Companies Act Case Law Shubh Shanti Services Ltd Vs Manjula S.Agarwalla & Ors

CASE NO.:
Appeal (crl.) 712 of 2005

PETITIONER:
SHUBH SHANTI SERVICES LTD.

RESPONDENT:
MANJULA S.AGARWALLA & ORS

DATE OF JUDGMENT: 11/05/2005

BENCH:
P. VENKATARAMA REDDI & P.P. NAOLEKAR

JUDGMENT:
J U D G M E N T

(Arising out of SLP (Crl.) No. 4247 of 2004)

P.P. NAOLEKAR J.

Leave granted.

This appeal is directed against the judgment and order dated
8.4. 2004 passed by the High Court of Bombay in Crl. Appeal
No. 48 of 2000 acquitting the respondents Mrs. Manjula S.
Agarwalla, Respondent No.1 and Ms. Anisha S. Agarwalla,
Respondent No.2 of the offence punishable under Section 630
of the Companies Act,1956.
The complainants, viz., Herdillia Chemicals Ltd., non-
chemical business was de-merged and vested in Shubh Shanti
Company Ltd., by a Scheme of arrangement, approved by the
Bombay High Court. Hence,, M/s. Shubh Shanti Services
Limited came to be substituted in place of M/s. Herdillia
Chemicals Ltd. as appellants during the pendency of the
appeal before High Court.
Brief facts of the case are that the complaint was filed by the
Company on 13.1.95 on the allegation that one Shri Suresh
Chander Agawalla, husband of Respondent No.1 and father of
respondent No.2 was employed with the appellant Co. since
1971 till his death on 2nd of November 1992. He was appointed
Managing Director of the appellant Co. for a period of five
years with effect from 15th of June 1988. Flat No.25 in a
building called “Sonmarg” at 7B, Jagmohandas Marg,
Mumbai, owned and possessed by the appellant-company was
allotted to late Shri S.C. Agarwalla on 10th of March 1975 to be
used for residential purpose for himself and members of his
family during the period he was in service of the appellant.
Board of Directors had extended the term of Shri S.C.
Agarwalla as Managing Director of the Company upto 14th of
June 1993. However, unfortunately, on 2nd of November 1992,
Shri S.C. Agarwalla died when he was whole time Managing
Director of the appellant-company. Respondents 1 and 2 were
residing with him in Sonmarg flat being members of his family.
Even after the death of Shri Agarwalla, they continued to
occupy the said flat. It was alleged in the complaint that after
the death of Shri Agarwalla, respondents were bound to vacate
and handover the vacant possession of the said flat to the
appellant-company but because of the critical health conditions
of Respondent No.1, the appellant, on humanitarian grounds,
did not take any step to get the flat vacated for some time .
The appellant-company by its letter dated 28th of December
1993 demanded possession of the flat within 45 days of the
receipt of the letter from the respondents. In response,
Respondent No.1 by her letter dated 7th February 1994,
addressed to the Secretary & Financial Controller of the
appellant-company informed the appellant-company that she
was staying in the flat because the Chairman had asked her to
do so till the flat in another building was made available to her.
The respondent by a subsequent communication addressed to
the Chairman, referred to the assurance given to her that she
would not be called upon to vacate the Sonmarg flat till the sale
of Blue Heaven flat is executed as per separate agreement dated
10th of February 1978, entered into between Shri S.C.
Agarwalla and the Company for purchase of Blue Heaven flat
and informed that her late husband had the right to purchase the
Blue Heaven flat and that the assurance given by the Chairman
should be adhered to, by the appellant, to permit her to remain
in possession of the Sonmarg flat till the sale deed is executed
in respect of Blue Heaven flat.
The appellant Co., thereafter, again by a registered letter
dated 9th of November1994, addressed to both the respondents,
called upon them to vacate the flat and handover the
possession. By this communication, the appellant also
specifically conveyed to the first respondent about its decision
that Blue Heaven flat cannot be sold and transferred. As the
respondents did not comply with the request made by the
appellant, a complaint was filed in the Court of Addl. Chief
Metropolitan Magistrate, 40th Court at Girgaum, Bombay under
Section 630 of the Companies Act, 1956 alleging that
respondents being the legal heirs of late Shri S.C. Agarwalla
who was allotted the property of the company for residential
purpose for himself and members of his family whilst he was in
service of the said company, have wrongfully withheld and
continued to withhold wrongfully by refusing to vacate and
handover possession thereof. Thus, they have committed an
offence, punishable under Section 630 of the Companies Act
read with Section 109 of the Indian Penal Code.
From the case set up by the respondent and the evidence led,
the case of the respondents is that there were discussions
between them and the Chairman of the Board of Directors of
the appellant and the Chairman, Board of Directors has assured
them to continue to stay in Sonmarg flat until such time as the
contract in respect of sale of Blue Heaven flat was
implemented and therefore the possession of the respondent of
Sonmarg flat is not unauthorized or wrongful.
Before complaint was filed, a Civil Suit No.7 of 1995 was
filed by Respondents 1 and 2 against appellant company on
23.12.1994 in the High Court for specific performance of the
contract dated 10th of February 1978 for sale, transfer and to
hand over possession of Flat No.33, 3rd Floor, Blue Heaven
Cooperative Housing Society Ltd., Mount Pleasant Road,
Bombay. In the suit further relief claimed is that the defendants
be ordered and decreed not to dispossess or interfere with the
occupation and residence of the 1st plaintiff and her family in
Sonmarg flat, Napean Sea Road, Bombay until such time as the
Defendant company transfer and handover vacant possession of
aforesaid Blue Heaven flat. In the said civil suit the High Court
on 10th of January 1995 passed an interim order “counsel for
the defendant has made a statement that the plaintiff shall not
be dispossessed from the premises in question except by due
process of law. The statement is accepted”.
Subsequent to the complaint filed under Section 630,
appellant company has also filed a suit in the High Court (Suit
No. 2391 of 1997) for possession of Sonmarg flat and other
reliefs against the respondents. The High Court by its order on
16th of November 1998 passed an order for appointment of the
Court Receiver for Flat No.67-B, 25 Sonmarg, Nepean Sea
Road, Mumbai and Receiver was placed in possession of the
flat. It was agreed between the parties that Respondent No.1
was in possession of the flat. The High Court directed that the
Court Receiver shall take symbolic possession of the flat from
Respondent No.1. The Court Receiver shall appoint
Respondent No.1 as his agent to be in actual possession of the
flat during the pendency of the suit. The Court Receiver shall
fix the amount of royalty payable by Respondent No.1 for
occupation of the flat. While fixing the royalty, the Court
Receiver shall take into consideration of the contentions urged
by both the parties. Pending fixation of the amount of royalty
by the Court Receiver, an ad hoc amount of royalty is fixed at
Rs.25,000/- per month. The respondent shall deposit the arrears
of royalty at the ad hoc rate from June 1997 to November 1998.
By this order the possession of the Respondent No.1 was
recognized of the Sonmarg flat and the Court Receiver was
given symbolic possession of the flat and possession of the
Respondent No.1 was to be treated as the agent of the Receiver
to remain in actual possession of the flat during the pendency of
the suit.
After issuance of summons both parties led evidence. The
Magistrate dismissed the complaint holding that the
respondents are in possession of Sonmarg flat as they have not
handed over possession of the Blue Heaven flat for which they
were required to file a suit for specific performance. The
respondents are under bonafide impression that they have right
to continue in the said flat in Sonmarg till they get possession
of the flat in Blue Heaven as per assurance given by Chairman
of the Company and thus it cannot be said that they have
wrongfully withheld the property of the company. It was
further held that the matter is pending consideration before the
civil court and, therefore, the Court cannot pass order of
restoration of possession to the appellant Co. till rights of the
parties are ascertained.
The appellant-company preferred an appeal before the High
Court. The High Court dismissed the appeal holding that the
respondents have made out a bona fide, probable and plausible
defence that they were allowed to occupy the flat at Sonmarg
by the Chairman of the Board of Directors till the flat in Blue
Heaven is made available to them. Respondents shall
ultimately succeed in the suit for specific performance or not is
another matter. The respondents have made out a case that an
assurance was so given and thus the appellant has failed to
prove that the respondents are in wrongful possession of the flat
in Sonmarg. Apart from this, the High Court has further held
that a suit for recovery of the possession of the flat in Sonmarg
filed by the appellant-company, a Court Receiver has been
appointed and the respondent has been appointed as an agent of
the Court Receiver and therefore also it cannot be held that the
respondents are in wrongful possession of the premises nor can
it be said that the respondent have no right to continue in
occupation of the flat in Sonmarg. The High Court has said that
in a suit for specific performance of the agreement filed by the
respondents, the High Court has granted an injunction
prevented the respondents from being dispossessed except by
due process of law and Section 630 proceedings being, penal in
nature, cannot be said to be the “due process of law”. Any
order in the proceedings initiated by the appellant-company for
recovery of possession of the Sonmarg flat from the
respondents would be in breach of express injunction order
issued by the Court. The High Court has dismissed the appeal
filed by the appellant company. Consequently complaint filed
by the appellant stands dismissed.
Learned counsel for the appellant-company has urged that the
High Court has not properly understood the scope and ambit of
Section 630 of the Companies Act and thereby committed an
error in holding that the proceedings under Section 630 of the
Companies Act could not be encompassed within its fold “due
process of law” not being civil proceedings. The provision
being penal in nature cannot be taken recourse to for
possession of the flat when the matter relating to flats in
question are pending in the Court.
Before we embark upon the discussion, we may first notice
the scope of language of Section 630 of the Companies Act.
The said Section reads as under:
“S.630:- Penalty for wrongful withholding of property 

(1) If any officer or employee of the Company –

(a) wrongfully obtains possession of any property of a
company; or

(b) having any such property in his possession, wrongfully
withholds it or knowingly applies it to purposes other than
those expressed or directed in the articles and authorized by this
Act;

he shall, on the complaint of the company or any creditor or
contributory thereof, be punishable with fine which may extend
to ten thousand rupees;

(2) The Court trying the offence may also order such
officer or employee to deliver up or refund, within a time to be
fixed by the Court, any such property wrongfully obtained or
wrongfully withheld or knowingly misapplied, or in default, to
suffer imprisonment for a term which may extent to two years”

From the bare reading of the Section, it is apparent that Sub-
S.(1) is in two parts. Sub-s.(1) of clauses (a) and (b) creates
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 authorized by the Company. Under this provision,
it may be that an officer or an employee may have lawfully
obtained possession of any property during the course of his
employment, still it is an offence if he wrongfully withholds it
after the termination of his employment. Clause (b) also makes
it an offence , if any officer or employee of the Company
having any property of the company in his possession
knowingly applies it to purposes other than those expressed or
directed in the articles and authorized by the Act. This Section
does not make any difference between the movable and
immovable property. The property in Section 630 includes
both movable and immovable property. Sub-s.(2) of Section
630 authorizes the Court trying the offence, in its discretion to
order any such officer or employee of the company which
includes past or present, or his or her legal representative, to
deliver, within a specified time, possession of such property
which has been wrongfully obtained or wrongfully withheld or
knowingly misapplied. In default, the Court may impose a
punishment of imprisonment for a term which may extend to
two years.
In the matter of Baldev Krishna Sahi vs. Shipping
Corporation of India Ltd. (1987) 4 SCC 361 this Court
resolved the conflict and has held that the expression `officer’
or `employee’ of the company applies not only to the existing
officer or employee but also includes past officer or employee
where such officer or employee either wrongfully obtained or
wrongfully withheld or knowingly misapplied any property
after the termination of his employment. This decision was
approved by a Three Judge Bench of this Court in Amrit Lal
Chum vs. Devoprasad Dutta Roy (1988) 2 SCC 269 where
it is held that Section 630 of the Act makes it an offence if an
officer or employee of the 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 and that there is no warrant to give a restrictive
meaning to the term “officer or employee” appearing in sub-
s.(1) of Section 630 of the Act as meaning only an existing
officer or an existing employee and not those whose
employment had been terminated or had otherwise come to an
end.
While interpreting and laying down the object of the
provision of Section 630 of the Companies Act, this Court in
the matter of Atul Mathur vs. Atul Kalra (1989) 4 SCC 514
has emphasized that the object of the provision of Section 630
of the Act is to retrieve the property of the company and that
even though the provisions are penal in nature, the object of
the provision is required to be given a purposive interpretation
so as not to choke the beneficent provision.
In the matter of Abhilash Vinodkumar Jain (Smt.) vs Cox
& Kings (India) Ltd. and others (1995) 3 SCC 732, a
Division Bench of this Court explained the object of Section
630 of the Companies Act and said: (Para 15 at Page 740)
“Even though Section 630 of the Act falls in Part XIII of the
Companies Act and provides for penal consequences for
wrongful withholding of the property of the company, the
provisions strictly speaking are not penal in the sense as
understood under the penal law. The provisions are quasi-
criminal. They have been enacted with the main object of
providing speedy relief to a company when its property is
wrongfully obtained or wrongfully withheld by an employee or
officer or an ex-employee or ex-officer or anyone claiming
under them.”

The Court has explained and interpreted the term `officer’ or
`employee’ of the Company in Section 630 of the Companies
Act and said that it would include 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.
A Three Judge Bench of this Court in Lalita Jalan and
Another vs. Bombay Gas Co. Ltd. and others (2003) 6
S.C.C. 107 has drawn a distinction between the provisions of
the Statute which are purely of a penal nature and the
Companies Act, particularly provisions of Section 628 to
Section 631 of the Companies Act and held: (Paragraphs 17
and 19)
“The purpose of criminal justice is to award punishment. It is a
method of protecting society by reducing the occurrence of
criminal behaviour. It also acts as a deterrent. Where the
punishment is disabling or preventive, its aim is to prevent a
repetition of the offence by rendering the offender incapable of
its commission. The Companies Act is entirely different from
those statutes which basically deal with offences and
punishment like the Indian Penal Code, the Terrorist and
Disruptive Activities (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, Section
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 is the object of
awarding sentence 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”
“Even otherwise as shown earlier, the wrongful withholding of
property of the company has been made punishable with fine
only. A substantive sentence or imprisonment can be awarded
only where there is a non-compliance with the order of the
court regarding delivery or refund of the property. Obviously,
this order would be passed against a specific person or persons
whether an employee, past employee or a legal heir or family
member of such an employee and only if such named person
does not comply with the order of the court, he would be liable
to be sentenced which may extend to imprisonment for two
years. At this stage, namely, where the court would award a
substantive sentence of imprisonment for non-compliance with
its order the question of enlarging or widening the language of
the section cannot arise as the order would be directed against a
specifically named person”

From above narration of authorities, it is absolutely clear that
Section 630 of the Companies Act, does not only cover cases of
the present employee or officer of the company and this
provision strictly speaking is not penal in the sense as
understood under penal law. 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 and to impose a fine
on the officer or employee of the company if found in breach of
the provision of Section 630 of the Companies Act and further
to issue direction if the Court feels it just and appropriate for
delivery of the possession of the property of the company and
to impose a sentence of imprisonment when there is non
compliance of the order of the Court regarding delivery or
refund of the property of the company.
On 23.12.1994, Respondents 1 and 2 filed a civil suit No.7 of
1995 for specific performance of the contract for transfer of the
flat at Blue Heaven Cooperative Housing Society. The High
Court had passed an order with the consent of the parties that
the plaintiff i.e. Respondent No.2 shall not be dispossessed
from the premises i.e. flat at Sonmarg except with due process
of law. The proceedings taken up by the appellant in the Court
under Section 630 of the Companies Act were held not to be the
proceedings under due process of law. We have already seen
that Section 630 of the Companies Act provides for summary
legal remedy for seeking possession of the property of the
company. Due process of law in the present context would
ordinarily mean such an exercise of power by the parties as the
settled principles of law permit and/or a course of legal
proceedings, according to those rules and principles which have
been established in our systems of jurisprudence for the
enforcement and protection of private rights. Due process of
law would in short mean a procedure established by law, which
is a procedure fixed or laid down in law. When the High Court
has passed an order of injunction, in the aforesaid terms, what is
meant by the High Court is, that the Company shall not take
forceable possession of Sonmarg flat during the pendency of
the suit and Company was given liberty to take steps for
possession as is permissible under law including the provisions
of any Statute giving right to obtain possession to the company
in the facts and circumstances of the case. The company can
prove the unlawful possession of the property by the employee
or his or her legal representative after the demise of the
employee or an officer of the company. The company has the
remedy to initiate action under Section 630(1) and on
conviction by the Competent Criminal Court it can approach
the same Court for directing delivery of possession which sub-
Section (2) of Section 630 of the Companies Act provides. The
remedy is provided in the Statute itself and the High Court’s
order by no stretch of imagination can be read to mean that the
Company has to necessarily approach the civil court only for
obtaining possession of the Sonmarg flat and that the remedy
available under the Companies Act cannot be resorted. In our
opinion the decision of the High Court that Section 630 of the
Companies Act being penal in nature, the proceeding
thereunder cannot be construed to be a proceeding taken in due
process of law, cannot be sustained. Filing of civil suit for
possession by the Company does not deprive the Company of
the right to institute prosecution under the Companies Act and
incidentally get an order for delivery of possession. It is stated
that the civil suit was filed by way of abundant caution as well
as to obtain reliefs which cannot cannot be granted by a
Criminal Court trying an offence under Section 630.
The next important question is whether the possession of
respondents of the property belonging to the company,
namely, the Sonmarg flat, after the death of Shri S.C.
Agarwalla, is unlawful and unauthorized and therefore
wrongful. Both the Courts, namely, the Court of Magistrate
and the High Court on appreciation of the material placed
before them have clearly held that after the death of Shri
Agarwalla, on the basis of assurance given by the Chairman of
the Board of Directors of the appellant-company, Shri Goenka
to Respondent No.1 the said flat is being occupied by the
Respondents. We have summarized the High Court’s ultimate
finding on this issue on the question of assurance given by
Chairman Shri Goenka to Respondent No.1. The learned
counsel for the appellant took us through the judgment of High
Court and the record in considerable detail for the purpose of
disputing this finding. Counsel for the appellant could able to
point to scarcely any error in this finding based on evidence on
record. He, however, submitted, that, in relying on this finding,
the Judge has drawn entirely wrong inference. The substance
of his full and careful argument in this context may be
summarized as follows:
It is urged by the learned senior counsel for the
appellant that the High Court has failed to appreciate that the
permission, if any, given to Respondent No.1 to live in
Sonmarg flat till the possession of the flat at Blue Heaven was
delivered to respondents, by the Chairman Shri Goenka, being
without any authority of law and being outside the powers
vested in the Chairman, would not be binding on or
enforceable against the company. It is submitted that those
powers could only be exercised by the Board of Directors or by
Chairman only with specific authorization to that effect by the
Board of Directors. Countering this argument, it is urged by
the learned counsel for Respondents 1 and 2 that the findings
arrived at by both the courts below that possession of
Respondents 1 and 2 is permissible and not wrongful as the
respondents have been assured by the Chairman of the
Company to continue to live in the flat at Sonmarg till the
possession of the flat at Blue Heaven is delivered to them is
based on proper assessment of relevant material on record and
does not warrant any interference by this Court. The
respondents’ possession of the flat being permissive cannot be
held to be wrongful to attract the provisions of Section 630 of
Companies Act.
The question really is whether the Chairman of the Board of
Directors of the Company has the authority to give such an
assurance to Respondents 1 and 2 when he met them at the
condolence meeting after the demise of Shri S.C. Agarwalla,
which could bind the company and thereby could it be taken as
a permission given by the company to respondents 1 and 2 to
reside in Sonmarg flat and thereby their possession could be
said to be a lawful possession. In the matter of company
affairs, Directors act as a body and collectively as a Board.
Any Director acting individually has no power to act on behalf
of the company in respect of any matter except to the extent to
which any power or powers of the Board have been delegated
to him by the Board within the limit permitted by the
Companies Act or any other law. The position of the Chairman
of the Board of Directors is not substantially different from an
individual Director. Under the Companies Act, Chairman of
the company does not have any special or extraordinary rights
to be exercised by him without being authorized by the Board
of Directors. The Board of Directors of course have an
authority to delegate the power or authority to act for and on
behalf of the company to the Chairman of the Board of
Directors.
Section 291 of the Companies Act authorizes the Board of
Directors of the Company to exercise such powers or of such
acts or things as the company is authorized to exercise and do
such acts or things, except in the matter where the power is to
be exercised by the company in general meeting. The exercise
of the powers by the Board shall be subject to the provisions
contained in the Companies Act or any other Act or in the
Memorandum or Articles of the company. Therefore, under
Section 291 of the Companies Act, the action of the Board of
Directors should be in conformity with the provisions of the
Company Law or any other enactment or in conformity with
the memorandum or articles of association of the company. It
is the specific case of the respondents which has been found
correct by the Courts that they are holding possession of the
company’s flat at Sonmarg on the oral assurance given by Shri
Goenka, Chairman of the Board of Directors that they can
continue to reside in the said flat until the possession of the flat
at Blue Heaven Cooperative Society is given to them.
Admittedly the flat at Sonmarg belongs to the Company. Shri
S.C. Aggarwalla, husband of Respondent No.1 and father of
Respondent No.2 was the ex employee of the Company. He
expired when he was in the employment of the company and
respondents 1 and 2 were residing in the flat after the demise of
Shri Aggarwalla as his heirs. Thus it is for Respondents 1 and
2 to show the authority of Shri Goenka to bind the company on
the basis of the oral assurance given to them by him to retain
the possession of the flat. The High Court has not referred to
any evidence to that effect led by the respondents, nor there is
any finding that the Board of Directors have authorized the
Chairman Shri Goenka to give such an assurance for and on
behalf of the company.
On 28th of December 1993 a letter was sent by appellant
requesting Respondent No.1 to vacate the premises and
handover peaceful possession of the premises within 45 days of
the receipt of the letter. The contents of the letter are that Shri
S.C. Agarwalla was occupying the premises as a facility
granted to him by the company until he was in the employment
of the company. On account of the demise of Shri Agarwalla,
the company deferred the request for vacation of the said
premises; that more than a year has lapsed since the demise of
Shri Agarwalla, it is essential for the company to take
possession of the same. The correspondence placed on record
by parties also does not indicate that the Chairman of the
Company Mr. Goenka gave an assurance on the basis that he
has been authorized to do so by the Board of Directors. In the
absence of any authority to the Chairman by the Board of
Directors to act for and on behalf of the company, the assurance
given by him to the respondents would not bind the company,
nor it will create a binding agreement between the parties,
namely, Respondents 1 and 2 and the company to permit the
respondents to remain in possession even after the death of Shri
Agarwalla, of the flat in Sonmarg. Apart from this, the Board
of Directors itself could exercise the powers in accordance with
the memorandum of association or the articles of the company.
Any power exercised beyond the memorandum or the articles
of the company would not bind the company. Any assurance
given by the Board of Directors either should be authorised
object of the company by the memorandum of association or
the articles of the company or its purpose should be reasonably
ancillary or incidental to carrying on the companies business.
Evidence produced on record indicates that agreement was
entered into between the company and husband of the
respondent No. 1 regarding Blue Heaven flat. Late Shri
Agarwalla was old employee of the company since 1971. He
expired on 2.11.1992 and assurance was given by the chairman
to widow of ex employee with whom he had long standing
relation, when he went to see her to console her on 4.11.92,
barely two days after the death of Shri Agarwalla. Such
evidence in our opinion irresistibly point, predominant, if not,
the only consideration operating in the mind of chairman was
to console the widow and to permit her to live in the flat for
some time. The assurance given to respondents 1 and 2 by the
chairman of the company has more at a gratuitous and
compassionate flavour and less to do with the interest of the
company in mind. Moreover, it is difficult to comprehend how
the chairman could promise on behalf of the Company that the
respondents will be permitted to remain in flat till delivery of
flat of Blue Heavan, when he himself was not sure of the time
the company would get the possession of the Blue Heaven flat.
That apart, the act of the Chairman cannot be construed to be
one done incidental to the business of the Company or as a
matter of necessity.
After the death of Shri Agarwalla on 2.11.1992, the
respondents 1 and 2 remained in possession of the company’s
Sonmarg flat. Admittedly they were not in employment of the
company nor company has authorized them to remain in
possession of the same particularly after notice dated 9.11.1994
to vacate the premises and handover the possession to the
company. The possession of the company’s flat by the
Respondents, after the service of notice to vacate the premises
by the company, is wrongful withholding of the property of the
company. The respondents by having wrongfully withheld the
possession of the company’s flat and not delivering the
property to the company, have committed an offence. The
interim order of the High Court dated 16.11.1998 in the civil
suit filed by the appellant-Company does not wipe out the
offence committed already for which criminal complaint was
filed. Subsequent to that order, the possession may not be
wrongful, but on the date of complaint and till the date of that
order, the Respondents did wrongfully withhold that property,
attracting the offence under Section 630(1). Having regard to
the factual position of the case, we think that imposition of fine
of Rupees One thousand each would be a proper punishment
for wrongful withholding the Sonmarg flat. Accordingly,
respondents 1 and 2 are sentenced to pay fine of Rupees one
thousand each. We would like to make it clear that so long as
order of the High Court dated 16.11.1998 in Civil Suit No.2391
of 1997  M/s. Herdillia Chemicals Ltd. versus Smt. Manjula
Agarwala and others, appointing the Court Receiver and
delivering him symbolic possession, and actual possession as
agent of Receiver to Respondent No.1 stands, no direction can
be given under Section 630(2) for delivery of actual possession
of Sonmarg flat to appellant. It is of course open to the
petitioner to approach the Civil Court for suitable orders. The
High Court may dispose of both the suits viz., Suit No.7/95 and
2391/97 expeditiously, as far as possible within one year.
For the aforesaid reasons, the appeal is partly allowed.
The judgment and order of the High Court and that of the Addl.
Chief Metropolitan Magistrate, 40th Court at Girgaum, Bombay
are set aside. However, in the facts and circumstances of the
case, we direct the parties to bear their own costs.

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