1991 (2) TMI 330 - SC - Companies Law

Whether the offence under section 630 (1) (b) of the Companies Act is a continuing offence for the purpose of limitation? Held that - Appeal allowed. The impugned orders are set aside and the cases are remanded to the trial court for disposal in accordance with law. 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.

Summary

1. ISSUES PRESENTED and CONSIDERED

The primary legal issue considered in this judgment is whether the offence under section 630(1)(b) of the Companies Act, 1956, is a continuing offence for the purpose of limitation. This determination is crucial in deciding whether the appellant company's complaints against the respondents for failing to vacate company quarters after retirement were barred by limitation.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework revolves around section 630(1)(b) of the Companies Act, 1956, which penalizes the wrongful withholding of company property by an officer or employee. The court also considered section 468 of the Criminal Procedure Code, which bars taking cognizance of an offence after the lapse of a specified period, unless the offence is continuing. The interpretation of a "continuing offence" was guided by precedents, including Bhagirath Kanoria v. State of Madhya Pradesh and State of Bihar v. Deokaran Nenshi, which discussed the nature of continuing offences.

Court's Interpretation and Reasoning

The Court interpreted a continuing offence as one that endures over time rather than being completed by a single act. It referenced Black's Law Dictionary's definition of a continuing offence as one committed over a span of time, with the last act controlling the commencement of the limitation period. The Court also drew parallels with the concept of trespass in tort law, where remaining on land unlawfully constitutes a continuing wrong.

Key Evidence and Findings

The Court noted that the respondents, after retiring from the appellant company, failed to vacate the company quarters. The trial magistrate had found that the respondents were allotted quarters by the company and had no authority to retain them post-retirement. However, the magistrate concluded that the complaints were barred by limitation, as they were filed more than six months after the alleged offence.

Application of Law to Facts

The Court applied the concept of a continuing offence to section 630(1)(b) of the Companies Act. It reasoned that wrongful withholding of company property is not terminated by a single act but continues until the property is returned. Thus, the offence under section 630(1)(b) is continuing, and the limitation period should be computed from the cessation of the wrongful act, not from the initial failure to vacate.

Treatment of Competing Arguments

The appellant argued that the offence was continuing, while the respondents contended that the offence was complete upon the initial failure to vacate, and any subsequent possession was adverse. The Court rejected the respondents' argument, emphasizing that the wrongful withholding of property continued until the property was returned, thereby constituting a continuing offence.

Conclusions

The Court concluded that the offence under section 630(1)(b) is a continuing offence. Therefore, the complaints were not barred by limitation, as the offence continued until the respondents vacated the quarters.

3. SIGNIFICANT HOLDINGS

The Court held that "the offence under section 630 of the Companies Act is not such as can be said to have consummated once for all." It emphasized that wrongful withholding of company property is an offence committed over a span of time, and the limitation period begins with the cessation of the wrongful act. The Court stated, "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 judgment established that section 630(1)(b) of the Companies Act encompasses a continuing offence, thereby allowing complaints to be filed beyond the initial six-month period if the wrongful act persists. The Court remanded the cases to the trial court for disposal in accordance with its findings.