CR.RA/311/2008 1/29 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL REVISION APPLICATION No. 311 of 2008 WITH CRIMINAL REVISION APPLICATION No. 312 of 2008 WITH CRIMINAL REVISION APPLICATION No. 313 of 2008 WITH CRIMINAL REVISION APPLICATION No. 320 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- ==================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? YES 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 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 ? NO 5. Whether it is to be circulated to the civil judge ? NO ==================================== CHANDUBHAI VIRJIBHAI GOKANI – Petitioners Versus STATE OF GUJARAT & 1 - Respondents ==================================== Appearance : MR SP MAJMUDAR with MR VIMAL A PUROHIT for Petitioners. MR PRADIP D. BHATE, APP for Respondent No. 1. CR.RA/311/2008 2/29 JUDGMENT MR KM PATEL for Respondent No. 2. MR VARUN K PATEL for Respondent No. 2. ==================================== CORAM : HONOURABLE MR.JUSTICE K.A.PUJ Date : 01/07/2008 COMMON ORAL JUDGMENT 1. Since common issue is involved in all the four matters and since they are heard together, the same are being disposed of by this common judgment and order. 2. All these four criminal revision applications are filed by the petitioners – original accused against the judgment and order passed by the learned Presiding Officer, Fast Track Court No. 1, Khambhaliya in Criminal Appeal Nos. 31, 12, 30 & 29 of 2002 dated 30.01.2008 whereby the learned Presiding Officer has confirmed the judgment and order of conviction dated 17.05.2002 passed by the learned Judicial Magistrate First Class, Dwarka in Criminal Case Nos. 850, 180, 716 & 632 of 1994 whereby the learned Judicial Magistrate First Class has convicted the petitioners for the offence punishable under Section 630 of the Companies Act, 1956 and imposed penalty of Rs.500/- CR.RA/311/2008 3/29 JUDGMENT and further directing the petitioners to deposit the amount of fine and, in default, the petitioners shall have to undergo a simple imprisonment for a period of 10 days. The learned Presiding Officer, Fast Track Court has also directed that the petitioners shall hand over the peaceful and vacant possession of the quarters allotted to them on or before 30.04.2008 and in default, the petitioners shall have to undergo rigorous imprisonment for a period of one month. 3. Bare facts are taken from Criminal Revision Application No. 311 of 2008. It is the case of the petitioners that the respondent No.2 Company through the Power of Attorney Holder has filed a complaint against the petitioners for the offence punishable under Section 630 of the Companies Act, 1956 claiming possession of the quarters from the petitioners and for imposing punishment as provided under Sub-section (1) of Section 630 of the Companies Act, 1956. It is stated in the said complaint that the petitioners were serving with the respondent No.2 Company and since the petitioners were the employees of the respondent No.2 Company, they were allotted CR.RA/311/2008 4/29 JUDGMENT residential premises owned and possessed by the respondent No.2 Company at concessional rate and as per the rules the amount was to be deducted from the salary of the petitioners. It is also alleged in the complaint that the petitioners were serving in the respondent No.2 Company and on their retirement, the respondent No.2 Company informed them for vacating the premises in dispute. However, the petitioners have not vacated quarters and it is alleged that the petitioners have wrongfully withheld the possession of the quarters allotted to them. It is further alleged that the petitioners have committed an offence punishable under Section 630 (1) of the Companies Act, 1956 and, therefore, the respondent No.2 Company prayed for obtaining possession of the residential quarters allotted to them. 4. The learned Judicial Magistrate First Class, Dwarka, after taking into consideration the evidence, the documentary as well as oral and after hearing both the sides, passed the impugned judgment dated 17.05.2002 convicting the petitioners for the offence CR.RA/311/2008 5/29 JUDGMENT punishable under Section 630 of the Companies Act, 1956 and further imposing the penalty of Rs.500/- and in default, the petitioners shall have to undergo sentence of simple imprisonment for a period of 10 days and also directed to give the vacant and peaceful possession of the quarters in question. 5. Being aggrieved by the said order, the petitioners have filed Criminal appeals under Section 304 of the Code of Criminal Procedure before the Additional Sessions Judge & Fast Track Court No.1, Khambhaliya. The learned Additional Sessions Judge & Fast Track Court No.1, Khambhaliya had without taking into consideration the evidence on record as well as the written submissions filed by the petitioners dismissed the appeals preferred by the petitioners vide his judgment and order dated 31.01.2008. 6. It is this order of the learned Additional Sessions Judge & Fast Track Court No.1, Khambhaliya which is under challenge in the present revision applications. CR.RA/311/2008 6/29 JUDGMENT 7. Mr. S. P. Majmudar, learned advocate appearing for the petitioners has submitted that both the Courts below have erred in not appreciating the fact that the complaints are to be filed by the Director or Chairman of the Company whereas in the present case, the complaints have been filed by the Manager who is also an employee of the Company. The employee of the Company has no authority or right to lodge complaint against another employee. Despite this fact, the learned Judicial Magistrate First Class had entertained the complaint. Mr. Majmudar has further submitted that both the Courts below have committed error apparent on the face of the record in as much as the Courts below have failed to appreciate the fact that the disputed quarters were given to the petitioners on rent. There was no contract between the petitioners and the respondent No.2 Company to the effect that the said quarters were being allotted to the petitioners only during the service tenure of the petitioners and there was no contract that the petitioners would have to vacate the quarters after the service tenure was over. Every month rent was deducted from the salary CR.RA/311/2008 7/29 JUDGMENT of the petitioners. Therefore, it cannot be said that the quarters in question were being wrongly withheld by the petitioners and the petitioners have committed the offence punishable under Section 630 of the Companies Act, 1956. 8. Mr. Majmudar has further submitted that the respondent No.2 is a limited Company and as per the provisions of the Companies Act, 1956, if any complaint is to be filed, then as per the Resolution of the Board of Directors, only the Chairman is authorized and empowered to lodge the complaint. In the present case, the complaint is not lodged by any Director or Chairman. The said complaint is also not filed pursuant to any Resolution passed by the Board of Directors. There is no evidence worth its name produced by the respondent No.2 Company that the complaint has been filed after the resolution passed by the Board of Directors. The present complaint is filed by one employee against another employee and the said complaint itself is not maintainable. However, this material aspect was not considered by both the CR.RA/311/2008 8/29 JUDGMENT Courts below and, therefore, the impugned judgment and orders are required to be quashed and set aside. 9. Mr. Majmudar has further submitted that the Judicial Magistrate First Class, Dwarka in similar case, more particularly, in Criminal Case No.1402 of 1981 filed by Shri Shiv Dayal Kvatra, Office Superintendent, M/s. Tata Chemicals Limited against Fatubhai Murad, an employee of the Company for the offence punishable under Section 630 of the Companies Act and under Sections 408 & 447 of the IPC, acquitted the accused of the said criminal case in similar set of facts and circumstances on the ground that the Company has failed to prove that the residential quarter was given to the accused only during the service tenure of the accused and that the accused had wrongly withheld the residential quarter. The respondent No.2 Company has challenged the said order of acquittal before this Court by way of preferring Criminal Misc. Application No. 1536 of 1982 and this Court had rejected the said application on the ground that there is no written contract produced on record, executed CR.RA/311/2008 9/29 JUDGMENT between the said employee and the respondent No.2 Company. Despite the order of this Court in similar set of facts, the learned Judicial Magistrate First Class had convicted the petitioners in the present group of complaints and the orders passed in the said complaints have been confirmed by the learned Additional Sessions Judge, Fast Track Court No.1, Khambhaliya. 10.Mr. Majmudar has further submitted that both the Courts below have failed to appreciate that the respondent No.2 has not produced any evidence to show that under what terms and conditions, the residential quarters were given to the petitioners. In absence of any such specific contract entered into between the parties, the relation would be as a landlord and a tenant. Mr. Majmudar has relied on the decision of this Court in the case of Chhatrasingh Nathusingh Vaghela V/s. State of Gujarat and another, 1998 (2) GLR 1426 wherein it is held that the Company could not produce any evidence to show under what terms and conditions of contract, the CR.RA/311/2008 10/29 JUDGMENT premises was allotted, then the defense put forward by the accused employee cannot be said to be a false one and if the defense version could not be said to be a false one, then the accused is entitled to be acquitted. Based on this decision, Mr. Majmudar has submitted that there is no evidence put forward by the respondent No.2 Company to prove that under what terms and conditions, the residential quarters were allotted to the petitioners and, therefore, all the petitioners deserve to be acquitted and the impugned orders are required to be quashed and set aside. 11.Mr. Majmudar has further submitted that one Mr. Nitin Mehta has deposed on behalf of the respondent No.2 Company. No Power of Attorney is given to the said Mr. Mehta on behalf of any of the Directors of the Company and in absence of any Power of Attorney, the deposition given by him cannot be taken into consideration. This material fact has not been taken into consideration by both the Courts below and hence, the impugned judgment and order is required to be quashed and set aside. CR.RA/311/2008 11/29 JUDGMENT 12.Mr. Majmudar has further submitted that all complaints are based on a document which is produced at Exh. 54 and the same is considered to be an agreement. Both the Courts below have failed to appreciate that the so-called agreement does not bear the signature of Mr. Mehta who has deposed at Exh.51. The said document is not executed in his presence. The said Mr. Mehta has no knowledge about such so-called agreement which is considered to be an agreement by the complainant is not as per the provisions of Section 2 (A) of the Contract Act and the same is also not executed on the stamp paper but the same is a printed format. As per the provisions of the Companies Act, when contract is entered into between the two parties, the names of both the parties should be mentioned and the terms and conditions between both the parties should also be mentioned and the contract bears the signature of both the parties. Admittedly, in the present case, there is no such agreement executed between the petitioners and the respondent No.2 Company. The agreement at Exh.54 CR.RA/311/2008 12/29 JUDGMENT should not have been taken into consideration and hence, it cannot be said that there is a breach of contract. He has further submitted that the impugned orders passed by the Courts below are absolutely illegal, bad in law, against the evidence on record, against the provisions of the Code and hence, deserve to be quashed and set aside. 13.Lastly, Mr. Majmudar has submitted that Criminal Revision Application Nos. 951 to 954 of 2005 are filed by some other occupants challenging the similar orders passed by the learned Judicial Magistrate First Class and they are admitted by this Court and bails are granted. Hence, these matters be also admitted and be heard along with those matters. 14.Mr. Pradip Bhate, learned Additional Public Prosecutor appearing for the respondent No.1 – State of Gujarat has submitted that provisions of Section 630 of the Companies Act, 1956 are very clear and once the applicants ceased to be the employees of the Company, they have no right to retain the possession CR.RA/311/2008 13/29 JUDGMENT of the Company's quarters which were given to them by virtue of their employment. There was no tenant- landlord relationship as alleged. Moreover, looking to the limited scope of revision, the concurrent finding given by the Courts below should not be disturbed by this Court. 15.Mr. Varun K. Patel, learned advocate appearing for Mr. K. M. Patel for the respondent No.2 Company has submitted that earlier two matters being Criminal Revision Application Nos. 339 & 347 of 1996 were filed before this Court challenging the order passed by the learned Judicial Magistrate First Class, Dwarka under similar circumstances. When the Court was not inclined to grant any relief in the said two revision applications, the same were allowed to be withdrawn by an order dated 27.11.1996. While allowing to withdraw the revision applications, the Court observed that the revision application stands dismissed. The petitioners were directed to pay the fine, if not paid and as regards handing over possession of the Company premises is concerned, the petitioners were CR.RA/311/2008 14/29 JUDGMENT directed to hand over the same on or before 31.05.1997. The petitioners were also directed to pay the electricity and water charges and compensation charges as per rules on or before 31.05.1997. The Court has further observed that non-compliance of the said order shall strictly amount to contempt of Court. Mr. Patel has, therefore, submitted that the present revision applications are filed under similar circumstances and since there is no substance or merit, the same deserves to be dismissed and the petitioners may be directed to hand over the vacant possession of the premises to the respondent No.2 Company forthwith. 16.So far as Criminal Revision Application No.951 to 954 of 2005, Mr. Patel has submitted that it is true that rule was issued by this Court in those four matters and bail was granted. However, the said orders were passed ex-parte and the respondent No.2 Company has already moved application for early hearing of the said revision applications. The Court's attention was not drawn to the earlier orders passed by the Court in CR.RA/311/2008 15/29 JUDGMENT similar set of circumstances. He has, therefore, submitted that no reliance can be placed on those matters which are admitted by the Court ex-parte. 17.As far as merits of the matter are concerned, Mr. Patel has at length referred to the orders and judgments passed by the Courts below. He also invited the Court's attention to the provisions contained in Section 630 of the Companies Act, 1956 and heavily relied on the decisions of the Hon'ble Supreme Court in the case of Lalita Jalan and another V/s. Bombay Gas Company Limited and others, (2003) 6 S.C.C. 107 and Shubh Shanti Services Limited V/s. Manjula S. Agarwalla and others, (2005) 5 S.C.C. 30. 18.The Court has considered the rival submissions of the parties, perused the impugned orders passed by the Courts below and examined the findings recorded therein. The Court gave its anxious thoughts to the relevant statutory provisions and authorities cited before it. Considering the limited scope of revision CR.RA/311/2008 16/29 JUDGMENT and further considering the concurrent judgments and orders of the Courts below which are based on proper appreciation of evidence and correct understanding of law, this Court finds itself in complete agreement with the view taken by the Courts below and rejects these revisions at the very threshold. 19.Before dealing with rival contentions, it is necessary to have a close look at the provisions of Section 630 of the Companies Act, 1956. It reads as under :- 630. Penalty for wrongful withholding of property :- (1) If any Officer or employee of a 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]. CR.RA/311/2008 17/29 JUDGMENT (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 extend to two years.” An analysis of the Section shows that what is penalized is not only wrongfully obtaining possession of property and the subsequent wrongfully withholding of it but also the refusal to deliver up the property within the time fixed by the Court for such delivery. Where the ingredients for attracting the application of Section 630 have been made out, the right of the Company to the possession of the property becomes established and there is no scope to exercise any mercy power by the Court in favour of the employee. In the case of Prahladbhai Rajaram Mehta V/s. Popatbhai Haribhai Patel, (1996) 87 Company Cases 557 (Gujarat), this Court has held that the section would be attracted even where the employee claims that the premises were allotted to him for residence during the tenure of his service on the basis of tenancy. Such an CR.RA/311/2008 18/29 JUDGMENT employee does not become an independent tenant. The Court also held that the rights, if any, in favour of the employee arising under the Bombay Rents, Hotel & Lodging House Rates Control Act, 1947 would become superseded by the Companies Act, 1956, being a later in time Central Act. 20.In the case of Lalita Jalan and another V/s. Bombay Gas Company Limited and others, (2003) 6 SCC 107, it is held that the main ingredient of Section 630 of the Companies Act is wrongful withholding of the property of the Company or knowingly applying it to purposes other than those expressed or directed in the articles of association and authorized by the Act. If the officer or employee of the Company does any such act by which the property given to him is wrongfully withheld and is not restored back to the Company, it will clearly amount to an offence within the meaning of Section 630. It is further held that the object of Section 630 is that the property of the Company is preserved and is not used for the purposes other than those expressed or CR.RA/311/2008 19/29 JUDGMENT directed in the articles of association of the Company or as authorized by the provisions of the Act. The Court further held that the view expressed in Abhilash Vinodkumar Jain, (1995) 3 SCC 732 clearly subserves the object of the Act which is to the effect of recovering the possession of the property belonging to the Company. If it is held that other members of the family of the employee or officer or any person not connected with the family who came into possession through such employee would not be covered by Section 630, such a view will defeat the quick and expeditious remedy provided therein. The possession of the property by an employee or anyone claiming through him of such property is unlawful and recovery of the same on the pain of being committed to a prison or payment of fine cannot be stated to be unreasonable or irrational or unfair so as to attract the rigour of Article 21 of the Constitution. The Court, therefore, declared that the statement of law made in J.K. (Bombay) Limited case, (2001) 2 SCC 700 to the effect that prosecution of the legal heirs and family members living with an erstwhile or former employee CR.RA/311/2008 20/29 JUDGMENT would violate Article 21 is, therefore, not correct. If the object of the provision of Section 630 is borne in mind, the expansive meaning given to the expression “employee or any one claiming through him” will not be unrelated to the object of the provision nor is it so far fetched as to become unconstitutional. Mr. Patel has, therefore, rightly submitted that any one who is in occupation of the premises belonging to the Company is covered by the provisions contained under Section 630 of the Companies Act and complaints can legitimately be filed against them. 21.In the case of Shubh Shanti Services Limited V/s. Manjula S. Agarwalla and others, (2005) 5 SCC 30, it is held that Section 630 of the Companies Act includes both movable and immovable property. The words “such officer or employee” occurring in Section 630 (2) include past or present officer or employee or his or her legal representative. This provision strictly speaking is not penal in the sense as understood under penal law. The main purpose to make the action an offence under Section 630 is to provide a speedy and CR.RA/311/2008 21/29 JUDGMENT 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 with the order of the Court regarding delivery or refund of the property of the Company. 22.Reliance placed by Mr. Majmudar on the decision of the Hon'ble Supreme Court in the case of V. M. Shah V/s. State of Maharashtra and another, AIR 1996 S.C. 339 is wholly irrelevant and uncalled for as in that case, the Civil Court, after full dressed trial recorded the finding that the appellant had not come into possession through the Company but had CR.RA/311/2008 22/29 JUDGMENT independent tenancy rights from the principal landlord and, therefore, the decree for eviction was negatived. The Court, therefore, held that the findings recorded by the Criminal Court stand superseded by the findings recorded by the Civil Court. Thereby, the findings of the Civil Court get precedence over the findings recorded by the Trial Court, in particular, in summary trial for offences under Section 630. Here, out of four matters, only in two matters, suits are filed and they are still pending before the trial Court and there is no decree in favour of the petitioners. Mere pendency of the suit has not have any effect of suspending the orders passed by the Trial Court as well as the Appellate Court in criminal proceedings. 23.The submission of Mr. Majmudar that the Power of Attorney Holder cannot file complaint is also not acceptable in view of the fact that the Company is a corporate personality and it always acts through human agency. Even otherwise, the power of attorney itself makes it clear that the same has been given under the common seal of the Company pursuant to CR.RA/311/2008 23/29 JUDGMENT Resolution passed by its Board of Directors on 25.03.1991. Specific powers are given to the power of attorney holder to appear and represent the Company in all Courts and Tribunals, Civil, Revenue and criminal, in any part of India or foreign country