TMI Blog1987 (9) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, is neither one which deserves to be quashed nor one which is liable to be stayed pending the declaratory suit in the Court of Small Causes. In any event, I do not find this case which calls for interference in exercise of the jurisdiction either under article 227 of the Constitution of India or section 482 of the Criminal Procedure Code. Thus 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. - SPECIAL LEAVE PETITION (CRIMINAL) NO. 1765 OF 1987 - - - Dated:- 17-9-1987 - A. P. SEN AND B. C. RAY, JJ. V.N. Ganpula for the Petitioner. Soli J. Sorabji, K.J. John and A.K. Desai for the Respondent. JUDGMENT [ The judgment of the High Court ran as follows ]. Ashok Agarwal, J. The present petition seeks to challenge the order of issue of process under section 630 of the Companies Act. The petitioner, while in the employment of the Mogul Line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 existing officers and employees of the company. The order of delivering up or refunding can be passed under section 630(2) only to an officer or employee of a company. That is possible when the accused in the case is an officer or employee of the company on the date of mandamus. If the accused is not such an officer or employee, such an order of refund cannot be passed on him. The provisions of section 630 are to be restricted in their operation against existing officers and employees of the company over whom the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32 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 with a very well-settled and normal legislative drafting practice. It has been pointed out that 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 bore. Thus, section 108 of the Transfer of Property Act, 1882, which deals with the rights and liabilities of lessor and lessee, by clause ( h ) provides that "the lessee may even after the dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rishan 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 with the company. After the termination of his services, he could not claim to continue to occupy the premises on the ground that he was a tenant thereof. The criminal court had jurisdiction to entertain the complaint under section 630 of the Companies Act. The facts in our case are practically identical. It cannot be disputed that the flat in question is owned by the company and it also cannot be disputed that the petitioner came to occupy the said flat by virtue of his being in the emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 61 Comp. Cas. 211 held that it refers only to the existing officers and employees of a company. It also held that the words "any such property" in section 630(1)( b ) 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. The High Court of Bombay, on the other hand, has placed a beneficent construction on the provisions contained in section 630 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 past officers and employees of the company. It is also of the view that the words "any such property" in clause ( b ) qualify the words "any property of a company" appearing in clause ( a ). That has been the consistent view 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 , Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp. Cas. 329 , which have since been followed in a series of cases referred to by the learned single judge (Ashok Agarwal J.) The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llotted service quarters. In 1975, the company purchased a spacious flat, being flat No. 151, in Jolly Maker Apartment III at 119, Cuffe Parade, and the petitioner being the seniormost executive was allotted the flat for his residence. The petitioner retired from the service of the company on or about September 30, 1984. Prior to that, i.e. , on September 26, 1984, he addressed a letter requesting the company to permit him to continue to live in the company's premises during the period of his accumulated leave after his retirement, i.e. , for a period of six months, undertaking to vacate the flat as early as possible. It appears that the company on humanitarian grounds acceded to this request and permitted the petitioner to stay on in the company's flat for six months after his retirement and in accordance with the company's rules, he was required to pay compensation for the use of the premises. After the expiry of the said period of six months, the company addressed a letter dated April 26, 1985, requesting the petitioner to vacate the premises stating that if he failed to do so, he would be liable to pay higher compensation as per the company's rules. Since the petitioner faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vacate the same after his retirement. It is asserted that the petitioner with a dishonest intention is wrongfully withholding the flat and has instituted false and frivolous proceedings with the ulterior object of protracting and delaying the eviction proceedings. We are informed that the petitioner has been deliberately and dishonestly withholding the flat covering an area of 1,750 square feet in Cuffe Parade which is a posh area, valued at approximately Rs. 30 lakhs and putting it to his own use contrary to the terms of his employment. The first and foremost argument of learned counsel for the petitioner is that the provision contained in section 630 of the Act is a penal provision and, therefore, must be subject to a strict construction and there is no room for intendment. It is submitted that on a true construction, the scope and effect of the section was limited to such property of the company which was wrongfully obtained by an officer or employee of the company. Emphasis was placed upon the words "any such property" in clause ( b ) of sub-section (1) for the contention that clause ( b ) does not stand by itself but is interconnected with clause ( a ) and, therefore, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecure 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the opening words of sub-section (1) of section 630, namely, "if any officer or employee of a company" qualify "the acts of delinquency" specified in clauses ( a ) and ( b ) thereof. He further held that the High Court of Bombay was in error in laying down in Govind T. Jagtiani's case, [1984] 56 Comp. Cas. 329 that for purposes of prosecution, clause ( a ) of section 630(1) was referable to existing officer or employee of a company, while clause ( b ) was wide enough to include former or past officer or employee of the company inasmuch as on a plain reading of the section, the two clauses do not permit different interpretations as suggested. Further, whenever the framers of the law in their wisdom thought it proper to bring within the mischief of the provisions of the Act former officers or employees of a company, they did not hesitate to do so and they expressly legislated. In particular, the learned judge referred to section 538 which provides for prosecution for offences by officers of companies in liquidation and uses the expression "a past or present officer of a company, etc .", as also section 545 which provides for prosecution of delinquent officers and members of a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the provisions of the section apply not only to the present officers and employees of the company but also to past officers and employees, and observed (at page 336 of 59 Comp. Cas.): "It is held that the features and deductions which flow logically and inescapably on an analysis of section 630 are 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 officer of the company, ( ii ) Clause ( b ) is equally independent and distinct from clause ( 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." In Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp. Cas. 329 (Bom.), Kanade J. followed the critical analysis of section 630 made by Kotwal J. as above, and observed that the entitlement of an officer to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine Ltd., had been allotted a residential flat. He continued in occupation even after September 30, 1984, when he retired from that company. Respondent No. 1, the Shipping Corporation of India, who are the successors of the erstwhile Mogul Line Ltd., filed the present impugned complaint under section 630 of the Companies Act on the allegation that the petitioner was given possession of the said flat belonging to the company and he had, after his retirement, wrongfully 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 applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the company has some hold or authority. Thus, where a company filed a complaint with an allegation that an officer to whom it had provided a furnished flat had, after the termination of his services and ceasing to be an officer, wrongfully retained possession of the flat, the Magistrate was right in not framing a charge under section 630 of the Companies Act, 1956. If the officer had not delivered up possession of the flat on the termination of his employment, he only 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 vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the determination of the lease remove, at any time whilst he is in possession of the property leased but not afterwards, all things which he has attached to the earth". Similarly, in various Matrimonial Acts, when dealing with the grant of permanent alimony to a wife after divorce, these Acts provide that the court may grant such alimony to the wife either at the time of the passing of the decree for divorce or on a subsequent application made to it for that purpose. The words used in the sections 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 Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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