TMI Blog1995 (3) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... K.S. PARIPOORNAN, JJ. D. Dave, N.M. Sakhardande, A.M. Khanwilkar, K.V. Viswanathan Anil Agarwalla and L.P. Aggarwalla for the Appellant. V.P. Vashi, K.J. John and A.S. Bhasme for the Respondent. JUDGMENT Dr. A.S. Anand, J. - Leave granted. Both these appeals raise a common question of law and are being disposed of by this common judgment. The admitted facts, which alone are relevant for the purpose of these appeals and are not in dispute are that the appellants in both the cases are the legal heirs of the employee/officer who died in harness while serving with the respective respondent-company. The concerned employees in both the cases had been allotted premises during their service by their respective employer (respondent-company) and on the failure of the appellants to hand over vacant possession of the allotted premises after the demise of the employee/officer concerned, prosecutions were launched against them (legal heirs) under section 630 of the Companies Act, 1956 (hereinafter referred to as the Act ). The appellants approached the High Court through petitions under section 482 of the Criminal Procedure Code, 1973, seeking quashing of the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta v. Binod Mills Co. Ltd. [1987] 3 Comp LJ 246; [1988] 64 Comp. Cas. 177, following the Calcutta High Court view, held that the provisions embodied in section 630(1) of the Act do not contemplate criminal proceedings being launched against relatives of an erstwhile employee or officer for recovering possession of the property of the company. This court, while hearing an appeal against the judgment of the Bombay High Court in Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1988] 63 Comp. Cas. 1 ; [1988] 1 SCR 168, resolved the conflict and set the controversy at rest. It was held that the expression officer or employee of a company applies not only to existing officers or employees but also includes past officers or employees, where 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. The court opined (at page 10 of 63 Comp Cas): 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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). This court then held that the decision of the Calcutta High Court in Amritlal Chum's case [1987] 61 Comp. Cas. 211 is erroneous and overruled the same. It was opined that the restrictive meaning to the term officer or employee which must take its colour from the context in which it appears would defeat the object of the provisions of section 630 of the Act, viz., preservation of the property of a company by the creation of two distinct offences by clauses (a) and (b) which arise under different set of circumstances. The Bench noticed with approval the judgments of the Bombay High Court in Harkishin Lakhimal Gidwani v. Achyut Kashinath G Wagh [1982] 52 Comp. Cas. 1 (Bom) and Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp. Cas. 329 (Bom). A three-judge Bench later on in Amrit Lal Chum v. Devoprasa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court has consistently taken the view and repeatedly emphasised that the provisions of section 630 of the Act have to be given a purposive and wider interpretation and not a restrictive interpretation. In the four cases referred to above, however, this court was not required to directly consider and deal with the question whether the provisions of section 630 of the Act can be invoked against the legal heirs for wrongfully withholding the property of the company, on the death in harness of an employee or officer of the company to whom the property was allotted. In these two appeals that precisely is the issue which invites our attention. 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 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 it squarely applies to the cases of past employees or officers; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that clause (b) does not stand by itself but is inter-connected with clause (a) and, therefore, both clauses (a) and (b) must be read together. In essence, the submission is that sub-section (1) of section 630 of the Act makes it an offence where any officer or employee of a company wrongfully withholds possession of such property of the company. Secondly, it is contended that the Legislature never intended to include past officers and employees of a company within the ambit of section 630 of the Act which provides for prosecution of an officer or employee of a company for wrongfully withholding the property of the company inasmuch as it has used different 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 Amritlal 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 subsection (1) of section 630 of the Act which defeats the very purpose and object with which it had been introduced. We are in respectful agreement with the above view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany after the death of the employee or the officer. Under sub-section (1) of section 630 for the wrongful obtaining of the possession of the property of the company or wrongfully withholding it or knowingly applying it to a purpose other than that authorised by the company, the employee or the officer concerned is punishable with fine which may extend to one thousand rupees . The fine under this sub-section is to be understood in the nature of compensation for wrongful withholding of the property of the company. Under sub-section (2) what is made punishable is the disobedience of the order of the court, directing the person, continuing in occupation, after the right of the employee or the officer to occupation has extinguished, to deliver up or refund within a time to be fixed by the court, the property of the company obtained or wrongfully withheld or knowingly misapplied. Thus, it is in the event of the disobedience of the order of the court that imprisonment for a term which may extend to two years has been prescribed. The provision makes the defaulter, whether an employee or a past employee or the legal heir of the employee, who disobeys the order of the court to hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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. The courts are, therefore, obliged to place a broader, liberal and purposeful construction on the provisions of section 630 of the Act in furtherance of the object and purpose of the legislation and construe it in a wider sense to effectuate the intendment of the provision. The heirs and legal representatives of the deceased employee have no independent capacity or status to continue in occupation and possession of the property, which stood alloted to the employee or the officer concerned or resist the return of the property to the employer, in the absence of any express agreement to the contrary entered into with them by the employer. The court, when approached by the employer for taking action under section 630 of the Act, can examine the basis on which the petition/complaint is filed and if it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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