2020 (8) TMI 551 - HC - Companies Law

Court orders accused to vacate company residence after retirement, denies eligibility for housing scheme. Enforcement imminent.

The High Court upheld the applicability of Section 452 of the Companies Act, 2013, directing the accused to vacate the company-provided residence by 30th ... Delivery of possession of the premises/flat - Sub-Section (2) of the Section 452 of the said Act - HELD THAT:- Having considered the period of service, the scheme referred to, the quarter/premises being part of the entitlement in terms of service and the settled principles of law which have spelt out the proposition regarding the provisions of Sub-Section (2) of Section 452 of the Companies Act (earlier Sub-Section (2) of Section 630 of the Companies Act, 1956), I am of the opinion that the accused/opposite party is unnecessarily dragging the issue relating to vacating the quarter/premises belonging to the company and a plea of granting extension of stay for a limited period for finding a suitable accommodation was unreasonably converted into a right. In view of the conduct of the accused/opposite party and the provisions of law along with the settled principles as has been decided by the Hon’ble Apex Court in GOPIKA CHANDRABHUSHAN SARAN VERSUS XLO INDIA LTD. [2009 (2) TMI 465 - SUPREME COURT] as also this Court, I hold that the order dated 17-4-2019 passed by the Ld. ACJM, Durgapur is not in consonance with the principles of law and is liable to be set aside. The order passed by the Ld. ACJM, Durgapur is hereby set aside and CRR 2592 of 2019 is allowed. Issues Involved:1. Applicability of Section 452 of the Companies Act, 2013.2. Validity and applicability of the scheme for utilization of company’s houses.3. Authority of the Magistrate to decide on the possession of the company’s property at the threshold of the case.Issue-wise Detailed Analysis:1. Applicability of Section 452 of the Companies Act, 2013:The petitioner filed a complaint under Section 452 of the Companies Act, 2013, alleging that the accused wrongfully withheld the company's property after retirement. The accused retired on 30-9-2016 but continued to occupy the company-provided residence. The petitioner sought an order for the accused to vacate the premises. The Magistrate initially dismissed the application, stating that the issues raised could not be decided at the threshold but only at the conclusion of the trial. The High Court, however, found that the accused was unnecessarily dragging the issue and upheld the applicability of Section 452, directing the accused to vacate the premises by 30th June 2021.2. Validity and applicability of the scheme for utilization of company’s houses:The accused argued that a scheme introduced by the company in 2008 allowed ex-employees to lease company houses. This scheme was valid until 31-12-2008. The accused claimed entitlement under this scheme. However, the court noted that the scheme had expired and did not apply to the accused, who retired in 2016. The court also found no evidence of any other existing scheme that would entitle the accused to retain the property post-retirement.3. Authority of the Magistrate to decide on the possession of the company’s property at the threshold of the case:The Magistrate initially dismissed the application under Section 452(2) on the grounds that the issues could not be decided at the inception of the case. The High Court reassessed this order, noting that the Magistrate had accepted the existence of a valid Leave & License Agreement and the complainant's ownership of the property. The High Court cited precedents, including Tata Tea vs. Fazlur Rahman and Metal Box India vs. State of W.B., which supported the view that the court could order the vacation of company property even before the formal disposal of the criminal case. The High Court concluded that the Magistrate's order was not in line with legal principles and set it aside.Conclusion:The High Court set aside the Magistrate's order dated 17-4-2019, allowing the petitioner's application under Section 452(2) of the Companies Act. The accused was directed to vacate the premises by 30th June 2021, considering the socio-economic conditions due to the pandemic. If the accused failed to vacate by this date, the Magistrate was instructed to take legal steps to enforce the order.