CR.A/379/2006 1/41 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL APPEAL No. 379 of 2006 To CRIMINAL APPEAL No. 395 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= INDIAN RAYON AND INDUSTRIES LTD. - Appellant Versus THE STATE OF GUJARAT & 1 – Respondents ========================================================= Appearance : MR BB NAIK WITH MS MEGHA JANI for Appellant : 1, MR MA PATEL ADDL PUBLIC PROSECUTOR for Respondent : 1, MR PAHWA FOR M/S THAKKAR ASSOC. for Respondent : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE S.R.BRAHMBHATT Date : 08/12/2006 COMMON ORAL JUDGMENT CR.A/379/2006 2/41 JUDGMENT 1. The Counsel of the respective parties have made joint request for taking up and finally disposing of this group of 17 Criminal Appeals. The appellant is common in all these acquittal appeals. These appeals are arising out of identical orders of acquittal dated 4/12/2004 passed by the learned Additional Sessions Judge, Junagadh at Veraval in Criminal Appeals filed by the respective respondents / original accused challenging th orders of their conviction and punishment under Section 630 of the Indian Companies Act 1956, dated 1/1/2004 passed by the learned 3rd Joint JMFC, Veraval, in Criminal Cases filed by the present appellant company as the present respondents / original accused ex- employees of complainant company wrongfully withheld their respective residential quarters allotted to them by the complainant company during their employment. As the fact and law points are common in all these appeals, the Counsels' requests for hearing them together and disposing them by this Common Judgment was accepted. 2. All the Appeals were admitted by this Hon'ble Court (Coram: H.B.Antani, J.) vide order dated 3.3.2006 and the same were expedited. 3. Facts leading to filing of the present appeals in brief deserve to be set out as under. CR.A/379/2006 3/41 JUDGMENT 4. The original complainant – Indian Rayon and Industries Ltd. (hereinafter referred to as 'the Company' for short) is a registered Company under the Act and it has its registered office at Veraval. The complainant had allotted staff quarters to the respective respondents for residential purpose during their employment with the complainant Company. The complainant Company terminated the services of respondents with effect from 7.10.2002. On termination of their service, the respondents – ex-employees were required to hand over peaceful and vacant possession of their respective staff quarters owned by the complainant Company and allotted to them as residential accommodation during their employment with the Company. The present respondents original accused did not hand over the vacant and peaceful possession of their respective quarters to the complainant Company despite notice for vacating the same served upon them. The complainant Company, therefore, lodged complaint before the learned JMFC, Veraval against all the respondents for commission of offence punishable under Section 630 of the Indian Companies Act and under Section 447 of the Indian Penal Code. It was the case of the complainant that the accused committed an offence under Section 630 of the Act as they wrongfully withheld the property of the Company and therefore, they be convicted and punished. The accused were summoned and their plea was CR.A/379/2006 4/41 JUDGMENT recorded. The accused pleaded not guilty and claimed to be tried. The prosecution evidence was recorded and case of the prosecution was put to the accused and thereafter, their further statement came to be recorded under Section 313 of the Code. The accused denied the case of the prosecution. The trial Court after appreciating the evidence on record acquitted the respective accused of charge of commission of offence under Section 447 of the IPC, however, convicted present respondents original accused of charge of offence under Section 630 of the Code and ordered payment of fine of Rs.500/- by each of the respondents original accused and in default thereof, to undergo, simple imprisonment for 30 days. Under Section 630(2) of the Act, the trial Court also ordered that the accused shall hand over peaceful and vacant possession of the quarters in their possession within one month, failing which, they were ordered to undergo 6 months simple imprisonment. The accused carried this order dated 1.1.2004 in Appeals under Section 374 of the Code in the Sessions Court, Junagadh at Veraval. The Sessions Court vide its order dated 4.12.2004 reversed the finding of the trial Court by setting aside the order of conviction and allowing individual appeals on the ground that as the labour proceedings challenging the termination of the accused by the complainant – Company were pending in the competent court, the termination itself cannot CR.A/379/2006 5/41 JUDGMENT be said to be legal and therefore, the withholding of the quarters allotted to the respective accused for residential purpose cannot be said to be wrongful. Being aggrieved and dissatisfied with the said order dated 4.12.2004 passed in Criminal Appeal, the original complainant – Company has preferred these appeals under Section 378 of the Code. 5. The facts, which are relevant for examining this appeals deserves to be set out in tabular form as under. Sr No Name of Respondent Criminal Appeal No.(High Court Crimina l Appeal No. (Sessio ns Court) Crimina l Case No Date of filing of complaint Status of respondent in SCA no. of 1. J.J.Mulia 379/2006 11/2004 347/03 11.02.2003 Petitioner No.27 2. J.V.Bapodara 380/2006 17/2004 787/02 15.5.2002 Not a party 3. Pankaj J. Dhandhusariy a 381/2006 6/2004 292/03 5.5.2003 Petitioner No.16 4. M.P.Sonaria 382/2006 3/2004 288/03 5.2.2003 Petitioner No.23 5. H.H.Thakar 383/2006 4/2004 289/03 5.2.2003 Petitioner No.09 6. S.B.Gunjaria 384/2006 5/2004 280/03 5.2.2003 Petitioner No.21 7. Dhirendrakum ar Singh 385/2006 12/2004 356/03 11.2.2003 Petitioner No.14 8. Himanshu Dave 386/2006 16/2004 355/03 11.2.2003 Petitioner No. 31 9. Rajnikant B. Pithadia 387/2006 9/2004 295/03 5.2.2003 Petitioner No.12 CR.A/379/2006 6/41 JUDGMENT Sr No Name of Respondent Criminal Appeal No.(High Court Crimina l Appeal No. (Sessio ns Court) Crimina l Case No Date of filing of complaint Status of respondent in SCA no. of 10 Rabinarayan Raut 388/2006 15/2004 296/03 5.2.2003 Petitioner No.05 11 K.K.Rai 390/2006 2/2004 286/03 5.2.2003 Petitioner No.08 12 Rajkumar Sharma 389/2006 10/2004 354/03 11.2.2003 Petitioner No.22 13 P.L.Sondarva 391/2006 14/2004 294/03 5.2.2003 Petitioner No.25 14 C.Thomas 392/2006 18/2004 1972/02 31.12.2002 Not a party 15 Jagan B. Dusani 393/2006 7/2004 293/03 5.2.2003 Petitioner No.18 16 D.D.Vadhvana 394/2006 8/2004 348/03 11.2.2003 Petitioner No.19 17 Pankaj R. Chauhan 395/2006 19/2004 291/03 5.2.2003 Petitioner No.04 6. Shri B.B.Naik, learned counsel with Ms. Jani appearing for the appellant has submitted that order impugned in this Appeals being erroneous and contrary to the evidence on record, the same deserves to be quashed and set aside. Shri Naik has submitted that the Sessions Court has not taken into consideration the prevailing law in respect of Section 630 of the Act. The Section 630 of the Act is enacted for the purpose of preventing an employee and ex-employee of the Company from wrongfully withholding company's property. Tenor of the judgment of the Sessions Court indicate that the Sessions Court has CR.A/379/2006 7/41 JUDGMENT travelled beyond its jurisdiction and considered the legality and validity of the termination and therefore, the orders impugned in these present appeals being perverse, the same deserves to be quashed and set aside. Shri Naik has submitted that the pendency of the labour dispute before the labour Court, in itself cannot be ground for quashing the order of conviction as it is done by the Sessions Court in its order under challenge in these appeals. Shri Naik has relied upon the decision of the Apex Court in case of Shubh Shanti Services Ltd. Vs. Manjula S. Agarwalla and others, reported in (2005) 5 SCC p.30 and submitted that the pendency of the other proceedings including Civil proceedings cannot be valid ground for setting aside conviction nor can the same be ground for withholding Company's property when the relationship of employer and employee has been severed. The severing of relationship and its legality cannot be the subject matter of criminal court's jurisdiction. The proceedings under Section 630 of the Act being summary in nature, once it is established by the complainant Company that the employee or ex- employee and/or his representative have wrongfully withheld the property of the Company, then, the only logical and consequential order is the order of punishment and order of handing over the property back to the Company. Shri Naik has submitted that in view of this and in CR.A/379/2006 8/41 JUDGMENT view of the document at Ex. 19 i.e. Letter of allotment-cum-agreement, the document at Ex.20 indicating that services of the concerned respondents accused have come to an end by striking off the names of the respondents and testimony of the complainant go to show that the respondents were in wrongful possession of the property i.e. the residential premises in question. In light of these evidence on record and in absence of any evidence indicating that the respondents accused have any protection from any other court in form of any prohibitory orders and or any orders enabling them to retain the possession, the trial Court has rightly come to the conclusion that the accused have wrongfully withheld the residential premises. Shri Naik has also invited this court's attention to the conditions in the allotment letter, which is styled as an agreement between the Company and respondents. Those conditions unequivocally go to show that respondents original accused were alloted the residential premises during their employment with the complainant-Company. When the relationship of employer and employee comes to an end, then the employee respondent has no right to withhold the quarter on a ground that termination was illegal or invalid. Shri Naik has submitted that the documents on record and testimony of the complainant go to show that accused have wrongfully withheld the residential quarters CR.A/379/2006 9/41 JUDGMENT given to them during their tenure of employment. Shri Naik has submitted that the appellate Court has misdirected itself in considering the validity of termination. The cursory glance at the order of the appellate Court would go to show that the same is perverse as it is based on the points which are not within the jurisdiction of the Appellate Court. In view of this, Shri Naik has submitted that the order impugned in these appeals deserves to be quashed and order of JMFC convicting the respondents deserves to be restored and the conviction deserves to be restored. 7. Shri Pahwa and Shri Lakhani, learned counsel appearing for the respondents original accused have vehemently opposed the present acquittal appeals. It is contended on behalf of the respondents that these being acquittal appeals under Section 378 of the Code, the Court has a very limited scope for interfering with the order of acquittal, unless and until it is aptly demonstrated by the appellant that sustaining the acquittal would result into miscarriage of justice, the order of acquittal need not be interfered with. The counsel for the respondents have submitted that essential ingredients for brining home guilt on the part of the accused for commission of offence under Section 630 of the Act is wrongful withholding or wrongfully obtaining or knowingly making misapplication of CR.A/379/2006 10/41 JUDGMENT the property. Thus, the trial Court before convicting the accused has to come to a conclusion on the fact and circumstances on record that concerned employees who are accused of wrongful withholding of Company's property, have in fact, withheld the property wrongfully. While examining the aspect of wrongfully withheld property, the Court is duty bound to take into consideration the attending circumstances and therefore, when the order of striking off the names of the accused and terminating their services was per-se illegal, and when the same was subject matter of challenge before the Competent Labour Court, the same ought to have weighed with the trial Court and it could not have been said to be wrongfully withholding of the quarters, thus the trial court's judgment was erroneous and contrary to the facts and evidence on record. It has rightly been reversed by the Appellate Court in the Appeal preferred by the present respondents. The appellate Court has rightly decided that as the termination of employee itself was illegal and as the same was awaiting its adjudication before the competent Court, the withholding of residential quarter by the accused could not be said to be wrongfully withholding so as to convict them and punished them under Section 630 of the Act. Reliance is placed upon the decision of CR.A/379/2006 11/41 JUDGMENT this Court in case of Yogeshkumar Kantilal Shah Vs. Gujarat Steel Tubes Ltd., reported in 1993(2) GLH p.1039 and a submission is canvassed that when the dispute raised by the accused was in relation to the very termination, the very cause due to which he loses his right to hold the property and when the dispute was referred by the Government for adjudication, it cannot be said that the possession was wrongful so as to invoke Section 630 of the Act and convict the respondents for the offence under Section 630 of the Act. 8. The counsel for the respondents has also relied upon the decision of this Court in case of Pravinbhai Ganeshbhai Chaudhary Vs. Neutral Glass & Allied Industries Pvt. Ltd., reported in 2001(4) GLR p.3481 in support of their submission that the Division Bench has also while appreciating the submission on behalf of the petitioner accused in respect of challenge to the applicability of Section 630 of the Act pending proceeding in Labour Court observed in para-9 as under : “........the petitioner's continued retention of the quarters could not be said to be wrongful in view of the provisions of Sec.33(1) of the I.D. Act, we find that the argument is misconceived. The said provisions intend to prohibit the employer CR.A/379/2006 12/41 JUDGMENT from altering the conditions of service of workmen who have already raised an industrial dispute with respect to some other conditions of their service in existence. If workmen of a unit have raised an industrial dispute about wage revision, the employer cannot be permitted to nullify the reference by terminating the services of the workmen without obtaining permission of the concerned body before whom the dispute about wage revision is pending. It is in order to save the workman from this kind of retaliation that the legislature has enacted Sec.33(1) of the Act providing that during pendency of any conciliation proceedings before a conciliation officer or a Board of any proceeding before an arbitrator or a Labour or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned, in such dispute, the conditions of service applicable to them immediately before the commencement of such proceedings or for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workman concerned with such dispute save with the express permission in writing of the authority before which the proceeding is pending. CR.A/379/2006 13/41 JUDGMENT The above provisions cannot be applied in the case like the present one where there was no pending industrial dispute when the employee was dismissed from service. Upon such dismissal, all the logical consequences would follow including the stoppage of salary and all other benefits which go with the employment. The employee, would therefore, also lose the right to occupy the quarters allotted to him during his employment. In view of the above discussion, we find no conflict between the provisions of Sec.33 of the I.D. Act and the provisions of Sec.630 of the Companies Act.” 9. Shri Pahwa has relied upon the decision of this Court and submitted that during the pendency of Labour proceedings in competent court, and when the termination itself was subject matter of approval, the termination cannot be said to be legal and valid and therefore, the quarters withheld by the employees original accused cannot be said to be wrongfully withheld. 10.The respondents have relied upon the decision of the Apex Court in case of Jagdish Chandra Nijhawan Vs. S.K. Saraf, reported in AIR 1999 SC p.217 in support of their submission that during CR.A/379/2006 14/41 JUDGMENT the pendency of Civil disputes and/or any other disputes before the Civil Courts, withholding of possession cannot be termed to be unauthorized or illegal. It is submitted on behalf of the respondents that the Apex Court had upheld the order of learned Magistrate discharging the accused employee, who had been proceeded against by the Company for wrongfully withholding flat given to him during his tenure of employment in the Company. The fact that proceedings in the labour courts are pending in itself is sufficient to show that possession cannot be said to have been withheld wrongfully. Shri. Pahwa has submitted that the present respondents were also under the protection of the order of this Court in Special Civil Application No. 10851 of 2002 passed on 22.12.2002 filed by the present respondent except respondent No. 2 and 14 respectively of the table reproduced herein above. In this order, this Court (Coram: N.G. Nandi, J.) passed the following order : “Para3: Having regard to the facts and circumstances of the case, status-quo as regards occupancy/possession of the residential quarters by the petitioners shall be maintained by respondents Nos. 2 and 3 till 21.1.2003.“ 11.Shri. Pahwa has submitted that after 21/1/2003 no protective orders are passed by any court CR.A/379/2006 15/41 JUDGMENT enabling the respondents to withhold the quarters. Shri. Pahwa has also taken this Court through the approval application preferred by the Company under Section 33(2)(b) of the I.D. Act, 1947 and order passed by the Labour Court, Junagadh in Reference Case Nos.14/2003 to 27/2003 and 30/2003 to 40/2003, wherein the Court has stayed the proceedings of Reference vide order dated 17.11.2005. Shri Pahwa has candidly admitted before this Court that none of these documents form part of the record and proceedings either of the trial Court or of the Appellate Court and for the first time, these documents have been relied upon by the respondents in support of the decision of acquittal. Shri Pahwa has also fairly admitted before this Court that on account of approval application, the labour Court has stayed the very References vide its order dated 17.11.2005 and this order of staying the reference has not been challenged by the respondents workmen. Shri Pahwa has submitted that due to such anomalous situation, the workmen could not have obtained the stay and/or prohibitory orders permitting them to retain the quarters in question. 12.It is submitted on behalf of the respondents accused that the proceedings in the labour Court are pending and therefore, the termination being per-se illegal, the withholding of quarter cannot be said to be a wrongful and therefore, CR.A/379/2006 16/41 JUDGMENT the decision of the appellate Court acquitting the respondents accused in their respective appeals deserve to be sustained. The respondents have invited this Court's attention to the testimony of the complainant and his cross- examination and stated that the defence side by putting questions clearly indicated that proceedings were pending and the termination was not legal. The Labour Court proceedings were pending. The termination was only by way of striking off the names of the concerned employee and that the complainant were not intending to produced on record any other document in respect of legal proceedings pending before the concerned lower court. Shri Pahwa has submitted that the request of the respondents for recalling the witness was considered by the trial Court and all relevant questions shaking up the case of the prosecution were put to the complainant's witness – original complainant. The witness has stated that he was not aware about the proceedings with regard to dismissal because he was not serving in that particular department. The witness has admitted that retirement age of the employee of the Company is 60 years. The witness has also admitted in his cross-examination that the accused had not attained the age of 60 years. He has also admitted that as per the prevailing rules, the person desirous of availing voluntary retirement, can avail the same. He has pleaded CR.A/379/2006 17/41 JUDGMENT no knowledge as to whether the accused ever intended to avail voluntary retirement scheme. He has admitted that he was not aware of the fact that any departmental proceedings were held against the accused. This witness has denied that the letter of striking off the names of the accused, had been issued vindictively. He has pleaded ignorance with regard to any challenge to the letter of striking off the names before the labour court. He has stated that he has no intention to produce such material, if any. In this behalf, he has denied the suggestion that he was aware that letter of striking off the names was challenged in the labour court and therefore, he was giving false testimony before the Court. He has stated that he was not interested in producing any other document in respect of the proceedings before the labour Court. Relying upon this testimony of the prosecution witness, it is vehemently submitted on behalf of the respondents that quarter in question cannot be said to be wrongfully withheld by the accused – present respondents. 13.Shri Pahwa and Shri Lakhani, learned counsel appearing for the respondents has also placed reliance upon the decision of this Court in case of Ronson Industrial Engineers Pvt. Ltd. Vs. State of Gujarat & Anr., reported in 2002 (1) GCD p.616 (Gujarat) and submitted that this Court did not interfere with the order of CR.A/379/2006 18/41 JUDGMENT acquittal passed by the learned Magistrate when the arbitrary termination of service was under challenged before the Labour Court by way of Reference. Shri Pahwa has submitted that in the instance case also, the termination of the service being arbitrary, the same is challenged by way of Reference and during the pendency of the Reference, it was not open to the employer to ask the employees to vacate the quarters and therefore, the order passed by the learned Sessions Judge setting aside the conviction is absolutely just, proper and does not call for any interference. Shri Pahwa has also relied upon the provisions of Section 33 of the Industrial Disputes Act, 1947 (hereinafter referred to as the 'the I.D. Act' for short) and submitted that the termination in this case cannot be said to have taken effect for want of prior permission as it is envisaged under Section 33 of the Industrial Disputes Act, 1947. Shri Pahwa was asked as to whether Section 33(1) or Section 33(2) of the I.D. Act would be applicable to the facts and circumstances of the present case, Shri Pahwa has submitted that Section 33(1) would be applicable and in the alternative, Section 33(2) of the I.D. Act also may be applicable but he has submitted that looking to the facts and circumstances of the present case, Section 33(1) is applicable and when Section 33(1) of the I.D. Act is applicable, the employer before effecting the CR.A/379/2006 19/41 JUDGMENT termination was required to obtain prior permission in writing of the concerned forum, wherein the proceedings were pending in respect of the labour dispute, which was pertaining to wage revision. Shri Pahwa has submitted that in the alternative and assuming for the sake of submission that looking to the facts of the wage revision dispute the present termination would not be covered by Section 33(1) of the I.D. Act, then, it would be covered by Section 33(2) of the Act. In any case, even if Section 33(2) of the I.D. Act is applicable then the termination cannot be said to have taken effect unless and until it is