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of <h1>Legal heirs liable for company property retrieval under Companies Act</h1> The Supreme Court held that a petition under section 630 of the Companies Act, 1956, is maintainable against the legal heirs of a deceased officer or ... Whether a petition under section 630 of the Act is maintainable against the legal heirs of a deceased officer or an employee for retrieval of the company's property? Held that:- Appeal dismissed. As our answer to the question posed in the earlier part of this judgment is in the affirmative and we hold that a petition under section 630 of the Act is maintainable against the legal heirs of the deceased officer/employee for retrieval of the company's property wrongfully withheld by them after the demise of the employee concerned. The High Court was, therefore, right in dismissing the petitions filed by the appellants under section 482 of the Criminal Procedure Code and declining to quash the proceedings initiated by the employer of the deceased employee for retrieval of the company's property under section 630 of the Act. Issues Involved:1. Whether a petition under section 630 of the Companies Act, 1956, is maintainable against the legal heirs of a deceased officer or employee for retrieval of the company's property.Analysis of Judgment:1. Maintainability of Petition Under Section 630 Against Legal Heirs:- Admitted Facts: The appellants are legal heirs of employees who died while in service and failed to vacate company-allotted premises. Prosecutions were launched under section 630 of the Companies Act, 1956. The appellants sought quashing of these proceedings, which the High Court dismissed, leading to these appeals.- Question Before the Court: Whether section 630 can be invoked against legal heirs of a deceased officer or employee for retrieving the company's property.- Provision of Section 630:- Sub-section (1): Penalizes wrongful possession or withholding of company property by any officer or employee.- Sub-section (2): Allows the court to order the return of wrongfully held property, failing which imprisonment may be imposed.- Divergence in High Court Opinions:- Bombay High Court: Included ex-officers and ex-employees.- Calcutta High Court: Restricted to current employees.- Madhya Pradesh High Court: Excluded relatives of erstwhile employees.- Supreme Court's Interpretation in Previous Cases:- Baldev Krishna Sahi Case: Included past officers and employees within the ambit of section 630.- Amrit Lal Chum Case: Confirmed wrongful holding post-employment as an offense.- Atul Mathur Case: Emphasized purposive interpretation to retrieve company property.- Gokak Patel Volkart Case: Recognized the offense under section 630 as a continuing offense.- Current Judgment's Analysis:- Clause (a) and (b) of Section 630: Both clauses are independent and create penal liability for wrongful possession or withholding of company property by current or past employees.- Right and Duration of Possession: Contingent upon employment; extinguishes with cessation of employment.- Legal Heirs' Status: By a deeming fiction, legal heirs in possession continue to enjoy the status of the employee or officer. Wrongful withholding by legal heirs is actionable under section 630.- Quasi-Criminal Nature of Section 630: Provides speedy relief to companies for wrongful withholding of property by employees, ex-employees, or their legal heirs.- Conclusion: Legal heirs of a deceased employee or officer fall within the ambit of section 630. Excluding them would defeat the provision's purpose. The court must interpret section 630 broadly to ensure the company's property is retrieved.2. Implications of the Judgment:- Legal Heirs' Obligation: Legal heirs must return company property upon the employee's death. Failure to do so renders them liable under section 630.- Nature of Penalty: The penalty under sub-section (1) is akin to compensation for wrongful withholding. Sub-section (2) imposes imprisonment for disobedience of court orders to return the property.- Beneficent Provision: Section 630 aims to protect company property and must be interpreted to prevent legal evasion and fraud.Conclusion:The Supreme Court affirmed that a petition under section 630 of the Companies Act, 1956, is maintainable against the legal heirs of a deceased officer or employee for the retrieval of company property. The High Court's dismissal of the appellants' petitions was upheld, and the appeals were dismissed.
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