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TaxTMI 
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TaxTMI 
1995 (3) TMI 344
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....nt possession of the allotted premises after the demise of the employee/officer concerned, prosecutions were launched against them (legal heirs) under section 630 of the Companies Act, 1956 (hereinafter referred to as "the Act"). The appellants approached the High Court through petitions under section 482 of the Criminal Procedure Code, 1973, seeking quashing of the proceedings on the ground that the provisions of section 630 of the Act cannot be invoked against the legal heirs of a deceased employee, who had died in harness, and as such the complaint against them under section 630 of the Act was not maintainable. The High Court dismissed their petitions filed under section 482 of the Criminal Procedure Code. Hence, these appeals. The meaningful question and as a matter of fact the only question which has been canvassed before us is: 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? With a view to answer the question, it is desirable that we may first notice the provisions of section 630 of the Act. The said section reads: "630. Penalty for wrongful withholding....
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....rty, or (b) having obtained possession of such property during his employment, wrongfully withholds the same after the termination of his employment. The court opined (at page 10 of 63 Comp Cas): "The beneficent provision contained in section 630, no doubt penal, has been purposely enacted by the Legislature with the object of providing a summary procedure for retrieving the property of the company (a) where an officer or employee of a company wrongfully obtains possession of the property of the company, or (b) where having been placed in possession of any such property during the course of his employment, wrongfully withholds possession of it after the termination of his employment. It is the duty of the court to place a broad and liberal construction on the provision in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy. Section 630 of the Act which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draftsman of the Act. The section is in two parts. Sub-section (1) by clauses (a) an....
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.... and (b) which arise under different set of circumstances. The Bench noticed with approval the judgments of the Bombay High Court in Harkishin Lakhimal Gidwani v. Achyut Kashinath G Wagh [1982] 52 Comp. Cas. 1 (Bom) and Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp. Cas. 329 (Bom). A three-judge Bench later on in Amrit Lal Chum v. Devoprasad Dutta Roy [1988] 63 Comp. Cas. 839 (SC); [1988] 2 SCR 783, while hearing an appeal from the judgment of the Calcutta High Court in Amritlal Chum's case [1987] 61 Comp. Cas. 211, held that section 630 of the Act plainly makes it an offence if an officer or employee of a company who was permitted to use the property of the company during his employment wrongfully retains or occupies the same after the termination of his employment. It was opined that it is the wrongful holding of the property of the company after the termination of the employment which is an offence under section 630(1) of the Act and that there is no warrant to give a restrictive meaning to the term "officer or employee" appearing in sub-section (1) of section 630 of the Act as meaning only an existing officer or an existing employee and not those whose employment....
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....th the capacity of creating penal liability embracing the case of an existing employee or officer of the company and includes a past officer or a past employee of the company; (ii)Clause (b) is equally independent and distinct from clause (a) as regards penal consequences and it squarely applies to the cases of past employees or officers; (iii)The entitlement of the officer or employee to the allotted property of the company is contingent upon the right and capacity of the officer or the employee by virtue of his employment to continue in possession of the property belonging to the company, under authority of the company and the duration of such right is co-terminous with his/her employment. Thus, inescapably it follows that the capacity, right to possession and the duration of occupation are all features which are integrally blended with the employment and the capacity and the corresponding rights are extinguished with the cessation of employment and an obligation arises to hand over the alloted property back to the company. Where the property of the company is held back whether by the employee, past employee or any one claiming under them, the retained possession would amount ....
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....61 Comp. Cas. 211. We are afraid, we find it difficult to subscribe to the narrow construction placed by the High Court of Calcutta on the provision contained in subsection (1) of section 630 of the Act which defeats the very purpose and object with which it had been introduced." We are in respectful agreement with the above view and are of the opinion that the legal representatives or the heirs of the deceased employee or officer would squarely fall within the ambit of section 630 of the Act. To exclude them, by giving a restrictive interpretation to the provisions would defeat the very object of the provision which declares the wrongful withholding of the property of the company to be an offence. It is immaterial whether the wrongful withholding is done by the employee or the officer or the past employee or the past officer or the heirs of the deceased employee or the officer or anyone claiming; their right of occupancy under such an employee or an officer. It cannot be ignored that the legal heirs or representatives in possession of the property had acquired the right of occupancy in the property of the company by virtue of being family members of the employee or the officer du....
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.... or knowingly misapplied. Thus, it is in the event of the disobedience of the order of the court that imprisonment for a term which may extend to two years has been prescribed. The provision makes the defaulter, whether an employee or a past employee or the legal heir of the employee, who disobeys the order of the court to hand back the property to the company within the prescribed time liable for punishment. The object of the Companies Act, inter alia, is to regulate the affairs of companies including the control of the management and protection of the property of the company. The object of section 630 of the Act has, thus, a direct nexus with the object of the Act. It is precisely for this reason that in Gokak Patel Volkart's case [1991] 71 Comp. Cas. 403 (SC), this court held the offence under section 630 of the Act to be "a continuing offence". Section 630 of the Act provides speedy relief to the company where its property is wrongfully obtained or wrongfully withheld by an "employee or an officer" or a "past employee or an officer" or "legal heirs and representatives" deriving their colour and content from such an "employee or officer" in so far as the occupation and pos....