands and passes under his dominion and absolute control."

This is self-explanatory and the combined reading of the definition of both the terms "wrongfully" and "withholding" makes the picture clear and complete.

Shri Modi, the learned counsel, further submitted that prescribing the same quantum of punishment for the commission of the mischief under both the cls. (a) and (b) is yet another criterion in support of his submission vis-a-vis the interpretation of this provision, otherwise, the provision contained in cl. (b) would have been the aggravated form of the mischief, inasmuch as, first, there is wrongful obtaining of the possession and it is thereafter and in addition thereto that there is wrongful withholding of such wrongfully obtained possession. Shri Vakil submitted that when the alternative and the normal remedy is available, such as in an ejectment suit, the company cannot have a short-cut practically by way of summary eviction by resorting to these provisions and this itself indicates that the Legislature could not have intended to cover the case of a past employee and, therefore, these provisions should be strictly construed. This submission also has no substance. On the contrary, a reading of the said provisions together make the purpose thereof quite prominent, inasmuch as, while the anxiety is to protect the property of the company when for the conviction for the breach of cl. (a) or (b), the punishment prescribed is only a sentence of fine up to Rs. 1,000, discretion is given to the court to direct delivery of possession of property within a stipulated time, failing which, the court is empowered to inflict a more serious sentence which is not restricted only to one of fine but consits of substantive sentence also. It is also worth noting that a right is given not only to the company but even to its creditor or contributory to file such a complaint which is again an indication in support of the view that the dominant purpose is to protect the property of the company. Existence of a normal remedy would hardly be a ground to bar such a remedy under these provisions.

Shri Modi, the learned counsel, then submits that normally the court should be anxious to adopt such interpretation of the relevant provision which would further and promote the object and policy of the Legislature and thereby not to encourage by any such interpretation the commission of the mischief as propriety requires that the purpose of interpretation would be to suppress such mischief. Reliance was placed by the learned counsel on the ratio in Sadashiv v. State, AIR 1960 Bom 243 [FB]. That was a case under the Prevention of Food Adulteration Act when an interesting question arose as to whether the expression "butter" within the meaning of the relevant rule could cover butter prepared from curd. A submission to the effect that, according to the said rule, "butter" would mean such product prepared exclusively from milk or cream or both and on the basis thereof, it was canvassed that it would not cover butter prepared from curd. Repelling this submission, it was observed (p. 244) :

"It is well settled that, so far as possible, the court should adopt that interpretation, which will promote and further the object and policy of the legislation and. suppress the mischief which the statute was enacted to prevent."

Shri Modi, therefore, in my opinion, relied rightly on the ratio of. this decision in support of his contention that the interpretation suggested by Shri Vakil would obviously destroy the furthering of the object and policy and suppressing the mischief.

Shri Modi then submitted without prejudice to his contention that really there is no scope for any doubt about the interpretation and that even assuming that a doubt may creep in, yet, it should be resolved in such a manner on the basis of the existence of the two views in favour of one against creating anomaly, or in other words, if two views are possible, one leading to an anomalous result, then, it would be the cardinal principle not to construe the provision so as to lead to such an anomalous result. In that behalf, he has relied on the ratio in Veluswami v. Raja Nainar, AIR 1959 SC 422, wherein it is observed (head-note) :

"It is no doubt true that if on its true construction, a statute leads to anomalous results, the courts have no option but to give effect to it and leave it to the Legislature to amend and alter the law. But when on a construction of a statute, two views are possible, one which results in an anomaly and the other not, it is the duty of a court to adopt the latter and not the former, seeking consolation in the thought that the law bristles with anomalies."

I am maintaining that in reality two views are not possible at all ; however, this has been referred to by way of abundant caution in order to dispel any doubt even about the existence of such two views and, in that event, if one view leads to the most logical conclusion and the other to the anomalous result, then, for obvious reasons, the latter cannot be accepted. It is true that it is indicated that if on a true construction, only such interpretation is possible which may lead to an anomalous result, then, in that event, the court may not have any option but to adopt the same. In my opinion, this contingency is poles apart in the instant case, as really speaking, the result on the suggested interpretation as canvassed by Shri Modi is the most logical and harmonious one.

The submission made by Shri Vakil on behalf of the petitioner about the strict construction, in respect of a provision entailing into penal consequence can well be met with effectively by relying on the ratio of a decision in Narendrakumar v. State, AIR 1972 Bom 184, which has also been rightly relied upon by Shri Modi, wherein it is observed (pp. 188, tion 189):

"As far as the second and alternative limb of his argument is concerned, Mr. Mody has relied upon another rule of construction stated in Maxwell ....... that if there are two reasonable constructions, the court must give the more lenient one which will avoid the penalty in any particular case. That rule of construction does not, however, lay down that if any two constructions are possible in regard to a penal statute, the more lenient one must be adopted, but what it lays down is that if the words of a statute are capable of two reasonable constructions, the court must adopt the more lenient one which will avoid the penalty......

In Maxwell on the Interpretation of Statutes, it is, however, stated...... that if the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation, the court should avoid a construction which would reduce the legislation to futility and should accept the bolder construction based on the view that the Legislature would legislate only for the purpose of bringing about an effective result...... The same rule has been cited in another way by Maxwell ....... when it is stated that where to apply words literally would defeat the obvious intention of the legislation and produce a wholly unreasonable result the court must do some violence to the words and so achieve that obvious intention and produce a rational construction...... the position in regard to the construction of a penal section is that if the only reasonable way of construing such a section, without stretching its language, is one which goes against the accused, to so construe it would not violate the rule of strict construction of penal statutes."

It is, therefore, rightly submitted by Shri Modi, which is by way of a very effective reply to the submission of Shri Vakil about the construction of such provision which entails into penal consequence. Even in such cases, the said ratio indicates that if some violence is necessary, then, that has got to be done irrespective of the fact that a penal consequence is likely to flow therefrom, provided the interpretation contains logic. It is thus apparent that merely because a penal consequence is likely to flow out of the provision, a construction should be artificially and mechanically brought into existence even at the cost of distorting the phraseology and twisting the meaning merely to achieve a very theoretical principle which obviously lies in the vacuum, namely, that an accused should not be punished, such a proposition cannot be accepted. In my opinion, the stretching of such a provision with such a speculative object would require entering into an arena of conjectures and doing violence to the language deviating from the normal practice of interpretation of statutes. It is rightly submitted that if on a plain reading or even having regard to the intent and other incidental aspects and on interpreting the provision in a rational manner, the consequence' ultimately results in the nature of penal consequence against the accused, then, merely to avoid that result to interpret in an artificial manner would obviously destroy the very process of interpretation as also the very purpose of the legislative intent and, in that event, it is rightly submitted that one should not so much concentrate on the resultant consequence vis-a-vis the accused persons.

Shri Modi has also rightly submitted that the interpretation sought to be placed by Shri Vakil, if accepted, is bound to lead almost to futility and, therefore, for obvious reasons, the court would be slow in upholding the same in the context of the doctrine of futility. If, on the contrary, a rational reading of the provision makes it harmonious and in consonance with the object and purpose, then, the resultant consequence of futility must be, as far as possible, avoided.

Shri Modi has also submitted that the employment of such, each and every, word is with some purpose and the Legislature must always be guided by the fact that it does not waste its words or make comments in vain and, therefore, effect must be given to all the terminology used by the Legislature in its logical and natural meaning, which has been well enunciated in Quebec Railway v. Vandry [1920] AC 662 ; AIR 1920 PC 181.

Shri Modi, the learned counsel, as indicated earlier, submitted that the term "such property" characterised and described as "property of the company" which is the last phrase of el. (a) and it is in that context that the earlier term has been used, which is obviously a referable term. This was again obviously to avoid duplication of the employment of the same term, as it is normally done when the word "property" figures more than once in the same provision. In other words, it was not necessary again to refer in cl. (b) to the property as "property of the company". It is in this context that the character of the property, namely, being that of the company, was being recognised and that the said label was tagged to it. In addition thereto, Shri Modi, the learned counsel, submitted further that even the character or the capacity of the person concerned, namely, in this concerned case, the person who wrongfully withheld the property, is described by a particular label in the context of the situation, and in the nature of things, it was not necessary to separate the character which was subsisting or the one which was held in the past. Such a label is always tagged for identification to point out the relationship and the obligations flowing therefrom not only during its subsistence but even after its termination. Reliance was rightly placed on the ratio in Nagin v. Haribhai, AIR 1980 Bom 123. In the said case, the provisions of the Presidency Small Cause Courts Act, 1882, as substituted by the Presidency Small Cause Courts (Maharashtra Amendment) Act, 1975, and in particular s. 41 thereof as so substituted was under scrutiny vis-avis its interpretation. A contention was raised therein that the said provision would apply to the licensor and licensee and would not cover the case of persons who once held the relationship of licensor and licensee but such relationship had come to an end. Provisions of various other statutes such as the Matrimonial Acts, the Transfer of Property Act, etc., and the terminology used therein were also considered while repelling this contention when, ultimately, it was held that it would cover not only the subsisting but even the past relationship. This court in the final analysis observed (headnote):

"The words ' a licensor and licensee' and 'a landlord and tenant' have been used in this section in accordance with a very well-settled and normal legislative drafting practice. In various statutes dealing with rights and obligations arising out of a jural or contractual relationship and enforcement of such rights and obligations, the parties are described by the legal character they bear. Words which describe a person's legal character — the character which he either holds or has once held—are used in statutes as a means of identification of a label-to point out the particular rights and obligations which arise out of such relationship either during its subsistence or after its termination, that is, either existing relationship or erstwhile relationship. "

This ratio also, therefore, supports the contention as raised by Shri Modi and reinforces my conclusion that the provisions of the Act would effectively cover the case of not only the subsisting relationship but even of a past one, that is, it would apply not only to an officer who continues to be in the employment of the company but even to a past officer or employee.

Shri Vakil relied on two provisions of the Act and the ratio in another decision to substantiate his contention that when the Legislature intended to cover the case not only of the present employee but also of the past employee, then, specific mention in that behalf is made in the statute. In that behalf, reference is made to the provisions contained in ss. 543 and 545 of the Act. Section 543 speaks of the powers of the court to assess the damages against the delinquent directors while s. 545 contemplates prosecution of such delinquent officers and members of the company. This submission can be disposed of on a short premise, as these sections have their own peculiarities as these relate to the winding-up proceedings as contained in Pt. VII of the Act. Section 543 makes it very clear that in the course of the winding-up of a company, categories mentioned therein including any past or present director has misapplied or retained any money or property of the company amongst other things, then, on an application by the official liquidator the court may examine into the conduct of such persons which may follow certain consequences. Section 545 also deals with a situation during the course of the winding-up of a company. It is obvious that in view of that situation itself reference to the past director alongwith the present director or other officers becomes inevitable. That can hardly serve as an analogy to the instant case. Shri Vakil then placed reliance on the ratio of a decision of this court in State v. Girdharlal Bajaj [1962] 32 Comp Cas 1114; 63 Bom LR 743, wherein it has been held in support of his contention that an employee docs not include an ex-employee. That was with reference to the provisions contained in s. 419 of the Act which contemplates that an employee shall be entitled in certain circumstances to see the bank receipts for any money or security which has been referred to in ss. 417 and 418, the former refers to the employees' securities deposited in the bank, while the latter refers to the provident fund of the employees. It is in that context that this court has held that s. 419 is restricted to the present employee and would not cover the case of a past employee. However, in my opinion, that again can hardly furnish an analogy to jump to the conclusion that the absence of user of the words "past employee" is the surest indication of the exclusion of the past employee. It is rightly submitted by Shri Modi that there is a peculiarity attached to s. 419 itself, inasmuch as, during the continuation of service, the officers or the employees are expected to be vigilant about the working of the company vis-a-vis the properties and monies in which they are vitally interested and it is in that context that they have ample opportunity as also the right to inspect the accounts and also to verify the holdings of the bank to achieve that object. If that is done, then, really speaking, nothing further is required to be done after going out of the employment at which stage the only right vests in them and the only thing with which they are concerned is about getting back the said amount. It is in that context that the provisions of s. 419 are enacted which could hardly furnish any analogy or comparison in the instant case. Some of the observations in the said decision, on the contrary, support the contentions raised by Shri Modi that if at all any intention is to be gathered then it can be safely stated that all these enactments are purpose-oriented. Thus, it is observed (pp. 1117, 1121, 1120 of 32 Comp Cas):

"If that be the object of the enactment, it is contended, it would amount to defeating the right of an employee not to permit him an inspection after he ceases to be an employee....It seems to us that the Legislature contemplated that it would be a serious inroad upon the rights of the employer to permit the employee, who has ceased to be an employee, to inspect the securities and bank receipts for moneys of his former employer. ...Moreover, it seems to us that when sections 417, 418, 419 and 420 of the Companies Act, 1956, were enacted, the present day notions of social justice between the employer and the employee were not the same and it is conceivable that the Legislature may have thought that upon termination of the contract of service, the employee should be relegated to his normal remedies of a suit..."

Apart from the observations in the said decision being restricted to the peculiar provisions of these four sections, this, on the contrary, indicates that the court felt that the said provisions are purpose-oriented. If that be so, Shri Modi poses a pertinent query. Provisions of s. 630 also should be construed in that context and in the same vein so as to find out the purpose for which those were enacted. It is not necessary to have a further probe in this behalf, inasmuch as I have already held that the primary and the most essential purpose of enacting such a provision was to avoid such a mischief which can easily be committed by an erring officer taking shelter behind such technicality and the precise purpose further is not to entail the company into any loss of property. If that is the purpose, it appears to be obviously manifest that it is a justified submission that as s. 419 was interpreted on the foundation that it is purpose-oriented, then s. 630 also should be interpreted on the same basis and to achieve that purpose as a logical corollary, the interpretation suggested by Shri Modi is the only available one in the circumstances. This decision, therefore, which has been relied upon by Shri Vakil is in reality of no assistance to the petitioner.

Reliance was also then placed rightly on a decision in Re Veerappan [1944] 14 Comp Cas 149 ; [1945] 46 Cr. LJ 347 (Mad). Really speaking, as the matter appears to be very clear, containing not even a grain of doubt, one need not bother to go to the other authorities. However, a similar situation had arisen except the change in the nature of the property. In the said case, where the managing agent of a bank failed to deliver up to the liquidator appointed by the court in winding-up proceedings, certain jewels which admittedly belonged to the bank. The defence was that he was not in possession of the jewels as those were pledged with certain persons. This defence was not accepted by any court. He was prosecuted under s. 238A(1)(b) and also under s. 282A of the Indian Companies Act, 1913. Though he was convicted on both the counts, yet, a sentence under S.282A was not formally recorded though it was stipulated under that provision, but he was directed to return the jewels within a definite period failing which, he was sentenced to suffer a particular term of imprisonment. The matter went up to the High Court and the conviction under s. 282A was upheld though it was corrected when the High Court found that the learned Magistrate had not recorded a sentence in that behalf. The High Court held that so far as the claim of possession is concerned, there was no satisfactory evidence and, therefore, the conviction under s. 238A could not be upheld. However, while upholding the conviction under s. 282A, the High Court observed that the jewels belonging to the bank in possession of the accused were wrongfully withheld by him and such wrongful withholding could squarely be covered by the provisions which are corresponding to s. 630 of the new Act. It is relevant to note that even at the relevant time, that is at the time of withholding, the accused had ceased to be the managing agent of the bank. This would, therefore, mean that even after severing his connections with the bank, wrongful withholding of the property of the bank entailing into a penal consequence is envisaged by s. 282A (old Act) which provisions are corresponding to s. 630 of the new Act. This authority, therefore, squarely covers the facts in the instant case.

In the final analysis, on a resume and survey of the entire canvas visa-vis the provisions contained in s. 630 of the Act, some of the features and deductions would flow logically and inescapably :

(A) Clause (a) is self-contained and independent of cl. (b), with the capacity of creating penal liability.

— and, it would as well embrace a case of an existing employee or officer of the company.

(B) Clause (b) is equally independent and distinct from cl. (a) as regards penal consequences.

— it would as well squarely cover the case of a past employee or officer of the company.

— entitlement to the property of the company has its existence contingent on the right and capacity of the officer by virtue of his employment.

— such a right can be transformed into actually getting possession of the property of the company which is again solely by reason of the employment.

— the duration of such right and claim over the property would be co-terminus with the term of employment.

— therefore, the capacity, the right to possession created thereunder and the duration during which such capacity exists and the right can be exercised, are the features integrally blended.

— consequently, with the termination of the employment, the capacity and the corresponding right are extinguished with the obligation to hand over the property, back to the company ipso facto coining into existence.

— if, therefore, in such an event, with the wiping out of the right and the obligation surviving, the property is held back and possession retained wrongfully, it would amount to wrongful withholding of the property of the company.

— the existence of the capacity, occurring of the right and actual possession would be while in employment, while withholding may be even after termination of employment.

— such obtaining of possession may even be rightful and yet, the withholding may be wrongful.

— the former act, therefore, would be in the past, while the latter at present, with reference to the point of time, obviously, as possession would precede the act of retention or withholding, though it affords an opportunity for such an act.

— however, the subject-matter, viz., the property of the company, the author, viz., the person in possession, and the corresponding right and liability of the parties to take back and hand over the property, remain unchanged. There is thus an obvious continuity and an inseparable nexus.

— consequently, the property is restricted and referable only as the property of the company; an employee or officer of the company may come into possession of the said property—even rightfully—during the subsistence of employment which may be an event in the past ; such person, having the said property in his possession, may wrongfully withhold it which may be an event at present and even after termination of employment and that would complete the circuit.

— by any yardstick and on any premise, therefore, an act of wrongfully withholding any property of the company would squarely apply even to a past employee or officer of the company, entailing into penal consequences within the meaning of s. 630(1)(b) of the Act.

In this view of the matter, on the question of interpretation of the relevant provisions of the statute, I am firm, in my opinion, that there is no substance in any of the contentions and the prosecution must continue and go to its logical end on the basis of the allegations made in the complaint and an opportunity will have to be given to the complainant to substantiate their claim.

Some aspects are disturbing. It is very interesting to note that the complaint was filed on behalf of the company on 19th December, 1978. The process was issued in response to which the petitioner appeared in the court and the matter lingered on without there being any progress of the proceeding. It is very surprising to note that for months together, it did not occur to the petitioner to move the trial court for the relief which he claimed for the first time by tendering an application on 23rd May, 1980, which was decided on 27th June, 1980. Shri Modi is quite justified in criticising this conduct of the petitioner though it was sought to be explained away by the learned counsel for the petitioner on a very specious ground that the delay was only on account of lethargy. In my opinion, this delay is thoroughly unexplained and this will be one of the grounds which will have to be considered whether, even otherwise, a relief can be granted in favour of such a petitioner. But the matter does not rest there, because for the first time in the month of May, 1980, the petitioner comes out almost with a very strange request that he is entitled to earn a discharge. The learned Magistrate has rightly brushed aside this contention on a short ground that this was a case of summons triable procedure. In the first instance, it required full 18 months to realise the deficiency in the complaint and, secondly, he came out with a request which obviously could not be granted in law. It is true that in the Code of Criminal Procedure, a contingency is contemplated whereunder the Magistrate may consider and treat a proceeding as a warrant procedure even in respect of cases triable as summons procedure. However, it has its own limitation as is evidenced by the provisions contained in s. 259 of the Code. It is not necessary for me to reproduce the said section as, in my opinion, absolutely no ground has been made out for attracting the said provisions and the more important part is that the trial had not even commenced. The said provision, therefore, has no application at all. If that be so, then there is no other provision under which such a relief could be claimed. The application in that behalf, therefore, was also misconceived.

The matter again does not rest there because there is yet another infirmity. As stated at the outset, the petitioner has invoked the revisional jurisdiction of this court as the petition filed by him is styled as a criminal revision application. In spite of that, at the hearing of this proceeding, an oral motion was made by Shri Vakil on behalf of the petitioner that he may be permitted to invoke the inherent powers of this court under s. 482 of the Cr. PC, though significantly, when the petition was filed, the petitioner was not intending to pursue this path. However, in order to do justice to the matter, such a concession was allowed in favour of the petitioner. However, having given this concession, Shri Vakil then came out with the contention that this court has no limitation in exercising these powers for the purpose of the quashing of the proceeding. As against this, Shri Modi, the learned counsel for the complainant, submitted that it is not as if such provision should be so liberally construed, in favour of the quashing of the proceeding, as such inherent powers have got to be very sparingly used. According to the learned counsel, the conduct of the petitioner and his attitude and the glaring facts and circumstances of the present proceeding justify him (the counsel) to submit that such a petitioner does not deserve the exercise of the inherent powers. Shri Vakil submitted that if a process is allowed to be issued and the trial continues, then, it will be an abuse of the process of the court, and to prevent or avoid such an abuse, interference by this court is necessary. To say the least, in my opinion, the facts are so glaring that if such a course is adopted, then, not only the interest of justice would be destroyed, but, there would obviously be a wrong user of discretion under the inherent powers of this court in favour of a person who does not deserve such exercise of discretion in his favour. Apart from this, the question of law is obviously against him and the facts are practically staring in his face.

In R. P. Kapoor v. State of Punjab, AIR 1960 SC 866, it has been enunciated that there may be some categories of cases where the inherent jurisdiction to quash the proceedings can be exercised when at the threshold itself there is a legal bar or when the complaint by itself on a plain reading does not make out an offence or even though the allegations do constitute an offence, yet, there is no legal evidence. In my opinion, this case is not covered by either of the three categories. It is true, as observed in State of Karnataka v. L. Muniswamy, AIR 1977 SC 1489, that (head-note):

"In the exercise of the wholesome power under s. 482 (of the Cr. PC) the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the court or that the ends of justice require that the proceeding ought to be quashed."

It is not necessary to multiply this principle propagated in a catena of cases, the net sresult of which would be that each case will have to be decided on the facts of the said case. However, reliance can be placed on the ratio in Kurukshetra University v. Stale of Haryana, AIR 1977 SC 2229, wherein it is observed (headnote):

"Inherent powers do not confer an arbitrary jurisdiction on the High Court to act according to whim or caprice. That statutory power has to be exercised sparingly, with circumspection and in the rarest of rare cases."

Apart from this, the well-settled principle in the matter of quashing of the proceeding when the trial is at the threshold when only process has been issued, has been high-lighted in several decisions. Thus, for instance, it has been observed in Hareram v. Thikaram, AIR 1978 SC 1568, that (headnote):

"Where the Magistrate after taking cognizance of the offence and perusal of the. record and having been satisfied that there were prima facie grounds for issuing process against certain persons,... issued process against them, (then, he) could not be said to have exceeded the power vested in him"

It has been further observed (headnote):

"As the Magistrate is restricted to finding out whether there is a prima facie case or not for proceeding against the accused and cannot enter into a detailed discussion of the merits or demerits of the case and the scope of the revisional jurisdiction is very limited, the High Court cannot launch on a detailed and meticulous examination of the case on merits and set aside the order of Magistrate directing issue of process against certain persons."

This court had also expressed a view on the same lines about the powers of the Magistrate at the time of issuance of the process and the corresponding powers of this court when a relief was asked for quashing of the proceeding on the ground that the process has been wrongly issued in Jacob Harold v. Vera Aranha [1979] Cr. LJ 974 (Born). In the said ratio, it has been observed that at the stage of issuing process, it is not the duty of the court to find out as to whether the accused will be ultimately convicted and the only requirement is about the existence of prima facie case and in the same context, it has been clearly observed that in such cases, when relief of quashing of the proceeding is asked for after issuance of process, then, inherent powers may be exercised sparingly with circumspection and in rare cases and that too, to correct patent illegalities.

In my opinion, therefore, on the premise as regards the interpretation of s. 630 of the Act, the issuance of process is manifestly justified and it cannot be said that there are no prima facie grounds for the learned Magistrate, to get himself satisfied, for proceeding with the case when he issued the process. Inherent powers under these circumstances for quashing of the proceeding cannot be obviously invoked. In these circumstances, the proceeding will have to be continued in the trial court.

Shri Vakil then submitted that the correspondence ensued between the parties to which a reference is made in the complaint, itself indicates that even after June 30, 1978, that is, after the date of his retirement, the petitioner was allowed to continue to stay over in the premises and the time for vacating was extended which according to the learned counsel may create a new and separate agreement between the parties under which he gets a right to stay over in the said premises. It may incidentally observe that this is also not factually correct, if one merely peruses the complaint in which contents of some of the letters are indicated. It is apparent that it was entirely on humanitarian grounds that the company gave a concession to the petitioner to stay over in the premises for a few days and this concession was obviously annexed with a definite qualification asking the petitioner to give an unequivocal undertaking to the effect that he would vacate at the end of the stipulated time. Now, the most surprising feature is that all along this remained in the nebulous state of a proposal which was never accepted by the petitioner, much less, he had assured the company in any manner, and on the top of it, in his letter dated 7th August, 1978, when for the first time, he chose to utter some words on paper, he made it very clear to the company that he never accepted the proposal and no agreement had been arrived at between the parties. This, in my opinion, has enough impact on destroying the submission made by Shri Vakil in this behalf. It will also indicate that the petitioner himself is not relying on the existence of any agreement as such. The course of events and the contents of the said letter, therefore, clearly indicate that no right has ensued in favour of the petitioner even on account of the inclination of the company to extend a concession only on humanitarian grounds and the texture remains the same, namely, that the petitioner continued to wrongfully withhold the premises.

Shri Modi, the learned counsel submitted that in the instant case, even apart from everything including the controversy on the question of interpretation of the said provision—though he claims that there is no scope for any controversy as such—still the facts and the recitals in the complaint even on a plain reading would show that the company had demanded the vacant possession of the fiat the moment the petitioner retired from the service of the company and was thus out of employment and in that context, the question whether he withheld the property while he was out of employment or while he continued to be in the employment would really pale in the background. There is an adequate force in this submission also as the facts stated in the complaint do justify such a submission. In effect, therefore, irrespective of the said controversy vis-a-vis the said provisions of the Act, the petitioner can be deemed to have wrongfully withheld possession of the property of the company which is squarely covered by the said provisions.

Shri Vakil, the learned counsel submitted that really speaking, any such prosecution under the provisions of the said Act, when launched after the retirement of the employee or the officer would always be unsustainable, inasmuch as, the points of time of going out of the employment and making the demand and lodging the complaint are quite distinct. There is hardly any substance in this contention also. Shri Vakil, the learned counsel, even went to the extent of submitting that the demand should be made and the complaint should be lodged in such a manner and at such point of time so as to synchronise and become identical with the moment of retirement and he clarified by submitting that even one second elapsing thereafter would make the prosecution infructuous. To say the least, I am a little surprised that such an argument has been advanced with all seriousness and it is mentioned only for being rejected. It is too much to accept and expect that the company should be ready with the notice and the complaint drafted at mid-night, and must start moving even before the loss of one second and if such a course is not adopted by the company, then, the petitioner would be completely out of their reach.

Having considered all these features, I have not even the slightest reservation that the petitioner's case is squarely covered by the said provision of the Act. I am tempted to observe, which I am sure will not be out of place, that if such persons who were one time officers of the company who could get the benefit of possession of such a huge flat merely in their capacity as such officers, are not to be embraced by these provisions of the Act, then, it would entail into disastrous results completely destroying the plain reading of the provision, the legislative intent and the purpose of such an enactment to ward off the attack on a very specious ground that the company may take recourse to normal remedy for evicting the petitioner, so that, during all those years, the petitioner would be in a dominating position sitting tight with an expression of victory on his face and treachery in the design.

It is also to be remembered that no evidence so far has been recorded when only process has been issued. The scheme of the Code of Criminal Procedure indicates that on taking cognizance, the Magistrate may either straightaway issue the process or postpone the same during the course of enquiry under s. 202, Cr PC and thereafter, may dismiss the complaint under s. 203 if there is no sufficient ground to proceed, or otherwise, may go to the other lap when he can issue process under s. 204, Cr PC. It is well settled that the requirement for dismissal of the complaint under s. 203 is the formation of the judicial opinion by the Magistrate that there are no sufficient grounds for proceeding and it is further well settled and for that purpose, it is not the function of the Magistrate to launch a full-dressed enquiry to find out if the accused would ultimately be convicted or acquitted. This aspect has been made abundantly clear in Debendra Nath v. State of West Bengal, AIR 1972 SC 1607. This court has also re-enunciated this principle in Jacob Harold v.Vcra Aranha [1979] Cr LJ 974 (Bom) observing that at the stage of issuance of the process, the only object would be to determine whether there are sufficient grounds for proceeding further or not and not to find out whether the accused would be ultimately convicted or acquitted. In Smt. Nagaiwwa v. Veeranna, AIR 1976 SC 1947, it has been reiterated that the scope of enquiry under s. 202, Cr PC, is extremely limited essentially for the purpose of finding out whether a prima facie case for issuance of process has been made out and that though the Magistrate is given discretion, there appears to be a very thin line of demarcation and the Magistrate is not expected to examine the entire case on merits with a view to find out whether or not the allegations in the complaint, if proved, will ultimately end into conviction, as these considerations are totally foreign to the scope and ambit for an enquiry under s. 202 which culminates under s. 204 of the Code. Thus, viewed on the touch-stone of all these judicial pronouncements, I am of the firm opinion that this is not a case at all wherein the complaint could have been dismissed, but, this is pre-eminently a fit case where the process has been rightly issued. The complainant will have to be given a reasonable opportunity to ventilate his grievances, to bolster up his case and substantiate his allegations, by tendering relevant evidence in which event, even the defence would be entitled to substantiate their claim. All this obviously requires the continuation of the trial and to say the least, the complaint or the prosecution cannot be throttled or short-circuited at the threshold itself.

All said and done, in the instant case, there are obviously sufficient grounds to proceed against the accused and, further, the interpretation about the relevant provisions of the Act being negatived, it follows that a prima facie case has been properly and adequately made out by the respondent-complainant and as such, the trial must reach its logical destination.

In the result, the rule is discharged. As the matter is pending in the trial court for quite some time, it would be in the fitness of things and in the interest of justice, as the delay should not defeat the cause of justice, that the learned trial Magistrate shall expedite the hearing in this matter.

At this juncture, Shri Adi P. Gandhi, the learned counsel on instructions from the clients, makes an oral motion with a request for leave to appeal to the Supreme Court and for grant of requisite certificate of fitness. In my opinion, the facts are manifestly glaring and the law is well settled. Absolutely, no ground is made out in support of this request. The oral motion is rejected.

[2003] 41 SCL 27 (Bom.)

High Court of Bombay

Gangubai Poonja Angre

Mukesh Textile Mills

D.G. DESHPANDE, J.

CIVIL REVISION APPLICATION NOS. 365 TO 390 OF 2001

FEBRUARY 8, 2002

Section 630 of the Companies Act, 1956 - Penalties for wrongful withholding of property - Petitioners occupied company/mill premises for residential accommodation under an agreement entered into between employer and employee - After closure of mill, company served notice upon petitioners claiming back possession of company’s premises which was refused - Whether, where gist of clause (a) of section 630 is wrongfully obtaining of property and gist of clause (b) is wrongfully withholding it, refusal to hand over back property to company by an employee after demand by company amounts to wrongfully withholding of property - Held, yes - Whether continuation of employment does not give right to employee to retain possession unless there is a contract to that effect between parties, and after service of notice claiming back possession on closure of mill, it was obligatory upon petitioners to deliver back possession - Held, yes - Whether there was no agreement between parties that company’s right to get back possession of property would depend upon company’s agreeing to give premises to its other employees, and section 630 does not give such a right to employee nor there is any provision in Act which gives an employee a right to retain property on that pretext - Held, yes - Whether rights conferred by Act under section 630 upon companies can be taken away by any circulars, directions, etc., of Government, relied upon by petitioners - Held, no - Whether, therefore, orders of courts below directing petitioners to hand over possession of premises to respondent-company, in addition to fine, had to be confirmed - Held, yes

Facts

The respondent No. 1 was the owner of the company premises. All the petitioner-accused were occupants of the residential accommodation of the company premises, either as employee or legal heirs of the original employee of the respondent No. 1. They were occupying those premises pursuant to an agreement entered into between the employer and the employee. On closure of the mill, the company served notice upon the petitioners claiming back possession of its premises but the petitioners refused to hand over the premises. Prosecutions were launched against them under section 630. The petitioner-accused submitted (1) that offences under section 630(1)(a) were different offences; (2) that the petitioner-accused had not acquired property wrongfully and, therefore, could not be prosecuted because acquiring property wrongfully was the gist of offence under section 630(1)(a); (3) that there was no breach of agreement by the petitioner-accused at any time and that the petitioner-accused were in employment continuously right from the beginning and unless their services were terminated and the terminal benefits granted, their occupation of the premises could not be held to be illegal or unauthorised; (4) that the employees were given residential accommodation by the company for smooth and proper functioning of the mill and unless mill-respondent No. 1 made out a case that the premises were required for the bona fide use of other workers, the petitioner-accused could not be asked to vacate the premises; and (5) that the policy of the Maharashtra Government was to grant protection to the occupants because there were directions and resolutions of the Government to that effect and, therefore, the proceedings against the accused under section 630 were untenable. The Magistrate found them guilty and ordered them to hand over possession of the premises to the respondent No. 1, in addition to imposition of fine. The additional Sessions Judge dismissed appeal filed by the petitioner-accused.

On revision application :

Held

Admittedly, the residential accommodation came in possession of the petitioner-accused-employees by virtue of their employment and under an agreement but their possession became illegal or wrongful when the accused even inspite of notice to that effect refused to deliver back the possession.

Clauses (a) and (b) of section 630(1) are meant for two different contingencies and clause (b) cannot be interpreted as an inseparable part of clause (a). Both the clause (a) and clause (b) are required to be interpreted separately otherwise the very purpose of the Act would be frustrated. Therefore, clause (b) can be invoked when having entered into possession lawfully, it is wrongfully withheld by an employee.

The gist of clause (a) is wrongfully obtaining of property and the gist of clause (b) is wrongfully withholding it and refusal to hand over back the property to the company by an employee after demand by the company amounts to wrongfully withholding of the property. It cannot, therefore, be accepted that clause (b) of section 630(1) is qualified by clause (a) of section 630(1). Both are different and distinct offences and, therefore, it was not necessary for the respondent to come up with a case that the petitioners had obtained wrongful possession of the property. It could succeed if it showed that the petitioners or their ancestors subsequently refused to deliver possession of the company’s property when demanded by giving notice to them on behalf of the company.

Continuation of employment does not give a right to the employee to retain possession unless there is a contract to that effect between the parties. Admittedly, the property belonged to the company. It was given to the employees because they were in service. Mill was closed long back and, therefore, the company/mill served a notice upon the petitioners claiming back the possession and, therefore, in that context it was obligatory upon the petitioners to deliver back the possession. Refusal to deliver back possession to the company of the premises by the applicants amounted to wrongfully withholding of the property of the company.

Moreover, firstly, there was no agreement between the parties to that effect that company’s right to get back possession of the property would depend only upon the company’s agreeing to give premises to its other employees, and secondly section 630 does not give such a right to the employee nor is any provision in the Act which gives an employee a right to retain the property on the above pretext. Therefore, the contention that unless the company was required to allot the residential premises to its other employees, it could not claim back possession of the company’s property from the applicants, could not be accepted.

The petitioners then made submissions on the policy of the Maharashtra Government to grant protection to the occupants because of different directions and resolutions of the Government to that effect. Against this, it was contended by the respondent that there was nothing on record to show that the petitioner-respondents complainants wanted to develop the land of the mill. Secondly, according to them the recommendations of the Government or the Committee formed by the Government could not have the force of law. Thirdly, it was contended that it did not in any way take away the right conferred upon the companies under the Act by virtue of section 630 and, therefore, firstly there was no statutory right upon the petitioner-accused to continue to occupy the premises and secondly, they could not get any protection. It was an admitted fact that there was nothing on record to suggest that respondents-company was going to develop the land or redevelop it and secondly rights conferred by the Act under section 630 upon the companies were not taken away by any of those circulars, etc., relied upon by the petitioners. Therefore, that aspect also could not be considered in favour of the petitioner-accused.

Hence, the revision applications were dismissed and orders of the courts below were confirmed.

Cases referred to

Baldev Krishna Sahi v. Shipping Corpn. of India [1987] 4 SCC 361, Amritlal Chum v. Devi Ranjan Jha [1987] 61 Comp. Cas. 211 (Cal.) and Smt. Abhilash Vinod Kumar Jain v. Cox & King’s (India) Ltd. [1995] 4 SCL 167 (SC).

Shamrao G. Samant for the Applicant. W.N. Yande, V.A. Thorat and A. N. Boghani for the Respondent.

Judgment

1. All these revision applications involve common question; therefore, they have been disposed of by this common judgment, by consent.

2. These revisions were for admission and at the time it was decided finally, initially oral arguments of Mr. Shamrao G. Samant, learned counsel for the petitioners-accused and Mr. Yande for respondent No. 1 were heard. Then both the counsels gave comprehensive written notes of arguments with case law and on that basis all these revision applications are being disposed of.

3. Petitioners in all these revision applications were accused before the trial court, i.e., Additional Chief Metropolitan Magistrate, 19th Court, Esplanade, Mumbai, under section 630 of the Companies Act, 1956 (‘the Act’). The complaints were filed by respondent No. 1 against them for refusal to vacate the premises. The magistrate found them guilty and by his common order dated 24th August, 2000 ordered them to hand over possession of the premises to the respondent No. 1, in addition to the imposition of fine of Rs. 100 each of the petitioners-accused.

4. Petitioners accused challenged that order by filing appeals but the Additional Sessions Judge, Greater Mumbai dismissed those appeals on 27th September, 2001, hence these revision applications.

5. In the meantime, these petitioners-accused had filed writ petition before this court vide Writ Petition No. 752 of 2001 in which Justice Palkar passed an order on 18th August, 2001 giving certain directions to the Sessions Judge.

6. Admitted facts are that the respondent No. 1 is the owner of the premises, i.e., the company registered under the Act and all the petitioners-accused are occupants of the company premises either as employee of the respondent No. 1 or legal heirs of the original employee of the respondent No. 1. They are occupying those premises pursuant to an agreement entered into between the employer and the employee. Respondent No. 1 gave notice to them to vacate the premises. The notices were received by them, i.e., by their employees or their legal heirs who were occupying those premises. All of them failed to vacate the premises, therefore, prosecutions were launched against them by filing separate complaints.

7. Before the trial court, appellate court and before this court similar points have been raised by the petitioner-accused. From the oral submissions made by Mr. Shamrao Samant initially and from his written submissions the petitioners accused are challenging both the orders of the court below on the following grounds :

(1) That offences under section 630(1)(a) are different offences. The trial court did not particularise whether the petitioners-accused are guilty under section 630(1)(a) or (b) or both.

(2) That the petitioners-accused had not acquired property wrongfully, therefore, cannot be prosecuted because acquiring property wrongfully is the gist of offence under section 630(1)(a).

(3) There was no breach of agreement by the petitioners-accused at any time that the petitioners-accused were in employment continuously right from the beginning and unless their services were terminated and terminal benefits granted, their occupation of the premises could not be held to be illegal or unauthorised.

(4) That the employees were given residential accommodation by the company for smooth and proper functioning of the mill and unless mill—respondent No. 1 makes out a case that the premises are required for the bona fide use of other workers, the petitioners-accused cannot be asked to vacate the premises.

(5) That section 630 of the Act is not properly interpreted by both the courts below and the object of incorporating section 630 is as enunciated by the Supreme Court was totally lost sight of.

(6) That the policy of the Maharashtra Government to grant protection to the occupants because there are directions and resolutions of the Government to that effect and, therefore, the proceedings against the accused under section 630 were untenable.

7.1 On the other hand, it was contended on behalf of the respondent No. 1 as under :

(i) That as per the agreement between the company and the employees they are bound to vacate the premises when called upon, that there was no necessity to terminate the employment and then call upon the petitioners-accused to vacate the premises.

(ii) That scope and object to section 630 has been conclusively decided by the Supreme Court in Smt. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. [1995] 17 CLA 90/[1995] SCC (Cri.) 590.

(iii) That both the courts below that is the trial court as well as the appellate court did not commit any error of law and concurrent findings of fact and also concurrent findings of law does not entitle the petitioners-accused to file these revision applications.

(iv) That the Government decision to protect the workers in mills with reference to their occupied premises cannot come in the way of the legal rights conferred upon the company.

(v) That closure of the mill - respondent No. 1 does not affect the right of mill respondent No. 1 exist as such and consequently the revision applications were liable to be dismissed.

7.2 Section 630 of the Act reads as under :

“Penalty for wrongful withholding property.—

(1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act; he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

8. Emphasis of Mr. Shamrao Samant, counsel for the petitioners-accused, was that none of the petitioners-accused before this court has wrongfully obtained possession of any property of the company. There is no dispute about this proposition because the property of the company came in possession of the petitioners-accused employer pursuant to the agreement between the parties, therefore, section 630(1)(a) will not apply, but it will be section 630(1)(b) which applies in the instant case which provides that having any such property in his possession the employee wrongfully withholds it. Admittedly, the residential accommodation came in possession of the petitioners-accused-employees by virtue of their employment and under an agreement but their possession becomes illegal or wrongful when the accused even inspite of notice to that effect refuses to deliver back the possession. Therefore, in a case under section 630 what the court has to see is whether an employee or officer of the company wrongfully obtains possession of any property of the company under section 630(1)(a) or having any such property in possession wrongfully withholds it.

9. Mr. Shamrao Samant, counsel for the petitioners-accused, contended that the use of the word “having any such property in his possession” in clause (b) of section 630 is with reference to clause (a) of sub-section (1) and, therefore, unless the company proves that the possession was wrongfully obtained, no company can succeed in getting possession of its property even under clause (b) of sub-section (1).

10. It is not only difficult to accept this contention of Mr. Shamrao Samant but the same has to be rejected outright because if clause (a) of section 630(1) is controlled by clause (b) of section 630(1), then there was no purpose in making two separate provisions. Clauses (a) and (b) of sub-section (1) are meant for two different contingencies and clause (b) cannot be interpreted as an inseparable part of clause (a). Both the clause (a) and clause (b) are required to be interpreted separately, otherwise the very purpose of the Act will be frustrated. Therefore, clause (b) can be invoked when having entered into possession lawfully it is wrongfully withheld by an employee.

11. It is true that in clause (b) of section 630(1) the words are “having any such property in his possession” are used. But since clauses (a) and (b) are separated by the word ‘or’, it is clear that two contingencies are covered by section 630, namely, officer or employee of a company wrongfully obtaining possession of any property of a company or secondly having such property in his possession wrongfully withholding it. If argument of Mr. Samant is accepted, then no company will be able to recover property given to its employee whenever there is refusal on the part of the employee to deliver it back. Such an interpretation which frustrate the entire object and purpose of section 630 cannot be accepted. The gist of clause (a) is wrongfully obtaining of property and the gist of clause (b) is wrongfully withholding it and refusal to hand over back the property to the company by an employee after demand by the company amounts to wrongfully withholding of the property. Counsel for the respondents in this regard places reliance on Baldev Krishna Sahi v. Shipping Corpn. of India [1987] 4 SCC 361, wherein the Supreme Court considered the scope and effect of sub-section (1) of section 630. Supreme Court had taken into consideration the judgment of Calcutta High Court in Amritlal Chum v. Devi Ranjan Jha [1987] 61 Comp. Cas. 211, wherein it was held that words ‘any such property’ in clause (b) of section 630(1) relate to property specified in clause (a), viz., property of a company wrongfully taken possession of by a present officer or employee of the company. Supreme Court also took into consideration the view of the Bombay High Court in this regard :

‘8. Section 630 of the Act which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draughtsman of the Act. The section is in two parts. Sub-section (1) by clauses (a) and (b) creates two distinct and separate offences. First of these is the one contemplated by clause (a), namely, where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment, to which he is not entitled. Normally, it is only the present officers and employees who can secure possession of any property of a company. It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property. This is the function of clause (a) and although it primarily refers to the existing officers and employees, it may also take in past officer and employees. In contrast, clause (b) contemplates a case where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment. That appears to be one of the functions of clause (b). It would be noticed that clause (b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. That would primarily apply to the present officers and employees and may also include past officers and employees. There is, therefore, no warrant to give a restrictive meaning to the term “officer or employee” appearing in sub-section (1) of section 630. It is quite evident that clauses (a) and (b) are separated by the word ‘or’ and, therefore, are clearly disjunctive.

9. The High Court of Calcutta in Amritlal Chum’s case (supra) obviously fell into an error in seeking to curtail the ambit of section 630(1)(b) by giving a restrictive meaning to the term ‘officer or employee’ which must take its colour from the context in which it appears. The whole object of enacting sub-section (1) of section 630 is the preservation of the property of a company by the creation of two distinct offences by clauses (a) and (b) which arise under different sets of circumstances, and it would be rendered nugatory by projecting clause (a) into clause (b). There is also no warrant for the construction placed by the High Court of Calcutta on the words “any such property” occurring in clause (b) as applicable to such property of a company, possession of which is wrongfully obtained by an officer or employee of the company, i.e., refers to the whole of clause (b). According to plain construction, the words “any such property” in clause (b) relates to any property of a company as mentioned in clause (a).’

Ultimately, the petition filed by the employee before the Supreme Court was dismissed and he was given one month’s time. Similar view is taken by Supreme Court in Smt. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. [1995] 4 SCL 167 and observed as under :

‘Section 630 of the Act, which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draughtsman of the Act. The section is in two parts. Sub-section (1) by clauses (a) and (b) creates two distinct and separate offences. First of these is the one contemplated by clause (a), namely, where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment, to which he is not entitled. Normally, it is only the present officers and employees who can secure possession of any property of a company. It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property. This is the function of clause (a) and although it primarily refers to the existing officers and employees, it may also take in past officers and employees. In contrast, clause (b) contemplates a case where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment. That appears to be one of the functions of clause (b). It would be noticed that clause (b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. That would primarily apply to the present officers and employees and may also include past officers and employees. There is, therefore, no warrant to give a restrictive meaning to the term ‘officer or employee’ appearing in sub-section (1) of section 630 of the Act. It is quite evident that clauses (a) and (b) are separated by the word ‘or’ and, therefore, are clearly disjunctive.’ [emphasis supplied] [p. 171]

Number of other judgments were cited by the petitioners in support of the aforesaid contentions but in my opinion the aforesaid two judgments of the Supreme Court are sufficient to meet the arguments of Mr. Samant and, therefore, for these reasons it cannot be accepted that clause (b) of section 630(1) is qualified by clause (a) of section 630(1). Both are different and distinct offences and, therefore, it is not necessary for the respondents to come up with a case that the petitioners before this court have obtained wrongful possession of the property. They can succeed if they show that even if the property so obtained wrongfully in the beginning by virtue of employment by the petitioners or their ancestors they subsequently refused to deliver possession whereof when demanded by giving notice to them on behalf of the company.

12. The next contention of Mr. Samant was that there was no breach of agreement by the petitioners at any time because they were in employment continuously right from the beginning and their services were not terminated by the company at any time, therefore, the company does not get any right to get back the possession of the premises. So far as agreement between the company and the petitioners is concerned, the same was not referred to by Mr. Samant during his arguments and it was not shown that company had ever agreed that they will not claim the possession from the employee till his services are terminated and, therefore, that aspect cannot be considered neither such a point appears to have been raised before the trial court as well as in the appellate court. Continuation of employment does not give a right to the employee to retain possession unless there is a contract to that effect between the parties. Admittedly, the property belongs to the company. It was given to the employees because they were in service. Mill is closed long back and, therefore, the company/mill served a notice upon the petitioners claiming back the possession and, therefore, in that context it was obligatory upon the petitioners to deliver back the possession. Refusal to deliver back possession to the company of the premises by the applicants amount to wrongfully withholding of the property of the company.

13. In this regard it was argued by Mr. Samant that company can take back property from the employees only for the purpose of giving the same to other employees who were waiting in queue for getting the residential accommodation. He contended that since the company has closed down, i.e., mill has closed down, there are no employees in waiting and, therefore, there is no question of company taking the premises from the petitioners and giving it to their employees and consequently the company cannot get back the possession. I do not find any reason to accept this submission, firstly, there is no agreement between the parties to that effect that company has a right to get back possession of the property will depend only upon the company agreeing to give premises to its other employees, and secondly section 630 of the Act does not give such a right to the employee nor there is any provision in the Companies Act which gives an employee a right to retain the property on the above pretext.

14. Counsel for the petitioners Mr. Samant also relied upon the same judgment of Supreme Court in Smt. Abhilash Vinodkumar Jain’s case (supra), and particularly following observations of the Supreme Court in support of his contention :

“.....If an employee or a past employee or anyone claiming the right of occupancy under them were to continue to ‘hold’ the property belonging to the company, after the right to be in occupation has ceased for one reason or the other, it would not only create difficulties for the company, which shall not be able to allot that property to its other employees, but would also cause hardship for the employee awaiting allotment and defeat the intention of the Legislature.....” (p. 176)

From the aforesaid observation, Mr. Samant tried to contend that unless the company is required to allot the residential premises to its other employees, it cannot claim back possession of the company’s property from the applicants. With respect, I am unable to agree with Mr. Samant. Repeatedly in the aforesaid judgment the Supreme Court has said that broader, liberal and purposeful construction of section 630 has to be made for furtherance of the object and purpose of the legislation and construe it in a wider sense to effectuate the intendment of the provision. The judgment has to be taken as a whole and, therefore, the contention of Mr. Samant has to be rejected.

15. Mr. Samant then made submissions on the policy of the Maharashtra Government to grant protection to the occupants because of different directions and resolutions of the Government to that effect. In support of his contention he relied upon some proceedings in Legislative Assembly and the statement made by the Government in this regard. Another star question in the Assembly and the decision of the Government in this regard, and letter from the Co-operation and text Department of Mantralaya dated 19th December, 2001 and Exhibit ‘B’ to Revision Applications which is another letter from Industry, Power and Labour Department of the Mantralaya dated 7th February, 2001 and a Gazette Notification of the Urban Development Department dated 20th March, 2001. All these submissions were made by Mr. Samant before the trial court as well as before the appellate court but they were rejected. Taking one by one the star question in Vidhan Sabha by Shri Gangadhar Patle, a member of the Vidhan Parishad and the statement made by the Government in this regard, and the star question of Jayant Patil and the statement of the Chief Minister in that regard can at the most be said to be intention of the Government, firstly to form a committee and a sub-committee and policy decision of the Government to protect interest of the labourers. These all are of recommendatory nature and that too the Government has stated that if the owner of a cotton mill wants to develop or redevelop the land then only they can be asked to reserve 225 sq. ft. of carpet area for the occupants in the chawl of the mill. The letter dated 19th December, 2001 is addressed to Police by Chief Secretary of the Government of Maharashtra wherein the Chief Secretary has informed the Police Officer that occupants of the chawl of the mills could not be evicted and if any such action is taken, police should not help the owners of the mill. Another letter of Co-operation and Textile Department dated 10th January, 2001 is also issued by Principal Secretary to the Government of Maharashtra and is addressed to General Managers of Mukesh Textile Mill, Century Mill Textile India Ltd., The Bombay Dying (Spring Mill) Mfg. Co. Ltd. and Modern Textile Mill Ltd., it refers to the meeting of the delegation of Girni Kamgar with Chief Minister on 15th December, 2001 and the intention of the Government that protection should be given to those occupants and they should not be evicted. There is some reference to modify the D C Regulation 58 as per which management is bound to give alternate accommodation to the tenants residing in chawl when the development of the land occupied by chawl is to be carried out by the mills.

16. As against this it was contended by counsel for the respondents that there is nothing on record to show that the petitioners-complainants wants to develop the land of the mill. Secondly, according to him the recommendations of the Government or the committee formed by the Government as stated above cannot have the force of law. Thirdly, he contended that it does not in any way take away the right conferred upon the companies under the Act by virtue of section 630 and, therefore, firstly there is no statutory right upon the petitioners-accused to continue to occupy the premises and secondly they cannot get any protection. It is an admitted fact that there is nothing on record to suggest that respondents company is going to develop the land or redevelop it and secondly rights conferred by the Act under section 630 upon the companies are not taken away by any of those circulars, etc., relied upon by Mr. Samant. Therefore, this aspect also cannot be considered in favour of the petitioners-accused. For all these reasons, I pass the following order :

Order

All the criminal revision applications are dismissed. Rule discharged in all the revisions. Orders of the trial court dated 24th August, 2000 and 7th April, 2001 and that of the appellate court dated 27th September, 2001 are confirmed.

Four weeks time granted to the petitioners-accused to pay fine and vacate the premises on humanitarian grounds.

Parties to act on an ordinary copy of this order duly authenticated by the Sheristedar of this court.

Criminal revision applications dismissed.

[2002] 37 scl 817 (mad.)

HIGH COURT OF MADRAS

G. Rangaswamy

Coimbatore Pioneer Mills

R. Balasubramanian, J.

Crl. R.C. No. 1087 of 2001

And Crl. M.P. No. 5815 of 2001

April 12, 2002

Section 630 of the Companies Act, 1956 - Penalty - For wrongful withholding of property - Whether when a dispute between two parties facing each other under section 630 is of a civil nature, then resorting to section 630 would be a misconceived one - Held, yes - Petitioner and one ‘G’, being managing-directors of respondent-company and C Ltd., signed a memorandum of understanding (MOU) providing for division of assets between the two - Petitioner was to retain control over C Ltd. and ‘G’ over respondent-company - Similarly other assets were also divided - Pursuant to terms of said MOU, some properties belonging to respondent-company came under possession of petitioner - Respondent-company filed a complaint under section 630 against petitioner in respect of such properties - Magistrate held against petitioner - In instant revision petition against said order, petitioner asserted that MOU had been implemented and as such it could not be said that he was wrongfully withholding properties - Respondent contended that neither it, nor C Ltd. were party to said MOU and as such same was not binding - Whether, though strictly speaking, the accused, as the Managing Director of the complainant-company, might be an employee, yet in view of the nature of dispute and thick relationship between the parties to the proceedings, such strict construction of employer-employee relationship need not be imported into the case - Held, yes - Whether, if the accused was simplicitor an employee, then different consideration would arise - Held, yes - Whether complicated questions of law and facts arose out of said dispute which could effectively be gone into only by a civil court - Held, yes - Whether, therefore, impugned order of Magistrate was legally unsustainable and was to be set aside - Held, yes

Facts

The petitioner and one ‘G’ were the managing directors of the respondent-company and another company C Ltd. as well. A memorandum of understanding (MOU) was entered into and signed by the petitioner and G. As per the terms of the MOU, the petitioner was to resign as the managing director of the respondent and G was to resign as the managing director of C Ltd. Further ‘P System, a division of the respondent, along with its assets and staff was to be given to the petitioner. Similarly, ‘P House’, belonging to the respondent-company, was agreed to be given to the petitioner and ‘C House’ belonging to C Ltd. was to be given to G. However, it was agreed that till the formalities regarding transfer of two houses were completed, ‘P House’, along with its movables, would be the tenanted property the petitioner’s wife and ‘C House’ would remain tenanted residence of G’s wife. Later on, the respondent-company filed a complaint under section 630 alleging that the petitioner was wrongfully holding some equipments, a car and a generator belonging to it. The Judicial Magistrate held against the petitioner and the order was confirmed by the Sessions Court. In the instant revision petition against the impugned order, the petitioner submitted that the equipments in question were the assets of ‘P System’ which had been given to him. It was also submitted that the car-in-question belonged to ‘P System’ and the generator was installed at ‘P House’ and thereby the petitioner was entitled to use the same, it being a movable property attached to ‘P House’. On the other hand, the respondent claimed that the car did not belong to ‘P System’. It was further contended that the said MOU could not be considered a binding agreement since it was neither signed by the respondent-company nor by C Ltd.

Held

There are two limbs of section 630. Under the first limb, if a person wrongfully obtains possession of any property of a company, then he, on the happening of the event mentioned therein, is liable to punishment. Under the second limb, if a person having the property of a company in his possession wrongfully withholds it, then he is also liable to be punished.

As regards the memorandum of understanding, the magistrate exercising powers under the Code of Criminal Procedure would have no jurisdiction at all to decide the issue, namely, one (the accused) asserting that this agreement had been implemented and the other (complainant) asserting contra that this was not a binding agreement. Such nature of dispute would come within the jurisdiction of the civil court only, which can effectively go into the issue and arrive at a conclusion one way or the other on construing the document; other documents, if any, placed and the oral evidence, if any, placed. Therefore, prima facie the Magistrate had no jurisdiction at all to go behind the terms of the agreement especially when there was no dispute about the parties to the agreement and the signatories to the same. It was not anybody’s case that said document was a fabricated document. Admittedly the generator was found installed in “P House” of which the wife of the accused was the tenant. When “P House” was the subject-matter of the tenancy in favour of the wife of the accused, then all things attached to that bungalow would also form part and parcel of the tenancy in favour of the said tenant. In such circumstances, it would not be legally right to contend that despite such tenancy in favour of the wife of the accused, the accused was wrongfully holding the generator contrary to the interest of the company itself. To put it clearly, so long as the tenancy of the wife of the accused continued in respect of “P House”, all things attached to that bungalow would also form part and parcel of the tenancy and to remove the generator from that bungalow, to be handed over to the complainant, would amount to interfering with the terms and conditions of the tenancy on the basis of which the wife of the accused was in occupation of the same. Under these circumstances, it could not be said, by any stretch of imagination, that the accused was wrongfully withholding the generator. It was not the case of the complainant at any stage that the accused had stealthily removed the said generator from the control of the complainant and installed the same in the “P House”.

The question as to whether the Contessa car was the property of the respondent or ‘P’ Systems involved larger complicated questions of law and fact arising on the construction of MOU, especially when at least a part of the same had been performed. The resignation of the accused as the managing director of the respondent-company was not due to any other cause but it was the end product of the MOU arrived at between G and the petitioner. It was possible to visualise that if the MOU was not there, whether the accused would have resigned his post as the managing director of the company on his own.

G was a party to the MOU. He could not be allowed to play hot and cold on principles of equity. No reason whatsoever had been given by him in the complaint that the said agreement was not binding on him. Probably it might be open to the other shareholders of the respondent to go before the criminal court either under section 630 to get the properties of the company to its custody or go before the civil court for a declaration that the MOU was not binding on the company on stated grounds known to law. But, however, none of them moved even their little finger in attacking the MOU. It appeared that the Chairman-cum-Managing Director, i.e., G and his family owned major share in the respondent-company. If that was the position, then the instant complaint initiated by G in his capacity as the Chairman-cum-Managing Director of the respondent-company did not appear to be a bona fide complaint. When bona fides was found wanting and when the dispute between the parties partook the character of a civil nature, in which complicated questions of law and facts arose, there could not be any doubt that the matter should definitely go out of the jurisdiction of the criminal court and the parties should be allowed to protect their rights in the civil forum. When a dispute between the two parties facing each other under section 630 is of a civil nature, then resorting to section 630 would be a misconceived one.

Simply because a person facing a complaint under 630 raises a hue and cry that the dispute is of a civil Nature, the Magistrate would not automatically divest himself of his jurisdiction. The question whether a dispute is bona fide or not depends upon the facts of each case and once the dispute is found to be bona fide, then the only remedy available is before the civil forum.

Though, strictly speaking, the accused, as the managing director of the complainant company, may be an ‘employee’, yet in view of the nature of dispute and thick relationship between the parties to the proceedings, such strict construction of employer-employee relationship need not be imported into the case. If the accused was simplicitor an employee, then different consideration would arise. The Chairman-cum-Managing Director of the complainant company and the accused were signatories to the MOU. The Chairman-cum-Managing Director of the complainant company by holding substantial shares in that company was actually controlling the said company. Therefore, what would be the legal consequence of the Chairman-cum-Managing Director entering into an agreement with the accused without making his company itself a party to the said agreement, was a matter which could not be decided light-heartedly and in a summary manner. This was all the more so, when the parties to the said agreement had performed some of the reciprocal obligations imposed on them under the said agreement. Therefore, there could not be any doubt at all that there existed a bona fide dispute of a civil nature. Therefore, the order under challenge could not be legally sustained and was, accordingly, set aside.

Cases referred to

Damodar Das Jain v. Krishna Charan Chakraborti [1990] 67 Comp. Cas. 564 (SC). and Atul Mathur v. Atul Kalra [1990] 68 Comp. Cas. 324 (SC).

T.R. Raja gopalan for the Petitioner. V. Gopinath for the Respondent.

Order

1. The revision petitioner has suffered an order under section 630 of the Companies Act, [1956] (‘the Act’) in S.T.C. No. 594 of 1995 on the file of the learned Judicial Magistrate No. 6, Coimbatore, which was affirmed in C.A. No. 96 of 1996 on the file of the Principal Sessions Judge, Coimbatore. That order came to be passed on a complaint filed under section 630 by the respondent herein. Heard Mr. T.R. Rajagopalan, the learned senior counsel appearing for the revision petitioner and Mr. V. Gopinath, the learned senior counsel appearing for the respondent.

2. The following are the five items mentioned in the said complaint, which according to the complainant, the accused was wrongfully holding :

(1) FUGI Automatic Gas Analyser

(2) Compaq Note Book Computer Sl. No. 7326HG 54819

(3) Ortem Computer LX 05 PC with built-in-software Sl. No. A03135

(4) Hindustan Contessa car bearing Regn. No. PY 01B 7155 with tools and Registration Certificate

(5) Diesel Generator of 62.5 KVA Kirloskar make with Alternator and Standard Panel Board, & Fuel Tank with accessories.

There is no dispute that these five items of properties described in the schedule to the plaint belong to the company called “Coimbatore Pioneer Mills Ltd.” which is a public limited company. It is also not in dispute that the revision petitioner was one of the two managing directors of that company and he ceased to be the managing director with effect from 1-10-1994. The complainant company is represented by the Chairman-cum-Managing Director of the said Coimbatore Pioneer Mills Ltd. The defence to the claim was that the accused neither wrongfully obtained possession of the property of the complainant company nor is he wrongfully withholding any property of the company. In sustaining this defence, the accused projected primarily two documents namely, Exs. D.1 and D.2. The Chairman-cum-Managing Director of the complainant company examined himself as P.W. 1, besides marking Exs. P.1 to P.10 on his side. The accused examined himself as D.W.1 and examined another witness on his side as D.W. 2. Exs. D. 1 and D. 2 had come to be marked on his side. Among the documents filed on behalf of both the sides before the court below, in my considered opinion, three documents alone need be looked into at this stage, besides the oral evidence, to decide whether the order under challenge could be sustained or not. They are :

Ex. P. 9 dated 29-9-1994

Ex. D. 1 dated 12-7-1994, and

Ex. D. 2 dated 15-3-1995

Ex. P. 9 is an agreement entered into between Coimbatore Pioneer Mills Ltd. represented by its Managing Director and Chandra Textiles Ltd., a company registered under the Companies Act, represented by its Managing Director. Ex. D.1 is the Memorandum of Understanding signed by one Devarajan on the one hand and Rangaswamy on the other hand. Ex. D. 2 is the proceedings of an arbitrator.

3. Mr. T.R. Rajagopalan, the learned senior counsel submitted that on the basis of these three documents, there is definitely a bona fide dispute of a civil nature between the parties concerned and when one such dispute is shown to exist, then the Magistrate would have no jurisdiction at all to decide the righteousness in the same. In other words, according to the learned senior counsel, once a bona fide dispute of a civil nature is shown to exist between the parties, then the civil court would be the most appropriate forum and no remedy is available under section 630 Mr. V. Gopinath, the learned senior counsel opposing the above arguments would contend that Ex. D. 1 is not binding on the parties to the complaint, because the company namely, Coimbatore Pioneer Mills Ltd. and Chandra Textiles Ltd. are not parties to it. According to the learned senior counsel, if a company is to be bound by any action of it with reference to its property, then the company must be represented in those proceedings. Inasmuch as the company is not a party to Ex. D.1, the learned senior counsel would contend that Ex. D.1 cannot be pressed into service at all to defeat the very object of section 630. As far as Ex. D. 2 is concerned, it is the contention of the learned senior counsel for the complainant that inasmuch as the said document had not reached its finality by both parties affixing their signature of acceptance, it cannot be admitted in evidence as a bindings document between the parties to it.

4. Having regard to the arguments advanced by the learned senior counsel on either side and in the context of Exs. P. 9, D.1 and D. 2, I applied my mind to the controversy at issue. There are two limbs of section 630. Under the first limb, if a person wrongfully obtains possession of any property of a company, then he, on the happening of the event mentioned therein, is liable to punishment. Under the second limb, if a person having the property of a company in his possession wrongfully withholds it, then he is also liable to be punished. On the admitted nature of the properties forming the subject-matter of the complaint namely, they belong to Coimbatore Pioneer Mills Ltd., the question that comes up for considera-tion is whether the possession of those properties by the accused would amount to the wrongfully holding it? To appreciate this controversy, in my opinion, a reference to Exs. D. 1, D. 2 and P. 9 alone would be more than sufficient, besides looking into the oral evidence. It is no doubt true that to Ex. D.1 neither Coimbatore Pioneer Mills Ltd. by name nor Chandra Mills Ltd. by name is a party. But, however, the document is signed by G. Devarajan, who happens to be the Chairman-cum-Managing Director of the Coimbatore Pioneer Mills Ltd. and G. Rangasamy, who is the Managing Director of Chandra Textiles Ltd. This memorandum of understanding is dated 12-7-1994. It contains as many as 17 effective clauses regarding the management of various companies under the control of Coimbatore Pioneer Mills Ltd. as well as under the control of Chandra Textiles Ltd. It also contemplates distribution of assets of both the companies in a particular manner. It is not in dispute that at least some of the clauses contained in this memorandum of understanding, had been performed in full and the remaining are yet to be performed. According to Mr. T.R. Rajagopalan, the learned senior counsel, most of the clauses have been performed while Mr. V. Gopinath, the learned senior counsel would contend that only a portion of it had been performed. Whatever it is, whether most of the clauses are performed or some of the clauses alone are performed, leads one to an irresistible conclusion that this agreement was intended to be acted and it was in fact acted upon. P.W. 1 in his evidence in cross admitted that he and his younger brother (accused) divided their respective rights in Pioneer Mills and Chandra Textiles and it was on 12-7-1994. (Ex. D.1 is dated 12-7-1994). His evidence in cross shows the following : (Translation by me)

“It was agreed that ‘Pioneer House’ should go to my brother and ‘Chandra Bungalow’ to me; pursuant to that, I am living in “Chandra Bungalow” and my brother is living in ‘Pioneer House’, as per the understanding on 12-7-1994, each one of us can continue to live in the respective house with the articles (movable) available thereon; till the exchange takes place, it was agreed that the wife of the accused would be the tenant of ‘Pioneer House’ and my wife would be the tenant of ‘Chandra Bungalow’; as per the terms of Ex. D. 1, the accused resigned as the managing director of Pioneer Mills, which came into force with effect from 1-10-1994; as per Ex. D.1, I and my family members have relinquished our rights in Sri Ranga Vilas Ginning & Oil Mills; as per Ex. D.1, I have given Pioneer Power Systems to my younger brother (accused); as per clause 17 of Ex. D. 1 only, my younger brother had removed the articles found therein as well as taken the workers; items 1, 2 and 3 of the complaint belong to Pioneer Power Systems; the endorsement at the foot of decision on Point No. 6 in Ex. D.2 is made by me.”

Under such circumstances, what would be the binding nature of this agreement on the respective companies would not be within the jurisdiction of the criminal court for its decision. In other words, in my consi-dered opinion, the Magistrate exercising powers under the Code of Criminal Procedure would have no jurisdiction at all to decide the issue namely, one (the accused) asserting that this agreement had been implemented and the other (complainant) asserting contra that this is not a binding agreement. In my opinion such nature of dispute would come within the jurisdiction of the civil court only, which can effectively go into this issue and arrive at a conclusion one way or the other or construing the document; other documents, if any, placed and the oral evidence, if any, placed. Therefore, prima facie I am of the firm opinion that the Magistrate has no jurisdiction at all to go behind the terms of this agreement marked as Ex. D.1, especially when there is no dispute about the parties to the agreement and the signatories to the same. It is no anybody’s case that Ex. D.1 is a fabricated document. It is also not in dispute that properties described as Item Nos. 4 and 5 in the plaint are not dealt with under Ex. D.1.

5. The relevant clauses in Ex. D. 1 to decide the nature of dispute between the parties are as follows :

(1) Clause 10 of the Memorandum of Understanding reads as follows:

“At present Mr. G. Devarajan is living in ‘Chandra’ bungalow, belonging to Chandra Textiles Ltd. and Mr. G. Rangaswamy is living in ‘Pioneer House’, belonging to the Coimbatore Pioneer Mills Ltd. These two bungalows will be exchanged between the two companies, so that there is no loss to either of the two companies, while doing the exchange, the office building of Chandra Textiles which is in ‘Chandra’ bungalow will be fenced off with access from main Avanashi Road. The well in Pioneer House will continue to be used by the Coimbatore Pioneer Mills Ltd., drawing water for its requirement and in reciprocation, the electricity charge of Pioneer House will be paid by Coimbatore Pioneer Mills Ltd.

The exchange of property is subject to the compliance of the Urban Land Ceiling and other enactments by both companies. If there should be any problem even for one company under the Urban Land Ceiling, the existing arrangement will continue without any change which means Smt. R. Nandini will continue to pay rent for ‘Pioneer House’ as a tenant and Smt. D. Suguna will continue to pay rent for ‘Chandra’ as a tenant and there will be no disturbance to any of the existing arrangements. Once the urban ceiling law is amended, which is expected the exchange will be put through immediately.”

Clause 17 of the Memorandum of Understanding reads as follows :

“Pioneer Power Systems, the automobile division of the Coimbatore Pioneer Mills Ltd. has some minor equipments of small value. It is functioning in the premises of the Coimbatore Pioneer Mills Ltd. at Peelamedu with a few staff. This division along with the equipment and the staff will be shifted out either to Chandra Textiles Ltd. or Sri Rangavilas Ginning and Oil Mills as decided by Mr. G. Rangasamy. This will cease to be a division of the Coimbatore Pioneer Mills Ltd.”

The properties described as items 1 to 3 at the foot of the complaint admittedly belong to Pioneer Power Systems. Clause 17 extracted above deals with the dealing of these three properties. This clause gives a right to the accused to take this property to two places of his choice. The accused had taken the properties mentioned therein only to one of the two places mentioned therein. In other words, under clause 17, Coimbatore Pioneer Mills Ltd. which owns Pioneer Power Systems and its assets, prima facie appears to have divested their interest in respect of that property, which prima facie resulted in the transfer of interest in the same in favour of the accused.

6. There are two bungalows, one called a ‘Pioneer House’ and the other called ‘Chandra Bungalow’. ‘Pioneer House’ originally belonged to Coimbatore Pioneer Mills Ltd. and ‘Chandra Bungalow’ belonged to Chandra Textiles Ltd. But however, in ‘Chandra Bungalow’ Mrs. Suguna, wife of the Chairman-cum-Managing Director of Coimbatore Pioneer Mills Ltd. was living while in ‘Pioneer House’ Mrs. R. Nandini, wife of the accused herein was living. Till the final exchange takes place in accordance with law, ‘Pioneer House’ would be the tenanted residence of Mrs. Nandini, wife of the accused and ‘Chandra Bungalow’ would be the tenanted premises of Mrs. Suguna, wife of Shri G. Devarajan. The sum and substance of the agreement between the parties as reflected in the memorandum of understanding is that, the accused stage by stage completely would divest his interest and the interest of his family members in Coimbatore Pioneer Mills retaining only the minimum share which requires to keep him on the board of that company and likewise stage by stage the Chairman-cum-Managing Director of Coimbatore Pioneer Mills would divest himself of his interest and the interest of his family members in Chandra Textiles except retaining the minimum share which is required in law to keep him on the Board. G. Devarajan and his family members will also have to retire from the partnership of Shri Ranga Vilas Ginning & Oil Mills and it is not in dispute that this event had taken place. The clear understanding therefore, was, the Chairman-cum-Managing Director of Coimbatore Pioneer Mills and his family should have no control over the affairs of Chandra Textiles and Sri Ranga Vilas Ginning & Oil Mills and likewise the accused and his family members should have no control over the affairs of the other.

7. Item No. 5 forming the subject-matter of the complaint is the generator. Admittedly this is found installed in ‘Pioneer House’ of which the wife of the accused is the tenant. Property No. 4 forming the subject-matter of the complaint is the Contessa Car. In my opinion when ‘Pioneer House’ is the subject-matter of the tenancy in favour of the wife of the accused, then all things attached to that bungalow would also form part and parcel of the tenancy in favour of the said tenant. In such circumstances, it would not be legally right to contend that despite such tenancy in favour of the wife of the accused, the accused is wrongfully holding the generator namely, the property of Coimbatore Pioneer Mills Ltd. contrary to the interest of the company itself. To put it clearly, I state that so long as the tenancy of the wife of the accused continues in respect of ‘Pioneer House’ all things attached to that bungalow would also form part and parcel of the tenancy and to remove the generator from that bungalow, to be handed over to the complainant, would amount to interfering with the terms and conditions of the tenancy on the basis of which the wife of the accused is in occupation of the same. Under these circumstances, it cannot be said, by any stretch of imagination, that the accused is wrongfully withholding the generator. It is not the case of the complainant at any stage that the accused had stealthily removed the said generator from the control of Coimbatore Pioneer Mills Ltd. and installed the same in the ‘Pioneer House’. It is true that the purchase invoice for this generator stands in the name of Coimbatore Pioneer Mills Limited. It is not in dispute that the generator was installed in ‘Pioneer House’ even on 14-7-1994. Therefore it is clear that the installation of generator in ‘Pioneer House’ preceded the tenancy agreement dated 3-10-1994, i.e., Ex. P.9. If really the generator does not form part and parcel of the tenancy, then nothing prevented the respective companies, when they entered into an agreement of tenancy dated 3-10-1994, to exclude the generator from the terms of the tenancy given to Mrs. Nandini, wife of the accused. In my opinion, the failure to exclude the generator from part and parcel of the tenancy in respect of ‘Pioneer House’ would make it very clear that the intention of the parties was that the generator should continue to form part and parcel of the tenancy.

8. As far as the car mentioned as Item No. 4 at the foot of the complaint is concerned, there is some reference to it in Ex. D.2. But as contended by Mr. V. Gopinath, the learned senior counsel, it is true that Ex. D.2 had not seen the light of the day. But, however, I am referring to the terms of Ex. D.2, only to find out whether the possession of the car by the accused is wrongful or it is in bona fide exercise of his rights. When the parties to the complaint were at logger heads, the memorandum of understanding was brought into existence. Clause 20 of the Memorandum of Understanding contains the following :

“If there are any areas of difference, both parties agree to refer the same to Mr. K. Rajagopal by whose advise they agree to abide.”

Ex. D. 2 is the proceedings of K. Rajagopal, the named arbitrator. He had framed several points for consideration; both the Chairman-cum-Managing Director, Coimbatore Pioneer Mills Ltd. and the accused were body and soul before him and they expressed their views. It is relevant at this stage to note down only point No. 6 raised before the arbitrator and his decision, which are as follows :

Point-6:

“Mr. G. Rangaswamy wants the transfer documents of the Contessa Car purchased in Pondicherry to be executed by Pioneer Mills.

Decision:

This point was agreed upon at the time of partition. So Pioneer Mills represented by either Mr. G. Devarajan, or Mr. D. Rajkumar should sign all documents such as transfer deed, transfer of insurance, etc. and hand over the same to Sri. G. Rangaswamy.”

At the foot of this decision, the following is found written :

“Car with all other things WDV (The abbreviation is written down value) + 10 per cent.”

P.W. 1, the complainant in his oral evidence admits that the above referred to written material is in his hand writing. Though the arbitrator could not give a binding verdict at the end of his proceedings for so many reasons, yet it is apparent from point No. 6 referred to above that the right to own the car was also in the mind of the parties when they entered into the memorandum of understanding dated 12-7-1994. The contention of Mr. T.R. Rajagopalan, the learned senior counsel is that, this car, though purchased in the name of Coimbatore Pioneer Mills Ltd., yet was treated as the property of Pioneer Power Systems and under clause 17 of the memorandum of understanding the assets of Pioneer Power Systems were transferred in favour of the accused, which included the car also. But, however, Mr. V. Gopinath the learned senior counsel would oppose this argument by stating that this car was never the property of Pioneer Power Systems but it always belonged to Coimbatore Pioneer Mills Ltd. The learned senior counsel also submitted that the accused in his capacity as the Managing Director of the said company alone was allowed to use the car. Whether the Contessa Car is the property of Pioneer Mills or Pioneer Power Systems covered under clause 17 of Ex. D.1 and whether the decision of Point No. 6 as reflected in Ex.D.2, though there appears to be no binding decision, involves larger complicated questions of law and fact arising on the construction of Ex.D.1/Memorandum of Understanding, especially when at least a part of the same had been performed. Resignation of the accused as the Managing Director of Coimbatore Pioneer Mills Ltd. was not due to any other cause but it was the end product of the Memorandum of Understanding arrived at between G. Devarajan and G. Rangaswamy and marked as Ex.D.1. It is possible to visualise that if the Memorandum of Understanding was not there, whether the accused would have resigned his post as the Managing Director of the company on his own and, to remove a person from the office of the Managing Director, if he is not a willing party, then it has to be done only by the General Body of the said company.

9. One other thing which can be taken into account at this stage to say whether the dispute is of a civil nature or not is the following :

G. Devarajan is a party to Ex.D.1. He cannot be allowed to play hot and cold on principles of equity. No reason whatsoever has been given by him in the complaint that the said agreement is not binding on him. Probably it may be open to the other shareholders of Coimbatore Pioneer Mills Ltd. to go before the criminal court either under section 630 to get the properties of the company to its custody or go before the civil court for a declaration that the Memorandum of Understanding is not binding on the company on stated grounds known to law. But however none of them have moved even their little finger in attacking this Memorandum of understanding. It appears that the Chairman-cum-Managing Director and his family own a major share in Coimbatore Pioneer Mills Ltd. If that is the position, then I have a lingering doubt in my mind that the present complaint initiated by G. Devarajan in his capacity as the Chairman-cum-Managing Director of Coimbatore Pioneer Mills Ltd. does not appear to be a bona fide complaint. When bona fides is found wanting and when the dispute between the parties partakes the character of a civil nature, in which complicated questions of law and facts arise, there cannot be any doubt that this matter should definitely go out of the jurisdiction of the criminal court and the parties should be allowed to protect their rights in the civil forum. It is not as though, law is not clear on this point and at least there are two judgments to that effect. The first judgment is (Damodar Das Jain v. Krishna Charan Chakraborti [1990] 67 Comp. Cas. 564). The facts available in this case are as follows :

“The company had taken a flat on lease; the employee was given the said flat for residing there while he was in employment of the company; after termination of service, the employee refused to vacate; hence the complaint under section 630 of the Companies Act; two questions came up for consideration namely, ‘whether the company could be said to be a tenant of the said flat as contemplated under the Bombay Rent, Hotels and Lodging House Rates (Control) Act, 1947 and whether after the written agreement of licence in favour of the company has expired, could it be said that the company was a licensee of the said flat?’ The court took the view that both these questions were complicated questions of civil law and that hence the Magistrate’s court has no jurisdiction to decide the same and the High Court felt that the disputes raised by the employee were bona fide disputes.”

On the above noted facts, the Apex Court held that the question of implied licence in favour of the company is a question which requires to be determined by a civil court and cannot be determined by a Magistrate’s court in a proceeding under section 630. The above referred to case was quoted with approval by the Apex Court in the latter judgment Atul Mathur v. Atul Kalra [1990] 68 Comp. Cas. p. 324. The facts in that case are as follows :

“The company secured a flat in Bombay on leave and licence basis; the agreement was entered into on behalf of the company by the employee of the company; the employee was allowed to occupy it as an employee of the company; the employee filed a suit for declaration that he is the licensee of the flat and for consequential injunction not to interfere with his possession of the flat; after filing the suit the employee resigned; as the employee failed to vacate, the company filed a complaint against him under section 630 of the Companies Act; the trial court found the employee guilty; the appeal filed by the employee was also dismissed; three contentions were raised before the High Court; the relevant contention is contention No. 3 as extracted hereunder :

Since complicated questions of title were involved, the Additional Chief Metropolitan Magistrate had no jurisdiction or competence to adjudicate the matter in summary proceedings under section 630 of the Companies Act.”

On the above referred to contention, the High Court, following the law laid down in Damodar Das Jain’s case (supra) set aside the order of the courts below holding that there exists a bona fide dispute regarding the company’s claim for possession of the flat. The aggrieved company filed a special leave petition before the Apex Court. After considering elaborately the rival contentions advanced, the Hon’ble Judges of the Supreme Court had held as follows :

“Therefore, what has to be seen in a complaint under section 630 is whether there is ‘no dispute or no bona fide dispute’ regarding a property claimed by the company between the company and its employee or ex-employee. It is needless to say that every dispute would not become a bona fide dispute merely because the company’s claim to possession is refuted by an employee or ex-employee of the company. As to when a dispute would amount to a bona fide dispute would depend upon the facts of each case.”

Ultimately the judgment of the High Court was reversed. A reading of this judgment definitely shows that when a dispute between the two parties facing each other under section 630 is of a civil nature, then resorting to section 630 would be a misconceived one. A reading of this judgment also shows that simply because a person facing a complaint under section 630 raises a hue and cry that the dispute is of a civil nature, the Magistrate would not automatically divest himself of his jurisdiction. The question whether a dispute is bona fide or not depends upon the facts of each case and once the dispute is found to be bona fide, then the only remedy available is before the civil forum.

10. Though strictly speaking, the accused, as the Managing Director of the complainant company may be an ‘employee’, yet in view of the nature of dispute and thick relationship between the parties to the proceedings, I am of the firm opinion that such strict construction of employer - employee relationship need not be imported into this case. If the accused is simplicitor an employee, then different consideration would arise. The Chairman-cum-Managing Director of the complainant company and the accused are signatories to Ex.D.1. I have already found that the Chairman-cum-Managing Director of the complainant company by holding substantial shares in that company is actually controlling the said company. Therefore, what would be the legal consequence of the Chairman-cum-Managing Director entering into an agreement with the accused (Ex.D.1) without making his company itself a party to the said agreement, is a matter which cannot be decided light heartedly and in a summary manner. This is all the more so, when the parties to the said agreement have performed some of the reciprocal obligations imposed on them under the said agreement. Therefore, there cannot be any doubt at all that here exists a bona fide dispute of a civil nature based on Exs.D.1 and D.2. It is true that the arbitrator under Ex.P.10 had declined to participate as an arbitrator with effect from 5-4-1995. From the totality of the circumstances available, it is clear to my mind that the dispute between the parties to the complaint based on the materials referred to above definitely partakes the character of a bona fide dispute of a civil nature. In the context of the law laid down in the above referred to judgments and in the light of the fact that the dispute is of a civil nature, I have no doubt in my mind that the order under challenge cannot be legally sustained and it is accordingly set aside. The fine amount, if any, paid by the accused is directed to be refunded to him. The revision is accordingly allowed. Crl. M.P. No. 5815 of 2001 is closed. I make it clear that whatever I have said in this order regarding the respective rights of the parties based on the documents referred to earlier, shall not influence the mind of any civil forum, if the parties approach the said civil forum for any appropriate relief, with reference to the subject-matter of the complaint.

[2003] 44 SCL 130 (sc)

SUPREME COURT OF INDIA

Lalita Jalan

Bombay Gas Co. Ltd.

S. RAJENDRA BABU, DR. A.R. LAKSHMANAN AND G.P. MATHUR, JJ.

CRIMINAL APPEAL NO. 574 OF 2003

APRIL 16, 2003

Section 630 of the Companies Act, 1956 - Penalty - For wrongful withholding of property - Whether in case where employee himself is not in occupation of premises either due to death or living elsewhere, all those who have come in possession of premises with express or implied consent of employee and have not vacated premises would be withholding delivery of property to company and, therefore, be liable to be prosecuted under section 630 - Held, yes

Words and phrases : ‘withholding’ and ‘employee or any one claiming through him’ in context of section 630 of the Companies Act, 1956

Interpretation of statutes : Rule of literal interpretation

Facts

The respondent company had taken on lease a flat in a building, which was allotted to one ‘N’ in his capacity as a director of the respondent company. Subsequent to the death of ‘N’, said flat was purchased by the company. It filed a criminal complaint under section 630 against accused Nos. 1, 2 and 3 [son, daughter-in-law and grandson of ‘N’, respectively]. The Magistrate issued process against the accused. The accused moved an application for recall of the process issued against them and for their discharge, which was rejected by the Metropolitan Magistrate. Thereafter, the appellants preferred a petition in the High Court, which was dismissed by the impugned order.

On appeal to the Supreme Court, the appellants contended that they were neither officers nor employees of company, and, therefore, they could not be prosecuted under section 630 and complaint filed against them was an abuse of the process of the Court which was liable to be quashed.

Held

The main ingredient of section 630 is wrongful withholding of the property of the company or knowingly applying it for purposes other than those expressed or directed in the articles and authorised by the Act. The dictionary meaning of the word ‘withholding’ is to hold back; to keep back; to restrain or decline to grant. The holding back or keeping back is not an isolated act but is a continuous process by which the property is not returned or restored to the company and the company is deprived of its possession. If the officer or employee of the company does any such act by which the property given to him is wrongfully withheld and is not restored back to the company, it will clearly amount to an offence within the meaning of section 630. The object of enacting the section is that the property of the company is preserved and is not used for purposes other than those expressed or directed in the articles of association of the company or as authorised by the provisions of the Act. On a literal interpretation of section 630 the wrongful withholding of the property of the company by a person who has ceased to be an officer or employee thereof may not come within the ambit of the provision as he is no longer an officer of employee of the company. [Para 6]

In sub-section (1) of section 630, wrongfully withholding the property of a company has been made an offence punishable with fine only and it does not provide for imposing any substantive sentence. It is only where the Court directs the officer or employee to deliver or refund the property within a fixed period and such order of the Court is not complied with and the property is not delivered or refunded that a sentence of two years can be awarded. Therefore, it is non-compliance or non-observance of the order of the Court regarding delivery or refund of the property which results in making the person so directed liable for being awarded a substantive sentence of imprisonment. [Para 15]

The purpose of criminal justice is to award punishment. It is a method of protecting society by reducing the occurrence of criminal behaviour. It also acts as a deterrent. Where the punishment is disabling or preventive, its aim is to prevent a repetition of the offence by rendering the offender incapable of its commission. The Companies Act is entirely different from those statutes which basically deal with offences and punishment like Indian Penal Code, 1860, Terrorist and Disruptive Activities (Prevention) Act, etc. It makes provisions for incorporation of the companies, its share capital and debentures, management and administration, allotment of shares and debentures, constitution of Board of Directors, prevention of oppression and mismanagement, winding-up of the company, etc. Having regard to the purpose for which section 630 has been enacted, viz., to retrieve the property of the company and the salient features of the statute (Companies Act), it is not possible to hold it as a penal provision as the normal attributes of crime and punishment are not present here. It cannot be said to be an offence against the society at large nor the object of awarding sentence is preventive or reformative. In such circumstances, the principle of interpretation relating to criminal statutes that the same should be strictly construed will not be applicable. [Para 17]

Even otherwise, the wrongful withholding of property of the company has been made punishable with fine only. A substantive sentence or imprisonment can be awarded only where there is a non-compliance of the order of the Court regarding delivery or refund of the property. Obviously, this order would be passed against a specific person or persons whether an employee, past employee or a legal heir or family member of such an employee and only if such named person does not comply with the order of the Court, he would be liable to be sentenced which may extend to imprisonment for two years. At this stage, namely, where the Court would award a substantive sentence of imprisonment for non-compliance of its order, the question of enlarging or widening the language of the section cannot arise as the order would be directed against a specifically named person. [Para 19]

If it is held that other members of the family of the employee or officer or any person not connected with the family who came into possession through such employee would not be covered by section 630, such a view will defeat the quick and expeditious remedy provided in section 630. A provision of this nature is for the purpose of recovery of the property and if, in spite of demand or subsequent order of the Court, the possession of the property is not returned to the company, the question of imposing penalty will arise. Such a provision by itself will not convert the civil proceeding into a criminal one. Even assuming that the said provision is criminal in nature, the penalty will be attracted in the event of not complying with the demand of the recovery of the possession or pursuant to an order made thereof. The possession of the property by an employee or anyone claiming through him is unlawful, and recovery of the same on the pain of being committed to a prison or payment of fine cannot be stated to be unreasonable or irrational or unfair so as to attract the rigour of Article 21 of the Constitution. If the object of the provision of section 630 is borne in mind, the expansive meaning given to the expression ‘employee or anyone claiming through him’ will not be unrelated to the object of the provision nor is it so far-fetched as to become unconstitutional. [Para 22]

If an erstwhile or former employee is prosecuted under section 630 on account of the fact that he has not vacated the premises and continues to remain in occupation of the same even after termination of his employment, in normal circumstances it may not be very proper to prosecute his wife and dependent children also as they are bound to stay with him in the same premises. The position will be different where the erstwhile or former employee is himself not in occupation of the premises either on account of the fact that he is dead or he is living elsewhere. In such cases all those who have come in possession of the premises with the express or implied consent of the employee and have not vacated the premises would be withholding the delivery of the property to the company and, therefore, they are liable to be prosecuted under section 630. This will include anyone else who has been inducted in possession of the property by such persons who continue to withhold the possession of the premises as such person is equally responsible for withholding and non-delivery of the property of the company. [Para 23]

In view of the discussion made above, plea taken by the appellants for recall of the process issued against them had no substance. The fact that appellant No. 2 was born subsequent to the death of ‘N’, would make no difference as his occupation of the flat in question clearly amounted to withholding of the property of the company. The appeal was, accordingly, dismissed. [Para 24]

Case review

Decision in J.K. (Bombay) Ltd. v. Bharti Matha Mishra [2001] 2 SCC 700, disapproved. (See para Nos. 12, 20, 21 and 22)

Decision in Smt. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. [1995] 3 SCC 732, approved. (See para 22)

Obiter Dicta

We would like to mention here that the principle that a statute enacting an offence or imposing a penalty is strictly construed is not of universal application which must necessarily be observed in every case. [para 18]

Cases referred to

Smt. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. [1995] 3 SCC 732 (para 2), J.K. (Bombay) Ltd. v. Bharti Matha Mishra [2001] 2 SCC 700 (para 2), Baldev Krishna Sahi v. Shipping Corpn. of India Ltd. [1987] 4 SCC 361 (para 6), Amrit Lal Chum v. Devoprasad Dutta Roy [1988] 2 SCC 269 (Para 8), Atul Mathur v. Atul Kalra [1989] 4 SCC 514 (para 8), Gokak Patel Volkart Ltd. v. Dundayya Gurushiddaiah Hiremath [1991] 2 SCC 141
(para 9), Tolaram Relumal v. State of Bombay [1955] 1 SCR 158 (para 14), Murlidhar Meghraj Loya v. State of Maharashtra AIR 1976 SC 1929 (para 18), Kisan Trimbak Kothula v. State of Maharashtra AIR 1977 SC 435 (para 18), Superintendent & Remembrancer of Legal Affairs to Govt. of West Bengal v. Abani Maity AIR 1979 SC 1029 (para 18), State of Maharashtra v. Natwarlal Damodardas Soni AIR 1980 SC 593 (para 18), Parbhani Transport Co-operative Society Ltd. v. Regional Transport Authority [1960]
3 SCR 177 (para 20), Naresh Shridhar Mirajkar v. State of Maharashtra AIR 1967 SC 1 (para 20) and Smt. Triveniben v. State of Gujarat [1989] 1 SCC 678 (para 21).

Ashok H. Desai, Pratik Jalan, Atul Dayal and K.R. Sasiprabhu for the Appellant. Dr. Abhishek Manu Singhvi, Gaurab Banerjee, R.N. Karanjawala, Ms. Nandini Gore, Ms. Meghna Mishra, Mrs. Manik Karanjawala, Arun Pednekar, S.S. Shinde and V.N. Raghupathy for the Respondent.

Judgment

G.P. Mathur, J. - Leave granted.

2. This appeal has been preferred against the judgment and order dated January 18, 2002 of High Court of Bombay by which the petition preferred by the appellants under section 482 Cr.P.C. and Article 227 of the Constitution was dismissed. The matter has been referred to a three Judge Bench in view of the apparent conflict in the two decisions of this Court in Smt. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. [1995] 3 SCC 732 and J.K. (Bombay) Ltd. v. Bharti Matha Mishra [2001] 2 SCC 700.

3. Bombay Gas Co. Ltd., respondent No. 1, had taken on lease a flat in a building known as “Hari Bhavan”, 64, Pedder Road, Bombay. Shri N.K. Jalan, in his capacity as Director of the Company, was allotted the said flat. Ashok Kumar Jalan (accused No. 1 and respondent No. 2 in the present appeal) is son of Shri N.K. Jalan. Appellant No. 1, Smt. Lalita Jalan (accused No. 2) is wife of Ashok Kumar Jalan and appellant No. 2, Siddharth Jalan (accused No. 3) is his son, Shri N.K. Jalan died in 1967. The company purchased the flat and became owner thereof in April, 1991. It filed a criminal complaint under section 630 of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) against Ashok Kumar Jalan, Smt. Lalita Jalan and Siddharth Jalan on March 16, 1994. The proceedings of the complaint case were stayed in a company petition and finally sometime in the year 2001, the learned Magistrate issued process against the accused. The appellants moved an application for recall of the process issued against them and for their discharge, which was rejected by the Metropolitan Magistrate, 14th Court, Girgaum, Mumbai by order dated December 1, 2001. Thereafter, the appellants preferred a petition under section 482 Cr.P.C. and Article 227 of the Constitution in the High Court of Bombay, which was dismissed by the impugned order dated January 18, 2002.

4. Shri Ashok Desai, learned senior counsel for the appellants, has submitted that in view of the plain language used in section 630 of the Act, the said provision can apply only to an officer or employee of the company. The flat was given to Shri N.K. Jalan for his residence but he died when he was still functioning as Director of the company. The appellants, are neither officers nor employees of the company and, therefore, they cannot be prosecuted under the aforesaid provision and the complaint filed against them is an abuse of the process of the Court which is liable to be quashed. Shri Abhishek Singhvi, learned senior counsel for the respondent, Bombay Gas Company Ltd., has submitted that the appellants are family members of Late Shri N.K. Jalan and it is they who are wrongfully withholding the property of the company. In these circumstances they are fully liable to be prosecuted under section 630 of the Act and there is absolutely no ground for either quashing the complaint or the process issued against them.

5. In order to examine the contentions raised by learned counsel for the parties, it will be convenient to set out the provisions of section 630 of the Companies Act, 1956, which read as under :

“Penalty for wrongful withholding of property.—(1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to ten thousand rupees.

6. The question which requires consideration is whether the appellants, having not vacated the flat after the death of Shri N.K. Jalan to whom it was allotted in his capacity as Director of the Company, come within the ambit of section 630 of the Act. The main ingredient of the section is wrongful withholding of the property of the company or knowingly applying it to purposes other than those expressed or directed in the articles and authorised by the Act. The dictionary meaning of the word “withholding” is to hold back; to keep back; to restrain or decline to grant. The holding back or keeping back is not an isolated act but is a continuous process by which the property is not returned or restored to the company and the company is deprived of its possession. If the officer or employee of the company does any such act by which the property given to him is wrongfully withheld and is not restored back to the company, it will clearly amount to an offence within the meaning of section 630 of the Act. The object of enacting the section is that the property of the company is preserved and is not used for purposes other than those expressed or directed in the Articles of Association of the company or as authorised by the provisions of the Act. On a literal interpretation of section 630 of the Act the wrongful withholding of the property of the company by a person who has ceased to be an officer or employee thereof may not come within the ambit of the provision as he is no longer an officer or employee of the company. In Baldev Krishna Sahi v. Shipping Corpn. of India Ltd. [1987] 4 SCC 361, the Court was called upon to consider the question whether the words “officer or employee” existing in sub-section (1) of section 630 should be interpreted to mean not only the present officers and employees of the company but also to include past officers and employees of the company. It was held that a narrow construction should not be placed upon sub-section (1) of section 630, which would defeat the very purpose and object with which it had been introduced but should be so construed so as to make it effective and operative. The Court held as under in para 7 of the report :

“7. The beneficent provision contained in section 630 no doubt penal, has been purposely enacted by the legislature with the object of providing a summary procedure for retrieving the property of the company (a) where an officer or employee of a company wrongfully obtains possession of property of the company, or (b) where having been placed in possession of any such property during the course of his employment, wrongfully withholds possession of it after the termination of his employment. It is the duty of the court to place a broad and liberal construction on the provision in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy.”

7. The Court went on to observe that it is only the present officers and employees who can secure possession of any property of a company and it is possible for such an officer or employee to wrongfully take away possession of any such property after termination of his employment. Therefore, the function of Clause (a) though it primarily refers to the existing officers and employees, is to take within its fold an officer or employee who may have wrongfully obtained possession of any such property during the course of his employment, but wrongfully withholds it after the termination of his employment. It was further held that section 630 plainly makes it an offence if an officer or employee of the company who was permitted to use any property of the company during his employment, wrongfully retains or occupies the same after the termination of his employment and that it is the wrongful withholding of the property of the company after the termination of the employment, which is an offence under section 630(1)(b) of the Act.

8. Soon thereafter the same question came up for consideration before a three Judge Bench of this Court in Amrit Lal Chum v. Devoprasad Dutta Roy [1988] 2 SCC 269, which reiterated that it is the wrongful withholding of such property, meaning the property of the company after termination of the employment, which is an offence under section 630(1)(b) of the Act. It was further held that the construction placed upon the section in Baldev Krishna Sahi’s case (supra) is the only construction possible and there was no warrant to give a restrictive meaning to the term “officer or employee” appearing in sub-section (1) of section 630 of the Act as meaning only the existing officers and employees and not those whose employment have been terminated. The matter was again considered in Atul Mathur v. Atul Kalra [1989] 4 SCC 514, and it was held that the purpose of enacting section 630 is to provide speedy relief to a company when its property is wrongfully obtained or wrongfully withheld by an employee or an ex-employee and the view taken in Baldev Krishna Sahi’s case (supra) and Amrit Lal Chum’s case (supra) that the term “officer or employee of a company” applies not only to existing officers or employees but also to past officers and employees, if such officer or employee either (a) wrongfully obtains possession of any property; or (b) having obtained possession of such property during his employment, wrongfully withholds the same after the termination of his employment.

9. In Gokak Patel Volkart Ltd. v. Dundayya Gurushiddaiah Hiremath [1991] 2 SCC 141, the Court following Baldev Krishna Sahi’s case (supra) and Amrit Lal Chum’s case (supra) held that section 630 of the Companies Act embraced both present and past officers and employees within its fold and having regard to the words “wrongfully withholding the property” observed that the offence continues until the property so obtained or withheld is delivered or refunded to the company. It will be useful to reproduce here the relevant portion of para 26 of the report :

“. . . we are of the view that the offence under this section is not such as can be said to have consummated once for all. Wrongful withholding, or wrongful obtaining possession and wrongful application of the Company’s property, that is, for purposes other than those expressed or directed in the articles of the company and authorised by the Companies Act, cannot be said to be terminated by a single act or fact but would subsist for the period until the property in the offender’s possession is delivered up or refunded. It is an offence committed over a span of time and the last act of the offence will control the commencement of the period of limitation and need be alleged. The offence consists of a course of conduct arising from a singleness of thought, purpose of refusal to deliver up or refund which may be deemed a single impulse. Considered from another angle, it consists of a continuous series of acts which endures after the period of consummation on refusal to deliver up or refund the property. It is not an instantaneous offence and limitation begins with the cessation of the criminal act, i.e. with the delivering up or refund of the property. It will be a recurring or continuing offence until the wrongful possession, wrongful withholding or wrongful application is vacated or put up an end to. The offence continues until the property wrongfully obtained or wrongfully withheld or knowingly misapplied is delivered up or refunded to the company. For failure to do so sub-section (2) prescribes the punishment. . . .”

10. The four cases referred to above, considered the question whether a former or past employee or officer of the company could be prosecuted under section 630 of the Act. In Smt. Abhilash Vinodkumar Jain’s case (supra), the question which arose for consideration was whether the legal heirs and representatives of the employee or the officer concerned continuing in occupation of the property of the company, after the death of the employee or the officer, could also be prosecuted under section 630 of the Act. The complaint in the said case had been filed against the legal heirs of the employee-officer of the company, who died in harness while serving the company. After noticing the above cited four decisions and also the fact that the Court had consistently taken the view and repeatedly emphasized that the provisions of section 630 of the Act have to be given purposive and wider interpretation and not a restrictive interpretation, it was held as under in para 14 of the Report :

“14. Thus, inescapably it follows that the capacity, right to possession and the duration of occupation are all features which are integrally blended with the employment, and the capacity and the corresponding rights are extinguished with the cessation of employment and an obligation arises to hand over the allotted property back to the company. Where the property of the company is held back whether by the employee, past employee or anyone claiming under them, the retained possession would amount to wrongful withholding of the property of the company actionable under section 630 of the Act. . . . It is immaterial whether the wrongful withholding is done by the employee or the officer or the past employee or the past officer or the heirs of the deceased employee or the officer or anyone claiming their right of occupancy under such an employee or an officer. It cannot be ignored that the legal heirs or representatives in possession of the property had acquired the right of occupancy in the property of the company, by virtue of being family members of the employee or the officer during the employment of the officer or the employee and not on any independent account. They, therefore, derive their colour and content from the employee or the officer only and have no independent or personal right to hold on to the property of the company. Once the right of the employee or the officer to retain the possession of the property, either on account of termination of services, retirement, resignation or death, gets extinguished, they (persons in occupation) are under an obligation to return the property back to the company and on their failure to do so, they render themselves liable to be dealt with under section 630 of the Act for retrieval of the possession of the property.” (p. 739)

11. Shri Ashok Desai, learned senior counsel for the appellant has tried to distinguish Smt. Abhilash Vinodkumar Jain’s case (supra) on the ground that the same related to the case of heirs of a deceased employee. It is urged that in accordance with Hindu Succession Act, Shri Ashok Kumar Jalan, who is the son of late Shri N.K. Jalan would be his legal heir and not the appellants and, therefore, the principle laid down in Smt. Abhilash Vinodkumar Jain’s case (supra) would not be applicable to the case in hand. In support of his submission, Shri Desai has placed strong reliance upon decision of this Court rendered in J.K. (Bombay) Ltd.’s case (supra), wherein it was observed that the possession of the legal heirs of the deceased employee cannot be equated with the family members of an erstwhile employee. In our opinion, this case is clearly distinguishable on facts and the principle laid down therein cannot be of any assistance to the appellants. One Mata Harsh Mishra was an employee of the company and he was given possession of a flat of the company for the purposes of his residence during the course of his employment which he had to vacate as and when he ceased to be the employee of the company. Mata Harsh Mishra tendered his resignation, which was accepted by the company and he was directed to hand over charge of his work to the Production Manager and to vacate the flat in his possession. Shri Mishra, however, did not vacate the premises on the pretext that he had not been paid his dues and, therefore, he had a right to remain in occupation of the flat. The company then filed the complaint under section 630 of the Act against Mata Harsh Mishra, his wife and son (respondent Nos. 1 and 2 in the appeal). The respondent Nos. 1 and 2, viz., wife and son, moved an application before the Judicial Magistrate for recall of the order of process, which was rejected and the revision preferred by them was also dismissed by the Sessions Judge. Thereafter, they filed a writ petition which was allowed by the Bombay High Court and the proceedings against them were quashed and the said decision was challenged by the company by filing an appeal in this Court. It was urged on behalf of the company that since in view of Smt. Abhilash Vinodkumar Jain’s case (supra) the legal heirs of the erstwhile employee can be prosecuted, the other family members of such employee living with him, cannot escape their liability of prosecution. It was in this context that the Bench observed that penal law cannot be interpreted in a manner to cover within its ambit such persons who are left out by the Legislature and the position of the legal heirs of a deceased employee cannot be equated with the family members of an erstwhile employee against whom admittedly the criminal prosecution has been launched and is pending. After taking note of the earlier decisions of this court, which we have referred to above, the Bench recorded its conclusion in the following manner :

“We are of the firm opinion that all the family members of an alive “officer” or “employee” of a company cannot be proceeded with and prosecuted under section 630 of the Act. The order impugned does not suffer from any illegality, requiring our interference.”

12. The ratio of this case clearly is that the position of legal heirs of a deceased employee who are in possession of the property and are wrongfully withholding the same is different from that of family members of a former or past employee, who is alive and against whom prosecution has also been launched. The view taken is that if a former or erstwhile employee of the company is in possession of the property and is wrongfully withholding to deliver the same to the company after cessation of his employment and a prosecution against him is launched under section 630 of the Act, then his other family members cannot be prosecuted. This case, in our opinion, is not an authority for the proposition that such family members of a deceased employee who are not his legal heirs in accordance with the personal law applicable to him, cannot be prosecuted under section 630 of the Act for wrongfully withholding the property.

13. In interpreting the provision of section 630 of the Companies Act, 1956, this Court in Smt. Abhilash Vinodkumar Jain’s case (supra) held that the object of the provisions of section 630 of the Act is retrieval of the possession of the property of the company which was in occupation of an employee or an officer and that such property can be recovered not only from a former employee or an officer but also his heirs or representatives in possession of the property who had acquired a right of such member or came to retain the possession of the property by tracing their possession to such employee or officer. This Court stated that they have no right independent of the employee but derive the same from the employee or officer who hold on to the property of the company and they would also be covered by the provisions of section 630 of the Act. In J.K. (Bombay) Ltd.’s case (supra), this Court took the view that the decision in Smt. Abhilash Vinodkumar Jain’s case (supra) should be confined to the legal heirs of the employees and that other family members cannot be covered by the provision of section 630 of the Act inasmuch as the provision is penal in nature and any expansive meaning attributed to the expression used in section 630 of the Act will attract the wrath of Article 21 of the Constitution and this Court also stated that they are of the firm opinion that all the family members of an alive ‘officer’ or ‘employee’ of a company cannot be proceeded with and prosecuted under section 630 of the Act.

14. Shri Desai has strenuously urged that a Statute enacting an offence or imposing a penalty is to be strictly construed and a clear language is required to create a crime. Strong reliance was placed upon a Constitution Bench decision of this Court in Tolaram Relumal v. State of Bombay [1955] 1 SCR 158, wherein it was held that it is well-settled rule of construction of penal statutes that if two possible and reasonable constructions can be put upon a penal provision, the Court must lean towards that construction which exempts the subject from penalty rather than the one which imposes penalty and it is not competent for the Court to stretch out the meaning of expression used by the Legislature in order to carry out the intention of the Legislature. The contention is that section 630 of the Act refers to an officer or employee of a company and being a penal provision, it will be against all canons of interpretation of Statutes to include family members of a former or deceased employee within its fold. Learned counsel has also submitted that the fact that an enactment is a penal provision is in itself reason for hesitating before ascribing to phrases used in it a meaning broader than that they would ordinarily bear and the same should be construed strictly. In view of the contention raised it becomes necessary to examine whether section 630 of the Act is really a penal provision.

15. Section 630 of the Act is in two parts. Clause (b) of sub-section (1) thereof lays down that if any officer or employee of a company having any property of the company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act, he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to Rs. 10,000. At this stage no substantive sentence can be awarded. Sub-section (2) thereof empowers the Court trying the offence to order such officer or employee to deliver up or refund within time to be fixed by the Court any such property wrongfully obtained or wrongfully withheld or knowingly misapplied or in default to suffer imprisonment for a term which may extend to two years. Sub-section (1), wherein wrongfully withholding the property of the company has been made an offence, is punishable with fine only and it does not provide for imposing any substantive sentence. It is only where the Court directs the officer or employee to deliver or refund the property within a fixed period and such order of the Court is not complied with and the property is not delivered or refunded that a sentence of two years can be awarded. Therefore, it is non-compliance or non-observance of the order of the Court regarding delivery or refund of the property which results in making the person so directed liable for being awarded a substantive sentence of imprisonment. In Smt. Abhilash Vinodkumar Jain’s case (supra) this has been clearly elaborated in para 16 of the report and it has been held that it is in the event of the dis-obedience of the order of the Court that imprisonment for a term which may extend to two years has been prescribed. This provision makes the defaulter, whosoever he may be, who disobeys the order of the Court to hand back the property to the company within the prescribed time, liable for punishment.

16. In Salmond on Jurisprudence (Twelfth Edition page 91) the difference between civil wrongs and crimes has been explained as under :

“The distinction between crimes and civil wrongs is roughly that crimes are public wrongs and civil wrongs are private wrongs. As Blackstone
says : “Wrongs are divisible into two sorts or species, private wrongs and public wrongs. The former are an infringement or privation of the private or civil rights belonging to individuals, considered as individuals, and are thereupon frequently termed civil injuries; the latter are a breach and violation of public rights and duties which affect the whole community considered as a community; and are distinguished by the harsher appellation of crimes and misdemeanours”. A crime then is an act deemed by law to be harmful to society in general, even though its immediate victim is an individual. Murder injures primarily the particular victim, but its blatant disregard of human life puts it beyond a matter of mere compensation between the murderer and the victim’s family. Those who commit such acts are proceeded against by the State in order that if convicted, they may be punished. Civil wrongs such as breach of contract or trespass to land are deemed only to infringe the rights of the individual wronged and not to injure society in general and consequently the law leaves it to the victim to sue for compensation in the courts.

English law, however, has certain features which prevent us drawing a clear line between these two kinds of wrong. First, there are some wrongs to the state and therefore public wrongs, which are nevertheless by law regarded as civil wrongs. A refusal to pay taxes is an offence against the state, and is dealt with at the suit of the state, but it is a civil wrong for all that, just as a refusal to repay the money lent by a private person is a civil wrong. . . .”

17. The purpose of criminal justice is to award punishment. It is a method of protecting society by reducing the occurrence of criminal behaviour. It also acts as a deterrent. Where the punishment is disabling or preventive, its aim is to prevent a repetition of the offence by rendering the offender incapable of its commission. The Companies Act is entirely different from those statutes which basically deal with offences and punishment like Indian Penal Code, Terrorist and Disruptive Activities (Prevention) Act, etc. it makes provision for incorporation of the companies, its share capital and debentures, management and administration, allotment of shares and debentures, constitution of Board of Directors, prevention of oppression and mismanagement, winding-up of the company, etc. The heading of part XIII of the Companies Act is “GENERAL” and a few provisions therein, namely, sections 628 to 631 create offences and also prescribe penalty for the same. Having regard to the purpose for which section 630 has been enacted viz. to retrieve the property of the company and the salient features of the statute (Companies Act) it is not possible to hold it as a penal provision as the normal attributes of crime and punishment are not present here. It cannot be said to be an offence against the society at large nor the object of awarding sentence is preventive or reformative. In such circumstances the principle of interpretation relating to criminal statutes that the same should be strictly construed will not be applicable.

18. We would like to mention here that the principle that a statute enacting an offence or imposing a penalty is strictly construed is not of universal application which must necessarily be observed in every case. In Murlidhar Meghraj Loya v. State of Maharashtra AIR 1976 SC 1929, Krishna Iyer, J. held that any narrow and pedantic, literal and lexical construction of Food Laws is likely to leave loopholes for the offender to sneak out of the meshes of law and should be discouraged and criminal jurisprudence must depart from old canons defeating criminal statutes calculated to protect the public health and the nation’s wealth. The same view was taken in another case under the Prevention of Food Adulteration Act in Kisan Trimbak Kothula v. State of Maharashtra AIR 1977 SC 435. In Superintendent & Remembrancer of Legal Affairs to Govt. of West Bengal v. Abani Maity AIR 1979 SC 1029, the words “may” occurring in section 64 of Bengal Excise Act were interpreted to mean “must” and it was held that the Magistrate was bound to order confiscation of the conveyance used in commission of the offence. Similarly, in State of Maharashtra v. Natwarlal Damodardas Soni AIR 1980 SC 593, with reference to section 135 of the Customs Act and Rule 126-H(2)(d) of Defence of India Rules, the narrow construction given by the High Court was rejected on the ground that they will emasculate these provisions and render them ineffective as a weapon for combating gold smuggling. It was further held that the provisions have to be specially construed in a manner which will suppress the mischief and advance the object which the Legislature had in view. The contention raised by learned counsel for the appellant on strict interpretation of the section cannot therefore be accepted.

19. Even otherwise as shown earlier, the wrongful withholding of property of the company has been made punishable with fine only. A substantive sentence or imprisonment can be awarded only where there is a non-compliance of the order of the Court regarding delivery or refund of the property. Obviously, this order would be passed against a specific person or persons whether an employee, past employee or a legal heir or family member of such an employee and only if such named person does not comply with the order of the Court, he would be liable to be sentenced which may extend to imprisonment for two years. At this stage, namely, where the Court would award a substantive sentence of imprisonment for non-compliance of its order the question of enlarging or widening the language of the section cannot arise as the order would be directed against a specifically named person.

20. With profound respects we are unable to agree with certain observations made in J.K. (Bombay) Ltd.’s case (supra) that prosecution of other family members of a former employee living with him would violate Article 21 of the Constitution. The award of sentence by the order of the Court cannot amount to violation of any of the fundamental rights guaranteed under the Constitution is now well-settled by several authoritative pronouncements of this Court. A Constitution Bench in Parbhani Transport Co-operative Society Ltd. v. Regional Transport Authority [1960] 3 SCR 177 (at 188) has held that no one can complain breach of Article 14 of the Constitution by a decision of a quasi judicial body and if it has made any mistake in its decision, there are appropriate remedies available to the aggrieved party for obtaining relief. In Naresh Shridhar Mirajkar v. State of Maharashtra AIR 1967 SC 1, a decision by a bench of nine Hon’ble Judges, Chief Justice Gajendragadkar speaking for the majority held as under :

“38. The argument that the impugned order affects the fundamental rights of the petitioners under article 19(1), is based on a complete misconception about the true nature and character of judicial process and of judicial decisions. When a Judge deals with matters brought before him for his adjudication, he first decides questions of fact on which the parties are at issue, and then applies the relevant law to the said facts. Whether the findings of fact recorded by the Judge are right or wrong, and whether the conclusion of law drawn by him suffers from any infirmity, can be considered and decided if the party aggrieved by the decision of the Judge takes the matter up before the appellate Court. But it is singularly inappropriate to assume that a judicial decision pronounced by a Judge of competent jurisdiction in or in relation to a matter brought before him for adjudication can affect the fundamental rights of the citizens under article 19(1). What the judicial decision purports to do is to decide the controversy between the parties brought before the Court and nothing more. If this basic and essential aspect of the judicial process is borne in mind, it would be plain that the judicial verdict pronounced by Court in or in relation to a matter brought before it for its decision cannot be said to affect the fundamental rights of citizens under article
19(1).” (p. 11)

21. In Smt. Triveniben v. State of Gujarat [1989] 1 SCC 678, a Constitution Bench while considering the validity of death sentence, held that it is well- settled that a judgment of Court can never be challenged under Article 14 or 21 of the Constitution and, therefore, a judgment of the Court awarding the sentence of death is not open to challenge as violating Articles 14 and 21 of the Constitution and the only jurisdiction which could be sought to be exercised by a prisoner for infringement of his rights can be to challenge the subsequent events after the final judicial verdict is pronounced and it is because of this that on the ground of long or inordinate delay, the condemned petitioner could approach the Court. The statement of law made in J.K. (Bombay) Ltd.’s case (supra) to the effect that prosecution of the legal heirs and family members living with an erstwhile or former employee would violate Article 21 of the Constitution is therefore not correct.

22. The view expressed in J.K. (Bombay) Ltd.’s case (supra) runs counter to the view expressed in Smt. Abhilash Vinodkumar Jain’s case (supra) wherein it has been clearly held that the object of section 630 of the Act is to retrieve the property of the company where wrongful holding of the property is done by an employee, present or past, or heirs of the deceased employees or officer or anyone claiming the occupancy through such employee or officer. The view expressed in Smt. Abhilash Vinodkumar Jain’s case (supra) clearly subserves the object of the Act which is to the effect of recovering the possession of the property belonging to the company. If it is held that other members of the family of the employee or officer or any person not connected with the family who came into possession through such employee would not be covered by section 630 of the Act, such a view will defeat the quick and expeditious remedy provided therein. The basic objection to this view is that the aforesaid provision contained in section 630 of the Act is penal in nature and must be strictly construed and therefore the actual words used should not be given any expansive meaning. A provision of this nature is for the purpose of recovery of the property and if, in spite of demand or subsequent order of the court, the possession of the property is not returned to the company, the question of imposing penalty will arise. Similar provisions are available even under the Code of Civil Procedure. In execution of a decree for recovery of money or enforcement of an injunction, the judgment-debtor can be committed to a prison. Such a provision by itself will not convert the civil proceeding into a criminal one. Even assuming that the said provision is criminal in nature, the penalty will be attracted in the event of not complying with the demand of the recovery of the possession or pursuant to an order made thereof. The possession of the property by an employee or anyone claiming through him of such property is unlawful and recovery of the same on the pain of being committed to a prison or payment of fine cannot be stated to be unreasonable or irrational or unfair so as to attract the rigour of Article 21 of the Constitution. If the object of the provision of section 630 of the Act is borne in mind, the expansive meaning given to the expression ‘employee or anyone claiming through him’ will not be unrelated to the object of the provision nor is it so far fetched as to become unconstitutional. Therefore, with profound respects the view expressed in J.K. (Bombay) Ltd.’s case (supra), in our opinion is not correct and the view expressed in Smt. Abhilash Vinodkumar Jain’s case (supra) is justified and should be accepted in interpreting the provision of section 630 of the Act.

23. If an erstwhile or former employee is prosecuted under section 630 of the Act on account of the fact that he has not vacated the premises and continues to remain in occupation of the same even after termination of his employment, in normal circumstances it may not be very proper to prosecute his wife and dependent children also as they are bound to stay with him in the same premises. The position will be different where the erstwhile or former employee is himself not in occupation of the premises either on account of the fact that he is dead or he is living elsewhere. In such cases all those who have come in possession of the premises with the express or implied consent of the employee and have not vacated the premises would be withholding the delivery of the property to the company and, therefore, they are liable to be prosecuted under section 630 of the Act. This will include anyone else who has been inducted in possession of the property by such persons who continue to withhold the possession of the premises as such person is equally responsible for withholding and non-delivery of the property of the company.

24. In view of the discussions made above, we are of the opinion that the plea taken by the appellants for recall of the process issued against them has no substance. The fact that the appellant No. 2 Siddharth Jalan was born subsequent to the death of N.K. Jalan, would make no difference as his occupation of the flat in question clearly amounts to withholding of the property of the company. The appeal is accordingly dismissed.

[1988] 63 COMP. CAS. 839 (SC)

SUPREME COURT OF INDIA

Amrit Lal Chum

Devoprasad Dutta Roy

A.P. SEN, E.S. VENKATARAMIAH AND L.M. SHARMA, JJ.

CRIMINAL APPEAL NOS. 251, 252 AND 368 OF 1986.

JANUARY 20, 1988

Dr. Y.S. Chitale, H.K. Puri for the Appellant.

Parijat Sinha, S.K. Kapur, Ranjan Dev and Mrs. Indra Sawhney for the Respondent.

Tapas Roy and D.K. Sinha for the State.

D.K. Sinha, K.R. Nambiar, Ms. Reba Roy, K.K. Lahiri and Apsi Ditta for the Intervener.

JUDGMENT

After hearing Shri S.K. Kapoor, learned counsel appearing for respondent No. 1 in Criminal Appeals Nos. 251-252 of 1986, at quite some length, we are not persuaded to take a view different from the one expressed by this court in the recent judgment in Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1988] 63 Comp Cas 1 (SC) overruling the judgment of the Calcutta High Court in Amrit Lal Chum v. Devi Ranjan Jha [1987] 61 Comp Cas 211, as to the scope and effect of sub-section (1) of section 630 of the Companies Act, 1956. The court in Baldev Krishna Sahi's case [1988] 63 Comp Cas 1 (SC) has placed a beneficent construction on the provisions contained in sub-section (1) of section 630 of the Act and, according to it, the term "officer or employee" in sub-section (1) of section 630 must be interpreted to mean not only the present officers and employees of a company but also to include the past officers and employees of the company. It has also taken the view that the words "any such property" in clause (b) thereof qualify the words "any property of a company" appearing in clause (a). As observed in Baldev Krishna Sahi's case [1988] 63 Comp Cas 1 (SC), section 630 of the Act plainly makes it an offence if an officer or employee of a company who was permitted to use the property of the company during his employment, wrongfully retains or occupies the same after the termination of his employment. It is the wrongful withholding of such property, meaning the property of the company after termination of the employment, which is an offence under section 630(1)(b) of the Act. The construction placed by this court in Baldev Krishna Sahi's case [1988] 63 Comp Cas 1 (SC) is the only construction possible. There is, therefore, no warrant to give a restrictive meaning to the term "officer or employee" appearing in sub-section (1) of section 630 of the Act as meaning only the existing officers and employees and not those whose employments have been terminated. The court in Baldev Krishna Sahi's case has expressly overruled the judgment of the Calcutta High Court in Amrit Lal Chum v. Devi Ranjanjha [1987] 61 Comp Cas 211, against which these appeals have been filed and upheld the consistent view to the contrary taken by the High Court of Bombay in a series of cases : See Harkishin Lakhimal Gidwani v. Achyut Kashinath Wagh [1982] 52 Comp Cas 1 (Bom) and Govind T. Jagtiani v. Sirajuddin S, Kazi [1984] 56 Comp Cas 329 (Bom).

Accordingly, these appeals must succeed and are allowed with costs. The judgment of the High Court allowing the applications under section 482 of the Code of Criminal Procedure, 1973, are set aside.

Shri S.K. Kapoor, learned counsel appearing for respondent No. 1 in Criminal Appeals Nos. 251-252 of 1986, and Shri Parijat Sinha, learned counsel for respondent No. 1 in Criminal Appeal No. 368 of 1986, pray for time to vacate the premises in their occupation. We grant the respondents time till June 30, 1988, to vacate the premises subject to their furnishing the usual undertaking in this court within four weeks from today. If there is failure on the part of the respondents to comply with these conditions, namely, failure to file the said undertaking and/or to vacate the premises within the time allowed, the cases against them, i.e., Complaint Case No. 1053 of 1983 in the Court of IIIrd Additional Judicial Magistrate, Alipore, 24 Parganas, and Complaint Case No. 2788 of 1984 in the Court of the Special Divisional Judicial Magistrate, Alipore, 24 Parganas, shall continue. In the event of the respondents' failure to file the undertaking and/or vacate the premises within the time specified, the learned Magistrates shall proceed with the trial of these cases and dispose of them as expeditiously as possible and in any event, not later than October 31, 1988.

The intervention application filed by Tata Iron and Steel Co. Ltd. is not pressed.

Appeal allowed.

[1984] 55 COMP. CAS. 61 (DELHI)

HIGH COURT OF DELHI

B.R. Herman & Mohatta India Ltd.

Ashok Rai

R.N. AGGARWAL AND G.R. LUTHRA JJ.

CRIMINAL APPEAL NO. 155 OF 1982

APRIL 20, 1983

P.P. Grover for the appellant.

R.N. Mittal for the respondent.

JUDGMENT

The judgment of the court was delivered by

Aggarwal J.—This appeal by M/s. B.R. Herman and Mohatta India Ltd. (hereinafter called "the company")is against the order of Shri Bhola Dutt, Metropolitan Magistrate, by which he dismissed the complaint under s. 630 of the Companies Act, 1956, by the company against Ashok Rai.

On 10th December, 1980, the company filed a complaint against Ashok Rai under s. 630 of the Companies Act alleging that the company on 15th November, 1971, had employed Ashok Rai in its project of manufacturing scooters and in that capacity the respondent was permitted to use and occupy a portion of the premises at 22, Ferozeshah Road, that the employment of Ashok Rai was terminated by the company on or about 11th October, 1976, and that after the termination of the services the Manager of the Delhi Office of the complainant company on several occasions requested Ashok Rai to vacate the premises but he had been assuring to do so but has not vacated the premises till date and that instead of vacating the premises the respondent had started using part of the premises for commercial purpose. The company alleged that the respondent was wrongfully withholding the property and thereby had committed an offence under s. 630 of the Companies Act.

The complainant in support of its case examined Shri Prithvi Raj. Shri Prithvi Raj gave evidence that at the time of the employment the respondent was given free furnished accommodation at 22, Ferozeshah Road and the services of the respondent were terminated on 11th October, 1976, and that after the termination of the services in spite of repeated requests and reminders the respondent had not vacated the said premises. The complainant further stated that the respondent had been repeatedly assuring the complainant that he would vacate the said premises but he had failed to do the same.

The repondent filed an application raising a few preliminary objections and one of them being that the complaint is barred by time.

The Magistrate after hearing the parties dismissed the complaint holding (i) that the complaint does not mention the fact that the accused had wrongly obtained the possession of the property of the company nor is there allegation that the accused was wrongfully withholding any property of the company, and (ii) that the limitation commenced with effect from 11th October, 1976, that is, the date on which the services were terminated and the complaint having been filed in the court on the 10th December, 1980, is barred by time.

We find that the first ground on which the complaint has been dismissed is factually not correct. The complainant has in the complaint clearly alleged that on the employment of the respondent, the respondent was given the right to use and occupy premises at 22, Ferozeshah Road and that after the termination of the services on 11th October, 1976, the respondent in spite of repeated requests had not vacated the said premises and he was wrongfully withholding the property. The said allegations if proved would clearly bring the case within the ambit of s. 630 of the Companies Act.

Shri Mittal, learned counsel for the respondent, made no attempt to support the impugned judgment on the first ground.

Shri Grover, learned counsel for the company, strenuously contended that the offence under s. 630 of the Companies Act is a continuing wrong and, therefore, each day of the wrongful withholding of the property would give fresh start of limitation. The counsel contended that the offence under s. 630 of the Companies Act would fall under s. 472 of the Code of Criminal Procedure which provides:

"472. Continuing offence.—In the case of a continuing offence, a fresh period of limitation shall begin to run at every moment of the time during which the offence continues".

The essential ingredients for an offence under s. 630 of the Companies Act are (a) that an officer or employee of the company wrongfully obtains possession of any property of a company, or (b) he having in his possession any property of the company wrongfully withholds it or knowingly applies it to a purpose other than that expressed or directed in the articles and authorised by the Act.

The facts constituting the complaint are these :

(a) that the company on the employment of the respondent had permitted him the use of a free and furnished accommodation at 22, Ferozeshah Road;

(b) the company had terminated the services of the respondent on 11th October, 1976; and

(c) in spite of repeated requests by the company to vacate the said premises the respondent continues to hold the property.

The expression "wrongfully" used in clause (b) of s. 630(1) would mean that a person continues to remain in possession or hold the property otherwise than in due course of law. There can be no doubt that after the termination of the services on 11th October, 1976 (assuming that the respondent was given possession of the property 22, Ferozeshah Road, as a condition of his employment), the possession of the respondent had become wrongful unless it is shown or proved that he continued in possession under some legal sanction.

The expression "continuing offence" has been defined in the following terms by a Division Bench of the Bombay High Court in State v. Bhiwandiaallah, AIR 1955 Bom 161 (headnote):

"The expression 'continuing offence' though not a very happy expression, has acquired a well-recognised meaning in criminal law. If an act committed by an accused person constitutes an offence and if that act continues from day to day, then from day to day a fresh offence is committed by the accused so long as the act continues. Normally and in the ordinary course an offence is committed only once But there may be offences which can be committed from day to day and it is offences falling in this latter category that are described as continuing offences.

In every case of a continuing offence it may be possible to describe the default as amounting to an omission or to a positive act on the part of the defaulter".

Reverting to the case in hand, if the premises in dispute was allotted to the respondent as a part of the conditions of employment with an obligation to vacate the same on the termination of the employment, the possession would become wrongful on the termination of the services. We are unable to appreciate how an act (in not delivering back the possession) once committed and which amounted to an offence under s. 630(1)(b) of the Companies Act could be repeated again and again.

This argument can be tested from another angle. Suppose the company had demanded possession of the property and the respondent had refused to hand back the possession and set up some kind of his own title, could, in that case, the company wait for indefinite period to recover the possession ? In our view, the answer must be in the negative. The adverse possession. Would begin to run the moment the offence under s. 630(1)(b) was complete, and in that situation if the company does not bring an action within the period prescribed by law, the company may lose not only the criminal but the civil remedy, as well.

For the aforesaid reasons we hold that the offence under s. 630(1)(b) of the Companies Act is complete as soon as committed and it is not a continuing offence.

The next question that falls for determination is as to on which date the limitation commenced. The company in para. 3 of the complaint has alleged that the services of the respondent were terminated on 11th October, 1976, but the respondent requested that he may be given some time to vacate the premises and in the next paragraph the company has alleged that thereafter the Manager of the Delhi Office of the complainant on several occasions requested Ashok Rai to vacate the premises but the respondent kept on assuring that he will vacate the premises but he has not done so till date. There is no allegation in the complaint that after 11th October, 1976, the company had at the request of the respondent or otherwise permitted the respondent to further stay on for any particular period. The only allegation is that the respondent had been assuring to vacate the premises but he had not done so. As already observed, the expression "wrongful" would mean withholding without legal sanction. There is no allegation that after 1Kb. October, 1976, the company had permitted the respondent to stay on for any period of time in which case the stay, during the permitted period, could be considered with authority, otherwise the period of limitation would commence the day the withholding was wrongful. This date, according to the complaint, was 11th October, 1976, or soon thereafter.

Thus we find that the limitation had commenced to run on or about 11th October, 1976. The complaint was filed in the court on 10th December, 1980. Sub-s. (2) of s. 630 provides for an imprisonment which may extend to two years. Section 468(1)(c) of the Code of Criminal Procedure provides that where the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years, the limitation shall be three years. Therefore, the period of limitation for taking cognizance of an offence under s. 630 of the Companies Act would be three years. The complaint was filed after more than four years of the date of the offence and, therefore, is clearly barred by time.

Shri Grover contended that it is a fit case where the court should extend the period of limitation. Section 473 which gives the power for extending the period of limitation reads as under :

"473. Extension of period of limitation in certain cases.—Notwithstanding anything contained in the foregoing provisions of this Chapter, any court may take cognizance of an offence after the expiry of the period of limitation, if it is satisfied on the facts and in the circumstances of the case, that the delay has been properly explained or that it. is necessary so to do in the interests of justice".

The learned trial Magistrate did not think it to be a fit case for condoning the delay on the ground that the complainant had not filed any application requesting for condonation of delay. We may mention that the trial Magistrate thinking that the offence is punishable only with a fine of Rs. 1,000 proceeded to hold that the limitation is six months and, therefore, the complaint could be filed on or before 11th October, 1977. We are of the view that the learned Metropolitan Magistrate is not correct in holding that the period of limitation for a complaint under s. 630 of the Companies Act is six months. It is true that under sub-section (1) the penalty provided for wrongful withholding of the property is fine which may extend to one thousand rupees. The learned Metropolitan Magistrate has overlooked the provisions of sub-s. (2) of s. 630 which reads as under :

"(2) The court trying the offence may also order such officer or employee to deliver up or refund within a time to be fixed by the court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years".

We have earlier observed that the case would fall under clause (c) of sub-s. (2) of s. 468 of the Criminal Procedure Code. Clause (c) reads as under:

"(c) three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years.

(3) For the purposes of this section, the period of limitation, in relation to offences which may be tried together, shall be determined with reference to the offence which is punishable with the more severe punishment or, as the case may be, the most severe punishment".

It is clear from a reading of the above provisions that the court under sub-s. (2) could make an order directing the respondent to deliver the possession of the property or in default to undergo imprisonment for a term extending up to two years. In this view, the limitation would be three years and not six months as held by the Magistrate.

The main reason given by the Magistrate for not extending the period of limitation is that the company had filed no application for condoning the delay. We find from a reading of s. 473 of the Code of Criminal Procedure that there is no legal requirement for making an application. Section 473 gives a discretion to the court that in case it is satisfied, on the facts and in the circumstances of the case, that the delay has been properly explained or that it is necessary so to do in the interest of justice, it may take cognizance of an offence after the expiry of the period of limitation. The only explanation given in the complaint for the delay is that the respondent after the termination of the employment had requested for time to vacate the premises and thereafter he had been assuring to vacate the premises but he did not do so. There is no counter version. The respondent has not alleged the capacity in which he continued to occupy the premises after the termination of the services in 1976. It appears that the petitioner was allowed to use a portion of 22, Ferozeshah Road which is in the tenance of the company as a condition of employment. It is stated in the complaint that in spite of repeated requests, the respondent has not vacated the premises. Looking to all the circumstances, we are of the view that it is a fit case where the learned Metropolitan Magistrate should have extended the period of limitation.

Before leaving the case we may observe that the company had filed an application under s. 378(4) of the Code of Criminal Procedure for special leave to appeal against the impugned order dated 7th May, 1982. There was an objection by the office that no appeal is competent against an order of discharge. The admitting Bench was prima facie of the view that in summons case an order of discharge tantamounts to an order of acquittal and consequently granted leave to appeal. The Bench had left it open to the respondent to object to the competency of the appeal, but the competency of the appeal has not been challenged before us.

For the reasons recorded we allow the appeal and send the case back to the learned trial Magistrate to proceed further in accordance with law. The parties shall appear before the court on 3rd May, 1983.

Nothing hereinbefore said shall be taken to be an expression of view on the merits of the complaint.

Appeal allowed:

[1987] 61 COMP. CAS. 744 (RAJ)

HIGH COURT of RAJASTHAN

Beguram

Jaipur Udhyog Ltd.

NAVIN CHANDRA SHARMA, J.

S.B. Criminal Miscellaneous Petition No. 37 of 1987

JANUARY 27, 1987

R.P. Garg for the petitioner.

JUDGMENT

Navin Chandra Sharma, J.—I have heard Shri R. P. Garg, appearing for the petitioner, Beguram.

Facts in brief are that Beguram was employed as fitter (maintenance) in M/s. Jaipur Udhyog Ltd., Sawai Madhopur. He retired on September 7, 1978, but did not vacate the free quarters of the company bearing No. 101/200 which had been allotted to him while he was in service. Consequently, Jaipur Udhyog Ltd. filed a criminal complaint against the petitioner in the court of the Chief Judicial Magistrate, Sawai Madhopur, for the offence under section 630(1)(b) of the Companies Act. The Chief Judicial Magistrate, Sawai Madhopur, by his judgment dated September 11, 1986, held the petitioner guilty of the said offence and punished him with a fine of Rs. 200. Along with this sentence, the Chief Judicial Magistrate also passed an order under sub-section (2) of section 630 of the Companies Act ordering the petitioner to deliver up the said quarters to M/s. Jaipur Udhyog Ltd. within three months of the date of his judgment and in default thereof, the petitioner was to undergo simple imprisonment for a term up to two months. Against this conviction and sentence, the petitioner filed Criminal Appeal No. 53 of 1986 before the Sessions Judge, Sawai Madhopur. Along with the appeal, he filed an application under section 389, Criminal Procedure Code, for suspension of the sentence and also of the order passed by the Chief Judicial Magistrate under sub-section (2) of section 630 of the Companies Act.

The first contention advanced by Mr. Garg is that section 630 of the Companies Act is only applicable with respect to movable property because sub-section (2) of the said section used the words "deliver up" or "refund" and these words, according to him, can relate only to movable property. There is no force in this contention. The word "property" used in section 630 of the Companies Act includes within its purview both movable as well as immovable property and there are no words, express or implied, in this section which can restrict the application of the word "property" to only movable property. The words "deliver up" very well applies to the delivering up of the possession of immovable property. These words are, on the other hand, indicative of the fact that immovable properties are also covered in the scope of section 630 of the Companies Act.

The next contention of Mr. Garg was that the petitioner had retired from the service of the company on September 1, 1978, and he continued to occupy the quarter No. 101/200 even after his retirement. According to him, the offence was committed by the petitioner on September 1, 1978, when despite his retirement from the employment of the company, he did not deliver possession of the quarter which had been allotted to him. Learned counsel relied on section 468(2) of the Criminal Procedure Code and contended that the period of limitation for taking cognizance of the offence which was punishable with fine only was six months, and, therefore, the Criminal Complaint No. 226 of 1982 filed by M/s. Jaipur Udhyog Ltd. was barred by limitation. I equally do not find any force in this contention. The petitioner was allotted the company's quarter No. 101/200 free of any rent so long as he was in the employment of the company. It was a case where the petitioner having been in possession lawfully of the said quarters up to September 1, 1978, wrongfully withheld the possession of the quarters. After September 1, 1978, the occupation by the petitioner of the quarters was in the capacity of a trespasser. Trespass is a continuing offence, and the matter is covered by section 472 of the Criminal Procedure Code which expressly provides that in the case of a continuing offence, a fresh period of limitation shall begin to run at every moment of time during which the offence continues. Continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. Trespass is susceptible of continuance and does not end on the date on which it is initially committed.

The last contention of learned counsel for the petitioner was that the Sessions Judge, Sawai Madhopur, was under a duty to suspend the order in pursuance of section 389, Criminal Procedure Code, and he urged that the word "may" used in section 389(1), Criminal Procedure Code, should be interpreted as containing a mandatory provision. There is no force in this argument also. Section 389, Criminal Procedure Code, gives discretionary power to the appellate court and the discretion has to be exercised judicially. Admittedly, the petitioner had retired from the employment of the company on September 1, 1978, and it would amount to giving him a reward for his trespass if he is allowed to continue a moment more. The Sessions Judge was right in rejecting the application of the petitioner under section 389, Criminal Procedure Code. This petition has no merit in it and it is hereby dismissed.

[1989] 65 COMP. CAS. 190 (BOM.)

HIGH COURT OF BOMBAY

Chandragupta Gupta

1. Padmanabha Subramani

TATED J.

Criminal Application No. 755 of 1988

SEPTEMBER 7, 1988

R.S. Bhonsale, S.G. Samant and Miss Kiran V. Gupta for the petitioner.

V.P. Vashi and R.T. Shinde for the respondent.

JUDGMENT

Tated J.—The petitioner-accused preferred this petition under section 482, Criminal Procedure Code, 1973, for quashing the proceedings in Criminal Case No. 108/S of 1982, pending before the learned Additional Chief Metropolitan Magistrate, 9th Court, at Bandra, Bombay, for the offence punishable under section 630 of the Companies Act, 1956, or in the alternative, for staying the proceedings of the said criminal case till the dispute raised by him under the Industrial Disputes Act, 1947, and which has been referred by the State to the First Labour Court is decided.

The facts giving rise to the present petition, briefly stated, are that the petitioner-accused was appointed and was working as an Industrial Relations Executive with Glaxo Laboratories (India) Ltd. (now Glindia Ltd.), a company incorporated under the Indian Companies Act, 1913. The petitioner joined the services of the said company in 1977. As the petitioner had no accommodation, the company, on July 2, 1977, allotted temporary accommodation to him at the company's transit camp. That flat had to be vacated and another temporary accommodation was given to the petitioner at 93/B, "Ashiana", Bandra, Bombay. That flat was also vacated by the petitioner on September 5, 1978, and thereafter the company allowed him to occupy the flat in question situated in the said building "Ashiana" on the eighth floor. The company, on October 8, 1980, directed the petitioner to vacate the flat by August 31, 1981. The petitioner did not vacate the flat. He was again asked on September 4, 1981, and April 16, 1982, to vacate the flat, but he did not vacate it. On September 15, 1982, the company terminated the services of the petitioner and asked him to hand over vacant possession of the flat. As the petitioner did not vacate the flat, the company filed a complaint under section 630 of the Companies Act, 1956, on November 12, 1982, against the petitioner in the Court of the Additional Chief Metropolitan Magistrate, Ninth Court, at Bandra, and it is registered as Case No. 108/S of 1982.

The company moved the learned Additional Chief Metropolitan Magistrate, Ninth Court, at Bandra, Bombay, to expedite the hearing of the said Criminal Case No. 108/S of 1982, and the learned Additional Chief Metropolitan Magistrate on March 4, 1983, passed an order for expediting the trial. Being aggrieved by the said order expediting the hearing of the criminal case, the petitioner filed a transfer application against the learned Additional Chief Metropolitan Magistrate to the Chief Metropolitan Magistrate, Bombay, and thereafter to the Sessions Court, Bombay. That application was dismissed. On June 6, 1983, the recording of evidence of respondent No. 1-complainant commenced. On June 14, 1983, the petitioner filed Criminal Application No. 616 of 1983 in this court challenging the initiation of the complaint by respondent No. 1. That application was dismissed by this court on July 13, 1983. The evidence of respondent No. 1, which had commenced on June 6, 1983, was completed on conclusion of the cross-examination on October 5, 1984, and, thereafter, on February 12, 1985, the examination of P.W. 2, R.P. Bharucha, the Vice-President, Personnel, Administration and Legal Division of the company, commenced. The examination-in-chief was completed on the same day and his cross-examination commenced on that very day and it is yet to be completed. The petitioner-accused raised a dispute under the Industrial Disputes Act, 1947, by contending that he is a "workman" within the definition of that term as appearing in section 2(s) of the said Act and the termination of his services with the company was not done in accordance with the provisions of section 25F of the said Act and as such it was bad in law and void abinitio and hence he continued to be in service. According to him, the flat in question was given to him as part of his conditions of service and as such he was entitled to occupy the same till his services were validly terminated. According to him, as his services have not been validly terminated, the company could not ask him to vacate the flat and also could not maintain any action in the criminal court under section 630 of the Companies Act, 1956. According to him, as the dispute raised by him has been referred by the State in 1985 to the Labour Court, it was necessary either to quash the criminal proceedings or to stay them till the Labour Court decided the dispute raised by him. By an application dated November 11, 1987, the petitioner moved the learned Additional Chief Metropolitan Magistrate, Ninth Court at Bandra, Bombay, for stay of the proceedings. That application was dismissed by the learned Additional Chief Metropolitan Magistrate by a reasoned order dated December 15, 1987. Feeling aggrieved, the petitioner has preferred this petition.

Learned counsel, Mr. R.S. Bhonsale, appearing for the petitioner-accused, submitted before me that though the petitioner was employed as an industrial relations executive with the company, he was doing duties of a clerical nature and as such he was a "workman" within the definition of that term as appearing in section 2(s) of the Industrial Disputes Act, 1947. Learned counsel contends that whether the petitioner is a workman and whether the termination of his services by the company is bad and illegal for non-compliance of the provisions of section 25F of the Industrial Disputes Act can be decided only by the courts constituted under the said Act and in case he is held to be a workman and it is also further held that the termination of his services or retrenchment is not in accordance with the said section 25F, he continues to be in the service of the company and as such he could not be asked to vacate the premises, as those premises were allotted to him as part of the conditions of his service. He, therefore, submits that it is necessary either to quash or to stay the criminal proceedings pending decision by the First Labour Court, Bombay. Learned counsel, Mr. V.P. Vashi, appearing for respondent No. 1-complainant, on the other hand, contends that the accommodation in question was never allotted to the petitioner as a condition of his service. According to him, as the petitioner could not arrange for his own accommodation, the company had obliged him by giving temporary accommodation and even before his services were terminated, he was asked by the company to vacate the premises, as the company wanted to honour the promise it had given to the landlord that it would surrender the premises to him by a particular date. According to learned counsel, the petitioner, when asked by the company to vacate the premises, never raised a contention that he was entitled to continue to occupy the premises as a condition of his service. On the contrary, he replied to the company that he was making arrangements for his accommodation and would vacate the premises. Learned counsel further submits that the petitioner was employed by the company in an executive capacity and that he is not a "workman" within the definition of the term appearing in section 2(s) of the Industrial Disputes Act and as such he could not raise any dispute under the said Act. He submits that the hearing of the criminal case and the examination of the complainant commenced on June 6, 1983, and one of the witnesses has been examined and cross-examined and the second witness is in the witness-box since February 12, 1985, and he is being cross-examined since then. According to him, the witness attended the trial court as many as 75 times and he has to attend it till his cross-examination is complete. According to learned counsel, though the dispute on the application of the petitioner was referred to the Labour Court in the year 1985, the petitioner did not move the trial court for stay of the criminal proceedings till November 11, 1987, that is for about two years after the dispute was referred to the Labour Court. He submits that right from the beginning, it has been the modus operandi of the petitioner to protract the trial for some reason or other and that he has not even failed to file a transfer application against the learned Additional Chief Metropolitan Magistrate, Ninth Court at Bandra, Bombay, when he ordered the expeditious hearing of the matter. Learned counsel contends that it is not necessary to stay the proceedings in the criminal court till the decision of the dispute referred to the Labour Court. According to him, he can raise the defence that is available to him in the criminal court and if the criminal court is satisfied about his defence, he can secure acquittal in the case and, therefore, it is not necessary to stay the proceedings.

The complaint under section 630 of the Companies Act, 1956, was filed against the petitioner-accused in the year 1982 and the recording of evidence has already commenced. Normally, when the recording of evidence commences in a criminal trial, the trial has to be held day-today and the matter has to be disposed of as early as possible. The speedy trial of the criminal cases is in the interest of the accused and the courts have gone to the extent of propounding that under article 21 of the Constitution of India, speedy trial is the fundamental right of the accused. Therefore, courts should be very reluctant to stay the hearing of criminal cases which have already begun. The fact that there is a dispute between the petitioner and the company as to whether the petitioner is a workman and whether his services have been properly terminated as required by section 25F of the Industrial Disputes Act, 1947, does not in any way affect the continuation of the trial and the decision of the criminal case. Section 630 of the Companies Act reads thus:

"630(1). If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

A reading of section 630 of the Companies Act, reproduced above, clearly shows that it is for the complainant to prove that the accused is wrongfully withholding the flat allotted to him by the company and the defence in the cross-examination of the complainant's witnesses or by adducing evidence can show that the accused is not wrongfully occupying the premises, and it is well settled that the burden of proof is always on the prosecution and the burden on the accused to prove the defence is not as onerous as that of the prosecution. Therefore, taking into consideration all those facts, I do not find that there is any case made out either for quashing or for staying the proceedings in Criminal Case No. 108/S of 1982.

It may be mentioned that counsel for both the parties have cited before me a large number of authorities on the question whether the petitioner is a workman, and also on the question as to when the proceedings in the criminal court should be stayed when there are civil proceedings pending, but I propose not to deal with those cases, lest my observations may, in any way, prejudice the defence or the case of the complainant, and counsel for both the parties also say that it is not necessary to discuss all those cases. Every case has to be decided on its facts, and under certain circumstances, to avoid failure of justice, it becomes necessary to stay the criminal proceedings pending the civil proceedings, but that is not the case in the present matter.

In the result, there is no substance in the petition and it is hereby dismissed. The rule is discharged. The interim stay is vacated. The writ shall be immediately sent to the trial court. The parties are directed to appear in the trial court on September 21, 1988, and the learned Additional Chief Metropolitan Magistrate shall continue the trial and dispose of the matter as expeditiously as possible within six months.

[1988] 64 COMP. CAS. 117 (MP)

High Court of Madhya Pradesh - Indore Bench]

Beharilal Gupta

Binod Mills Ltd.

K. L. Srivastava, J.

M. CR. C. NO. 1104 OF 1987

October 1, 1987

M. Bhatnagar for the Petitioner.

A. K. Chitale for the Respondent.

JUDGMENT

This is an application under section 482 of the Criminal Procedure Code, 1973, for quashing the criminal complaint under section 630 of the Companies Act, 1956, filed against the present petitioners and one Rampal Gupta (Vide Criminal Case No. 1845 of 1987 of the C. J. M. Ujjain).

Circumstances giving rise to this petition are these. The said Rampal Gupta, who is the uncle of petitioner No. 1 and the husband of petitioner No. 2, was the executive director of the non-applicant-company. In that capacity he had been allotted the bungalow in question situate at Ujjain. After he had resigned from that office, the aforesaid complaint under section 630 of the Companies Act, 1956, has been filed on the ground that he did not vacate the bungalow even after the acceptance of his resignation.

The contention of the petitioners' learned counsel is that section 630 of the Companies Act in terms permits filing of a complaint by the company only against the office-bearer or employee, and as the present petitioners are only relatives of the erstwhile executive director, the complaint against them is misconceived in law.

The contention of learned counsel for the non-applicant is that the present petitioners are actively abetting the commission of the offence by Rampal Gupta and can be proceeded against under section 630 of the Companies Act.

The point for consideration is whether the application deserves to be allowed.

Section 630 of the Companies Act is in these terms:

"630. Penalty for wrongful withholding of property.—(1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully with holds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

Learned counsel for the petitioners contended that a plain perusal of the provision extracted above shows that a person who is not an officer or an employee, whatsoever be the nature of the offence, cannot be subjected to prosecution thereunder by the company.

Shri Chitale's contention is that section 630 of the Companies Act has to be so interpreted as not to defeat the very purpose behind it and, therefore, those abetting the offence under section 630 of the Act must be held liable for prosecution thereunder along with the officer or the employee concerned.

On a careful consideration, I find that in view of the express terms of the provision extracted above, the contention of the non-applicant's learned counsel is wholly devoid of merit.

As the provision embodied in section 630 of the Companies Act does not contemplate prosecution of the petitioners thereunder, the proceedings in question so far as they relate to them deserves to be dropped and in exercise of the inherent powers under section 482 of the Criminal Procedure Code, 1973, are accordingly ordered to be dropped.

[1991] 70 COMP. CAS. 324 (BOM)

HIGH COURT OF BOMBAY

Dr. Hirak Ghosh

Tata Iron Steel Co. Ltd.

H. SURESH J.

CRIMINAL WRIT PETITION NO. 1002 OF 1988

FEBRUARY 16, 1989

P.R. Baldota, Miss R.V. Sondur and Mrs. S.C. Hirekar for the Petitioner.

K. Lahiri, R.S. Bhonsale, Kishore Lahiri, M.F. Saldanha, Miss A. Chandurkar and Girdharlal for the Respondent.

JUDGMENT

H.Suresh J.—By a letter dated June 20, 1968, issued at Jamshedpur, the petitioner was appointed as an assistant medical officer at the Tata Main Hospital, Jamshedpur, which is run by the Tata Iron and Steel Co. Ltd. The petitioner was given residential quarters by the company. After 17 years of service, on October 3, 1985, by a letter of the same date, issued at Jamshedpur, the services of the petitioner were terminated abruptly. The petitioner has challenged his termination in the Labour Court at Jamshedpur. The said proceedings are pending. In the meanwhile, the company wanted him to vacate the residential quarters. He has refused to do so. In 1986, the company filed an eviction suit in the Munsiff’s Court at Jamshedpur and sought possession and mesne profits. The said suit in the Munsiff's Court is being contested and is pending.

In the meanwhile, sometime in June, 1988, the company was advised to file a Criminal Case No. 54/S/88 in the court of the Additional Chief Metropolitan Magistrate, 33rd Court, Ballard Pier, Bombay, under section 630 of the Companies Act and section 406 of the Indian Penal Code, when apparently there was no justification for filing such a complaint in Bombay. Nothing has happened in Bombay and nothing has to be done by the petitioner in Bombay, nor is the property situated in Bombay, the sole justification being that the company has its registered office in Bombay. Hence, this petition for quashing the process issued on the ground of want of territorial jurisdiction. But the legal ingenuity with which it is pursued and persisted makes it nothing but an abuse of the process of the court.

Now, for some more details. In the complaint, after setting out the facts relating to the petitioner's employment and allotment of residential quarters, the company proceeds to set out as to how the petitioner has no right of occupation of the staff quarters as his services have been terminated. I will have a detailed analysis of this complaint done, a little later. But, in the meanwhile, the basis on which the present complaint was filed in the Magistrate's court finds its place in para 8 of the complaint, which is as follows :

"The complainant states that the premises belong to the complainant-company and the remuneration and emoluments of the officers and employees are also accounted for in the head office of the complainant-company in Bombay along with the assets and liabilities of the company. In short, all accounting of income and losses, assets and liabilities including the remuneration and emoluments of the officers and of the company are maintained in Bombay on the basis of which the balance-sheet and profit and loss accounts are made at Bombay. For the purpose of assessment of assessable income of the company for taxation purposes, accounts are maintained at the head office of the complainant-company. The complainant submits that all accountability within the meaning of section 181(4) of the Criminal Procedure Code arises at Bombay alone."

It is well-settled that the venue of an enquiry or a trial of a case like the present one is primarily to be determined by the averments contained in the complaint (see State of Madhya Pradesh v. K.P. Ghiara, AIR 1957 SC 196). But, before any definite finding on the territorial jurisdiction can be given, if the averments are not clear and the facts stated in the complaint are to be proved or disproved, the High Court will not exercise its jurisdiction under section 482, Criminal Procedure Code, as it is for the learned Magistrate to decide such a question, on evidence.

Mr. Baldota submitted that the company seeks to have filed this case in Bombay, mainly on the basis that the company has its registered office in Bombay and that the files of the company are kept in Bombay and that all accounting of income and losses, assets and liabilities are done in Bombay and is accountable in Bombay. He submitted that the draftsman of the complaint thinks that the charge of section 406, Indian Penal Code, can be brought home at a place where the accused has to "account for" under section 181(4), Criminal Procedure Code, meaning thereby where the "account of the accused is maintained by the company." This is what the company says in the complaint. He submitted that the words "accounted for" will have no application to a case of this type, where it is alleged that the accused has not returned the very property which is entrusted to him. He submitted that wherever the allegation is that the property has not been returned in specie, that would be covered by the words "any part of the property which is the subject of the offence was received or retained, or was required to be returned", as provided under section 181(4) of the Code of Criminal Procedure. But it is possible, where the property is converted into money or where money is entrusted for a particular purpose and is misappropriated, to say that the words "accounted for" under section 181(4), Criminal Procedure Code, would apply. That is not the case here.

Mr. Lahiri would not meet the argument of Mr. Baldota straight. The theme of his song is that the question of territorial jurisdiction and also the question of accountability are mixed questions of law and fact, and that, therefore, I cannot intervene under section 482, Criminal Procedure Code. He cited a number of cases in support of his contention that it is for the trial court to decide all mixed questions of fact and law (see Delhi Municipality v. Ram Pratap Singh, AIR 1976 SC 2301, Debabrata Gupta v. S.K Ghosh [1970] 1 SCC 521 ; Ramesh Chandra v. State of U.P. [1971] 3 SCC 689, and Kanailal v. Ramkrishnadas, AIR 1958 Cal 128. I have no quarrel with these propositions. But it always depends on the facts of each case.

At the outset, I may say that while it is possible for the company to contend that the withholding of the property or failure to return the property might attract section 630 of the Companies Act, 1 cannot understand how, having regard to the averments made in the complaint, there can ever be a charge under section 406 of the Indian Penal Code. In para 3 of the complaint, it is pleaded that the officers and employees are given accommodation and they are entitled to such accommodation only as far as it is part of the conditions of service and as one of the facilities made available to them. Then the complaint in the said para says : "The complainant submits that consequently the right of occupation stands automatically terminated when the relationship between the company and the officer/employee concerned comes to an end, that is, when his service with the company is terminated or he is retired from the services of the company. The complainant submits that all the properties in question regardless of where they are situate, vest in the company which is a juridical person and which is functioning from its registered office at. Bombay." In para 4 of the complaint, what is pleaded is that the accused was only a licensee, and the relevant portion is as follows : "The complainant submits that the accused was no more than a licensee of the said premises at the discretion and will of the company for a period of time coterminous with his services with the company on a nominal payment of Rs. 17 per mensem." In para 5 of the complaint, it is stated that the entrustment was for a specific purpose and for a specified prescribed period and that the accused had dominion over the property and was never permitted to convert the same to his own use. In para 6 of the complaint, the company says that the premises must be vacated so that the new set of employees who replace those who have left, can be accommodated in those premises by the company. In para 7 of the complaint, it is submitted that after termination of the services, the accused was called upon by the company to deliver vacant and peaceful possession of the said premises. Since the accused did not comply with the same, the company submits that "the accused with dishonest intention, wrongfully withheld the possession of the said premises and thereby wrongfully deprived the company of the use of the premises for its other working employees resulting in loss of money in the form of allowing house rent allowance to other employees entitled to the said premises." Needless to say, if these submissions are carried to its logical end, in every case of leave and licence or in every case of service occupancy, if the occupant does not vacate, but asserts a right, it becomes a criminal breach of trust. I am pointing this out only to show that these submissions are as absurd as what has been submitted in para 8 of the complaint. Realising that the substance of the company's case is withholding possession of the premises for which the courts in Bombay would have had no jurisdiction, the draftsman had to necessarily, but artificially, plead what is set out in para 8 of the complaint. If what is pleaded therein is accepted as true, there is not even a plea that the accused has to account for withholding the premises, in Bombay. What is pleaded is the company's liability to account for, in Bombay. But there is nothing that the accused has to account for, in Bombay. When I asked Mr. Lahiri whether there is no difference between the words "retained" or "required to be returned" and the words "accounted for" as appearing in section 181(4), Criminal Procedure Code, he would not answer the same. The only answer is that accountability is a question of fact and the learned Magistrate will decide the same.

Mr. Lahiri referred to the objects and reasons of the amended provision of section 181(4) of the Code of Criminal Procedure, the relevant portion of which is as follows :

"(i) The Law Commission in its forty-first report had commented thus on section 181(2) corresponding to this provision : '15.15. As defined in section 405, Indian Penal Code, the offence of breach of trust may be one of two types..........The place of commission of the offence in the first type is the place where the accused dishonestly misappropriated the property or converted it to his use, and in the second type it is the place where he dishonestly used or disposed of the property in violation of the law or contract. Doubt exists in many cases as to the exact manner, point of time and place where the dishonest misappropriation, conversion, use or disposal was effected. Since, these matters are within the special knowledge of the accused, the complainant is unable to adopt the jurisdiction within which the offence has been committed Though no such doubts ordinarily arise in regard to the place or places where the property in question was received or retained by the accused, these places are not always suitable for launching the prosecution....The question has, accordingly, arisen in a number of reported cases whether these offences can be inquired into or tried by a court within whose jurisdiction the accused was bound, by law or contract, to render accounts or to return the entrusted property but failed to discharge the obligation........15.24. In view of the conflicting decisions of various High Courts, we recommend that sub-section (2) of section 181 (now sub-section (4)) be amended thus —(same as sub-section (4)). We do not think it necessary to limit the additional alternative venue, namely, the local area where the property was required (by law or contract) to be returned or accounted for by the accused person, to cases where there is no evidence of the offence other than the failure to return or account for the property."

I do not understand how this would help the company in the present case. There is no plea in the present case that the residential quarters are required, by law or contract, to be returned or accounted for in Bombay. Again, this provision would apply in such cases where there is no evidence of the offence other than the failure to return or account for the property. In the present case, the withholding or retaining of the property itself is evidence of the offence. This has taken place at Jamshedpur. It is there where the property has been retained. When that is so, there is no question of the accused becoming liable to "account for" in Bombay. By amending the law, the legal position has been clarified. The words "required to be returned or accounted for" in section 181(4), Criminal Procedure Code, would apply only where there is no evidence of the offence other than failure to return or account for the property, and where any provision of law or contract requires the accused to return or account for the property in any local area, so as to invoke the jurisdiction of the courts in that area. Any other interpretation would suffer from the vice of tautology rendering the words used in the statute redundant.

The initial inspiration for the draftsman of the complaint must have come from the judgment of a single judge of the Calcutta High Court in the case of T.S. Satyanath v. J. Thomas and Co. [1985] 57 Comp Cas 648. In that case, in a similar situation, while the premises were in Cochin, a case under section 630(1)(b) of the Companies Act, was filed in Calcutta. When the accused filed a petition under section 482, Criminal Procedure Code, for quashing the proceedings on the ground of want of territorial jurisdiction, as also on another ground, it was argued across the Bar, on behalf of the complainant company that the accused could have delivered possession by sending a note posted at Calcutta or that he could perhaps send the key of the property to the head office at Calcutta. The learned judge, however, does not decide any of these questions, but he leaves this question open, granting liberty to the petitioner to reagitate these points after evidence has been adduced at the trial. Therefore, this case is no authority for determining the question of jurisdiction within the meaning of section 181(4), Criminal Procedure Code. Mr. Lahiri, however, toeing the same line as counsel for the company in the above case did, submitted that the complainant can demand that the property be given to the company in Bombay, though he could not spell out whether that could be done by sending the key or a note. Again, why should it be in Bombay ? Mr. Lahiri says that it is because the company has its registered office in Bombay. But is there a law that a company can receive its property only at its registered office ? Why not Kashmir ? Why not Kanyakumari ? Therefore, the company can as well demand at any other place of its choice, and if the accused refused, it can file a complaint in such courts. I thought that in any situation of construction of any provision of law, common sense and not sutble subterfuges which have the effect of subverting a judicial process, should be the guiding factor. The essence of the offence both under section 630(1)(b) of the Companies Act, and under section 406 of the Indian Penal Code, is the wrongful withholding or retention of the property. The offence is complete when such retention takes place. It is at Jamshedpur where the retention has taken place and it is but natural that the case be filed at Jamshedpur.

Mr. Bhonsale submitted that under section 179, Criminal Procedure Code, when an act is an offence by reason of anything which has been done and of a consequence which has ensued, the offence may be inquired into or tried by a court within whose local jurisdiction such thing has been done or such consequence has ensued. What is the consequence here ? There is no answer. Mr. Bhonsale submitted that the company has suffered loss in Bombay, consequent upon the accused having refused to vacate, as the company is unable to accommodate their other employees who have to be accommodated on the accused vacating the residential quarter and that those employees who are in the waiting list will have to be given their allowances for accommodation. Mr. Bhonsale submitted that the accounts of such employees have been maintained in Bombay. Therefore, the consequences can be said to have ensued in Bombay and that, therefore, this court has jurisdiction to entertain such a case. I am afraid that this involved argument can have no basis for invoking the jurisdiction under section 179, Criminal Procedure Code. The act with its consequence must itself constitute an offence. The property has been witheld at Jamshedpur and the company is unable to let out the premises at Jamshedpur to any other employees and as a result of which the company has to pay some allowance to their other employees, it cannot be considered as a consequence so as to invoke the jurisdiction of the court in Bombay within the meaning of section 179, Criminal Procedure Code. In fact, the company has lost sight of the fact that the company has itself filed a suit in the Munsiff's court at Jamshedpur and apart from asking for possession in that suit, the company has also asked for mesne profits in that suit. The company can as well claim further damages if the same has any nexus to the accused retaining the premises. But how does that become a criminal offence ? In fact, the following passages from the Full Bench judgment of our own High Court Jivandas v. Savchand, In re [1931] 32 CLJ 331 ; AIR 1930 Bom 490 will be a complete answer to what Mr. Bhonsale has been contending. The facts are somewhat identical to the facts of the case before me, in so far as it relates to the question of jurisdiction. The learned Chief Justice Beaumont, while explaining the scope of section 179, Criminal Procedure Code, says (at page 492 of AIR) :

"What it provides is that when a person is accused of the commission of any offence by reason of two things, by reason first of anything which has been done, and, secondly, of any consequence which has ensued, then jurisdiction is conferred on the court where the act has been done or the consequence has ensued. But, the offence must be charged by reason of those two things, the act done and the consequence which ensued. If that is so, the consequence is necessarily part of the offence. It does not matter whether you say, as some of the courts have said, that the consequence must be an integral part of the offence or whether you say, as others of the courts have said, that it is a necessary ingredient of the offence, the point is that the consequence must be part of the offence charged. The section does not refer to an offence charged by reason of an act done, from which act any consequence has ensued. When you look at the illustrations, they show clearly the meaning of the section. Take the first illustration. A is wounded within the local limits of the jurisdiction of court X, and dies within the local limits of the jurisdiction of court Z. The offence of culpable homicide of A may be inquired into or tried by X or Z. In that case, the offence charged is culpabie homicide. The mere act done of wounding is not by itself enough to constitute a charge of culpable homicide. It may, no doubt, be a ground for another charge, but that is immaterial. It does not constitute a charge of culpable homicide, unless it is followed by the consequence of death. So that, taking section 179 alone and reading it without the help of any authority, I should have thought it was plain that the consequence referred to is a consequence which forms part of the offence, and a consequence which does not form part of the offence, does not attract jurisdiction under section 179."

Again at page 493 :

"What is the natural and grammatical meaning of the word 'consequence ?' per se ; the question is : What is the natural and grammatical meaning of the word 'consequence' in the context in which it appears in section 179 ? and as I have already pointed out, in my view, having regard to the context there, the consequence is to be part of the offence."

Thereafter, dealing with the contention that the accused is to render accounts in Bombay, the learned Chief Justice says (at page 494) :

"I can see nothing in section 405, Indian Penal Code, to justify the contention that when a man in Rangoon delivers false accounts in Bombay, he is thereby making a dishonest use in Bombay of money or property which has never left Rangoon. If the principle contended for is sound, it might have far-reaching consequences. A banker or a factor in Bombay may have in his hands moneys belonging to thousands of customers or clients, and he may deliver false accounts to those customers or clients in a hundred different towns in India, and it seems to me that if the view of the Calcutta Court is right, he could be sued for criminal breach of trust in any one of the hundred towns in which he has delivered false accounts. That would be a very serious inroad upon the general provision of section 177 which requires offences to be tried by a court within the local limits of whose jurisdiction they were committed. I think that the general provision is one which is found on considerations of principle and expediency, and that courts ought not to be astute in finding reasons for assuming jurisdiction to deal with crimes committed outside their jurisdiction."

Again at page 494 :

"Now, the accounts were really falsified by the accused in Rangoon, but Mr. Velinkar says that the false accounts were sent from Rangoon to the head office in Bombay with the intention that they would be, and in effect that they were, written into the accounts at the head office, and, therefore, the falsification of the accounts in Rangoon and the sending of them to Bombay with the intention that they should be used to falsify the accounts in Bombay amounts itself to a falsification of accounts in Bombay, and for that proposition he relies on the English case, Rex v. Oli-phant [1905] 2 KB 67 ; 74 LJKB 591 ; 21 Cox. C.C. 192 ; 2 TLR 416 ; 53 WR 556 ; 94 LT 824 ; 69 JP 230. That was a case which turned on the construction of an English Act, and can be no authority on the construction of the Criminal Procedure Code ; but, apart from that I do not find in the complaint any allegation that the accounts were falsified in Rangoon for the purpose of procuring a falsification of the accounts in Bombay, i.e., that the accounts in Bombay were falsified. That being so, I think that that point also is not open to the complainant."

The other two learned judges Madgavkar J. and Baker J. agree with the learned Chief Justice when they say that where the consequential loss is not a part of that offence, section 179 has no application, but rather section 177 and section 181, sub-section (2), and, of course, presently section 181, sub-section (4).

Mr. Bhonsale also argued that wrongful loss is also a matter of evidence and I should not exercise my discretion under section 482, Criminal Procedure Code. But surprisingly Mr. Bhonsale also sought to invoke section 462, Criminal Procedure Code, to submit that no finding, sentence or order of any criminal court shall be set aside merely on the ground that the inquiry, trial or other proceedings in the course of which it was arrived at or passed, took place in a wrong sessions division, district, sub-division or other local area, unless it appears that such error has, in fact, occasioned a failure of justice. This is a strange argument. In one breath, they say that the question of territorial jurisdiction should not be decided now. At the same time, in the other breath, they say that even if the court has no territorial jurisdiction (sic), do not set aside the order unless it has resulted in injustice. I wonder whether section 462, Criminal Procedure Code, can be invoked in the present case. In my view, the very act of filing of the complaint against the petitioner-accused, when no offence whatsoever has taken place within Bombay, in a court which has no jurisdiction whatsoever and then have the process issued itself, is nothing but judicial oppression which cannot be obviated by resorting to section 462, Criminal Procedure Code.

Mr. Bhonsale relied on the case of Raj Kumari v. Dev Raj, AIR 1977 SC 1101, to show that there are two types of jurisdiction of a criminal court, namely, (1) the jurisdiction with respect to the power of the court to try particular kinds of offences, and (2) its territorial jurisdiction. While the former goes to the root of the matter and any transgression of it makes the entire trial void, the latter is not of a peremptory character and curable under section 531 (equivalent to section 462, Criminal Procedure Code.).

I need not deal with this authority, as, in my view, this authority does not lay down the proposition that whatever be the offence and wherever it might be committed, the complainant can choose a court of his choice and summon the accused to that court, and take shelter under section 462. Ordinarily, if the court lacks inherent jurisdiction to try an offence, the entire proceedings become null and void. But, otherwise, if the court has power to try an offence, it may not be possible to set aside its orders, unless the accused can show that it has resulted in injustice. But, that does not mean that the complainant can choose, with impunity, a court of his choice and drag the accused to that court, and, in the present case, all on the basis of a specious plea that the company has its registered office, in Bombay. The plea of want of territorial jurisdiction has been taken at the very beginning of the case and in such a case, it becomes the duty of the court to go into this question, as continuance of the proceedings any further, if the court has no jurisdiction whatsoever itself, becomes an abuse of the process of the court.

In the result, I pass the following order :

order

I quash the process issued in Case No. 54/S of 1988, now pending in the Court of the Additional Chief Metropolitan Magistrate, 33rd Court, Ballard Pier, Bombay.

Rule is made absolute accordingly.

[1991] 71 COMP. CAS. 403 (SC)

SUPREME COURT OF INDIA

Gokak Patel Volkart Ltd.

Dundayya Gurushiddaiah Hiremath

K.N. SAIKIA AND MADAN MOHAN PUNCHHI JJ.

CRIMINAL APPEALS NOS. 97, 98, 99, 100 AND 101 OF 1991

FEBRUARY 14, 1991

A.S. Bobde, Vinod Bobde, S. Sukumaran, for the Appellant.

G. Ramaswamy, K.N. Nobi Singh and Lalita Kaushik, for the Respondent.

M. Veerappa for the State.

JUDGMENT

K.N. Saikia J.—Special leave granted.

These five appeals are from as many similar orders of the High Court of Karnataka at Bangalore dismissing the appellant company's criminal revision petitions impugning the respective orders passed by the Judicial Magistrate, First Class, Gokak, holding that the appellants' complaint against the respondents alleging offence under section 630 (1)(b) of the Companies Act, by not vacating the company's quarters as required by it even more than six months after retirement of the respondents, were barred by limitation and the same could not be taken into consideration.

The first respondent in each of these criminal appeals was appointed on August 1, 1942, June 11, 1945, November 24, 1939, May 1, 1939, and January 23, 1937, respectively, in the service of the appellant-company and they retired on March 14, 1984, October 1, 1983, February 12, 1984, October 4, 1983, and January 27, 1981, respectively, from the appellant-company's service whereafter, each of them was required to vacate the company's quarters. Each having declined to vacate the company quarter even more than six months after retirement, despite legal notice, the appellant-company filed a private criminal complaint under section 630(1)(b) of the Companies Act, 1956, and section 406, Indian Penal Code, against each of them, before the Judicial Magistrate, First Class, Gokak, and, in each case, after inquiry, framed charges for offences under section 406, Indian Penal Code, and section 630(1)(b) of the Companies Act, 1956. The learned Judicial Magistrate, after the prosecution had examined its witnesses, recorded the statements of all the accused under section 313 of the Criminal Procedure Code and despite a finding that the accused in each case was allotted a quarter by the company for his use and occupation and each had no authority to retain possession of the same after he retired, and that the cause of action in each case arose when the accused failed to deliver possession of the quarter to' the company, held that the documents produced by the company did not disclose anything regarding the retirement of the accused from the service, but at the same time he recorded that, during the course of evidence, PW-1 had deposed that each of the accused retired from service and, immediately after the retirement, failed to redeliver possession of the company's quarter which attracted section 630(1)(b) of the Companies Act and which was punishable only with fine and the complaint, therefore, ought to have been filed within six months from the date of retirement of the accused, and as the complaint was filed only during the year 1985, it was clearly barred by limitation and, therefore, the complaint could not be taken into consideration, and consequently, the accused was to be acquitted. The company's revision petition therefrom was dismissed by the High Court holding that the view taken by the trial Magistrate was plausible and reasonable as the complaint was filed in each case beyond six months from the date of the alleged offence and that the question of limitation was concluded by a decision of the same High Court in W.M.I. Cranes Ltd. v. G.G. Advani [1984] 1 Kar Law Chronicle 462, wherein it was held that the offence under section 630 (1) of the Companies Act was not a continuing offence and the decisions of this court in Bhagirath Kanoria v. State of Madhya Pradesh with Bahadur Singh v. Provident Fund Inspector and Raja Bahadur Singh v. Provident Fund Inspector, AIR 1984 SC 1688 ; [1986] 68 FJR 98 would not be of any assistance to the petitioner.

Mr. A.S. Bobde, learned counsel appearing for the appellant company, submits that the offence under section 630(1)(b) of the Companies Act, 1956, is a continuing offence and the learned courts below erred in holding to the contrary and dismissing the company's complaints on the ground of limitation.

Mrs. Lalitha Kaushik, learned counsel for each of the first respondents, submits that when the first respondent, upon his retirement, failed to vacate and deliver possession of the company's quarter to the company, the offence must be taken to have been complete, and thereafter the right would accrue to the first respondent by adverse possession ; and that if this state of affairs continued till completion of the period of limitation, the company's right would be extinguished. The trial court as well as the High Court, according to counsel, rightly held that the offence was not a continuing one.

The only question to be decided in these appeals, therefore, is whether the offence under section 630(1)(b) of the Companies Act is a continuing offence for the purpose of limitation.

What then is a continuing offence? According to Black's Law Dictionary, Fifth Edition (Special Deluxe), "Continuing" means "enduring; not terminated by a single act or fact ; subsisting for a definite period or intended to cover or apply to successive similar obligations or occurrences." Continuing offence means "type of crime which is committed over a span of time." As to period of statute of limitations in a continuing offence, the last act of the offence controls the commencement of the period. "A continuing offence, such that only the last act thereof within the period of the statute of limitations need be alleged in the indictment or information is one which may consist of separate acts or a course of conduct but which arises from that singleness of thought, purpose or action which may be deemed a single impulse. So also, a "continuous crime" means "one consisting of a continuous series of acts, which endures after the period of consummation, as the offence of carrying concealed weapons. In the case of instantaneous crimes, the statute of limitation begins to run with the consummation while, in the case of continuous crimes, it only begins with the cessation of the criminal conduct or act."

The corresponding concept of continuity of a civil wrong is to be found in the law of torts. Trespass on land in the English law of torts (trespass quare clausum fregit) consists in the act of (1) entering upon land in the possession of the plaintiff, or (2) remaining upon such land, or (3) placing or projecting any object upon it—in each case without lawful justification.

Trespass by remaining on land, as we read in Salmond and Heuston on the Law of Torts, 19th edition, page 50 : "Even a person who has lawfully entered on land in the possession of another commits a trespass if he remains there after his right of entry has ceased. To refuse or omit to leave the plaintiffs land or vehicle is as much a trespass as to enter originally without right. Thus, any person who is present by the leave and licence of the occupier may, as a general rule, when the licence has been properly terminated, be sued or ejected as a trespasser if, after request and after the lapse of a reasonable time, he fails to leave the premises.

Trespass in law of torts may be a continuing one. The authors write: "That trespass by way of personal entry is a continuing injury, lasting as long as the personal presence of the wrongdoer, and giving rise to actions de die in diem so long as it lasts, is sufficiently obvious. It is well settled, however, that the same characteristic belongs in law even to those trespasses which consist in placing things upon the plaintiffs land. Such a trespass continues until it has been abated by the removal of the thing which is thus trespassing ; successive actions will lie from day to day until it is so removed : and in each action damages (unless awarded in lieu of an injunction) are assessed only up to the date of the action. Whether this doctrine is either logical or convenient may be a question, but it has been repeatedly decided to be the law."

Again, if the entry was lawful but is subsequently abused and continued after the permission is determined, the trespass may be ab initio. In 1610, six carpenters entered the Queen's Head Inn, Crip-plegate, and consumed a quart of wine (7d.) and some bread (1d.), for which they refused to pay. The question for the court was whether their non-payment made the entry tortious, so as to enable them to be sued in trespass quare clausum fregit. The court held that : "When entry, authority or licence is given to any one by the law, and he doth abuse it, he shall be a trespasser ab initio," but that the defendants were not liable as their non-payment did not constitute a trespass. The rule is that the authority, having been abused by doing a wrongful act under cover of it, is cancelled retrospectively so that the exercise of it becomes actionable as a trespass.

In Halsbury's Laws of England, 4th edition, Volume 45, para 1389, it is said :

"If a person enters on the land of another under an authority given him by law, and, while there, abuses the authority by an act which amounts to a trespass, he becomes a trespasser ab initio, and may be sued as if his original entry were unlawful. Instances of an entry under the authority of the law are the entry of a customer into a common inn, of a reversioner to see if waste has been done, or of a commoner to see his cattle.

To make a person a trespasser ab initio there must be a wrongful act committed, a mere nonfeasance is not enough."

Against the above background, we may now examine the relevant provision of law, keeping in mind that some of the torts have their counterparts in criminal law in India.

Section 441 of the Indian Penal Code defines criminal trespass as follows :

"Whoever enters into or upon property in the possession of another with intent to commit an offence or to intimidate, insult or annoy any person in possession of such property,

or having lawfully entered into or upon such property, unlawfully remains there with intent thereby to intimidate, insult or annoy any such person, or with intent to commit an offence,

is said to commit 'criminal trespass'."

House trespass is punishable under section 448 of the Indian Penal Code. It is significant that when entry into or upon property in possession of another is lawful, then unlawfully remaining upon such property with the object of intimidating, insulting or annoying the person in possession of the property would be criminal trespass. The offence would be continuing so long as the trespass is not lifted or vacated and intimidation, insult or annoyance of the person legally in possession of the property is not stopped. The authors of the Code had the following words to say :

"We have given the name of trespass to every usurpation, however slight, of dominion over property. We do not propose to make trespass, as such, an offence, except when it is committed in order to the commission of some offence injurious to some person interested in the property on which the trespass is committed, or for the purpose of causing annoyance to such a person. Even then we propose to visit it with a light punishment, unless it be attended with aggravating circumstances.

These aggravating circumstances are of two sorts. Criminal trespass may be aggravated by the way in which it is committed. It may also be aggravated by the end for which it is committed."

Section 630 of the Companies Act reads as under ;

"Penalty for wrongful withholding of property.—(1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company ; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act ; he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

Thus, both wrongfully obtaining and wrongfully withholding have been made offences punishable under sub-section (1). Under subsection (2) knowingly misapplication has also been envisaged. The offence continues until the officer or employee delivers up or refunds any such property if ordered by the court to do so within a time fixed by the court, and in default to suffer the prescribed imprisonment. The idea of a continuing offence is implied in sub-section (2).

Section 468 of the Criminal Procedure Code says :

"Bar to taking cognizance after lapse of the period of limitation.—(1) Except as otherwise provided elsewhere in this Code, no court shall take cognizance of an offence of the category specified in sub-section (2), after the expiry of the period of limitation.

(2) The period of limitation shall be—

(a) six months, if the offence is punishable with fine only ;

(b) one year, if the offence is punishable with imprisonment for a term not exceeding one year ;

(c) three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years.

(3) For the purposes of this section, the period of limitation, in relation to offences which may be tried together, shall be deter mined with reference to the offence which is punishable with the more severe punishment or, as the case may be, the most severe punishment."

The parties have not disputed that this case attracted section 468 (1) and (2)(a). Regarding the fact of the first respondent having retired from service, though the trial Magistrates observed that the document did not specifically state that the first respondent retired, when after referring to oral evidence, the cause of action under section 630(1)(b) was held to have arisen on the first respondent's failure to vacate and deliver possession of the company's quarter and that the period of limitation ran therefrom tantamounted to finding that the first respondent did retire.

"Officer" or "employee" in section 630 of the Companies Act includes both present and past officers and employees. In Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1987] 4 SCC 361; [1988] 63 Comp Cas 1 (SC), at paragraph 3 of the report, this court said (at pages 10, 11 of 63 Comp Cas) :

"Section 630 of the Companies Act, which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draughtsman of the Act. The section is in two parts. Sub-section (1) by clauses (a) and (b) creates two distinct and separate offences. First of these is the one contemplated by clause (a), namely, where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment to which he is not entitled. Normally, it is only the present officers and employees who can secure possession of any property of a company. It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property. This is the function of clause (a) and although it primarily refers to the existing officers and employees, it may also take in past officers and employees. In contrast, clause (b) contemplates a case where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment. That appears to be one of the functions of clause (b). It would be noticed that clause (b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. That would primarily apply to the present officers and employees and may also include past officers and employees. There is therefore no warrant to give a restrictive meaning to the term 'officer or employee' appearing in sub-section (1) of section 630 of the Act. It is quite evident that clauses (a) and (b) are separated by the word 'or' and therefore are clearly disjunctive."

This court also observed at paragraph 7 of the report that the beneficent provision contained in section 630, no doubt penal, has been purposely enacted by the legislature with the object of providing a summary procedure for retrieving the property of the company (a) where an officer or employee of a company wrongfully obtains possession of property of the company, or (b) where having been placed in possession of any such property during the course of his employment, wrongfully withholds possession of it after the termination of his employment. "It is the duty of the court to place a broad and liberal construction on the provision in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy."

As was reiterated in Amrit Lal Chum v. Devoprasad Dutta Roy [1988] 63 Comp Cas 839, (headnote) that "section 630 of the Companies Act, 1956, plainly makes it an offence if an officer or employee of a company who was permitted to use the property of the company during his employment, wrongfully retains it or occupies the same after the termination of his employment. It is the wrongful withholding of such property, meaning the property of the company, after termination of the employment, which is an offence under section 630(1)(b) of the Act". What then is the nature of this offence ? The question then is whether it is a continuing offence or not. According to Black's Law Dictionary, Revised Fourth Edition, "continuing offence" means a transaction or a series of acts set on foot by a single impulse, and operated by an unintermittent force, no matter how long a time it may occupy. In State of Bihar v. Deokaran Nenshi [1973] 1 SCR 1004 ; AIR 1973 SC 908, the question was whether the failure to furnish returns on the part of the owner of a stone quarry under regulation 3 of the Indian Metalliferrous Mines Regulations, 1926, even after a warning from the Chief Inspector was a continuing offence. Section 79 of the Mines Act, 1952, which provided that no court shall take cognizance of an offence under the Act unless a complaint was made within six months from the date of the offence and the explanation to the section provided that if the offence in question was a continuing offence, the period of limitation shall be computed wherefore to every part of the time during which the said offence continued. Shelat J. for the court observed (at page 909) :

"A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or non-compliance occurs and recurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission is committed once and for all."

Their Lordships referred to English cases, Best v. Butler and Fitzgibbon [1932] 2 KB 108, Verney v. Mark Fletcher and Sons Ltd. [1909] 1 KB 444, King v. Taylor [1908] 2 KB 237 and London County Council v. Worley [1894] 2 QB 826. In Best v. Butler and Fitzgibbon [1932] 2 KB 108, in England, the Trade Union Act, 1871, by section 12, provided that if any officer, member or other person being or representing himself to be a member of a trade union, by false representation or imposition obtained possession of any moneys, books, etc., of such trade union, or, having the same in his possession wilfully withheld or fraudulently misapplied the same, a court of summary jurisdiction would order such person to be imprisoned. The offence of withholding the money referred to in this section was held to be a continuing offence, presumably because every day that the moneys were wilfully withheld, an offence within the meaning of section 12 was committed. In Verney's case [1909] 1 KB 444, section 10(1) of the Factory and Workshop Act, 1901, inter alia, provided that every fly-wheel directly connected with steam, water or other mechanical power must be securely fenced. Its sub-section (2) provided that a factory in which there was contravention of the section would be deemed not to be kept in conformity with the Act. Section 135 provided a penalty for an occupier of a factory or workshop if he failed to keep the factory or workshop in conformity with the Act. Section 145 provided that information of the offence under section 135 shall be laid within three months after the date on which the offence came to the knowledge of the inspector of the district within which the offence was charged to have been committed. The contention was that, in May, 1905, and again in March, 1908, the fly-wheel was kept un-fenced to the knowledge of the Inspector and yet the information was not laid until July 22, 1908. The information, however, stated that the fly-wheel was unfenced on July 5, 1908, and that was the offence charged. It was held that breach of section 10 was a continuing breach on July 10, 1908, and, therefore, the information was in time. The offence under section 135 read with section 10 consisted in failing to maintain the factory in conformity with the Act. Every day the flywheel remained unfenced, the factory was maintained not in conformity with the Act and, therefore, the failure continued to be an offence. Hence, the offence defined in section 10 was continuing offence. In London County Council [1894] 2 KB 826, section 85 of the Metropolis Management Amendment Act, 1852, prohibited the erection of a building on the side of a new street of less than fifty feet in width, which shall exceed in height the distance from the front of the building on the opposite side of the street without the consent of the London County Council and imposed penalties for offences against the Act and a further penalty for every day during which such offence continued after notice from the County Council. The court construed section 85 as having laid down two offences : (1) building to a prohibited height, and (2) continuing such a structure already built after receiving a notice from the County Council. The latter offence was a continuing offence applying to anyone who was guilty of continuing the building at the prohibited height after notice from the County Council.

State of Bihar v. Deokaran Nenshi [1973] 1 SCR 1004 was explained by this court in Bhagirath Kanoria v. State of Madhya Pradesh, AIR 1984 SC 1688 ; [1986] 68 FJR 98. Therein, the Provident Fund Inspector filed complaints against the directors, the factory manager and the respondent-company charging them with nonpayment of employer's contribution under the Employees' Provident Funds and Family Pension Fund Act, 19 of 1952, from February, 1970, to June, 1971. At the trial, the accused contended that since the limitation prescribed by section 468 of the Code of Criminal Procedure, 1973, had expired before the filing of the complaints, the Court had no jurisdiction to take cognizance of the complaints. The trial court having held that the offences of which the accused were charged were continuing offences and, therefore, no question of limitation could arise, and that order having been upheld by the High Court in revision, the directors in appeal to this court contended that the offence of non-payment of the employer's contribution could be committed once and for all on the expiry of 15 days after the close of every month and, therefore, prosecution for the offence should have been launched within the period of limitation provided in section 468 of the Code. Rejecting the contention, it was held by this court that the offence of which the appellants were charged, namely, non-payment of the employer's contribution to the provident fund before the due date, was a "continuing offence" and, therefore, the period of limitation prescribed by section 468 of the Code could not have any application and it would be governed by section 472 of the Code, according to which a fresh period of limitation began to run at every moment of the time during which the offence continued. It was, accordingly, held that each day the accused failed to comply with the obligation to pay their contribution to the fund, they committed a fresh offence. Section 472 of the Code of Criminal Procedure deals with continuing offences and says :

"In the case of a continuing offence, a fresh period of limitation shall begin to run at every moment of the time during which the offence continues."

The concept of a continuing offence does not wipe out the original guilt, but it keeps the contravention alive day after day. It may also be observed that the courts, when confronted with provisions which lay down a rule of limitation governing prosecutions, in cases of this nature, should give due weight and consideration to the provisions of section 473 of the Code which is in the nature of an overriding provision and, according to which, notwithstanding anything contained in the provisions of Chapter XXXVI of the Code of Criminal Procedure, any court may take cognizance of an offence after the expiration of a period of limitation if, inter alia, it is satisfied that it is necessary to do so in the interest of justice.

The expression "continuing offence" has not been defined in the Code. The question whether a particular offence is a "continuing offence" or not must, therefore, necessarily depend upon the language of the statute which creates that offence, the nature of the offence and the purpose intended to be achieved by constituting the particular act as an offence.

Applying the law enunciated above to the provisions of section 630 of the Companies Act, we are of the view that the offence under this section is not such as can be said to have consummated once for all. Wrongful withholding or wrongfully obtaining possession and wrongful application of the company's property, that is, for purposes other than those expressed or directed in the articles of the company and authorised by the Companies Act, cannot be said to be terminated by a single act or fact but would subsist for the period until the property in the offender's possession is delivered up or refunded. It is an offence committed over a span of time and the last act of the offence will control the commencement of the period of limitation and need be alleged. The offence consists of a course of conduct arising from a singleness of thought, purpose or refusal to deliver up or refund which may be deemed a single impulse. Considered from another angle, it consists of a continuous series of acts which endure after the period of consummation on refusal to deliver up or refund the property. It is not an instantaneous offence and limitation begins with the cessation of the criminal act, i.e., with the delivering up or refund of the property. It will be a recurring or continuing offence until the wrongful possession, wrongful witholding or wrongful application is vacated or put an end to. The offence continues until the property wrongfully obtained or wrongfully withheld or knowingly misapplied is delivered up or refunded to the company. For failure to do so, sub-section (2) prescribes the punishment. This, in our view, is sufficient ground for holding that the offence under section 630 of the Companies Act is not a one-time but a continuing offence and the period of limitation must be computed accordingly, and when so done, the instant complaints could not be said to have been barred by limitation. The submission that when the first respondent, upon his retirement, failed to vacate and deliver possession of the company's quarter to the company, the offence must be presumed to have been complete, has, therefore, to be rejected.

These appeals, accordingly, succeed. The impugned orders are set aside and the cases are remanded to the trial court for disposal in accordance with law in the light of the observations made here-in-above.

[1990] 68 COMP. CAS. 482 (CAL.)

HIGH COURT OF CALCUTTA

Arun Kumar Das

State

A. K. CHATTERJEE J.

CRIMINAL REVISION NO. 909 OF 1989

SEPTEMBER 28, 1989

Sushanta Banerjee for the Petitioner.

Dr. Monotosh Mookherjee for the Respondent.

JUDGMENT

A.K. Chatterjee J. — The short point raised in this revisional application is whether an offence punishable under section 630 of the Companies Act, 1956, is a continuing one or not. Material facts which may be necessary for appreciation of the contention raised on behalf of the petitioner are that he was a Deputy Divisional Manager of Bharat Petroleum Corporation Ltd., opposite party No. 2 herein, and he was allotted by the company a flat in the ground floor of premises No. 15, Rowland Road. The petitioner had retired from the service of the company on or about September 1, 1984, but as he did not vacate the flat allotted to him, the said company had filed a complaint before a competent Magistrate sometime in 1986 under section 630 of the Companies Act. The petitioner contends that the offence, if any, was committed and completed on or about September 1, 1984, and, therefore, the learned Magistrate had committed an error by taking cognizance of the complaint filed in 1986, because the offence being punishable with fine only, the complaint should have been filed within six months from the date of its commission. This contention is sought to be repelled on the ground that the offence in question is a continuing one and, as such, there was no question of taking cognizance after expiry of the period of limitation.

In order to determine whether an offence punishable under section 630 of the Companies Act is a continuing one or not, it is necessary to bear in mind the distinctive feature of such an offence which has been explained by the Supreme Court in Deokaran's case, AIR 1973 SC 908, Shelat J. delivering judgment for the court had stated that a continuing offence was one which was susceptible of continuance and was distinguishable from one which was committed once and for all It was further pointed out that the distinction between the two kinds of offences was between an act or omission which constituted an offence once and for all and an act or omission which continued and, therefore, constituted a fresh offence every time or occasion on which it continued. Therefore, in order to decide whether an offence punishable under section 630 of the Companies Act is susceptible of continuance or not, it is imperative to look to the language of the section itself. The company wants to make out a case under section 630(1)(b) of the Companies Act which provides that if any officer or employee of a company, having any property of the company in his possession wrongfully withholds it, etc., he shall, on the complaint of the company or any other person specified therein, be punishable with fine extending up to Rs. 1,000. Clearly, therefore, the offence consists of wrongfully withholding property of the company and, necessarily, the offence must continue so long as the property is so withheld. The same view has also been taken by the Rajasthan High Court in Beguram v. Jaipur Udyog Ltd. [1987] 61 Comp Cas 744, though on a different consideration.

Learned advocate for the petitioner has pointed out that the offence of non-filing of the annual return or the copy of the balance-sheet, etc., with the Registrar under section 159 and section 220, respectively, of the Companies Act are non-continuing offences and certain Bench decisions of this court to that effect were cited. Learned advocate for the petitioner has argued that, for an analogous reason, the offence punishable under section 630 of the Companies Act should also be held as a non-continuing offence. There is no merit in this contention as, clearly, the analogy does not apply. Both sections 159 and 220 of the said Act provide, inter alia, that the annual return and copy of balance-sheet, etc., shall be filed within a prescribed date and thus the offence is committed and completed as soon as the same were not filed within the prescribed date. On the other hand, section 630(1)(b) of the said Act, as already pointed out, makes wrongful withholding of the property of the company an offence, necessarily implying that the offence continues as long as the property is so withheld. Neither section 159 nor section 220 of the Companies Act provides that withholding the annual return or the copy of the balance-sheet constitutes an offence punishable under section 162 of the same Act. It is because of this distinction in the language of the different sections pointed out above that analogy sought to be drawn by learned Advocate for the petitioner does not apply.

For the reasons stated above, it is held that the instant revisional application is without any merit and it is rejected. All interim orders are vacated and the learned Magistrate is directed to dispose of the proceeding with utmost expedition.

[1990] 68 COMP. CAS. 324 (SC)

SUPREME COURT OF INDIA

Atul Mathur

Atul Kalra

S. NATARAJAN AND S. RATNAVEL PANDIAN JJ.

CRIMINAL APPEAL NO. 549 OF 1987

AUGUST 8, 1989

Anil B. Divan, V.P. Vashi, Ms. Naina Kapur and K.J. John, for the Appellant.

H.M. Jagtiani, S. Mullik, Kamini Jaiswal and A.M. Khanwilkar, for the Respondents.

JUDGMENT

The judgment of the court was delivered by

Natarajan J.—What falls for consideration in this appeal by special leave is whether the High Court has erred in law in setting aside the judgments of the courts below in a matter arising under section 630 of the Companies Act in exercise of its powers under section 482 of the Criminal Procedure Code, 1973.

The facts are as under: Jenson and Nicholson (India) Ltd. (appellant company) had secured a flat in Bombay (No. 84, Mehr-Dad, Cuffe Parade) belonging to one Mehdi Mandil, on leave and licence basis for the residential occupation of the flat by its officers/employees. The leave and licence agreement was entered into on behalf of the company by the first respondent who was then the Divisional Sales Manager of the company at Bombay, the registered office of the company being at Calcutta. It is common ground that the first respondent acted on behalf of the company under a power of attorney executed in his favour by the company. The leave and licence was for an initial period of 11 months but subject to renewal for a total period of 66 months. The agreement provided for payment of advance compensation of Rs. 16,500 for 11 months and a monthly compenstion of Rs. 1,500 and a deposit of Rs. 3,50,000 free of interest to be returned at the end of the licence period. The company paid the deposit and the advance compensation and was paying the monthly compensation of Rs. 1,500 thereafter. On taking possession of the flat on November 1, 1980, the company allowed the first respondent to occupy it as an employee of the company. More than three years later, i.e., on March 23, 1984, the first respondent filed a suit (Suit No. 1360 of 1984), in the Court of Small Causes, Bombay, against the company and the owner of the flat for a declaration that he is the actual licensee of the flat and for a permanent injunction to restrain the defendants from interfering with his possession of the flat. The first respondent claimed to be the licensee of the flat on the basis of two letters dated January 25, and February 1, 1984, written to him by a junior employee of the company, viz., one Mr. Jain, who was the office manager of the company at Bombay and working under the first respondent. In those letters, Mr. Jain has made it appear that the first respondent was the tenant of the flat. Besides the reliefs of declaration and injunction, certain other reliefs such as fixation of standard rent, etc., were also asked for in the suit against the owner of the flat. Three days after the filing of the suit, i.e., on March 26, 1984, the first respondent tendered a letter of resignation to the company and his resignation was accepted by the management on March 27, 1984. In accordance with his claim to be the licensee of the flat, the first respondent offered to reimburse the company the deposit amount of Rs. 3,50,000 but the company declined the offer and asserted that it was the licensee of the flat and not the first respondent.

As the first respondent failed to vacate the flat after resigning his post, the company filed a complaint against him under section 630 of the Companies. Act in the Court of the Additional Chief Metropolitan Magistrate, Bombay. The complaint was filed on behalf of the company by its power of attorney agent, Mr. Atul Mathur, who had been appointed as Divisional Sales Manager, Bombay, in place of the first respondent after his resignation. The Additional Chief Metropolitan Magistrate took the complaint on file and after trial found the first respondent guilty under section 630 of the Companies Act and sentenced him to pay a fine of Rs. 1,000 and also directed him to deliver possession of the flat to the company on or before June 15, 1987, in default to suffer simple imprisonment for three months. Against the said judgment, the first respondent preferred an appeal to the Sessions Court, but by judgment dated October 22, 1986, the Additional Sessions Judge, Greater Bombay, dismissed the appeal. The Trial Magistrate as well as the appellate court concurrently held that the company was the licensee of the flat, that the first respondent had acted only as the power of attorney agent of the company in entering into the agreement, that his occupation of the flat was only as an employee of the company and consequently the first respondent was in unlawful occupation of the flat after he ceased to be an employee of the company. The first respondent was, therefore, directed to deliver possession of the flat to the company.

Despite the concurring judgments rendered against him, the first respondent filed a petition before the High Court under article 227 of the Constitution but at the time of arguments, he was permitted to convert the petition into one under section 482, Code of Criminal Procedure. Three contentions as under were urged before the High Court to assail the judgments of the courts below:

1. The complaint had been filed by a person without due authority to act on behalf of the company and this irregularity vitiated the entire proceedings.

2. The Additional Sessions Judge had wrongly cast the burden of proof on the accused and the wrong approach has vitiated the judgment of the first appellate court.

3. Since complicated questions of title were involved, the Additional Chief Metropolitan Magistrate had no jurisdiction or competence to adjudicate the matter in summary proceedings under section 630 of the Companies Act.

The first two contentions did not find favour with the High Court. On the first contention, the High Court held that though the power of attorney conferred only special powers on Mr. Atul Mathur to act on behalf of the company only in civil suits, sales tax proceedings and excise matters, Mr. Atul Mathur could still validly file the complaint as he was an officer of the company in the rank of a manager and could, therefore, validly act on behalf of the company. The High Court further held that even if Mr. Atul Mathur did not have the requisite competence to file the complaint, the irregularity was a curable one under section 465 of the Code of Criminal Procedure. As regards the second contention, the High Court held that the Additional Sessions Judge has nowhere cast the burden of proof on the accused in dealing with the appeal and hence the appellate judgment did not suffer from any perversity or illegality. The High Court, however, sustained the third contention of the first respondent and set aside the sentence of fine and the direction to the first respondent to deliver possession of the flat to the company. In giving its acceptance to the third contention, the High Court felt influenced by the two letters, exhibits 3 and 4, written by Mr. Jain and felt that the letters afforded a basis for the first respondent to bona fide dispute the company's claim for possession of the flat. The High Court was also of the view that since the first respondent had filed a suit even before the complaint was filed, the civil court was in seisin of the matter and, therefore, the criminal court "ought to have stayed its hand and allowed the civil court to adjudicate upon the issue".. In support of its view, the High Court invoked the ratio in Damodar Das Jain v. Krishna Charan Chakraborti [1985] 57 Comp Cas 115 (Bom).

The aggrieved company is now before us. Mr. Anil Diwan, learned senior counsel appearing for the company, argued that the High Court, after having held that there were no reasons to interfere with the concurrent findings of the courts below, ought not to have gone back on its view and rendered a finding that a bona fide dispute was involved in the proceedings and the dispute could be adjudicated upon only by a civil court and not by a criminal court in summary proceedings under section 630 of the Companies Act. Mr. Anil Diwan referred to the acceptance of the findings of the first two courts by the High Court in its judgment in the following terms:

"I do not think that there is any scope for reappreciating or reappraising the evidence. Two courts below have come to concurrent findings of fact and I see no reason for interfering with the conclusions arrived at by the courts below".

It was, therefore, urged by counsel that once the concurrent findings of the courts below found acceptance with the High Court, there was no justification for the High Court to set aside the judgment of the two courts. Learned counsel further submitted that section 630 of the Companies Act has been provided with an intent and purpose and its scope and ambit have been set out by this court in reported decisions, but the High Court has failed to notice them and construed section 630 in an unrealistic manner and this had led to miscarriage of justice. Mr. Diwan also invited our attention to the leave and licence agreement entered into by the company with the owner of the flat as well as an affidavit and letter given by the first respondent at the time of the agreement and submitted that, in the face of these clinching documents, there was absolutely no room for the first respondent to contend that he and not the company was the licensee of the flat in question. He also commented upon the conduct of the first respondent in getting two letters, exhibits Nos. 3 and 4, written by a junior employee of the company without the knowledge of the directors of the company and filing a suit on the basis of those letters and resigning his post three days later and refusing to vacate the flat. It was finally urged by Mr. Diwan that the High Court went wrong in applying the ratio in Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom), because there was no bona fide dispute between the first respondent and the company regarding the flat occupied by the first respondent.

Mr. Jagtiani, learned counsel for the first respondent who had appeared for him before the High Court, also contended, on the other hand, that the High Court has acted rightly in exercising its power under section 482, Criminal Procedure Code, and in setting aside the judgments of the lower courts and the High Court's judgment does not suffer from any error of law which needs correction by this court. The arguments of Mr. Jagtiani may briefly be summarised as under:

1. Proceedings under section 630 of the Companies Act are in the nature of criminal proceedings and consequently the burden of proof is upon the complainant. Besides, the accused is entitled to the benefit of doubt on all matters not proved beyond reasonable doubt. Moreover, any weakness in the accused's case set up by way of defence cannot be relied upon to fill up the lacuna in the prosecution case.

2. The letters, exhibits 3 and 4, written by Mr. Jain on behalf of the company, have not been convincingly disproved by the company and as such a bona fide doubt exists as to who is the actual licensee of the flat and the said dispute can be resolved only by a civil court and not by a criminal court.

3. A civil suit had already been filed by the first respondent and it was pending in the civil court and as such the criminal court should not have adjudicated upon the rights of the parties but should have directed them to seek their remedies before the civil court.

4. The explanation offered by Mr. Jain that he had written the letters under duress and coercion has been falsified by his admissions in cross-examination and hence the criminal court should have accepted the first respondent's plea that a bona fide dispute existed between the parties regarding the licence rights over the flat and refrained from adjudicating upon the rights of the parties in the complaint filed under section 630.

5. Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom), sets out the correct ratio and the High Court was fully justified in applying the said ratio to this case.

Before we deal with the contentions of the parties, we may refer to section 630 of the Companies Act and the decisions of this court on the scope and ambit of the section. Section 630 reads as under:

"630. Penalty for wrongful withholding of property.— (1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully with holds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act; he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

There was divergence of opinion between the Bombay High Court and the Calcutta High Court regarding the interpretation of the words "any officer or employee of a company", the Bombay High Court giving a broad interpretation to the words and the Calcutta High Court giving a narrow interpretation. The controversy was set at rest by this court in Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1987] 4 SCC 361; [ 1988] 63 Comp Cas 1, by holding that the term "officer or employee" of a company applies not only to existing officers or employees but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property, or (b) having obtained possession of such property during his employment, wrongfully withholds the same after the termination of his employment. It was pointed out that wrongful obtainment of possession would attract section 630(1)(a) and wrongful withholding of possession of the company's property would attract section 630(1)(b) of the Act, It is, therefore, clear that the purpose of enacting section 630 is to provide speedy relief to a company when its property is wrongfully obtained or wrongfully withheld by an employee or ex-employee.

In a later case, Amritlal Chum v. Devoprasad Dutta Roy [1988] 63 Comp Cas 839; [1988] 2 SCC 269, which arose directly from the decision of the Calcutta High Court in Amritlal Chum v. Devi Ranjan Jha [1987] 61 Comp Cas 211, the view taken in Baldev Krishna Sahi, AIR 1987 SC 2245; [ 1988] 63 Comp Cas 1 was affirmed and the High Court's judgment was reversed.

Coming now to the question whether the licence for occupation of the flat was obtained by the company or the first respondent, we may refer to three crucial documents. The first one is the leave and licence agreement dated November 1, 1980. The deed specifically states that the licensee is Jenson and Nicholson (India) Ltd. having its registered office at Calcutta and executive office at Bombay and that the company shall have the flat "for use and occupation as residence by its bona fide employee/employees and/or his/their families" and shall not be transferred to anyone else (vide clauses 11 and 12). The agreement was entered into by the first respondent as the power of attorney agent of the company and he has contemporaneously executed an affidavit on November 1, 1980, wherein he has affirmed as follows:

"I say that for the purpose of securing a flat on leave and licence basis for providing residence for the employees of the company, I have entered into negotiations on behalf of the company with Shri Mehdi Mandil the owner of flat No. 84 on the 8th floor of the building known as 'Mehr Dad' at Cuffe Parade, Bombay, to allow the company the use and occupation of the said flat under a leave and licence to be executed between the said Mehdi Mandil and the said company" (emphasis supplied).

In para 3 of the affidavit, the first respondent has given an assurance that the flat "would be made use of for the purpose of residence only by the bona fide employees of the company and/or their family/families". In para 4, the first respondent has affirmed "that neither the company nor any employee of the company who may be in occupation of the flat would claim any right, title or interest or any rights of tenancy other than the right to use and occupy the said flat purely as a licensee under and in accordance with the terms and conditions of the leave and license agreement". On November 5, 1980, the first respondent, acting for the company, has written a letter to the licensor, Mr. Mehdi Mandil, stating, inter alia, as under:

"The flat being given to the company, it would be occupied by only a bona fide official employee of the company.

Yours faithfully,

Jenson and Nicholson (India) Ltd.,

(Sd.) Atul Kalra,

Divisional Sales Manager, Bombay".

These documents clinch the issue and prove beyond a shadow of doubt that the flat was taken on leave and licence basis only by the company for providing accommodation to its employee or employees during their term of employment in the company. It was purely on that basis that the first respondent who was the then Divisional Sales Manager was allowed to occupy the flat and he was allowed to occupy the flat till he resigned his post on March 26, 1984. It is pertinent to mention here that it was the company which had give the deposit of Rs. 3,50,000 to the licensor and had been paying the licence fees, advance and monthly compensation all through.

Notwithstanding this incontrovertible position, the first respondent developed ideas to cling to his possession of the flat even after ceasing to be an employee of the company. Consequently, he contrived to obtain two letters dated January 25, 1984, and February 1, 1984, from Mr. Jain who was working only as office manager at Bombay. In the first letter, Mr. Jain has formally written to say (though he and the first respondent were working in the same office) that the company has received a letter from the municipal corporation regarding the rateable value of the flat and that the first respondent may deal with the matter. Instead of stopping with that, Mr. Jain has gone on to say as follows:

"We are forwarding the said letter to you. to deal with the same as you are the tenant of the flat and you are in possession of the same. The flat was taken by you from the landlord, but the landlord had insisted to have the agreement in the name of the company merely.

The company will not be liable if the rateable value of the flat is increased and if there is any consequential increase in the property taxes. All the matters will be between you and the landlord. Please therefore deal with the letter as you deem fit". (emphasis supplied).

Yours faithfully,

Jenson and Nicholson (India) Ltd.,

(Sd.) A.S. Jain,

Office Manager, Bombay".

On January 30, 1984, the appellant has acknowledged the letter and agreed to deal with the corporation authorities and has in addition stated that he will also take steps for fixation of standard rent by the court as the landlord was charging exorbitant rent. Digressing for a moment, it has to be noticed that the first respondent had come to realise the rent to be exorbitant only after 3 years and 2 months, and just before he wanted to claim tenancy rights for himself. Reverting back to the correspondence, Mr. Jain has sent a reply on February 1, 1984, to state that the company will have no objection to legal proceedings being taken for fixation of standard rent "of your Flat at 84, Mehr-Dad, Cuffe Parade, Bombay, but however, he (first respondent) alone will have to bear the expenses including the court fees and advocate's fees and the company will not be liable to reimburse him. It is on the footing of these two letters that the first respondent sought to build up. a case that he was the actual licensee of the flat and not the company.

Before considering the explanation given by Mr. Jain as to his writing the letters, it will be worthwhile to notice certain factors. In the first place, Mr. Jain was only a junior employee of the company, viz., office manager, Bombay, and could not, therefore, have directed the first respondent to attend to the matter of furnishing information to the corporation authorities about the rateable value of the flat. Secondly, Mr. Jain and the first respondent were both working in the same office and as such it is inconceivable that Mr. Jain would have carried on correspondence with the first respondent instead of merely placing the alleged letter of the corporation before the first respondent for suitable action by him. Thirdly, Mr. Jain joined the services of the company only in July, 1983, i.e., long after the company had taken the flat on licence and as such he could not have known what were the terms of the leave and licence agreement and who was the actual licensee of the flat. Fourthly, even if Mr. Jain had purported to act on behalf of the company, he would have sent copies of the letters to the head office at Calcutta but he had not done any such thing but on the other hand he had suppressed information from the head office about the correspondence. The first respondent too had not brought the matter to the notice of the head office at Calcutta. The first respondent resigned his post on March 26, 1984, and in order to forestall the company from seeking his eviction, he had filed a suit on March 23, 1984, to seek the reliefs of declaration and injunction. All these factors lead to the unmistakable conclusion that the first respondent had somehow prevailed upon Mr. Jain to give the letters, exhibits 3 and 4, with the ulterior motive of filing a suit and then tendering his resignation.

Now, coming to the explanation offered by Mr. Jain for writing the two letters, he has sworn to an affidavit that he was "pressurised and threatened" by the first respondent to sign the letters brought by him and that he signed the letters without knowing the implications. He has also given evidence to the same effect in the trial of the case before the Additional Chief Metropolitan Magistrate. Mr. Jagtiani strenuously contended that Mr. Jain's statement that he gave the letters under coercion has been disproved by the answers elicited from Mr. Jain in his cross-examination, viz., that the first respondent did not actually threaten him but he construed the commanding manner in which he made the demand as containing a threat. Mr. Jagtiani's argument was that once Mr. Jain's explanation for giving the letters stood falsified, then the letters must be treated as genuine documents binding on the company and affording material to the first respondent to contend that he was the real licensee of the flat. We are unable to find any merit in this contention. Even assuming for argument's sake that Mr. Jain had not written the letters under threat, the first respondent's case will not stand advanced in any manner. A junior employee of the company cannot relinquish the rights of the company in favour of the first respondent especially when the first respondent himself had categorically stated in the leave and licence agreement as well as in his affidavit and letter that the company was the licensee of the flat and the employees are not entitled to claim any tenancy rights for themselves.

Fully realising the weakness in his case, the first respondent has made an attempt to authenticate the letters, exhibits 3 and 4, by contending that Mr. Roy, director of the company, had instructed Mr. Jain from Calcutta to write the letters and hence the letters were fully binding upon the company. The story invented by the first respondent was rightly disbelieved by the trial court and the appellate court because it is inconceivable that Mr. Roy would have asked a junior officer like Mr. Jain to write the letters instead of asking some one from the head office itself to write the letters. No suggestion was put to Mr. Jain in the witness box that he wrote the letters under the instructions of Mr. Roy. There is also no mention in the letters that they were being written as per the instructions received from the head office. Another strange feature is that a copy of the letters has not been sent to the head office. Such would not have been the case if the letters had really been written by Mr. Jain under directions from the head office.

Mr. Jagtiani sought to discredit the affidavit and the evidence of Mr. Jain on the ground that Mr. Jain had given his affidavit after consulting the company's lawyer and, secondly, he had not been punished by the company for his misconduct. The arguments of counsel in this behalf have no merit in them because Mr. Jain was duty bound to explain to the company the circumstances in which he had arrogated powers to himself and written the letters, exhibits 3 and 4, to the first respondent. Naturally, therefore, he would have sought the guidance of the company's counsel as to how the affidavit is to be formally worded. As regards the company not awarding any punishment to Mr. Jain, it was open to the company to pardon him for the folly of his action when it came to know that he had been unwittingly made use of by the first respondent to write the letters in question.

All these factors have unfortunately escaped the notice of the High Court and the omission has led the High Court to accept the first respondent's contention that there was a bona fide dispute between him and the company as to who was the actual licensee of the flat. We have already referred to the relevant portions of the leave and licence agreement and the affidavit and letter of the first respondent wherein he has categorically accepted that the company was the licensee of the flat. Secondly, the evidence projected by the first respondent to lay claim to licence rights over the flat is his own creation without the knowledge of the company. The two letters in question had been obtained from a junior employee who had joined the company long after the flat was taken on rent and who knew nothing of the agreement between the company and the owner of the flat. The author of the letters has himself confessed that he had signed the letters at the behest of the first respondent without knowing the implications of his act. Leaving aside these factors, even if we are to take that Mr. Jain had of his own accord written the letters, can it ever be said that the letters afford scope for the first respondent to contend that he is bona fide entitled to dispute the company's claim to possession of the flat. The sequence of events also go to show that the first respondent had formulated a plan for clinging to his possession of the flat even after resigning his post and in accordance with that plan he had obtained the letters, exhibits 3 and 4, and then filed a suit in order to forestall the company from proceeding against him under section 630 of the Companies Act. Merely because the first respondent had schemingly filed a suit before tendering his resignation, it can never be said that the civil court was in seisin of a bona fide dispute between the parties and as such the criminal court should have stayed its hands when the company filed a complaint under section 630. If a view is mechanically taken that whenever a suit has been filed before a complaint is laid under section 630, the criminal court should not proceed with the complaint, it would not only lead to miscarriage of justice but also render ineffective the salutory provisions of section 630.

So much for the bona fides of the alleged dispute projected by the first respondent regarding the company's claim to possession of the flat. Coming now to the question of law, the High Court has invoked the ratio in Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom). The facts therein were very different and it was with reference to those facts that the High Court held that a bona fide dispute existed between the parties therein. This may be seen from the question posed for consideration by the High Court, viz., "whether, on the facts and circumstances of the case, the Magistrate could himself, under section 630, determine the dispute as to the title to the property". On the evidence before it, the High Court held and rightly so that there was a genuine dispute between the parties and the said dispute required adjudication by a civil court in the suit filed by the ex employee. While rendering its judgment, the High Court had construed section 630 properly and observed that "the Magistrate's jurisdiction thereunder (under section 630) would extend only to those cases where there was no dispute, or in any event no bona fide dispute, that the property involved was the property of the company". (emphasis supplied).

Mr. Jagtiani pointed out that the decision of the High Court in Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom) was affirmed by this court in Damodar Das v. Krishna Charan Chakraborti [1988] 4 JT 714; [ 1990] 67 Comp Cas 564 (SC). He fails to notice that the acceptance of the High Court's view was with reference to the facts of the case. This may be seen from the following observation in the judgment of this court (at page 566): "The High Court felt that the disputes raised by the respondent herein were bona fide disputes. Before us, it has not been disputed that this view of the High Court was correct as far as the question whether the company could be held to be a tenant of the flat is concerned"..

Therefore, what has to be seen in a complaint under section 630 is whether there is "no dispute or no bona fide dispute" regarding a property claimed by the company between the company and its employee or ex-employee. It is needless to say that every dispute would not become a bona fide dispute merely because the company's claim to possession is refuted by an employee or ex-employee of the company. As to when a dispute would amount to a bona fide dispute would depend upon the facts of each case. In the present case, the High Court has realised this position and observed that "while considering whether the plea of tenancy is a bona fide plea, it is always necessary to examine and consider the transaction on the basis of which the plea is based" (vide para 39). While stating the position correctly, the High Court went wrong in holding that the self-serving documents produced by the first respondent gave a touch of bona fides to his defence. The High Court was, therefore, not right in thinking that the ratio in Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom) was attracted to the case inasmuch as the defence put forward by the first respondent was patently an incredible story.

Another contention of the first respondent to thwart the proceedings under section 630 which has been repelled by all the courts including the High Court, is regarding the competence of PW-1, Mr. Atul Mathur, the present Divisional Sales Manager of the company, to file the complaint on behalf of the company. Belatedly, the first respondent has filed a memorandum of cross-objections against the finding of the High Court on this question. The appellant's counsel objected to the memorandum of cross-objections being entertained as it has been filed belatedly and furthermore, the appellant has not been given notice or furnished copies of the cross-objections. Leaving aside the technical pleas, we find the cross-objections to be worthless even on merits. The first respondent would say that the power of attorney in favour of Mr. Atul Mathur empowers him to act on behalf of the company only in civil suits, sales tax proceedings and excise matters and does not empower him to file criminal complaints on behalf of the company. The first respondent's contentions suffer from a misconstruction of the terms of the power of attorney executed by the company. The power of attorney, read as a whole, is seen to confer general powers on Mr. Atul Mathur and not merely special powers. It has been engrossed on stamp paper of the value of Rs. 50 and it is indicative of the nature of the deed. Though specific reference is made in the power of attorney only to the filing of suits and to matters relating to sales tax and central excise, there is a general clause which reads as follows:

"And the company hereby agrees that all acts, deeds and things lawfully done by the attorney shall be construed as acts, deeds and things done by it and the company undertakes to ratify and confirm all and whatsoever that its said attorney shall do or cause to be done by virtue of powers hereby given".

The power of attorney has been executed just before the complaint was filed and it is stated in the complaint that Mr. Atul Mathur was filing the complaint on behalf of the company and he was duly authorised to do so. The High Court was, therefore, not right in construing the power of attorney as conferring only special powers and not general powers on Mr. Atul Mathur. Be that as it may, the High Court has held, and very rightly, that as Mr. Atul Mathur was the Divisional Sales Manager of the company at Bombay, he was certainly competent to file the complaint on behalf of the company as per instructions given to him from the head office of the company. We do not, therefore, find any substance in the contention of the first respondent that the complaint suffered from a material irregularity not curable under section 465, Criminal Procedure Code. Incidentally, we may observe that in spite of contending that the complaint suffered from an irregularity, the first respondent has neither pleaded nor proved that failure of justice has been occasioned on account of the alleged irregularity.

Learned counsel for the first respondent relied upon Ballabhdas Agarwala v. J.C. Chakravarty [1960] 2 SCR 739; AIR 1960 SC 576, in support of his contention that the company's complaint suffered from an irregularity not curable under section 465, Criminal Procedure Code. In the view we have taken of the matter, viz., that Mr. Atul Mathur had the requisite authority to file the complaint on behalf of the company, the question does not survive for consideration. The cross-objection must, therefore, fail even if entertained.

For the aforesaid reasons, the judgment of the High Court is not sustainable. We, therefore, allow the appeal, set aside the judgment of the High Court and restore the judgments of the Additional Chief Metropolitan Magistrate and the Additional Sessions Judge. However, the first respondent is given time till September 30, 1989, to deliver possession of the flat to the company failing which the sentence of imprisonment awarded to him would be enforced.

[1993] 76 COMP. CAS. 323 (MAD)

HIGH COURT OF MADRAS

S. Palaniswamy

Sree Janardhana Mills Ltd.

JANARTHANAM J.

CRL. O.P. NOS. 2253 TO 2256 OF 1991.

MARCH 18, 1991

Venkatraman and V. Nicholas for the Petitioner.

JUDGMENT

Janarthanam J.—The petitioners in all these matters are respectively accused in C.C. Nos. 115 to 118 of 1991 on the file of the Chief Judicial Magistrate, Coimbatore, facing prosecution for the alleged offence under section 630 of the Companies Act, 1956, for wrongful withholding of the premises of Shri Janarthana Mills Limited, Uppilipalayam Post, Coimbatore 641 015, the respondent herein (allotted to them during their tenure of office), even subsequent to their retirement, which event respectively occasioned on December 30, 1987, August 30, 1988, March 30, 1989, and October 30, 1988. Subsequent to their retirement, the respondent issued notices calling upon them to vacate the premises and hand over vacant possession, giving them reasonable time. Since they did not comply with the same, the respondent had been impelled to resort to prosecution as aforesaid.

All the petitioners, it is said, approached a civil forum for filing a suit for a bare injunction and, on an interlocutory application filed therein, obtained orders for maintenance of status quo.

After receipt of process, all the petitioners came forward with the present action invoking the inherent jurisdiction of this court to quash the criminal proceedings initiated against them.

Learned counsel appearing for the petitioners would vehemently contend that, in the face of the orders of the civil court for maintenance of the status quo in the civil suit filed by them, the proper course to be adopted is that the prosecutions launched before the criminal court are liable to be quashed, inasmuch as it is the established law that the criminal courts are bound to respect the orders of the civil courts.

The submission of learned counsel appears to be luminous and attractive at first sight. But the utter untenability of this submission, however, gets exposed by delving deep into the facts and circumstances of the case.

There is no pale of controversy that the premises in question belong absolutely to the respondent. All the petitioners were permitted to occupy the premises during their tenure of office as an incident of service. In such a situation, the entitlement to possession of the premises enures to their benefit during their tenure of office and the moment their employment gets terminated for whatever reason, it goes without saying that they have to vacate the premises and hand over possession of the same for the benefit of their successors. There is no question of any relationship of landlord and tenant in such cases. It is rather obvious that the civil court before which a suit appears to have been filed for a bare injunction, on the basis of the claim of tenancy, does not appear to have been properly apprised of the legal position arising from the factual foundation of the petitioners having been allotted the premises by the respondent, as an incident of service, creating no relationship of landlord and tenant. It is apparent and quite evident, in the face of the salutary provisions adumbrated under section 630 of the Companies Act that the moment the employment ceases, the employee is not entitled to remain in possession of the premises allotted to him and the withholding of the premises, after cessation of the employment, amounts to wrongful withholding, punishable as an offence by the criminal court, besides his being required to vacate and hand over possession to the company which allotted the premises to him. It is thus clear that the offence of wrongful withholding of the premises becomes complete the moment there is cessation of employment.

A situation similar to the one on hand arose for consideration in the case in Krishan Avtar Bahadur v. Col. Irwin Extross [1986] 59 Comp Cas 417 (Bom) wherein a learned judge of the Bombay High Court expressed (page 426) :

"The plea of tenancy is not at all open on the facts of this case. The flat in question belonging to the company was occupied by the petitioner during the term of his employment with the company and he was entitled to occupy it only during his employment with the company. After the termination of his services with the company, he could not claim to continue to occupy the premises on the ground that he was a tenant thereof. While considering whether the plea of tenancy is a bona fide plea, it is always necessary to examine and consider the transaction on the basis of which the plea of tenancy is based and if on those facts no plea can be raised, such a plea cannot be entertained. Consequently, I reject the contention of learned counsel for the petitioner-accused that the criminal court has no jurisdiction to entertain the complaint under section 630 of the Companies Act, as the petitioner claims to be a tenant thereof".

I respectfully agree with the view expressed by learned judge.

In this view of the matter, it cannot be stated that the launching of prosecution for the offence under section 630 of the Companies Act is incompetent even in the face of the pendency of the civil litigation between the parties.

For the reasons stated above, all the petitions deserve to be dismissed even at the admission stage and are, accordingly, dismissed.

[1998] 92 COMP. CAS 680 (PUNJ. & HAR.)

HIGH COURT OF PUNJAB AND HARYANA

Bimal Chand

D.C.M. Ltd.

V.S. AGGARWAL J.

Criminal Revision No. 816 of 1996

APRIL 29, 1997

M.L Puri for the petitioner.

Ashok Aggarwal, and Subhash Goyal, for the respondent.

JUDGMENT

V.S. Aggarwal J.—The respondent, D.C.M. Ltd., was running a textile mills at Hissar. The said mill was set up in the year 1955-56. The respondent-company had constructed a residential colony for its workers. The quarters were being allotted to the workers while they were in the employment of the respondent-company at Hissar. On the termination of the employment, the allottee was liable to vacate the quarters and hand over the same to the respondent.

By this common judgment, Criminal Revisions Nos. 816 of 1996 and 817 of 1996, can conveniently be disposed of together because all the petitioners are aggrieved by a similar order passed by the learned Judicial Magistrate and dismissal of the appeals by the learned Additional Sessions Judge at Hissar.

It has been contended by the respondent that the petitioners were employed in the company in the unit known as Hissar Textile Mills. Each of them had been allotted a quarter. The allotment was made during the course of the employment of the petitioners. There were certain unavoidable circumstances which were beyond the control of the respondent-company. The result was that the company was closed. On closure of the said unit, the services of the petitioners were terminated in accordance with law. They ceased to be in employment of the company. The petitioners, thus, became liable to vacate the said quarters which they did not do so. A notice was issued to the petitioners to vacate the quarters but when they did not do so, it was followed by another notice. Finally, a complaint was filed under section 630 of the Companies Act, individually against the petitioners.

The learned trial court served a notice to the petitioners to which they pleaded not guilty and claimed a trial. During the course of trial, the respondent produced two witnesses. In their statements under section 313 of the Criminal Procedure Code, the defence of the petitioners was that the respondent-company was not the owner of the land and that they were in fact tenants in the property in question.

The learned trial court held that each of the petitioners was employed with the respondent-company. The quarters were allotted to them, to each of the petitioners, by virtue of their being in the employment of the respondent-company. The respondent-company closed its business at Hissar. The closure of the respondent-mill at Hissar was challenged by some workers. The writ petition was dismissed. The trial court further noted that a new unit in the name of D.C.M. Textiles was constructed. The version of the petitioners that they were tenants in the property was rejected. The trial court held that even being ex-employees or workers of the respondent-mill/company, they were liable to vacate the property. In these circumstances, the learned trial court allowed the petition and directed the petitioners to vacate the quarters within 30 days.

The petitioners had preferred an appeal but the learned Additional Sessions Judge did not find favour with the contentions raised. The appeal was dismissed.

The first and foremost question agitated on behalf of the petitioners was that they were tenants in the property and not licensees. In this regard reliance is being placed on the fact that in the receipts the expression "rent" had been used and that rent would only be paid by a tenant. Therefore, the petitioners must be taken to be tenants in the properties.

In the facts of the present case, the said contention is totally devoid of any merit because the question as to whether a person is tenant or licensee necessarily has to be determined keeping in view the intention of the parties. It has to be seen whether the documents create a lease or licence. The substance of the documents must be preferred to the form. The real test is the intention of the parties. Giving the payment a label of rent will not make a person tenant. A similar question arose before the Supreme Court in the case of Dr. H.S. Rikhy v. New Delhi Municipal Committee, AIR 1962 SC 554. This was a dispute under the Delhi and Ajmer Rent Control Act, 1952. A similar argument had been advanced and was repelled by the following findings in paragraph 6 which reads (page 558):

"It was also contended that it was admitted by the respondent that rent was received and receipts for rent were granted by its agents. The use of the word 'rent' is not conclusive of the matter. It may be used in the legal sense of recompense paid by the tenant to the landlord for the exclusive possession of premises occupied by him. It may also be used in the generic sense, without importing the legal significance aforesaid, of compensation for use and occupation. 'Rent' in the legal sense can only be reserved on a demise of immovable property. Reference may be made in this connection to paragraphs 1193 and 1194 of Halsbury's Law of England (Third edition, Vol. 23) at pages 536-537. Hence, the use of the term 'rent' cannot preclude the landlord from pleading that there was no relationship of landlord and tenant. The question must, therefore, depend upon whether or not there was a relationship of landlord and tenant in the sense that there was a transfer of interest by the landlord in favour of the tenant."

Similarly, in the case of Konchada Ramamurty Subudhi v. Gopinath Naik, AIR 1968 SC 919, the same question was considered and it was held that it is the intention of the parties which is the determining factor as to if a person is a tenant or a licensee. At this stage, reference with advantage may be made further to the decision in the case of Sardar Bhagwant Singh v. Shri Jagan Nath [1976] RCR 239. It was concluded therein that the use of the term 'rent' or 'tenant' is not conclusive. Whether a given transaction is one of lease or licence is a matter not of words but of substance. The decisive consideration is the intention of the parties. The intention can be gathered from the conduct and the surrounding circumstances.

Reverting back to the facts of the present case, it is obvious from the findings on the record that the petitioners were in the employment of the respondent. The quarters had been built for the employees. The same were allotted after the petitioners joined service at Hissar. Outsiders had never been allotted quarters. Obviously, the same were for the benefit of the workers. There was nothing to indicate that there was any intention to create a demise in the property. In the absence of any such intention, it must follow that the petitioners were not tenants in the property.

A feeble attempt was made to urge that the provisions of section 630 of the Companies Act will not apply to the case of the employees particularly when the respondent claims that it had stopped its business at Hissar. To appreciate the said argument, reference with advantage may be made to section 630 of the Companies Act, which reads:

"630. (1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

A perusal of the same indicates that no distinction had been made by the Legislature pertaining to an employee or an ex-employee. Further discussion becomes unnecessary because the matter in question is concluded by the decision of the Supreme Court in the case of Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1988] 63 Comp Cas 1; [1988] 1 SCR 168. An identical question had arisen for consideration. It was held that the term "officer or employee" existing in section 630 of the Companies Act, applies even to past officers of the company. Keeping in view the said decision of the Supreme Court, the plea raised necessarily must be negatived.

There is another way of looking at the matter. There was a memorandum of settlement under section 12(3) of the Industrial Disputes Act. The union of workers had agreed that workers would vacate the mill quarters within a period of one month. Once such a settlement had been arrived at, it would have a binding force on all the workers. One seeks support in this conclusion from the decision of the Supreme Court in the case of Ram Pukar Singh v. Heavy Engineering Corporation, AIR 1995 SC 251. Since the settlement was having a binding force, it was improper for the petitioners to continue and take shelter under the pleas which are not tenable.

As a last resort it was submitted that the mill has been reconstructed and under section 25H of the Industrial Disputes Act, the retrenched workers should be re-employed and in any case preference has to be given to them. However, it is not being disputed that the Labour Court at Hissar has not decided the reference in favour of the petitioners. In fact it was decided against the petitioners. Merely because some further litigation is pending that will not permit the petitioners to take shelter under section 25H of the Industrial Disputes Act, till such time the findings are in their favour or it is permitted that they can take advantage of any provision of the Industrial Disputes Act that they are employees of the respondent. On this date, they cannot claim a right to continue in occupation of the property. We know from the decision of the Supreme Court in the case of Atul Mathur v. Atul Kalra [1990] 68 Comp Cas 324 (SC); [1989] 4 SCC 514 that the object of section 630 of the Companies Act, is to provide speedy relief to the company when the property has wrongfully been withheld by an employee or ex-employee. Herein more than a decade has expired but the petitioners had not vacated the property. They cannot take shelter thus or raise any such plea that they might succeed in some litigation.

No other argument was raised.

For these reasons, the revision petitions are dismissed. The petitioners are given 15 days' time to vacate the property.

[2001] 33 SCL 176 (Guj.)

High Court of Gujarat

Pravinbhai Ganeshbhai Chaudhary

Neutral Glass & Allied Industries (P.) Ltd.

D.M. Dharmadhikari, CJ.

and M.S. Shah, J.

Criminal Revision Application No. 327 of 1999

November 9, 2000

Section 630 of the Companies Act, 1956, read with section 33 of the Industrial Disputes Act, 1947 - Offences - Penalty for wrongful withholding of company’s property - Whether term ‘employee’ is a wider generic term which would include workmen also - Held, yes - Whether there is no conflict between powers of Labour Court under Industrial Disputes Act and powers of Criminal Court under section 630 - Held, yes - Whether mere pendency of reference before Labour Court can deprive Criminal Court of its powers under section 630 - Held, no

Words & phrases - ‘Employee’ occurring in section 630 of the Companies Act, 1956

Facts

Pursuant to dismissal of service of the petitioner, a fitter, the company called upon him to vacate the company quarter allowed for residential purposes during his employment. On his refusal to do so, the company moved the Magistrate’s court under section 630 for getting the quarters vacated but the petitioner took the plea that since the petitioner had right to challenge the order of dismissal, during pendency of such adjudication proceedings before the Labour Court, he was entitled to occupy the quarters. The Magistrate held that the quarter was allotted to the petitioner during his employment with the company and since he was dismissed from service, he was liable to vacate the quarters. On appeal, the Sessions Court upheld the Magistrate’s order on the same ground.

On revision application, the petitioner challenged, besides the merits of the case, also the constitutional validity of the provisions of section 630 and the inapplicability of section 630 to workmen who, according to him, were not employees.

Held

The term ‘employee’ is a wider generic term which would include workman also. In fact, the definition of workmen in section 529(3)(a) itself indicates that the Legislature has treated workmen as one of the categories of employees. The object of section 630 is to provide speedy remedy for enabling the company to obtain possession of its property where it is wrongfully obtained or wrongfully withheld by any officer or employee of the company. There will be no rationale in excluding workmen from the scope of section 630.

The provisions of section 630 do not suffer from the vice of any constitutional infirmity. In Petlad Bulakhidas Mills Co. Ltd. v. State of Gujarat [1999] 92 Comp. Cas. 900/[1998] 18 SCL 438 (Guj.) it has already been held that the law in question is within the legislative competence. Even the challenge to the constitutional validity of section 630 on the ground that it is discriminatory or that it deprives the right to life under article 21 of the Constitution was also negatived.

There is no conflict between the powers of the Labour Court under the Industrial Disputes Act and the powers of the Criminal Court under section 630. When a workman is dismissed from service, he has the remedy of challenging such dismissal before the Labour Court by setting a reference made under section 10 of the I.D. Act. So long as the Labour Court hearing such reference does not give any declaration that the dismissal was illegal or so long as the Labour Court does not pass any other order staying the operation or any further implementation of the order of dismissal (assuming that the Labour Court has any such power), the order of dismissal would remain in force and the Criminal Court hearing the complaint under section 630 has to consider the situation in light of the order of dismissal/termination of service. Mere pendency of the reference before the Labour Court cannot and does not deprive the Criminal Court of its powers under section 630.

Section 33(1) of the I.D. Act intends to prohibit the employers from altering the conditions of service of workmen who have already raised an industrial dispute with respect to some other conditions of the service in existence. If workmen of a unit have raised an industrial dispute about wage revision, the employer cannot be permitted to nullify the reference by terminating the services of the workmen without obtaining permission of the concerned body before whom the dispute about wage revision is pending. It is in order to save the workman from this kind of retaliation that the Legislature has enacted section 33(1) of the ID Act.

The above provisions could not be applied in the case like the present one where there was no pending industrial dispute when the employee was dismissed from service. Upon such dismissal, all the logical consequences would follow including the stoppage of salary and all other benefits which went with the employment. The employee would, therefore, also lose the right to occupy the quarters allotted to him during his employment.

The consequential order of eviction of quarters came to be passed by the Magistrate when the order of dismissal was in full force and, therefore, the Magistrate was justified in giving a finding that in view of the order of dismissal the petitioner had no right to continue to occupy the quarters and that such continued occupation of the quarters even after receiving the notice of eviction from the respondent-employer was sufficient to bring the case within the scope of section 630. The Magistrate was not bound to await the disposal of the reference by the Labour Court in which the petitioner had challenged his dismissal of service.

Thus, the revision application, having no merit, was dismissed.

Case referred to

Petlad Bulakhidas Mills Co. Ltd. v. State of Gujarat [1999] 92 Comp. Cas. 900/[1998] 18 SCL 438 (Guj.).

K.S. Nanavati and R.C. Kodekar for the Respondent.

Judgment

Shah, J. - In this Revision application under section 401 of the Code of Criminal Procedure, the petitioner, an ex-employee of the respondent-company, has challenged the order passed by the learned JMFC, Surat under section 630 of the Companies Act, 1956 (‘the Act’), as confirmed by the learned Sessions Judge, Surat, requiring the petitioner to vacate the quarters allotted by the respondent-company upon dismissal of the petitioner from service. The petitioner has also challenged the constitutional validity of section 630 on various grounds.

2. The facts leading to filing of the petition, briefly stated, are as under :—

The petitioner was employed as a fitter by the respondent-company on 2-5-1990. The company passed order dated 28-1-1997 dismissing the petitioner from service after holding a departmental inquiry. Thereafter the company also moved the Court of the learned JMFC, Surat under section 630 on the ground that the petitioner was allotted company quarters for residential purpose during his employment with the company and upon dismissal, the petitioner was required to vacate the quarters which he was wrongfully withholding. The petitioner’s defence in the said proceedings was that during pendency of the complaint, the petitioner had already moved the appropriate Government for referring the industrial dispute challenging his dismissal and that the Government had made such a reference on 2-4-1997. Since the petitioner has right to challenge the order of dismissal, during pendency of such adjudication proceedings before the Labour Court, the petitioner was entitled to occupy the quarters and, therefore, the petitioner was not withholding the possession of the quarters wrongfully. Ultimately by order dated 27-7-1998 (Annexure III to the petition), the learned Magistrate held that since the petitioner was dismissed from service, he had no right to continue to occupy the quarters and, therefore, the petitioner was wrongfully withholding possession of the property of the company in spite of service of notice by the company to vacate the quarters. The learned Magistrate gave a finding that the quarter was allotted to the petitioner during his employment with the company and since the petitioner was dismissed from service, he is liable to vacate the quarters. The learned Magistrate passed eviction order and levied a fine of Rs. 1,000. The learned Magistrate directed the petitioner to vacate the quarters and hand over possession thereof to the company by 14-8-1998.

Aggrieved by the above order, the petitioner moved the Sessions Court which, however, dismissed Criminal Appeal No. 13 of 1998 on the same ground. The petitioner, therefore, filed the present Revision Application.

3. During pendency of this application before the learned Single Judge, the petitioner obtained permission of the Court to amend the petition for challenging the constitutional validity of the provisions of section 630 which amendment was granted. That is how the petitioner has challenged the vires of the aforesaid provisions before us.

We have heard Dr. Mukul Sinha, the learned counsel for the petitioner and Mr. K.S. Nanavati, the learned counsel for the respondent at length.

4. Before going to the merits of the case, we may first deal with the contention urged by the learned counsel for the petitioner that the provisions of section 630 do not cover workman and that they are only applicable to officers and employees of the company other than workmen.

“630. Penalty for wrongful withholding of property.—(1) If any office or employee of a company —

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

(2) The Court trying the offence may also order such office or employee to deliver up to refund, within a time to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years.”

It is submitted that section 630 specifically provides that if any officer or employee of the company wrongfully withholds the property of the company, he shall be punished with fine which may extend to one thousand rupees, but the section deliberately does not refer to ‘workmen’ even though the Legislature itself has made reference to workmen in certain other provisions of the Act like section 529(3)(a) and section 529A of the Act.

We are not inclined to accept this contention for the simple reason that the term ‘employee’ is a wider generic term which would include workman also. In fact, the provisions of section 529(3)(a) defines ‘workmen’ in the following terms :—

“(a) ‘workmen’, in relation to a Company, means the employees of the company, being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947).”

The above definition itself indicates that the Legislature has treated workmen as one of the categories of employees. There is nothing in the provisions of section 630 or any other provision which would indicate that the Legislature intended to exclude workmen from the scope of section 630. The object of section 630 is to provide speedy remedy for enabling the company to obtain possession of its property where it is wrongfully obtained or wrongfully withheld by any officer or employee of the company. There will be no rationale in excluding workmen from the scope of section 630.

5. Dr. Sinha’s other contentions are as under :—

5.1 When the services of an employee are terminated or when he is dismissed from service, he has the right to challenge such termination/dismissal before an appropriate forum like the Labour Court under the provisions of the Industrial Disputes Act, 1947 (‘the ID Act’). If the petitioner is able to satisfy the Labour Court that the termination/dismissal was illegal, the declaration would relate back to the date of termination/dismissal and in such an eventuality it can never be contended that the petitioner’s possession of the quarters was illegal during pendency of the reference before the Labour Court. It is further submitted that during pendency of the reference before the Labour Court, the employee has a right to move the Court for interim relief and that the employer cannot be permitted to resort to section 630 without the employee getting an opportunity to obtain appropriate order from the Labour Court.

5.2 It is submitted that as held by the Apex Court in the case of premier automobiles and other cases, the Industrial Disputes Act is a special Act creating rights and remedies which were not provided earlier by the general law and that for enforcement of such rights under the I.D. Act, the remedies and the machinery are available only under the I.D. Act and that all the disputes between the employer and the workmen would be covered by the I.D. Act. The I.D. Act being a special Act, the same would prevail over the provisions of section 630 which is a general law for the companies and which does not provide for any settlement of disputes between the employer and employees or other workmen.

5.3 It is submitted that even otherwise if two parallel Courts are permitted to conduct two parallel proceedings independent of each other, there would be a possibility of conflict of decisions. On the one hand the Labour Court may say that the workman is entitled to continue in service and also entitled to continue in possession of the quarters and on the other hand, the Criminal Court may pass an order against the workman convicting him for illegal possession and requiring him to vacate the quarters. It is submitted that in order to save such an interpretation, it must be held that the provisions of section 630 must yield to the provisions of the I.D. Act.

5.4 It is contended that even if the employee is dismissed from service, once he raises an industrial dispute, the provisions of section 33(1) of the I.D. Act would come into force, and thereupon the employer would be prohibited from altering the conditions of service which would also include the petitioner’s occupation of the quarters allotted by the company and, therefore, during pendency of the reference, as a matter of right the petitioner would be entitled to continue to occupy the quarters and, therefore also it cannot be said that the occupation of the quarters in question was wrongful.

6. On the other hand, Mr. Nanavati for the respondent-company has submitted as under :—

6.1 Allotment of quarters in question was in view of the petitioner’s employment with the company and upon the employment coming to an end, the petitioner ceased to have any right to occupy the company’s quarters. The provisions of section 33 of the I.D. Act do not contemplate that a workman whose services have come to an end, once the relationship of employer and employee came to an end upon dismissal of the petitioner from service, the petitioner ceased to have any right whatsoever and consequently the petitioner also did not have any right to occupy the quarters.

6.2 On the question of alleged inconsistency between the I.D. Act and the Companies Act, it is submitted that section 630 provides for speedy remedy to the Company and there is no inconsistency as the Criminal Court would not be in a position to take any decision contrary to the decision of the Labour Court provided there is any such decision of the Labour Court or there is any other order of the Labour Court on the question of status of the petitioner as a workman and about continuance of the relationship of employer and employee between the parties.

6.3 On the question of vires, the learned counsel for the respondent has submitted that the section is neither discriminatory nor constitutionally invalid, as per the decision of this Court in Petlad Bulakhidas Mills Co. Ltd. v. State of Gujarat [1999] 92 Comp. Cas. 900, wherein this Court had an occasion to consider the challenge to the constitutional validity of section 630 and all the challenges including the challenge on the ground of legislative competency were negatived by this Court.

7. Having heard the learned Counsel for the parties and having considered the decision of a Division Bench of this Court in Petlad Bulakhidas Mills Co. Ltd. (supra), we are not in a position to hold that the provisions of section 630 suffer from the vice of any constitutional infirmity. The Division Bench of this Court has already held that the law in question was within the legislative competence. Even the challenge to the constitutional validity of section 630 on the ground that they are discriminatory or that they deprive the right to life under article 21 of the Constitution was also negatived.

8. Dr. Sinha, however, strenuously urged that the question of two conflicting remedies being on the statute book was not considered by the Division Bench and that, therefore, the said question is required to be examined.

We do not find any substance in the contention urged by or Dr. Sinha for the petitioner. We do not find any conflict between the powers of the Labour Court under the I.D. Act and the powers of the Criminal Court under section 630. When a workman is dismissed from service, he has the remedy of challenging such dismissal before the Labour Court by setting a reference made under section 10 of the I.D. Act. So long as the Labour Court hearing such reference does not give any declaration that the dismissal was illegal or so long as the Labour Court does not pass any other order staying the operation or any further implementation of the order of dismissal (assuming that the Labour Court has any such power), the order of dismissal would remain in force and the Criminal Court hearing the complaint under section 630 has to consider the situation in light of the order of dismissal/termination of service. Mere pendency of the reference before the Labour Court cannot and does not deprive the Criminal Court of its powers under section 630. Hence, we do not find any conflict between the provisions of the I.D. Act and section 630 which are both Central legislations.

9. Coming to the contention of Dr. Sinha that otherwise also, the petitioner’s continued retention of the quarters could not be said to be wrongful in view of the provisions of section 33(1) of the I.D. Act, we find that the argument is misconceived. The said provisions intend to prohibit the employer from altering the conditions of service of workmen who have already raised an industrial dispute with respect to some other conditions of their service in existence. If workmen of a unit have raised an industrial dispute about wage revision, the employer cannot be permitted to nullify the reference by terminating the services of the workmen without obtaining permission of the concerned body before whom the dispute about wage revision is pending. It is in order to save the workman from this kind of retaliation that the Legislature has enacted section 33(1) of the Act providing that during pendency of any conciliation proceeding before a conciliation officer or a Board of any proceeding before an arbitrator or a Labour or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall in regard to any matter connected with the dispute, alter to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceedings or for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workman concerned with such dispute save with the express permission in writing of the authority before which the proceeding is pending.

The above provisions cannot be applied in the case like the present one where there was no pending industrial dispute when the employee was dismissed from service. Upon such dismissal, all the logical consequences would follow including the stoppage of salary and all other benefits which go with the employment. The employee would, therefore, also lose the right to occupy the quarters allotted to him during his employment.

In view of the above discussion, we find no conflict between the provisions of section 33 of the I.D. Act and the provisions of section 630.

10. It is clarified that the above observations on the question of scope of section 33 of the I.D. Act do not have any bearing on the question of right (if any) of the workman to pray for appropriate interim order or interim relief before the Labour Court in a pending reference.

11. In view of the above discussion, we do not find any merit in any challenge to the constitutional validity of section 630.

12. In the facts of the instant case also, it is apparent that after the order of dismissal was passed in January, 1997 and after the employer filed the complaint under section 630 on 5-3-1997, the consequential order of eviction of quarters came to be passed by the learned Magistrate on 27-7-1998 on which date the order of dismissal was in full force and, therefore, the learned Magistrate was justified in giving a finding that in view of the order of dismissal the petitioner had no right to continue to occupy the quarters and that such continued occupation of the quarters even after receiving the notice of eviction from the respondent-employer was sufficient to bring the case within the scope of section 630.

13. Both the Courts have given the finding that the petitioner was allotted quarters in question by the respondent-company during his employment and that upon dismissal from service, the petitioner ceased to have any right to occupy the quarters in question and the continued occupation of the quarters from the date of the dismissal order and more particularly from the date of service of eviction notice by the respondent-company amounted to the wrongful withholding of the property of the respondent-company. We would like to note that after the petitioner was dismissed from service in January, 1997, the respondent-company had moved the learned Magistrate under section 630 on 5-3-1997 and the proceedings came to be concluded by the learned Magistrate only in July, 1998 during which period the matter was already referred to the Labour Court as far back as on 2-4-1997. Even so, for a period of about 15 months, although the petitioner had the opportunity, he did not get any interim relief from the Labour Court (assuming that the Labour Court could have granted such interim relief). The learned Magistrate was, therefore, not bound to await the disposal of the reference by the Labour Court in which the petitioner has challenged his dismissal from service.

14. In view of the above discussion, we find no merit in this revision application and dismiss the same.

Rule is discharged. Ad interim relief granted earlier is vacated. In the facts and circumstances of the case, there shall be no order as to costs.

15. At this stage, the learned counsel for the petitioner prays for stay of operation of this order and in the alternative prays that the ad interim relief granted earlier may be continued for some time in order to enable the petitioner to have further recourse in accordance with law.

We are not inclined to stay the operation of this order, but in the fact and circumstances of the case, we direct that the respondent shall not take any coercive action or enforce the order passed by the learned Magistrate under section 630 as confirmed by the Sessions Court till 31-12-2000.

Revision dismissed.

[2001] 29 SCL 303 (SC)

SUPREME COURT OF INDIA

J.K. (Bombay) Ltd.

Bharti Matha Mishra

K.T. Thomas and R.P. Sethi, JJ.

Criminal Appeal No. 87 of 2001

January 18, 2001

Section 630 of the Companies Act, 1956 - Penalty - For wrongful withholding of company’s property - Whether all family members of an alive ‘officer’ or ‘employee’ of a company can be proceeded against and prosecuted under section 630 - Held, no - Whether position of legal heirs of deceased employee can be equated with family members of erstwhile employee against whom criminal prosecution is launched and pending - Held, no

Interpretation of statutes - Rule of liberal interpretation and criminal law

Facts

One ‘M’ was an employee of the appellant-company. M resigned but refused to vacate and give possession of a flat given to him by virtue of his employment, on the pretext that he had not been paid his dues and, hence, he had a right to remain in occupation. The company filed complaint under section 630 against ‘M’ and his wife and son, the respondents. The respondents’ application in the Court of the Magistrate for recall of the order of process was rejected. Revision petition thereagainst also was dismissed. The High Court quashed the order of process.

On appeal to the Supreme Court :

Held

The argument that in Smt. Abhilash Vinodkumar Jain v. Cox & Kings Ltd. 1995 (3) SCC 732 it was held by the Supreme Court that a petition under section 630 of the Act is maintainable against the legal heirs of the deceased officer/employee for retrieval of the company’s property wrongfully withheld by them after the demise of the employee concerned and, therefore, as legal heirs of the erstwhile employee can be prosecuted, the other family members of such employee, living with him cannot escape their liability of prosecution, though attractive on the face of it, was devoid of any force when examined in depth in the light of the constitutional mandate and the legal provisions applicable in the case.

The penal law cannot be interpreted in a manner to cover within its ambit such persons who are left out by the legislature. The position of the legal heirs of the deceased employee cannot be equated with the family members of an erstwhile employee against whom, admittedly, the criminal prosecution is launched and pending. In criminal cases the law which entails conviction and sentence, liberal, construction, with the aid of assumption, presumption and implications cannot be resorted to for the purpose of roping in the criminal prosecution, such persons who are otherwise not intended to be prosecuted or dealt with by Criminal Court. Accepting the contention of the appellant would amount to the violation of fundamental right of personal liberty as enshrined under article 21 of the Constitution which declares that no person shall be deprived of his life or personal liberty except according to the procedure established by law. The paramount object of article 21 is to prevent the encroachment of the right of a person with respect to his life and liberty, save in accordance with the procedure established by law and in conformity with the provisions thereof. Personal liberty envisaged under this article means freedom from physical restraint of a person by incarceration or otherwise. Agreeing with the plea of the appellant would also be against the public policy, inasmuch as under similar circumstances the companies would be authorised to resort to harassment tactics by having recourse of arraigning minors and old members of the family of its officer or employee in office or even past. Therefore, all the family members of an alive ‘officer’ or ‘employee’ of a company cannot be proceeded with and prosecuted under section 630.

Cases referred to

Smt. Abhilash Vinodkumar Jain v.Cox & Kings (India) Ltd. [1995] (3) SCC 732, Baldev Krishna Sahi v.Shipping Corporation of India [1987] (4) SCC 361, Amritlal Chum v.Devoprasad Dutta Roy [1988] (2) SCC 269, Atul Mathur v. Atul Kalra [1989] (4) SCC 514 and Gokak Patel Vokart Ltd. v. Dundayya Gurushiddiah Hiremath [1991] (2) SCC 141.

S. Ganesh, P. Venugopal, P.S. Sudheer, K.J. John, Pradeep Misra, S.V. Deshpande for the Appearing Parties.

Judgment

Sethi, J. - Leave granted.

2. Whether the family members of an employee or an ex-employee of a company can be proceeded with in a Criminal Court, convicted and sentenced for the commission of offence under section 630 of the Companies Act, 1956? (“the Act”) is the question of law to be determined by us in this appeal. Relying upon the judgment of this Court in Smt. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. [1995] (3) SCC 732 it has been argued on behalf of the company that the expression “officer or employee appearing in section 630 would include all his family members.

3. The admitted facts of the case are that one Mata Harsh Mishra, who is the husband of respondent No. 1 and father of the Respondent No. 2, Joined the employment of the appellant-company as trainee Supervisor in its plant. He was allotted Flat No. 8 in Anil Co-operative Housing Society Ltd., and possession delivered to him for the purpose of his residence during the course of employment while he was in the service of the company. It was made clear to the said employee that he was to remain in possession of the premises only during his employment with the company and had to vacate the flat as and when he ceased to be the employee of the company. The said Shri Mishra tendered his resignation on 31-3-1994 which was accepted with effect 4-4-1994 vide letter of the company dated 23-4-1994. He was directed to hand over the charge of his work to the production Manager and vacate the flat in his possession given to him by virtue of his employment. Despite notice, the erstwhile employee did not vacate the premises on the pretext that as he had not been paid his dues, he had a right to remain in occupation. On 16-5-1995, a complaint under section 630 was filed by the appellant in the Court of Judicial Magistrate, Thane, against said Shri Mishra, its ex-employee and the respondents 1 and 2 herein. The respondents herein moved an application in the court of the magistrate for recall of the order of process. Their application was rejected by the Court of the Judicial Magistrate, first class, Thane on 12-4-1995. The revision petition filed by them was also dismissed by the additional sessions judge, Thane which compelled the aforesaid respondents to file writ petition in the Bombay High Court which has been allowed vide the order impugned herein.

Section 630 of the Companies Act Reads :

“630. Penalty for wrongful withholding of property.— (1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

(2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, or suffer imprisonment for a term which may extend to two years.”

4. The divergence of opinion between various High Courts regarding interpretation of the expression ‘an officer or employee of a company’ appearing in sub-section (1) of section 630 was resolved by this Court in Baldev Krishna Sahi v. Shipping Corpn. of India [1987] (4) SCC 361 holding that the expression ‘officer or employee of a company’ applies not only to existing officer or employee but also includes past officers or employees where such officer or employee; either (a) wrongfully obtains possession of any property, or (b) wrongfully withholds the same after the termination of his employment. Explaining the position of law this Court held :

“The beneficent provision contained in Section 630 no doubt penal, has been purposely enacted by the legislature with the object of providing a summary procedure for retrieving the property of the company (a) where, an officer or employee of a company wrongfully obtains possession of property of the company, or (b) where having been placed in possession of any such property during the course of his employment, wrongfully withholds possession of it after the termination of his employment. It is the duty of the court to place a broad and liberal construction on the provision in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy.

Section 630 of the Act which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draughtsman of the Act. The section is in two parts, Sub-section (1) by clauses (a) and (b) creates two distinct and separate offences. First of these is the one contemplated by clause (a), namely, where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment, to which he is not entitled. Normally, it is only the present officers and employees who can secure possession of any property of a company. It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property. This is the function of clause (a) and although it primarily refers to the existing officers and employees, it may also take in past officers and employees. In contrast, clause (b) contemplates a case where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment. That appears to be one of the functions of clause (b). It would be noticed that clause (b) also makes it an offence in any officer or employee or a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. That would primarily apply to the present officers and employees and may also include past officers and employees. There is therefore no warrant to give a restrictive meaning to the term ‘officer or employee’ appearing in sub-section (1) of section 630 of the Act. It is quite evident that clauses (a) and (b) are separated by the word ‘or’ and therefore are clearly disjunctive.

5. Again, this Court in Amritlal Chum v. Devoprasad Dutta Roy [1988] (2) SCC 269] (Three Judge Bench), Atul Mathur v. Atul Kalra [1989 (4) SCC 514], Gokak Patel Vokart Ltd. v. Dundayya Gurushiddaiah Hiremath [1991] (2) SCC 141, interpreted the position of law and approved the dictum of this Court in Baldev Krishna Sahi’s case (supra). In Abhilash Vinodkumar Jain’s case (supra) this Court was concerned with the prosecution of the legal representatives of the deceased employee and in that context, it held :

“The logical deduction of the analysis of section 630 of the Act in the light of the law laid down by this Court is that :

(i) Clause (a) of the section is self-contained and independent of clause (b) with the capacity of creating penal liability embracing the case of an existing employee or an officer of the company and includes a past officer or a past employee of the company;

(ii) Clause (b) is equally independent and distinct from clause (a) as regards penal consequences and its squarely applies to the cases of past employees or officers;

(iii) the entitlement of the officer or employee to the allotted property of the company is contingent upon the right and capacity of the officer or the employee by virtue of his employment to continue in possession of the property belonging to the company, under authority of the company and the duration of such right is coterminous with his/her employment.

Thus, inescapably it follows that the capacity, right to possession and the duration of occupation are all features which are integrally blended with the employment, and the capacity and the corresponding rights are extinguished with the cessation of employment and an obligation arises to hand over the allotted property back to the company, where the property of the company is held back whether by the employee, past employee or anyone claiming under them, the retained possession would amount to wrongful withholding of the property of the company actionable under section 630 of the Act. The argument of the learned counsel for the appellants that since the provisions of section 630 of the Act are penal in nature the same must be strictly construed and, the parties which have not been expressly included by the legislature in section 630(1) of the Act, cannot by any interpretative extension be included in the said provision, ignores the situation that by a deeming fiction, the legal representatives or heirs of a past employee or officer, in occupation of the property of the company, would continue to enjoy the personality and status of the employee or the officer only. . . .” (p. 738)

6. This Court further held that section 630 is intended to provide speedy relief to the company where its property wrongfully obtained or wrongfully withheld by an ‘employee or a officer’ or ‘a past employee and officer’ or ‘legal heirs or representative’ deriving their colour and content from such an employee or officer, insofar as the occupation of the property belonging to the company, is concerned. The beneficial provision would be defeated if the legal heirs or family members who continue in possession of the allotted premises, are permitted to remain in possession despite the cessation of the relationship of deceased employee with the company. Answering the question referred to it, the Court held :

7. Stretching further the verdict of the Court in Smt. Abhilash Vinodkumar Jain’s case (supra) learned counsel appearing for the appellant has submitted that as legal heirs of the erstwhile employee can be prosecuted, the other family members of such employee, living with him cannot escape their liability of prosecution. The argument, though attractive on the face of it, is devoid of any force when examined in depth in the light of the constitutional mandate and the legal provisions applicable in the case. The penal law cannot be interpreted in a manner to cover with in its ambit such persons who are left out by the Legislature. The position of the legal heirs of the deceased employee cannot be equated with the family members of an erstwhile employee against whom, admittedly, the criminal prosecution is launched and pending. In criminal cases, the law which entails conviction and sentence, liberal construction, with the aid of assumption, presumption and implications cannot be resorted to for the purpose of roping in the criminal prosecution, such persons who are otherwise not intended to be prosecuted or dealt with by Criminal Court. Accepting the contention of the appellant would amount to the violation of fundamental right of personal liberty as enshrined under article 21 of which declares that no person shall be deprived of his life or personal liberty except according to the procedure established by law. The paramount object of article 21 is to prevent the encroachment of the right of a person with respect to his life and liberty, save in accordance with the procedure established by law and in conformity with the provisions thereof. Personal liberty envisaged under this article means freedom from physical restraint of a person by in carceration or otherwise. Agreeing with the plea of the appellant would also be against the public policy, inasmuch as under similar circumstances the companies would be authorised to resort to harassment tactics by having recourse of arraigning minors and old members of the family of its officer or employee in office or even past.

8. We are of the firm opinion that all the family members of an alive ‘officer’ or ‘employee’ of a company cannot be proceeded with and prosecuted under section 630. The order impugned does not suffer from any illegality, requiring our interference.

9. There is no merit in this appeal, which is accordingly dismissed.

[2001] 33 SCL 699 (MP)

HIGH COURT OF MADHYA PRADESH, INDORE BENCH

Gajra Gears Ltd.

Smt. Ashadevi

N.K. Jain, J.

Misc. Criminal Case No. 2506 of 1996

March 11, 1998

Section 630 of the Companies Act, 1956 - Penalty - For wrongful withholding of property - Widow of deceased employee failed to hand over vacant possession of premises allotted by company to her husband - Whether complaint under section 630 was maintainable against widow - Held, yes - Whether it was open to court to dwell upon factual aspect of instant case as to whether property in fact belonged to company - Held, no

Facts

The respondent was the widow of an employee of the company which had allotted to her husband the premises which she failed to hand over to the petitioner-company after the demise of her husband. The petitioner filed a complaint under section 630 with the Chief Judicial Magistrate who dismissed the complaint holding that section 630 does not contemplate criminal proceedings being launched against the relations of any erstwhile employee of the company for recovering possession of the property of the company. The order was affirmed in the revision petition by the Sessions Court.

On appeal under section 482 of the Code of Criminal Procedure :

Held

Following the Supreme Court’s decision in the case of Abhilash Vinod Kumar Jain v. Cox & Kings (India) Ltd. [1995] 84 Comp. Cas. 28/4 SCL 167, the legal position that now emerges is that a complaint under section 630 is maintainable against legal heirs of the deceased officer/employee for retrieval of the company’s property wrongfully withheld by them, after the demise of the employee concerned.

It was, however, argued by the respondent that the property in question did not, in fact, belong to the petitioner-company. If that was so, the respondent would be free to demonstrate the same before the trial court. It was not open for the High Court in the present petition to dwell upon the factual aspect of the case.

The petition was, thus, allowed and the order passed by the Sessions Judge, was quashed as also the order passed by the Chief Judicial Magistrate. The case would now go back to the Chief Judicial Magistrate, who would re-admit the complaint and proceed with the same in accordance with law.

Cases referred to

Beharilal v. Binod Mills Co. Ltd. [1987] Bank J 621, Amritlal Chum v. Devi Ranjan Jha [1987] 61 Comp. Cas. 211 (Cal.), Harikishin Lakshimal Gidwani v. Achyut Kashinath Wagh [1982] 52 Comp. Cas. 1 (Bom.) and Smt. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. [1995] 84 Comp. Cas. 28/4 SCL 167 (SC).

S.P. Joshi for the Petitioner. Patne for the Respondent.

Judgment

Jain, J. - By this petition under section 482 of the Criminal Procedure Code, the petitioner, a public limited company, seeks quashment of the order dated 28-2-1996, passed by the Sessions Judge, Dewas, in Cr. Rev. No. 9 of 1996, in affirmance of the order dated 20-10-1995, passed by the Chief Judicial Magistrate, Dewas, dismissing the petitioner’s complaint against the respondent under section 630 of the Companies Act, 1956 (‘the Act’).

2. The respondent, Smt. Ashadevi, is the widow of the late Shri Ram Pravesh Singh who was an employee of the petitioner-company and died while serving with the company. The petitioner-company filed a com-plaint before the Chief Judicial Magistrate, Dewas, against the respondent alleging commission of the offence under section 630 and it was averred that the respondent has after the death of her husband, failed to hand over vacant possession of the premises allotted by the company to her husband.

3. The learned Chief Judicial Magistrate has dismissed the complaint holding that section 630 does not contemplate criminal proceedings being launched against the relatives of any erstwhile employee/officer of the company for recovering possession of the property of the company. The order of the learned Chief Judicial Magistrate, was affirmed in revision by the Sessions Court who also took the same view. Reliance has been placed on a decision of this Court in Beharilal v. Binod Mills Co. Ltd. [1987] Bank J 621.

4. The question requiring determination by this Court is whether a complaint under section 630 is tenable against the legal heirs of a deceased employee for recovery of the company’s property.

5. This Court in Beharilal’s case (supra) has held that the provisions embodied in section 630 do not contemplate criminal proceedings being launched against the relatives of an erstwhile employee or officer for recovering the possession of the property of the company. A similar view is taken by the Calcutta High Court in Amritlal Chum v. Devi Ranjan Jha [1987] 61 Comp. Cas. 211. However, a different view has been expressed by the High Court of Bombay in Harikishin Lakshimal Gidwani v. Achyut Kashinath Wagh [1982] 52 Comp. Cas. 1.

6. The point projected in all the aforesaid decisions now stands resolved finally by the Supreme Court’s decision in Smt. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. [1995] 84 Comp. Cas. 28, wherein the Apex Court after taking into consideration all the decisions referred to above has held :

“Thus, our answer to the question posed in the earlier part of this judgment is in the affirmative and we hold that a petition under section 630 of the Act is maintainable against the legal heirs of the deceased officer/employee for retrieval of the company’s property wrongfully withheld by them after the demise of the employee concerned. The High Court was, therefore, right in dismissing the petitions filed by the appellants under section 482 of the Criminal Procedure Code and declining to quash the proceedings initiated by the employer of the deceased employee for retrieval of the company’s property under section 630 of the Act. . . .” (p. 39)

7. It will be, thus, seen that the decision of this Court in Beharilal’s case (supra) stands overruled by the Apex Court and the legal position that now emerges is that a complaint under section 630 is maintainable against the legal heirs of the deceased officer/employee for retrieval of the company’s property wrongfully withheld by them after the demise of the employee concerned.

8. It was, however, argued by the learned counsel for the respondent that the property in question does not, in fact, belong to the petitioner-company. If that is so, the respondent shall be free to demonstrate the same before the trial court. It is not open for this Court in the present petition to dwell upon the factual aspect of the case. The decision impugned was passed solely on the ground of maintainability of the complaint and as held above, the view taken by the courts below is not in conformity with the law laid down by the Supreme Court in Smt. Abhilash Vinodkumar Jain’s case (supra).

9. I, thus, allow the petition and quash the order dated 28-2-1996, passed by the Sessions Judge, Dewas, as also the order dated 28-11-1995, passed by the Chief Judicial Magistrate, Dewas. The case shall now go back to the Chief Judicial Magistrate, Dewas, who shall re-admit and proceed with the same in accordance with law.

[1994] 81 COMP. CAS. 104 (BOM)

HIGH COURT OF BOMBAY

Kannankandi Gopal Krishna Nair

Prakash Chunder Juneja

M.F. SALDANHA J.

CRIMINAL APPEAL NO. 92 OF 1986

APRIL 19, 1993

V.P. Vashi for the Appellant.

C.C. Chhaya and D.T. Palekar for the Respondent.

JUDGMENT

M.F. Saldanha J.—Though this appeal is just one more of the numerous litigations relating to the non-return of a company flat by an ex-employee, it raises certain interesting legal aspects of far-reaching consequences. The first question that arises is as to whether the employee whose wife has subsequently purchased the premises and, therefore, become the owner thereof can still be ordered to restore the possession to the company which continues to be the tenant. Since section 630 of the Companies Act, 1956, deals essentially with the question of wrongful withholding, the restoration of possession is a necessary relief which can and must be granted regardless of the change of ownership.

The more important dimension, however, surrounds the anatomy of the offence. The accused resigned from the services of the company on February 28, 1977, and the resignation was accepted with effect from March 1, 1977, and the company called upon him to restore possession of the flat by March 31, 1977. The accused is in possession of the premises up to date, which works out to a period of a little over 16 years. The offence under section 630 of the Companies Act is a continuing offence and, consequently, it is an offence which recurs for the period during which it continues. Where an offence is repeated, in relation to premises, the court will have to define the unit in relation to which the offence can be associated and the penalty awarded would, therefore, have to be in consonance with the number of times the offence is repeated. This is the only fair and logical approach which a court ought to adopt in a situation such as this. It is pointed out that the accused has retained the possession of the premises with a degree of brazenness for as along as 16 years and deprived the company of the use thereof. It would be irrational, therefore, to award a fine of Rs. 1,000 in such a case where the occupation has continued for 16 years and the punishment would, therefore, have to be in consonance with the number of times that the offence has been repeated. In keeping with that principle, therefore, since the premises are let out on a monthly basis as is the position in the present case, the court would have to treat the offence as one recurring from month to month and the accused would, therefore, be liable for payment of fine in respect of the offence that recurs for every month starting from April 1, 1977, until the date of restoration of possession. As regards the incidental relief, even though it is submitted that the accused cannot be ordered to restore possession to the company since the flat now belongs to his wife, the argument is fallacious and as long as the tenancy rights are alive, the company would be entitled to an order for restoration of possession, in default of which the accused would be liable to a sentence of two years' rigorous imprisonment.

A curious position in law arises in the case of a continuing offence and it was traditionally contended that in such instances the continuation of the offence up to its cessation must be treated as constituting one punishable act. If this view were to be upheld, it would provide a premium to an offender who indulges in a legal wrong over a protracted period of time and is awarded a single punishment as prescribed by law. It is essential to adopt a more rational and fundamentally correct approach in such cases whereunder the offence must be treated as having been repeated from day to day or from month to month during its pendency and the unit of punishment prescribed for the offence be applied in accordance with that time frame. This concept alone will be in consonance with the view that the punishment must bear a direct nexus and proportion to the gravity of the offence and should not be inversely proportioned thereto.

The courts have been flooded with prosecutions instituted by companies under section 630 of the Companies Act and it has been demonstrated that this provision of law has almost been rendered impotent by employees and ex-employees who hold on to company property by litigating for decades together. At the end of this long exercise, if the accused loses, the company is expected to consider itself fortunate if the premises are restored and the offence, if any, is to be treated as, to use a common parlance expression, "forgiven and forgotten". Another ploy that has been successfully employed in these cases is to take advantage of the desperation of the poor landlord who, in the midst of these legal skirmishes, genuinely feels that it is better to make the best of the bad bargain by selling out to the party in possession. The accused who, on the one hand, has frustrated the law as far as section 630 of the Companies Act is concerned thereafter contends that he cannot be ordered to restore possession of his own flat. In other words, through such a devious procedure, the accused is permitted to take advantage of his own wrong which is anathema to accepted canons of criminal jurisprudence. Such gymnastics, if permitted, will have the effect of nullifying the rule of law and the courts, with some clear thinking, will, therefore, have to adopt a no-nonsense policy in the event of such mischief.

The courts, particularly in the city of Bombay, are groaning under the weight of such frivolous and avoidable litigation which is used as an umbrella for delaying and defeating the application of clear and enforceable legal provisions and if honesty and respect for the written word of a contract is to be meaningful, a-stop will have to be put to this class of unjustified litigation. This case presents an incidence of such a situation and the issues involved therein being common to thousands of other such cases, require to be clearly adjudicated as they are of some consequence. To begin with, the relevant facts which, to my mind, are themselves gross.

The accused, who is respondent No. 1, joined Hindustan Ciba-Geigy Ltd. as an assistant officer on April 1, 1962. He was originally allotted a flat in Silver Oak building under an agreement dated August 4, 1967. On January 1, 1968, he was promoted as manager and flat No. 2 in Cote D' Azur was allotted to him and the garage was allotted a month later. The agreement in respect of the premises is dated December 5, 1975. Respondent No. 1-accused resigned his services on February 28, 1977, the effective date being March 1, 1977. What transpired around this point of time is of consequence.

The agreement dated December 5, 1975, which is at exhibit P-7, is a contract under which the accused was permitted the use of the flat by virtue of his employment with the company for which eight per cent. of his monthly salary was deductible. There was no ambiguity with regard to this agreement which specified in clause (a), inter alia, that the licence shall automatically terminate on the licensee ceasing to be the company's employee on account of his resignation, retirement, etc. This clause is quite specific about the legal obligation that devolves on the licensee when such termination takes place whereby the licensee and all other persons using the flat along with him are required to remove themselves and their belongings within a period of seven days. I need to clarify here that clause (9) does not provide for any right of occupation to continue in the event of there being any subsisting dispute with regard to the cessation of employment or matters incidental thereto. This aspect of the matter is of some consequence. Clause (10) states very specifically that no easementary or tenancy rights of any type are created in favour of the licensee, that it is only a right of user that is granted, that the possession of the premises is that of the company and that the accused in his capacity as an employee is granted the restrictive right of using the premises by virtue of a status as an employee of the company. The accused does not dispute having signed this agreement and, consequently, the validity thereof cannot be questioned. By memorandum dated November 12, 1975, addressed to the accused, the keys of the garage were handed over to him and it was specified that the same was to be used only for the purpose of parking the car and for no other purposes and that on termination of the leave and licence granted in respect of the said flat, the accused was required to hand over vacant possession of the garage also. The accused has signed this memorandum and accepted the conditions mentioned therein.

On February 28, 1977, the accused wrote a letter to the company tendering therewith his resignation from the service of the company and further stated in the said letter that as per his service agreement dated May 23, 1963, he was giving six months' notice with effect from March 1, 1977, and that he intended to avail of his privilege leave due to him towards the end of the notice period. On the very same day, the company acknowledged receipt of the accused's said letter of resignation and informed him that his resignation was accepted with effect from March 1, 1977, and that the accused would be paid six months' salary in lieu of the notice given by him. By the said letter, the company requested the accused to hand over to the company its car which was in his possession and informed him that the company's personnel department would arrange to settle his account when he handed over vacant possession of the company's flat occupied by him. The accused handed over the car to the company immediately on March 2, 1977. On the very next day after accepting the resignation of the accused, the company wrote to him a letter on that day, namely, March 1, 1977, advising him that in accordance with clause (9) of the memorandum of agreement dated December 5, 1975, between the company and the accused, the accused was not entitled to use and occupy the said flat and as agreed to between the company and the accused, the accused should take immediate steps to hand over vacant possession of the company's flat occupied by him as soon as possible, but in any case not later than March 31, 1977. It was further stated in the said letter that the extended period had been allowed to the accused as a very special case and that vacant possession of the said flat was required by the company early as it has been allotted to another executive. The accused sent a reply dated March 25, 1977, wherein he falsely alleged that it was understood that he would continue to occupy the said flat until the six months' notice period had expired and assured the company that he would vacate the flat latest by August 31, 1977:

The falsity of the abovementioned allegation of the accused is borne out by the fact that the accused had written on March 9, 1977, to the company about the settlement of his provident fund account. The accused in the said letter specifically asked the company to arrange to send to him his statement of account of the provident fund up to the end of February, 1977. By his said letter, the accused had requested the company to send to him urgently a cheque for the full amount payable to him (including interest) from his provident fund account. Thus the accused has admitted that the last day of his employment with the company was February 28, 1977. The accused received from the company his own contribution to the provident fund up to February 28, 1977, plus 100 per cent, of the company's contribution up to February 28, 1977, with interest thereon up to February 28, 1977, in full and final settlement of all his claims against the provident fund. The accused has passed a receipt dated April 5, 1977, acknowledging receipt of the total amount of Rs. 1,30,572.90 for his provident fund as stated above.

As the accused thereafter failed and neglected to hand over possession of the said flat, correspondence was exchanged wherein the accused falsely contended that in respect of the said flat, an understanding was arrived at on February 28, 1977, between the company and the accused that the accused would be allowed to continue to occupy the said flat until six months' notice period expired. By March 31, 1977, the accused ought to have vacated the said flat which was in his possession and handed over peaceful possession of the said flat to the company. The accused ought to have also handed over vacant and peaceful possession of the said garage to the company.

As the accused did not hand over possession of the said flat, the company filed a suit against the accused in the Court of Small Causes at Bombay being Suit No. L.C. No. 164/225 of 1977 for a decree and an order directing the accused to quit, vacate and deliver to the company possession of the said flat and for other reliefs. The said suit was contested by the accused and ultimately a decree was passed in the said suit on November 29, 1979, directing the accused to hand over vacant possession of the said flat to the company on or before November 29, 1979. The accused has preferred an appeal against the said decree and order dated November 29, 1979, which is pending. In the said appeal, on an application made on behalf of the accused, stay of execution of the decree was granted by an order dated July 29, 1980. The company preferred a writ petition, being Writ Petition No. 2785 of 1980 against the said order dated July 29, 1980, and on October 6, 1980, when the said writ petition came up for admission, the accused appeared through his advocate and gave an undertaking to the hon'ble court that possession of the said flat would not be surrendered or parted with by the accused pending the appeal filed by him. In view of the said undertaking, the order dated July 29, 1980, granting stay of execution of the decree was confirmed and the said Writ Petition No. 2785 of 1980 preferred by the company was rejected.

As the accused has not handed over possession of the said garage, the company has filed against the accused a suit in the Court of Small Causes at Bombay, being L.E. and C. Suit No. 291/394 of 1980 for recovery of possession of the said garage. The accused has apparently till date not filed his written statement in the said suit. The said suit is pending disposal.

The company thereafter filed a special leave petition before the Supreme Court against the order of the Bombay High Court which came to be disposed of on March 6, 1981, on a statement being made by the wife and daughter of the accused that they would all file undertakings within four weeks that they would not transfer or deal with or dispose of the premises until the disposal of the proceedings that were pending before the Court of Small Causes at Bombay.

As respondent No. 1, who was an employee of the company, had wrongfully withheld handing over possession of the said flat, the company through its officer Shri K.G.K. Nair filed a criminal case against him under the provisions of section 630 of the Companies Act in the Court of the Metropolitan Magistrate, 14th Court at Girgaum, Bombay. The case was numbered as Criminal Case No. 141/S of 1980. Process was issued on the complaint and the accused was served. In that proceeding, the accused filed an application dated March 1, 1981, briefly contending that by virtue of the civil proceedings that were pending and the statement that had been made on behalf of the company in those proceedings that the criminal complaint required to be filed, the learned Magistrate by an order dated January 14, 1982, stayed the proceedings. The company filed Criminal Revision Application No. 53 of 1982 in the Court of Sessions, Greater Bombay, which came to be allowed and the stay order was vacated.

Another disturbing feature that had come to light from the record of this case is that the wife and daughter of the accused by an assignment dated September 3, 1979, took over the ownership of the flat subject to the tenancy of the petitioner-company and it subsequently transpired that they, in turn, had let out the premises to a limited company by the name of Indofil Chemicals Ltd. and that this fact was withheld while obtaining stay of execution of the decree passed by the Court of Small Causes.

The company filed a contempt petition before the Supreme Court, but it is not very clear from the record as to what order the Supreme Court passed in the said contempt proceedings. The criminal case was thereafter taken up for hearing and the company examined two witnesses, K.G. Nair (PW-1) and K.J. Shetty (PW-2). The defence examined the clerk from the Court of Small Causes, who produced the copy of the decree filed in that proceedings. In his statement, the accused contended that he had originally not taken up the plea of subtenancy as his dues had not been settled by the company. He admitted that his provident fund dues of Rs. 1,30,000 had been paid to him. He contended that even though a decree was passed against him by the Court of Small Causes and he was directed to vacate the flat before December 29,1979, his wife had purchased the flat on September 3, 1979. In sum and substance, apart from some minor technicalities that were pleaded, the defence put forward by the accused, which is rather confused, appears to suggest that the accused expected the company to accept the position that he was a lawful subtenant, though at other places, it was suggested to the witnesses that there was an understanding between the accused and the company that it would surrender its tenancy in favour of the accused. There is a parallel contention adopted by the accused who has also raised the plea that since his wife and daughter have subsequently become owners of the flat, there is no wrongful withholding of the premises by him. In his defence, the accused had contended that two officers of the company Shri Puran and Dr. Gaud were allowed to take over the flats allotted to them on the company surrendering its tenancy and he contended that this was the understanding on which the flat was allotted to him and that, therefore, there was no question of wrongful withholding. The learned Metropolitan Magistrate at the conclusion of the trial recorded a finding that having regard to the contentions raised by the accused and, more importantly, the fact that he was residing in the premises with his wife and daughter who, in turn, had become the owners of the flat, it cannot be contended that he was wrongfully withholding the same and accordingly dismissed the complaint and acquitted the accused. The company after obtaining leave from this court challenged the order of acquittal through the present appeal, which was filed in the year 1986. Due to the backlog of pending cases, the appeal had not come up for hearing all these years. The company through its counsel made an application that the appeal be taken up for hearing expeditiously and, pursuant to that application being granted, the matter was heard.

Shri Vashi, learned counsel appearing on behalf of the appellant, has taken me through the material on record, the bulk of which consists of the orders passed in the various proceedings and copies of the plaints, petitions, etc. As far as the accused is concerned, Shri Vashi pointed out to me that the evidence is clear and conclusive that he was an officer of the company and that he was allotted the flat and garage by the company under a simple licence which document is on record and that the clauses of this document very specifically indicate that no rights whatsoever have devolved on the accused and that he was permitted the use and occupation of the premises during the limited period of time when he was an officer of the company and that he was obliged to restore the possession when asked to do so or when he ceased to be an employee of the company. It is also undisputed that the accused resigned from the services of the company and that the plea of so-called sub-tenancy was nothing but an afterthought and emerged for the first time several months after he had resigned from the service of the company, in the course of the correspondence. Since that issue is sub judice in a sense that I am informed that there is an appeal pending before the Court of Small Causes, I do not propose to comment on that aspect of the case because the short question before me is as to whether the premises would come within the legal definition of property of the company and whether the accused can be said to have wrongfully withheld the same.

Learned counsel appearing on behalf of respondent No. 1 placed emphasis on the fact that the accused did not raise any contentions immediately after his resignation because he was desirous of first collecting all his dues and that this was the reason why the plea was put forward at a belated stage. This explanation to my mind is a hollow one and, as is evident from the record, totally lacking in honesty. The further plea that was canvassed by learned counsel for the accused was that the wife and daughter of the accused have purchased the flat in the year 1979 and that nothing would, therefore, survive in this proceeding because they have become owners of the flat and have every right to reside in the premises and that the accused, as a part of the family, is entitled to stay there with them. Learned counsel contended that it would be a misapplication of law if the accused were to be convicted and punished for staying in his own flat or that if he were to be ordered to restore possession of the premises to the company under these circumstances. This is a very confused, weak and wholly untenable argument because the change of ownership, to my mind, is completely irrelevant to the present proceeding. It is also very clear that the premises were wrongfully withheld by the accused who in law was obliged to restore possession immediately on ceasing to be an employee of the company and it was at that point of time that the offence was committed. The offence continues and as has been pointed out by the Supreme Court, it recurs and any subsequent developments such as institution of civil proceedings which were obviously in order to play for time or were an attempt to get out of the criminal liability, or for that matter the change of ownership cannot have the effect of purging the offence which continues and recurs until the property is restored to the company.

It is unnecessary for me to go into the details of the evidence led before the trial court because even in the cross-examination of the two witnesses, nothing of any significance has emerged. The learned Magistrate was impressed by the fact that the company is alleged to have facilitated the take-over of the premises in two other cases and the accused had contended that there was a similar understanding with him. The accused sought to take advantage of the fact that this understanding had been entered into with one Shri Kamat and the learned Magistrate has observed in the judgment that the non-examination of Shri Kamat would result in an adverse inference. This finding is incorrect for the reason that the plea of the defence runs completely contrary to the documents on record and one cannot expect that in the case of a public limited company, there were any such dubious agreements or understandings. If the accused was so confident about there being any substance in this plea, nothing prevented him from establishing it by even summoning Shri Kamat. Merely because an accused raises a far-fetched plea and throws up the name of some officers of the company, to my mind, there is no obligation cast on the prosecution to examine that officer. The material on record conclusively establishes that the accused was entrusted with the company's property and that he has wrongfully withheld that property from the company and the offence under section 630 of the Companies Act stands established.

Once again in this case, as with most others, a plea has been put forward about an arrangement that is alleged to have been discussed but which never materialised. It has become a regular feature for the defence in these cases to contend that there was an understanding that the company would relinquish its rights in the premises in favour of the employee or that the company would give him the option to buy it at a concessional rate. The fact of the matter is that such an agreement did not materialise and, to my mind, even if the employee had asked for it or the company had considered it, both situations are thoroughly irrelevant and to my mind unconscionable. Whether the company is the owner or a tenant makes little difference because residential premises, particularly in the city of Bombay, are extremely valuable and it is, therefore, quite improper to conceive of situations whereby valuable assets of the company can be gifted away to ex-employees to the prejudice of the company. I see little justification behind the ethics, or lack of it, in such transactions because the company's property is not for being gifted away, particularly when it is required to accommodate future employees. In any event, such offers or attempts to alienate company property, which fortunately did not fructify, cannot create any rights whatsoever in the employee and, therefore, such defences are no more than so much of wishful thinking. The courts in any event cannot take cognizance of such happenings even if they went up to the stage of a veritable miss between the cup and the lip. What needs to be emphasised is that the character and the complexion of the property being a company asset does not change merely because somebody negotiated for it or tried to get hold of it and it is that character of the property which makes for the essence of an offence of wrongful retention.

Shri Vashi, learned counsel appearing on behalf of the appellant, has relied on the well known decision of the Supreme Court in the case of Baldev Krishna Sahl v. Shipping Corporation of India Ltd. [1988] 63 Comp Cas 1 (SC) in which case the Supreme Court had occasion to interpret section 630 of the Companies Act rather comprehensively. Even though the main issue involved in that decision was as to whether the term "officer" or "employee" included past officers or employees, which the Supreme Court answered in the affirmative, the judgment also very clearly lays down that the retention or wrongful withholding of company property of which the employee obtained possession constituted an offence under section 630 of the Companies Act. What needs to be emphasised here is that this provision of the Companies Act does not concern the aspect of title, but it is exclusively confined to the aspect of possession. It is in these circumstances, therefore, that the courts have consistently applied section 630 of the Companies Act even in cases of residential accommodation which admittedly does not belong to the company, but in respect of which the company is in exclusive possession. In other words, the right of user in respect of property, moveable or immovable, which is conferred on an employee by virtue of his status as an officer or employee of the company and which gets extinguished on the cessation of the contract of service, cannot be extended and this provision of law prescribes a penalty in such cases where an attempt is made to wrongfully extend it and also empowers the court to ensure that possession is restored. That order is essential as otherwise the whole purpose of the law would be frustrated in so far as in cases where the property is of considerable value, an accused would prefer to pay the fine of Rs. 1,000 and to hold on to the flat.

Shri Vashi also placed reliance on a decision of the Supreme Court in the case of Atul Mathur v. Atul Kalra [1990] 68 Comp Cas 324 (SC). In this case, the Supreme Court clarified that the pendency of a civil proceeding did not in any way debar a company from instituting proceedings under section 630 of the Companies Act. What was also emphasised in this decision was that section 630 of the Companies Act is intended to provide speedy relief to a company when its property is wrongfully retained or withheld. This last aspect of the matter is of some consequence because the familiar modus operandi employed, as has happened in the present case, is to take advantage of the overloading of the courts by starting some frivolous litigation in a civil court, adopting pleas that are couched in the garb of legality and this handle is used to either usurp the property or to retain it for decades together. The important issue that arises, therefore, is as to whether when there is a special provision, specifically directed at restoration of possession of that property, its effect can be defeated or totally nullified by having resort to other parallel proceedings and in my considered view that can never be the case. If such a procedure were to be allowed, it would be tantamount to obliterating section 630 of the Companies Act. The High Courts and the Supreme Court have times without number repeatedly stressed that section 630 of the Companies Act is armed with coercive provisions which is why it is within the domain of a criminal court and, to my mind, those provisions must be enforced in the manner in which they were expected to be. Where the provision provides for speedy remedy and where the courts say that this is the position, something will be seriously wrong if the net result is otherwise.

On the basis of the arguments canvassed by learned counsel, the position that emerges is that the withholding of the flat in question, which was undoubtedly wrongful and which constitutes an offence punishable under section 630 of the Companies Act, was committed on and from April 1, 1977, when the accused was required in law to have restored possession to the company. Admittedly, that possession has not been restored and there is no order from any court of competent jurisdiction justifying the wrongful retention or possession by the accused. On the contrary, there is a decree of a civil court passed against the accused and it may be that by virtue of the appeal that is pending, as an interim arrangement, the company has been restrained or has agreed not to execute that decree. This, to my mind, does not alter the position vis-a-vis the present proceeding and to that extent, therefore, the accused would be liable for punishment until such time as the property is restored to the company. The offence having been committed and the offence being a continuing one, the accused is liable to be convicted under section 630 of the Companies Act.

The interesting question arises as to whether an order under section 630 of the Companies Act can be passed in this case. In a proceeding of the present type, the relief granted by the court under section 630 to the aggrieved party, namely, the company, would be totally illusory unless an order under sub-clause (2) is also passed. Learned counsel appearing on behalf of the respondent-accused contends that the wife of the accused had purchased the flat from the landlady in September, 1979. He further points out that the wife of the accused has filed a suit against the company terminating the tenancy on the ground of bona fide use and requirement and that in these circumstances, there can be no question of the accused restoring possession to the company because effectively the flat belongs to his wife and he is in possession of the flat and the family is, therefore, staying in the flat since they own the premises. The argument seemingly appears both profound and unassailable. What I need to point out is that the provisions of section 630 of the Companies Act cannot be nullified by parallel arrangements of this type. I do not desire to comment on either the legality or propriety of the transaction of sale/purchase of the premises because none of these documents is before this court nor is that transaction the subject-matter of this proceeding. Accepting the position that after a particular date, the wife of the accused has become the owner of the flat, to my mind, the position remains totally unaltered. The real test would be of examining the situation whereby the wife of the accused purchased the flat from the landlady at a point of time when the accused had not wrongfully withheld it and, therefore, when possession was rightfully with the company, the company would have been entitled to continue in possession regardless of the change in ownership until the tenancy was validly terminated and the wife of the accused obtained possession through due process of law. That requirement cannot be short-circuited by any devious arrangement and, therefore, orders in this proceeding shall have to be passed regardless of the change of ownership.

This court will, while passing orders, have to take due notice of the pending litigations between the parties. To that extent, therefore, the accused will have to be directed to hand over vacant possession of the premises to the company by September 30, 1993. Even though the accused is not entitled, on the record of this case, to any indulgence or consideration from this court, I have taken note of the fact that there may be practical difficulties in the way of the accused who would have to shift to some other suitable premises by way of securing such accommodation and completing the process of shifting, etc. Also, in the event of the respondent-accused desiring to carry the matter higher, it is only fair that reasonable time be afforded to him.

Shri Vashi, learned counsel appearing on behalf of the appellant, advanced the submission that the offence under section 630 of the Companies Act is a continuing offence and in this regard, he relied on the decision of the Supreme Court in the case of Gohah Patel Volhart Ltd. v. D.G. Hiremath [1991] 71 Comp Cas 403. The Supreme Court was dealing with a group of cases from Karnataka and had occasion to interpret in detail another facet of section 630 of the Companies Act and it would be useful to reproduce the observations of the Supreme Court in this regard (at page 415):

"The expression 'continuing offence' has not been defined in the Code. The question whether a particular offence is a 'continuing offence' or not must, therefore, necessarily depend upon the language of the statute which creates that offence, the nature of the offence and the purpose intended to be achieved by constituting the particular act as an offence.

Applying the law enunciated above to the provisions of section 630 of the Companies Act, we are of the view that the offence under this section is not such as can be said to have been consummated once for all. Wrongful withholding, or wrongfully obtaining possession and wrongful application of the company's property, that is, for purposes other than those expressed or directed in the articles of the company and authorised by the Companies Act cannot be said to be terminated by a single act or fact but would subsist for the period until the property in the offender's possession is delivered up or refunded. It is an offence committed over a span of time and the last act of the offence will control the commencement of the period of limitation and need be alleged. The offence consists of a course of conduct arising from a singleness of thought, purpose or refusal to deliver up or refund which may be deemed a single impulse. Considered from another angle, it consists of a continuous series of acts which endures after the period of consummation on refusal to deliver up or refund the property. It is not an instantaneous offence and limitation begins with the cessation of the criminal act, i.e., with the delivering up or refund of the property. It will be a recurring or continuing offence until the wrongful possession, wrongful withholding or wrongful application is vacated or put an end to. The offence continues until the property wrongfully obtained or wrongfully withheld or knowingly misapplied is delivered up or refunded to the company. For failure to do so sub-section (2) prescribes the punishment. This, in our view, is sufficient ground for holding that the offence under section 630 of the Companies Act is not a one time but a continuing offence and the period of limitation must be computed accordingly, and when so done, the instant complaints could not be said to have been barred by limitation. The submission that when the first respondent, upon his retirement, failed to vacate and deliver possession of the company's quarters to the company the offence must be taken to have been complete has, therefore, to be rejected."

In the light of the aforesaid judgment, Shri Vashi contended that there is no bar of limitation that can be canvassed as against the company and the respondent-accused's learned counsel, who had pointed out this aspect of the case to me, was required to concede that in view of the conclusive pronouncement of the Supreme Court in the cases referred to supra, which again dealt with non-return of premises to a limited company wherein prosecutions had been instituted under section 630 of the Companies Act is a valid and binding judgment and that it applies squarely to the present proceeding.

In this context, it would be useful to make a reference to the following decisions as also to certain publications and certain text-books as the issue relating to a continuing offence is something which has apparently not been considered in sufficient depth by the courts in our country while interpreting section 630 of the Companies Act:

Best v. Butler and Fitzgibbon [1932] 2 KB 108; Verney v. Mark Fletcher and Sons Ltd. [1909] 1 KB 444; King v. Taylor [1908] 2 KB 237; London County Council v. Worley [1894] 2 QB 826; Black's Law Dictionary, fourth edition (revised) (para 21); Black's Law Dictionary, fifth edition (Special Deluxe) (para 7); Halsbury's Laivs of England, volume 45, fourth edition (para 1389) and Salmond and Heuston: Law of Torts, 19th edition, page 50 (para 9).

The Supreme Court in Gokah Patel Volhart's case [1991] 71 Comp Cas 403, had occasion to deal with the issue from a very limited angle in so far as the bar of limitation having been canvassed in those proceedings, the court desired to examine the question as to whether the offence was complete and consummated in the true sense of the term at the commencement of the period when the premises were wrongfully withheld or not returned or whether the offence was continuing or in other words "alive" when the company approached the criminal court a long time later and the accused had not still restored possession of the premises. In the present proceeding, I am required to consider a new facet and an entirely different one, namely, the question as to what would be a fair punishment which the court can award to the accused person in a situation where the offence still subsists after the lapse of 16 years on the accused stating that he will not restore possession to the company. The court is presented with a defiant situation and the argument advanced on behalf of the respondent-accused is that this court is helpless because of the fait accompli. Whether a court is helpless or whether within the framework of the law, a court would be justified in prescribing a punishment that is in consonance with what is just in the face of a continuing offence is the question at issue.

Coming to the definition of the term "continuous offence", it will be useful to refer to the definitions from Words and Phrases:

"'Continuing' means enduring, not terminated by a single act or fact. 'Continuous crime' consisting of continuous series of acts."

According to Black's Law Dictionary, fifth edition (Special Deluxe), "continuing" means "enduring; not terminated by a single act or fact; subsisting for a definite period or intended to cover or apply to successive similar obligations or occurrences." Continuing offence means "type of crime which is committed over a span of time." As to the period of the statute of limitation in a continuing offence, the last act of the offence controls the commencement of the period. "A continuing offence, such that only the last act thereof within the period of the statute of limitations need be alleged in the indictment or information, is one which may consist of separate acts or a course of conduct but which arises from that singleness of thought, purpose or action which may be deemed a single impulse." So also a continuous crime means "one consisting of a continuous series of acts, which endures after the period, of consummation, as, offence of carrying concealed weapons. In the case of instantaneous crimes, the statute of limitation begins to run with the consummation, while in the case of continuous crimes it only begins with the cessation of the criminal conduct or act."

The corresponding concept of continuity of a civil wrong is to be found in the Law of Torts. Trespass to land in the English law of torts (trespass quare clausum fregit) consists in the act of (1) entering upon land in the possession of the plaintiff, or (2) remaining upon such land, or (3) placing or projecting any object upon it—in each case without lawful justification.

Trespass by remaining on land, as we read in Salmond and Heuston on the Law of Torts, 19th edition, page 50: "Even a person who has lawfully entered on land in the possession of another commits a trespass if he remains there after his right of entry has ceased. To refuse or omit to leave the plaintiff's land or vehicle is as much a trespass as to enter originally without right. Thus, any person who is present by the leave and licence of the occupier may, as a general rule, when the licence has been properly terminated, be sued or ejected as a trespasser, if after request and after the lapse of a reasonable time he fails to leave the premises."

Trespass in Law of Torts may be a continuing one. The authors write: "That trespass by way of personal entry is a continuing injury, lasting as long as the personal presence of the wrongdoer, and giving rise to actions de die in diem so long as it lasts, is sufficiently obvious. It is well-settled, however, that the same characteristic belongs in law even to those trespasses which consist in placing things upon the plaintiff's land. Such a trespass continues until it has been abated by the removal of the thing which is thus trespassing; successive actions will lie from day to day until it is so removed: and in each action damages (unless awarded in lieu of an injunction) are assessed only up to the date of the action. Whether this doctrine is either logical or convenient may be a question, but it has been repeatedly decided to be the law."

Again, if the entry was lawful, but is subsequently abused and continued after the permission is determined, the trespass may be ab initio. In 1610, six carpenters entered the Queen's Head Inn, Cripplegate and consumed a quart of wine (7d) and some bread (1d), for which they refused to pay. The question for the court was whether their non-payment made the entry tortious so as to enable them to be sued in trespass quare clausum fregit. The court held: "When entry, authority or licence is given to anyone by the law, and he doth abuse it, he shall be a trespasser ab initio," but that the defendants were not liable as their non-payment did not constitute a trespass. The rule is that the authority, having been abused by doing a wrongful act under cover of it, is cancelled retrospectively so that the exercise of it becomes actionable as a trespass.

In Halsbury's Laws of England, fourth edition, volume 45, para 1389, it is said:

"If a person enters on the land of another under an authority given him by law, and, while there, abuses the authority by an act which amounts to a trespass, he becomes a trespasser ab initio, and may therefore be sued as if his original entry were unlawful. Instances of an entry under the authority of the law are the entry of a customer into a common inn, of a reversioner to see if waste be done, or of a commoner to see his cattle."

To make a person a trespasser ab initio, there must be a wrongful act committed; a mere non-feasance is not enough.

It would be useful at this juncture to reproduce the provisions of section 630 of the Companies Act, which reads as under :

"Penalty for wrongful withholding of property.—(1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company, or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

The Supreme Court in Gohak Patel Volkart Ltd.'s case [1991] 71 Comp Cas 403 observed as follows (at page 409):

"Thus, both wrongfully obtaining and wrongfully withholding have been made offences punishable under sub-section (1). Under sub-section (2) knowingly misapplication has also been envisaged. The offence continues until the officer or employee delivers up or refunds any such property if ordered by the court to do so within a time fixed by the court, and in default to suffer the prescribed imprisonment. The idea of a continuing offence is implied in sub-section (2)."

The Supreme Court, in the case of State of Bihar v. Devharan Nenshi [1973] 1 SCR 1004; AIR 1973 SC 908 had occasion to lay down the position in law and Shelat J., for the court, observed as follows:

"A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or non-compliance occurs and recurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and therefore constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission is committed once and for all."(emphasis supplied)

Their Lordships referred to English cases : Best v. Butler and Fitzgibbon [1932] 2 KB 108, Vemey v. Mark Fletcher and Sons Ltd. [1909] 1 KB 444, King v, Taylor [1908] 2 KB 237 and London County Council v. Worley [1894] 2 QB 826. In Best v. Butler and Fitzgibbon [1932] 2 KB 108 in England, the Trade Union Act, 1837, by section 12 provided that if any officer, member or other person being or representing himself to be a member of a trade union, by false representation or imposition obtained possession of any moneys, books, etc., of such trade union, or, having the same in his possession wilfully withheld or fraudulently misapplied the same, a court of summary jurisdiction would order such person to be imprisoned. The offence of withholding the money referred to in this section was held to be a continuing offence, presumably because every day that the moneys were wilfully withheld, an offence within the meaning of section 12 was committed.

In Verney's case, [1909] 1 KB 444, section 10(1) of the Factory and Workshop Act, 1901, inter alia, provided that every fly-wheel directly connected with steam, water or other mechanical power must be securely fenced. Its sub-section (2) provided that a factory in which there was contravention of the section would be deemed not to be kept in conformity with the Act. Section 135 provided penalty for an occupier of a factory or workshop if he failed to keep the factory or workshop in conformity with the Act. Section 146 provided that information for the offence under section 135 shall be laid within three months after the date at which the offence came to the knowledge of the inspector for the district within which the offence was charged to have been committed. The contention was that in May, 1905 and again in March, 1908, the fly-wheel was kept unfenced to the knowledge of the inspector and yet the information was not laid until July 22, 1908. The information, however, stated that the flywheel was unfenced on July 1,1908, and that was when the offence charged. It was held that the breach of section 10 was a continuing breach on July 10, 1908, and therefore, the information was in time. The offence under section 135 read with section 10 consisted in failing to keep the factory in conformity with the Act. Every day that the fly-wheel remained unfenced, the factory was kept not in conformity with the Act, and, therefore, the failure continued to be an offence. Hence the offence defined in section 10 was a continuing offence.

In London County Council's case [1894] 2 QB 826, section 85 of the Metropolis Management Amendment Act, 1852, prohibited the erection of a building on the side of a new street of less than fifty feet in width, which shall exceed in height the distance from the front of the building on the opposite side of the street without the consent of the London County Council and imposed penalties for offences against the Act and a further penalty for every day during which such offence should continue after notice from the County Council. The court construed section 85 to have laid down two offences: (i) building to a prohibited height, and (ii) continuing such a structure already built after receiving a notice from the County Council. The latter offence was a continuing offence applying to anyone who was guilty of continuing the building at the prohibited height after notice from the County Council.

In Gohak Patel Volhart Ltd.'s case [1991] 71 Comp Cas 403, the Supreme Court had occasion to observe as follows (at pages 414-415):

"Section 472 of the Code of Criminal Procedure deals with continuing offences and says:

'In the case of a continuing offence, a fresh period of limitation shall begin to run at every moment of time during which the offence continues.'

The expression 'continuing offence' has not been defined in the Code. The question whether a particular offence is a 'continuing offence' or not must, therefore, necessarily depend upon the language of the statute which creates that offence, the nature of the offence and the purpose intended to be achieved by constituting the particular act as an offence.

Applying the law enunciated above to the provisions of section 630 of the Companies Act, we are of the view that the offence under this section is not such as can be said to have been consummated once for all. Wrongful withholding, or wrongfully obtaining possession and. wrongful application of the company's property, that is, for purposes other than those expressed or directed in the articles of the company and authorised by the Companies Act, cannot be said to be terminated by a single act or fact but would subsist for the period until the property in the offender's possession is delivered up or refunded. It is an offence committed over a span of time and the last act of the offence will control the commencement of the period of limitation and need be alleged. The offence consists of a course of conduct arising from a singleness of thought, purpose or refusal to deliver up or refund which may be deemed a single impulse. Considered from another angle, it consists of a continuous series of acts which endures after the period of consummation on refusal to deliver up or refund the property. It is not an instantaneous offence and limitation begins with the cessation of the criminal act, i.e., with the delivering up or refund of the property. It will be a recurring or continuing offence until the wrongful possession, wrongful withholding or wrongful application is vacated or put an end to. The offence continues until the property wrongfully obtained or wrongfully withheld or knowingly misapplied is delivered up or refunded to the company. For failure to do so sub-section (2) prescribes the punishment. This, in our view, is sufficient ground for holding that the offence under section 630 of the Companies Act is not a one time but a continuing offence and the period of limitation must be computed accordingly, and when so done, the instant complaints could not be said to have been barred by limitation. The submission that when the first respondent, upon his retirement, failed to vacate and deliver possession' of the company's quarter to the company, the offence must be taken to have been complete, has, therefore, to be rejected." (emphasis supplied).

Drawing a parallel from this judgment, what emerges from the concept of a continuing offence is that the anatomy of such an offence presents another important aspect, namely, that the offence has been committed and is, therefore, actionable at the point of time when the property was wrongfully withheld and that as the aforesaid decisions indicate and, as has been pointed out by the Supreme Court, the offence "recurs". It is precisely for this reason that we have a parallel in section 472 of the Code of Criminal Procedure which prescribes that a fresh period of limitation shall commence at each point of time when the offence is continuing. This aspect of recurrence of an offence, to my mind, would also provide the basis for prescribing punishment that would be in consonance with the period of time during which the offence has recurred.

Confining the consideration to the facts of the present case where the property consists of a residential flat on which the company is required to pay rent or compensation from month to month, the wrongful withholding of the premises by the accused from month to month will constitute a recurrence of the offence from month to month. To my mind, the legal injury that has been done to the company runs parallel to the wrongful gain or wrongful benefit derived by the accused from month to month and for this purpose, the only unit that can be correctly applied in such cases would be the period of one month since the tenancy runs from month to month. There is no dispute in this case that the company is required to pay to the landlord the rent/compensation from month to month and, therefore, the wrongful loss has occurred to the company every month and the corresponding wrongful gain has accrued to the accused from month to month. In this view of the matter, to my mind, the accused would be liable to be penalised from month to month during the entire period during which the offence has recurred. In the present instance, the accused was liable to restore possession of the premises to the company on March 30, 1977, and he shall, therefore, be liable to a fine in the sum of Rs. 1,000 per month from April 1, 1977, for every month that he has been in possession of the premises until the date on which possession is restored to the company. The trial court shall accordingly compute the amount of fine recoverable from the accused and shall take appropriate steps for ensuring that the same is paid.

The last issue that falls for determination in this case is as to whether the order under section 630(2) of the Companies Act can be passed. As far as that aspect of the matter is concerned, Shri Vashi submitted that, in the event of this court holding that the accused is liable to be convicted, such an order must follow as of course. Learned counsel appearing on behalf of respondent No. 1-accused stated that on the special facts of this case, no such order can be passed. The reason given by him is that by a document dated September 3, 1979, the wife and daughter of the accused have purchased the flat in question. He contends that since the wife and daughter of the accused with whom he is living are the owners of the premises, they are virtually occupying their own flat and in these circumstances an order under section 630(2) of the Companies Act would not be competent.

Assuming that the wife and daughter of the accused have become the owners or, in other words, landlords/landladies of the premises, the limited alteration in the situation would be that the relation between then and the company would be one of landlord and tenant, but this to my mind would not in any manner defeat the possessory rights of the company by virtue of the subsisting tenancy. It is precisely for this reason that a suit has been instituted in the Court of Small Causes by the new owners against the company for restoration of possession. That proceeding is subsisting and if the plaintiffs succeed, they would most certainly be entitled to restoration of possession. In the light of that proceeding, it would be necessary for this court to prescribe that on the accused handing over possession to the company, the company shall not create any third party rights and further that in the event during the intervening period until the disposal of the proceeding before the Court of Small Causes the company puts any of its other officers in possession of the premises, they shall obtain an unconditional undertaking which shall equally bind the company and the concerned officer and his family and which shall be filed in the eviction proceedings before the Court of Small Causes, and such possession shall be subject to the final orders in those proceedings.

To my mind, it would be quite impermissible for a court to allow the present situation to be used as an automatic termination or cessation of the company's tenancy. If the argument canvassed by learned counsel on behalf of the respondent-accused were to be accepted, it would lead to the absurd situation that the offending party, namely, the accused, gets the full advantage of his own wrong merely by purchasing the premises and thereafter contending that the company is automatically ousted. It would be essential as stated earlier to consider a situation whereby the ownership of the premises had changed with some other officer in occupation and it is precisely that situation that is required to be contemplated.

In this view of the matter, it would be perfectly legitimate for this court to pass an order under sub-section (2) of section 630 of the Companies Act and the respondent-accused is accordingly directed to hand over vacant and peaceful possession to the appellant-company of the premises, namely, the flat and the garage that were allotted to him, at the very earliest but in any event not later than September 30, 1993. In making this order, I have taken into account the fact that the respondent-accused may require reasonable time to arrange for alternate accommodation as also the fact that the respondent-accused may desire to carry the matter higher in which case appropriate time would be required for filing a special leave petition to the Supreme Court.

Before parting with this appeal, it is essential that certain guidelines be formulated in relation to the conduct of these proceedings instituted under section 630 of the Companies Act, if the law is to be meaningfully applied and if a total sabotage of the relevant provisions of the Companies Act is to be countermanded. In this appeal, we are faced with the atrocious situation of the accused having successfully succeeded in dodging the operation of law for 16 years and the record of this case is not very different from that of other similar proceedings. As indicated by me earlier, the pendency of proceedings and the multiplicity thereof coupled with the protraction of each of them is contraindicated by the position in law which enunciates in crystal clear terms that the provisions of section 630 of the Companies Act are intended to provide speedy and efficacious redress in cases where a company's property is wrongfully withheld. Towards restoring this property, it is essential that a conscious effort be made, particularly by the subordinate courts, to ensure that the delay factor is controlled to the maximum extent and the following guidelines are required to be observed:

(a) That the complaints be taken up and disposed of on a priority basis, the accent being on the avoidance of any unwarranted delay.

(b) That the trial courts should address themselves to the fact that the scope of the enquiry in a proceeding under section 630 of the Companies Act is extremely restricted in law and, consequently, the parties be confined within those narrow ambits without being permitted to dilate or protract the proceeding through extraneous avenues.

(c) That no frivolous applications for adjournment, stay of proceedings, etc., should be permitted by the trial courts because the history of those proceedings indicates that each of such stages is responsible for further litigation and years of delay. The law is well-settled now with regard to the position that the pendency of other civil proceedings is no bar to the decision of an application under section 630 of the Companies Act which fact should be taken cognizance of in such situations.

(d) That the appeal courts, i.e., the Court of Sessions, in the first instance, must judiciously scrutinise and vigorously examine the revision applications and appeals before granting stay orders.

(e) That applications for discharge on frivolous and untenable pleas are required to be speedily and effectively disposed of and are not to be used as handles for protracting the litigation.

The appeal is accordingly allowed. The judgment and order of the trial court are set aside. Respondent No. 1-accused is convicted under section 630 of the Companies Act and is ordered to pay a fine in the sum of Rs. 1,000 per month for each month during which the offence has recurred starting from April 1, 1977, until the date of restoration of possession of the premises to the company. The accused is further directed to hand over vacant possession of the two premises to the company latest by September 30, 1993. In the event of the accused committing default of this order, he is sentenced to suffer rigorous imprisonment for two years. The appeal is allowed.

[1999] 084 COMP. CAS 0001 (BOM)

HIGH COURT OF BOMBAY

Abhilash Vinodkumar Jain (SMT.)

Cox and Kings (India) Ltd.

M.F. SALDANHA, J.

CRIMINAL WRIT PETITION NO. 414 OF 1992

DECEMBER 13, 1993

M.M. Sakhardande, S.B. Probhavalkar and S.K. Sthalekar for the Petitioner.

I.M. Chagla, D.J. Khambatta, V.P. Vashi, Bhai Shankar Kanga, Gridharilal, D.T. Palekar and R.M. Agrawal for the Respondent.

JUDGMENT

M.F. Saldanha, J.—One more dimension concerning the ambit and scope of section 630 of the Companies Act, 1956, has been canvassed in this case. The issue is briefly summarized in the question as to whether the criminal action contemplated under section 630 of the Companies Act for retrieval of company property or premises wrongfully withheld is maintainable against the legal heirs of a deceased employee. More exactly, the two possible situations that are illustrated are, firstly, where the employee has died in service and the legal heirs wrongfully withhold possession of the premises, and, secondly, where the employee himself, who has wrongfully withheld the premises, dies during the pendency of the section 630 proceedings and the legal heirs continue to wrongfully withhold the premises. Having regard to the fact that section 630 of the Companies Act, 1956, refers to action only against officers/employees of a company which as now clarified by the Supreme Court necessarily includes ex-employees, whether legal heirs who wrongfully withhold company property can claim that they are outside the ambit and scope of section 650 of the Companies Act and, therefore, immune from criminal Prosecution. The answer in both cases is an emphatic no.

Simultaneously, a curious contention was raised in all solemnity and seriousness and argued threadbare with the assistance of hundreds of authorities and comparisons with the provisions of scores of other statutes in support of the plea that section 630 of the Companies Act is discriminatory vis-a-vis employees of companies as a class and that it singles them out for penal action in cases of wrongfully withholding of property whereas no such steps are provided for in relation to all other classes of employees and that, consequently, section 630 of the Companies Act is liable to be struck down as being ultra vires the provisions of article 14 of the Constitution of India. The petition having been admitted, at which time a speaking order was passed to the effect that the point requires consideration, I have examined it threadbare only to conclude that the challenge is thoroughly devoid of substance. Section 630 of the Companies Act incorporates a simple provision whereby a criminal court is empowered to direct the restoration of the property to the company and to impose, a fine and, in appropriate cases, a jail sentence as a penalty for defaulting. The section applies to any employee of a company who commits the offence of wrongfully withholding company property and it is well-settled law that the Legislature is empowered to make separate provision for a class of such persons. The categorisation is neither arbitrary nor unreasonable and the provision does not single out one or several persons for hostile discrimination, but only prescribes a penalty for those persons who commit an offence. I see little difference between this provision of law and any other penal provision and the argument that its application to company employees as a class constitutes discrimination is illogical and untenable.

The Supreme Court has recently come down heavily on a class of litigation indulged in for purposes of compounding a wrongful act such as withholding of property and has specifically directed such attempts to be curbed at the threshold. To my mind, this proceeding can aptly be defined as a fake litigation on which over a hundred hours of judicial time were consumed. The trial is yet to conclude before the learned Magistrate and the proceedings have been successfully stalled for over a year, thanks to this petition. Though it is unusual to award costs in a criminal proceeding, this court is left with no option except to award exemplary costs so that this at least would act as a deterrent. Simultaneously, it is essential to issue certain directions to the trial court prompt disposal of the case without permitting any laxity whatsoever.

The petitioner, Smt. Abhilash Vinodkumar Jain, has been prosecuted by Cox and Kings (I.) Ltd. for offences under sections 403, 406 and section 441 of the Indian Penal Code and section 630 of the Companies Act. The learned Additional Chief Metropolitan Magistrate, 9th Court, Bandra at Bombay, has issued process against the petitioner and the proceeding been numbered as Criminal Case No. 60/S of 1990. Essentially, the company contends that it is the owner of Flat No. 1102/C on the 11th floor of Kanti Apartments. Mount Mary Road, Bandra (West), Bombay-400 050, and that the flat in question is at present occupied by the present petitioner. The late husband of the petitioner, Vinodkumar Jain, was employed as the financial controller of respondent No. 1-company. It is contended by the petitioner that the flat in question was allotted to him by the company and that there was, an understanding to the effect that he would be allowed to occupy the same until the date of his retirement. Several other statements have been made in the petition along these lines which I am not reproducing because the company has seriously contested the correctness of all of them. The petitioner's husband, Vinodkumar Jain, died on October 11, 1987. He was a relatively young officer and appears to have died of a sudden heart attack. It is contended on behalf of the company that on humanitarian grounds, sufficient time was given to the petitioner to vacate the company flat and that all dues had been settled immediately. She was orally requested by the company's executives and subsequently this was followed by a written notice. Instead of vacating the premises, the petitioner filed R.A. Declaratory Suit No. 5857 of 1989 in the Court of Small Causes at Bombay and obtained the usual injunction restraining the company from dispossessing her save and except through due process of law. The company, in its turn, instituted proceedings before the criminal court through Criminal Case No. 60/5 of 1990. After process was issued and the petitioner was served, the company applied to the learned Chief Metropolitan Magistrate for expeditious hearing of the criminal case and an order dated July 14, 1992, was passed expediting the trial. Thereafter, the petitioner filed an application or stay of the proceedings before the learned Magistrate on the ground that the civil suit is pending before the Court of Small Causes at Bombay between the same parties. This stay was to be argued, but in the meanwhile, the petitioner moved this court in or about September, 1992, praying for an order quashing the criminal proceedings. The basic contention canvassed was that the petitioner is not an officer or employee or, for that matter, a past officer or employee of the company, that the entrustment of the premises was not done to her that, consequently, the prosecution was improper and impermissible.

Essentially, what was contended was that the criminal proceedings even though maintainable against employee or the ex-employee could not be directed against the petitioner since she answers neither of these two descriptions and would, therefore, have to be quashed and they are, therefore, not maintainable. Subsequently, the petition has been amended a challenge to the vires of section 630 of the Companies Act has been included, the principal plank being that section 630 of the Companies Act is discriminatory in so far as it provides for prosecution in the case of employees of companies' and no other classes of employees who may have wrongfully retained premises allotted to them in connection with their employment and that, consequently, the section is liable to be struck down.

When the petition came to be admitted, my brother, Shah J, passed a speaking order to the effect that the point canvassed on behalf of the petitioner requires consideration, but at the same time having regard to the character of the proceedings, namely, the fact that the accused is in occupation of premises which the company claims with some degree of urgency, the petition was made peremptorily returnable in December, 1992. As the matter could not be taken up, it was once again listed and in the month of April, 1993, the hearings commenced. Shri Sakhardande, learned counsel appearing on behalf of the petitioner, contended that he desired to argue both the contentions that are the subject-matter of this petition in extenso in so far as the first issue, namely, the aspect of applicability of section 630 of the Companies Act to the present petitioner, who is the legal heir of the company's employee, has been the subject-matter of an earlier decision of this court and similarly the question of vires of section 650 of the Companies Act had also been raised at an earlier point of time, but it was Shri Sakhardande's contention that a perusal of those judgments will indicate that the point was not canvassed with the degree of seriousness and on the basis of the decisions which he desires to put forward. It is Shri Sakhardande's contention that the earlier decisions are not only distinguishable but that he would be able to convince this court that a different view ought to be taken in the matter. Towards this end, he has filed before me a set of nine compilations containing submissions, legal contentions, copies of decisions and extracts of the various legal provisions to which Shri Sakhardande referred in the course of his arguments. I need to compliment learned counsel for two things, firstly, the degree of industry and research that has gone into the preparation of these compilations, and, secondly, for the truly excellent presentation of the case. Nobody could have done a better job of the subject and even though, to my mind, it is not necessary to deal in extenso with all this material, I have heard learned counsel at great length for as many as twenty days and have also very carefully perused all the material produced by him before me before arriving at a decision in the matter. So outstanding was the total preparation and presentation of the case that quite apart from the compliments which Shri Sakhardande received from the presiding judge, Shri Iqbal Chagla, one of the very senior and outstanding counsel of this court who represents the respondents unreservedly stated that Shri Sakhardande deserved appreciation of the highest order. It is, indeed, a pleasure when members of the Bar research and argue a matter with such a high degree of skill on both sides. So much for the quality of the exercise; the desirability and the justification therefor at an interlocutory stage in a case where the premises have been withheld from the company for as long as six years is the more important facet.

Coming to the first contention raised by Shri Sakhardande, he submitted that the premises in question were allotted to the late husband of the petitioner in his capacity as an officer of respondent No. 1-company. There is also a contention in the petition to the effect that this entrustment was with the understanding that the petitioner would occupy the premises until the date of his formal retirement in 2016 A.D. Nothing has been produced in support of this contention and I would be justified in straightaway rejecting it, not because respondent No. 1-company has denied it but principally because it would be rather absurd to suggest that any company while employing a young man in his twenties would allot a company flat to him with an assurance that the occupation would continue till his date of retirement which would be about 50 years thereafter and that too regardless of whether he continues with that company or whether he survives that entire period. Prima facie, it is impossible to accept such a contention, but in any event that issue is not very relevant for the decision of the present petition.

It is contended by Shri Sakhardande on behalf of the petitioner that section 630 of the Companies Act specifically empowers a company to prosecute an employee who is in possession of company property and is wrongfully withholding the same. Shri Sakhardande emphasises the fact that according to him that right of the company stood extinguished on the death of the employee, namely, the petitioner's husband. He capitalised on the fact that, admittedly, for some time thereafter the company permitted the present petitioner who is the wife to continue in occupation of the premises and it is Shri Sakhardande's contention that this grant in favour of the present petitioner constituted the confirmation a licence on her. He states that the present petitioner is, therefore, a licensee of the company independently of the allotment made to her late husband and having regard to her status, both legal and otherwise, the invocation of section 630 of the Companies Act is impermissible.

On the facts, Shri Sakhardande contended that after the death of petitioner's husband, the company permitted her to continue in occupation and even if it was at the request of the petitioner, this constitutes the grant of a licence within the meaning of section 52 of the Easements Act. Learned counsel has relied on the definition of the term "licence" as it appears in section 52 of the Easements Act in support of this argument. I need to straightaway record that the argument itself is thoroughly misconceived in so far as the company had never granted any licence to the present petitioner. It was only an indulgence or in other words reasonable time to vacate which is distinguishable from conferring on an occupant the right to occupy and stay in the premises. The transaction is clearly distinguishable and can never be stretched to make out a licence having been conferred on the petitioner.

Shri Sakhardande relied on Halsbury's Laws of England, fourth edition, volume 27, paragraph 10, and on a decision in the case of Townsend v. Electrical Yams Ltd. [1952] 1 All ER 918 (Ch D), in support of his contention that even if the permission to occupy one's property has devolved out of humanitarian considerations, the same can be construed in law as a licence. It needs to be clarified here that the circumstances under which the right of occupation was granted need to be examined and the proposition can only flow from a set of facts which are similar to the present case. Learned counsel drew my attention to three more decisions: (i) Sohanlal Naraindas v. Laxmidas, [1966] 68 Bom LR 400, (ii) Ramamurty Subudhi v. Gopinath Naik, AIR 1968 SC 919, and (iii) Murray, Bull and Co. Ltd. v. Murray [1952] 2 All ER 1079 (QB) and contended that in these cases where a party had been permitted to continue in occupation, the courts had held that the same constituted a licence. I have carefully considered the judgments in question and find that they were not similar on the facts. The circumstances under which the courts recorded a finding in those cases are clearly distinguishable from the present ones. In this context, Shri Sakhardande sought to distinguish the present case from the decision in the case of Raja of Vizianagaram v. Official Liquidator, Vizianagaram Mining Co. Ltd. [1952] 22 Comp Cas 1 (Mad.), wherein the learned judges have held that the act of permitting a person to occupy the flat for some extends period of time was nothing more than a mere concession which is distinguishable in law from the grant of a licence. The effort is futile.

One cannot do violence to a legal concept and more so not only defined in the statute, but interpreted time and again by thinkers, authors and court decisions. The crux of the matter is really that there never was any privity of contract between the petitioner and respondent No. 1-company, who are the owners of the flat. The petitioner A came to occupy the premises being the wife of the company's employee. The duration of the original entrustment or allocation was co-extenso with the service period of the employee and came to an end when that contract of service was prematurely terminated on the untimely death of the employee. It was a sad event and the officers and the management of the company acted with a degree of kindness and magnanimity. Had they been insistent, they could have refused to grant the petitioner time to vacate, but in the present case, it was purely on act of goodness on the part of the company in permitting the petitioner reasonable time to shift out. It is unfortunate, to say the least, that this goodness has virtually been abused and an attempt has been made to appropriate the premises. Not only has the petitioner refused to vacate but she has dragged the company through a series of unnecessary litigations. I am constrained to observe that from the manner in which the present petition was argued almost interminably, one got the impression that the solitary object is to keep the litigation going endlessly so that the petitioner can continue occupying the premises for another decade at least. A court of law will, of necessity, have to take a serious view of the matter in these circumstances.

The sequitur of what was argued under this head is that section 630 of the Companies Act is inapplicable in cases where a company has granted a licence to occupy in favour of a third party, i.e., a non-employee. As far as the first part of the argument is concerned, I have already held that both on the facts and in law, the contention is wholly and completely misconceived. No licence was either granted to the petitioner nor can it be held that she is in occupation in her capacity as a licensee. Under these circumstances, the contention raised under this head is wholly without merit and the same stands rejected.

Shri Sakhardande canvassed a subsidiary argument concerning the matter of jurisdiction on the part of the Magistrate to entertain the present proceedings. He contended that the deceased husband of the petitioner was a service tenant and sought to place reliance on the decision in the case of Governor-General of India v. Calcutta Corporation, AIR 1948 Cal 8. Once again, I need to record that the decision is wholly inapplicable. Shri Sakhardande has thereafter proceeded to contend that since the occupation is pursuant to the creation of a service tenancy, the exclusive jurisdiction in respect of any action concerning the same vests in the Court of Small Causes under section 28 of the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947. The alternative submission is that the only proceedings whereby an erstwhile service occupant or his heirs can be removed from licensed premises is under section 41 of the Presidency Small Causes Courts Act, 1888. In this context, reliance was placed on the case of Nagin Mansukhlal Dagli v. Haribhai Manibhai Patel, AIR 1980 Bom 123. I only need to observe that there are cases and cases and we are concerned with the facts of the present one wherein it is impossible to argue that either a licence or a service tenancy was in existence. I do not, therefore, need to labour the point in so far as it is more than abundantly clear that the Court of Small Causes could have no exclusive jurisdiction to entertain a proceeding on the present set of facts. It is a case of wrongful withholding of company property simpliciter and the jurisdiction to try the case vests in the Metropolitan Magistrate before whom the prosecution was very correctly instituted. There is no ground whatsoever on which the jurisdiction of the learned Magistrate to try the proceeding can be either undermined or questioned.

That brings me to the more substantial part of the challenge canvassed in the present petition and, in fact, the main ground as originally urged. As indicated by me earlier, Shri Sakhardande contended that section 630 of the Companies Act speaks of and refers to any officer or employee of a company. It is his case that a plain and liberal construction of the section, which happens to be a criminal statute and which must, as of necessity, be strictly construed, would permit the prosecution of an officer or employee of the company and nobody else. Learned counsel points out that, admittedly, the petitioner is not an officer or employee of respondent No. 1-company and as such the Companies Act cannot be pressed into service against the present petitioner. Shri Sakhardande reinforced his arguments by placing reliance on a decision of the Madhya Pradesh High Court in Beharilal Gupta v. Binod Mills Co. Ltd. [1985] 64 Comp Cas 177 (MP) wherein the High Court quashed a prosecution under section 630 of the Companies Act holding that it is not applicable to relatives of an officer or employee of a company. I need to record, however, that the case in question presented a very different situation in so far as the proceedings against the wife and nephew of the director were quashed not in the absence of the original employee but on the ground that the prosecution could not be extended to cover those persons. This distinction, to my mind, would make a substantial difference because the original employee was very much on the scene. Here, we are faced with an unusual situation where the employee has died and it is the legal heir who is in possession of the property and who is withholding it from the company. Shri Sakhardande also relied on a decision of this court in the case of Aravind Kotecha v. Mahesh Kumar Mathur [1992] Crl LJ 124; [1994] 79 Comp Cas 333, wherein certain observations were made by me to the effect that section 630 of the Companies Act applies only to an officer or employee of he company and not to "third parties". This decision was subsequently set aside by the Supreme Court, apart from which it is quite inappropriate to cite it de hors the facts. That was a case in which a director of a company fraudulently surrendered possession of a company flat and section 650 of the Companies Act proceedings were instituted against the party who had taken possession of the flat in question. The applicability of section 650 of the Companies Act to an outsider on those facts was held to be improper. That case, however, has nothing to do with the facts of the present proceeding.

The main hurdle in Shri Sakhardande's way is a decision of this court in the case of Abdul Quayaum Ansari v. State of Maharashtra [1990] 2 Bom CR 475 [1990] 70 Comp Cas 368 wherein Agarwal J. held that section 630 of the Companies Act applies to the heirs and legal representatives of the employee or officer of the company. While so doing, he held that section 630 of the Companies Act is not a purely penal provision and that the beneficent object of the Act and the intention of the legislation justified the giving of an extended meaning to the expression "officers or employees of the company".

Shri Sakhardande draws my attention to the Commentary on the Companies Act by Ramaiya, wherein at page 220, the learned author has submitted that the view in question is not correct. Learned counsel further contends that tie view of Agarwal J. is not only incorrect but that it is not a binding precedent since it is per incuriam. He has cited two decisions of the Supreme Court in support of this last proposition, which are (i) Municipal Corporation of Delhi v. Gurnam Kaur [1989] 1 SCC 101; AIR 1989 SC 38 and (ii) State of U.P. v. Synthetics and Chemicals Ltd. [1991] 4 SCC 139. The question as to whether a judgment is to be treated as per incuriam or not is an issue that I shall deal with subsequently after setting out the submissions of Shri Chagla on this aspect of the case. I do not dispute tie fact that there are situations in which a judgment will have to be treated as being per incuriam. That issue is not of paramount importance, however, because this is a court of co-ordinate jurisdiction and if, for better reasons or on the basis of substantial material that was not placed before Agarwal J. a different view is possible, it is certainly open to this court to take that view. The earlier judgment is not binding on this court in that sense, though it is a judgment that is to be respected and one that would normally be followed unless there are compelling circumstances not to do so.

A reading of Agarwal J.'s judgment indicates that he proceeded on the footing that:

(i) Section 630 of the Companies Act is not purely penal because the main thrust thereof is on speedy recovery of. the company's property by punishment.

(ii) The death of the concerned officer/employee pending prosecution does not cause abatement and the same can be continued against his legal representatives because their possession is as much wrongful as that of the prosecuted officer and they are as much liable as the officer to return the property of the company.

(iii) By a little extension of the said principle the learned judge held that death of the prosecuted officer pending prosecution does not result in the abatement thereof and entitles the company to continue with the prosecution against his legal representatives. Even after the death of the concerned officer/employee, action under section 630 can be initiated against his legal representatives.

(iv) The learned judge undertook the exercise of liberal construction of section 630 so as not to defeat the (beneficent) object and purpose to promote the object of the statute.

Shri Sakhardande submitted with utmost deference to the learned judge that the aforesaid submissions are incorrect in law. As regards the, first aspect, namely, the question as to whether section 630 of the Companies Act, 1956, is purely penal, he relied on the decision of the Supreme Court in the case of Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1988] 63 Comp Cas 1; AIR 1988 SC 2245, paragraphs 7 and 8, expressly holding that the section is a penal provision. It is, therefore, submitted that section 630 of the Companies Act must be construed as being what Shri Sakhardande terms as purely penal. The logical extension of the argument being that in that case the wording of the section will have to be rigidly circumscribed to what is literally set out therein and that would not be permissible to extend the scope under any circumstance or to widen it. The decision of the Supreme Court, referred to supra would only assist Shri Sakhardande to the limited extent of demonstrating that the failure to return company property or the wrongful withholding thereof would have penal consequences. One needs to take note of the fact that this section does not provide for any imprisonment, but only a monetary fine and that too one limited to Rs. 1,000 as it is only if the order to restore possession is defied that the question of a jail sentence comes in. What was, in fact, pointed out by the Supreme Court and which, to my mind, is obvious is that since the jurisdiction is with a criminal court and since a fine and jail sentence could be awarded as punishment that this section of the Companies Act will have to be characterised as a penal provision, but as I have indicated above, the more apt description of the section would be to characterise it as Agarwal J. has done as being not purely penal. The Companies Act is not a penal statute and the fact that it provides for a penalty alone is really what takes section 630 of the Companies Act within the jurisdiction of a criminal court.

Black's Law Dictionary defines the term "penal" as punishable, inflicting a punishment, containing a penalty or relating to a penalty. The dominant intention embodied by the Legislature in section 630 of the Companies Act is an order for restoration or possession of the property which is why the punishment provided is only token and incidental. It was for this reason and, to my mind, very rightly that Agarwal J. used the expression not purely criminals I would prefer to describe the section as being quasi-criminal to the extent that the dominant relief permissible and, in fact, the main one, is the restoration of the property and the punishment for withholding it is the incidental part. Such provisions, though few and far between, are not foreign to criminal law and can be found for instance in section 145 of the Code of Criminal Procedure, 1973.

Shri Sakhardande advanced the submission that if the proceedings under section 630 of the Companies Act are held to be maintainable against the legal representatives of a deceased employee, it would amount to either rewriting the section or, in effect, grafting on to it something that is not contained therein. To my mind, this-criticism is unjustified because through a process of legal fiction, it is the legal heir who replaces the original employee or, in other words, substitutes for him and it would, therefore, be incorrect to contend that anything is being added on to the section in Place of what was not originally there. The important point to be noted here is that the legal heir is in law no different from the original employee and is, therefore, not to be equated with a third party. Furthermore, the leased employee being the custodian of the company property so trusted, the obligations or liabilities attached to such entrustment necessarily bind the legal heir who cornea into possession of that property on behalf of the deceased.

Shri Sakhardande thereafter went on to contend that the cause action abates on the death of the employee and he sought to rely on the provisions of section 394 of the Code of Criminal Procedure, 1973 which provides for abatement of appellate proceedings on the death of an accused person. I do not propose to deal with the case law cited by Shri Sakhardande under this head for the reason that we are not concerned here with abatement of proceedings because this is not a case where an enroll who has wrongfully withheld possession of the premises has died during the pendency of the case and where the prosecution was sought to be continued against the original employee. In the present instances, the employee has died in service and it is the legal representative who stepped into his shoes who has committed the act of wrongfully withholding the premises and to the extent that the legal heir, namely, the wife, is acting in the position of the employee, an action under section 630 Companies Act would clearly and certainly be maintainable.

Since the point has been raised and argued before me, I need to also deal specifically with a situation where an ex employee wrongfully with holds possession of the premises and dies before the conclusion of the proceedings. In such a situation, the question would arise as to whether the original proceedings can be continued against the legal heirs. Unlike in civil proceedings, in a criminal case there is no question of bringing the heirs on record for the reason that the prosecution itself abates as the death of the accused. If, however, instead of surrendering the premises the legal heirs continue to wrongfully withhold the premises, the would most certainly be liable to be prosecuted under section 630 of the Companies Act. One needs to take into account the simple fact that as the legal heirs of the deceased, these persons have effectively obtained control of the company property, the character of which property has not been altered. The law makes provision for the restitution of that property to the company and it would be absurd to argue that merely because of the intervention of death a third party, even if he/she is a legal representstive, can acquire any better right to the retention of that properly than what vested in the deceased. The essence of a criminal action stems from the fact that the right to retain the property has been extinguished and the accused-employee is withholding possession despite the extinction any such legal right. The position of the heirs can be no better on their circumstances. Therefore, to my mind, it does not make any difference whatsoever as to whether the prosecution was commenced before the death of the employee or after, the legal heirs would still be criminal-liable. The only distinction that needs to be made is that if the employee has died while the proceedings were on, that the same would have to be recommenced after his death, if the heirs insist on wrongfully retaining the property.

While dealing with the reasoning adopted by my brother, Agarwal J., Shri Sakhardande was critical of the reference made by the learned judge to the principle of liberal construction and to the fact that an extended meaning has been given to the expression "officer or employee of a company". Shri Sakhardande went on to contend that this line is fallacious because it can amply be demonstrated that the section is, in fact, penal and towards this end, he sought to place reliance on the decision of the Supreme Court in the case of W.H. King v. Republic of India, AIR 1952 SC 496; as also on the decision of the Supreme Court in the case of Tolaram Relumal v. State of Bombay [1954] 56 Bom LR 1206; AIR 1954 SC 496. Shri Sakhardande placed reliance on the observations of the Supreme Court to the effect that it is not competent for the court to stretch the meaning of the expression used by the Legislature in order to carry out the intention of the Legislature. I need to record here that the two decisions, referred to supra, were cases under the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947, and that both the facts and the law are clearly distinguishable. Frankly, we are not, in the present instance, concerned with extending or stretching the wording of the section, but the short issue under debate is confined to deciding as to whether on the death of the officer or employee, the legal representative who substitutes for that very person is liable or not. Shri Sakhardande relied on a series of decisions, most of them being of the apex court, all the way down to Niranjan Singh K.S. Punjabi v. Jitendra Bhimraj Bijjaya [1990] 4 SCC 76; AIR 1990 SC 1962, wherein the Supreme Court held that those not covered by the express language of the special statute should not be subjected to the special provision by stretching the express language of the special statute. None of these cases arose under the provisions of the Companies Act and, therefore, to insist on borrowing the principle enunciated therein would not be altogether appropriate.

Lastly, Shri Sakhardande relied on a passage from Maxwell on the Interpretation of Statutes, 12th edition, page 239, in support of his contention. To my mind, the principle of strict construction is not to be confused with literal construction nor, for that matter, can one play with words in these situations. The interpretation and application of the law in the case of a penal statute is required to be done by the courts in consonance with achieving the end result that the law is required to achieve and towards this objective the court is required to grasp the basic essence of that provision and give effect to it without being fettered by difficulties which words or expressions may seemingly create. That the term "officer or employee of a company" must necessarily include the heirs and legal representatives is not only a requirement of law which stems from first principles but anything to the contrary would lead to a downright frust-ration of the provisions of section 630 of the Companies Act, if it confers a licence on the heirs or legal representatives of the wrongdoer to continue the offence for which the law would have otherwise punished the said officer or employee. The utter absurdity of the argument is further illustrated by the fact that it could never be intended that whereas the offence committed by the original employee is punishable under section 630 of the Companies Act, the extension or continuation of that offence is immune from punishment when it is committed by the heirs and legal representatives of the very employee. I do not need to labour further in this regard and I am in total agreement with the view expressed by my brother Agarwal J.

The second basic head of challenge presented by Shri Sakhardande on behalf of the petitioner centres around the alleged infraction of the guarantee of equality by section 630 of the Companies Act. He has sum marized his challenge under four heads as follows:

(a) the classification of company employees thereby made by the Legislature is repugnant to article 14 of the Constitution.

(b) the object of the impugned classification is discriminatory,

(d) the procedure under the impugned provisions is harsher than the one under the ordinary law.

I need to preface the consideration of this argument by the fact that the principles of constitutional law are now well-defined. It is true thay in the course of the last 40 years, in thousands of cases, the guarantee of equality and the principle relating to discriminatory treatment has been interpreted by the Supreme Court as also by various High Courts. The canons of law are now well defined and in his effort to convince the court that the vires of section 630 of the Companies Act are seriously suspect, Shri Sakhardande has argued the matter for several days and has drawn my attention to parallel provisions in different-rules, orders and Acts are decisions, both of Indian and foreign courts, to the views of learned authors and has also advanced submissions based on the legislative history of the provision. I have not restricted the arguments of learned counsel at any stage and by virtue of change of my assignment, the judgment was required to be reserved and in the course of the last several weeks. I have very carefully re-read all the material that was placed before me under these heads. Much of it is illustrative, none of it is directly on the point and, in my considered view, the challenge itself is devoid of justification. It is therefore, unnecessary for me to burden this judgment with a mechanical reproduction of that material which, even if summarized, would occupy the greater part of a couple of hundred pages. I am, however, constrained to observe that the courts, particularly in this State, have noted with a degree of pain and concern that litigation of this type is invariably resorted to in different courts with the sole objective of gaining mileage and it is not unusual to come across a situation where through the assistance of such litigation the premises are wrongfully retained even for as many as 15 to 20 years. Legal ingenuity is boundless and the challenge on the ground of vires always appears very profound at the first blush. Undoubtedly, a court before which such a challenge is raised in the first instance is required to examine the challenge threadbare which I have done. Having, however, meticulously examined every aspect of this head of challenge and unhesitatingly arrived at the decision that it is totally devoid of substance, I propose to briefly summarise the salient points of the submissions and my conclusions thereon.

Dealing with the first aspect, namely, classification, Shri Sakhardande, through elaborate use of comparative charts and detailed references to the various provisions as also to the Indian Companies Act, 1915, sought to point out that section 650 of the Companies Act, 1956, came into force with effect from April 1, 1956. In sum and substance, Shri Sakhardande contends that under the law, remedies are available to the owner of property or premises in case of wrongful retention and that there is no justification to incorporate a penal provision only in the case of employees of companies who indulge in this particular act. Shri Sakhardande drew my attention to the fact that there are partnership firms, societies, proprietary firms, statutory corporations and Governments, all of whom have employees and that none of the other categories of employees other than those employed by companies are vulnerable to a prosecution and that, consequently, the classification itself is unjustified. Learned counsel seeks to point out that this is a special provision that hits only employees of companies and does not affect any of the other classes of employees and the classification is, therefore, unreasonable. I do not propose to examine the case law on the subject because the argument itself is fallacious in so far as it is a well-settled principle that it is permissible to make special provisions for special categories where the Legislature considers it essential.

A parallel may be drawn from the fact that under the Public Premises (Eviction) Act, it is unnecessary for eviction proceedings to be adopt before any legal forum, whereas such a provision does not govern other classes of employees. These provisions are, undoubtedly, different, both in their content and effect, but they do not single out any individual of class of individuals to hostile treatment under the law nor is the method of classification irrational. An employee of a company has a status that is not comparable nor is it identical with that of all other employees and it is. therefore, perfectly permissible to make a provision that governs that class of persons. The law permits categorisation, but what the law prohibits is arbitrary or irrational categorisation and in so far as the Companies Act, which deals with all facets of the working of a company, makes a provision in respect of retrieval of company property, one cannot read into it any shred of arbitrariness, unreasonableness or hostility. In the absence of these elements, one could go on endlessly comparing one provision of law with the other, but such differences are essential, they are necessary, they are legally permissible and they would not offend the mandate of article 14 of the Constitution of India. I am unable to agree with Shri Sakhardande when he contends that the classification is unscientific, that it is artificial or that the company employees have been mechanically grouped together.

Coming to the object being allegedly discriminatory, Shri Sakhardande contends that there is nothing on record to indicate as to special treatment has been accorded as far as the retrieval of only company property is concerned. He further contends that this confers a special benefit of privilege to companies and subjects the employees to a special burden and a liability. I need only to point out that this argument virtually stretches the logic too far in the sense that there is no special benefits that is conferred on companies. What the Legislature has provided for is that in a situation where an employee, in the course of his service, is entrusted with company property, the wrongful withholding thereof can result in prosecution. It is quite obvious that the legislative intent behind provision was that in the case of a company, it would become impossible for it to continue functioning if its property were to be fully withheld by its employees. Such a situation could obviously lead to economic consequences and to the total collapse of the unit in a given situation. Obviously, therefore, it was essential to bring in a provision whereby such property could be speedily restored, for which purpose a special provision has been incorporated. There is a definite and rational justification and need for such a provision which cannot, therefore, be wrongly defined as an act of favouritism. More so, it would not lie in the mouth of an offender to contend that such a provision is wrong or discriminatory, particularly when there is a clear and definite objective and justification for it. I do not see anything discriminatory in this provision and the argument under this head will, therefore, have to be rejected.

I need only to deal, in passing, with the submission of learned counsel that in the absence of a rational nexus between the provision and the objective, the same will have to be struck down because the only possible answer to this contention is that the Legislature, for good reasons, thought it very essential to provide for a speedy remedy in relation to the return or retrieval of company property and this can by no stretch of imagination be categorised as irrational. Towards this end, if the Legislature provided for the resort to the jurisdiction of a criminal court, one can never categorise the provision to be devoid of containing a rational nexus to the objective. It was quite clear that the normal civil remedies which are complex and time-consuming were not intended to be resorted to in the case of company property and in sum and substance the provision of an expeditious remedy for retrieval of the company property to my completely establishes the rationality between the provisions of law and the object sought to be achieved.

The essence of Shri Sakhardande's challenge on the ground of infraction of article 14 of the Constitution of India is that the impugned procedure prescribed under section 630 of the Companies Act is harsher than the ordinary procedure and that, consequently, the provision is discriminatory. Towards this end, again, Shri Sakhardande proceeded to make good his submissions by adverting to the parallel provision applicable to other clauses of employees as also to a virtual string of cases. I have refrained from reproducing this material, though I did go through very carefully because, in my considered view, every submission advanced by learned counsel requires to be examined with a degree of care, as it is often that an unusual angle or a novel point is presented, quite possibly one which virtually breaks new ground. Unfortunately, the basic premise on which this argument is founded is fallacious because the status of employees of different types of corporations and concerns cannot be equated with each other nor, for that matter, can the provisions of law that govern each of these. To quote a simple example, under the Companies Act, the liability of a director is limited, whereas under the Partnership Act, the liability of a partner is immensely widen and, if Shri Sakhardaride's argument were to be upheld, it could be argued that a partner is more vulnerable, that he is exposed to harsher provision and discrimination.1 Different classes of employees are not equally situated. The concerns that employ them are dissimilar and it is, therefore? perfectly justifiable to make provisions that are appropriate or what the Legislature considers reasonable and necessary for the management of that class or type of organisation. Section 630 of the Companies Act to my mind, contemplates a situation has reached epidemic proportions, particularly in the city of Bombay. The civil courts are choked up with litigation and the criminal courts, though faced with a similar situation, are able to work only marginally faster. A convenient ploy that is adopted, therefore, is to pay a nominal court fee and to institute some frivolous civil proceedings against a company and thereafter contend that unless the criminal case is stayed, the civil proceedings will be rendered infructuous. These are virtually sham arguments and this court has had occasion more than once to record that the trial courts should guard against entertaining any such pleas. The present proceeding is illustrative of a similar modus operandi where a suit is filed in the Court of Small Causes, in the first instance, and thereafter an application for stay is presented before the trial Magistrate and before that application could be decided, the present petition has been filed before the High Court. It is not difficult to squeeze out seemingly profound contentions in each of these proceedings in order to keep them alive, but the bottom line of the whole situation is that the law is given a go-by and the wrongdoer seemingly gets away with his acts and injustice of the highest order to done to the aggrieved party to whom, ironically enough, the justice-dispensing system is supposed to provide relief.

It is in this context that I fail to see There is no semblance of discriminai in the argument that the accused is subjected to a harsher procedure than that to which other clauses of employees are subjected. The two situations cannot be compared nor can there be any argument with regard to the rigours of the provisions. Oftentimes, it is essential to make a Provision that is in the public interest, such as the one incorporated in section 63A of the Companies Act and the grievance regarding harsher treatment or rather more rigorous action as projected by Shri Sakhardande can be fully answered by demonstrating that public servants alone, though in common parlance employees like all other classes, are governed by the provisions A of the Prevention of Corruption Act and if they indulge in acts of a certain type are liable to be prosecuted, whereas other classes of employees are not subjected to such legal hazards. This would not render the law discriminatory. It is in these circumstances, and after a thorough consideration of everything that has been argued at great length by Shri Sakhardande, that 1 am constrained to reject the challenge in toto.

In reply to the contentions canvassed by Shri Sakhardande. Shri Chagla has contended with both the case law as also the arguments though with considerable brevity. I do not mean to undermine the considerable research put in and the material presented by learned counsel, both of which are of a high order, but to which it is unnecessary 10 advert to in any great detail. To start with, Shri Chagla submitted that the applicability of section 650 of the Companies Act to the legal heirs of an officer-employee is virtually concluded by the decision of my brother Agarwal J. in Abdul Quayaun Ansari v. State of Maharashtra [1991] 73 Comp Cas 368 (Bom), and that the distinctions sought to be canvassed are groundless. Shri Chagla has referred to several provisions of the English courts in support of his submission that this judgment is good law. I have had occasion to deal with that aspect of the matter earlier and I have already held that regardless of the submissions canvassed on behalf of the present petitioner. I am in agreement with the ratio laid down in that judgment. Similarly, the question of the vires of section 630 of the Companies Act had come up for consideration before this court in Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp Cas 329 (Bom) but there again it is the contention of Shri Chagla that the decision has set the issue at rest and that Shri Sakhardande is wrong in contending that the court hardly examined the issue. On a consideration of that judgment. I do find that, perhaps, the point was not argued in such detail as was done in the proceedings before me, but it would be wrong to contend that the court had no occasion to deal with it on the merits. Effectively, the court has considered the challenge along the same lines as was raised in these proceedings and, to my mind, that decision cannot be faulted. I have referred specifically to these two cases, principally because they effectively deal with the two main planks that are the subject-matter of Shri Sakhardande's arguments. Even though learned counsel is entitled to try and distinguish these decisions or, for that matter, to produce material and convince the court that another view is possible and even though I must say that he has made a valiant effort in this direction, unfortunately his attempts have been unsuccessful.

Shri Chagla has basically contended that a plain reading of section 630 of the Companies Act indicates that it is a special provision for the expeditious retrieval of company property. This being the dominant and only purpose behind the enactment of these provisions, a court cannot permit it to be defeated because of the demise of the employee concerned. As long as one maintains an unclouded view of the intention of the Legislature, there will be no difficulty in interpreting the section ver clearly and correctly and holding that the legal heir who steps into the shoes of the employee will be as much liable if the offence is sought be continued. This court had occasion to consider the view taken by the Supreme Court in Gokak Patel Volkart Ltd.'s case [1991] 71 Comp Cas 403 wherein, while interpreting section 630 of the Companies Act, the Supreme Court held that the offence in question is a continuing one. On a detailed consideration of the law, this court had occasion to hold in Hindustan Ciba Geigy Ltd.'s case that the offence is not only a continuing one, but that it recurs from time to time which is why a fine of Rs. 1.000 per month was imposed in that matter for even month of wrongful withholding. Applying that principle, there would be no difficulty in concluding that even on the facts of the present case where the legal heir continues to withheld company property wrongfully, the action contemplated under section 630 of the Companies Act and the penalty prescribed therein would be applicable because the offence has recurred after the death of the employee and at a point of time when the legal heir has committed it. It is in these circumstances that I considered it unnecessary to enter into any detailed discussion with regard to several other aspects of matter canvassed by Shri Chagla and the many decisions, both Indian and English, referred to by him because all that material is essentially rendered academic in the light of the view taken by me.

Having regard to this position, the petition fails and stands dismissed. It is essential that certain directions be issued to the trial court in this case which principally will, undoubtedly, hold good in all such proceedings under section 630 of the Companies Act. The jurisdiction conferred on the learned Magistrate is a special one and could, perhaps, be comparable with that under section 138 of the Negotiable Instruments Act. All that the learned Magistrate is required to examine in such a proceedings is the question as to whether the company property has been wrongfully withheld and, if so, to pass an order for its restoration and to compute the fine payable for the period of retention and the manner of such computation as has been already laid down in Hindustan Ciba Geigy Ltd.'s case. This is virtually a summary procedure and even though will undoubtedly be made before the trial court to complicate the issue by referring to angles and documents and material that are wholly and completely irrelevant for the decision of the proceedings, the learned Magistrate ought to take up these cases on a priority basis, restrict the scope of the evidence and the arguments to that which is strictly germane to the short issue involved and to dispose of the matter within the minimum time. I do concede that the trial courts are required to give priority to custody cases and other such criminal proceedings, but it should not be difficult for the learned Magistrates, if the aforesaid procedure is strictly adopted and if adjournments are refused on all except absolutely genuine grounds, to dispose of complaints under section 650 of the Companies Act within an outer limit of six months from the date on which they are filed. These cases should be specially numbered, taken up on a priority basis and summarily disposed of because experience has shown that when they are allowed to drift, as is happening till now they linger on for anything from 5 to 10 years in the trial courts.

The Supreme Court recently had occasion to deal with a class of litigation that is indulged in for ulterior reasons and, while doing so, to characterise that litigation as "fake" litigation. As indicated by me, the points canvassed in these proceedings are concluded by earlier judgments of this court which are binding. These judgments are still good law and in these circumstances, there was virtually no justification to interrupt the trial except in order to gain mileage. The premises ought to have been restored to the company in the year 1987, six years have elapsed and the trial has not yet commenced in spite of an order for expedition that has heen passed in these proceedings. The present petition has been prosecuted with a degree of militancy and in such detail that over a hundred hours of judicial time, which this court can scarcely afford to devote to proceedings of this type, were utilised in this exercise. Due to the change of assignment after I commenced with the hearing before the summer vacation and since I have been continuously on the Division Bench, there was no option except to hear this matter specially and the court had to specially sit on several Saturdays and holidays for this purpose. It is necessary sometimes to firmly dissuade litigants from adopting such tactics and one of them would be by saddling the party concerned with exemplary costs. Having regard to the amount of judicial time that has been expended this matter, to my mind, the costs are required to be quantified at Rs. 25.000. The petitioner shall deposit the costs with the office of this court within a period of 30 days from today.

The criminal writ petition accordingly fails and stands dismissed. Rule to stand discharged. The records and proceedings if called for shall forthwith be returned to the trial court and the parties are directed to appear before the learned Magistrate on Friday, 7th January, 1994. The learned Magistrate shall fix a date for proceeding with the matter after hearing learned counsel on both sides and shall thereafter hear and dispose of the complaint on a priority basis, and, in any event, before February 28, 1994.

Before parting with this judgment, I need to observe that almost 40 years have elapsed since section 630 of the Companies Act was brought on the statute book. Obviously, when the penalties were originally scribed, the type of property that is likely to be withheld, more importantly, the value of that property and, above all, the staggering loss caused to the company if the property were to be withheld over a long period of time, were aspects that had not been sufficiently highlighted. In the course of the last decade where real estate prices, not to mention compensation, have risen out of all proportion, the penalty prescribed under section 630 of the Companies Act in cases relating to retention of flats or residential premises can only be likened to a flea bite. Having regard to these almost, innocuous penalties that are provided for, employees are emboldened to commit these offences almost with a sense of defiance and impunity. On an equation of the nature of the offence and the ingredients thereof, one sees little difference between this charge and the one under section 403 of the Indian Penal Code. It is in these circumstances that, to my mind it is very much in the public interest that section 630 of the Companies Act be amended and that the penalties prescribed be brought on par with those provided for under section 409 of the Indian Penal Code. This is very much in the public interest. To quote a parallel, it is not very long ago that the Government took stock of the fact that the widespread obnoxious practice of issuing cheques that were dishonoured required to be curbed and the introduction of section 138 of the Negotiable Instruments Act and the penalty prescribed therein have had a salutary effect already. The Registrar shall forward a copy of this judgment to the Secretary, Company Law Board, as also the Secretary to the Government, Ministry of Law, Government of India, both of which authorities shall consider the recommendations made by this court and take appropriate steps thereon expeditiously.

After judgment was pronounced, learned counsel appearing on behalf of the petitioner advanced a submission that since the challenge in this

Case is confined to two pure points of law, the petitioner desires to carry the matter higher in appeal. He also pointed out to me that the petitioner is a lady, that she is a widow, and that the Supreme Court is likely to is a lady, that she is a widow, and that the Supreme Court is likely to break for some time on vacation and that having regard to all these factors, stay for a period of eight weeks should be granted. Shri Vashi on behalf of respondent No. 1-company opposes the application. He pointed out that even during the pendency of this proceeding the High Court had not granted any blanket stay of the trial and, furthermore, even if the recording of evidence were to be commenced in January, 1994, the petitioner will have adequate time to move the apex court and obtain appropriate orders thereafter.

In the course of the judgment, I have made very specific observations which are to the effect that I have thoroughly disapproved of the stoppage of the trial at an interlocutory stage through the filing of the present proceeding. Furthermore, I have also pointed out that section 630 of the Companies Act has been specifically put on the statute book with the express purpose of ensuring efficacious and speedy retrieval of company property. These legal provisions cannot be either defeated, frustrated or put into cold storage through litigation at an interlocutory stage. Having regard to this position, the application for stay is rejected. It is, however, necessary to clarify that no prejudice whatsoever will be caused to the present petitioner in so far as the recording of evidence, arguments and decision of the proceedings before the trial court will, undoubtedly, take several weeks. The judgment has been signed by me today and copies are immediately made available. The petitioner, therefore, has adequate time to seek further legal redressal without being prejudiced by the fact that trial is proceeding. Under these circumstances, I am not inclined to stay the operation of the judgment and, as indicated earlier, the application for stay stands rejected.s

[1994] 81 COMP. CAS. 132 (BOM)

HIGH COURT OF BOMBAY

Indian Hotels Co. Ltd.

Bhaskar Moreshwar Karve

M.F. SALDANHA J.

CRIMINAL REVISION APPLICATION NO. 33 OF 1993

JULY 6, 1993

Rafique Dada, U.P. Vashi and J.V. Vashi Advocates, for the Petitioner.

Sudhir Shah and R.F. Lambay for the Respondent.

JUDGMENT

M.F. Saldanha J.—This proceeding is reminiscent of the allegoric reference to the proverbial serpent that attempted to sting the hand that was feeding it milk. Harsh as this may seem, a narration of the facts would indicate how appropriate the analogy is. The central issue canvassed in the case being one that is customarily pleaded as a defence in prosecutions under section 630 of the Companies Act, 1956, the law on the point requires to be settled. It has almost become routine in this class of litigation, for a contention to be adopted by the defence, that a promise was made to the accused ex-employee by or on behalf of the company that the premises in question would be sold to the employee at book value or, in other words, for a fraction of the real market value or, in the case of rented premises, that the tenancy would be surrendered in favour of the occupant. This contention is pleaded in all seriousness and it is contended that the accused is entitled to enforce his rights by insisting on specific performance by the company and that, consequently, the ingredient of wrongful retention or withholding of the premises is absent. Litigations are commenced in the civil courts for a declaration that the accused should be declared a tenant or that he is entitled to enforce the sale at book value to himself for a totally unreal consideration on the ground that he is an intending purchaser, apart from other parallel proceedings in various courts, and the criminal prosecution instituted by the company is sought to be stayed on the ground that the accused has raised issues which are within the exclusive jurisdiction of a civil court where the accused can confidently assure himself that the first round of litigation will not be over for at least two decades if the requisite dilatory tactics are resorted to.

The courts in this country, and in particular the apex court, have held with consistent regularity that section 630 of the Companies Act is a penal provision and that it is intended to provide an expedient and surefire remedy for recovery of company property that is wrongfully withheld, the term "property" being inclusive of residential premises retained by employees or ex-employees, who undoubtedly would use every available means to retain the property for as long as possible and to even appropriate it wherever the situation permits. The application of the law against such wrong-doers is not to be in a weak, long-drawn out, insipid action which would have the effect of encouraging dishonesty, but the approach has to be strong, vigorous and efficient if there is to be respect for the rule of law. The courts have hitherto interpreted section 630 of the Companies Act and have crystallised the position. That the remedy prescribed by the section is required to be speedy, that it is required to be effective and that, consequently, it must necessarily yield the desired result is how the section has been interpreted. What is, in fact, happening in the proceedings is exactly the reverse and it is, therefore, necessary to ensure that the law is given effect to and not put into cold storage.

To state the central point in this proceeding, which briefly is that the accused was allotted and is in occupation of residential flat No. 32 on the third floor of Mehr-Dad Building, Cuffe Parade, Bombay-400005, along with a garage in the same building since about the year 1978 in his capacity as an officer of the Indian Hotels Co. Ltd. (hereinafter referred to as "the company"). At the time of the purchase, the company had paid Rs. 1,70,000 for the property. The accused conveyed a request in the year 1978 to the managing director of the company that he should be permitted to purchase the flat in question at book value. The managing director, Mr. Kerkar, intimated to him that he viewed the proposal favourably, but that the same was subject to the sanction of the board of directors. The accused contends that he is entitled to apply the doctrine of promissory estoppel in so far as a promise was held out to him that the flat would, in fact, be sold to him at book value and that it was because of this assurance that he did not acquire suitable residential accommodation for himself. The matter was hanging fire for several years and ultimately placed before the board in 1989 when the board of directors of the company rejected the proposal. The accused, who had in the meanwhile retired, continued to reside in the premises without making any payments whatsoever to the company and the company had to prosecute him under section 630 of the Companies Act. Criminal Case No. 2199/S of 1989 was filed by the company in the court of the learned Additional Chief Metropolitan Magistrate, 37th Court, Esplanade, Bombay, charging the accused with having committed an offence punishable under section 630 of the Companies Act.

The accused has filed a suit, which is pending in the High Court, being Suit No. 2187 of 1992 on May 20, 1992, wherein he has prayed for a decree of specific performance against the company for compelling it to sell the flat to the accused at book value. The accused contends through some involved and difficult process of reasoning that he is entitled to enforce the assurance given to this effect and that the adjudication of the case is purely within the ambit of the civil court. Simultaneously, he states that by canvassing such a plea he is entitled to claim total immunity in the criminal prosecution because he is legally justified in retaining possession of the premises and is, therefore, not wrongfully withholding the same. I found it difficult to read much logic into the aforesaid contentions apart from there being precious little legal justification in the argument, but this point has been argued at length and, therefore, requires to be settled, more so since such pleas are being canvassed with regularity in section 630 of the Companies Act proceedings and are responsible for abnormal delays in the disposal of cases. The law on the point, therefore, requires to be stated.

As far as the criminal prosecution was concerned, the accused had earlier approached this court by way of Criminal Application No. 2491 of 1990 contending that the criminal proceedings against him ought to be quashed. After hearing the parties, Dhabe J. passed a speaking order dated November 5, 1990, and held that it was not a fit case in which the powers under section 482 of the Code of Criminal Procedure ought to be invoked and rejected the petition. The accused filed an appeal to the Supreme Court, being Criminal Appeal No. 164 of 1991. It is obvious from the order of the Supreme Court dated September 12, 1991, that the court was not inclined to entertain the appeal whereupon the petitioner sought the leave of the court to withdraw it. The petition was disposed of with the observation that the appeal is dismissed as withdrawn. The court, however, expressed no opinion on the merits of the case and directed the trial court to hear and dispose of the case preferably within a period of six months from the date of the receipt of the order. The trial thereafter proceeded and when it came to the stage of framing charges, the accused once again seriously contended that he should be discharged. The defence taken before the trial court is exactly the same, namely, that it was promised to the accused that the flat would be sold to him at book value, that consequently he did not acquire a place of his own and that the company is, therefore, estopped from going back on the promise. The learned Magistrate, after hearing the parties, rejected the application for discharge by an order dated November 23, 1992, and on December 1, 1992, framed the charge against the accused for an offence under section 630 of the Companies Act.

The accused thereafter filed Criminal Revision Application No. 378 of 1992 before the Court of Sessions for Greater Bombay, principally contending that the framing of charges against him was unjustified and once again pleading the point regarding promissory estoppel. The matter was finally heard by the Court of Sessions and the honourable judge Deshpande by his judgment dated March 1, 1993, upheld the plea raised by the accused. The revision was allowed, the order of the Metropolitan Magistrate dated November 23, 1992, was set aside and the accused was discharged. It is against this order that the company has approached the High Court through the present petition. When this petition came up for admission, after hearing learned counsel on both the sides and on a consideration of the order dated March 1, 1993, passed by the Court of Sessions, it appeared that the case did require reconsideration. Shri Vashi, on behalf of the petitioner, had pointed out to me that in the year 1991, the Supreme Court had directed that the proceeding be disposed of within six months, that the order of the Supreme Court was dated January 12, 1991, and was binding on the courts below, that almost two years had passed and the proceeding had not yet terminated in the trial court. Learned counsel pointed out to me that the accused has retired from the services of the company, that the company badly requires the premises for its other officers and that, consequently, the matter ought to be disposed of on a priority basis. The only point that arose for consideration in the matter was as to whether the accused could plead and enforce the doctrine of promissory estoppel and to this extent on the facts of this case and a consideration of the law appeared to be an important argument. The Supreme Court direction, on the one hand, the need of the company on the other and the fact that the trial was already part-heard before the learned Magistrate were grounds that required expeditious hearing. The matter was, therefore, admitted and fixed for final hearing on April 20, 1993.

The petition was taken up for hearing in the third week of April and learned counsel on behalf of the petitioner pointed out to me the facts of the case, the correspondence on record, the notes of evidence, the orders, etc., on two main points and submitted that there can be no two opinions about the fact that the accused had wrongfully retained the flat and if at all anything was to be said in favour of his defence that the same could only be taken cognizance of at the time of the main judgment. He submitted that interference by the learned Sessions Judge and that too at the stage of framing of charges was wholly improper and consequently the proceedings be remanded to the trial court for a decision on the merits. Shri Sudhir Shah, learned counsel appearing on behalf of the respondents, defended the order of the learned Sessions Judge who had discharged his client. Shri Shah was eloquent in his arguments, which were also long-winded, and he maintained that this court must look at all the material on record, particularly the documents which were rather voluminous. After the case was heard for a considerable period of time, I informed Shri Shah that the plea of promissory estoppel canvassed by him which is the only defence in this case was wholly without substance and that the order of the Sessions Court would have to be set aside.

It is not obligatory on the part of the court to forewarn a litigant, but out of a sense of fairness, as is often done by the superior courts, I pointed out to Shri Shah that at the interlocutory stage it did not appear advisable for him to invite an order on the merits from the High Court. It had been pointed out to me by learned counsel on behalf of the company that in this very case on an earlier occasion when the matter had been taken to the Supreme Court in appeal, their Lordships, after hearing learned counsel for the accused, informed him that if he desired an order on the merits the same was bound to adversely affect him at the trial, at which time the accused sought the leave of the court to withdraw the appeal. The learned Magistrate has yet to hear the parties and to decide as to whether the accused is liable to be convicted and in these circumstances it appeared indiscreet to invite an order on the merits from the High Court. Shri Shah stated that after considering the matter and after obtaining the instructions from his client they desired that the matter be disposed of on the merits and that this court should hear the parties completely and indicate its decision. Shri Shah stated that he was confident of succeeding in the case and if he did not, that his client would like to carry the matter higher and that he has considered the implications of an order on the merits being passed at this stage and that he would like a total adjudication of the matter on the merits. It does often happen in judicial proceedings, such as when a reference is made, that a superior court decides the issue and after resolving it merely re-transmits the matter to the lower court for disposal in the light of the law as laid down. The arguments thereafter continued right until the vacation and after the re-opening of the court. In view of my Division Bench assignment, I sat specially on a Saturday to hear the matter so that the arguments could be heard completely. This was done on June 19, 1993, and the matter was kept for judgment. While going through the record and the compilations, I was surprised to find an engrossed compilation entitled "written arguments which were advanced orally on behalf of respondent No. 1". The compilation runs into something like 52 pages and there is a lot of material, particularly case law that was never even referred to in the course of the arguments. The court was never informed that this was being filed nor was the leave of the court obtained for placing it on record. I sent for the Sheristedar and enquired with him, whereupon he informed me that after I had heard counsel, concluded the hearing and left the court room, Shri Sudhir Shah, learned counsel appearing on behalf of respondent No. 1, had tendered this compilation to him and requested him to put it into the case papers. He admitted that it was a lapse on his part to have taken the compilation from the learned advocate, but that he did so because the advocate told him that he had mentioned it to the judge after the arguments, that he was filing written submissions. This last statement is a false one. Normally, written submissions and compilations are not only helpful but are useful. I, therefore, decided to scrutinise the compilation when I found that a reference has been made to a very large number of cases which were never cited.

In the present instance, I was sorry to find that the manner in which this compilation was attempted to be smuggled on record was particularly in an attempt to put the court in the wrong box and prepare some technical grounds for protracting the proceedings further. Various statements and various cases are referred to, which I was not aware of, since there was not even a remotest reference of those in the arguments of Shri Shah and the attempt is quite obvious to make a grievance that this court has ignored and overlooked all this material. What is far more serious is the fact that virtual allegations of bias and pre-conceived notions have been attributed to the judge which, apart from being false and unfair, prima facie constitute contempt of court.

Regardless of the tactics adopted by the learned advocate, I have at all times been fair and absolutely impartial to both the parties and shall continue to do so. Having read the compilation, I have taken the trouble to ensure that everything which the accused desires to point out through his learned counsel will be considered on the merits. In so far as the misconduct is concerned, it is necessary to uphold the need for proper behaviour in the course of judicial proceedings and not to permit unhealthy and dishonest practices and to this extent, therefore, appropriate proceedings under the Contempt of Courts Act in respect of the compilation are being adopted separately.

Shri Vashi, learned counsel appearing on behalf of the petitioners, and Shri Sudhir Shah, learned counsel appearing on behalf of respondent No. 1, have presented their respective cases with a degree of thoroughness that is commendable. Learned counsel are agreed on one aspect, namely, that the correspondence and the documents that are on record are admitted by both sides. Undoubtedly, the areas of differences are with regard to what exactly the record can be said to truly represent. For this purpose, I have culled out on a datewise basis the important factual material that is relevant for this case, as a decision on the merits would require an appraisal of this material. The chronology that emerges on such an examination is as follows :

(1) January, 1956.—The accused joined the company as officer.

(2) 1971.—The accused was allotted as an officer of the company a company flat No. 12-A, Mehr-Dad Building, Cuffe Parade, Bombay-400 005.

(3) July 1, 1976—The company purchased flat No. 32 in the same building for a consideration of Rs. 1.70 lakhs and all charges and taxes. At the request of the accused the flat was allotted to him for his occupation during the period of his employment with the company. He had represented that he was booking an ownership flat at Shivaji Park, Dadar, which was expected to be ready for occupation in about two years' time. The accused had requested for allotment of the said flat during that period.

(4) July 22, 1978.‑The accused wrote to the managing director of the company, Mr. Kerkar, informing him that as his children were grown up and settled down, he intends going into business and, therefore, he was retiring prematurely by March, 1979. He had requested that he be allowed to buy the company's flat and car at book value, "if permitted".

(5) July 27, 1978.—Reply from the managing director informing the accused that he had discussed the proposal concerning the flat and the car with the then deputy managing director of the company, Mr. Natarajan, that they were in principle agreeable to the same "with some modifica tions and subject to board's approval."

(6) July 31, 1978.—Letter from the accused to the managing director informing him, inter alia, that he proposed to pay for the company's flat and the car from his provident fund and gratuity, and also setting out as to what he intended to do after prematurely retiring from the company.

(7) April 30, 1981—The accused wrote to the managing director of the company as to how he could not retire prematurely, but once again requesting that he would like to buy the flat in question.

(8) June 7,1984.—The accused wrote a note to the managing director to allow him to buy the company's flat at book value and stating that he would like to buy the flat immediately and requesting him to arrange to take steps to effect the sale.

(9) September 25, 1986.—The accused wrote to the managing director of the company informing him that the company secretary and the accused had met the company's tax consultant Mr. D.M. Harish on September 22, 1986, to find out about the feasibility of effecting the sale of the said flat by the company to accused at book value, the suggestions given by Mr. Harish and requesting that the required resolution be passed at the board meeting to be held on September 29, 1986.

(10) October 3, 1986.—Reply from the managing director to the accused pointing out that there had been dramatic change in the real estate prices and, therefore, he finds it difficult to approach the board with a proposal that the flat be sold at book value to the accused. The managing director had offered an alternative proposal regarding another flat with which, if approved, the managing director was to go to the board and work out the formula. The managing director had expressed confidence that he would be able to persuade the board to agree to certain concessions, but pointed out that he would not be able to help much if the accused still requested that he be allowed to buy the present flat. As regards the flat in question, the managing director had clarified that at the highest, he could approach the board with a recommendation to allow the accused to buy the flat at a cost which will be 10 per cent, less than the market value.

(11) February 23, 1987.—Letter from the accused to the managing director mentioning that he had all along proceeded on the assumption that the very flat would be sold to him at book value.

(12) April 28, 1987.—Reply from the managing director pointing out that there has been an abnormal rise in the cost of housing in Bombay and that consequently he could not approach the board for selling of the flat to respondent No. 1.

(13) May 30, 1987.‑Note from the managing director to the accused that he should accept the alternative flat offered to him.

(14) May 15, 1989.‑The accused retired from the service of the company.

(15) August 30, 1989.‑Letter from the managing director to the accused that the board had considered his request in the meeting held on June 6, 1989, that the same had been turned down and an offer was still made to the accused with regard to some alternative accommodation.

(16) January 19, 1990.‑Letter from the accused to the managing director of the company stating that the earlier commitments made were irrevocable, that they cannot be annulled for any subsequent reasons and calling upon the managing director to honour the same.

(17) July 13, 1990. ‑Letter from the managing director to the accused stating that he had placed the correspondence between the accused and himself before the board and that the board did not accede to the request of the accused.

(18) August 11, 1990.—Letter from the accused once again insisting that the flat in question be sold to him at book value.

(19) August 20, 1990.‑Letter from the secretary of the company recording that the company is withdrawing the offer of alternate accommodation and calling upon the accused to hand over possession of the flat.

(20) August 28, 1990.‑The company filed the criminal complaint against the accused for the offence under section 630 of the Companies Act.

(21) May 20, 1992.‑The accused filed a suit in the High Court at Bombay, being Suit No. 2187 of 1992 against the company for specific performance of the agreement to sell the flat and the garage at its book value.

(22) December 17, 1992.‑The company filed a suit in the Small Causes Court at Bombay against the accused and his family members for obtaining vacant possession of the flat.

The above essentially represents the correct sequence of events. Shri Vashi, on behalf of the petitioners, points out to me that there could be no ambiguity about the fact that the request for sale of the flat to the accused at book value had come from him at a time when he was contemplating premature retirement. Shri Vashi states that all this had transpired in the mid-seventies at which time many of the better companies used to permit some of the senior executives the facility of purchasing used items like cars, furniture, etc., at book value which the companies in any case were disposing of. As far as the flats are concerned, since it was always a problem for companies to find sufficient accommodation for their executives, such proposals could not be acceded to. When the accused conveyed his request to the managing director, which was very shortly after the purchase of the flat, the book value of the flat would have been the same as the market value at which the flat had been bought. The managing director and the vice-president, prima facie, felt that this would not prejudice the interest of the company and that the proposal could be put up to the board, the decision being ultimately that of the board. Shri Vashi emphasised the fact that in the case of a limited company and that too in matters of alienation of property, the decision to dispose of such property can only be taken by the board of directors and that no other officer of the company is empowered to either take the decision or enter into a contract that binds the company. Even at that stage, Shri Kerkar while indicating his personal reaction that the proposal appeared to be good enough as far as he was concerned, clearly indicated with the use of the words "with some modifications and subject to board's approval" that he had no power to decide the matter. What is important is that nothing was concluded at that point of time.

Coming to the next stage, namely, the meeting with the company's tax advisor in September, 1986, which is relied upon heavily by the accused, Shri Vashi points out that in none of the documents produced up to this point of time was there any concluded agreement or assurance that the flat would be sold to the accused or that this would be done at book value. He further states that the advice of the company's tax advisor was sought for purposes of ascertaining his views with regard to the proposal from the accused because the accused was still persisting with his request. What is important is that Shri Vashi points out that in the letter dated October 3, 1986, the managing director has recorded a significant fact, namely, the abnormal rise in real estate prices. This meant that the book value or the price at which the accused wanted to buy the flat was approximately 1/2 5th of the market value and Shri Kerkar himself informed the accused that he finds it difficult to even approach the board with such a proposal. He states that the accused was a senior officer of the company and in order to be helpful to him Shri Kerkar even put forward the alternative proposal that the company would consider certain concessions in case the accused approved of some other flat and that he would go to the board to work out the formula. Shri Vashi emphasised the fact that Shri Kerkar clearly informed the accused that he would not be able to help if he insisted on buying the present flat and that the only recommendation, which he could even put up, was that it be offered to the accused at a price 10 per cent, less than the market value. The accused was still persistent with his request and on April 28, 1987, Shri Kerkar once again recorded the fact that the unforeseen rise in the cost of housing in Bombay, which he himself had not foreseen earlier, virtually precluded him from approaching the board to sell the flat to respondent No. 1. On May 30, 1987, the managing director had even written to him again that he should accept some other flat. Shri Vashi explains that the managing director of the company just could not consider a proposal to dispose of the flat at a throw-away price, quite apart from the fact that it was improper and illegal and the law itself would not permit it. It would be very damaging to the interest of the company as it would be the loss of a valuable asset and would involve the company in huge expenditure when a replacement had to be bought. He states that though not obligatory, it was a gesture of kindness and magnanimity that the accused was offered an alternative flat. The record indicates that this proposal was never accepted by the accused and that he adamantly stayed on in the present flat. In sum and substance, Shri Vashi submits that there was no promise, no assurance, no obligation and no concluded contract between the company and the accused for sale of the flat to him at book value. He contends that the accused is attempting to distort the record and that he is putting forward false claims which are only in an effort to prolong the litigation and get out of the criminal liability.

This essentially is the main controversy in the present proceedings. Shri Shah has repeated ad nauseum that the company had promised to sell the flat to him at book value. When I asked him to produce any documents or evidence in support of this contention, he stated that the reaction of the managing director to the initial proposal of the accused in 1978 when he had asked for the flat and a car at book value signifies that the proposal was accepted and concluded and that according to Shri Shah the board approval was a mere formality. Shri Shah repeated several times in his arguments that a commitment made by Shri Kerkar as managing director binds the company. In this case, I find no such commitment having been made. It needs to be clarified, however, that in matters of alienation of property, no such commitment made by any officer at any level could either be valid or binding—it is only the board in whom the powers vest.

Shri Shah then proceeded with a startling argument, namely, that the managing director had assured the accused that he could persuade the board to give the flat to him and that the managing director, Shri Kerkar, was, consequently, instrumental in the accused not buying a flat of his own at that time because of the assurance that this flat would be given to him. I pointed out to Shri Shah that this argument runs contrary to the facts on record and that, apart from Shri Kerkar's letters, even his own client's correspondence does not support any such version. At this, Shri Shah attempted to contend that the court must accept his client's word that because he was confident of getting the present flat at book value, that he did not purchase another flat. Since Shri Shah had made a direct accusation that it was Shri Kerkar who stopped his client from purchasing another flat, I asked Shri Shah to substantiate this statement from anything on record, but apart from making this statement in the air, he was totally unable to do so. Shri Shah then adverted to the fact that since his client had "understood that he was getting the flat and since Shri Kerkar kept him in hopes, his client did not purchase another flat at a point of time when he was in a position to do so." The first part of the submission is contrary to the record and as far as the second part of it is concerned, if the accused for whatever reason did not purchase a flat of his own, I see no justification in his trying to insist on the company providing him accommodation at a later point of time. This demand is not only illogical but it is absurd.

I have devoted considerable time both in the court room and while deciding this case to a meticulous examination of the record because Shri Shah's contention is that his client is entitled to spell out an agreement to sell from the correspondence and the events that transpired and that, in these circumstances, he is justified in his demand for specific performance of what he termed an agreement to sell. This is inter-linked with his contention that the doctrine of promissory estoppel would be applicable in the present case. Shri Shah has contended further that not only did the company hold out a promise to his client but that his client altered his position to his prejudice thereby refraining from purchasing a flat of his own. I have already held that there was no promise, no assurance or no contract and I do not accept that the accused did not purchase a flat of his own in the circumstances so pleaded by Shri Shah.

To my mind, the entire plea with regard to promissory estoppel is completely and totally misconceived. To start with, on facts, the record unmistakably indicates that there was no promise and, therefore, there can be no estoppel. One requires to approach the situation, however, from a slightly deeper angle which I consider necessary because it is not only a question of arriving at a conclusion as to whether from an appraisal of the material on record the doctrine of promissory estoppel applies or not. I need to go a stage further and to record that the argument should be tested from another aspect, namely, the question as to whether the accused could have insisted on the purchase of a flat in a situation whereby even the board of directors might have agreed to sell the company property to an employee at a ridiculously low price. Shri Shah has used the term "book value", but one needs to be a little more honest and realistic. The price at which the accused is asking for the flat works out to about one-100th the real value or market value of that property in the city of Bombay today. Not only would the tax laws not permit this but it would be a fraud on the company and it would be wrong on the part of the board of directors to even contemplate a transaction of this type. More importantly, one needs to bear in mind that even the board of directors of a limited company are trustees as far as its property is concerned and that they will not be acting in consonance with law or in the public interest or, for that matter, the interest of the shareholders if they permit this. If such favouritism were to be shown to selective employees who are allowed to take away company property at ridiculously low prices, to my mind, even if such transactions are approved of, the contracts would have to be struck down on the ground that they are illegal and against public policy. Viewed at from any angle, therefore, the record of this case apart, there is no justification even to the remotest extent for the application of the doctrine of promissory estoppel. Even in those of the cases, where such promises are pleaded or even established, a court of law will have to ignore them. I do not see any merit whatsoever in this plea and the detailed reasoning set out by the learned Sessions Judge upholding this contention is not only a wrong appraisal of the record but a total misreading of the law.

As regards the justification for framing of charges, Shri Vashi clearly points out that the accused was permitted residence in the premises in his capacity as employee of the company and that, consequently, on his ceasing to be an employee of the company, i.e., when he retired from service, he was legally obliged to restore the company's property and in not doing so, he has wrongfully withheld the same. Shri Vashi points out to me that the accused has no locus standi to be in the premises which, admittedly, belongs to the company and he is in wrongful occupation of it even after he is repeatedly called upon to hand over possession. He submits that the offence is complete and that consequently the charge has validly been framed against the accused. The only justification pleaded in the cross-examination and in the material that was brought on record was that the accused is an intending purchaser, that the company is wrong in not having completed the sale transaction and that, therefore, he is not liable to restore possession. As indicated by me earlier, the defence plea is wholly and completely baseless and looked at from any angle it cannot justify the wrongful retention of the premises. The learned Magistrate was, therefore, fully justified in framing the charge against the accused.

Shri Shah has insisted on arguing every conceivable aspect of the matter on the merits and has insisted that this court must examine it which makes it inevitable that this court must express its views and record its findings. This has been done in spite of my having repeatedly brought it to his notice that at the interim stage, it may not be the best course of action. Shri Shah has relentlessly pursued his arguments and has attacked the validity of the board decision dated June 6, 1989, refusing to accept his client's proposal for purchase of the flat at book value. The first contention is that as regards some of the items on the agenda, a note was put up that the board was requested to approve of the item in question, but that as far as this item was concerned, the board was asked only to decide. According to Shri Shah, the managing director, Mr. Kerkar, and the company secretary were obliged to request the board to decide the proposal favourably. To say that there is no substance in this argument would be an understatement. To my mind, the office of the company has acted correctly in so far as the correspondence was put up. to the board and it was left to the board to consider the merits of the matter and take a decision. I need to mention here that the board of a company is obliged to act fairly, but at all times in accordance with law and, to my mind, where an absurd proposal was put up that an employee requests that a property be sold to him for a microscopic fraction of its market value, the board has acted very correctly in having rejected such a proposal.

Shri Shah contended that the papers had not been circulated to at least one of the board of members and that, therefore, the decision is bad. Frankly, I do not see how in a prosecution under section 630 of the Companies Act the learned advocate expects this court to go behind the board decision on all sorts of frivolous and unsustainable pleas. The hollowness of the arguments presented is aptly illustrated by the next submission whereby it was contended that the board completed 16 items in 45 minutes and that, therefore, the directors did not apply their minds to the subjects. The fact that they could have read the material earlier and dealt with each item on the agenda without any loss of time is totally overlooked. The present proposal itself was so inherently unacceptable that I do not visualise the board of any responsible company spending more than half a minute to consider it. Again, Shri Shah argued that some of the employee-directors were junior to Shri Kerkar, that some of the senior directors had not attended and that had Shri Kerkar so desired, he could have persuaded the board to accept the proposal because Shri Kerkar is a senior and a highly respected director and the board would normally go by his advice. Shri Shah contends that in Shri Kerkar not having voted in favour of the proposal and having abstained from voting, he acted wrongly and unfairly and in Shri Shah's words, the "decision is consequently vitiated". Shri Kerkar was a party to the correspondence between the parties. In the latter part of the correspondence he has himself indicated a valid reason, namely, the high value of the property as being the ground for his not being in favour of the proposal and in these circumstances, he has acted very correctly in not having taken any part when the matter came up for consideration before the board. I have considered these submissions advanced by Shri Shah because he has insisted on adopting this line of argument even though I told him that this court is neither obliged nor required to go into all these questions, but he still maintains that they are intrinsically interlinked with the main issue and, therefore, must be adjudicated upon.

Shri Shah then wept over to another submission. He cited the decision of Rege J. (as he then was) in the case of Damodar Das Jain v. Krishna Charan Chakraborti [1984] Mh. LJ 952 ; [1985] 57 Comp Cas 115 (Bom) wherein the learned judge has held that the issues involved in that dispute wherein a prosecution under section 630 of the Companies Act was pending were ones which were of a civil nature and which were required to be decided by a civil court and the learned judge, therefore, disapproved of a criminal court deciding those issues. Shri Vashi was quick to point out to me that apart from the facts in the present case being totally distinguishable from the ones in the proceeding decided by Rege J., the legal issues involved are also entirely different. He also pointed out that the Supreme Court in the case of Atul Mathur v. Atul Kalra [1989] SCC (Crl.) 761 ; [1990] 68 Comp Cas 324 has virtually set aside this decision. He also relied on the following three judgments wherein three single judges of this court have taken a contrary view :

(i) C.Y. Patil v. Chander Batheja (Criminal Revision Application No. 252 of 1987, decided on October 26, 1988, by Tated J.)

(ii) M.Y. Gaitonde v. Pradip Kumar Das (Criminal Revision Application No. 234 of 1986, decided on December 3, 1986, by Kantharia J.)

(iii) Lt. Col. M.K. Puri v. J.S. Bhatia (Criminal Revision Application No. 272 of 1990, decided on September 19, 1990, by Chavan J.)

To my mind, it is necessary to ascertain as to whether at all on the facts the issues involved are such that it is inadvisable or impermissible for a criminal court to decide them, and secondly, whether there is any bar for doing so. A complicated question of title such as a case in which there is a substantial dispute on the facts supported by evidence as to whether at all the character of the property is such that it conforms to the legal definition of company property and where, for instance, the person in occupation has already asked for a declaration from the competent civil court that he is, in fact, the de facto and de jure owner of the premises; the question of title could best be adjudicated by a civil court rather than by a Magistrate in a proceeding under section 630 of the Companies Act. Another instance could perhaps arise where there is substantial material to support a bona fide plea of tenancy. I have been guarded in using the words substantial and bona fide because I do not have in mind the numerous cases where a frivolous plea is put up merely in order to delay the bad day. What is contemplated is a genuine case where the Court of Small Causes may be the only competent forum to finally decide the status of the party in which case a criminal court may not be the competent forum. In the present case, no such plea has been canvassed. On the present record, I see nothing that would justify the arguments that the learned Magistrate is precluded from deciding any aspect of the matter or that he is not competent to do so. This submission, therefore, is devoid of substance and must be rejected. Shri Shah was alluding to the fact that his client's civil suit is pending, but he again overlooks the all important angle that the proceeding is between the same parties, the issues are common, i.e., promissory estoppel, the material relied on in the civil suit is the very same evidence that has been evaluated in this proceeding—to my mind this is only an attempt to litigate and delay, both of which are characteristics of section 630 proceedings in the city of Bombay.

Lastly, Shri Shah relied on a decision in the case of R. Gupta v. Dharamchand [1983] Crl. LJ 612, a copy of which judgment he did not produce before me. He, however, advanced the proposition that where an accused has been discharged, a higher court ought not to lightly set aside that order unless it is demonstrated that there is gross miscarriage of justice and that the order itself is perverse in law. I have taken cognizance of several decisions wherein such a principle is enunciated, such as where the accused has been acquitted and the law states that the acquittal ought not to be set aside merely because another view is possible. This unfortunately is not such a case. I have recorded a clear and conclusive finding that the grounds on which the learned Sessions Judge has discharged the accused are wholly and completely unsustainable. The view taken runs contrary to the law as laid down by the Supreme Court and by this court and the several other High Courts. It is a total misreading of the facts and a misconception of the law. The result of such a decision is that the accused who is in wrongful occupation of the premises is permitted to continue and the company which is entitled to restoration of the premises is deprived of such a relief. That the decision has resulted in a gross miscarriage of justice and that it would unfortunately come within the legal definition of "perverse" is the only possible conclusion and it is, therefore, imperative that the order in question be set aside.

Shri Shah on behalf of the accused, who is an ex-employee, contended that the courts while considering applications under section 630 of the Companies Act are very much concerned about the case from the angle of the company which pleads that it has been deprived of the user of the property, that loss has been caused, that it requires the same back, etc., but that unfortunately the other half of the picture has not been given sufficient weight. It was, therefore, his request that the court should view the matter from the opposite angle for purposes of appreciating his arguments. It was unnecessary for him to make such a request because any court which includes this one must necessarily take cognizance of every aspect, more so the one in which the accused is placed particularly in a criminal prosecution. Shri Shah pointed out to me that the accused joined the company in the year 1956 and. worked there for 34 years until his retirement in 1989. The learned advocate got a bit emotional while stating that his client has given his life for the company, that he is today an old man retired from service and that his client virtually feels cheated and let down. He projected the view that the insistence on the part of his client that the flat be sold to him at book value is fair and justified in these circumstances and that equities are in favour of his client. According to Shri Shah, such a course of action would be most appropriate having regard to the excellent service record of his client and that this is the very least that the company ought to do for him. I need to record here that in disputes of the present type where it is a company v. an employee, the battle is an unequal one and I am conscious of the fact that special consideration must be accorded to the point of view of the employee. This has been done at all stages even to the extent of allowing his learned advocate to carry on for much longer than necessary. In the circumstances, it is most insulting to the presiding judge when statements attributing bias are then made by counsel. If the expectation is that the court must bend over backwards to help a wrong-doer, it is asking for the impossible.

I proceed on the assumption that the accused was a good officer and that he rendered praiseworthy service for the company while he worked for it, but the flaw in the argument is that the accused in the present case was extremely well-compensated for his services all through his period of employment and when he retired, he collected a substantial sum of money by way of terminal benefits which again were not withheld even though he had not restored possession of the flat. It would be difficult to visualise a situation where an employee has been better treated and one needs to note that the accused held a top position in the company and it was least expected from an old person that he would behave in the manner in which he has thereafter done. Shri Vashi described his conduct as nothing short of treachery. I prefer not to comment about this aspect of the matter except to record that it is entirely at the benevolence of the management to commend or place on record a career of good service and it is not unknown for a company to give such a retiring employee a memento. Under no circumstances, however, would it justify the management of the board picking out a particular employee and handing over to him on a platter valuable property belonging to the company which the learned counsel informed me is valued at a crore of rupees. I am not concerned with the estimates of the market value, but with the principle involved, namely, that company property is not for being gifted away or bartered because the law does not sanction this. Again, it would be a most improper and unhealthy practice because it would give rise to a situation whereby certain employees who have towed the line of the management would go home with a huge bonanza ; whereas those who have been principled and required to take unpleasant decisions at times being sent home without such rewards. In any event, that issue just does not arise in the present proceeding because the company has not offered the flat to the accused, but on the contrary is aggrieved by the fact that he is not returning it and requests for legal redress by way of an order for its recovery.

In the course of his arguments, Shri Shah was particularly severe on Shri Kerkar, the managing director of the company. He not only attacked him but he even made direct allegations against him. He sought to contend that Shri Kerkar has defrauded his client, that he has acted dishonestly and that he has even avoided coming to give evidence. On a perusal of the material before me, I am of the view that these accusations were thoroughly unjustified. To my mind, the company and Shri Kerkar have shown not only a very high degree of kindness and consideration to the accused but they were even magnanimous enough to help him by considering an alternative flat. The statements made by Shri Shah about Shri Kerkar on the record of this case would, in fact, be more appropriate visa-vis the conduct of his own client. This is a case in which an attempt has been made to appropriate a valuable property of the company virtually for a song. The attempt failed and thereafter the litigation has been protracted and dragged on so that the accused can continue in occupation and that too absolutely free of cost. This unfortunately is the return meted out to the company by a senior responsible officer who, as the correspondence indicates, was given the very best of terms, the very best of treatment and who has taken complete advantage of all of it. It was for this reason that I have observed that the facts of this case are reminiscent of the proverbial serpent that stings the hand which feeds it.

The criminal revision application accordingly succeeds. The rule is made absolute. The order of the learned Sessions Judge dated March 1, 1993, is set aside and, consequently, the order of discharge in favour of respondent No. 1 is also set aside. The proceedings before the trial court are restored. The office shall forthwith send back to the trial court the R. & P. in this case, if the same has been called for.

In view of the earlier directions of the Supreme Court and having regard to the fact that the evidence has already been practically concluded before the trial court, the learned Magistrate shall proceed with the trial, according it top priority. He shall bear in mind the guidelines laid down by this court in Hindustan Ciba Geigy's case, a copy of which judgment shall be made available to him by the petitioner's learned advocate. The parties are directed to appear before the trial court on July 12, 1993, and the learned Magistrate shall dispose of the proceeding on a priority basis, preferably within an outer limit of eight weeks thereafter.

[1994] 79 COMP. CAS. 338 (BOM)

HIGH COURT OF BOMBAY

Arvind Kotecha

Mahesh Kumar

M. F. SALDANHA J.

Criminal Writ Petition No. 92 of 1990

SEPTEMBER 5, 1991

K.M. Desai and H.R. Desai for the petitioner.

S.S. Shinde, K.R. Belosay and B.R. Patil for the respondent.

JUDGMENT

M.F. Saldanha J.—The jurisdiction of the High Court to quash a criminal proceeding at a pre-trial stage is often exercised and the principles governing the situation in which such power would be justifiably used are embodied in a number of judgments of the Supreme Court, this court and several other High Courts. On this occasion, it may be necessary to classify a class of cases in which the exercise of power under section 482 of the Code of Criminal Procedure, 1973, ought to be refrained from.

A few relevant facts giving rise to this petition are as follows :

A criminal complaint bearing No. 256/S of 1989 came to be filed before the learned Metropolitan Magistrate, 23rd Court, Esplanade, Bombay, by one Mahesh Kumar Mathur for and on behalf of M/s. Binod Mills Co. Ltd., Ujjain. The complaint alleged the commission of offences under sections 120B, 409 read with section 120B of the Indian Penal Code, 1860, and under section 630 of the Companies Act, 1956. It was primarily alleged in that complaint that accused No. 1, Baburam Lila, who is a director of the Binod Mills Co. Ltd., is alleged to have surrendered to the second accused, who is styled as the landlord of the building, flat No. 10 on the third floor of "Ram Mahal" Building, situated at Churchgate in South Bombay. The company was the tenant of this flat and it appears that the flat was being used as a company guest house. There is no dispute about the fact that the company was paying the rent in respect of this flat to the second accused till about June, 1984. It appears that the company addressed a letter dated January 24, 1985, to the second accused pointing out that they have not received the monthly rent bills for the period July, 1984, to December, 1984. According to averments in paragraph 12 of the complaint, accused No. 2 sent a reply that "the aforesaid flat was surrendered to accused No. 2 by accused No. 1 and that possession of the aforesaid flat was given by accused No. 2 to one Smt. Saraswati Damani, who is now occupying the said flat". It appears that the company thereafter proceeded to the Magistrate's Court at Ujjain, that a complaint was filed, which was sent for enquiry and report, and that the police submitted a report to the effect that the dispute was of a civil nature and that the property is situated outside the local jurisdiction, upon which the Magistrate at Ujjain dismissed the criminal complaint. We are not much concerned about that proceeding even though some point was made by Mr. K.M. Desai, learned counsel appearing on behalf of the petitioner, that the Ujjain court had dismissed the complaint on the merits. A perusal of the certified copy of the order would indicate that the case was not heard on the merits and that it was dismissed predominantly because the complainant remained absent, but in any event it was not a verdict given after the evidence came to be recorded and consequently, to my mind, the filing of a subsequent complaint before the Bombay court would not present any legal bar. The learned Magistrate has issued process against both the accused shown in the complaint for offences under sections 120B, 409 read with section 120B of the Indian Penal Code and section 630 of the Companies Act. It is against this order that the present petitioner has moved this court for quashing of the proceeding. He essentially contends that he is one of the directors of Kotecha Investment Corporation P. Ltd., who are the landlords in respect of the flat in question. He states that so far as the disputes between the company and its director are concerned basically he is a total foreigner to that matter and that when the flat was surrendered to him he had taken a letter in writing from the director of the company and to this extent it is wrong to allege that he has committed any offence whatsoever. He has further submitted that there is no dispute about the fact that original accused No. 1 is a director of the company, and if he has accepted the surrender of the flat from a director of the company, who was also a power of attorney holder, his action cannot be faulted and least of all can he be hauled up before a criminal court even if it is established that accused No. 1 has acted without the authority or that accused No. 1 has committed the alleged offences. He, therefore, submits that the process issued against him would constitute an abuse of the judicial process of a criminal court and that this is a fit case in which the proceedings be quashed as against him.

Mr. K.M. Desai, learned counsel appearing on behalf of the petitioner, has taken me in detail through the averments in the complaint and the annexures thereto which apparently was all the material that was placed before the learned Magistrate. Mr. Desai has submitted that no case whatsoever has been made out against the present petitioner either under section 409 of the Indian Penal Code or under section 630 of the Companies Act. I shall deal with the first aspect of the matter presently, but it needs to be emphasised that the order of the learned Magistrate issuing process is rather vague in so far as it is not very clear as to whether or not he has issued process under the provisions of section 630 of the Companies Act against the present petitioner. A plain reading of the provisions of this section will indicate that it is the elementary requirement of law that the person against whom action is contemplated must be an employee or a person connected with the company as prescribed by that section and that there can be no application of section 6,30 of the Companies Act to other categories of persons. To this extent, the submission advanced by Mr. K. M. Desai is valid and will have to be upheld and the process against the present petitioner, if at all it has been issued under section 630 of the Companies Act, will have to be quashed.

As regards the charge under section 409 of the Indian Penal Code, the submission of Mr. Desai is to the effect that even if accused No. 1 is categorised as an agent of the company and it is argued that he had dominion over the company's property, namely, the flat in question, by no stretch of imagination can the present petitioner be categorised as an agent of the company. He further submits that if this be the position, there can be no question of alleging abetment or conspiracy in respect of the commission of an offence of criminal breach of trust against the present petitioner. In response to this submission Mr. Shinde, learned counsel appearing on behalf of the original complainant, has contended that the charge against the present petitioner is confined to his having acted in conspiracy with the first accused. In this regard he has submitted that the first accused could not have under any circumstances, either in his capacity as director or as power of attorney holder of the company, virtually disposed of a valuable asset of the company without following the procedure prescribed by law. He submits that if in the commission of this act the prosecution is in a position to demonstrate that the present petitioner has been a knowing participant or an abettor that it would be permissible for the criminal court to exercise the jurisdiction in respect of such a charge against the present petitioner. It is necessary for me to mention that the trial has yet to commence and that the accused who are before the criminal court cannot be deprived of their full and complete right of defending themselves, both on points of fact and on points of law, and to this extent they ought not to be prejudiced by the observations that may be made in this proceeding. To this extent, therefore, the observations and findings in this judgment shall be circumscribed by two distinct conditions, the first of them being that the learned trial Magistrate shall not in any way rely upon or be influenced by the contents of this judgment in the course of the proceedings pending before him, and the second being that these observations are for purposes of justifying the reasons for the decision of this court in the present petition.

There has been considerable debate with regard to the power of attorney which, admittedly, the company appears to have issued to its director who is original accused No. 1. Mr. Desai, advanced an argument that apart from the letter given to the landlord by the first accused that the present petitioner was justified in having accepted the surrender of the flat from him because of the additional factor, namely, the existence of that power of attorney. Among other things, Mr. Desai submitted that admittedly a civil suit has been filed in the High Court which was subsequently transferred to the court of competent jurisdiction, namely, the Court of Small Causes which encompasses the total gamut of the complaint in relation to the surrender of the flat in question and to which suit even the present occupant of the flat, Mrs. Damani is made a party. Mr. Desai submits that the civil proceedings will effectively take care of the entire dispute because that court will go into the validity or otherwise of the surrender and, furthermore, that as far as the complainant mills are concerned the civil court will grant adequate reliefs to them if they are entitled thereto. He submits that the filing of the criminal complaint, according to him, is tainted with mala fides because the criminal court cannot pass any orders in respect of the disputed flat nor for that matter can it examine the allegations made at the Bar that a considerable amount of money had passed in relation to this transaction. He, therefore, concludes that if neither of these two reliefs can be granted by the criminal court he is justified in arguing that the sole purpose of filing that proceeding is in order to exert pressure or, to use his own phrase, to indulge in virtual arm-twisting. The submissions advanced by Mr. Desai are not very relevant, to my mind, with regard to the issue that is before me in so far as admittedly the criminal court cannot grant the reliefs in question and admittedly the criminal court is not concerned with the stray allegations regarding the large amount of money having passed. The narrow ambit of the dispute before the criminal court is to find out as to whether a criminal offence has been made out or not. What I am required to examine is even a narrower issue as to whether a prima facie case exists on the material placed before the criminal court.

The complaint itself very specifically states that it was accused No. 2 who accepted the surrender of the flat. Undisputedly, the flat in question had been in the possession and occupation of the company for several years. This is a limited company, the flat consists of one of its valuable assets and if the company were to decide for any reason to surrender the flat in question, there is a procedure prescribed for this process. In the present case, we find that a mere letter has been issued by the first accused which letter does not so much as even state that the company has decided through a resolution of the board that it does not desire to retain the flat any longer. There is no reference in this letter nor is there any reference even in the reply sent on behalf of accused No. 2 to the power of attorney. Even assuming that the power of attorney was one of the documents that was relied upon at the time of the surrender, it is quite elementary that the document did not authorise accused No. 1 to do any such act on behalf of the company. If he purports to do an act of which the legality is seriously disputed under the umbrella of such a document, then that document cannot be used as a justification. On the bare averments made out in the complaint there is a clearcut admission about the second accused that the flat was surrendered to him. Under these circumstances, the learned Magistrate was justified in issuing process also against the present petitioner on the basis of the material placed before him because it was contended that the present petitioner had acted in conspiracy with the first accused. It needs to be clarified here that it is certainly open to the present petitioner to establish his innocence before the forum of the trial court, and to this extent the observations made above are confined to the present proceedings alone.

Mr. Desai has placed strong reliance on the judgment of the Supreme Court in the case of Madhavrao v. Sambhajirao, AIR 1988 SC 709. The Supreme Court had in that case considered a decision relating to a criminal proceeding instituted in relation to a dispute concerning the "Shrikrishna Madhava Trust". On the facts of that case, the Supreme Court observed that there would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence. The facts of the present proceedings are entirely different from that case and are consequently distinguishable. Furthermore, in paragraph (7) of that judgment, the Supreme Court has laid down the salutary principle that where the chances of an ultimate conviction are bleak, no useful purpose is likely to be served by allowing a criminal prosecution to continue. It was, therefore, Mr. Desai's submission that regardless of some averments in the complaint or some stray references in the correspondence he can demonstrate that the proceedings before the learned Magistrate could never conclude in the conviction of the present petitioner or for that matter if such a conviction appeared to be a remote possibility that interference by this court would be justified. Undoubtedly, it is difficult to predict the outcome of a prosecution, but an evaluation of the material and the possible evidence, which the prosecution can produce, would certainly give a fair indication of the likely outcome. In the present case the all important question that yet remains to be established before the trial court is as to what was the mens rea, if any, on the part of the present petitioner in the commission of the alleged offence where a nexus in law can be said to have been established and where he can be said to have acted in that manner as would justify his conviction on a conspiracy charge. Prima facie, this court cannot come to the conclusion on the basis of the documents and averments in the complaint that a conviction of the present petitioner is either bleak or remote. Under these circumstances, without adducing any elaborate reasons for the above conclusion, it will have to be held that interference at this stage in the present proceeding is uncalled for.

It is necessary for me to observe that the present complaint has been filed on behalf of a public limited company which is supposed to be now categorised as a sick unit. The complaint further states that the Government of Madhya Pradesh is now in the picture and that effectively this is a complaint lodged on behalf of a public authority. A solemn statement was made in the course of the arguments on behalf of the complainant that the flat in question is a very valuable asset and, therefore, an allegation was made that a lot of money has passed in this transaction. I need to mention that there are no allegations to this effect in the complaint and, therefore, I refuse to take cognizance of such wild statements. What, however, needs to be taken note of is the fact that it would be too much to expect this court to believe that the surrender of the flat was as innocent a transaction as has been made out to be. An investigation by the criminal court into the circumstances of this surrender is, therefore, to my mind, very essential and is also in the public interest. To this extent, I will categorise this case as being one of those categories of cases where the public interest requires that the forum before which the complaint is presented needs in the public interest to embark upon an enquiry of the suspicious circumstances in which an important transaction has taken place and that such an enquiry should not be stifled by having resort to the provisions of section 484 of the Code of Criminal Procedure. Perhaps this is an angle which has not hitherto come up in many cases, but since it has come up in the present instance, these observations are necessary.

In this view of the matter, no interference is justified at this stage. The criminal writ petition accordingly fails and is dismissed. The rule to stand discharged and the interim orders to stand vacated.

[1985] 57 COMP. CAS.648 (CAL.)

HIGH COURT OF CALCUTTA

T.S. Satyanath

J.Thomas & Co

N.G.CHAUDHURI, J

CRIMINAL REVISION NO. 2328 OF 1981.

JUNE 2,1983

Ananga Mohan Dhar and N. C. Saha for the Petitioner.

Dilip Kumar Dutt and Debabrata Mukherjee for the Respondent.

JUDGMENT

Chaudhuri J.—This application under s. 482 of the Cr. PC by the accused-petitioner is directed against an order dated May 12, 1981, passed by the learned Chief Metropolitan Magistrate in Case No. C/1231 of 1981. By the order, he has purported to take cognizance of an offence under s. 630(1)(b) of the Companies Act, 1956, alleged against the accused-petitioner and has directed issue of process.

The petitioner has been residing in the disputed premises at No. 1/81, Church Road, P. S. Fort Cochin. He was the managing director and subsequently adviser of M/s. J. Thomas & Co. Pvt. Ltd., No. 11, R.N. Mukherjee Road, P. S. Hare Street, Calcutta, the complainant before the learned Chief Metropolitan Magistrate. The petitioner and his wife had considerable shareholding in the complainant company. A civil suit by the complainant against the petitioner for a claim of Rs. 5,00,000 as damages is pending in the Original Side of the High Court at Calcutta. The petitioner has also made a claim of nearly ten lakhs of rupees against the company in the said suit. On the application of the complainant company in the said suit, Mr. Justice Dipak Kumar Sen passed an order directing the complainant company not to disturb the petitioner's possession in the premises mentioned therein and also restrained the petitioner from taking any further steps in Suit No. O. S. 180 of 1981 and I.A. No. 1050 of 1981 filed before the Court of Munsif at Cochin. Against the above background, the complainant company filed a petition of complaint against the petitioner in the Court of the Chief Metropolitan Magistrate, Calcutta, under s. 406, IPC, and s. 630(1)(b) of the Companies Act, 1956, on May 12, 1981. The principal allegation of the complainant company was that the petitioner was allowed by the company to reside in the disputed premises, namely, 1/81, Church Road, Cochin, fitted with furniture and fixtures, initially in his capacity as managing director and subsequently as adviser of the company, but on temination of the said employment as adviser, the petitioner failed to deliver vacant possession of the disputed premises to the company. The learned Chief Metropolitan Magistrate in consideration of the initial deposition and materials produced before him by the complainant took cognizance of the offence under s. 630(1)(b) of the Companies Act, 1956, but refused to take cognizance of the offence alleged under s. 406, IPC.

The petitioner challenges the order of the learned Magistrate taking cognizance of the offence and on his behalf it is contended that the learned Magistrate had no jurisdiction, particularly territorial, for taking cognizance of the offence. It is alleged that the petition of complaint did not lay foundation of an offence under s. 630(1)(b) of the Companies Act. It is strenuously urged that the petitioner on the date of alleged commission of the offence was not an officer of the company and the provisions of s. 630 of the Companies Act were not attracted. It is alleged that the petition of complaint was liable to be thrown out for suppression of material facts.

Mr. Dhar, the learned advocate for the petitioner, in the course of his argument by way of preface, pinpoints the following facts :

The petitioner was an employee of the company from 1950. He was the managing director of the company at Cochin from 1966 to March 31, 1980, and the last contract for such appointment was from April 1, 1979, to March 31, 1980. There are two annexures to the affidavit-in-opposition. In annexure "A" in the affidavit-in-opposition at pp. 10 to 16, terms of appointment are given. Suffice it to say that emoluments were high and perquisites were enviable. On March 31, 1980, the petitioner retired from service as managing director with a very decent pension. From April 1, 1980, to March 31, 1981, the petitioner was appointed as adviser at Cochin by the chairman of the company on terms mentioned at p. 157 of the affidavit-in-opposition, annexure B. Mr. Dhar emphasises that the petitioner's remuneration was described as fee of Rs. 1,500 per month. The petitioner accepted the appointment as adviser with effect from April 1, 1980. On December 19, 1980, the complainant company wrote a letter to the petitioner at Cochin terminating arrangement for advisership and stating that the petitioner's accounts and dues, if any, would be settled and asked the petitioner's advocate to vacate the said premises. The petitioner made a claim for Rs. 5,00,000 for his remuneration. In 1981, the petitioner submitted a notice under s. 434 of the Companies Act upon the company demanding legal dues stating that in default of payment, application for winding up would be filed. On January 16, 1981, the company filed a suit being Suit No. 51 of 1981 in the Original Side of the High Court at Calcutta claiming damages and in that suit the company obtained an order of injunction to the effect earlier mentioned. On March 31, 1981, the petitioner filed a suit, namely, O.S. No. 180 of 1981, before the learned Munsif at Cochin for continuous possession of the disputed premises and obtained an order of ad interim injunction. On April 6, 1981, the company admitted the petitioner's claim for roughly Rs. 9,50,000 in Suit No. 51 of 1981.

Mr. Dhar took considerable pains to establish that the petitioner has a higher money claim against the complainant company and that claim is admitted. He wants arguing that suppressing all those things the complainant company filed a petition of complaint and obtained an order simply to harass and humiliate the petitioner, who is a man of status generally residing at Cochin. Mr. Dhar argues that the filing of the petition of complaint was a mala fide act. I do not go deep into the merits of the contention because at the time of trial, the learned Magistrate will have an opportunity to consider the plea. On a perusal of the said petition of complaint, it does not appear that the complainant company suppressed any fact which was material to the complaint made. In para. 15 of the petition of complaint, reference has been made to Original Suit No. 51 of 1981 pending in the Original Side of the High Court and order passed therein. In para. 16 of the petition of complaint, reference has been made to the suit pending in the Court of Munsif at Cochin. From a perusal of the petition of complaint, the anxiety of the complainant to suppress anything does not become evident. From the huge claim and counter-claim made by the parties to the proceeding against each other, it is dangerous to infer mala fides. The plea is, therefore, disposed of with liberty given to the trial court to consider the plea in depth if that is considered necessary.

It has already been pointed out that the learned Magistrate has taken cognizance of the offence under s. 630(1)(b)of the Companies Act. He has ordered issue of process under the said section giving liberty to the complainant company to file separate proceedings against the accused under s. 406, IPC, if the company is so advised. Mr. Dhar takes exception to the above point. It is to be seen if the petition of complaint and the initial deposition of the complainant's witness discloses prima facie commission of an offence under s. 630 of the Companies Act. While we proceed to examine the petition of complaint, it will be proper for us to bear in mind the case of Nagawwa v. Veeranna Shivalingappa Konjalgi, AIR 1976 SC 1947, which lays down that on which points a Magistrate is required to be satisfied before ordering issue of summons and on which point the enquiry under s. 202, Cr. PC, is limited. The said case spells out what is to be found in a petition of complaint before cognizance of an offence is taken.

According to s. 630(1)(b) of the Companies Act, if an officer or employee of a company having property of the company in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act, he shall, on complaint of the company or any creditor thereof, be punishable with fine which may extend to Rs. 1,000. Sub-s. (2) is also important, in so far as it provides that the court trying the offence may also order such officer or employee to deliver up or refund within a time to be fixed by the court any such property wrongfully obtained or wrongfully withheld or knowingly misapplied or in default to suffer imprisonment for a term which may extend to two years. The term "officer" used in the above section has been defined in s, 2(30) of the Act to include any director, managing agent, secretaries, treasurers, manager or secretary or any person in accordance with whose direction or instruction the board of directors or any one or more of the directors is or are accustomed to act. In para. 4 of the petition of complaint, it is stated that under agreement dated April 1, 1976, the accused was appointed managing director of the company for a period of three years from February 6, 1976, to February 5, 1979, and, according to the terms of appointment as an officer of the company, the accused was to occupy the furnished residential house at Cochin. In the next paragraph of the petition, it is alleged that the company purchased premises No. 1/81, Church Road, Cochin, together with furniture and fixtures and in terms of the agreement aforesaid, the accused started occupying a portion of the said premises as his residence and in the remaining portion of the premises was situate the office of the advisory division of the company. It is alleged that the company purchased further items of furniture and fixtures and the same were kept in the premises. In para. 8 it is alleged that pursuant to the second agreement executed on May 24, 1979, the accused continued as managing director of the company from April 1, 1979, to March 31, 1980. Next it is alleged in para. 9 that after tenure of office as managing director came to an end on the basis of correspondence, particularly letters dated April 12, 1980, and July 8, 1980, addressed by the company, the accused accepted the office of adviser of the company with effect from April 1, 1980, as evidenced by his letter dated September 12, 1980, addressed to the company. The company by its letter dated July 12, 1980, offered the accused occupation of a part of premises No. 1/81, Church Road, where the advisory division of the company was located. It is the case of the company that the employment of accused-complainant as adviser was terminated in Calcutta by letter dated December 19, 1980, with immediate effect. It is the contention of the company that immediately on the termination of his employment as adviser, the complainant was liable to give up possession of the aforesaid portion of the premises at 1/81, Church Road, Cochin, to the company and having failed to do so, the accused was liable to be prosecuted of an offence under s. 630 of the Companies Act. In the petition of complaint, express reference has been made to letter dated December 19, 1980, aforesaid in para. 11 and a copy of the said letter is on the record. In the said letter, it has been stated that in view of the cessation of the arrangement, the accused became liable to vacate the portion of the Advisory Division's Office at 1/81, Church Road, Cochin, which had been made available to him under the said agreement and the company expected the accused to vacate the same forthwith. In reply letter dated January 3, 1981, the accused admitted that his vacating the premises would arise only on March 31, 1981. In his letter dated January 14, 1981, addressed to the company, the accused is alleged to have admitted that when the time came to vacate the house, the same would be vacated and all the company's articles lying there would be handed over to the representative of the company. Reference to such correspondence and admissions have been made in paras. 11, 12, 13 and 14 of the petition. In para. 21 of the petition of complaint, it has been categorically stated that the head office or registered office of the company is situate at Nilhat House, No. 11, R. N. Mukherjee Road, Calcutta. The accused was appointed at Calcutta. His remuneration was paid at Calcutta and with respect to matters, the accused was accountable to the company at its Calcutta office. Being satisfied prima facie as to commission of the offence as alleged, the learned Magistrate took cognizance of the offence by an order referring in detail to the complainant's case. Mr. Dhar contends that the learned Magistrate was wrong and there was absolutely no reason to hold that a prima facie case transpired from the petition of complaint and examination of the complainant's witness on solemn affirmation. To drive home his contention, Mr. Dhar took considerable pains to compare the amenities the accused enjoyed at the time he was managing director of the company and the emoluments he enjoyed as adviser of the company. Comparing the emoluments, perquisites and pension attached to the two posts, Mr. Dhar attempts to build up an argument that the accused was not an officer of the company and he was simply rendering a professional service to the company as adviser. Mr. Dhar accordingly argues that the petitioner was not an officer as defined in the Act and was not liable to be prosecuted under the Act. Mr. Dhar emphasizes that the term 'adviser' is not mentioned in s. 2(30) of the Act defining officer. He contends that there is absolutely no material on record to indicate that, according to the directions or instructions given by the petitioner, the board of directors of the company or any one or more of the directors is or are accustomed to act. This is not the appropriate time to clearly formulate the nature of duties to be discharged by a person in relation to a company if he is to come within the mischief of s. 2(30) of the Companies Act. It will only be noticed that the definition begins with the words "includes", which implies that the terms used in the definition like "managing agent", "secretary", etc., are only illustrative and not exhaustive. So non-inclusion of the term "adviser" in the definition does not entitle the petitioner to an order of quashing of the proceeding at this stage. A very careful consideration of this contention will be undertaken at the time of trial by the learned Magistrate when the parties will be in a position to adduce evidence regarding the nature of the duty discharged by the accused as "adviser" and as to the binding character of the same on the board of directors. That stage has not yet been reached. In any way, from a reading of the petition of complaint and examination of the complainant's witness, it does not appear that the learned Magistrate was wrong in inferring that a prima facie case under s. 630(1)(b) of the Companies Act was made out against the accused to justify an order of issue of summons. Discussion on the contention in greater detail is deliberately avoided so that the complainant is not prejudiced at the time of trial and the court trying the case is not influenced by any observation made herein.

Mr. Dhar contends that that the principal intention of the complainant, company is to evict the accused from the premises in question and to get back possession of the same. He contends that to forestate that the accused obtained an order from the Court of Munsif at Cochin. He contends that the present petition of complaint is in a way mala fide and illegal. This argument has very little to commend itself for acceptance. The occasion for demanding possession of the property under s. 630(2) may not arise if the accused, in the event of his conviction under s. 630(1)(b), gives up possession of the premises. It is worthy of note that the penalty to be imposed under s. 63C(1)(b) is a fine of Rs. 1,000. Under s. 468 of the Cr. PC, the period of limitation for an offence with such penalty is only six months. There was, therefore, great urgency in filing the petition of complaint on May 11, 1981, when according to the petition of complaint, the offence was committed on April 1, 1981. From the mere filing of the complaint against the background of civil suits, mala fide conduct on the part of the complainant company cannot be inferred.

Mr. Dhar next comes to the question of jurisdiction of the court. It is obvious that the property is situate far away from the jurisdiction of the court of the Chief Metropolitan Magistrate, Calcutta. The property of which the accused is alleged to be in wrongful possession as an officer of the company is situate at Cochin. The learned Magistrate taking cognizance was not unmindful of this aspect of the case. The complainant in para. 21 of the petition of complaint referred to in s. 181(4) of the Cr. PC to invoke the jurisdiction of the court. The learned Magistrate has considered this aspect and has made express reference to s. 181(4) of the Cr. PC to arrive at the conclusion that he had jurisdiction to take cognizance of the offence. Section 181(4) of the Cr. PC provides" Any offence of criminal misappropriation or of criminal breach of trust may be enquired into or tried by a court within whose local jurisdiction the offence was committed or any part of the property which is the subject of the offence was received or retained, or was required or to be returned or accounted for, by the accused person". Mr. Dhar contends that the essence of the offence, namely, wrongful retention of the property, occurred at Cochin and only a court at Cochin could take cognizance of the offence. He lays emphasis in this connection on the provision of s. 177, Cr. PC, laying down "Every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed". Mr. Dhar argues that in view of s. 177 read with s. 181(4) of the Cr. PC, the learned Magistrate should have straightaway held that he had no jurisdiction to try the case or to take cognizance of the offence. He argues that it will be extremely inconvenient and harassing for the accused to defend himself in a court at Calcutta. In s. 181(4) an offence of criminal misappropriation or of criminal breach of trust has been mentioned but we have noticed that the learned Magistrate has not issued any process against the accused under s. 406, IPC, although the said offence has been mentioned in the petition of complaint. This does not create much difficulty. The provisions regarding place of investigation and trial of offence are contained in s. 4 of the Cr. PC. In the absence of anything to the contrary in the Companies Act, the place of enquiry for the offence under the Companies Act is to be determined with reference to s. 4 of the Cr. PC. The Companies Act does not expressly or impliedly confer jurisdiction on criminal courts in respect of acts punishable under that Act. So using s. 4 of the Cr. PC, as key, the learned Magistrate was perfectly justified in resorting to the provisions of s. 181 of the Code. Ordinarily, under s. 177 of the Cr. PC, an offence is to be tried by the court within whose local jurisdiction the offence was committed "Ordinarily" in s. 177 means except as otherwise provided in the Code. From s. 177 an inference is permissible that an offence shall not invariably without exception be tried by the court within whose jurisdiction the offence was committed. Such an interpretation of s. 177 was made in the case of Purushottamdas Dalmia v. State of West Bengal, AIR 1961 SC 1589 at p. 1593. An offence under s. 630(1)(b) of the Companies Act has obvious similarities with an offence of criminal misappropriation or of criminal breach of trust defined in the IPC. Now, s. 181(4) of the Cr. PC, after making reference to offence of criminal misappropriation and criminal breach of trust, provides that such offence will be enquired into or tried by a court within whose local jurisdiction the offence was committed or any part of the property which is the subject of the offence as received or retained or was required to be returned or accounted for by the accused person.

Replying to the contention of Mr. Dhar, Mr. Dutt, on behalf of the complainant opposite party, lays emphasis on the last portion of the above sub-section. Mr. Dutt argues that the accused was appointed as officer by virtue of correspondence carried on from the head office of the company at Calcutta. He argues that pursuant to the correspondence, the accused continued in possession of the premises in question subsequent to the termination of his appointment as managing director of the company upon his assumption of office as adviser of the company. In the above background, the accused was liable to return possession of the premises in question to the company by sending the key of the property to the company at Calcutta. Mr. Dutt contends that the accused was accountable to the company at its head office at Calcutta for delivery of possession of the property in question subsequent to the termination of his office as adviser; and this he could do by sending a note stating that he had delivered possession of the disputed property to an authorised agent of the company posted at Cochin. Mr. Dutt argues that in any event the learned Magistrate cannot be said to have been wrong in assuming jurisdiction. Having considered the provisions of ss. 177 and 181(4) and the averments made in para. 21 of the petition of complaint, no reason is found for holding that the learned Magistrate was wrong in assuming jurisdiction. The correspondence on record indicates strongly that the accused was appointed as adviser pursuant to exchange of letters and was given delivery of possession of the premises in question pursuant to such exchange of letters. It follows, therefore, that subsequent to termination of the appointment as adviser of the company, he became accountable to the company for delivery of possession of the property situate at Cochin and he could discharge his obligation by sending a letter to the company at its head office at Calcutta noting that he had delivered possession. In token thereof, he could perhaps send the key of the property to the head office. The question of inconvenience and costs to be incurred by the accused in defending the proceeding at Calcutta while he is residing at Cochin does not appear to be insurmountable. The provisions of s. 205, Cr. PC, are well known and from the order of the learned Magistrate dated July 17, 1981, it appears that accused has already filed such a petition and order is awaited thereon. Giving careful and anxious consideration to the arguments advanced on behalf of the petitioner accused, I do not find any reason to quash the proceedings or to find fault with the learned Magistrate for the order he has passed. The learned Magistrate appears to have passed a detailed order taking into consideration the long petition of complaint and the initial deposition of the complainant's witness in support thereof. There are sufficient and cogent reasons for the learned Magistrate to take cognizance of the offence and to issue process. The petition will, therefore, fail. But it is made clear that the contentions raised by the accused petitioner touch the case both in the matter of territorial jurisdiction of the court and in the matter of his being or not being an officer of the company. So, the accused petitioner will have the liberty to reagitate the points after evidence has been adduced at the trial and the learned Magistrate will consider the points in depth upon evidence.

Subject to the above observations, the rule is discharged on contest. The order of stay earlier issued is vacated.

The records be sent down to the court concerned forthwith.

[1953] 23 COMP CAS 58 (ALL.)

HIGH COURT OF ALLAHABAD

Hindustan Biologicals Ltd.

Jagat Narain Rohatgi

Nasir Ullah Beg J.

CRIMINAL REFERENCE NO. 8 OF 1952

JUNE 26, 1952

G.P. Shukla, for the Applicant.

Sri Ram, for the opposite party.

JUDGMENT

Nasir Ullah Beg J.—This is a reference by the learned Additional Sessions Judge, Lucknow, recommending that the order of Shri C.P. Srivastava, City Magistrate, Lucknow, refusing to entertain the complaint filed by the applicant under Section 282-A of the Indian Companies Act should be set aside.

On 14th March, 1950, the complainant applicant, The Hindustan Biologicals Limited through Amareshwar Ghosh filed a complaint against the opposite party Shri Jagat Narain Rohatgi purporting to be under Section 282-A of the Indian Companies Act. The allegations in the complaint inter alia are that from September, 1946, to 12th April, 1949, the accused opposite-party was the managing agent and managing director of the complainant company, that in such capacity the accused wrongfully obtained possession of properties of the company detailed in the complaint, that by dishonest and fraudulent representation (including express assurances that the accused would return all properties held by him on behalf of the company) the accused induced the directors of the complainant company to accept the accused's resignation, that the accused was refusing to deliver to the company the said articles in spite of demand and was wrongfully and wilfully withholding and dishonestly retaining them to the detriment of the company for his unlawful gain and that the accused as an employee and director of the company had committed the aforesaid offence and he be punished for that according to law.

After the accused was summoned, he filed a petition raising objection to the maintainability of the complaint in the Court of the City Magistrate. This objection was based on Section 3 of the Indian Companies Act read with Section 282-A of the same Act. The learned Magistrate after hearing the arguments on this point allowed the objection of the accused opposite-party and held that he had no jurisdiction to entertain the complaint.

The applicant filed a revision application which came up for hearing before the learned Additional Sessions Judge, Lucknow, who disagreed with the view taken by the trial court and referred the case to this court with the above recommendation.

Having heard the learned counsel for the parties I am of opinion that this reference must be accepted. The complaint purports to have been lodged under Section 282-A of the Indian Companies Act according to which wrongful withholding of property by a director, managing agent, manager or other officer or employee of a company is made punishable. Section 3 (1) of the same Act lays down that:

"The Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate."

The learned counsel appearing for the opposite party has placed strong reliance on the words "under this Act" and has argued that the effect of the use of these words in Section 3 of the Indian Companies Act is to make prior sanction of the High Court a condition precedent to the cognizance by a Magistrate of a case relating to an offence under the Indian Companies Act. I can find no warrant whatsoever for this interpretation of Section 3 of the Indian Companies Act. He has not argued that the Magistrate has no jurisdiction to try the case. The argument advanced by him is that the jurisdiction arises only after the necessary direction or sanction is given by the High Court. In order to bar the right of a private individual to lodge a complaint the restriction on such a right should be clear and unambiguous. I find no such restriction on the right of a person to institute a complaint under the aforesaid section. In this connection it will be relevant to refer to Section 237 of the Indian Companies Act which deals with the prosecution of delinquent directors. Under Section 237(2) of the said Act it is laid down that if it appears to the liquidator in the course of voluntary winding up that any past or present director, manager or other officer has been guilty of any offence in relation to the company for which he is criminally liable he would forthwith report the matter to the Registrar. Sub-section (4) of Section 237, lays down the procedure for the prosecution of such persons in the following words:

"If on any report to the Registrar under sub-section (2) it appears to him that the case is not one in which proceedings ought to be taken by him, he shall inform the liquidator accordingly, and thereupon, subject to the previous sanction of the Court, the liquidator may himself take proceedings against the offender."

The use of the words "subject to previous sanction" is noteworthy.

It is, therefore, quite evident that where under the companies Act the legislature thought that prior sanction of the court was necessary for launching prosecution of the offenders, the said condition was laid down explicity and clearly. No such condition with regard to the prosecution of persons under Section 282-A of the Companies Act seems to have been laid down either under Section 3 of the Indian Companies Act or in any other section of the Act. This argument of the learned counsel, therefore, seems to be devoid of all merit.

Section 282-A of the Indian Companies Act is only a declaratory section specifying the ingredients constituting an offence under the Indian Companies Act. The proceedings relating to the trial of such offences are not proceedings under the Indian Companies Act but they are proceedings under the Criminal Procedure Code.

Section 3 of the Indian Companies Act was interpreted by the Allahabad High Court in a Full Bench case reported in Harish Chandra v. Kavindra Narain Sinha. It was laid down in that case that: "the jurisdiction of the High Court referred to in Section 3 (1) of the Companies Act is obviously the jurisdiction exercised by virtue of the specific provisions of the Act and not a jurisdiction which may be invoked where merely a criminal offence is declared. This section does not say that that the High Court would be the court of first instance to try persons who are guilty of offences committed by breaches of the statutory provisions of the Act."

Section 3 of the Companies Act is found in Part I of the said Act, the heading of which is "Preliminary". Section 1 of the said Act relates to short title, commencement and extent. Section 2 deals with definitions. Section 2A relates to provisions as to companies registered in Burma or Aden before their separation from India. Section 3 deals with jurisdiction of the court. The above sections are the only sections constituting Part I of the said Act. It would appear that the said part merely contains some general provisions relating to company matters which are specifically dealt with by the Indian Companies Act. The provisions relating to legal proceedings and offences are contained in Part XI of the Companies Act under the heading "Supplemental" and sub-heading "Legal proceedings, offences, etc." Section 278 deals with the cognizance of offences and sub-clauses (1) and (2) of the said section run as follows:

"(1) No court inferior to that of a Presidency Magistrate or a Magistrate of a first class shall try any offence against this Act.

(2) If any offence which by this Act is declared to be punishable by fine only is committed by any person within the local limits of the ordinary original civil jurisdiction of the High Court of Judicature at Fort William, Madras and Bombay, such offence shall be punishable upon summary conviction by any Presidency Magistrate of the place at which such court is held."

It is no doubt correct that the said section does not clearly specify the court by which the offences against the Companies Act are to be tried but they do indicate that the legislature at any rate contemplated their trial by the Court of a Presidency Magistrate or a Magistrate of the first class. In an indirect way they are indicative of the intention of the legislature. Sub-clause (3) of Section 278 further states as follows:

"Notwithstanding anything in the Code of Criminal Procedure 1898, every offence against this Act shall, for the purpose of the said Code, be deemed to be non-cognizable."

The above section also indicates that the Companies Act contemplated the trial of offences according to the Criminal Procedure Code except in so far as the said Code was specifically modified by the Companies Act. In this connection reference may also be made to Section 6 of the Criminal Procedure Code, 1898, sub-sections (1) and (2) of which run as follows:

"(1) All offences under the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the provisions hereinafter contained.

(2) All offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences."

In the Full Bench case of the Allahabad High Court mentioned above it was laid down that:

"Section 29 of the Criminal Procedure Code, merely empowers the High Court, when no court is mentioned for any offence under any law other than the Indian Penal Code, to try such offences. Reading it with Section 5 (2) of the Code, it is clear that Section 29 does not intend that the High Court can take cognizance of the offence straight off and try the accused itself, without following the procedure laid down in the Code."

In view of the law laid down in the said case I am unable to see any force in the arguments of the learned counsel for the applicants.

The learned counsel for the opposite-party has also raised certain other points which according to him, are legal points and go to the root of the matter. He has argued that according to the complaint itself no ingredients of any offence either under the Indian Companies Act or under the Indian Penal Code have been made out. Further he has submitted that Section 282-A of the Indian Companies Act ceas as to be applicable as soon as the property is taken into custodia legis. He has also argued that in order to make out an offence under Section 282-A of the Indian Companies Act the accused must be holding the post of director, managing agent, manager, officer or other employee of a company at the date of the complaint. At this stage I am not concerned with the merits of these objections and I do not express any opinion on them. It is open to him to urge these points when the case goes back to the trial court for proceedings according to law or bring this matter to the notice of the court by means of a proper application stating the grounds on which he bases his prayer for quashing these proceedings.

I am of opinion that the order of the Magistrate refusing to entertain the complaint is clearly wrong and must be set aside. I accordingly accept this reference, set aside the order of the trial court refusing to entertain the complaint and direct that the case shall be sent back to the court concerned for disposal according to law.

[1995] 83 COMP. CAS. 339 (CAL.)

HIGH COURT OF CALCUTTA

Vijai Kapur

Guest Keen Williams Ltd.

GITESH RANJAN BHATTACHARJEE, J.

Criminal Revisional Jurisdiction No. 15 of 1991

SEPTEMBER 15, 1992

JUDGMENT

GITESH RANJAN BHATTACHARJEE,J. - By this revisional application, the petitioner has sought to quash the criminal proceeding, being Complaint Case No. 2026 of 1990, pending in the court of the Metropolitan Magistrate, 17th Court, Calcutta, under section 630(1) (b) of the Companies Act, 1956. The opposite party, Guest Keen Williams Ltd., lodged the complaint against the present petitioner in the court of the Metropolitan Magistrate, Calcutta. It is the allegation of the opposite party/complainant that the petitioner/accused was initially appointed as an employee of the company and was then promoted as a director of the company and in course of such employment the accused was entrusted with the company's premises situated at H-9, Maharani Bagh, New Delhi - 110 065 and he was permitted to use the said premises during his employment with the company. The petitioner accused, however, submitted his resignation in November 1987. Therefore, in pursuance of a decision of the chairman and managing director of the company the accused was appointed as a consultant of the company for the period from December 1, 1987, to March 31, 1988. One of the terms and conditions of the appointment was that the petitioner will get rent-free furnished residential accommodation and the accommodation will be used for consultancy work relating to the company's business. The petitioner was appointed as adviser to the company for the period from April 1, 1988, to December 31, 1988, and under the terms and conditions of that appointment also he was given rent free furnished residential accommodation. The accused, it is alleged in the petition of complaint, ceased to be in the employment of the company in any capacity whatsoever on and from January 1, 1989, but in spite of that the petitioner who was in possession of the premises situated at H-9, Maharani Bagh, New Delhi, by virtue of the terms of his appointment as mentioned earlier, wrongfully withheld the same and knowingly applied it for purposes other than those expressed in the letter of appointment.

It is also alleged in paragraphs 15 and 16 of the petition of complaint that the company called upon the accused to forthwith vacate and deliver to the company possession of the said premises which the accused was occupying and also to return all the properties of the company which the accused was no longer entitled to occupy or retain by reason of termination and determination of his employment with the company and, finally on June 22, 1990, a registered letter was sent to the accused directing him to vacate the premises of the company but the accused refused to do so on frivolous grounds. As regards jurisdictional facts it is stated in paragraph 4 of the petition of complaint that the company has various branches/offices/factory spaces in the country but all major decisions regarding the control, management and administration including the employment of the senior persons are being done from Calcutta at the registered office of the company within the jurisdiction of the Park Street police station and all profits and loss accounts and balance-sheets of the company are prepared at Calcutta and approved by the shareholders at Calcutta an dare being filed with the Registrar of Companies, West Bengal, in accordance with the provisions of the Companies Act, 1956. It is further stated that all statutory requirements regarding the filling of the returns, profit and loss accounts, balance-sheets, returns regarding the provident fund dues are done from Calcutta and senior personnel and executives are appointed at Calcutta. In paragraph 19 of the petition of complaint, it is stated that the appointment of the accused in the employment of the company as an employee and as a director/whole-time director of the company and as a consultant and adviser was made in Calcutta and the agreements for such appointments were also entered into at Calcutta. It is also stated therein that the accused being an officer of the company shall be deemed to be the officer of the company having its registered office at Calcutta irrespective of the fact that he was posted at New Delhi. According to the averment made in the said paragraph 19, all salary remittance of the accused was being made from Calcutta and/or liable to be made from Calcutta, the payment of income-tax and provident fund contributions of the accused were made at Calcutta and were deposited with the appropriate authorities at Calcutta, the termination of the service of employment of the accused was being effected in Calcutta and the resolution of the board of directors of the company regarding the appointment and acceptance of the termination were accepted at Calcutta. Lastly, it is alleged that the refusal of the accused to part with the properties of the company was also communicated by the accused to the company in Calcutta and for all those reasons the court at Calcutta has jurisdiction to entertain and try the complaint.

The petitioner/accused has challenged the proceeding started on the basis of the complaint mainly on the ground that the Calcutta court has no jurisdiction to try the case and since, for reasons discussed below, I find that the Calcutta court has no jurisdiction to try the case, I will dispose of the present revisional application on that ground alone without entering into the merits of the other grounds taken in the revisional application. Section 630 of the Companies Act, 1956, reads thus :

"630. Penalty for wrongful withholding of property. - (1) If any officer or employee of a company -

(a) wrongfully obtains possession of any property of a company;

In the present case, the petition of complaint is based on the allegation that the petitioner/accused being an officer/employee of the company has wrongfully withheld the premises of the company even after the termination of his employment and has applied it to purposes other than the purpose for which occupation of the same was given to him although he was required to vacate possession of the same after he ceased to be in the employment of the company thereby attracting the provisions of section 630 (1) (b) of the Companies Act.

The question is whether the Calcutta court has jurisdiction to try the case. The learned advocate for the opposite party in this connection cited the decision of a single judge of this court in Satyanath (T.S.) v. J. Thomas and Co. [1985] 57 Comp Cas 648 (Cal). In that case, the petitioner-accused was originally an employee of the respondent-company which had its head office at Calcutta. He was the managing director of the company at Cochin, where he occupied premises of the company. He retired from service as managing director on March 31, 1980. From April 1, 1980, to March 31, 1981, the petitioner was appointed as adviser of the company at Cochin. On December 19, 1980, the company wrote a letter to the petitioner at Cochin terminating arrangement advisership and asked the petitioner to vacate the said premises. The petitioner did not comply. There were certain litigations between the parties. Ultimately, the company filed a petition of complaint against the petitioner in the court of the Chief Metropolitan Magistrate, Calcutta, under section 406 of the Indian Penal Code and section 630(1) (b) of the Companies Act, 1956. The principal allegation of the complainant-company was that the petitioner was allowed by the company to reside in the disputed premises at Cochin, filled with furniture and fixtures, initially in his capacity as managing director and subsequently as adviser to the company but on termination of the said employment admittedly the petitioner failed to deliver vacant possession of the premises to the company. The learned Chief Metropolitan Magistrate on consideration of the initial deposition and materials produced before him by the complainant took cognizance of the offence under section 630(1) (b) of the Companies Act, 1956, but refused to the cognizance of the offence alleged under section 406 of the Indian Penal Code. The petitioner challenged the order of the learned Magistrate taking cognizance of the offence and contended that the learned Magistrate had no jurisdiction, particularly territorial, for taking cognizance of the offence. The facts in that case were not much in dispute. What was in dispute was the inferences to be drawn from the basic facts as well as the interpretation of law.

In connection with the question of territorial jurisdiction of the court the learned single judge at page 657 of the said decision observed thus :

"The correspondence on record indicates strongly that the accused was appointed as adviser pursuant to exchange of letters and was given delivery of possession of the premises in question pursuant to such exchange of letters."

The above observations of the learned judge were observations on the facts and these facts were not disputed. On the basis of the above noted facts which were not in dispute the learned judge next deduced the following corollary :

"It follows, therefore, that subsequent to termination of the appointment as adviser of the company, he became accountable to the company for delivery of possession of the property situate at Cochin and he could discharge his obligation by sending a letter to the company at its head office at Calcutta noting that he had delivered possession. In token thereof, he could perhaps send the key of the property to the head office."

That the learned judge made the above observation only by way of a casual and tentative observation without intending to lay down thereby any proposition of law is self-evident from the application of the word "perhaps" is that connection which indicates the clear intention of the learned judge not to treat the observation as a confirmed proposition. At the end of the judgment, the learned judge against made it clear that the contentions raised by the accused petitioner both in the matter of territorial jurisdiction of the court and in the matter of his being or not being an officer were not in dispute and in the circumstances there was practically no scope of throwing any new or additional light by adducing evidence at the time of trial. Even then the learned judge left the matter for consideration of the learned Magistrate in depth at the trial which is a clear indication that the learned judge did not lay down any proposition of law and kept the matter open. This judgment of the learned single judge of this court in Satyanath (T.S.) v. J. Thomas and Co. [1985] 57 Comp Cas 648 also came up for consideration of the Bombay High Court in Dr. Hirak Ghosh v. Tata Iron and Steel Co. Ltd. [1991] 70 Comp Cas 324 and there it is observed, at page 331, by the Bombay High Court that the learned judge of the Calcutta High Court in the said decision does not decide any of these questions, but he leaves this question open, granting liberty to the petitioner to reagitate these points after evidence has been adduced at the trial and, therefore, this case is no authority for determining the question of jurisdiction within the meaning of section 181(4) of the Criminal Procedure Code. I also fully agree with the above view of the Bombay High Court and hold that the decision in Satyanath (T.S.) v. J. Thomas and Co. [1985] 57 Comp Cas 648 (Cal) does not lay down nor does it purport to lay down any principle of law intended to play to role of an authoritative pronouncement on the question of territorial jurisdiction of a court to try a case in similar circumstances.

Section 4(1) of the Code of Criminal Procedure provides that all offences under the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the provisions contained in the Code. Sub-section (2) of section 4 provides that all offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. The Companies Act, 1956, does not contain any provisions regarding the venue of trial of cases punishable under section 630 of the said Act. Section 622 of the Companies Act only says that no court inferior to that of a Presidency Magistrate or a Magistrate of the First Class shall try any offence against the Act. Therefore, the question of venue of trial of an offence punishable under the said section 630 of the Companies Act must be determined by the provisions contained in the Criminal Procedure Code. Chapter XIII of the Code relates to the jurisdiction of the criminal courts in inquiries and trials. Section 177 which appertains to the said Chapter XIII provides that every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed. Section 181(4) provides that any offence of criminal misappropriation or of criminal breach of trust may be inquired into or tried by a court within whose local jurisdiction the offence was committed or any part of the property which is the subject of the offence was received or retained, or was required to be returned or accounted for, by the accused person. One branch of the argument of the learned advocate for the opposite party was that the said section 181(4) of the Criminal Procedure Code will be applicable to the present case and that being so the Calcutta High Court will have jurisdiction to try the case inasmuch as the petitioner although occupying the premises at Delhi was and is required to account for the same at the head office of the company at Calcutta. I would, however, only like to note that I am not impressed by this aspect of the argument because section 181(4) by its own terms applies only to an offence of criminal misappropriation or criminal breach of trust and not to any other offence. Obviously, therefore, section 181(4) of the Criminal Procedure Code is not attracted to an offence punishable under section 630 of the Companies Act. The mere fact that in certain cases some of the components of the offence punishable under section 630 of the Companies Act may have some similarly with some of the components of an offence of criminal misappropriation or of criminal breach of trust do not qualify for attracting section 181(4) of the Criminal Procedure Code, to a case under section 630 of the Companies Act. I reiterate that section 181(4) of the Criminal Procedure Code, by its own terms, applies only to an offence of criminal misappropriation or criminal breach of trust and not to any other offence. Therefore, the "account for" theory which is an attribute of section 181(4) of the Criminal Procedure Code, and is applicable for determining the venue of trial in respect of certain offences mentioned therein is not perforce applicable in determining the venue of trial of an offence punishable under section 630 of the Companies Act.

The gist of the offence alleged against the petitioner is that he has wrongfully withheld the premises under his occupation even after his association with his employer company came to an end thereby attracting section 630(1) (b) of the Companies Act. In this connection, the learned advocate for the opposite party argued that the expression "wrongfully withholds" as used in section 630(1) (b) is very significant and connotes a meaning different from the sense of merely not parting with the possession of the property. He referred to the meaning of the word "withhold", as given in Webster's Third New International Dictionary which is "hold back". He developed the argument in this way that the offence is that the petitioner is wrongfully holding back the property from some one else which in turn implies that some other person is entitled to receive the property from the person who is holding back the same and, therefore, the commission of the offence of wrongful withholding is projected even at the place where the person entitled to receive the property stays and to whom the property has to be made over. In that view of the matter, it was submitted by the learned advocate for the opposite party that since the head office of the company is at Calcutta it must, therefore, be held that the petitioner, although he has been possessing the property at Delhi which is residential premises in this case, is amenable to the jurisdiction of the Calcutta High Court for unlawfully withholding that property from the company whose head office is at Calcutta. This argument, I must say, although highly ingenious, lacks logical validity in the ultimate analysis. In a more or less similar situation where the residential quarters occupied by the accused as employee of the company were at Jamshedpur but the head office of the company was at Bombay, the company lodged a complaint at Bombay against the accused in respect of offences under section 630 of the Companies Act and section 406 of the Indian Penal Code. In that connection, it was argued before the Bombay High Court in Dr. Hirak Ghosh v. Tata Iron and Steel Co. Ltd. [1991] 70 Comp Cas 324 that since the company had its registered office in Bombay the complainant, therefore, could demand that the property be given to the company is Bombay. In respect of that argument the Bombay High Court made the following observation at page 331 :

"But is there a law that a company can receive its property only at its registered office ? Why not Kashmir ? Why not Kanyakumari ? Therefore, the company can as well demand at any other place of its choice, and if the accused refused, it can file a complaint in such courts. I thought that in law situation of construction of any provision of law, common sense and not subtle subterfuges which have the effect of subverting a judicial process, should be the guiding factory. The essence of the offence both under section 630(1) (b) of the Companies Act, and under section 406 of the Indian Penal Code, is the wrongful withholding or retention of the property. The offence is complete when such retention takes place. It is at Jamshedpur, where the retention has taken place and it is but natural that the case be filed at Jamshedpur."

Even apart from the above analysis of the Bombay High Court, I would have held and I do hold that where an offence is committed under section 630(1) (b) of the Companies Act by reason of wrongful withholding of residential premises the offence is committed and the commission of the offence is complete at the situs of the premises and not at the head office of the company.

Wrongful withholding of a property is committed under section 630(1) (b) by not delivering the property to the person entitled to receive back the same or to some other person appointed or authorised by such person the receive the same on his behalf. Where the concerned property is immovable property under the occupation of a person, such person commits the offence of wrongfully withholding the same if he does not vacate the same on delivering possession thereof to the person entitled or authorised to receive the same. Such an act of delivering the immovable property to another person can be effected only at the place where the property is situate. It need not be state that the delivery of an immovable property cannot be effected at any place other than the place where the property is situate for the simple reason that the same cannot be physically moved or carried to a different place. The person entitled to receive delivery of possession of an immovable property has to come or to send or to authorise someone to take possession of the property at the place where the property is situate. Any suggestion that the delivery of an immovable property like a residential house can be effected at a different place by sending the key of the house is not at all free from certain positive practical difficulties. It is an unworkable proposition, for all practical purposes, to say that a person occupying a residential premises at Delhi can deliver possession of the same to someone are Calcutta by sending the key of the house to Calcutta. Even if the key is sent from Delhi to Calcutta, how is it possible for the person receiving the key at Calcutta to be sure that the property at Delhi has really been vacated and it would be a matter of easy access for him to go to the premises at Delhi and open the lock of the premises with that key. It the mere sending of the key is good enough for delivery of possession to is quite possible that person even without vacating the premises may send a key for making a faked show of delivery of possession. It may so happen that the occupant has inducted some stranger in that house and has sent a key for merely giving the colour of delivery of possession. It may also so happen that the person has vacated the premises and has locked the same with his own lock and key and has sent an altogether different key to dupe and to mislead the person to whom the key is sent. In view of all such possibilities the person receiving the key is not definitely expected to grant a filed discharge or acknowledgment of possession unless he has satisfied himself by making spot inquiry at the locale either himself or through his own agency that the premises have been really vacated by the occupant and the key with has been sent to him will really work for giving him free and peaceful access to the premises for bringing back the same under his own occupation.

Therefore, the mere sending of the key will not be of any practical avail in the matter nor will it solve the problem. Delivery of possession at the locale in respect of immovable property is the crux of the matter and delivery cannot be effective, nor can it be acceptable to the person entitled to receive possession thereof where such delivery is sought to be made only by sending a key or by sending a letter. Delivery of possession of immovable property, therefore, must take place at the locale where the property itself is situate and therefore the offence of wrongful withholding of any immovable property must take place at the sites of the property and not elsewhere. That being so, in the present case, the wrongful with holding of the premises in question must have taken place at Delhi and, therefore, the alleged offence under section 630(1) (b), in the facts and circumstances of the present case, must have been committed at Delhi. The other facts which have been pleaded on behalf of the opposite party that the letter of appointment of the petitioner was issued from the head office of the company at Calcutta or that his provident fund contributions are made at Calcutta or that the income-tax deductions are made at Calcutta, etc., whether considered separately or cumulatively are of no consequence and relevance in determining the jurisdiction of the court for trying the offence. Since the offence has been committed at Delhi for reason elaborately discussed by me and section 181(4) of the Criminal Procedure Code is not applicable to the case for reasons already discussed, the court which has jurisdiction to try the case under section 177 of the Criminal Procedure Code is the Delhi court and not the Calcutta court. The Metropolitan Magistrate at Calcutta has no jurisdiction to inquire into or try the offence. In the circumstances the impugned proceedings pending in the 17th Court of the Metropolitan Magistrate against the petitioner/accused under section 630(1)(b) of the Companies Act, 1956, is hereby quashed. The revisional application stands disposed of accordingly.

[1995] 83 COMP. CAS. 351 (MAD.)

HIGH COURT OF MADRAS

Cap. M. Gopalakrishnan

Leafin India Ltd.

RENGASAMI, J.

Criminal Original Petition No. 10366 of 1993

SEPTEMBER 27, 1994

JUDGMENT

RENGASAMI, J. - The above criminal original petition is filed under section 482 of the Criminal Procedure code to quash the proceedings in E.O.C.C. No. 252 of 1993, on the file of the Additional Chief Metropolitan Magistrate, E.O.I., Egmore, Madras-8.

The petitioner, who is the accused in the above said complaint, was the president of Leafin India Limited, Hyderabad. The petitioner in his capacity as precedent was entitled to have vehicle for his use and an air-conditioned Premier Padmini car, bearing Registration No. AP.9-T 6214, was given to him for his use. Now his services have been dispensed with. The complainant-company issued notice to him to had over the said car, which was not complied with by the petitioner. Hence, invoking section 630 of the Companies Act (hereinafter referred to as "the Act"), this petition has been filed to direct the petitioner to return the vehicle.

The petitioner in his petition to quash the proceedings has raised two contentions, viz., that he is not an employee as defined under the Act to initiate proceedings against him and that there is nothing in the complaint to show that the Additional Chief Metropolitan Magistrate, Egmore, Madras, has jurisdiction to make enquiry of this petition and that therefore, the proceedings are liable to be quashed.

It is true that the designation of the petitioner is described as the president of the complainant-company. Learned counsel for the petitioner would contend that the designation "president" cannot be equated with an employee of the company or officer of the company, that under section 630 of the Act, only an officer or an employee of the company can be called upon to comply with the directions given therein and that, therefore, this petition is not maintainable against the president of the company.

In Satyanath (T.S.) v. J. Thomas and Company [1985] 57 Comp Cas 648, the Calcutta High Court, while considering the terms "officer" and "employee" has held that the terms "officer" includes and director, etc., which implied that the terms used in the definition were only illustrative and not exhaustive. In that case, the word "adviser" was contended to be an employee and in that connection in Calcutta High Court has held that even a director is an officer of the company.

The president of the respondent-company also has assigned duties and, therefore, it cannot be said that he is not an officer of the respondent-company. For the president there must be duties and responsibilities while having the administration of the company and by no stretch of imagination, can it be said that the word "officer" does not fit him in his capacity as the president of the respondent-company. Therefore, the first objection raised by learned counsel for the petitioner for the petitioner falls to the ground.

With regard to the next contention, viz., the jurisdiction of the Additional Chief Metropolitan Magistrate, I find that nowhere in the petition is it stated where the vehicle was handed over to the petitioner. Learned counsel for the petitioner refers to the telegrams and letters of the petitioner, in which he has admitted his liability to hand over the vehicle to the respondent-company. No doubt, his liability is admitted, but for invoking a provision, the court must have the jurisdiction and the place of cause of action must be specifically mentioned in the complaint, which alone will have to be taken into consideration for deciding the jurisdiction of the court. In this petition, as the place of jurisdiction into mentioned the petitioner has every right to contend that in view of the absence of the materials in the complaint with regard to the place of cause of action, the learned Additional Chief Metropolitan Magistrate, Madras, has no jurisdiction to try this case. Section 177 of the Code of Criminal Procedure also refers to the place of trial, in the local jurisdiction of the court within whose jurisdiction, the offence was committed. Therefore, only if the cause of action arose within the jurisdiction of the learned Additional Chief Metropolitan Magistrate, this petition under section 630 of the Act is entertainable before him. Similarly for want of details with regard to the cause of action now a doubt is created as to the jurisdiction of the learned Additional Chief Metropolitan Magistrate, Madras. Therefore, I feel that an opportunity may be given to the respondent-company to amend the complaint petition furnishing full details with regard to the place of cause of action.

Mr. Rajagopalan, learned counsel for the petitioner, would represent that instead of giving liberty to the respondent-company to amend the petition, the entire proceedings can be quashed giving liberty to the respondent-company to file a fresh complaint. Process has already been issued to the petitioner and if this proceeding is quashed, once again a fresh proceeding has to be initiated from the beginning. Instead of that, an opportunity may be given to the respondent-company to amend the petition. If that is not complied with by the respondent-company, the petitioner can very well knock at the doors of this court to quash the proceedings under section 482 of the Code of Criminal Procedure. Therefore, I feel it just and proper to permit the respondent-company to amend the petition before the learned Additional Chief Metropolitan Magistrate, Egmore, Madras. Subject to the observation that the respondent-company is to take out an application to amend the complaint, furnishing details of the place of jurisdiction within a period of two weeks from the date of receipt of the records from this court, for which the petitioner is at liberty to file his objections, if any, for this amendment, this criminal original petition is dismissed.

[2002] 35 scl 11 (cal.)

High Court of Calcutta

Tata Tea Ltd.

Fazlur Rahman

Debiprasad Sengupta, J.

C.R.R. No. 259 of 2000

December 5, 2000

Section 630 of the Companies Act, 1956, read with section 482 of the Code of Criminal Procedure, 1973 - Offences by Companies - Penalty for wrongful withholding of property - Petitioner-company terminated services of respondent, an Assistant Manager - He, however, did not hand over vacant possession of bungalow allotted to him while in service - Pursuant to complaint filed under section 630, petitioner also sought direction by Magistrate to respondent to vacant bungalow - Magistrate took cognizance of complaint but refused to issue requisite direction - Whether in view of fact that respondent’s suit challenging his termination had, in meanwhile, been dismissed, petitioner-company’s right to retrieve property was explicit and respondent could be directed, by invoking inherent power under section 482 of Code of Criminal Procedure, to vacate bungalow in favour of petitioner under section 630 - Held yes - Whether such a direction could be passed under section 630(2) even before Magistrate trying case under section 630(1) formally disposed of criminal case against such employee - Held, yes

Facts

The petitioner-company had revoked the contract of employment of the accused opposite party and terminated his service as Assistant Manager. However, the accused refused to hand over vacant possession of the bungalow allotted to him during his employment. The petitioner filed a complaint under section 630 on the ground that there being no relationship of employer and employee now, the accused had no legal right to use and occupy the said bungalow along with furniture and fixtures. The Magistrate took cognizance of the offence and issued process against the accused. The petitioner also filed an application under section 630(2) praying for a direction to the accused to vacate the said bungalow and deliver the possession as delay was causing extreme difficulties to it. The Magistrate, however, rejected the application under section 630(2).

On revision application :

Held

In the instant case, the main intention of the accused opposite party was to drag the proceedings for an indefinite period. Repeated prayers for adjournments were made before the Magistrate and, ultimately, Magistrate directed warrant of arrest to be issued against the opposite party. By the said order the opportunity granted to the accused opposite party under section 205 of the Criminal Procedure Code was also withdrawn. It appeared that the warrant of arrest could not be executed against the accused opposite party. The Magistrate could not proceed any further with the case.

A civil suit filed by the accused against the order of termination of service was dismissed by the civil judge, and later his revision application was also dismissed by the High Court. In such circumstances, the company’s right to retrieve the property was quite explicit. It was in consonance with the view of the Apex Court to pass an order under section 630(2) to direct an employee or past employee to vacate the flat or to restore the company’s property to the company even before the Magistrate trying the case under section 630(1) formally disposed of the criminal case against such employee. Thus, this was a fit and proper case for invoking the inherent power under section 482 direct the accused to vacate the bungalow in favour of the petitioner under section 630. The accused was given one month’s time to vacate the bungalow.

Cases referred to

Metal Box India v. State of West Bengal [1977] (II) C.H.N. 423, Smt. Abhilash Vinodkumar Jain v. Cox and Kings (India) Ltd. [1995] 84 Comp. Cas. 1/4 SCL 167 (Bom.) and Baldev Krishna Sahi v. Shipping Corpn. of (India) Ltd. [1988] 63 Comp. Cas. 1 (SC).

Pradip Ghosh and A. Nag for the Petitioner.

Judgment

1. In spite of notice nobody appears on behalf of the opposite party.

2. This revisional application is directed against an order dated 20-12-1999, passed by the learned Chief Judicial Magistrate, South 24 Parganas, Alipore, in Case No. C-502 of 1999 thereby rejecting the application of the present petitioner praying for a direction upon the accused to vacate the bungalow which is the property of the petitioner and which the accused opposite party is illegally and wrongfully withholding after the termination of service.

3. The present petitioner filed a petition of complaint against the accused opposite party under section 630 of the Companies Act, 1956 (‘the Act’) in the court of the learned Chief Judicial Magistrate, South 24 Parganas, Alipore, on 20-2-1999. The allegation made in the petition of complaint is that Tata Tea Ltd. is a public limited company within the meaning of the Companies Act. The company appointed the accused opposite party as an assistant manager and provided him with free housing accommodation while he was posted as assistant manager in Sagmoo Tea Estate, Police Station Kaliabor, Nawgaon, Assam. The company, vide its letter dated 12-6-1998, revoked with effect from 15-6-1998, the contract of employment of the accused opposite party and terminated his service by the said letter. It was alleged that in spite of the receipt of the said letter the accused failed and neglected and/or refused to hand over the vacant possession of the said bungalow to the company. Since the termination of service of the accused by the complainant-company with effect from 15-6-1998, there has been no relationship of employer and employee between the complainant-company and the accused. The accused had no legal right to use or occupy the said bungalow along with furniture and fixtures. As such the accused is in wrongful possession of the said bungalow. It was alleged that in the aforesaid manner the accused has committed an offence punishable under section 630 for which he should be tried and punished according to law.

4. On receipt of the petition of complaint the learned Magistrate took cognizance of the offence and issued process against the accused opposite party. The opposite party appeared through his learned advocate and he was allowed to be represented by his learned advocate under section 205 of the Code of Criminal Procedure.

5. On 12-7-1999, the complaintant/petitioner filed an application in the court of the learned Chief Judicial Magistrate praying for a direction upon the accused opposite party to vacate the said bungalow and to deliver the possession of the same to the petitioner-company. In the said application it was stated that the accused opposite party was wrongfully withholding the possession of the said bungalow and was wilfully and deliberately delaying the matter and the case would prolong for a long time. Such delay is causing extreme difficulties to the complainant-company, which is not able to allot the said bungalow to other officers of the company. It was also stated that the accused opposite party in this way was frustrating the provisions of section 630.

6. The said application under section 630(2) was rejected by the learned Magistrate and against such order of rejection the petitioner came up before this Court in revision.

7. Mr. Pradip Ghosh, the learned advocate appearing for the petitioner, submits that after termination of service by the complainant-company, vide its letter dated 12-6-1998, the accused opposite party has no right to occupy the said bungalow. As the said bungalow is the property of the complainant-company, which the accused has been wrongfully withholding after the termination of his service, the learned Magistrate should have allowed the application under section 630(2) and directed the accused opposite party to vacate the same and to deliver possession of the said bungalow to the complainant-company. Mr. Ghosh points out that the accused opposite party filed a civil suit, being Title Suit No. 54 of 1998, in the court of the learned Civil Judge No. 1, Junior Division, Nawgaon, challenging the termination of his service and praying for a declaration that the order of revocation of his service dated 12-6-1998, was illegal and void. The learned Civil Judge, Kaliabor, Nawgaon, by his order dated 21-8-1999, dismissed the said suit. Against the said order the accused opposite party filed Civil Revision No. 366 of 1999 in the Hon’ble Gauhati High Court. The Hon’ble High Court at Gauhati by an order dated 13-10-1999, issued a rule but refused to stay the said order. Mr. Ghosh also brings to the notice of this court by producing an order of the Gauhati High Court that the said civil revision preferred by the accused opposite party was dismissed by the High Court at Gauhati by its judgment and order dated 15-2-2000.

8. The moot question is whether during the pendency of the prosecution concerned the court can invoke section 630(2) to get a company bungalow vacated and restored to the company.

9. Mr. Ghosh, the learned advocate of the petitioner, relies on a judgment of this Court in Metal Box India v. State of West Bengal [1997] (II) C.H.N. 423. In deciding the said case the learned single judge of this Court relied upon two judgments of the Hon’ble Apex Court, one is in Smt. Abhilash Vinodkumar Jain v. Cox and Kings (India) Ltd. [1995] 84 Comp. Cas. 1 (Bom.) and Baldev Krishna Sahi v. Shipping Corpn. of (India) Ltd. [1988] 63 Comp. Cas. 1. In the said judgment it was held by this Court as follows :

“In Baldev Krisha Sahi’s case (supra) also the officer of the company was being prosecuted as an accused and the outer limit fixed by the Apex Court for disposal of the criminal case pending before the Magistrate was longer than that which was fixed for the officer accused to vacate the company’s property. The pendency of the criminal case did not deter the Apex Court to give direction for delivery of the property even before the trial was directed to be concluded. The only difference between Baldev Krishna Sahi’s case (supra) and the present case is that here it is the company who has approached this court under section 482 of the Criminal Procedure Code and article 227 of the Constitution for a direction to deliver the property while in Baldev Krishna Sahi’s case (supra) it was the accused officer of the company who approached the Supreme Court in a special leave petition. In the circumstances, it would be in consonance with the Apex Court’s decision in Baldev Krishna Sahi’s case (supra) to pass an order under section 630(2) directing respondent No. 2 to vacate the flat even before the Magistrate formally disposes of the criminal case against respondent No. 2.

Indeed, the company’s right to retrieve the property is quite explicit here particularly when respondent No. 2 has not yet come forward with a definite stand to resist the company’s claim and I really do not find any sufficient reason as to why I am not to rely on this decision of the Apex Court in Baldev Krishna Sahi’s case (supra) and direct respondent No. 2 to deliver back the company’s property.”

10. In the present case it appears that the main intention for the accused opposite party is to drag the proceedings for an indefinite period. Repeated prayers for adjournments were made before the learned Magistrate and, ultimately, by his order dated 7-2-2000, the learned Magistrate directed warrant of arrest to be issued against the opposite party. By the said order the opportunity granted to the accused opposite party under section 205 of the Code of Criminal Procedure was also withdrawn. From the subsequent orders dated 3-4-2000, 2-5-2000, 30-5-2000, 7-7-2000 and 24-8-2000, it appears that the warrant of arrest could not be executed against the accused opposite party. The learned Magistrate could not proceed any further with the case.

11. The accused opposite party filed a suit before the Civil Judge, Junior Division, challenging the termination of service and the said suit was dismissed. Against such order of dismissal a revision was preferred in the High Court at Gauhati and the said revisional application was also dismissed. In such circumstances, the company’s right to retrieve the property is quite explicit. It is in consonance with the view of the Apex Court to pass an order under section 630(2) to direct an employee or past employee to vacate the flat or to restore the company’s property to the company even before the Magistrate trying the case under section 630(1) formally disposes of the criminal case against such employee.

12. In view of the discussion made above and relying upon the judgments referred to above, I am of the view that this is a fit and proper case for invoking the inherent power of this Court under section 482 to direct the accused opposite party to vacate the bungalow concerned in favour of the petitioner-company under section 630. The accused opposite party is hereby given one month’s time to vacate the bungalow. The learned Chief Judicial Magistrate, 24 Parganas (South), Alipore, is also directed to proceed with the trial of the criminal case and to dispose of the same with utmost expedition. The present application is accordingly allowed. The impugned order dated 20-12-1999, is hereby set aside.

[2001] 33 SCL 174 (MP)

High Court of Madhya Pradesh, indore bench

Deepak Panchal

Gajra Gears Ltd.

N.K. Jain, J.

Criminal Revision Nos. 320 to 324 and 331 of 1997

January 3, 2001

Section 630 of the Companies Act, 1956 - Offences - Penalty for wrongful withholding of company’s property - Magistrate convicted petitioners for not vacating, on their ceasing to be in company’s employment, residential accommodation allotted to them for use and occupation during employment - Addl. Sessions Judge upheld Magistrate’s order, but granted time to petitioners to vacate and on their so doing, sentence was made unexecutable - Whether above findings of fact were unassailable in revision - Held, yes - Whether it was open for court to undertake detailed reappraisal of evidence and come to its own conclusion - Held, no - Whether petitioners’ conviction had been rightly recorded and no interference was called for in revision - Held, yes

Facts

The trial Magistrate passed orders convicting the petitioners under section 630 and sentencing them to pay certain amount of fine, on the charge of having failed to vacate the residential accommodation provided to them for use and occupation during employment, on their ceasing to remain in company’s employment. The Addl. Sessions Judge, while affirming the orders, granted time to the petitioners to vacate the disputed accommodation and, on their so vacating, the sentence was made unexecutable.

On revision :

Held

Both the courts below had held in a fact that the accommodation in question belonged to the respondent-company and the same was allotted to the petitioners for use and occupation on their being in the employment of the company. Since the petitioners had now ceased to be in the employment of the company, they were bound to vacate the said accommodation. These findings of fact were unassailable in revision, and it was not open for the court to undertake detailed reappraisal of the evidence and come to its own conclusion. The petitioners were occupying the said accommodation being in the employment of the company. That being so, they must vacate the same on their ceasing in the said employment. Their conviction had been rightly recorded and no interference was, therefore, called for in revision.

The revision applications were, accordingly, dismissed.

C.B. Patne for the Petitioner. G.M. Chaphekar and Bharat Chitle for the Respondent.

Judgment

Jain, J. - Heard Shri C.B. Patne, LC for the petitioners and Shri G.M. Chafekar, the learned senior counsel appearing with Shri Bharat Chitle for the respondent.

2. All the aforesaid revisions have been heard as connected matters as they involve similar questions of fact and law.

3. The impugned judgments in these revisions are rendered in appeals by the Sessions Court below in affirmance, with slight modifications, of the order of conviction passed by the trial magistrate, convicting petitioners under section 630 of the Companies Act, 1956 and sentencing them to pay certain amount of fine. The learned Additional Sessions Judge, while affirming the judgment of the Trial Court, granted the appellants-petitioners time to vacate the disputed accommodations and on their so vacating the sentence has been made unexecutable.

4. LC for the petitioners has vehemently contended that the dispute was essentially of civil nature and the ownership of the respondent-company over the accommodations in question was in dispute. However, both the courts below have held as a fact that the accommodation in questions belong to be respondent-company and the same was allotted to the petitioners for use and occupation on their being in the employment of the company. Since the petitioners have now ceased to be in the employment of the company, they were bound to vacate the said accommodation. These findings of fact, I am afraid unassailable in revision, and it is not open for this court to undertake detailed reappraisal of the evidence and come to its own conclusion. It is not disputed that the petitioners were occupying the said accommodations being in the employment of the company. That being so, they must vacate the same on their ceasing in the said employment. Their conviction has been rightly recorded and no interference is, therefore, called for by this court in revision.

5. Even while dismissing these revisions, I deem it just and necessary to grant the petitioners further time to vacate the said accommodations in terms of sub-section (2) of section 630. In the meantime, they shall be free to approach the civil court to establish their title over the said accommodation and obtain appropriate interim orders in accordance with law.

6. Accordingly, I dismiss all these revisions, but grant the petitioners further time of 3 months to vacate the disputed accommodations; failing which they shall be made to suffer the sentence awarded by the trial magistrate and affirmed in appeal by the Sessions Court.

7. This order be retained in Criminal Revision No. 320 of 1997 and a copy each be filed in other matters. Certified copy in 7 days.

[2000] 27 SCL 343 (MP)

High Court of Madhya Pradesh, Jabalpur Bench

Mohd. Zameel Hussain

Assistant Labour Commissioner

S.K. KULSHREstha, J.

WRIT PETITION NO. 1218 OF 1998

MARCH 31, 1999

Section 630 of the Companies Act, 1956, read with section 33 of the Industrial Disputes Act, 1947 - Offences - Penalty for wrongful withholding of property - Whether jurisdiction of court empowered to take cognizance of complaint under section 630 is suspended during pendency of proceedings in Labour Court under section 33 of Industrial Disputes Act, 1947 - Held, no

Facts

The petitioner was appointed by the respondent-company (R-3) as an operator in its quarry. His services were terminated within a year on charges of misbehaviour, after a domestic enquiry. The petitioner was allotted a quarter by the company and on dismissal from service, he was directed to vacate the same. The employers filed an application under section 630 before the Chief Judicial Magistrate for restoration of the possession of the said quarters to the company. The petitioner contended that he had raised a dispute before the Assistant Labour Commissioner about termination of his service and during the pendency of conciliation proceedings before the Assistant Labour Commissioner, the Chief Judicial Magistrate had no jurisdiction to entertain the application. The preliminary objection was, however, rejected and the petitioner was directed to vacate the quarter.

On writ :

Held

Section 33 of the Industrial Disputes Act contemplates alteration of conditions during the pendency of any conciliation proceeding before a conciliation officer or a Board. In the instant case, the quarter had been allotted to the petitioner by virtue of his employment and the petitioner was not entitled to retain the same on termination thereof. A Division Bench of Madhya Pradesh High Court in L.S. Nair v. Hindustan Steel Ltd. AIR 1980 MP 106 has held that there is nothing to indicate that the Estate Officer will have no jurisdiction to evict a person from a quarter until the dispute relating to termination of services is finally decided by the Labour Court. It was opined that the order of termination could not be ignored as void and inoperative and the termination was to be treated as valid and effective until it was set aside. It was held that the petitioner had, therefore, no authority to occupy that quarter till the order of termination was in force.

In the instant case also, the position was no different except that the proceedings had been initiated by the respondents under the provisions of section 630. Section 630 is a penal provision for a wrongful act of obtaining possession, or wrongfully withholding any property. Sub-section (2) creates an independent offence if the direction of the court to deliver the property is not obeyed. Pendency of conciliation proceeding under section 33 of the Industrial Disputes Act, much less the proceedings which were initiated after the initiation of proceedings under section 630, did not, therefore, create a bar to the jurisdiction of the court to deal with the complaint under section 630. The Bombay High Court in Chandragupta Gupta v. Padmanabha Subramani [1989] 65 Comp. Cas. 190 has observed that the fact that there is a dispute between the petitioner and the company as to whether the services have been properly terminated, will not in any way affect the continuation of the trial and decision of the criminal case. It, therefore, clearly follows that pendency of conciliation proceedings before a conciliation officer cannot arrest or suspend the jurisdiction of the court to deal with the complaint under section 630.

The court by the impugned order had exercised the jurisdiction under section 630(2) and the jurisdiction was not taken away by the pendency of the proceedings before the Assistant Labour Commissioner. The petition had, therefore, no merit, and was to be dismissed.

Cases referred to

L.S. Nair v. Hindustan Steel Ltd. AIR 1980 MP 106 and Chandragupta Gupta v. Padmanabha Subramani [1989] 65 Comp. Cas. 190 (Bom.).

A.G. Dhande for the Petitioner. R. Menon for the Respondent.

Order

1. By this petition, the petitioner has challenged the order, dated 10-3-1990 passed by the learned Chief Judicial Magistrate, Damoh (respondent No. 4), by which application filed on behalf of respondent Nos. 2 and 3 under section 630(2) of the Companies Act, 1956 (‘the Act’) has been entertained by the said Chief Judicial Magistrate. The petitioner was appointed by the respondent No. 3 on 16-9-1996 as an operator in the quarry on probation for a period of 6 months. On the charges of misbehaviour, a charge sheet, dated 14-3-1997 was issued to him and after a domestic enquiry, the petitioner was awarded punishment of dismissal from service by order, dated 11-6-1997. It is not disputed that the petitioner was allotted a quarter by the company and on cessation of his employment on account of his dismissal from services, he was directed to vacate the same.

2. The case of the petitioner, in short, is that he was victimized on account of his union activities, and against the termination of his service, he had raised a dispute before the Assistant Labour Commissioner (respondent No. 1 and had made an application for retention of the quarter; but despite knowledge of the pending proceedings before the respondent No. 1, the employers (respondent Nos. 2 and 3) filed an application under section 630 before the Chief Judicial Magistrate, Damoh, for restoration of the possession of the said quarter to the company. On receipt of the notice, the petitioner raised preliminary objection about the jurisdiction of the respondent No. 4 to entertain the said application during pendency of the proceedings before the respondent No. 1, but the respondent No. 4, rejecting the objection, passed order dated 10-3-1998 (Annexure-P/9) directing the petitioner to vacate the quarter.

3. Respondent Nos. 2 and 3 have filed their returns in which the respondents have pointed out that the quarter in question was allotted to the petitioner by virtue of the contract of service with the result, on termination of his service, the petitioner was required to vacate the same and hand over its possession to the company. The respondents have pointed out that after termination of the petitioner’s services on 11-6-1997, application under section 630 was filed before the Chief Judicial Magistrate on 17-11-1997 with the result, the proceedings for conciliation initiated on 20-11-1997, could otherwise not have been a bar. The respondents have asserted that pendency of a dispute does not take away the right of the company to make such an application before the Chief Judicial Magistrate and, therefore, the order passed by the respondent No. 4 does not call for any interference.

4. The learned counsel for the petitioner has referred to section 33(1) of the Industrial Disputes Act, and has urged that during the pendency of any conciliation proceedings before a conciliation officer, there is a statutory injunction against the employer restraining the employer from altering to the prejudice of the workman, the conditions of service applicable to him immediately before the commencement of such proceeding, save with the permission in writing of the authority before which the proceeding, is pending. The learned counsel has, therefore, contended that the respondent No. 4 on being apprised of this legal position, ought not to have proceeded with the matter and should have either dismissed the application or have kept the proceedings in abeyance till conclusion of the proceedings initiated before the respondent No. 1. Learned counsel for the respondent Nos. 2 and 3 has, however, submitted that a liability to vacate the quarter being coterminous with the employment, the same did not amount to any alteration of the condition of service during the pendency of the conciliation proceedings which had admittedly been initiated after the petitioner had been dismissed from service. The learned counsel for the respondents has also pointed out that in any case, the proceedings under section 630 had been initiated even before any application was made before the respondent No. 1 with the result, the proceedings before the respondent No. 1 could not be said to be pending when the said application was made before the respondent No. 4.

5. The short question that arises is as to whether, in the present case, the application filed under the provisions of section 630(2) was maintainable before the respondent No. 4. Section 630 provides for penalty for wrongful withholding of property and lays down that if any officer or employee of a company wrongfully obtains possession of any property of a company or having any such property in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act, he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees. Sub-section (2) of section 630 empowers the court trying an offence to order such officer or employee to deliver up or refund any such property wrongfully obtained or wrongfully withheld or in default to suffer imprisonment for a term which may extend to 2 years. The question, however, is whether the jurisdiction of the court empowered to take cognisance under section 630 is suspended during the pendency of the proceedings under section 33 of the Industrial Disputes Act, 1947. Section 33 of the Industrial Disputes Act, 1947 reads as under :

“Section 33, Conditions of service, etc., to remain unchanged under certain circumstances during pendency of proceedings.—(1) During the pendency of any conciliation proceeding before a conciliation officer or a Board or of any proceeding before (an arbitrator or) a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall,—

(a) In regard to any matter connected with the dispute, alter, to the prejudice of the workman concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding; or

(b) For any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending.

(2) During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with the standing orders applicable to a workman concerned in such dispute (or, where there are no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman),—

(a) alter, in regard to any matter not connected with the dispute, the conditions of services applicable to that workman immediately before the commencement of such proceeding; or

(b) for any misconduct not connected with the dispute, discharge or punish, whether by dismissal or otherwise, that workman :

Provided that no such workman shall be discharged or dismissed, unless he has been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer.

(3) Notwithstanding anything contained in sub-section (2), no employer shall, during the pendency of any such proceeding in respect of an industrial dispute, take any action against any protected workman concerned in such dispute—

(a) by altering, to the prejudice of such protected workman, the conditions of service applicable to him immediately before the commencement of such proceeding; or

(b) by discharging or punishing whether by dismissal or otherwise, such protected workman,

save with the express permission in writing of the authority before which the proceeding is pending.

Explanation.—For the purpose of this sub-section, a ‘protected workman’, in relation to an establishment, means a workman who, being (a member of the executive or other office bearer) of a registered trade union connected with the establishment, is recognised as such in accordance with rules made in this behalf.

(4) In every establishment, the number of workmen to be recognised as protected workmen for the purposes of sub-section (3) shall be one per cent of the total number of workmen employed therein subject to a minimum number of five protected workmen and a maximum number of one hundred protected workmen, and for the aforesaid purpose, the appropriate Government may make rules providing for the distribution of such protected workmen among various trade unions, if any, connected with the establishment and the manner in which the workmen may be chosen and recognised as protected workmen.

(5) where an employer makes an application to a conciliation officer, Board (an arbitrator), Labour Court, Tribunal or National Tribunal under the proviso to sub-section (2) for approval of the action taken by him, the authority concerned shall, without delay, hear such application and pass (within a period of three months from the date of receipt of such application) such order in relation thereto as it deems fit :

Provided that where any such authority considers it necessary or expedient so to do, it may, for reasons to be recorded in writing, extend such period by such further [period ?] as it may think fit :

Provided further that no proceedings before any such authority shall lapse merely on the ground that any period specified in this sub-section had expired without such proceedings being completed.”

6. On a plain reading of the provisions, it is clear that the section contemplates alteration of conditions during the pendency of any conciliation proceedings before a conciliation officer or a Board. In the present case, it is not disputed that the quarter had been allotted to the petitioner by virtue of his employment and the petitioner was not entitled to retain the same on termination thereof. The learned counsel for the respondents has invited attention to a Division Bench decision of this Court in L.S. Nair v. Hindustan Steel Ltd. AIR 1980 MP 106 wherein the case of an employee allotted a quarter by the management subject to the conditions that on termination, he shall not be allowed to retain the quarter for a period exceeding one month from the date, the proceedings were initiated under the Public Premises (Eviction of Unauthorised Occupants) Act, on failure of the employee to vacate the quarter. The employee had challenged the maintainability of the proceedings on the ground that the validity of the order of termination was pending adjudication in the Labour Court. It was held that there was nothing to indicate that the Estate Officer will have no jurisdiction to evict a person from a quarter until the dispute relating to termination of services was finally decided by the Labour Court.
The observation contained in paragraph 8 of the said judgment read as follows :

“8. It was then contended by the learned counsel that the definition of the expression ‘unauthorised occupation’ as contained in the Public Premises Act must be so construed as not to cover a person, the validity of the order of termination of whose employment is pending adjudication in the Labour Court. We have already stated that the petitioner was allotted the quarter, being an employee of the company. The petitioner’s employment was terminated. According to the rules relating to the allotment of the quarters, the petitioner ceased to have any right to occupy the quarter from the date of the termination of his employment. The order of termination passed against an employee has to be treated as valid until it is set aside by the Labour Court. The Estate Officer functioning under the Public Premises Act has no jurisdiction to decide upon the validity of the termination of services of an employee. He has to proceed upon the footing that the termination of services is valid until set aside by the Labour Court. There is nothing in the definition of ‘unauthorised occupation’ to which references has already been made which may indicate that in such cases, the Estate Officer will have no jurisdiction to evict a person from a quarter until the dispute relating to termination of service is finally decided by the Labour Court. We have already stated that the order of termination of services passed against the petitioner suffered from the defect that it was passed by an authority lower in rank to the appointing authority, and thereby contravened the requirements of certified standing orders. Even as it would be open to the Labour Court to uphold the order if it is justified on the material collected in the domestic enquiry R.K. Nair v. G.M. Bhilai Steel Plant 1977 Lab LC 1079 (MP) (supra). The order of termination cannot, therefore, be ignored as void and inoperative. As earlier stated by us, the termination is to be treated as valid and effective until it is set aside. The petitioner has, therefore, no authority to occupy that quarter till the order of termination is in force.”

7. In the present case also, the position is no different except that the proceedings have been initiated by the respondents under the provisions of section 630. Section 630 is a penal provision for a wrongful act of obtaining possession, or wrongfully withholding any property. Sub-section (2) creates an independent offence if the direction of the court to deliver the property, is not obeyed. Pendency of conciliation proceedings under section 33 of the Industrial Disputes Act, much less the proceedings which were initiated after the initiation of proceedings under section 630 does not, therefore, create a bar to the jurisdiction of the court to deal with the complaint under section 630. References may also be made to a decision of the Bombay High Court in Chandragupta Gupta v. Padmanabha Subramani [1989] 65 Comp. Cas. 190 in which it has been observed that the fact that there is a dispute between the petitioner and the company as to whether the services have been properly terminated, does not in any way affect the continuation of the trial and decision of the criminal case. It therefore, clearly follows that pendency of conciliation proceedings before a conciliation officer cannot arrest or suspend the jurisdiction of the court to deal with the complaint under section 630 of the Companies Act.

8. The Court by the impugned order has exercised the jurisdiction under section 630(2), and, as discussed above, the jurisdiction was not taken away by the pendency of the proceedings before the respondent No. 1. The petition has, therefore, no merit. Accordingly, this petition is dismissed with no order as to costs.

Jharkhand high court

companies act

[2004] 55 scl 662 (jharkhand)

HIGH COURT OF JHARKHAND

Ganesh Roy

State of Jharkhand

M.Y. EQBAL, J.

CR. M.P. NO. 895 OF 2003

APRIL 8, 2004

An officer or employee, whose service has been terminated,
also comes within mischief of provision of section 630 of
Companies Act

Section 630 of the Companies Act, 1956 - Penalty - For wrongful withholding of property - Whether if an officer or employee of company, who was permitted to occupy any property of company during his employment, remains in wrongful occupation of same after termination of his employment, he is liable to be prosecuted under section 630 even if order of termination has been challenged before Labour Court - Held, yes

Facts

The petitioner was in employment of OP No. 2-company and while he was in service, he was extended the facility of residential accommodation. Subsequently, the petitioner’s service was terminated and the company asked him to vacate the residential quarter. In spite of notice and reminders, the petitioner did not vacate the premises and, therefore, he was alleged to have committed offence under section 630. The petitioner, by filing the instant petition, prayed for quashing the entire criminal proceedings initiated against him alleging that the termination of his service was illegal and the Government had referred the dispute to the Labour Court for adjudication and, thus, under such circumstances, criminal proceedings under section 630 could not be initiated against him.

Held

If an officer or employee of the company was permitted to occupy any property of the company during his employment and remain in wrongful occupation of the same after termination of his employment, he commits an offence under section 630. [Para 7]

The service of the petitioner was terminated and he ceased to be in the employment of the company. Consequently, possession of the quarter allotted to him had become wrongful possession. It was a different thing if the termination of service of the petitioner was declared illegal and he was reinstated in service but so long as the order of termination subsisted, the petitioner could not be held to be in the employment of the company and possession of the premises allotted to him, while he was in service, could not be held to be legal and valid possession. In that view of the matter, initiation of criminal proceedings under section 630 could not be held to be without jurisdiction. [Para 9]

For the aforesaid reasons, no merit was found in the instant petition, and it was, accordingly, dismissed. [Para 10]

Cases referred to

Baldev Krishna Sahi v. Shipping Corpn. of India Ltd. [1987] 4 SCC 361 (para 6) and Lalita Jalan v. Bombay Gas Co. Ltd. [2003] 6 SCC 107 (para 8).

Manish Kumar and S.K. Dwivedi for the Petitioner. G.M. Mishra and Umesh Mishra for the Respondent.

Order

1. In this application filed under section 482 Cr. P.C., the petitioner has prayed for quashing the entire criminal proceedings and the order dated 16-3-2001 passed by Judicial Magistrate, Jamshedpur in C.I. No. 1152 of 2000 whereby he has taken cognizance under section 630 of the Company’s Act against the petitioner.

2. The brief facts of the case is that petitioner was in the service of opposite party No. 2 Company and while he was in service he was extended the facility of residential accommodation since 93. Petitioner’s service was terminated by the Company with effect from 6-10-1999. The Company thereafter asked the petitioner to vacate the residential quarter since he ceased to be in employment of the Company. In spite of notice and reminders, petitioner did not vacate the premises and thereby he alleged to have committed offence under section 630 of the Companies Act by wrongfully withholding the said premises which is the property of the Company.

3. Learned counsel for the petitioner assailed the criminal proceeding and the order of cognizance as being illegal and wholly without jurisdiction. Learned counsel submitted that when the services of the petitioner was terminated, he moved before the appropriate government for referring the dispute to the labour court under section 10 of the Industrial Disputes Act and the Government finally referred the disputes to the Labour Court vide notification dated 17-11-2000 being Reference Case No. 61/2000. Learned counsel submitted that since termination of service of the petitioner was illegal, the Government referred the dispute to the Labour Court for adjudication and as such under these circumstances the criminal prosecution against the petitioner under section 630 of the Companies Act is an abuse of process of the Court.

4. Section 630 of the Companies Act reads as under :

“Penalty for wrongful withholding of property.—(1) If any officer or employee of company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorized by this Act; he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to ten thousand rupees.

(2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the Court any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default to suffer imprisonment for a term which may extend to two years.”

5. From bare perusal of the aforesaid provision, it is manifest that if any employee of a company wrongfully obtains illegal possession of any property of a company or having in possession of such property wrongfully withholding the same, is liable to be prosecuted and punished.

6. Having regard to the submission made by the learned counsel, the only question that falls for consideration is whether an officer or employee of a company whose services has been terminated can be brought under the mischief of the provision of Companies Act. In other words whether any employee or the officer of a company whose service has been terminated cannot be prosecuted under the aforesaid section merely because the order of termination is challenged before a Court of law. This question came for consideration before the Supreme Court in the case of Baldev Krishna Sahi v. Shipping Corpn. of India Ltd. [1987] 4 SCC 361. It was held that such an employee or officer whose services has been terminated also come within the mischief of the provision of section 630 of the said Act. Their Lordships observed :

“8. Section 630 of the Act which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draughtsman of the Act. The section is in two parts. Sub-section (1) by clauses (a) and (b) creates two distinct and separate offences. First of these is the one contemplated by clause (a), namely, where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment to which he is not entitled. Normally, it is only the present officers and employees who can secure possession of any property of a company. It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property. This is the function of clause (a) and although it primarily refers to the existing officers and employees, it may also take in past officers and employees. In contrast, clause (b) contemplates a case where an officer of employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorized by the Act. It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment. That appears to be one of the functions of clause (b). It would be noticed that clause (b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorized by the Act. That would primarily apply to the present officers and employees and may also include past officers and employees. There is therefore no warrant to give a restrictive meaning to the term ‘officer or employee’ appearing in sub-section (1) of section 630 of the Act. It is quite evident that clauses (a) and (b) are separated by the word ‘or’ and therefore are clearly disjunctive. (p. 366)

7. It is, therefore, clear that if an officer or employee of the Company was permitted to occupy any property of the company during his employment and remain in wrongful occupation of the same after termination of his employment commits an offence under section 630 of the said Act.

8. Similar view has been taken in the case of Lalita Jalan v. Bombay Gas Co. Ltd. [2003] 6 SCC 107, where their Lordships held:

“6. The question which require consideration is whether the appellants, having not vacated the flat after the death of Sri N.K. Jalan to whom it was allotted in his capacity as director of the company, come within the ambit of section 630 of the Act. The main ingredient of the section is wrongful withholding of the property of the company or knowingly applying it to purposes other than those expressed or directed in the articles and authorized by the Act. The dictionary meaning of the word ‘withholding’ is to hold back; to keep back; to restrain or decline to grant. The holding back or keeping back is not an isolated act but is a continuous process by which the property is not returned or restored to the company and the company is deprived of its possession. If the officer or employee of the company does any such act by which the property given to him is wrongfully withheld and is not restored back to the company, it will clearly amount to an offence within the meaning of section 630 of the Act. The object of enacting the sections is that the property of the company is preserved and is not used for purposes other than those expressed or directed in the articles of association of the company or as authorized by the provisions of the Act. On a literal interpretation of section 630 of the Act the wrongful withholding of the property of the company by a person who has ceased to be an officer or employee thereof may not come within the ambit of the provisions as he is no longer an officer or employee of the company. . . . ” (p. 112)

9. Coming back to the instant case, admittedly service of the petitioner was terminated in 1999 and thereafter he ceased to be in the employment of the Company. Consequently, possession of the quarter allotted to the petitioner became wrongful possession. This is a different thing when the termination of service of the petitioner is declared illegal and he is reinstated in service but so long as the order of termination subsist the petitioner cannot be held to be in the employment of the company and possession of the premises allotted to him while he was in service cannot be held to be legal and valid possession. In that view of the matter initiation of criminal proceeding under section 630 of the Companies Act cannot be held to be without jurisdiction.

10. For the aforesaid reasons, I do not find any merit in this application, which is accordingly dismissed.

Bombay High Court

Companies Act

[2004] 52 scl 536 (bom.)

HIGH COURT OF BOMBAY

Manohar Gunaji Anubhawne

State of Maharashtra

J.A. Patil, J.

Criminal Writ Petition No. 749 of 2003

August 1 and 5, 2003

Section 630 of the Companies Act, 1956, read with section 37(1) of the Maharashtra Regional and Town Planning Act, 1965 - Penalty for wrongful withholding of property - Whether object of the regulation 58(7) of Development Control Regulations for Greater Mumbai, 1991, issued under the Maharashtra Regional Town Planning Act, 1965 for protection of occupants of tenements in premises of cotton textile mills, is to afford protection of occupants to persons who are in unauthorised and wrongful occupation of premises - Held, no - Whether section 41 of the Presidency Small Causes Courts Act, 1882 has no application to suits or proceedings for recovery of possession of any immovable property to which provisions of section 630 apply - Held, yes - Whether it is discretionary, and not mandatory, upon Court to pass an order under sub-section (2) of section 630 - Held, yes - Whether there is no merit in contention that provisions of section 630 being penal in nature must be construed strictly - Held, yes - Whether words ‘any other law for time being in force’ in section 41(1) of 1882 Act cover section 630 - Held, yes

Facts

The petitioner-employee was allotted room for his use and occupation till such time as he would be in the employment of the respondent-company. The petitioner resigned from service but continued to hold possession of the allotted room. The security officer of the company, on behalf of company, filed complaint before the Metropolitan Magistrate who directed the petitioner to vacate premises. The Sessions Judge dismissed the appeal.

On writ petition, the petitioner contended :

(i) that the complaint was not filed or in the name of the company to whom the room in question belonged but it was filed by one of its employees and, therefore, the same was not maintainable.

(ii) that the petitioner’s possession of the suit room was protected in view of the notifications dated 20-3-2001 and 20-6-2002 issued by the State Government in exercise of its powers under section 37(1) of the Maharashtra Regional and Town Planning Act, 1965 (the MRTP Act).

(iii) the petitioner was tenant of the room in question and, therefore, his possession thereof was protected by the provisions of the Bombay Rent Act. The company had, therefore, to file a suit under section 41 of the Presidency Small Causes Courts Act, if it wanted to take possession from the petitioner.

(iv) that the relief under section 630(2) is a discretionary relief and that both the Courts below had erred in directing the petitioner to vacate the room within a stipulated period.

(v) that the provisions of section 630 being penal in nature must be construed strictly.

Held

As regards the first contention, the said employee had filed the complaint not for himself but on behalf of the company under an authority and in his representative capacity. It could not be ignored that possession of the room in question had been claimed not for the said employee but for the company itself to whom the said room belonged. There was therefore, no substance in the first contention raised by employee and the same was, therefore, to be rejected. [Para 5]

The second contention of the petitioner was based on two notifications dated 20-3-2001, 20-6-2002 issued by the State Government in exercise of its power under section 37(1) read with section 154 of the MRTP Act; it might be noted that under the said Act, the Government had sanctioned the Development Control Regulations for Greater Mumbai, 1991. [Para 6]

The Companies Act which is a central enactment, prevails over the notification issued by the State Government under the MRTP Act. It could not be ignored that the petitioner was a mere licensee or service occupier in occupation of room and he was supposed to occupy the same during his employment. Upon his ceasing to be in the employment of the company for whatever reason, he was supposed to vacate the room and hand over possession thereof to the company. Despite that fact, the petitioner had continued to be in the possession of the said room for number of years. Therefore both the Courts below had rightly come to the conclusion that the petitioner was in wrongful occupation of the room in question. It could not by any stretch of imagination be said that the object of the Regulation 58(7) issued under the MRTP Act for the protection of occupants of tenements in the premises of the cotton textile mills, was to afford protection to the persons who were in unauthorised and wrongful occupation of the premises. There was also much substance in the submission that Regulation 58(7) could not have retrospective operation and it could not legalise unlawful possession. In the instant case, the petitioner failed to vacate the room in his occupation, after he was served with a notice. Therefore, it was obvious that commission of the offence by the petitioner under section 630 was complete in December, 1988. The above mentioned notifications which were issued about 12 years thereafter, could not have effect of legalising the petitioner’s act of wrongfully withholding the possession of the room which he was bound to vacate after his resignation from the service. Therefore, the second contention deserved to be rejected. [Para 8]

As regards the third contention, sub-section (1) of section 41 does not have any application to suits or proceedings for recovery of possession of any immovable property to which the provisions of Bombay Rent Act, the Bombay Government Premises (Eviction) Act, 1955, the Bombay Municipal Corporation Act, Bombay Housing Board Act, 1948 or any other law for the time being in force, apply. Section 630 is one of such laws, which is in force and applies to recovery of possession of immovable properties of the company’s employees who no longer had a right to continue to occupy the premises allotted to them during their employment. Thus, the third contention also had no merit. [Para 11]

As regards the fourth contention, the offence of wrongfully withholding of property can be in respect of any property of the company, whether movable or immovable and it is just possible that by the time the employee is held guilty, he may have already lost, and disposed of the movable property given in his possession. In such an eventuality the Court would not be in a position to order the officer or employee to deliver it up or to refund to the company. The Legislature appears to be alive to such an eventuality and, therefore, has purposely used the word ‘may’ instead of the word ‘shall’ in sub-section (2) of section 630. It is, therefore, discretionary and not mandatory upon the Court to pass an order under sub-section (2) of section 630. [Para 12]

As regards the contention that the provisions of section 630 being penal in nature must be construed strictly, there was no force in that submission for the simple reason that sub-section (2) of section 630 at any rate gives a discretion to the Court to direct the concerned employee of the company to deliver the property which he had wrongfully withheld. There was nothing wrong if the Magistrate in the peculiar facts and circumstances of the case, decided to exercise the discretion in favour of the company and directed the petitioner to handover possession of the premises to the company. No question of strict consideration of sub-section (2) of section 630, therefore, arose in that case. [Para 13]

Taking into consideration the above mentioned objections, it was to be held that there was no merit in the challenge to the impugned orders. There was, therefore, no reason for the instant High Court to interfere with the impugned orders. Consequently, the petition was to be dismissed. [Para 15]

Cases referred to

Atul Mathur v. Atul Kalra [1990] 68 Comp. Cas. 324 (SC) (para 5), Jagdish Chandra Nijhawan v. S.K. Saraf AIR 1999 SC 217 (para 9), Dr. Suresh Venkatrao Nerlekar v. Sharanghadar Pandurang Nadkarni [1982] 1 Bom. CR 867 (para 10), Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp. Cas. 329 (Bom.) (para 10), Krishna Avtar Bahadur v. Col. Irwin Extross [1986] 59 Comp. Cas. 417 (para 10), Hasan Jahagirdar v. Fatesingh Shikshan Sanstha AIR 1999 Bom. 383 (para 11), Hiralal Vallabbhram v. Sheth Kastorbhai Lalbhai AIR 1967 SC 1853 (para 11), Mangat Ram Roshan Lal v. Harbans Lal AIR 1983 J&K 86 (para 12), CIT v. Smt. P.K. Noorjahan AIR 1999 SC 1600 (para 12), Lalita Jalan v. Bombay Gas Co. Ltd. [2003] (4) SCALE 52 (para 13) and Murlidhar Meghraj Loya v. State of Maharashtra AIR 1976 SC 1929 (para 13).

Madhav Jamdar for the Petitioner. Shekhar Naphade, Ms. Prachi Nimbalkar for the Respondent. V.B. Konde Deshmukh for the State.

Order

1. The petitioner was tried in Cri. Case No. 148/S/1994 by the learned Metropolitan Magistrate, 13th Court, Dadar, Mumbai, who convicted him of the offence under section 630 of the Companies Act and sentenced him to pay a fine of Rs. 1000 in default to suffer S.I. of 15 days. The learned Magistrate further directed the petitioner to vacate the premises of the respondent-company within 3 months. Feeling aggrieved thereby, the petitioner preferred Cri. Appeal No. 145/2002 in the Sessions Court, Mumbai but the learned Addl. Sessions Judge dismissed the same and directed the petitioner to hand over premises to the respondent-company on or before 31-3-2003. The petitioner has therefore, filed the present petition under Articles 226 and 227 of the Constitution of India and under section 482 of the Cr. P. Code to challenge both these orders.

2. The above mentioned complaint was filed by Ramanath Gorakhnath Ghag, who was at the relevant time working as security officer in the Bombay Dyeing and Manufacturing Company Ltd. The said company owns a residential building known as Spring Mills Chawls situated at G.D. Ambekar Marg. Naigaum, Mumbai. It was stated in the complaint that the petitioner-accused was in the employment of the said company as a worker from 12-12-1966 to 11-10-1988 and that as per the policy of the company, he was allotted room No. 15 of Chawl No. 5(E), G.D. Ambekar Marg, Naigaum as an employee of the company for his use and occupation till such time as he would be in employment of the company. It appears that the company used to charge certain amount towards maintenance charges. The petitioner resigned from the service on 11-10-1988 and, therefore, he was bound to hand over possession of the said room but he did not do so in spite of the company’s letter dated 16-12-1988, calling upon him to vacate the said room. It was alleged that the petitioner continued to hold wrongful possession of the suit room and thereby, he committed an offence under section 630 of the Companies Act. As pointed out above, the learned Magistrate convicted and sentenced the petitioner and the appeal filed by the petitioner against that order came to be dismissed.

3. I have heard Shri Madhav Jamdar, the learned Advocate for the petitioner, Shri Naphade, the learned senior counsel for respondent No. 2 and Mrs. S.R. Kumbhat, APP for respondent No. 1-State. Shri Jamdar has assailed the impugned orders on the following grounds, namely :—

(i) That the complaint is not filed by or in the name of the company to whom the room in question belongs but it is filed by one of its employees and, therefore, the same is not maintainable.

(ii) That the petitioner’s possession of the suit room is protected in view of the notifications dated 20-3-2001 and 20-6-2002 issued by the State Government in exercise of its powers under section 37(1) of the Maharashtra Regional and Town Planning Act, 1965.

(iii) The petitioner is a tenant of the room in question and that therefore, his possession thereof is protected by the provisions of the Bombay Rent Act. The company has, therefore, to file a suit under section 41 of the Presidency Small Cause Courts Act, if it wants to take possession from the petitioner.

(iv) The relief under section 630(2) of the Companies Act, is a discretionary relief and that both the Courts below have erred in directing the petitioner to vacate the room within a stipulated period.

(v) That the provisions of section 630 of the Companies Act being penal in nature, must be construed strictly.

(vi) The trial Court had wrongfully called upon the petitioner to admit certain documents and, therefore, whole trial has been vitiated.

It will be convenient to deal with each of these contentions serially, but before that a look at section 630 would be advantageous. The section reads :—

“630. Penalty for wrongful withholding of property.—(1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the article and authorised by this Act;

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

(2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years.”

4. As regards the first contention it may be noted that the complaint against the petitioner was filed by one Mr. Ramnath Gorakhnath Ghag, who was at the relevant time security officer in the company. The cause of the title of the complaint does not indicate the name of the company as the complainant. It is, therefore, contended by Shri Jamdar that the complaint is not at all maintainable. It is true that in the cause title the name of the company to whom the room in question belongs should have been cited as the complainant but it cannot be ignored that para 1 of the complaint, makes it clear that the said R.G. Ghag has filed the complaint not for himself but on behalf of the company under an authority and in his representative capacity In this respect, Shri Naphade pointed out that on 25-4-1994 the Board of Directors of the Company had passed a resolution to grant a power of attorney in favour of R.G. Ghag, the security officer and one M.N. Mahale of the company for the purpose of filing criminal proceedings in the Court for recovery of possession from unauthorised occupants of its premises. Clause 1 of the said power of the attorney shows that both these persons were authorised to manage Spring Mills Chawl belonging to the company and to recover possession of portions thereof allotted to the employees of the company upon their ceasing to be in the service of the company. Clause 3 of the power of attorney, authorised both these persons to commence, carry on and prosecute actions, proceedings whatsoever including execution proceedings for recovering possession and compensation etc. Clause 4 inter alia authorises the said two persons generally to do, execute and perform any other acts, deeds, matters and things whatsoever which ought to be done, executed or performed or which in the opinion of the said attorneys ought to be done, executed or performed. It will thus be seen that though the complaint purports to have been filed in the name of the company’s security officer R.G. Ghag, but in substance it is for and on behalf of the company only.

5. Shri Naphade relied upon the decision in Atul Mathur v. Atul Kalra [1990] 68 Comp. Cas. 324 (SC), wherein the competence of the divisional sales manager of the company to file a complaint on behalf of the company was questioned. It was, however, held that the power of attorney granted in favour of the said Manager, duly authorised him to file such a complaint. The Supreme Court, therefore, rejected the contention that the complaint suffered from a material irregularity not curable under section 465 of the Cr. P. Code. It was further pointed out that in spite of such a contention, the respondent in that case had neither pleaded nor proved that failure of justice had occurred on account of the said irregularity. The observations made by the Supreme Court hold good, in this case also since nothing has been pleaded or pointed out as to how there has been failure of justice on account of filing of the complaint in the name of R.G. Ghag instead of the company. It cannot be ignored that possession of the room in question has been claimed not for the said R.G. Ghag but for the company itself to whom the said room belongs. There is, therefore, no substance in the first contention raised by Shri Jamdar and the same is, therefore, rejected.

6. The second contention of Shri Jamdar is based on two notifications dated 20-3-2001, 20-6-2002 issued by the State Government in exercise of its power under section 37(1), read with section 154 of the MRTP Act. It may be noted that under the said Act, the Government has sanctioned the Development Control Regulations for Greater Mumbai, 1991. The Regulation 58 deals with the development and redevelopment of lands of Cotton Textile Mills. Clause 7(a) of the Regulation 58 provides as under:—

“(7) Notwithstanding anything contained above—

(a) if and when the built up areas of a cotton textile mill occupied for residential purposes as on the 1st of January, 2000 are developed or redeveloped, it shall be obligatory on the part of the land owner to provide to the occupants in lieu of each tenement covered by the development or redevelopment scheme, free-of-cost, an alternative tenement of the size of 225 sq. ft. carpet area:”

It appears that in spite of the said provisions, certain complaints were received by the Government about eviction of the occupants of the tenements in the premises of the Cotton Textile Mills and, therefore, the Government thought it necessary to give protection to the occupants of such tenements by modifying Regulation 58(7)(a). The notification dated 20-6-2002 which contains the proposed modification, gives a direction to the Bombay Municipal Corporation, to initiate modification to Regulation 58. The proposed modification is in the nature of proviso which reads “provided that no such occupants shall be evicted till such time, he or she is provided with alternative accommodation of the size of 225 square feet carpet area in such development or redevelopment scheme”. Clause (d) of the directions states “pending sanction to these modifications by the Government under section 37(2) of the said Act, the aforementioned modifications shall come into effect forthwith”. Shri Jamdar, therefore, contended that the petitioner is entitled to retain the room in his occupation unless and until he has been provided with the alternative accommodation of the size of 225 sq. feet carpet area. He further submitted that since the company has not at all done anything in this behalf, the petitioner is entitled to retain his possession of the said room and cannot be directed to vacate the same. It is an undisputed fact that the petitioner was in the employment of the company and that in that capacity he was allotted the room in question for his residential purpose. There is also no dispute of the fact that the petitioner resigned from the service on 11-10-1988 and continued to hold possession of the room. As a matter of fact, he was under an obligation to vacate the room as soon as he ceased to be an employee of the company. Both the Courts below have recorded a concurrent finding of fact that petitioner’s occupation of the room after he ceased to be the company’s employee, is unauthorised and wrongful. Therefore, the petitioner has prima facie no right to continue to hold possession of the suit room any longer.

7. As regards the question whether the petitioner is entitled to get protection of the above mentioned Notifications, Shri Naphade pointed out that the said notifications were not in force when the offence under section 630 of the Companies Act, was completed in December, 1988, Shri Naphade further submitted that the two notifications do not and cannot have retrospective operation. He further pointed out that the two notifications issued are under the MRTP Act and that the State Legislature has no legislative competence to nullify or modify any of the provisions of the Companies Act. According to Shri Naphade, if the State Legislature cannot modify or repeal any of the provisions of the Companies Act, then the notifications issued under the MRTP Act, cannot do so and they are subject to the provisions of the Companies Act. The third submission of Shri Naphade in this respect is that the notifications in question are delegated legislation and it is settled law that delegated legislation cannot have any retrospective effect. He further submitted that a central legislative enactment cannot be affected or altered by the State Government notifications issued under the State law. The fifth and last submission of Shri Naphade is that the Development Control Regulation 58(7) necessarily postulates that the occupation must be lawful and that the said Regulation cannot legalise illegal occupation of the premises.

8. A careful consideration of all these submissions made by Shri Naphade would show that it has much force. It need not be disputed that the Companies Act, which is a central enactment prevails over the notification issued by the State Government under the MRTP Act. It cannot be ignored that the petitioner was a mere licencee or service occupier in occupation of room No. 15 and he was supposed to occupy the same during his employment. Upon his ceasing to be in the employment of the company for whatever reason, he was supposed to vacate the room and hand over possession thereof to the company. Despite this fact, the petitioner has continued to be in the possession of the said room for number of years. Therefore, both the Courts below have rightly come to the conclusion that the petitioner is in wrongful occupation of the room in question. It cannot by any stretch of imagination be said that the object of the Regulation 58(7) issued under the MRTP Act for the protection of occupants of tenements in the premises of the cotton textile mills, is to afford protection to the persons who are in unauthorised and wrongful occupation of the premises. There is also much substance in the submission of Shri Naphade that Regulation 58(7) cannot have retrospective operation and it cannot legalise unlawful possession. In the instant case, the petitioner failed to vacate the room No. 15 in his occupation, after he was served with a notice dated 16-12-1988. Therefore, it is obvious that commission of the offence by the petitioner under section 630 of the Companies Act was completed in December, 1988. The above mentioned notifications which were issued about 12 years thereafter, cannot have effect of legalising the petitioner’s act of wrongfully withholding the possession of the room which he was bound to vacate after his resignation from the service. In view of this discussion, the second contention raised by Shri Jamdar deserves to be rejected.

9. Coming to the third contention of Shri Jamdar, it is contended that the petitioner is not an unauthorised occupant of room No. 15 and that on the contrary he is tenant of the said room. He also pointed out that the petitioner was paying maintenance charges on account of his occupation of the said room. According to Shri Jamdar, the question whether the petitioner is or is not a tenant of room No. 15 cannot be decided on the forum of Criminal Court in a complaint filed under section 630 of the Companies Act and that the proper forum to decide this question is the Court of Small Causes, Mumbai which alone has jurisdiction to entertain and try the disputes between the landlords and the tenants. Shri Jamdar also referred to certain provisions of the Bombay Rent Act and relied upon the decision of the Supreme Court in Jagdish Chandra Nijhawan v. S.K. Saraf AIR 1999 SC 217. However, having regard to the facts in that case, it is obvious that the reliance upon it is totally misconceived and irrelevant. In that case the facts were that the appellant was appointed as Managing Director of the Company for a limited period and provided with rent-free furnished flat till he was with the said company. There was an agreement of service which contained certain terms and one of such terms was as under :—

“(i) If such termination be at the instance of the company, then the employee and/or the employee’s wife shall continue to enjoy rent free accommodation during their respective lives but only until the employee takes up any other profession, vocation or business.

The appellant’s services were terminated by the company and he was called upon to hand over possession of the flat. Since, he failed to do so; the company filed a criminal case against him for the offences under sections 406, 408 and 409 of the I.P. Code and under section 630 of the Companies Act. The company also filed a separate suit for recovery of possession of the flat. It was in this set of facts that the Magistrate discharged the appellant, holding that the dispute between the parties was of a civil nature. The order of the Magistrate was upset by the High Court which held that a prima facie case was made out against the appellant for the said offence but the Supreme Court set aside the order of the High Court and restored the order of discharge passed by the Magistrate, pointing out that the appellant did not resign nor take up any employment elsewhere. The aforementioned condition in the service agreement was prima facie applicable and that it cannot be said that appellant had wrongfully withheld the flat of the company. In the instant case, there is no such service agreement between the petitioner and the company, authorising the petitioner to retain possession of the room No. 15, even after the termination of his service.”

10. Shri Naphade pointed out that the contentions of the petitioner that the company must file its suit under section 41 of the Presidency Small Cause Courts Act to recover possession, has no substance. Under section 41(1) of the said Act, the Court of Small Causes has exclusive jurisdiction to entertain and try all suits and proceedings between licensor and licensee, or a landlord and tenant, relating to recovery of possession of any immovable property situated in Greater Bombay. Shri Naphade, however, pointed out that sub-section (1) of section 41 does not have any application to suits or proceedings for recovery of possession of any immovable property to which the provisions of Bombay Rent Act, Bombay Government Premises (Eviction) Act, 1955, the Bombay Municipal Corporation Act, Bombay Housing Board Act, 1948 or any other law for the time being in force, applies. Emphasising the words “any other law for time being in force” occurring in sub-section (2) of section 41, Mr. Naphade, therefore, rightly submitted that section 630 of the Companies Act is one of such laws, which is in force and which applies to recovery of possession of immovable properties of the company’s employees who no longer have a right to continue to occupy the premises allotted to them during their employment. In this respect Shri Naphade relied upon the decision of a learned Single Judge of this Court in Dr. Suresh Venkatrao Nerlekar v. Sharanghadar Pandurang Nadkarni [1982] 1 Bom. CR 867, wherein the facts were that the petitioner was an ex-employee of the respondent-company, conducting dispensary in the premises of the company under an agreement of leave and licence. After termination of his employment, the petitioner denied that he was permissive user of the premises and contended that he was tenant of respondent-company. The company then filed criminal case against him under section 630 of the Companies Act. Before that the respondent-company had also filed a suit for possession in the Court of Small Causes. On these facts, the learned Judge held that the petitioner had obtained the premises as an employee of the company and that his occupation of the premises after termination of the employment was without any lawful authority and it was wrongful. Although the issue of tenancy of the petitioner was common before the Civil Court and the Criminal Court, the learned Judge declined to stay the prosecution, observing that civil and criminal process works in different spheres. It was further observed that if the premises were given to the petitioner as medical officer and if they were to be enjoyed by him for a particular purpose and with special permission to the respondent-company, as mentioned in the agreement, it is not necessary for the Criminal Court to find out his actual status at all and, therefore, to that extent the issue before the Criminal Court will not be ascertainment of the status. In the instant case, admittedly the company has not filed any suit against the petitioner for recovery of the possession nor has the petitioner filed any such suit for declaratory relief that he is a tenant in the suit room. Similar question arose in Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp. Cas. 329 (Bom.), wherein the officer of the company who retired from service was found to be withholding wrongful possession of the flat, which was allotted to him by the company for his occupation. It was contended on his behalf that in view of the provisions of the Public Premises Eviction Act, the learned Metropolitan Magistrate had no jurisdiction to try the alleged offence punishable under section 630 of the Companies Act The learned Single Judge to this Court held that the word “proceedings” used in section 15 of the said Act, does not include criminal proceedings and, therefore, there was no ouster of the jurisdiction of the Criminal Court. It was further pointed out that on a plain reading of section 630, it is clear that if an employee or officer of a company wrongfully withholds any property belonging to the company it is an offence punishable with fine of Rs. 1000. It was pointed out that sub-section (2) of section 630 permits the Court, trying the offences to pass an order directing such officer or employee to deliver up or refund, within time to be fixed by the Court any such property wrongfully obtained or wrongfully withheld or knowingly misapplied. The said sub-section further makes it clear that disobedience of the order of the Court is made punishable and a sentence to suffer imprisonment for a term of two years is provided. It was further pointed out that it is only that the disobedience of the order of the Court that is made an offence, an officer or employee of a company may not vacate the premises as directed by the Court and may undergo imprisonment for a period of two years, allowing his family members to enjoy the property. It was held that in such eventuality, there cannot be any order of eviction from the property of the company under section 630 of the Companies Act. In Krishan Avtar Bahadur v. Col. Irwin Extross [1986] 59 Comp. Cas. 417, a similar question about the tenancy of the petitioner-accused was raised and it was contended that the petitioner was entitled to the protection of the Bombay Rent Act and that the Criminal Court had no jurisdiction to entertain and continue the proceedings under section 630 of the Companies Act. This contention was, however, rejected and it was pointed out that plea of tenancy was not at all open to the facts of that case, when the flat in question belonged to the company and it was occupied by the petitioner during the tenure of his employment, After the termination of his service, he could not claim to continue to occupy the premises on the ground that he was a tenant thereof. It was observed that while considering whether the plea of tenancy is a bona fide plea, it is always necessary to examine and consider the transaction on the basis of which the plea of tenancy is based, and if on those facts, no plea of tenancy can be raised, such a plea cannot be entertained.

11. Shri Jamdar relied upon the decision in Hasan Jahagirdar v. Fatesingh Shikshan Sanstha AIR 1999 Bom. 383, wherein the deceased was working as a teacher in the school run by the respondent and as he was in need of accommodation, he was provided with a room in the students hostel. After the death of the said teacher, the possession was sought from his legal heirs, who were residing with him. It appears that the contention, that the deceased-teacher was a tenant of the premises was raised but the same was rejected, inter alia that if a person to be a tenant under the Bombay Rent Act, the rent has to be paid in money and it cannot be in the form of service. These facts will make it clear that reliance upon these authorities is useless and irrelevant. Shri Jamdar further relied upon the decision in Hiralal Vallabbhram v. Sheth Kastorbhai Lalbhai AIR 1967 SC 1853. However, this decision is also not at all relevant for the purpose of this case as it was a case of ejectment on the ground of sub-letting and default in payment of rent. In view of the above discussion, the third contention of Shri Jamdar is rejected.

12. The fourth contention of Shri Jamdar is based on sub-section (2) of section 630 of the Companies Act. According to him it is not obligatory on the part of the Court to direct the ex-employee of the company to deliver possession of the premises in his occupation, Shri Jamdar emphasised the use of word “may” in sub-section (2) and pointed out that in the circumstances the petitioner having raised a plea of tenancy, the Courts below should not have directed him to hand over possession. According to him instead of the Courts below should have left the question of the petitioner’s tenancy to be decided at the proper forum. In this respect Shri Naphade submitted that the word “may” used in sub-section (2) has to be read as “must”. For this purpose, he relied upon the decisions in Mangat Ram Roshan Lal v. Harbans Lal AIR 1983 J&K 83 and CIT v. Smt. P.K. Noorjahan AIR 1999 SC 1600. In the former case, it was held that the words used in a statute must be given their natural meaning. If the language of the statute is clear and unambiguous, the Court must give effect to it unless there are strong and obvious reasons to the contrary. In the said case, it was held that the use of the word “may” in section 4 of the Jammu and Kashmir House and Shops Rent Control Act, does not mean “must”. In the latter case, the Supreme Court held that the word “may” as used in section 69 of the Income-tax Act cannot be read as “shall”. I am, however, not inclined to accept the interpretation which Shri Naphade has tried to place. In my view the word “may” used in sub-section (2) deserves to be given its plain and grammatical meaning. It may be noted that the offence of wrongfully withholding of property can be in respect of any property of the company whether movable or immovable and it is just possible that by the time the employee is held guilty, he may have already lost, spent disposed of the movable property given in his possession. In such an eventuality the Court will not be in a position to order the officer or employee to deliver it up or to refund to the company. The Legislature appears to be alive to such an eventuality and,therefore, purposely used the word “may” instead of the word “shall” in sub-section (2) of section 630. It is, therefore, discretionary and not mandatory upon the Court to pass an order under sub-section (2) of section 630. In my opinion, in the facts and circumstances of the case both the Courts below have correctly used their discretion in favour of the company and directed the petitioner to hand over possession of the room who has been wrongfully withholding it for a number of years. Hence, I do not accept the fourth contention of Shri Jamdar.

Dt. 5-8-2003

13. Coming to the 5th ground, it was contended by Shri Jamdar that the provisions of section 630 being penal in nature must be construed strictly. I, however, do not find any force in this submission for the simple reason, that sub-section (2) of section 630 at any rate gives a discretion to the Court to direct the concerned employee of the company to deliver the property which he has wrongfully withheld. There is nothing wrong if the learned Magistrate in the peculiar facts and circumstances of the case, decides to exercise the discretion in favour of the company and directs the petitioner to hand over possession of the premises to the company. No question of strict consideration of sub-section (2) of section 630 of the Companies Act, therefore, arises in this case. Shri Naphade referred to the decision in Lalita Jalan v. Bombay Gas Co. Ltd. [2003] (4) SCALE 52, wherein it was observed that the principle that a statute enacting an offence or imposing a penalty is strictly construed is not of universal application. Reference was made by Their Lordships to certain observations made by Krishna Iyer, J. in Murlidhar Meghraj Loya v. State of Maharashtra AIR 1976 SC 1929 in connection with Food laws and it was observed that literal and lexical construction of Food laws is likely to leave loopholes for the offender to sneak out of the meshes of law and should be discouraged and criminal jurisprudence must depart from old cannons defeating criminal statutes calculated to protect the public health and the nation’s wealth. The Supreme Court referred to the objections that the provisions contained in section 630 of the Companies Act is of penal nature and observed that a provision of this nature is for the purpose of recovery of the property and if, in spite of demand or subsequent order of the Court, the possession of the property is not returned to the company, the question of imposing penalty will arise. It was further observed that possession of the property by an employee or anyone claiming through him of such property is unlawful and recovery of the same on the pain of being committed to a prison or payment of fine cannot be stated to be unreasonable or irrational. It may further be noted that sub-section (2) of section 630 gives an option to the concerned employee to suffer imprisonment for a term which may extend to two years if he wants to withhold possession of the premises to him. In view of this position, it is not possible to accept the submission of Shri Jamdar.

14. The last contention of Shri Jamdar is with regard to the fact that during the course of examination-in-chief of P.W. 1, the learned Magistrate called upon the petitioner-accused to admit certain documents which were tendered by its witness. In this contention it may be noted that section 294 of the Cr. P. Code, prescribes such a procedure for admitting the documents and objecting to dispense with the formal proof to save the time. There might have been some irregularity on the part of the learned Magistrate in following procedure prescribed by section 294, but it is not pointed out on behalf of the petitioner as to how that has caused prejudice to him. At any rate, the petitioner was not forced to admit the said documents. It was on his admission that the documents came to be accepted. There is, therefore, no substance in this last submission also made on behalf of the petitioner.

15. Taking into consideration the above mentioned objections, I am of the opinion that there is no merit in the challenge given to the impugned orders. There is, therefore, no reason for this Court to interfere with the impugned orders. Consequently, the petition is dismissed and the rule is discharged.

16. Shri Jamdar prays for three months time for the petitioner to vacate the premises. It may be noted that the petitioner has been wrongfully withholding the premises for about last 15 years. Shri Jamdar states that the petitioner proposes to file an appeal in the Supreme Court against this order. In view of this fact, eight weeks time is granted to the petitioner for vacating the premises in his possession.

[2001] 32 SCL 171 (SC)

SUPREME COURT OF INDIA

Maratt Rubber Ltd.

J.K. Maratukalam

G.B. PATTANAIK AND R.P. SETHI, JJ.

CRIMINAL APPEAL NO. 235 OF 1998

JANUARY 27, 2000

Section 630 of the Companies Act, 1956, read with section 482 of the Code of Criminal Procedure, 1973 - Penalty - For wrongful withholding of property - High Court quashed criminal proceedings instituted by appellant-company against accused-respondent under section 630 for continuing to utilise property given to him as a director of company after he ceased to be director since 1991 on basis of observation made by Civil Court in suit for injunction filed by appellant to the effect that property in question had not been delivered to accused as director of company - Whether pendency of civil proceedings before any Civil Court would be ground for quashing of criminal proceedings or not to frame charge against accused even though assertions in complaint petition together with material produced by complainant constituted offence - Held, no - Whether High Court exceeded jurisdiction under section 482 in quashing impugned criminal proceedings since High Court was possibly not entitled to look to several documents purported to have been filed by accused in civil proceedings and rely on some orders/observations made thereunder - Held, yes

Facts

The complainant-appellant-company instituted criminal proceedings against the accused-respondent who was a former director of the company alleging that he had committed an offence under section 630 by continuing to utilise the property that was given to him as a director notwithstanding the fact that he had ceased to be a director of the company since 1991. It transpired that the respondent-accused had filed a civil suit in 1992 for a declaration that he continued to be the director of the company but the same had been finally dismissed. The impugned complaint was filed after the dismissal of the said civil suit. The accused-respondent filed an application under section 245 of the Code of Criminal Procedure praying for discharge on the ground that civil suits being pending in different forums it would not be appropriate for the criminal Court to proceed with the impugned complaint. The magistrate, however, came to the conclusion that the pendency of a civil suit would not be a bar either to institution or proceeding with the criminal complaint. After the magistrate rejected the prayer of the accused, the matter was carried to the High Court under section 482. The High Court held that it was a fit case where the inherent power of the High Court should be invoked as otherwise it would be a case of miscarriage of justice. The High Court considered some observation made by Civil Courts to the effect that the property in question had not been delivered to the accused as a director of the company and on that basis quashed the proceedings.

On appeal :

Held

Once the allegation made in the complaint petition made out an offence in which cognizance had been taken, it was not understandable as to how an application could be filed under section 245 of the Code of Criminal Procedure, 1973 (‘Code’). When a complaint is filed, if the magistrate, after examining the complainant on oath and the witnesses produced by him, comes to the conclusion that a prima facie case is made out, then he takes cognizance of the offence and directs issuance of process. If the magistrate thinks that further enquiry is necessary, he can postpone issuance of process and either enquire into the case himself or direct further investigation to be made for the purpose of deciding whether or not there is sufficient ground for proceeding, as provided in section 202 of the Code. If ultimately on consideration of the statements of the complainant and his witnesses and the result of inquiry or investigation (if any) under section 202 of the Code the magistrate is of opinion that there is no sufficient ground for proceeding, he shall dismiss the complaint as provided under section 203 of the Code.

Obviously, in the case in hand, the magistrate did not think it proper to dismiss the complaint on the materials produced by the complainant and took cognizance of the offence and issued process. That apart, merely pendency of a civil proceeding before any Civil Court would not be a ground for quashing of the criminal proceeding or not to frame a charge against an accused, even if the assertions in the complaint petition together with the materials produced by the complainant would constitute an offence.

It has been repeatedly held by the Supreme Court that the power of the High Court under section 482 of the Code should be sparingly and cautiously exercised and only when the court on consideration, comes to a conclusion that otherwise it would be a case of abuse of process of the court or that there will be gross miscarriage of justice. In the instant case, the High Court was possibly not entitled to look to the several documents purported to have been filed by the accused in several civil proceedings, and rely on some orders/observations made thereunder. A bare scrutiny of the impugned judgment would indicate that the High Court had thought as if it was trying the case, and then after weighing the materials it had come to a conclusion one way or the other. This was certainly in excess of the jurisdiction conferred on the High Court under section 482 of the Code. In that view of the matter, the Court had no hesitation to come to the conclusion that the High Court by the impugned order had exceeded its jurisdiction vested under section 482 of the Code in quashing the criminal proceeding. The impugned order of the High Court was therefore set aside and it was directed that the complaint proceeding should proceed in accordance with law.

Case review

Decision of the Karnataka High Court in J.K. Marathukalam v. Maratt Rubber Ltd. [1997] 27 CLA 105, reversed.

Sushil Kumar, Sanjay Jain and R.P. Wadhwani for the Appellant. T.C. Vishwanath Iyer and T.G. Narayana Nair for the Respondent.

Judgment

1. This appeal is directed against the judgment of the Karnataka High Court quashing a criminal proceeding instituted by the complainant-company alleging that the accused-respondent, who was a former director of the company committed an offence under section 630 of the Companies Act, 1956 (‘the Act’) by continuing to utilise the property, that was given to him as a director notwithstanding the fact that he has ceased to be a director of the company since 1991. It transpires from the records of this proceeding that in 1992, the respondent-accused filed a civil suit for a declaration that he continues to be the director of the company Maratt Rubber Ltd. and obtain an interim order therein, but the same suit ultimately was dismissed for default on 2-1-1995. An application for restoration also has been dismissed. There is no material to indicate as to whether the respondent has taken any further steps in that proceeding. The present complaint was filed after the dismissal of the said suit of 1992, and on the basis of the allegations made in the complaint, cognisance had been taken under section 630 of the Act. The accused-respondent
appeared before the learned magistrate and filed an application under section 245 praying for discharge.

2. The gravamen of the allegations in the application for discharge was that civil suits being pending in different forums it would not be appropriate for the criminal court to proceed with the complaint case. The magistrate, however, came to the conclusion that pendency of a civil suit will not be a bar either to institution or proceeding with the criminal complaint.

3. Once the allegation made in the complaint petition makes out an offence in which cognisance has been taken, we fail to understand as to how an application could be filed under section 245 of the Code of Criminal Procedure, 1973 (‘Code’). When a complaint is filed, if the magistrate, after examining the complainant on oath and the witnesses produced by him, comes to the conclusion that a prima facie case is made out, then he takes cognisance of the offence and directs issuance of process. If the magistrate thinks that further enquiry is necessary, he can postpone issuance of process and either enquire into the case himself or direct further investigation to be made for the purpose of deciding whether or not there is sufficient ground for proceeding, as provided in section 202 of the Code. If ultimately on consideration of the statements of the complainant and his witnesses and the result of inquiry or investigation (if any) under section 202 of the Code the magistrate is of opinion that there is no sufficient ground for proceeding, he shall dismiss the complaint as provided under section 203 of the Code. Obviously, in the case in hand, the magistrate did not think it proper to dismiss the complaint on the materials produced by the complainant and took cognisance of the offence and issued process.

4. That apart, we are in agreement with the view of the learned magistrate that mere pendency of a civil proceeding before any civil court will not be a ground for quashing of the criminal proceeding or not to frame a charge against an accused, if the assertions in the complaint petition together with the materials produced by the complainant would constitute an offence. After the magistrate rejected the prayer of the accused, the matter was carried to the High Court by invoking the powers of the High Court under section 482 of the Code. The High Court by a very lengthy judgment went into the civil suits filed by the parties as well as the observations/directions given by the Civil Court in some of those cases and came to the conclusion that this is a fit case where the inherent power of the High Court should be invoked, as otherwise it would be a case of miscarriage of justice. In exercising the power under section 482, the High Court considered some observations made by the Civil Court in a suit for injunction filed by the company-complainant, to the effect that the property in question had not been delivered to the accused as a director of the company and on that basis quashed that proceeding. It has been repeatedly held by this court that the power of the High Court under section 482 of the Code should be sparingly and cautiously exercised and only when the Court on consideration, comes to a conclusion that otherwise it would be a case of abuse of process of the court or that there will be gross miscarriage of justice. In a case instituted on complaint, the High Court was possibly not entitled to look to the several documents purported to have been filed by the accused in several civil proceedings, and rely on some orders/observations made thereunder.

5. A bare scrutiny of the impugned judgment would indicate that the High Court has thought, as if it is trying the case, and then after weighing the materials it has come to a conclusion one way or the other. This is certainly in excess of the jurisdiction conferred on the High Court under section 482. In that view of the matter, we have no hesitation to come to the conclusion that the High Court by the impugned order has exceeded its jurisdiction vested under section 482 in quashing the criminal procee-ding. We, therefore, set aside the impugned order of the High Court and direct that the complaint proceeding should proceed in accordance with law. The appeal is disposed of. Needless to mention, we have not expressed any opinion on the merits of CC No. 1254 of 1995.

[2000] 27 SCL 281 (Cal.)

High Court of Calcutta

Manas Kumar Ghosh

T.T.P. Mahmood

G.R. BHAtTACHARJEE, J.

C.R.R. NO. 2903 OF 1997

JUNE 18, 1999

Section 630 of the Companies Act, 1956 - Offences - Penalty for wrongful withholding of property - One ‘T’, occupying company’s flat as employee, failed to vacate it even after retirement - Company initiated criminal proceedings under section 630 as well as filed a civil suit - Whether pendency of civil suit filed by company for possession of flat and for damages debarred criminal proceedings or necessitated stay of same till disposal of civil suit - Held, no

Facts

‘T’, an employee of the petitioner-company, failed to vacate the company’s flat after retirement, in spite of demand, and a complaint was filed against him under section 630. While the criminal proceedings were in progress, the company also filed a civil suit for recovery of possession of the flat for damages. ‘T’ filed an application before the Trial Court for staying the criminal proceedings on the ground of the pendency of the civil suit. When this was rejected, he filed a revisional application. The Sessions Judge ordered that the judgment in the case under section 630 should not be delivered till the disposal of the civil suit.

On revision petition :

Held

In the present case, ‘T’ was occupying the flat of the company as its employee and it was the case of the company that even after retirement from the service ‘T’ had been illegally retaining the same and was not delivering the possession of the same to the company. Such allegation no doubt prima facie made out a case triable under section 630. The mere fact that they had also remedy for possession and damages in civil law and in pursuance of that they had also filed a civil suit for such relief did not make section 630 inoperative in respect of the said matter nor could that be a good ground for staying the proceeding under section 630. The Supreme Court in Atul Mathur v. Atul Kalra, 1989 SCC (Crl.) 761 has held that merely because the accused had schemingly filed a suit in Civil Court, it could never be said that the Civil Court was in seisin of a bona fide dispute between the parties and as such the Criminal Court should have stayed its hands when the company filed a complaint under section 630 and that if such a view was taken, it would not only lead to miscarriage of justice but also render ineffective the salutary provision of section 630. The principle enunciated in the said Supreme Court decision was also applicable in the instant case. However, in the present case, the civil suit that had been filed was that of the company and the civil suit filed by ‘T’ was only for his retiral benefit.

Therefore, in the facts and circumstances, prima facie appearing in the case, the company could seek relief both under the civil law as well as under section 630 and there was no bar against the simultaneous continuance of both sorts of proceedings.

In the result, the Court below should proceed with the proceedings under section 630, notwithstanding the pendency and continuance of any civil suit in the matter.

Cases referred to

Bal Krishan Das v. P.C. Nayar AIR 1991 SC 1531, Madhavrao v. Sambhajirao AIR 1988 SC 709, Vishanjee Dungarmal Futnani v. Mrs. Krishna Mohanlal Futnani [1990] 69 Comp. Cas. 585 (Bom.), A.C. Bose v. The State [1992-93] 97 CWN and Atul Mathur v. Atul Kalra 1989 SCC (Crl.) 761.

Dilip Kumar Dutta, Amit Bhattacharjee and Arup Ch. Chatterjee for the Petitioner. Samarjit Ghosh for the Respondent.

Order

1. This criminal revision is directed against the order of the learned Additional Sessions Judge, 11th Court, Alipore dated 8-8-1997 passed in Criminal Motion No. 122 of 1997.

2. The present petition has been filed by Sri Manas Kumar Ghosh who is the Assistant Manager of the Shipping Corporation of India. The opposite party No. 1, T.T.P. Mahmood was an employee of the Shipping Corporation of India and under a written agreement the opposite party was allowed to occupy a flat of the said Corporation in his capacity as an employee on condition that he will have to vacate the flat and deliver possession of the same in favour of the Corporation on his retirement or removal or resignation from service. In due course the opposite party No. 1 retired from the service of the Corporation on 30-11-1992, but as in spite of such retirement and in spite of demand of the Corporation, the opposite party No. 1 did not deliver possession of the flat in favour of the Corporation, the Corporation filed a petition of complaint in the year 1993 under section 630 of the Companies Act, 1956. As the criminal proceeding under the said section of the Companies Act was not proceeding with due expedition the matter was brought before this Court and learned Single Judge of this Court, viz. S.K. Tiwari, J. by an order dated 24-9-1996 directed the learned Magistrate of the trial Court to dispose of the case expeditiously, preferably within four months from the date of communication of that order. It is needless to mention that in spite of such order the proceeding in the Court of the learned Magistrate was not concluded. It may be mentioned here that sometime in the year 1995 the company also filed a civil suit against the opposite parties for recovery of the possession of the flat and for damages which is also yet pending. The opposite party No. 1 filed an application before the learned trial Court for staying the criminal proceeding on the ground, as submitted, of the pendency of the civil suit. That application was, however, rejected by the learned trial Court. Being aggrieved by such rejection, the opposite party filed a revisional application before the learned Sessions Judge and the same was disposed of by the learned Additional Sessions Judge by his impugned order dated 8-8-1997 against which the company has preferred the present revisional application. The learned Additional Sessions Judge by his impugned order directed that the learned trial Magistrate would conclude the evidence of the complainant/prosecution but the accused/opposite parties shall not be examined under section 313 of the Code of Criminal Procedure nor shall, judgment in the case under section 630 of the Companies Act, be delivered till the disposal of the concerned title suit being T.S. No. 88 of 1995 pending in that Court of the learned Second Munsif, Alipore.

3. It is contended on behalf of the opposite party No. 1 that since a civil suit for possession and damages is pending over the self-same matter the criminal proceeding should be quashed or be stayed till the disposal of the civil suit. It may incidentally be mentioned here that the opposite party No. 1 also filed a civil suit, as submitted, for his retiral benefits. Be that as it may, the question which is now required to be decided is whether the pendency of the civil suit filed by the company for possession of the flat and for damages debars the criminal proceeding or necessitates stay of the same till the disposal of the civil suit. The learned advocate for the opposite party No. 1 submits that in view of the pendency of the civil suit brought by the company itself, the criminal proceeding itself should either be quashed or stayed till the disposal of the civil suit. In support of his such contention he refers to two decisions of the Supreme Court, namely, Bal Krishan Das v. P.C. Nayar, AIR 1991 SC 1531 and Madhavrao v. Sambhajirao, AIR 1988 SC 709 as well as a single Bench decision of Bombay High Court, namely, Vishanjee Dungarmal Futnani v. Mrs. Krishna Mohanlal Futnani, [1990] 69 Comp. Cas. 585. The two Supreme Court decisions referred to above were considering the question where a criminal charge of breach of trust was involved. Obviously in view of the said Supreme Court decisions, if the facts of the case indicated that the matter is purely of civil nature then a criminal proceeding over the self-same matter will not be tenable. None of the said two decisions was dealing with a case under section 630. In the present case, the opposite party No. 1 was occupying the flat of the company as its employee and it is the case of the company that even after retirement from the service, the opposite party No. 1 has been illegally retaining the same and is not delivering the possession of the same to the company. Such allegation no doubt prima facie makes out a case triable under section 630. The Bombay High Court decision referred to by the learned advocate for the opposite party No. 1 no doubt deals with a case which was brought not only under section 630 but also under sections 120B/406 and 428 of the Indian Penal Code. But in that case the dispute was not between the Company and its employee. It was a dispute between two brothers. The perspective there was totally different from what it is obtaining in the present case where the employer-employee relationship between the parties at all material time is not in dispute. Prima facie the company has a cause of action against the opposite party No. 1 under section 630. The mere fact that they have also a remedy for possession and damages in civil law and in pursuance of that they have also filed a civil suit for such relief does not make section 630 inoperative in respect of the said matter nor can that be a good ground for staying the proceeding under section 630. In support of his submission in this respect the learned advocate for the petitioner Company has referred to a decision of this Court in A.C. Bose v. The State [1992-93] 97 CWN 1 and also the Supreme Court decision in Atul Mathur v. Atul Kalra, 1989 SCC (Crl.) 761. It has been held in the said Supreme Court decision that merely because the accused had schemingly filed a suit in Civil Court it can never be said that the Civil Court was in seisin of a bona fide dispute between the parties and as such the Criminal Court should have stayed its hands when the company filed a complaint under section 630 and that if such a view is taken it would not only lead to miscarriage of justice but also render ineffective the salutary provision of section 630. The principle enunciated in the said Supreme Court decision is also applicable in the present case. However, it is to be mentioned here that in the present case the civil suit that has been filed is that of the company and that the civil suit filed by the opposite party No. 1 is only for his retiral benefit as submitted.

4. Having regard to the facts and circumstances, I have, therefore, no manner of doubt that in the facts and circumstances prima facie appearing in the case the company can seek relief both under the Civil law as well as under section 630 and there is no bar against the simultaneous continuance of both sorts of proceedings. In the result I direct that the learned Court below will proceed with the proceeding under section 630 and conclude the same in accordance with law as early as possible, desirably within a period of four months from the date of communication of this order notwithstanding the pendency and continuance of any civil suit in the matter. The impugned order of the learned Additional Sessions Judge stands set aside and the present revisional application stands allowed.

5. As submitted, this order be communicated to the learned Court below through special messenger at the cost of the petitioner and the cost is to be deposited in course of next week.

Supreme Court

COMPANIES ACT

[1997] 13 SCL 38 (SC)

SUPREME COURT OF INDIA

V.M. Shah

State of Maharashtra

K. RAMASWAMY AND B.L. HANSARIA, JJ.

CRIMINAL APPEAL NO. 1011 OF 1995

[ARISING OUT OF SLP CRIMINAL NO. 1750 OF 1995]

AUGUST 25. 1995

Section 630 of the Companies Act, 1956 - Wrongful withholding of company property - During pendency of criminal prosecution against an employee, company filed civil suit for eviction - Criminal court found offence proved and directed restitution of property and High Court upheld order -Subsequently civil court held that appellant had not come into possession through company, but had independent tenancy rights from principal landlord and, therefore, refused eviction - Whether notwithstanding fact that appeal against civil court's decree was pending, criminal court's finding stood superseded by civil court's finding, and therefore, it could not be said that appellant had been in wrongful possession of property entailing his conviction and punishment under section 630 - Held, yes

FACTS

The respondent-company initiated proceedings against the appellant under section 408 of the Indian Penal Code and section 630 for the continued wrongful occupation of the appellant in flat allegedly belonging to the company. During pendency of the case the company filed civil suit for eviction. The Magistrate decided the case in respondent's favour and ordered restitution of the flat to the company. On appeal, Session Judge partly allowed it by altering the sentence while confirming conviction. The High Court confirmed the same. Subsequently, the civil court after full-dress trial recorded the finding that the appellant had not come into possession through the company but had independent tenancy rights from the principal landlord and, therefore, the eviction decree was negatived. Appeal against the civil court's decree was pending. The question was whether the conviction under section 630 was sustainable.

HELD

In M.S. Shariff v. State of Madras AIR 1954 SC 397, the Supreme Court held that as between the civil court and the criminal proceedings, the criminal matters should be given precedence. No hard and fast rule can be laid down, but the possibility of conflicting decisions in the civil and criminal courts is not a relevant consideration. Law envisages such an eventuality when it expressly refrains from making the decision of one court binding on the other or even relevant except for certain limited purposes, such as sentence or damages. The only relevant consideration is the likelihood of embarrassment. Another relevant factor to be noted is that a civil suit often drags on for years and it is undesirable that a criminal prosecution should await till everybody concerned has forgotten all about the crime. Public interest demands that criminal justice should be swift and it should ensure that the guilty is punished while the events are still fresh in public mind and that the innocent should be absolved as early as is consistent with a fair and impartial trial. Another reason is that it is undesirable to let things slide till memories have grown too dim to trust. This, however, is not a hard and fast rule. Special considerations obtaining in any particular case may make some other course more expedient and just. Therefore, each case has to be considered on its own facts.

In the instant case, it could be seen that the civil court after full-dress trial recorded the finding that the appellant had not come into possession through the company but had independent tenancy rights from the principal landlord and, therefore, the decree for eviction was negatived. Until that finding was duly considered by the appellate court after weighing the evidence afresh, and if it so warranted, reversed, the findings bound the parties. The findings, recorded by the criminal court, stood superseded by the findings recorded by the civil court. Thereby, the findings of the civil court got precedence over the findings recorded by the trial court, in particular in summary trial for offences like section 630. The mere pendency of the appeal does not have the effect of suspending the operation of the decree of the trial court and neither the finding of the civil court gets precedence nor the decree becomes inoperative.

In these circumstances it could not be held that the appellant had been in wrongful possession of the property entailing his conviction and punishment under section 630 and requiring handing over of the possession of the flat. The appeal was, accordingly allowed.

CASES REFERRED TO

Baldev Krishna Sahi v. Shipping Corpn. of India Ltd AIR 1987 SC 2245, Atul Mathur v. Atul Kalra [1989] 3 Comp. LJ 127 (SC), Gokak Patel Volkart Ltd. v. D.G. Hirematu [1991] 1 Comp. LJ 235 (SC) and M.S. Shariff v. State of Madras AIR 1954 SC 397.

Santosh Hegde, P.K. Dey, Ms. Rani Jethmalani and A.A. Khan for the Appellant. V.P. Vashi and K.J. John for the Respondent.

ORDER

Ramaswamy, J. - Leave granted.

2. This appeal by special leave arises from the judgment and order dated 28-4-1995, by the Bombay High Court in Criminal Application No. 1222 of 1995. The appellant had joined the services of Rallis India Ltd. on 10-3-1965. He had occupied a residential flat at Morena No. 11, M.C. Dhanuka Road, Bombay. He resigned on 15-7-1986. The Rallis India Ltd., the second respondent, initiated proceedings in January 1987, against the appellant under section 408 of the Indian Penal Code and section 630 of the Companies Act, 1956 ('the Act') for the continued occupation of the appellant in the said flat. The Magistrate, by his order dated 12-10-1994, found the appellant guilty of offence under section 630 of the Companies Act and directed restitution of the flat. On appeal, the Session Judge partly allowed it by his judgment dated 20-3-1995, altering the sentence while confirming the conviction. The High Court confirmed the same by the impugned order.

3. The primary question in this case is whether the conviction under section 630 of the Companies Act (is) sustainable ? We have heard the counsel on both sides. Pending criminal proceedings, the company laid L.E. & C. Suit No. 104/126 of 1989 in small causes court, Bombay, for eviction of the appellant. The case set out in the plaint and evidence adduced in proof of the issues framed therein was that company had tenancy rights in the flat. Consequent upon joining the service, the appellant was inducted into possession. On his resignation and acceptance thereof, he ceased to be an employee of the company. Consequently, the appellant is enjoined to deliver possession of the premises to the company, but he failed to do so.

4. The case set up by the appellant and evidence adduced in proof thereof was that there is no jural relationship between the appellant and the company. He is not in occupation of the premises in his capacity as an employee of the company. He is a tenant under Mr. Badami and others on a monthly payment of rent to his landlord. The company had surrendered the tenancy rights in the flat to the owners due to dilapidation of the building, etc. Thereafter, the appellant occupied the flat and was in possession thereof as a direct tenant with the landlords.

5. The trial court after considering the entire evidence recorded the findings by his judgment and decree dated 9-6-1995, holding that the company failed to prove that they are the tenant in respect of the suit premises. They had not given the premises to the appellant under (any) leave and licence agreement, as pleaded by them in the plaint. The company failed to prove that the appellant is a licensee of the suit premises. It also failed to prove that the premises were given to the appellant in lieu of his services. On the other hand, the appellant proved that he is a monthly tenant of the premises with the landlords, Badami, etc. Accordingly, the suit was dismissed. We are informed that an appeal has been filed before the bench of small causes court and it is pending.

6. Shri Santosh Hegde, the learned senior counsel for the appellant, contended that whatever may be the findings recorded by the criminal court and affirmed by the High Court on the liability of the appellant to deliver possession to the company by operation of Section 630(1), they are no longer tenable in view of the findings recorded by the civil court. Therefore, the orders passed under section 630(1) is illegal and unsustainable. Shri Maisty, the learned counsel for the company, contended that the findings of the small causes court are contrary to the evidence and clearly unsustainable. In view of the concurrent findings recorded by the criminal courts for offence under section 630(1), the order passed thereunder does not become illegal. Therefore, the appellant is liable to be rejected and needs no interference under article 136 of the Constitution.

7. In Baldev Krishna Sahi v. Shipping Corporation of India Ltd. AIR 1987 SC 2245, this Court considered the scope of sub-section (1) of section 630 and held that an officer or an employee of a company who obtains possession of any property of the company during the course of his employment, to which he is not entitled, but for employment, if he does not deliver possession of such property to the company, after termination of his property (service ?), he would be in wrongful possession of such property. Therefore, the existence of the relationship of employer and employee is a condition precedent of an employee. If the company having any property of the company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles of company and authorised by the Act, he will be liable for the punishment under section 630.

8. In Atul Mathur v. Atul Kalra [1989] 3 Comp. LJ 127 (SC), another Bench of this Court, held that because of mere pendency of a suit in a civil court, it cannot be said that the civil court is in seisin of a bona fide dispute between the parties, and as such, the criminal court should have stayed its hands when the company filed a complaint under section 630. Such a view would lead to miscarriage of justice and render section 630 ineffective. Dispute regarding claim of property between company and its employee depends upon facts in each case. Merely because company's claims to possession was refuted by the employee, it would not amount to bona fide dispute. The criminal court, therefore, would be entitled and competent to proceed with the enquiry on the complaint filed on behalf of the company and decide the matter according to law.

9. Gokak Patel Volkart Ltd. v. D.G. Hiremath [1991] 1 Comp. LJ 235 (SC), is also relied on by Shri Maisty. Therein, the question was whether the failure to deliver possession and the wrongful withholding of the property would be a continuing offence ? This Court held that failure to deliver possession or wrongful withholding (of) the property would be a continuing offence and period of limitation must be counted accordingly.

10. M.S. Shariff v. State of Madras AIR 1954 SC 397, is also pressed into service. Therein, this Court held that as between the civil (proceedings) court and the criminal proceedings, the criminal matters should be given precedence. No hard and fast rule can be laid down, but the possibility of conflicting decisions in the civil and criminal courts is not a relevant consideration. Law envisages such an eventuality when it expressly refrains from making the decision of one court binding on the other or even relevant except for certain limited purposes, such as sentence or damages. The only relevant consideration is the likelihood of embarrass-ment. Another relevant factor to be noted is that a civil suit often drags on for years and it is undesirable that a criminal prosecution should await till everybody concerned has forgotten all about the crime. Public interest demands that criminal justice should be swift and it should ensure that the guilty is punished while the events are still fresh in public mind and that the innocent should be absolved as early as is consistent with a fair and impartial trial. Another reason is that it is undesirable to let things slide till memories have grown too dim to trust. This, however, is not a hard and fast rule. Special considerations obtaining in any particular case may make some other course more expedient and just. Therefore, each case has to be considered on its own facts.

11. As seen that the civil court after full dress trial recorded the finding that the appellant had not come into possession through the company, but had independent tenancy rights from the principal landlord and, therefore, the decree for eviction was negatived. Until that finding is duly considered by the appellate court after weighing the evidence afresh, and if it so warranted, reversed, the findings bind the parties. The findings, recorded by the criminal court, stand superseded by the findings recorded by the civil court. Thereby, the findings of the civil court get precedence over the findings recorded by the trial court, in particular, in summary trial for offences like section 630. The mere pendency of the appeal does not have the effect of suspending the operation of the decree of the trial court and neither the finding of the civil court gets (precedence) nor the decree becomes inoperative.

12. In these circumstances, we are clearly of the opinion that it cannot be held that the appellant has been in wrongful possession of the property entailing his conviction and punishment under section 630 and requiring handing over of the possession of the flat. The appeal is accordingly allowed. No costs.

madras high court

companies act

[2004] 55 scl 667 (Mad.)

High Court of Madras

Satwant Singh

Bharati Mobinet Ltd.

MALAI SUBRAMANIAN, J.

CR. O.P. NO. 26932 OF 2002 AND CRL. MP. NOS. 11129 AND 12298 OF 2002

JANUARY 24, 2003

Section 630 of the Companies Act, 1956 - Penalty - For wrongful withholding of property - Petitioner, a former director of company, was in possession of assets of said company - After his termination, he opted to buy certain assets, but failed to fulfil his commitment - Therefore, company sent him a debit note calling upon him to pay value of assets held by him but there was no reply - Thereafter a complaint was filed before trial court - Petitioner filed petition for quashing complaint contending that when debit note had been created, it could not be said that he was withholding assets of company and claiming that company owed petitioner various sums of money for more than amount claimed in debit note and hence, he had adjusted amounts claimed in debit note - Whether lawful possession turned to be unlawful for non-payment and, therefore, merely because debit note had been created for value of assets, it could not be said that petitioner was holding assets of company lawfully - Held, yes - Whether question whether company owed petitioner, was matter of fact which could be appreciated only when evidence is let in as to dues of petitioner from company - Held, yes - Whether, therefore, proceedings under section 630, could not be quashed at this stage as sought for by petitioner - Held, yes

Case referred to

G. Ramaswamy v. Coimbatore Pioneer Mills [2002] 2 Crl. LW 715 (para 5).

R. Yasho Vardhan for the Petitioner. V. Gopinath and H. Karthik Seshadri for the Respondent.

Order

1. The petitioner is the accused in EOCC 577/2002 on the file of Additional Chief Metropolitan Magistrate pending against him.

2. The petitioner was one of the directors of the complainant/company. He was also functioning as Chief Executive Officer. The assets listed in the complaint were given to him for use. Pursuant to the appointment of Mr. P.H. Rao, as managing director of the company on 13-8-1999, the appointment of the petitioner stood terminated. When the company requested the accused to return the assets, he opted to buy some of them, but did not keep his commitments. Therefore, the company sent a letter dated 24-3-2000 with a debit note dated 21-3-2000 to the petitioner calling upon him to pay the value of the assets held by him, the value of some of the assets being Rs. 8,00,450. There was no reply. On 31-3-2000, the company forwarded a debit note to him, but the petitioner did not come forward to pay for the assets. Therefore, a legal notice was sent on 21-5-2002, but there was no reply. Under these circumstances, the complaint was lodged against the petitioner.

3. The contention of the petitioner is that inasmuch as debit note has been created, it cannot be said that the petitioner is withholding the assets of the company and the assets have become his own. The petitioner also disputes the value of the assets and claim that the company owes the petitioner various sums of money for more than the amount claimed in the debit note, and hence he adjusted the amounts claimed in the debit note and requested the company to pay the balance to him. This is purely a matter of fact that can be appreciated only when evidence is let in as to the dues to the petitioner from the company. But insofar as the contention of the learned counsel appearing for the petitioner that inasmuch as debit note has been created for the value of the assets, it cannot be said that the petitioner is wrongfully withholding the assets of the company, I am not inclined to accept [this] since lawful possession turns to be unlawful for non-payment.

4. The learned senior counsel, Mr. V. Gopinath, appearing for the respondent/complaint submits that so long as the value of the assets is not paid, the petitioner can be deemed to have been withholding wrongfully the assets of the company.

5. The learned counsel for the petitioner relying on the decision of this court in G. Ramaswamy v. Coimbatore Pineer Mills [2002] 2 Crl. LW 715 submits that this is purely a question of civil dispute between the parties and section 630 of the Companies Act is not attracted. This court under section 630 is of a civil nature : resorting to section 630 would be a misconceived one. On the facts of the particular case, this court held that bona fides were found wanting and when the dispute between the parties partakes the character of a civil nature in which complicated questions of law and facts arise, there cannot be any doubt that the matter should definitely go out of the jurisdiction of the Criminal Court and the party should be allowed to protect their rights in the civil forum. There seems to be an agreement between the managing director of the company and the petitioner in that case. Moreover, the parties to the said agreement have performed some of the reciprocal obligations imposed upon them under such agreement. Only in that context, this court has held that the matter is purely civil in nature and allowed the revision as the revision petitioner suffered an order under section 630 of the Companies Act as confirmed by the Appellate Court also. But in this case, there is absolutely no evidence let in by either side to appreciate any dispute bona fide between the parties. At the threshold of the case, the petitioner seeks to quash the proceedings. On the face of the complaint, I am unable to hold at this stage that it is purely a civil matter. It is for the Trial Court to decide after recording evidence as to whether the ruling rendered by this Court in G. Ramaswamy’s case (supra) can be applied to the facts of the present case also. But, at this stage, it is too premature to quash the proceedings in its threshold. Since the offence is one of technical in nature, the Trial Court may show leniency in permitting the petitioner to be represented by this pleader.

6. Therefore, petition stands dismissed. Consequently, the connected Crl. M.Ps. are closed.

[2001] 104 COMP. CAS. 718 (CAL.)

HIGH COURT OF CALCUTTA

Tata Tea Ltd.

Fazlur Rahman

DEBIPRASAD SENGUPTA J.

C.R.R. NO. 259 OF 2000.

DECEMBER 5, 2000

Pradip Ghosh and A. Nag for the Petitioner.

JUDGMENT

Debiprasad Sengupta J. —In spite of notice nobody appears on behalf of the opposite party.

This revisional application is directed against an order dated December 20, 1999, passed by the learned Chief Judicial Magistrate, South 24 Parganas, Alipore, in Case No. C-502 of 1999 thereby rejecting the application of the present petitioner praying for a direction upon the accused to vacate the bungalow which is the property of the petitioner and which the accused opposite party is illegally and wrongfully withholding after the termination of service.

The present petitioner filed a petition of complaint against the accused opposite party under section 630 of the Companies Act, 1956, in the court of the learned Chief Judicial Magistrate, South 24 Parganas, Alipore, on February 20, 1999. The allegation made in the petition of complaint is that Tata Tea Ltd. is a public limited company within the meaning of the Companies Act. The company appointed the accused opposite party as an assistant manager and provided him with free housing accommodation while he was posted as assistant manager in Sagmoo Tea Estate. Police Station Kaliabor, Nawgaon, Assam. The company, vide its letter dated June 12, 1998, revoked with effect from June 15, 1998, the contract of employment of the accused opposite party and terminated his service by the said: letter. It was alleged that in spite of the receipt of the said letter the accused failed and neglected and/or refused to hand over the vacant possession of the said bungalow to the company. Since the termination of service of the accused by the complainant-company with effect from June 15, 1998, there has been no relationship of employer and employee between the complainant-company and the accused. The accused had no legal right to use or occupy the said bungalow along with furniture and fixtures. As such the accused is in wrongful possession of the said bungalow. It was alleged that in the aforesaid manner the accused has committed an offence punishable under section 630 of the Companies Act, 1956, for which he should be tried and punished according to law.

On receipt of the petition of complaint the learned magistrate took cognizance of the offence and issued process against the accused opposite party. The opposite party appeared through his learned advocate and he was allowed to be represented by his learned advocate under section 205 of the Code of Criminal Procedure.

On July 12, 1999, the complainant/petitioner filed an application in the court of the learned Chief Judicial Magistrate praying for a direction upon the accused opposite party to vacate the said bungalow and to deliver the possession of the same to the petitioner-company. In the said application it was stated that the accused opposite party was wrongfully withholding the possession of the said bungalow and was wilfully and deliberately delaying the matter and the case would prolong for a long time. Such delay is causing extreme difficulties to the complainant-company, which is not able to allot the said bungalow to other officers of the company. It was also stated that the accused opposite party in this way was frustrating the provisions of section 630 of the Companies Act, 1956.

The said application under section 630(2) of the Companies Act was rejected by the learned magistrate and against such order of rejection the petitioner came up before this court in revision.

Mr. Pradip Ghosh, the learned advocate appearing for the petitioner, submits that after termination of service by the complainant-company, vide its letter dated June 12, 1998, the accused opposite party has no right to occupy the said bungalow. As the said bungalow is the property of the complainant company, which the accused has been wrongfully withholding after the termination of his service, the learned magistrate should have allowed the application under section 630(2) of the Companies Act and directed the accused opposite party to vacate the same and to deliver possession of the said bungalow to the complainant-company. Mr. Ghosh points out that the accused opposite party filed a civil suit, being Title Suit No. 54 of L99B, in the court of the learned Civil Judge No. 1. Junior Division, Nawgaon, challenging the termination of his service and praying for a declaration that the order of revocation of his service dated June 12, 1998, was illegal and void. The learned Civil Judge, Kaliabor, Nawgaon, by his order dated August 21. 1999, dismissed the said suit. Against the said order the accused opposite party filed Civil Revision No. 366 of 1999 in the Hon'ble Guahati High Court. The Hon'ble High Court at Guahati by an order dated October 13, 1999, issued a rule but refused to stay the said order. Mr. Ghosh also brings to the notice of this court by producing an order of the Guahati High Court that the said civil revision preferred by the accused opposite party was dismissed by the High Court at Guahati by its judgment and order dated February 15, 2000.

The moot question is whether during the pendency of the prosecution concerned the court can invoke section 630(2) of the Companies Act to get a company bungalow vacated and restored to the company.

Mr. Ghosh, the learned advocate of the petitioner, relies on a judgment of this court reported in Metal Box India v. State of West Bengal [1997] (II) C.H.N. 423. In deciding the said case the learned single judge of this court relied upon two judgments of the Hon'ble apex court, one is reported in Smt. Abhilash Vinodkumar Jain v. Cox and Kings (India) Ltd. [1995] 84 Comp Cas 1 (Bom) and Baldev Krishna Sahi v. Shipping Corporation of (India) Ltd. [19881 63 Comp Cas 1. In the said judgment it was held by this court as follows:

"In Baldev Krishna Sahi's case [1988] 63 Comp Cas 1 (SC) also the officer of the company was being prosecuted as an accused and the outer limit fixed by the apex court for disposal of the criminal case pending before the magistrate was longer than that which was fixed for the officer accused to vacate the company's property. The pendency of the criminal case did not deter the apex court to give direction for delivery of the property even before the trial was directed to be concluded. The only difference between Baldev Krishna Sahi's case [1988] 63 Comp Cas 1 (SC) and the present case is that here it is the company who has approached this court under section 482 of the Criminal Procedure Code and article 227 of the Constitution for a direction to deliver the property while in Baldcv Krishna Sahi's case [1988] 63 Comp Cas 1 (SC) it was the accused officer of the company who approached the Supreme Court in a special leave petition. In the circumstances, it would be in consonance with the apex court's decision in Baldev Krishna Sahi's case [1988] 63 Comp Cas 1 to pass an order under section 630(2) directing respondent No. 2 to vacate the flat even before the magistrate formally disposes of the criminal case against respondent No. 2.

Indeed, the company's right to retrieve the property is quite explicit here particularly when respondent No. 2 has not yet come forward with a definite stand to resist the company's claim and I really do not find any sufficient reason as to why I am not to rely on this decision of the apex court in Baldev Krishna Sahi's case [1988] 63 Comp Cas 1 and direct respondent No. 2 to deliver back the company's property."

In the present case it appears that the main intention of the accused opposite party is to drag the proceedings for an indefinite period. Repeated prayers for adjournments were made before the learned magistrate and, ultimately, by his order dated February 7, 2000, the learned magistrate directed warrant of arrest to be issued against the opposite party. By the said order the opportunity granted to the accused opposite party under section 205 of the Criminal Procedure Code was also withdrawn. From the subsequent orders dated April 3, 2000, May 2, 2000, May 30, 2000, July 7, 2000, and August 24, 2000, it appears that the warrant of arrest could not be executed against the accused opposite party. The learned magistrate could not proceed any further with the case.

The accused opposite party filed a suit before the Civil Judge, Junior Division, challenging the termination of service and the said suit was dismissed. Against such order of dismissal a revision was preferred in the High Court at Guahati and the said revisional application was also dismissed. In such circumstances, the company's right to retrieve the property is quite explicit. It is in consonance with the view of the apex court to pass an order under section 630(2) of the Companies Act to direct an employee or past employee to vacate the flat or to restore the company's property to the company even before the magistrate trying the case under section 630(1) of the Companies Act formally disposes of the criminal case against such employee.

In view of the discussion made above and relying upon the judgments referred to above, I am of the view that this is a fit and proper case for invoking the inherent power of this court under section 482 of the Criminal Procedure Code to direct the accused opposite party to vacate the bungalow concerned in favour of the petitioner-company under section 630 of the Companies Act. The accused opposite party is hereby given one month's time to vacate the bungalow. The learned Chief Judicial Magistrate, 24 Parganas (South), Alipore, is also directed to proceed with the trial of the criminal case and to dispose of the same with utmost expedition. The present application is accordingly allowed. The impugned order dated December 20, 1999, is hereby set aside.

Let this order be communicated to the learned magistrate forthwith.

[1993] 76 COMP. CAS. 875 (MAD)

HIGH COURT OF MADRAS

T.N.V. Nanjappa Chettiar

Devi Films (P.) Ltd.

PRATAP SINGH J.

CRIMINAL ORIGINAL PETITION NO. 1537 OF 1992.

FEBRUARY 12, 1992

P. Ananthakrishnan Nair for the Petitioner.

JUDGMENT

Pratap Singh J.—The accused in C.C. No. 123 of 1991 on the file of the Additional Chief Metropolitan Magistrate (E.O.I.), Madras, has filed this petition under section 482, Criminal Procedure Code, praying to call for the records in the aforesaid case and to quash the same.

The respondent has filed a private complaint against the petitioner in C.C. No. 123 of 1991 for an offence under section 630 of the Companies Act. The allegations in it are briefly as follows:

The complainant is a private limited company. The accused was one of the directors of the company till January 2, 1984. He was provided with residential accommodation at No. 16, Dr. Nair Road, T, Nagar, Madras, for his occupation and an Ambassador car bearing Registration No. TMU 1085 by virtue of his being one of the directors of the company. He was removed from directorship of the company on January 2, 1984. On his ceasing to be a director of the company, he ought to have delivered possession of the house and car mentioned supra. Despite repeated demands, he had not delivered possession of the same. He had ceased to be an officer of the company from January 2, 1984. He is wrongly withholding the properties of the company and has thereby committed an offence punishable under section 630 of the Companies Act. It is a continuing offence. The offence is being committed till such time as the accused delivered possession of the property belonging to the company. Hence the complaint.

Mr. K.N. Thampi, learned counsel appearing for the petitioner, would submit that the penalty for the offence under section 630 of the Companies Act is only fine which may extend to Rs. 1,000 and, by virtue of section 468(2)(a), Criminal Procedure Code, the period of limitation for such offence is only six months. He would add that as per the complaint, the petitioner was removed from the directorship on January 2, 1984, and after that date, he was not a director of the company and six months had elapsed since January 2, 1984, and hence the complaint is liable to be quashed on the ground of limitation.

In Harkishin Lakhimal Gidwani v. Achyut Kashinath Wagh [1982] 52 Comp Cas 1 (Bom) a single judge of the Bombay High Court had held that clause (b) of section 630 deals with wrongful withholding of possession by both a past and present employee. This view was approved by the Supreme Court in Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1987] 3 Comp LJ 57; [1988] 63 Comp Cas 1. Though the beneficent provision contained in section 630 is penal, it has been purposely enacted by the Legislature with the object of providing a summary procedure for retrieving the property of the company, (a) where an officer or employee of a company wrongfully withholds possession of property of the company, or (b) where, having been placed in possession of any such property during the course of his employment, wrongfully withholds possession of it after the termination of his employment. It is the duty of the court to place a broad and liberal construction on the provision in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy.

So, I am clear that the question of limitation does not arise in this case, since it is a continuing offence so long as withholding continues. No pther ground was urged before me.

In view of the above, the petition does not deserve admission and is dismissed.

[2002] 37 scl 9 (AP)

HIGH COURT OF ANDHRA PRADESH

M. Narasimhulu

State of Andhra Pradesh

S.B. Sinha, CJ.

and V.V.S. Rao, J.

Writ Appeal No. 367 of 2001

April 6, 2001

Section 630 of the Companies Act, 1956, read with sections 406, 420 and 468 of the Indian Penal Code, 1860 - Penalty - For wrongful withholding of property - Whether by reasons of lodging of a first information report, no person’s fundamental right is infringed - Held, yes - Whether a complaint might be quashed only in a case where allegations contained therein, even if given face value and taken to be correct in entirely, make out no case for investigation - Held, yes - Whether where appellants had not only been charged for not returning properties of company but also had been accused of snatching rubber stamps and letter head pad of company forcibly so as to transfer vehicle in their names, their writ for quashing of FIRs was to be dismissed - Held, yes

Facts

The accused-appellants were directors of a company. They used a car which the company provided for official duty but even after resigning from the directorship they refused to return the car. A FIR was filed. The accused appellants filed a writ petition to quash the complaint/FIR which was dismissed.

On appeal :

Held

A bare perusal of the allegations made in the first information report would clearly show that it was not a case where the appellants had only been charged for not returning the properties of the company, but also had been accused of snatching rubber stamps and letter head pad of the company forcibly so as to transfer the vehicle in their names. By reason of lodging of a first information report, no person’s fundamental right is infringed. The court, in exercise of its jurisdiction under article 226 of the Constitution of India, can quash the investigation if it is found to be mala fide. A complaint might be quashed only in a case where the allegations contained therein even if given face value and taken to be correct in entirety, make out no case for investigation.

In view of the aforementioned facts and the pronouncements in G. Kandaram v. Sunder Chikha Amin [2000] 2 ALT 448, Mahavir Prashad Gupta v. State of National Capital Territory of Delhi [2000] 8 SCC 115, there was no merit in the appeal and accordingly it was to be dismissed.

Cases Referred to

G. Kandaram v. Sunder Chikha Amin [2000] 2 ALT 448 (FB) and Mahavir Prashad Gupta v. State of National Capital Territory of Delhi [2000] 8 SCC 115.

S. Ramachandra Rao and L. Ravi Chander for the Appellant. G.V.R. Chowdary for the Respondent.

Judgment

1. This appeal is directed against a judgment and order dated 13-2-2000, passed by a learned single Judge of this court in Writ Petition No. 11417 of 2000 whereby and whereunder the writ petition filed by the appellants herein for quashing a first information report was dismissed.

2. The first appellant was a director of a company incorporated and registered under the Companies Act, 1956 (‘the Act’). The second appellant who is the wife of the first appellant was also a director of the said company. The appellants were using a car allegedly belonging to the second respondent herein. They resigned from the directorship but refused to return the car in spite of repeated demands. A complaint under sections 406, 420 and 468 of the Indian Penal Code, 1860, was filed.

3. The contention of the appellants is that having regard to the fact that at best they have committed an offence under section 630 of the Act, the impugned first information report should be quashed. Strong reliance in this connection has been placed on G. Kandaram v. Sunder Chikha Amin [2000] 2 ALT 448 (FB) and Mahavir Prashad Gupta v. State of National Capital Territory of Delhi [2000] 8 SCC 115.

4. The first information report against the petitioner contains the following allegation :

“The facts of the case are that the accused persons noted in Col. No. 7 resigned from the Board of directors of Oban Finance and Investment Ltd. During the time of his directorship, the company has provided vehicle for official duty No. AP 12A 1116 Premier; but after resignation, the accused has not handed over the vehicle even after nine months till today; he is utilising the company vehicle for his personal use unauthorisedly when he is not the director of the company. He snatched rubber stamps and letter head pad of the company forcibly which he utilised for transfer of the company vehicle to his personal name through R.T.A. Office Karkhana which is an unlawful act.”

5. Sections 630 and 634 of the Act read thus :

“630. Penalty for wrongful withholding of property.—(1) If any officer or employee of a company :—

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the article and authorised by this Act,

he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

634. Enforcement of orders of courts.—Any order made by a court under this Act may be enforced in the same manner as a decree made by the court in a suit pending therein.”

6. A bare perusal of the allegations made in the first information report would clearly show that it is not a case where the appellants have only been charged for not returning the properties of the company, but also have been accused of snatching rubber stamps and letter head pad of the company forcibly so as to transfer the vehicle in their names.

7. By reason of lodging of a first information report, no person’s fundamental right is infringed. The court, in exercise of its jurisdiction under article 226 of the Constitution of India, can quash the investigation if it is found to be mala fide.

8. A complaint may be quashed only in a case where the allegations contained therein even if given face value and taken to be correct in entirety, make out no case for investigation.

9. The point at issue is no longer res integra in view of a Full Bench decision of this court in G. Kandaram’s case (supra) wherein it has been held:

“Unless the investigation is completed, material evidence is gathered by examining different persons and authorities with regard to the collection of money, return of visas and the cheques issued by the petitioner and his brother, it cannot be said that the FIRs are without any basis and the petitioner has to be discharged for the accusation under sections 420 and 406 of the Indian Penal Code. The complaint cannot be treated as a charge-sheet. Based on the complaints, FIRs were issued. Unless further investigation is made and chargesheet submitted, it is difficult to come to a definite conclusion. The power under Article 226 of the Constitution of India ought not to be invoked in such a case. On the facts and circumstances of the case, the learned Single Judge was not justified in holding that it is a fit case under Article 226 of the Constitution of India for quashing the FIRs.

13. Unless the investigation is completed, it cannot be presumed that the complaint does not make out offences under sections 420 and 406 of the Indian Penal Code or that the alleged offence falls under section 405 of the Indian Penal Code only and that prosecution is barred by limitation under sections 468 and 469 of the Criminal Procedure Code. It would be wholly improper to exercise jurisdiction under Article 226 even before the investigation is completed and decide these partly legal and partly factual questions.”

10. In Mahavir Prashad Gupta’s case (supra), the Apex Court, upon taking into consideration a large number of decisions, observed :

“Mr. Chidambaram also relied on the case of Hridaya Ranjan Prasad Verma v. State of Bihar [2000] 4 SCC 168: [2000] SCC (Crl.) 786. In this case, there was a transaction of sale of land by the appellant to respondent 2.

The cheques had been issued by respondent 2 in favour of the appellant. Those cheques were dishonoured for insufficiency of funds. The appellant had lodged complaint/FIR under sections 406, 420 and 120B of the Indian Penal Code. As a counter-blast, respondent 2 filed a complaint alleging offences under sections 418, 420, 423, 469, 504 and 120B of the Indian Penal Code. This court held as follows (SCC pages 174-175 and 177, paras 8, 9 and 16) :

“8. In the case of State of Haryana v. Bhajan Lal [1992] Suppl 1 SCC 335 : [1992] SCC (Crl.) 426—this court in the backdrop of interpretation of various relevant provisions of the Code of Criminal Procedure under Chapter XIV and of the principles of law enunciated by this court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under section 482 of the Criminal Procedure Code, gave the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of the court or otherwise to secure the ends of justice, making it clear that it may not be possible to lay down any precise, clearly defined and sufficiently channellised and inflexible guidelines or rigid formulae and to give an exhaustive list to myriad kinds of cases wherein such power should be exercised :

‘102(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose cognizable offence, justifying an investigation by police officers under section 156(1) of the Code except under an order of a magistrate within the purview of section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a magistrate as contemplated under section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted), to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

(9) In the decision, this court added a note of caution to the effect that the power of quashing criminal proceedings should be exercised ‘very sparingly and with circumspection and that too in the rarest of rare cases’.”

11. In view of the aforementioned authoritative pronouncements, it must be held that there is no merit in this appeal which is accordingly dismissed.

12. No costs.

Calcutta High Court

Companies Act

[2004] 50 SCL 247 (Cal.)

High Court of Calcutta

Eveready Industries India Ltd.

Birendra Nath Bhattacharjee

Malay Kumar Basu, J.

C.R.A. No. 39 of 1998

July 7, 2002

Section 630 of the Companies Act, 1956, read with sections 255(1) and 313 of the Code of Criminal Procedure, 1973 - Offences and Prosecution - Penalty for wrongful withholding of property - Respondent, an employee of appellant-company, retained company’s rented flat after his retirement against terms and conditions - Plea of respondent was that owners of disputed flat permitted him to occupy flat and, therefore, complainant had no right to bring such a proceeding against him - However his plea was falsified by evidence of landlady - On complaint, trial court convicted respondent under section 630(1)(b) - Whether once conditions of section 630(1)(b) had been fulfilled and there was no evidence in support of plea taken by respondent while being examined under section 313 of Code, conviction order passed by trial court called for no interference - Held, yes

Facts

The respondent was an employee of the appellant-company and was provided a flat during his service, which was taken on rent by the company. Under the terms and conditions, he was to vacate it in favour of the company on his superannuation. However, after retirement, he did not vacate the same. Therefore, the appellant lodged a complaint before the trial court under section 630(1)(b). The trial court found him guilty under section 630(1)(b) and convicted him therein. The respondent preferred appeal before the Sessions Judge, who allowed the said criminal appeal and set aside the order of the trial court and acquitted the respondent under section 255(1) of the Code.

On further appeal :

Held

It was abundantly proved by the prosecution that the accused-respondent had no legal right whatsoever to continue to be in occupation in the disputed flat which was a tenanted-quarter of the company. The accused had taken a plea in his statement under section 313 of the Code that the owners of the disputed flat permitted him to occupy the flat in question and he was, thus, in permissive possession of the same and the company though an erstwhile tenant in respect of the same was no longer so and, therefore, it had no right to bring such a proceeding against him. But the instant case of the accused had been falsified by the evidence of the landlady. She had stated that she had been receiving rent from the company through account-payee cheques every month regularly by registered post and there was no relationship of landlord and tenant between herself and the accused-respondent. The defence had miserably failed to adduce the slightest evidence in support of such a plea as taken by the accused while being examined under section 313 of the Code. [Para 9]

Therefore, in spite of his retirement from the service under the company, he had been overstaying unlawfully paying no heed to the repeated reminders given by the company to vacate the disputed flat in favour of the company and thereby he had rendered himself liable under section 630(1)(b). It was not understandable how the Additional Sessions Judge, being the Appellate Court, drew such conclusions and arrived at self-contradictory finding regarding the question as to whether the ingredients of the provisions of section 630(1)(b) had been fulfilled from the evidence. The decision of the trial court was perfectly in order and there was no reason why such findings of the trial court should not be accepted. [Para 10]

Debabrata Roychowdhury, Jayanta Dutta, Pabitra Sengupta and Ashoke Biswas for the Appellant. R.K. Ghosal for the Respondent.

Order

1. This criminal appeal is directed against the judgment and order dated 24-11-1997 passed by the learned Additional Sessions Judge, 11th Court, Alipore in Criminal Appeal No. 19 of 1997 of that Court under which he acquitted the accused appellant by reversing the judgment and order dated 18-3-1997 passed by the learned Chief Judicial Magistrate convicting the accused under section 630(1)(b) of the Companies Act.

2. The relevant facts leading to the filing of this appeal may be summarised as follows :—

M/s. Union Carbide India Ltd. under which the respondent-accused, Birendra Nath Bhattacharjee, was employed as an officer brought a criminal case against the said respondent-accused before the Court of the learned Chief Judicial Magistrate, 24-Parganas (South) Alipore on the allegations that the respondent was provided with residential accommodation in the first floor-flat of premises No. 766/1. Block ‘P’, New Alipore, Calcutta in respect of which the company-complainant was a tenant on payment of monthly rent on the fulfilment of different terms and conditions as stipulated under a written agreement. The accused-respondent was allowed to occupy this flat as an officer of the company on the condition that he would restore the vacant possession of that flat in favour of the company immediately on his retirement. He retired on and from 1-3-1991, but he did not deliver the vacant possession of the flat in favour of the company, when the company was compelled to send a letter dated 25-3-1991 to him asking him to vacate the said flat in favour of the company at once. But the accused in violation of the terms and conditions of his service and also the statutory provisions of law continued to occupy the flat raising different wrongful pleas at different times. Under such circumstances, the company became constrained to lodge this complaint against him before the Court of the learned C.J.M., Alipore under section 630(1)(b) of the Companies Act.

3. The Court took cognisance of the offence and issued summons against the accused whereupon he appeared before the Court. When the Court examined him under section 251 of the Cr.P.C. stating the substance of the accusation against him, he pleaded not guilty and claimed trial. Thereafter, the trial commenced and the complainant-company examined its witnesses numbering six. They were cross-examined by the defence, but the defence examined only one witness, namely, P.W. 1. Besides oral evidence, the company also adduced documentary evidences. Sixteen documents were exhibited on behalf of the prosecution. The defence, however, produced two documents marked as Exts. ‘A’ and ‘B’. Thereafter, the accused who was examined under section 313 of the Cr.P.C. After considering the materials on record and hearing the arguments of the learned advocates of both sides, the learned C.J.M. passed his judgment whereunder he found the accused guilty under section 630(1)(b) of the Companies Act and convicted him therein and sentenced him to pay fine of Rs. 2000. The Court also directed the convict to deliver up the flat in dispute in favour of the company within three months from the date of judgment, i.e., 18-3-1997.

4. Being aggrieved thereby, the convict-respondent preferred an appeal against that judgment and order of conviction and sentence before the Court of the Sessions, South 24-Parganas, Alipore and the appeal was transferred to the Court of the learned Additional Sessions Judge after hearing the arguments of both the sides passed the impugned judgment dated 24-11-1997 allowing the said criminal appeal and setting aside the judgment and order of the learned C.J.M. under challenge and finding the appellant not guilty of the charge and acquitting him under section 255(1) of the Cr.P.C.

5. Being aggrieved by and dissatisfied with this judgment and order of the learned Additional Sessions Judge, the company-complainant has preferred the present appeal challenging the impugned judgment as erroneous, illegal, unjustified and liable to be set aside.

6. During the hearing of this appeal before this Court the respondent-accused did not appear in spite of repeated calls either personally or through his learned Counsel. On the other hand, Mr. Biplab Mitra, who was the learned advocate for him, appeared before this Court and submitted that the respondent having taken away the brief from him, he no longer was empowered to make any submission on his behalf. Under such circumstances, the matter was heard in the absence of the accused-respondent.

7. Mr. Roychowdhury, learned advocate appearing on behalf of the appellant company, at the very outset, has drawn my attention to the cryptic manner in which the judgment has been passed by the learned court below, namely, the Additional Sessions Judge, Alipore. In this very brief judgment the learned Additional Sessions Judge has simultaneously expressed diametrically opposite observations. At the first instance, he begins with the assertion that among the witnesses, P.W. 4, Smt. Jaya Mitra, is the landlady in respect of the disputed flat. But few lines after, he observes that in this case the landlady having not been examined by the complainant, the company has failed to show that its tenancy under that landlady in respect of the disputed flat is still continuing. It is needless to mention that the said landlady, as per his own statement at page 4 of the judgment, has been examined by the complainant and as a matter of fact, the deposition of that landlady (P.W. 4) is very much there in the lower Court records and in her deposition, she appears to have stated in unambiguous language that the tenancy of the company is still continuing on payment of rent every month through cheques and in the face of such clear-cut evidence the learned Additional Sessions Judge, for reasons best known to him, comes to a finding like this. It is not understood how and under what circumstances he has made his comments in the judgment that there is scope for doubt as to why there was a move to go on with a draft agreement as revealed in the letter, namely, Ext. ‘A’. Such unwarranted observation on the part of the learned Additional Sessions Judge, who appears to be one of the seniormost and veteran judicial officers, is unthinkable and leaves this Court surprised.

8. Under the provisions of section 630(1)(b) of the Companies Act, if any officer of a company having any property belonging to the company in his possession, wrongfully withholds it, he shall on the complaint of the company be punishable with fine which may extend to Rs. 1,000 and further under sub-section (2) of the said Act is provided that the Court trying the offence may order such officer or employee to deliver up within a time to be fixed by the Court, any such property wrongfully withheld, in default, to suffer imprisonment for a term which may extend to two years.

9. As the oral and documentary evidence shows, the accused was provided with the disputed flat as a residential accommodation in his official capacity and under the terms he was to vacate it in favour of the company on his superannuation. It is also admitted that the flat was given to him by the company on such terms and conditions vide his answer to question No. 1 under section 313 of the Cr.P.C. and also the letter of his advocate dated 13-5-1991 vide Ext. 4 written to the company. In this letter, it has been admitted in clear terms that the company used to pay rent to the landlady on behalf of the accused-respondent and also that the company took tenancy in respect of this flat for this employee and used to pay rent Rs. 625 per month to the landlady. Ext. 7 is another letter from the respondent-accused to the company which shows that he would retire from services under the company on and from 1-3-1991 and he was eligible for pension and accordingly, he was submitting his option as required under the rules. Ext. 8 is a letter dated 20-3-1992 on the question of his getting arrears accumulated due to increase in the rate of pension. Similarly, Exts. 9, 10 and 11 are all documents to show that he retired from the office under the company on the above-mentioned date. Ext. 12 is a letter dated 25-4-1991 to the respondent from the company containing the intimation refusal of the company in respect of his request for being granted house rent allowance. It further shows that the company informed him further that it was under no obligation to transfer the tenancy in favour of him who is a retired employee of the company. So, it is abundantly proved by the prosecution that the accused-respondent had no legal right whatsoever to continue in occupation in the disputed flat which was a tenanted-quarter of the company. The accused respondent has taken a plea in his statement under section 313 of the Cr.P.C. that Mr. Alok Ghosh and Mrs. Jaya Mitra, the owners of the disputed flat permitted him to occupy the flat in question and he was thus in permissive possession of the same and the company though an erstwhile tenant in respect of the same was no longer so and, therefore, it had no right to bring such a proceeding against him. But this case of the accused has been falsified by the evidence of the said Mrs. Jaya Mitra (P.W. 4), the very landlady in respect of the disputed flat. She has stated that she has been receiving rent from the company through account-payee cheques every month regularly by registered post and there was no relationship of landlord and tenant between herself and the accused respondent. The defence has miserably failed to adduce the slightest evidence in support of such a plea as taken by the accused while being examined under section 313 of the Cr.P.C. The documents which has been produced by him are Exts. ‘A’ and ‘B’ but neither of them has any bearing upon the claim of the accused that he is a tenant directly under the landlords of the disputed flat. Ext. ‘A’ is a letter written by one Sri P.K. Bose to the accused-respondent to the effect that the writer was expressing his hope that he (the accused) had a clear talk over phone with Mrs. Mitra before her departure for Pondicherry and he (the accused) had perhaps understood her views regarding the flat. These statements request nothing. There is nothing absolutely in the contents of this letter which can be stated to serve as a proof or evidence in support of the claim of the accused that he had a direct tenancy or a licence taken from the landlady, Ms. Jaya Mitra. Thus, such a case made out by the accused appears to be totally absurd and unworthy of reliance.

10. As I have shown above, the entire evidence including both oral and documentary adduced on behalf of the prosecution has abundantly proved that the disputed flat was given to the accused-respondent as an officer of the complainant-company by way of a residential accommodation during the period of his service under the company and on termination of such service, he was to deliver up the same back to the company. But in spite of his retirement from the service under the company, he has been overstaying time unlawfully paying no heed to the repeated reminders given by the company to vacate the disputed flat in favour of the company and thereby he has rendered himself liable under the provisions of section 630(1)(b) of the Companies Act. I fail to understand how the learned Additional Sessions Judge being the Appellate Court drew such absurd conclusions and arrived at self-contradictory findings regarding the question as to whether the ingredients of the provisions of section 630(1)(b) of the Companies Act had been fulfilled from the evidence. The decision of the learned trial Court, i.e., the Court the learned C.J.M. were perfectly in order and I do not find any reason why such findings of the learned trial Court should not be accepted.

11. Accordingly, the judgment and order passed by the learned Additional Sessions Judge; 11th Court, Alipore being totally perverse be set aside and the judgment and order of the learned trial Court, i.e., the Court of the learned C.J.M. be revised. The accused-respondent stands found guilty under section 630(1)(b) of the Companies Act and stands convicted thereunder and the order that he be sentenced to pay a fine of Rs. 1,000 be upheld and restored. The further order of the learned trial Court directing the accused-respondent to deliver up vacant possession of the disputed flat in favour of the complainant-company within three months, in default, to suffer simple imprisonment for one year be also restored and affirmed.

12. The Criminal Appeal is allowed.

13. Let the L.C.R. of the case be sent down to the learned trial Court forthwith.

14. The learned trial Magistrate after receiving the records shall direct the convict to comply with the above orders of this Court within two months from the date on which such direction will be issued by the learned Magistrate. If the convict fails to make payment of the fine as per the order within the said stipulated period, then the learned Magistrate shall issue non-bailable warrant of arrest against the convict and after procuring his appearance send him to the jail to serve out the sentence of imprisonment in default of payment of fine. If the convict fails to comply with the second part of this order, that is, if he fails to deliver up vacant possession of the disputed flat in favour of the complainant-company as directed, then the complainant will be at liberty to proceed against him in accordance with law.

Appeal Allowed.