TaxTMI 
TaxTMI 
1983 (3) TMI 230
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....mpanies, West Bengal, against Ashoka Marketing Ltd., and its four directors and secretary alleging commission of an offence under section 629A read with section 635B of the Companies Act, 1956. The substance of the complaint is that the accused company and four other companies, viz., Ashoka Cement Ltd., Jaipur Udyog Ltd., Rohtas Industries Ltd. and Sone Valley Portland Cement Co. Ltd., brought into existence a common concern named Sahu Cement Service with a view to getting various services including appointment of personnel for all the participating companies, that Sahu Cement Service on behalf of its constituents appointed Sri. D. N. Gupta as their registered engineer by a letter dated April 16, 1960, that thereafter, the services of Sri D....
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....rely an organiser and agent, (3) that the services of Sri D.N. Gupta were never lent and transferred to the accused company as alleged and could not be legally transferred without a tripartite agreement (between the transferor, the transferee and the employee concerned) of which there is no allegation or averment in the complaint, and (4) that section 635B of the Companies Act, 1956, does not constitute or create a criminal offence punishable under section 629A of the Act. The learned advocate for the petitioner has elaborated the aforesaid points and relied on the decision in the case of Mahalderam Tea Estate Ltd. v. D. N. Prodhan [1979] 49 Comp. Cas. 529; 1978 CHN 336, in relation to the first point, the decision in the case of Pyarcha....
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....ers' application), between the accused company as organizers and four companies which were manufacturers of cement for rendering technical services to them was a separate legal entity and that Sri D.N. Gupta was appointed regional engineer in the said organisation at Calcutta by the letter of appointment date April 16, 1960 (annexure "A" to the application), subsequently superseded by the letter dated May 16, 1960 (annexure "Y" to the application), on the terms and conditions mentioned therein. The said letters of appointment were signed by one T.P. Bhalle, director for Sahu Cement Service. There is nothing in the said memorandum of agreement to show that Sahu Cement Service had any authority or power to appoint any employee for or on behal....
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....ginal contract of service by mutual consent and to make a new contract between the employee and the third party. Therefore, when an employer orders an employee to do a certain work for another person, the employee still continues to be in his employment. The only thing that happens in such a case is that he carries out the orders of his master. The employee has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired. It may be that such third party may pay his wages during the time that he has hired his services, but that is because of his agreement with the employer. That does not preclude the employee from claiming his wages from the employer. If the employee fails to carry out th....
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.... So the allegation that accused Nos. 2 to 6 were directors of the accused company without any averment of their taking part in its day-to-day business operations does not make out a case for taking cognizance of an offence punishable under section 629A read with section 635B of the Act (See Girdharilal Gupta v. D. N. Mehta AIR 1971 SC 2162, Mahalderam Tea Estate P. Ltd. v. D.N. Prodhan [1978] CHN 336; [1979] 49 Comp. Cas. 529 (Cal.). On the point whether section 635B creates an offence punishable under section 629A of the Act, the learned advocate for the petitioners has submitted that it does not, and in support of his submission has relied on the case of Registrar of Companies v. Bharat Produce Co. Ltd. [1980] 50 Comp. Cas. 250 (Cal.),....