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TMI Blog1987 (9) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... rongfully withheld the said property of the company and had thus committed an offence under the said section. On May 22, 1986, the trial Magistrate issued process against the petitioner and that is how the petitioner has filed the present petition under article 227 of the Constitution of India and section 482 of the Criminal Procedure Code for quashing the said process and criminal prosecution instituted by respondent No. 1. Smt. Shenoi, appearing in support of the petition, has vehemently contended that the provisions of section 630 of the Companies Act were not applicable to the petitioner inasmuch as the petitioner was not an officer or employee of respondent No. 1 and the provisions of section 630 could not be made applicable to past officers, ex-officers or ex-employees of the company. Consequently, the trial Magistrate had no jurisdiction to entertain the said complaint and to issue order of process. She further submitted that the petitioner had been inducted by the Shipping Corporation of India, who were the employers of the petitioner, and that was on the strength of a tenancy being created in his favour. On retirement from service, the said tenancy rights of the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed a breach of contract and would not be committing either the offence of breach of trust under section 406 of the Indian Penal Code or the offence of misappropriation under section 406 or 403 of the Indian Penal Code. Relying upon the said decision, it was contended that the impugned process as also the criminal prosecution was liable to be quashed. Having considered the aforesaid submissions of Smt. Shenoi, in my judgment, the same are without any substance and are liable to be rejected. Though it is true that the aforesaid decision of the Calcutta High Court referred to by Smt. Shenoi does support her in her aforesaid contentions, however, there are decisions of this court which have taken a contrary view. In the case of Harkishin Lakhimal Gidwani v. Achyut Kashinath Wagh [1981] Mah LJ 61; [1982] 52 Comp Cas 1 (Bom), it has been held that 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 clause ( a) of section 630(1) of the Companies Act. If an officer or employee who is already in possession of the property of the company, does a further act of wrongfully withho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Matrimonial Acts are "husband" and "wife" even though after divorce the relationship of husband and wife between the divorced parties does not subsist. 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 or 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 are existing relationships or are erstwhile relationships. Having regard to the aforesaid decision, I am inclined to hold that the term "officer" or "employee" of the company, as used in section 630 of the Companies Act, must include the present officer or employee of the company as also a past officer or past employee of the company. Giving the said interpretation would further the object of the said provision and giving any restricted interpretation as suggested by Smt. Shenoi is likely to further the mischief which is sought to be remedied by the said provisions of section 630. If the submission of Smt. Shenoi as also the decision of the Calcutta High Court is to be accepted, it would be open to an offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Criminal Procedure Code. In the result, I find no merit in the petition and the same is dismissed. Rule discharged. Smt. Shenoi applies for continuation of stay for a period of three weeks in order to enable the petitioner to approach the Supreme Court. Shri Vashi objects to the grant of time. I find the request of Smt. Shenoi to be reasonable. Stay to continue for a period of three weeks from today. Sen, J.-The Companies Act, 1956, by section 630, enacts: "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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the provisions contained in subsection (1) of section 630 which provide for the launching of a prosecution against an officer or employee of a company for wrongful possession of such property under clauses (a) and (b) of sub-section (1) of section 630 and for the recovery of such property by the issue of process under subsection (2), also extend to past officers and employees of the company and whether the court trying the offence has the power to issue process under sub-section (2) against such officer or employee. At the conclusion of the hearing we had by a short order dismissed the special leave petition and held that the view expressed by the learned single judge following the earlier decision of the High Court in Harkishin Lakhimal Gidwani [1982] 52 Comp. Cas. 1 and reiterated in Govind T. Jagtiani [1984] 56 Comp. Cas 329 was to be preferred to the view to the contrary expressed by the High Court of Calcutta in Amritlal Chum [1987] 61 Comp. Cas. 211 (Cal.). As the respondent, Shipping Corporation of India, a public sector undertaking was in dire need of the flat in question which is situate in a posh locality like the Cuffe Parade in Bombay, for the use of its senior exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside the eviction order and directed the estate officer to give a personal hearing to the petitioner. Instead of availing of that opportunity, the petitioner on March 3, 1986, moved the High Court by a petition under article 226 of the Constitution and obtained ad interim stay of the proceedings before the estate officer. A few days thereafter, i.e., on March 7, 1986, the petitioner instituted a suit, being Civil Suit No. 1382 of 1986, in Small Causes Court, Bombay, seeking a declaration that he was a tenant of the disputed flat, which is now pending. In view of this, the company was constrained to lodge a complaint against the petitioner under section 630 of the Act in the Court of the Additional Chief Metropolitan Magistrate, 37th Court, Esplanade, Bombay, alleging that he was wrongfully withholding the flat in question which had been given to him for his residence during the period of his employment and thereby committed an offence punishable under section 630. The learned Magistrate, by his order dated May 22, 1986, took cognizance of the complaint against the petitioner and directed issue of process. On June 30, 1986, the company merged with the Shipping Corporation of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent language where it was so intended, namely, in sections 538 and 545. The entire argument of learned counsel is based upon the judgment of the High Court of Calcutta in Amrital Chum's case [1987] 61 Comp. Cas. 211. We are afraid we find it difficult to subscribe to the narrow construction placed by the High Court of Calcutta on the provision contained in sub-section (1) of section 630 of the Act which defeats the very purpose and object with which it had been introduced. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust 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 the plain construction, the words "any such property" in clause (b) relate to any property of a company as mentioned in clause (a). Section 630 of the Act 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. By a curious process of reasoning, the High Court of Calcutta in Amritlal Chum's case [1987] 61 Comp. Cas. 211 (Cal) held that section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property of the company after termination of the employment, which is an offence under section: 630(1)(b) of the Act, as rightly pointed out by V. S. Kotwal J. in Harkishin Lakhimal Gidwani v. Achyut Kashinath Wagh [1982] 52 Comp. Cas. 1 (Bom.). The facts were also identical as here. The petitioner there was the general manager of a company known as the English Electrical Co. of India Ltd., a company incorporated under the Companies Act, 1956, having its registered office at Calcutta. He had been allotted the premises of a flat, approximately 3,500 square feet in area, located at Mayfair Gardens, Little Gibbs Road, Bombay. He had been inducted into the flat only by virtue of his capacity as the general manager of the company's branch office at Bombay but the company allowed him to retain the same on humanitarian grounds for a short period after his retirement to enable him to find alternative accommodation. This humanitarian and charitable consideration shown by the company was reciprocated by the petitioner by adopting an adamant attitude and he declined to vacate the same on one pretext or another. The question was whether such wrongful retention of the flat amounted to an offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affording an opportunity to withhold, the withholding may be wrongful as in the present case." The learned judge (Ashok Agarwal J.) observes that that has been the consistent view of the High Court and has referred to the subsequent decisions of Khatri J. and Kurdukar J. In our considered opinion, the construction placed by the High Court on the provisions contained in section 630(1) is the only construction possible. We accordingly uphold the view of the High Court of Bombay 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 such property during the course of his employment, withholds the same after the termination of his employment. The decision to the contrary of the High Court of Calcutta in Amritlal Chum's case [1987] 61 Comp. Cas. 211, does not lay down good law and is overruled. In the result, the special leave petition must fail and is dismissed with costs. The petitioner is given one month's time to vacate the premises failing which the respondents will be at liberty to take su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner's tenancy rights and for other ancillary reliefs and this was filed on March 7, 1986, which was prior in point of time to the filing of the complaint which was filed on April 30, 1986. According to Smt. Shenoi, the petitioner's substantial rights of tenancy to the said flat could not be scuttled away by taking resort to the summary proceedings provided in section 630 of the Companies Act. She lastly contended that respondent No. 1 had taken resort to proceedings under the Eviction of Public Premises Act and after the said proceedings were stayed, respondent No. 1 had mala fide taken resort to the present criminal complaint under section 630 of the Companies Act. In any event, this was a fit case where the present prosecution should be stayed pending the disposal of the suit in the Small Causes Court. Reliance was placed upon the judgment of the Calcutta High Court in the case of Amritlal Chum v. Devi Ranjan Jha [1987] 61 Comp. Cas. 211 wherein it has been held that section 630 of the Companies Act, 1956, applies only to existing officers and employees and not to those whose employment has been terminated. Clause (b) of section 630(1) is confined in its application to existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. The facts of that case are in pari materia with the facts of the present case and having regard to the said decision from which I see no good reason to differ, the submissions of Smt. Shenoi in this behalf will have to be rejected. Moreover, the aforesaid decision of this court has been followed in a series of cases of this court, viz., the case of Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp. Cas. 329 , as also in the unreported decisions being Criminal Revision Application No. 332 of 1980 decided by my brother Kotwal J. on September 11, 1980, Criminal Revision Application No. 374 of 1982 with Criminal Appeal No. 674 of 1983 decided by my brother Khatri J. on January 15, 1984, and Miscellaneous Criminal Application No. 2215 of 1981 decided by my brother Kurdukar J. on July 5, 1983. Shri Vashi, appearing on behalf of respondent No. 1, has placed reliance upon the case of Nagin Mansukhlal Dagli v. Haribhai Manibhai Patel, AIR 1980 Bom 123, wherein it has been held in reference to proceedings under section 41 of the Presidency Small Cause Courts Act, 1882, that the use of the words "a licensor and licensee" and "a landlord and tenant" have been used in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions by merely resigning from the company a shortwhile prior to the court passing an order under section 630 rendering the company without any remedy merely on account of the said resignation. In regard to the submission of Smt. Shenoi that the petitioner has filed a declaratory suit in the Court of Small Causes and, therefore, the present summary proceedings should not be permitted to thwart his legal rights under the Bombay Rent Act, it has been held by this court in the case of Krishan Avtar Bahadur v. Col. Irwin Extross [1986] 59 Comp. Cas. 417 , while dealing with the facts which are practically similar to the present case that merely because the petitioner had filed a declaratory suit in the Court of Small Causes on the ground of tenancy, the High Court was not justified in staying the criminal proceedings on the bare theoretical ground that the question of tenancy could more appropriately be dealt with by that court and that the plea of tenancy was not open to the petitioner. The flat belonged to the company and it was occupied by the petitioner during the term of his employment with the company and he was entitled to occupy it only during the term of his employment wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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