TaxTMI 
TaxTMI 
TaxTMI 
2009 (2) TMI 465
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....ng "Devenshire House", Westfield Estate, at Bhulabhai Desai Road, Mumbai (hereinafter referred to as "suit premises") since he was appointed as a Director and Technical Advisor of one M/s. Automobile Products of India Ltd. (for short "API Ltd."). Subsequently he was appointed as Managing Director of the said company. The suit premises was owned by Her Highness Vijaya Raje Scindia, Maharani of Gwalior and was taken on lease by the API Ltd. for the residential needs of its employee. However, Mr. C.B. Saran resigned as Managing Director and later on also as its Director. Subsequent to his resignation as Managing Director, he was appointed as the Managing Director of Ex-Cello Ltd., respondent No. 1 herein. Mr. C.B. Saran made a representation to the then Chairman of the API Ltd., that as a Managing Director of the respondent No. 1 company he was entitled to rent free accommodation and for the sake of convenience the API Ltd. may execute a licence agreement in respect of the suit premises in favour of respondent No. 1, who in turn may permit him to occupy the suit premises. The request of Mr. C.B. Saran was considered favourably in the Board Meeting dated 12-6-1968 in which Mr. Saran ....
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....nder section 630 of the Act and a sentence of Rs. 5,000 was imposed on each of the accused-appellant with default stipulation of simple imprisonment for 15 days. The appellants were directed to vacate the suit premises within 4 months from the date of said order and in default to suffer simple imprisonment for 4 months. 8. Being aggrieved by the said order the appellants filed a criminal appeal before the Sessions Judge which was dismissed. As the mother of appellant No. 1 died on 29-11-2007 her appeal stood abated. Against the said dismissal the two appellants preferred a criminal revision application before the High Court of Bombay. The learned Single Judge heard the parties on merits and dismissed the appeal. The learned Single Judge while upholding the order of the courts below held that the appellants were liable to be convicted under section 630 of the Act as they withhold the delivery of the property of respondent No. 1 - company. In terms of the prayer made by the learned counsel appearing for the appellants, the learned Single Judge granted stay of eight weeks to approach the higher court, subject to an undertaking that in the event of their failing before the higher cour....
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....withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years." 13. The main purpose to make action an offence under section 630 is to provide a speedy and summary procedure for retrieving the property of the company where it has been wrongly obtained by the employee or officer of the company or where the property has been lawfully obtained but unlawfully retained after termination of the employment of the employee or the officer. From the bare reading of the section, it is apparent that sub-section (1) is in two parts. Clauses (a) and (b) of sub-section (1) create two different and separate offences. Clause (a) contemplates a situation wherein an officer or employee of the company wrongfully obtains possession of any property of the company during the course of his employment to which he is not entitled whereas clause (b) contemplates a case where an officer or employee of the company having any property of the company in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the company. Under this provision, it may be that an officer o....
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....onding rights are extinguished with the cessation of employment and and obligation arises to hand over the allotted property back to the company. Where the property ofthe company is held back whether by the employee, past employee or anyone claiming under them, the retained possession would amount to wrongful withholding of the property of the company actionable under section 630 of the Act. The argument ofthe learned counsel for the appellants that since the provisions of section 630 of the Act are penal in nature the same must be strictly construed and, the parties which have not been expressly included by the Legislature in section 630(1) of the Act, cannot by any interpretative extension be included in the said provision, ignores the situation that by a deeming fiction, the legal representatives or heirs of a past employee or officer, in occupation of the property of the company, would continue to enjoy the personality and status of the employee or the officer only. An argument quite similar in nature was raised in Baldev Krishna Sahi case [1987] 4 SCC 361 also while resisting the extension of the provisions of section 630 of the Act to the past employee or past officer and rej....
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....ight 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 during the employment of the officer of the employee and not on any independent account. They, therefore, derive their colour and content from the employee or the officer only and have no independent or personal right to hold on to the property of the company. Once the right of the employee or the officer to retain the possession of the property, either on account of termination of services, retirement, resignation or death, gets extinguished, they (persons in occupation) are under an obligation to return the property back to the company and on their failure to do so, they render themselves liable to be dealt with under section 630 of the Act for retrieval of the possession of the property." (p. 739) 15. The ratio of Abhilash Vinodkumar Jain (supra) was reiterated by another Larger Bench in Lalita Jalan (supra), wherein it laid down the main ingredients of section 630 in paras 6 and 7, the same are extract....
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....the property of the company (a) where an officer or employee of a company wrongfully obtains possession of 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.' The Court went on to observe that it is only the present officers and employees who can secure possession of any property of a company and it is possible for such an officer or employee to wrongfully take away possession of any such property after termination of his employment. Therefore, the function of clause (a) though it primarily refers to the existing officers and employees, is to take within its fold an officer or employee who may have wrongfully obtained possession of any such property during the course of his employment, but wrongfully withholds it after the termination of his employment. It was further held that section 630 plainly makes it an offence if an of....
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....g through him of such property is unlawful and recovery of the same on the pain of being committed to a prison or payment of fine cannot be stated to be unreasonable or irrational or unfair so as to attract the rigour of article 21 of the Constitution. If the object of the provision of section 630 of the Act is borne in mind, the expansive meaning given to the expression 'employee or anyone claiming through him' will not be unrelated to the object of the provision nor is it so far- fetched as to become unconstitutional. Therefore, with profound respects the view expressed in J.K. (Bombay) Ltd. [2001] 2 SCC 700 in our opinion is not correct and the view expressed in Abhilash Vinodkumar Jain [1995] 3 SCC 732 is justified and should be accepted in interpreting the provision of section 630 of the Act. If an erstwhile or former employee is prosecuted under section 630 of the Act on account of the fact that he has not vacated the premises and continues to remain in occupation of the same even after termination of his employment, in normal circumstances it may not be very proper to prosecute his wife and dependent children also as they are bound to stay with him in the same premises. The....
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....direct relationship with the respondent-company. Both of them came in possession of the suit premises through the original allottee of the said premises, namely, Mr. C.B. Saran, who has since died. The company has every right and jurisdiction to preserve its property and to see that the same is not used for purposes other than the one expressed or directed in the articles of association of the company. On a careful reading of the ratio of the decisions in Abhilash Vinodkumar Jain's case (supra) and Lalita Jalan (supra), it is explicitly clear that they are squarely applicable to facts of the present case. When the legal representatives of the original allottee withhold the property wrongfully the company is entitled to invoke the provisions of section 630 of the Act so as to retrieve the property being withheld wrongfully. The above quoted decisions have also laid down that all those who have come in possession of the premises with the express or implied consent of the employee and have not vacated the premises would be withholding the delivery of the property to the company and, therefore, they are liable to be prosecuted under section 630 of the Act as is done in the present case....