TMI Blog2005 (5) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... ents by having wrongfully withheld the possession of the company s flat and not delivering the property to the company, have committed an offence. The interim order of the High Court dated 16-11-1998 in the civil suit filed by the appellant-Company does not wipe out the offence committed already for which criminal complaint was filed. Subsequent to that order, the possession may not be wrongful, but on the date of complaint and till the date of that order, the Respondents did wrongfully withhold that property, attracting the offence under section 630(1). Having regard to the factual position of the case, we think that imposition of fine of Rupees One thousand each would be a proper punishment for wrongful withholding the Sonmarg flat. - CRIMINAL APPEAL NO. 712 OF 2005 - - - Dated:- 11-5-2005 - P. VENKATARAMA REDDI AND P.P. NAOLEKAR, JJ. Arun Jaitely, J.A. Rana, Levi Ruben and Madhup Singhal for the Appellant. Haresh M. Jagtiani, Bhargava V. Desai, Curush Bilimoria, Sanjeev Kumar Singh and Pradeep Kumar Malik for the Respondent. JUDGMENT P.P. Naolekar J. - Leave granted. 2. This appeal is directed against the judgment and order dated 8-4-2004 passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Controller of the appellant-company informed the appellant-company that she was staying in the flat because the Chairman had asked her to do so till the flat in another building was made available to her. The respondent by a subsequent communication addressed to the Chairman, referred to the assurance given to her that she would not be called upon to vacate the Sonmarg flat till the sale of Blue Heaven flat is executed as per separate agreement dated 10th of February, 1978, entered into between Shri S.C. Agarwalla and the Company for purchase of Blue Heaven flat and informed that her late husband had the right to purchase the Blue Heaven flat and that the assurance given by the Chairman should be adhered to, by the appellant, to permit her to remain in possession of the Sonmarg flat till the sale deed is executed in respect of Blue Heaven flat. The appellant Co., thereafter, again by a registered letter dated 9th of November, 1994, addressed to both the respondents, called upon them to vacate the flat and handover the possession. By this communication, the appellant also specifically conveyed to the first respondent about its decision that Blue Heaven flat cannot be sold and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order on 16th of November, 1998 passed an order for appointment of the Court Receiver for Flat No. 67-B, 25 Sonmarg, Nepean Sea Road, Mumbai and Receiver was placed in possession of the flat. It was agreed between the parties that Respondent No. 1 was in possession of the flat. The High Court directed that the Court Receiver shall take symbolic possession of the flat from Respondent No. 1. The Court Receiver shall appoint Respondent No. 1 as his agent to be in actual possession of the flat during the pendency of the suit. The Court Receiver shall fix the amount of royalty payable by Respondent No. 1 for occupation of the flat. While fixing the royalty, the Court Receiver shall take into consideration of the contentions urged by both the parties. Pending fixation of the amount of royalty by the Court Receiver, an ad hoc amount of royalty is fixed at Rs. 25,000 per month. The respondent shall deposit the arrears of royalty at the ad hoc rate from June 1997 to November 1998. By this order the possession of the Respondent No. 1 was recognized of the Sonmarg flat and the Court Receiver was given symbolic possession of the flat and possession of the Respondent No. 1 was to be treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company for recovery of possession of the Sonmarg flat from the respondents would be in breach of express injunction order issued by the Court. The High Court has dismissed the appeal filed by the appellant company. Consequently complaint filed by the appellant stands dismissed. 8. Learned counsel for the appellant-company has urged that the High Court has not properly understood the scope and ambit of section 630 of the Companies Act and thereby committed an error in holding that the proceedings under section 630 of the Companies Act could not be encom-passed within its fold "due process of law" not being civil proceedings. The provision being penal in nature cannot be taken recourse to for possession of the flat when the matter relating to flats in question are pending in the Court. 9. Before we embark upon the discussion, we may first notice the scope of language of section 630 of the Companies Act. The said section reads as under : "630. Penalty for wrongful withholding of property (1) If any officer or employer of the company ( a )wrongfully obtains possession of any property of a company; or ( b )having any such property in his possession, wrongfully withh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of Baldev Krishna Sahi v. Shipping Corporation of India Ltd. [1987] 4 SCC 361 this Court resolved the conflict and has held that the expression officer or employee of the company applies not only to the existing officer or employee but also includes past officer or employee where such officer or employee either wrongfully obtained or wrongfully withheld or knowingly misapplied any property after the termination of his employment. This decision was approved by a Three Judges Bench of this Court in Amrit Lal Chum v. Devoprasad Dutta Roy [1988] 2 SCC 269 where it is held that section 630 of the Act makes it an offence if an officer or employee of the 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 and that there is 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 an existing officer or an existing employee and not those whose employment had been terminated or had otherwise come to an end. 12. While interpreting and laying down the object of the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is the object of awarding sentence 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.****** 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for seeking possession of the property of the company. Due process of law in the present context would ordinarily mean such an exercise of power by the parties as the settled principles of law permit and/or a course of legal proceedings, according to those rules and principles which have been established in our systems of jurisprudence for the enforcement and protection of private rights. Due process of law would in short mean a procedure established by law, which is a procedure fixed or laid down in law. When the High Court has passed an order of injunction, in the aforesaid terms, what is meant by the High Court is, that the Company shall not take forceable possession of Sonmarg flat during the pendency of the suit and Company was given liberty to take steps for possession as is permissible under law including the provisions of any statute giving right to obtain possession to the company in the facts and circumstances of the case. The company can prove unlawful possession of the property by the employee or his or her legal representative after the demise of the employee or an officer of the company. The company has the remedy to initiate action under section 630(1) and on convic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appreciate that the permission, if any, given to Respondent No. 1 to live in Sonmarg flat till the possession of the flat at Blue Heaven was delivered to respondents, by the Chairman Shri Goenka, being without any authority of law and being outside the powers vested in the Chairman, would not be binding on or enforceable against the company. It is submitted that those powers could only be exercised by the Board of Directors or by Chairman only with specific authorization to that effect by the Board of Directors. Countering this argument, it is urged by the learned counsel for Respondents 1 and 2 that the findings arrived at by both the courts below that possession of Respondents 1 and 2 is permissible and not wrongful as the respondents have been assured by the Chairman of the Company to continue to live in the flat at Sonmarg till the possession of the flat at Blue Heaven is delivered to them is based on proper assessment of relevant material on record and does not warrant any interference by this Court. The respondents possession of the flat being permissible cannot be held to be wrongful to attract the provisions of section 630 of Companies Act. 18. The question really is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggarwalla, husband of Respondent No. 1 and father of Respondent No. 2 was the ex-employee of the Company. He expired when he was in the employment of the company and respondents 1 and 2 were residing in the flat after the demise of Shri Aggarwalla as his heirs. Thus it is for Respondents 1 and 2 to show the authority of Shri Goenka to bind the company on the basis of the oral assurance given to them by him to retain the possession of the flat. The High Court has not referred to any evidence to that effect led by the respondents, nor there is any finding that the Board of Directors have authorized the Chairman Shri Goenka to give such an assurance for and on behalf of the company. 19. On 28th of December, 1993 a letter was sent by appellant requesting Respondent No. 1 to vacate the premises and hand over peaceful posses- sion of the premises within 45 days of the receipt of the letter. The contents of the letter are that Shri S.C. Agarwalla was occupying the premises as a facility granted to him by the company until he was in the employment of the company. On account of the demise of Shri Agarwalla, the company deferred the request for vacation of the said premises; that more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e act of the Chairman cannot be construed to be one done incidental to the business of the Company or as a matter of necessity. 20. After the death of Shri Agarwalla on 2-11-1992, the respondents 1 and 2 remained in possession of the company s Sonmarg flat. Admittedly they were not in employment of the company nor company has authorized them to remain in possession of the same particularly after notice dated 9-11-1994 to vacate the premises and hand over the possession to the company. The possession of the company s flat by the Respondents, after the service of notice to vacate the premises by the company, is wrongful withholding of the property of the company. The respondents by having wrongfully withheld the possession of the company s flat and not delivering the property to the company, have committed an offence. The interim order of the High Court dated 16-11-1998 in the civil suit filed by the appellant-Company does not wipe out the offence committed already for which criminal complaint was filed. Subsequent to that order, the possession may not be wrongful, but on the date of complaint and till the date of that order, the Respondents did wrongfully withhold that property, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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