Companies Act Case Law V M Shah Vs The State Of Maharashtra And Anr K Ramaswamy B L Hansaria






1996 AIR 339 1995 SCC (5) 767
JT 1995 (6) 433 1995 SCALE (5)191




Leave granted.
This appeal by special leave arises from the judgment
and order dated April 28, 1995 by the Bombay High Court in
Criminal Aplicstion No.1222 of 1995.The appellant had joined
the services of M/s. rallis India Ltd. on March 10, 1965. He
had occupied a residential flat at Morena No. 11,M.C.
Dhanuka road,Bombay. He resigned on july 15,1986. The Rallis
India Ltd. , the second respondent (the Company.,
hereinafter) initiated proceedings in January , 1987 against
the appellant under s.408 IPC and s.630 of the Companies Act
for the continued occupation of the appellant in the said
flat. The Magistrate. by his order dated October 12, 1994,
found the appellant quality offence under s.630 of the
Companies Act and directed restitution of the flat. on
appeal, the Session judge partly allowed it by his judgement
dated March 20, 1995, altering the sentence while
confirming the conviction. The High Court confirmed the same
by the impugned order.
The primary question in this case is whether the
conviction under s.630 of the Companies Act sustainable? We
have heard the counsel on both sides. pending criminal
proceedings, the company laid L.E. & C. Suit No. 104/126 of
1989 in Small Causes Court, Bombay for eviction of the
appellant. The case set out in the plaint and evidence
adduced in proof of the issues framed therein was that the
Company had tenancy rights in the flat. Consequent upon
joining the service, the appellant was inducted into
possession. on his resignation and acceptance thereof, he
ceased, to be an employee of the Company. Consequently, the
appellant is enjoined to deliver possession of the premises
to the Company but he failed to do so.
The case set up by the appellant and evidence adduced
in proof thereof was that there is no jural relationship
between the appellant and the Company. he is not in
occupation of the premises in this capacity as on employee
of the Company. He is a tenant under Mr. badani and others
on a monthly payment of rent to his landlord. The Company
had surrendered the tenancy rights in the flat to the owners
due to dilapidation of the building etc. Thereafter,the
appellant occupied the flat and was in possession thereof as
a direct tenant with the landlords.
The trial court after considering the entire evidence
recorded the findings by his judgement and decree dated June
9, 1995 holding that the Company failed to prove that they
are the tenant in respect of the suit premisses. They had
not given the premises to the appellant under leave and
licence agreement. as pleaded by them in the plaint. The
Company failed to prove that the appellant is a licensee of
the suit premises. It also failed to prove that the premises
were given to the appellant in lieu of his services. On the
other hand, the appellant proved that he is a monthly tenant
of the premises with the landlords Badami etc. Accordingly,
the suit was dismissed. we are informed that an appeal has
been field before the bench of small Causes court and it is
Sri Santosh Hegde, learned senior counsel for the
appellant, contented that whatever may be the findings
recorded by the criminal court and affirmed by the High
Court on the liability of the appellant to deliver
possession to the Company by operation of s.630(1) of the
Companies Act. they are no longer tenable in view of the
findings recorded by the Civil Court, Therefore, the orders
passed under s.630(1) of the Companies Act is illegal and
unsustainable. In view of the concurrent findings recorded
by the criminal courts for offence under s.630(1) of the
Companies Act.the order passed thereunder does not become
illegal. Therefore, the appellant is liable to be ejected
and needs no interference under Art.136 of the Constitution.
In Baldev Krishana v. Shipping corpn. of India Ltd.
[Air 1987sc 2245] this court considered the scope of sub-
s.(1)of s.630 of Companies Act and held that an officer or
an employee of a Company who obtains possession of any
property of the Company during the course of his employment
to which he is not entitled but for employment , if he does
not deliver possession of such property to the Company, he
would be in wrongful possession of such property. therefore,
the existence of the relationship of a employee. if the
company. having any property of the company in his
possession wrongfully withholds it or knowingly apples it to
purposes other than those expressed or directed in the
articles of Company and authorised by the Companies act., he
will be liable for the punishment under s.630
In Atul Mthur v. Atul Kalra & Anr. [1989]4scc 514]
another bench of this Court, held that because of mere
pendency of a suit in a civil court it cannot be said that
the civil court is in seizin of a bona fide dispute between
the parties, and as such the criminal court should have
stayed its hands when the Company filed a complaint under
s.630 of the Act Such a view would lead to miscarriage of
justice and render s.630 ineffective. dispute regarding
claim of property between Company and its employee depends
upon facts in each case. Merely because Company’s claims to
procession was refuted by the employee, it would not amount
to bona fide dispute. the criminal court,therefore would be
entitled and competent to proceed with the enquiry on the
complaint field on behalf of the Company and decide the
matter according to law.
Gokak Patel Volkart Ltd. v. D.G. Hiremath & Ors.[J]
1991 (1) SC 376] is also relied on Sri Maisty. Therein. the
question was whether the failure to deliver possession and
the wrongful withholding of the property would be a
continuing offence? This Court held that failure to deliver
possession or wrongful withholding the property would be a
continuing offence and period of limitation must be counted
M.S. Shariff v. State of Madras [AIR 1954 SC 3971 is
also pressed into service. Therein this Court held that as
between the civil Court and the criminal proceedings, The
criminal matters should be given precedence. No hard and
fast rule can be laid down but the possibility on
conflicting decision in the civil and criminal Courts is not
a relevant consideration. Law envisages such an eventuality
when it expressly refrains from making the decision of one
Court binding on the other or even relevant except for
certain limited purposes, such as sentences or damages The
only relevant consideration is the likelihood of
embarrassment. Another relevant factor to be noted is that a
civil suit often drags on for years and it is undesirable
that a criminal prosecution should await till everybody
concerned has forgotten all about the crime. Public interest
demands that criminal justice should be swift and it should
ensure that the guilty is punished while the events are
steel fresh in public mind and that the innocent should be
absolved as early as is consistent with a fair and impartial
trial. Another reason is that it is undesirable to let
things slide till memories have grown too dim to trust. this
however, is not a hard and fast rule. Special consideration
obtaining in any particular case may make some other course
more expedient and just. Therefore each case has to be
considered on its own facts.
As seen that the civil court after full dressed trial
recorded the finding that the appellant had not come into
possession through the Company but had independent tenancy
rights from the principal landlord and, therefore the decree
for evictions was negatived. until that finding is duly
considered by the appellate court after weighing the
evidence afresh and if it so warranted reversed the findings
bind the parties. The findings recorded by the criminal
court,stand superseded by the findings recorded by the civil
court get precedence over the findings recorded by the trial
court. in particular, in summary trial for offences like
s.630. the mere pendency of the appeal does not have the
effect of suspending the operation of the decree of the
trial court gets nor the decree becomes inoperative.
In these circumstances we are clearly of the opinion
that it cannot be held that the appellant has been in
wrongful possession of the property entailing his
conviction and punishment under s.630 of the Companies Act
and requiring handing over of the possession of the flat.
The appeal is accordingly allowed no costs.



Leave a Comment