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TaxTMI 
TaxTMI 
TaxTMI 
2003 (4) TMI 436
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....3. Bombay Gas Co. Ltd., respondent No. 1, had taken on lease a flat in a building known as "Hari Bhavan", 64, Pedder Road, Bombay. Shri N.K. Jalan, in his capacity as Director of the Company, was allotted the said flat. Ashok Kumar Jalan (accused No. 1 and respondent No. 2 in the present appeal) is son of Shri N.K. Jalan. Appellant No. 1, Smt. Lalita Jalan (accused No. 2) is wife of Ashok Kumar Jalan and appellant No. 2, Siddharth Jalan (accused No. 3) is his son, Shri N.K. Jalan died in 1967. The company purchased the flat and became owner thereof in April, 1991. It filed a criminal complaint under section 630 of the Companies Act, 1956 (hereinafter referred to as 'the Act') against Ashok Kumar Jalan, Smt. Lalita Jalan and Siddharth Jalan on March 16, 1994. The proceedings of the complaint case were stayed in a company petition and finally sometime in the year 2001, the learned Magistrate issued process against the accused. The appellants moved an application for recall of the process issued against them and for their discharge, which was rejected by the Metropolitan Magistrate, 14th Court, Girgaum, Mumbai by order dated December 1, 2001. Thereafter, the appellants preferred a pet....
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...., come within the ambit of section 630 of the Act. The main ingredient of the section is wrongful withholding of the property of the company or knowingly applying it to purposes other than those expressed or directed in the articles and authorised by the Act. The dictionary meaning of the word "withholding" is to hold back; to keep back; to restrain or decline to grant. The holding back or keeping back is not an isolated act but is a continuous process by which the property is not returned or restored to the company and the company is deprived of its possession. If the officer or employee of the company does any such act by which the property given to him is wrongfully withheld and is not restored back to the company, it will clearly amount to an offence within the meaning of section 630 of the Act. The object of enacting the section is that the property of the company is preserved and is not used for purposes other than those expressed or directed in the Articles of Association of the company or as authorised by the provisions of the Act. On a literal interpretation of section 630 of the Act the wrongful withholding of the property of the company by a person who has ceased to be a....
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....lding of the property of the company after the termination of the employment, which is an offence under section 630(1)(b) of the Act. 8. Soon thereafter the same question came up for consideration before a three Judge Bench of this Court in Amrit Lal Chum v. Devoprasad Dutta Roy [1988] 2 SCC 269, which reiterated that it is the wrongful withholding of such property, meaning the property of the company after termination of the employment, which is an offence under section 630(1)(b) of the Act. It was further held that the construction placed upon the section in Baldev Krishna Sahi's case (supra) is the only construction possible and there was 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 the existing officers and employees and not those whose employment have been terminated. The matter was again considered in Atul Mathur v. Atul Kalra [1989] 4 SCC 514, and it was held that the purpose of enacting section 630 is to provide speedy relief to a company when its property is wrongfully obtained or wrongfully withheld by an employee or an ex-employee and the view taken in Baldev Krishna Sah....
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....y misapplied is delivered up or refunded to the company. For failure to do so sub-section (2) prescribes the punishment. . . ." 10. The four cases referred to above, considered the question whether a former or past employee or officer of the company could be prosecuted under section 630 of the Act. In Smt. Abhilash Vinodkumar Jain's case (supra), the question which arose for consideration was whether the legal heirs and representatives of the employee or the officer concerned continuing in occupation of the property of the company, after the death of the employee or the officer, could also be prosecuted under section 630 of the Act. The complaint in the said case had been filed against the legal heirs of the employee-officer of the company, who died in harness while serving the company. After noticing the above cited four decisions and also the fact that the Court had consistently taken the view and repeatedly emphasized that the provisions of section 630 of the Act have to be given purposive and wider interpretation and not a restrictive interpretation, it was held as under in para 14 of the Report : "14. Thus, inescapably it follows that the capacity, right to possession and th....
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....served that the possession of the legal heirs of the deceased employee cannot be equated with the family members of an erstwhile employee. In our opinion, this case is clearly distinguishable on facts and the principle laid down therein cannot be of any assistance to the appellants. One Mata Harsh Mishra was an employee of the company and he was given possession of a flat of the company for the purposes of his residence during the course of his employment which he had to vacate as and when he ceased to be the employee of the company. Mata Harsh Mishra tendered his resignation, which was accepted by the company and he was directed to hand over charge of his work to the Production Manager and to vacate the flat in his possession. Shri Mishra, however, did not vacate the premises on the pretext that he had not been paid his dues and, therefore, he had a right to remain in occupation of the flat. The company then filed the complaint under section 630 of the Act against Mata Harsh Mishra, his wife and son (respondent Nos. 1 and 2 in the appeal). The respondent Nos. 1 and 2, viz., wife and son, moved an application before the Judicial Magistrate for recall of the order of process, which ....
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....sh Vinodkumar Jain's case (supra) held that the object of the provisions of section 630 of the Act is retrieval of the possession of the property of the company which was in occupation of an employee or an officer and that such property can be recovered not only from a former employee or an officer but also his heirs or representatives in possession of the property who had acquired a right of such member or came to retain the possession of the property by tracing their possession to such employee or officer. This Court stated that they have no right independent of the employee but derive the same from the employee or officer who hold on to the property of the company and they would also be covered by the provisions of section 630 of the Act. In J.K. (Bombay) Ltd.'s case (supra), this Court took the view that the decision in Smt. Abhilash Vinodkumar Jain's case (supra) should be confined to the legal heirs of the employees and that other family members cannot be covered by the provision of section 630 of the Act inasmuch as the provision is penal in nature and any expansive meaning attributed to the expression used in section 630 of the Act will attract the wrath of Article 21 of th....
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....default to suffer imprisonment for a term which may extend to two years. Sub-section (1), wherein wrongfully withholding the property of the company has been made an offence, is punishable with fine only and it does not provide for imposing any substantive sentence. It is only where the Court directs the officer or employee to deliver or refund the property within a fixed period and such order of the Court is not complied with and the property is not delivered or refunded that a sentence of two years can be awarded. Therefore, it is non-compliance or non-observance of the order of the Court regarding delivery or refund of the property which results in making the person so directed liable for being awarded a substantive sentence of imprisonment. In Smt. Abhilash Vinodkumar Jain's case (supra) this has been clearly elaborated in para 16 of the report and it has been held that it is in the event of the dis-obedience of the order of the Court that imprisonment for a term which may extend to two years has been prescribed. This provision makes the defaulter, whosoever he may be, who disobeys the order of the Court to hand back the property to the company within the prescribed time, liabl....
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....ities (Prevention) Act, etc. it makes provision for incorporation of the companies, its share capital and debentures, management and administration, allotment of shares and debentures, constitution of Board of Directors, prevention of oppression and mismanagement, winding-up of the company, etc. The heading of part XIII of the Companies Act is "GENERAL" and a few provisions therein, namely, sections 628 to 631 create offences and also prescribe penalty for the same. Having regard to the purpose for which section 630 has been enacted viz. to retrieve the property of the company and the salient features of the statute (Companies Act) it is not possible to hold it as a penal provision as the normal attributes of crime and punishment are not present here. It cannot be said to be an offence against the society at large nor the object of awarding sentence is preventive or reformative. In such circumstances the principle of interpretation relating to criminal statutes that the same should be strictly construed will not be applicable. 18. We would like to mention here that the principle that a statute enacting an offence or imposing a penalty is strictly construed is not of universal appl....
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....anguage of the section cannot arise as the order would be directed against a specifically named person. 20. With profound respects we are unable to agree with certain observations made in J.K. (Bombay) Ltd.'s case (supra) that prosecution of other family members of a former employee living with him would violate Article 21 of the Constitution. The award of sentence by the order of the Court cannot amount to violation of any of the fundamental rights guaranteed under the Constitution is now well-settled by several authoritative pronouncements of this Court. A Constitution Bench in Parbhani Transport Co-operative Society Ltd. v. Regional Transport Authority [1960] 3 SCR 177 (at 188) has held that no one can complain breach of Article 14 of the Constitution by a decision of a quasi judicial body and if it has made any mistake in its decision, there are appropriate remedies available to the aggrieved party for obtaining relief. In Naresh Shridhar Mirajkar v. State of Maharashtra AIR 1967 SC 1, a decision by a bench of nine Hon'ble Judges, Chief Justice Gajendragadkar speaking for the majority held as under : "38. The argument that the impugned order affects the fundamental rights of ....
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....Vinodkumar Jain's case (supra) wherein it has been clearly held that the object of section 630 of the Act is to retrieve the property of the company where wrongful holding of the property is done by an employee, present or past, or heirs of the deceased employees or officer or anyone claiming the occupancy through such employee or officer. The view expressed in Smt. Abhilash Vinodkumar Jain's case (supra) clearly subserves the object of the Act which is to the effect of recovering the possession of the property belonging to the company. If it is held that other members of the family of the employee or officer or any person not connected with the family who came into possession through such employee would not be covered by section 630 of the Act, such a view will defeat the quick and expeditious remedy provided therein. The basic objection to this view is that the aforesaid provision contained in section 630 of the Act is penal in nature and must be strictly construed and therefore the actual words used should not be given any expansive meaning. A provision of this nature is for the purpose of recovery of the property and if, in spite of demand or subsequent order of the court, the ....