TaxTMI 
TaxTMI 
1989 (8) TMI 272
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the first respondent who was then the Divisional Sales Manager of the company at Bombay, the registered office of the company being at Calcutta. It is common ground that the first respondent acted on behalf of the company under a power of attorney executed in his favour by the company. The leave and licence was for an initial period of 11 months but subject to renewal for a total period of 66 months. The agreement provided for payment of advance compensation of Rs. 16,500 for 11 months and a monthly compenstion of Rs. 1,500 and a deposit of Rs. 3,50,000 free of interest to be returned at the end of the licence period. The company paid the deposit and the advance compensation and was paying the monthly compensation of Rs. 1,500 thereafter. On taking possession of the flat on November 1, 1980, the company allowed the first respondent to occupy it as an employee of the company. More than three years later, i.e., on March 23, 1984, the first respondent filed a suit (Suit No. 1360 of 1984), in the Court of Small Causes, Bombay, against the company and the owner of the flat for a declaration that he is the actual licensee of the flat and for a permanent injunction to restrain the defend....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e company and consequently the first respondent was in unlawful occupation of the flat after he ceased to be an employee of the company. The first respondent was, therefore, directed to deliver possession of the flat to the company. Despite the concurring judgments rendered against him, the first respondent filed a petition before the High Court under article 227 of the Constitution but at the time of arguments, he was permitted to convert the petition into one under section 482, Code of Criminal Procedure. Three contentions as under were urged before the High Court to assail the judgments of the courts below: 1.The complaint had been filed by a person without due authority to act on behalf of the company and this irregularity vitiated the entire proceedings. 2.The Additional Sessions Judge had wrongly cast the burden of proof on the accused and the wrong approach has vitiated the judgment of the first appellate court. 3.Since complicated questions of title were involved, the Additional Chief Metropolitan Magistrate had no jurisdiction or competence to adjudicate the matter in summary proceedings under section 630 of the Companies Act. The first two contentions did n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....courts by the High Court in its judgment in the following terms: "I do not think that there is any scope for reappreciating or reappraising the evidence. Two courts below have come to concurrent findings of fact and I see no reason for interfering with the conclusions arrived at by the courts below". It was, therefore, urged by counsel that once the concurrent findings of the courts below found acceptance with the High Court, there was no justification for the High Court to set aside the judgment of the two courts. Learned counsel further submitted that section 630 of the Companies Act has been provided with an intent and purpose and its scope and ambit have been set out by this court in reported decisions, but the High Court has failed to notice them and construed section 630 in an unrealistic manner and this had led to miscarriage of justice. Mr. Diwan also invited our attention to the leave and licence agreement entered into by the company with the owner of the flat as well as an affidavit and letter given by the first respondent at the time of the agreement and submitted that, in the face of these clinching documents, there was absolutely no room for the first respondent ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e existed between the parties regarding the licence rights over the flat and refrained from adjudicating upon the rights of the parties in the complaint filed under section 630. 5. Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom), sets out the correct ratio and the High Court was fully justified in applying the said ratio to this case. Before we deal with the contentions of the parties, we may refer to section 630 of the Companies Act and the decisions of this court on the scope and ambit of the section. Section 630 reads as under: "630. Penalty for wrongful withholding of property.- (1) If any officer or employee of a company- (a)wrongfully obtains possession of any property of a company; or (b)having any such property in his possession, wrongfully with holds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act; he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees. (2) The court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the court,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o by the first respondent as the power of attorney agent of the company and he has contemporaneously executed an affidavit on November 1, 1980, wherein he has affirmed as follows: "I say that for the purpose of securing a flat on leave and licence basis for providing residence for the employees of the company, I have entered into negotiations on behalf of the company with Shri Mehdi Mandil the owner of flat No. 84 on the 8th floor of the building known as 'Mehr Dad' at Cuffe Parade, Bombay, to allow the company the use and occupation of the said flat under a leave and licence to be executed between the said Mehdi Mandil and the said company" (emphasis supplied). In para 3 of the affidavit, the first respondent has given an assurance that the flat "would be made use of for the purpose of residence only by the bona fide employees of the company and/or their family/families". In para 4, the first respondent has affirmed "that neither the company nor any employee of the company who may be in occupation of the flat would claim any right, title or interest or any rights of tenancy other than the right to use and occupy the said flat purely as a licensee under and in accordance with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....holson (India) Ltd., (Sd.) A.S. Jain, Office Manager, Bombay". On January 30, 1984, the appellant has acknowledged the letter and agreed to deal with the corporation authorities and has in addition stated that he will also take steps for fixation of standard rent by the court as the landlord was charging exorbitant rent. Digressing for a moment, it has to be noticed that the first respondent had come to realise the rent to be exorbitant only after 3 years and 2 months, and just before he wanted to claim tenancy rights for himself. Reverting back to the correspondence, Mr. Jain has sent a reply on February 1, 1984, to state that the company will have no objection to legal proceedings being taken for fixation of standard rent "of your Flat at 84, Mehr-Dad, Cuffe Parade, Bombay, but however, he (first respondent) alone will have to bear the expenses including the court fees and advocate's fees and the company will not be liable to reimburse him. It is on the footing of these two letters that the first respondent sought to build up. a case that he was the actual licensee of the flat and not the company. Before considering the explanation given by Mr. Jain as to his writing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....construed the commanding manner in which he made the demand as containing a threat. Mr. Jagtiani's argument was that once Mr. Jain's explanation for giving the letters stood falsified, then the letters must be treated as genuine documents binding on the company and affording material to the first respondent to contend that he was the real licensee of the flat. We are unable to find any merit in this contention. Even assuming for argument's sake that Mr. Jain had not written the letters under threat, the first respondent's case will not stand advanced in any manner. A junior employee of the company cannot relinquish the rights of the company in favour of the first respondent especially when the first respondent himself had categorically stated in the leave and licence agreement as well as in his affidavit and letter that the company was the licensee of the flat and the employees are not entitled to claim any tenancy rights for themselves. Fully realising the weakness in his case, the first respondent has made an attempt to authenticate the letters, exhibits 3 and 4, by contending that Mr. Roy, director of the company, had instructed Mr. Jain from Calcutta to write the letters and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mployee who had joined the company long after the flat was taken on rent and who knew nothing of the agreement between the company and the owner of the flat. The author of the letters has himself confessed that he had signed the letters at the behest of the first respondent without knowing the implications of his act. Leaving aside these factors, even if we are to take that Mr. Jain had of his own accord written the letters, can it ever be said that the letters afford scope for the first respondent to contend that he is bona fide entitled to dispute the company's claim to possession of the flat. The sequence of events also go to show that the first respondent had formulated a plan for clinging to his possession of the flat even after resigning his post and in accordance with that plan he had obtained the letters, exhibits 3 and 4, and then filed a suit in order to forestall the company from proceeding against him under section 630 of the Companies Act. Merely because the first respondent had schemingly filed a suit before tendering his resignation, it can never be said that the civil court was in seisin of a bona fide dispute between the parties and as such the criminal court shoul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er there is "no dispute or no bona fide dispute" regarding a property claimed by the company between the company and its employee or ex-employee. It is needless to say that every dispute would not become a bona fide dispute merely because the company's claim to possession is refuted by an employee or ex-employee of the company. As to when a dispute would amount to a bona fide dispute would depend upon the facts of each case. In the present case, the High Court has realised this position and observed that "while considering whether the plea of tenancy is a bona fide plea, it is always necessary to examine and consider the transaction on the basis of which the plea is based" (vide para 39). While stating the position correctly, the High Court went wrong in holding that the self-serving documents produced by the first respondent gave a touch of bona fides to his defence. The High Court was, therefore, not right in thinking that the ratio in Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom.) was attracted to the case inasmuch as the defence put forward by the first respondent was patently an incredible story. Another contention of the first respondent to thwart the proceedings un....