TaxTMI 
TaxTMI 
2022 (8) TMI 884
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....hereinafter referred as 'petitioner') for commission of an offence under Section 630 of the Companies Act and for prosecution/punishment of the petitioner for wrongfully withholding the companies' property. 3. The learned ACMM (Special Acts)/Central, after recording pre-summoning evidence of CW-1 (S.K. Bajpai), and having perused the record found that prima-facie, there was sufficient material to proceed against the petitioner for the offence under Section 630 of the Companies Act and accordingly, the petitioner has been summoned by the concerned Court vide impugned order dated 19.10.2012. 4. The brief facts of the case are that on 27.02.1971, the complainant was incorporated as a Public Limited Company and was registered in the records of Registrar of Companies, Kanpur. The father of the petitioner, namely, Shri K.N. Modi, was the Chairperson and one of the Managing Directors of the complainant company, with approximately 14,000 shareholders. On 04.02.1984 an Agreement to Sell for the purchase of property, bearing No. 15, Friends Colony (West), New Delhi-110065 admeasuring 2800 square yards, with an old structure built thereon (property in dispute) was entered into between the c....
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....erty in dispute. On 08.04.2008, the BIFR sanctioned a rehabilitation scheme qua the complainant company. The sanctioned scheme stipulated that the complainant company is not in possession of the property in question. 6. In an appeal bearing No.174/2008, at the instance of the petitioner, the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) on 25.08.2008, in view of the order passed by this Court in CS(OS) No. 974/2007, directed status quo with respect to the property in question. There is another suit bearing CS(OS) No. 991/2009 filed by the petitioner against the members of the Modi family including against the complainant company for permanent and mandatory injunction restraining them from acting contrary to the terms of the MoU and the decision of the Chairman, IFCI dated 18.02.1995. On 22.04.2010, the AAIFR passed an order in the aforesaid appeal holding that since Civil suit No. 974/2007 is pending before this court, none of the parties should seek to pray either for deletion of the property or for implementation of Sanctioned Scheme, 2008 in relation to the said property till the disposal of the said civil suit and parties were directed to maintain sta....
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....r to the petitioner. The father of the petitioner was given the charge of the property in dispute only on behalf of the company. Once he resigned from the company, the legal heirs of the erstwhile employee of the company cannot claim any perpetual right; (ii) provisions of Section 630 of the Companies Act, is a special remedy and the same is a complete Code in itself. Section 630 of the Companies Act can always be resorted to, notwithstanding, the pendency of any civil dispute between the company with others; (iii) the learned court below has considered the facts of the case in the right perspective and has recorded its prima facie satisfaction, therefore, at the stage of issuing summons nothing more is required to be done; (iv) this Court, therefore, should stay its hands from scrutinizing the merits and demerits of the case, instead, should leave it to the concerned court to deal with, at an appropriate stage; (v) There is no suppression of facts by the complainant in its disclosure before the court below. The pendency of the civil dispute was very much disclosed. The right of the company to claim its property is independent of any other settlement rights and obligation....
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....w applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence, both oral and documentary, in support thereof and consider if that be sufficient for the complainant to succeed in bringing home the charge against the accused. The Magistrate is not a silent spectator. The Magistrate may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused. It has also been held that the accused can approach the High Court under Section 482 of the Code or Article 227 of the Constitution to have the proceeding quashed against him when the complaint does not make out any case against him. It is also a settled law that if the High Court finds that invoking a criminal jurisdiction is an abuse of the process of law, the High Court should not hesitate to exercise its power under Section 482 of Cr.P.C. or 226 of the Constitution of India. 13. Section 630 of the Companies Act is reproduced as under: - "Penalty for wrongful withholding of property - If any officer or employee of a company- (....
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....er, which is essentially of a civil nature, has been given a cloak of a criminal offence. Criminal proceedings are not a shortcut to other remedies available in law. Before issuing a process, criminal court has to exercise a great deal of caution. For the accused, it is a serious matter. 17. In the matter of Gopika Chandrabhushan Saran and Anr. (supra), the Hon'ble Supreme Court was considering the scope and ambit of the provisions of Section 630 of the Companies Act, as to whether the proceedings under the said provision would cover within its purview only the employee of the company or also the persons claiming a right through him or under him. The respondent in that case instituted a proceeding under Section 630 of the Companies Act against the appellant therein. The Additional Chief Metropolitan Magistrate found the appellant guilty under Section 630 of the Act and sentenced him for Rs.500/- with a default stipulation of simple imprisonment for 15 days. The appellant therein was also directed to vacate the suit premises within four months from the date of the said order. The appellant filed an appeal before the Court of Sessions which was dismissed. The matter was taken up in ....
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....ase, could not be held responsible for wrongfully withholding the property in question. 20. In view of the aforesaid, so far as the legal position is concerned, it can be safely concluded that the mere pendency of a civil dispute with respect to the property in question would not be a bar to take recourse to Section 630 of the Companies Act if there is no bonafide dispute regarding the right of the company over the property in question. 21. In view of the aforesaid legal position, if the facts of the present case are analyzed, the same would demonstrate that on 24.01.1989, a MoU was executed between Group 'A' & Group 'B' consisting of family members of Modi family. As can be seen from the MoU, Modi Rubber Limited came into the share of Group 'B'. In terms of Clause-4 of the MoU, it is stated that the houses occupied by each Modi will continue with them. It is also stated in Clause-6 that Shri K.N. Modi (father of the petitioner) and his sons would resign from Chairman/Managing Director/Directorship of various companies including Modi Rubber Limited. It is in pursuance of Clause 4, the father of the petitioner resigned from Modi Rubber Limited. Clause-9 of the MoU specifically men....
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....een from para-19 of the complaint, that the complainant has stated that notwithstanding the pendency of the dispute, the complainant company can still prefer a complaint for seeking prosecution and punishment of the accused/petitioner under the provisions of 630 of the Companies Act. Thus, the background of the pending litigation and the dispute was very much available before issuing the order of summons. 23. If the entire litigation history with respect to the property in dispute is briefly to be taken note of, the same would demonstrate that Civil Suit No. 991/2009 is pending against various members of the Modi family including the complainant for a decree of permanent and mandatory injunction against the defendants injuncting and restraining them from acting contrary to the terms of MoU. RFA No. 127/2013 is pending before this Court, where an order of status quo dated 04.10.2013 is operating. The FAO(OS) No. 2/2014 filed by respondent/complainant is pending before the Division Bench of this Court, wherein the order dated 24.09.2013 passed in CS(OS) No. 991/2009 dismissing the application for rejection of the plaint is under challenge. The CS(OS) No. 2809/2015 filed by the respo....
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....cumstances of the case, this court finds that the learned Magistrate has committed a palpable error while summoning the petitioner for offence punishable under Section 630 of the Companies Act. A perusal of the impugned order dated 19.10.2012 does not reflect any application of mind with respect to the facts as stated in paragraph 19 of the complaint regarding the pendency of the civil suit between the parties. The impugned order simply refers to the fact that the complainant examined himself as (CW-1), who reiterated that Shri K.N. Modi was the Chairman and one of the Managing Directors of the company and who was allowed to occupy the property in question. Since Shri Modi ceased to be the CMD of the office w.e.f. 24.01.1989, by tendering the resignation letter on that date, therefore, the learned ACMM was of the view that with effect from the date of resignation, the occupation of the property in dispute has become unauthorized. There is no application of mind as to what would be the effect of the MoU and the pendency of the civil suit between the parties as mentioned in paragraph Nos. 19 & 20 of the complaint. The proceedings under Section 630 of the Companies Act are summary in ....