TaxTMI 
TaxTMI 
2019 (12) TMI 397
X X X X Extracts X X X X
X X X X Extracts X X X X
....er 'disputed property') with the legal heirs of one late Mr. Arun Kumar Bajoria (hereinafter 'vendors'). Per the terms of the agreement, the vendors would execute and register the deed of conveyance in favour of the appellant upon payment of the entire sale consideration of Rs. 2,02,26,000/-. However in the interim, under Clause 6 of the agreement, the appellant company would be put into possession of the property subject to payment of monthly rent of Rs. 84,275/-. This agreement is not disputed. The appellant's case is that the 2nd Respondent/accused Mr. Bal Binode Bajoria was a director of the appellant company from 1988 to 2008. He was allowed to use and occupy the disputed property on and from 1.5.2008 by virtue of holding the office of director. The 2nd Respondent was to retire by rotation from the Board of Directors in the Annual General Meeting of the appellant company held on 22.11.2008; however he offered himself for reelection. The members present in the meeting voted against him and thereafter the 2nd Respondent ceased to be a director of the appellant company. Consequently he was required to return the disputed property to the company; however he failed to do so. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....joria's family became strained. Hence the vendors failed to execute a deed of conveyance as agreed upon between the 2nd Respondent and their predecessor-in-interest, and also wrongfully removed him from Directorship of the appellant company. Thereafter the 2nd Respondent filed Suit No. 2126/2009 before the Civil Judge (Senior Division) at Alipore against the vendors, praying for specific performance and a permanent injunction restraining the vendors from disturbing his possession, based upon the supposed oral agreement/understanding of sale he had with Arun Kumar Bajoria. The Civil Judge (Senior Division) by order dated 6.7.2009 issued a temporary injunction directing the parties to maintain status quo in respect of possession of the disputed property. This suit is still pending adjudication. 4. The learned Judicial Magistrate at Alipore by order dated 6.9.2010 allowed the appellant's application under Section 630(2). The Magistrate relied upon this Court's decision in Atul Mathur v. Atul Kalra, (1989) 4 SCC 514, and the Calcutta High Court's decision in Tata Tea Limited v. Fazlur Rahman, (2001) 104 Comp Cas 718 Cal. to hold that the pendency of a civil suit would not bar the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....operty had been allotted by the company to the accused officers/employees as a perquisite of their service. The High Court further held that since there was no evidence that any deed of conveyance was registered with respect to the agreement for sale dated 26.4.2008 (supra), and the company had not paid any consideration or advance rent at the time of the agreement, it could not be said that the company had any title to the disputed property. Hence the High Court held that the lower court finding that the disputed property had been given to the 2nd Respondent by the company was patently incorrect, and that Section 630(2) of the 1956 Act would not apply to the present case; and consequently set aside the lower courts' orders. 5. Learned senior counsel for the appellant, Mr. Shyam Divan, emphatically argued that the High Court's finding was erroneous in as much as it found that the appellant company had no right to claim recovery of possession of the disputed property merely because no sale deed was executed. The 2nd Respondent himself has admitted in his counter-affidavit that he had delivered the original title documents of the disputed property to the appellant company by le....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... too via an unregistered sale deed. Consequently it cannot be said that the appellant had any title to the disputed property, and that the company gave the 2nd Respondent possession of the property in his capacity as an officer of the company. Hence Section 630 is not attracted to the present case. 7. Therefore the following issues arise for consideration in the present appeal: First, whether an application under Section 630(2) of the 1956 Act was maintainable, in spite of pendency of the civil suit and issue of temporary injunction in respect of the disputed property? Second, whether an order could be made under Section 630(2) prior to final disposal of the complaint under Section 630(1)? Third, if the first and second issues are answered in the affirmative, whether the company is entitled to pray for dispossession of 2nd Respondent from the property? Fourth, whether it is required that 2nd Respondent should have been in possession of the disputed property as a perquisite of his service? Finally, whether in light of the answers to the aforementioned issues, the High Court was justified in exercising its inherent powers under Section 482 of the Cr.P.C? 8. With ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s favour in the civil suit. The mere issuance of a temporary injunction by the civil court directing maintenance of status quo in respect of the disputed property does not make the dispute bona fide or bar the company's right to recover the disputed property from the accused employee under Section 630 of the 1956 Act. At best, such an injunction would only bar the company from creating any rights in favour of third parties pending disposal of the civil suit. This is because the cause of action in the civil suit is completely different from the question of whether the employee is wrongfully withholding the company's property, which is the issue for consideration in the present criminal proceedings. If prima facie the trial court finds that the company has the right to possess the property, the issuance of a temporary injunction by the civil court cannot be used to defeat the company's lawful right of possession. This is also reflected in the following relevant clauses of Section 41 of the Specific Relief Act, 1963. "41. Injunction when refused.-An injunction cannot be granted- (b) to restrain any person from instituting or prosecuting any proceeding in a court n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Kannankandi Gopal Krishna Nair v. Prakash Chunder Juneja, (1994) 81 Comp Cas 104,: "4. The courts have been flooded with prosecutions instituted by companies under section 630 of the Companies Act and it has been demonstrated that this provision of law has almost been rendered impotent by employees and ex-employees who hold on to company property by litigating for decades together. At the end of this long exercise, if the accused loses, the company is expected to consider itself fortunate if the premises are restored and the offence, if any, is to be treated as, to use a common parlance expression, "forgiven and forgotten". Another ploy that has been successfully employed in these cases is to take advantage of the desperation of the poor landlord who, in the midst of these legal skirmishes, genuinely feels that it is better to make the best of the bad bargain by selling out to the party in possession. The accused who, on the one hand, has frustrated the law as far as section 630 of the Companies Act is concerned thereafter contends that he cannot be ordered to restore possession of his own flat. In other words, through such a devious procedure, the accused is permitted to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Section (See Kannankandi Gopal Krishna Nair (supra); PV George v. Jayems Engineering Co. (P) Ltd, (1990) 2 Comp LJ 62 (Mad)). The 2nd Respondent has admitted that after the death of Arun Kumar Bajoria, the disputed property was inherited by the vendors who subsequently transferred possession to the appellant company by the agreement dated 26.4.2008. The 2nd Respondent also handed over the title deeds of the property to the appellant company. Therefore, till the time that the 2nd Respondent does not prove in the civil suit that the vendors were required to have sold the property to him, it is the company which has the exclusive right to possess the property at present. Further, it is true that in the majority of cases falling under the ambit of Section 630, it has been that property possessed by the company was allotted to an employee for the purposes of residential accommodation, etc. as an incidence of his service, at the first instance itself. In the present case, the 2nd Respondent has been a director of the company since 1988, and claims to be in permissive possession of the disputed property as per the alleged understanding between him and his relative, the deceased ....