1989 (8) TMI 272 - SC - Companies Law

Supreme Court overturns lower court ruling, orders surrender of possession of flat.

The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the decisions of the Additional Chief Metropolitan Magistrate ... Whether the High Court has erred in law in setting aside the judgments of the courts below in a matter arising under section 630 of the Companies Act in exercise of its powers under section 482 of the Criminal Procedure Code, 1973? Held that:- Appeal allowed. The power of attorney has been executed just before the complaint was filed and it is stated in the complaint that Mr. Atul Mathur was filing the complaint on behalf of the company and he was duly authorised to do so. The High Court was, therefore, not right in construing the power of attorney as conferring only special powers and not general powers on Mr. Atul Mathur. Thus set aside the judgment of the High Court and restore the judgments of the Additional Chief Metropolitan Magistrate and the Additional Sessions Judge. However, the first respondent is given time till September 30, 1989, to deliver possession of the flat to the company failing which the sentence of imprisonment awarded to him would be enforced. Issues Involved:1. Authority to file the complaint.2. Burden of proof and approach of the Additional Sessions Judge.3. Jurisdiction of the Additional Chief Metropolitan Magistrate under section 630 of the Companies Act.4. Bona fide dispute regarding the licensee of the flat.5. Applicability of the ratio in Damodar Das Jain's case.Detailed Analysis:1. Authority to File the Complaint:The first respondent contended that the complaint was filed by an unauthorized person, Mr. Atul Mathur, which vitiated the proceedings. The High Court held that Mr. Mathur, being an officer of the company in the rank of a manager, was competent to file the complaint. Even if there was an irregularity, it was curable under section 465 of the Criminal Procedure Code. The Supreme Court affirmed this view, noting that the power of attorney conferred general powers on Mr. Mathur, authorizing him to act on behalf of the company.2. Burden of Proof and Approach of the Additional Sessions Judge:The first respondent argued that the Additional Sessions Judge wrongly cast the burden of proof on the accused. The High Court found no merit in this contention, holding that the appellate judgment did not suffer from any perversity or illegality. The Supreme Court upheld this finding, emphasizing that the burden of proof was correctly placed on the complainant, and the accused was entitled to the benefit of doubt on all matters not proved beyond reasonable doubt.3. Jurisdiction of the Additional Chief Metropolitan Magistrate under Section 630 of the Companies Act:The first respondent contended that since complicated questions of title were involved, the Additional Chief Metropolitan Magistrate lacked jurisdiction to adjudicate the matter in summary proceedings under section 630 of the Companies Act. The High Court accepted this contention, influenced by two letters written by a junior employee, which it believed afforded a basis for a bona fide dispute. The Supreme Court disagreed, stating that the purpose of section 630 is to provide speedy relief to a company when its property is wrongfully obtained or withheld by an employee or ex-employee. The court held that the criminal court had jurisdiction as there was no bona fide dispute regarding the company's claim to possession of the flat.4. Bona Fide Dispute Regarding the Licensee of the Flat:The High Court found that the letters written by Mr. Jain created a bona fide dispute about whether the company or the first respondent was the licensee of the flat. The Supreme Court refuted this, citing the leave and licence agreement, affidavit, and letter by the first respondent, which clearly indicated that the company was the licensee. The court noted that the first respondent's claim was based on self-serving documents created without the company's knowledge, and the letters from Mr. Jain did not afford a bona fide basis for the dispute.5. Applicability of the Ratio in Damodar Das Jain's Case:The High Court applied the ratio in Damodar Das Jain's case, concluding that the criminal court should have stayed its hand and allowed the civil court to adjudicate the issue. The Supreme Court clarified that the ratio in Damodar Das Jain's case was fact-specific and did not apply to the present case. The court emphasized that the dispute projected by the first respondent was not bona fide and that the criminal court was right to proceed under section 630.Conclusion:The Supreme Court allowed the appeal, set aside the judgment of the High Court, and restored the judgments of the Additional Chief Metropolitan Magistrate and the Additional Sessions Judge. The first respondent was given time until September 30, 1989, to deliver possession of the flat to the company, failing which the sentence of imprisonment would be enforced.