Wrongful retention of company accommodation may be ended through inherent powers despite pending prosecution

Section 630 of the Companies Act, 1956 is described as a remedy against wrongful retention of a company's property by a present or former employee after termination of service. The Calcutta High Court noted that where the company's entitlement to possession is clear and the civil challenge to termination has failed, pendency of the criminal prosecution does not by itself prevent restoration of possession. The article further states that the High Court's inherent powers may be used to prevent continued wrongful withholding and to secure vacating of company accommodation, even before the criminal trial concludes.

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Issues: Whether the High Court could, in exercise of its inherent powers, direct an ex-employee to vacate and restore company accommodation under section 630 of the Companies Act, 1956, even though the criminal prosecution under that provision was still pending.

Analysis: The complaint alleged that the accused, after termination of service, continued to retain the company bungalow without legal right. The Court noted that the civil challenge to the termination had already failed and that the accused had repeatedly delayed the criminal proceedings, preventing effective progress before the Magistrate. Relying on the principle that section 630 is intended to protect a company's property from wrongful retention by an employee or former employee, the Court held that the pendency of the criminal case did not bar an order directing delivery of possession where the company's entitlement was clear. It further held that the inherent jurisdiction of the High Court could be invoked to prevent continued wrongful withholding and to secure restoration of the property.

Conclusion: The direction to vacate the bungalow was warranted and the petitioner-company was entitled to restoration of possession.

Ratio Decidendi: Where a company's property is wrongfully retained by a present or former employee after termination of service, the Court may, in appropriate cases, direct restoration of possession under section 630 of the Companies Act, 1956 in exercise of its inherent powers, even before the criminal trial concludes.

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