Case: Hooghly Mills Company Ltd Vs. The State of West Bengal and Ors

enunciated by this Court in Baldev Krishna Sahi (supra), by strictly interpreting Section 630 to mean that the Appellant company must have title by way of ownership to the disputed property and that the Accused should have been in possession of the flat as a perquisite of his service. Section 630 nowhere requires that the company should have title to the property. The emphasis is on whether the Accused has obtained wrongful possession of the property which defeats the companys lawful right of exclusive possession, even though the property as such may not belong to the company but to a third-party landlord or licensor, as was the case in Atul Mathur (supra). The term property of the company has to be construed widely having regard to the beneficial object of the Section (See Kannankandi Gopal Krishna Nair (supra); PV George v. Jayems Engineering Co. (P) Ltd., (1990) 2 Comp LJ 62 (Mad)). The 2nd Respondent has admitted that after the death of Arun Kumar Bajoria, the disputed property was inherited by the vendors who subsequently transferred possession to the Appellant company by the agreement dated 26.4.2008. The 2nd Respondent also handed over the title deeds of the property to the Appellant company. Therefore, till the time that the 2nd Respondent does not prove in the civil suit that the vendors were required to have sold the property to him, it is the company which has the exclusive right to possess the property at present. Farther, it is true that in the majority of cases falling under the ambit of Section 630, it has been that property possessed by the company was allotted to an employee for the purposes of residential accommodation, etc. as an incidence of his service, at the first instance itself. In the present case, the 2nd Respondent has been a director of the company since 1988, and claims to be in permissive possession of the disputed property as per the alleged understanding between him and his relative, the deceased Arun Kumar Bajoria, since 1994. However the company acquired the disputed property only in 2008. Be that as it may, the 2nd Respondent has failed to rebut the fact that as of 26.4.2008 it is the company which has acquired the exclusive right to possess the property, and the company handed over possession to him w.e.f. 1.5.2008 only in his capacity as the director of the company. Whatever may have been the situation prior to 26.4.2008, on and after that date the company became entitled to recover possession of the disputed property. We find no substance in the 2nd Respondents argument that he was misled into delivering the title documents of the disputed property by his sister-in-law on the ground that they were required for updation of records. The 2nd Respondent, being an office bearer in the company, could have got the records updated on his own or could have delivered it to the vendors, if it was on their insistence that he handed over the documents. However the letter dated 9.6.2008 shows that the title documents were delivered to a representative of the Appellant company. This shows that the 2nd Respondent acknowledged that title was to be transferred to the company vide the agreement dated 26.4.2008. Section 630 nowhere stipulates that the property should have been allotted by the company to the Accused as a perquisite of service. There may be a number of purposes for which the Accused may be given lawful possession of the companys property during the course of employment for example, for safe custody of the property or for maintenance thereof. The purpose for which and the time at which possession was given is irrelevant. What is sufficient is that the Accused was put into possession of the property in their capacity as an officer/employee of the company and continued to withhold such property without having any independent right, title or interest thereto even after cessation of his employment. As we have found in the discussion supra, mere oral agreement or understanding would not be sufficient to establish such an independent right. 11. Coming to the final issue, Section 397(2) of the Code of Criminal Procedure provides that the High Courts powers of revision shall not be exercised in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceeding. Whereas Section 482 of the Code of Criminal Procedure provides that nothing in the Code of Criminal Procedure will limit the High Courts inherent powers to prevent abuse of process or to secure the ends of justice. Hence the High Court may exercise its inherent powers Under Section 482 to set aside an interlocutory order, notwithstanding the bar Under Section 397(2). However it is settled law that this can only be done in exceptional cases. This is, for example, where a criminal proceeding has been initiated illegally, vexatiously or without jurisdiction (See Madhu Limaye v. State of Maharashtra, (1977) 4 SCC 551). In the present case, the order of the Magistrate Under Section 630(2) was an interlocutory relief based on a prima facie assessment of facts and did not conclusively decide the ongoing trial Under Section 630(1). If the Magistrate finds that the Appellant company has been unable to prove that the 2nd Respondent was wrongfully withholding possession of the property, such interlocutory relief shall stand vacated. In light of the above discussion, it is clear that there was no exceptional case of illegality or lack of jurisdiction in the interlocutory order of the lower court calling for the exercise of the inherent powers of the High Court Under Section 482, Code of Criminal Procedure. However we are in agreement with the High Courts direction that the trial Under Section 630(1) ought to be completed as soon as possible. Further, it is needless to say that if the civil court passes a decree in favour of the 2nd Respondent in Suit No. 2126/2009, such decree must be honoured and possession of the disputed property may be restored to him accordingly.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. With respect to the first issue, it is undisputed that a company has a separate legal personality. Hence even if we accept the Respondents contention that the Appellant company is owned and controlled by the vendors themselves, any orders issued in the civil suit between 2nd Respondent and the vendors would not be binding upon the Appellant company as it is not a party to the suit. It is true that in some cases the Court may pierce the corporate veil and look at the reality behind the entity if it is found that the device of incorporation has been used to perpetrate some illegality or fraud (See Delhi Development Authority v. Skipper Construction Company (P) Ltd., (1996) 4 SCC 622 ). However no such illegality or fraud has been pleaded and proved in the presentany case, it has been settled by this Court in Damodar Das Jain v. Krishna Charan Chakraborti, (1989) 4 SCC 531 , and Atul Mathur (supra) that the pendency of a civil suit in respect of a property, would not bar a complaint Under Section 630 with respect to the same property, even if it is between the same parties, if there is no dispute or no bona fide dispute regarding the companys right over the property. The mere fact that the Accused employee has refuted the companys claim to possession would not make the dispute bonathe present case, we find that there is no bona fide dispute in as much as the 2nd Respondents entire claim to the disputed property is based on an oral agreement/understanding, as to the terms of which no documentary evidence has been produced. Whereas the Appellant company has at least been put into symbolic possession of the property by Clause 6 of the agreement for sale dated 26.4.2008, which 2nd Respondent has notare of the considered opinion that in a case such as the present complaint, where there was only an oral agreement in favour of the Accused employee for purchase of the property, but the civil court has issued a temporary injunction directing status quo, the Accused will nevertheless acquire the right to possess the disputed property lawfully only if he is successful in obtaining a decree in his favour in the civilmere issuance of a temporary injunction by the civil court directing maintenance of status quo in respect of the disputed property does not make the dispute bona fide or bar the companys right to recover the disputed property from the Accused employee Under Section 630 of the 1956 Act. At best, such an injunction would only bar the company from creating any rights in favour of third parties pending disposal of the civil suit. This is because the cause of action in the civil suit is completely different from the question of whether the employee is wrongfully withholding the companys property, which is the issue for consideration in the present criminal proceedings. If prima facie the trial court finds that the company has the right to possess the property, the issuance of a temporary injunction by the civil court cannot be used to defeat the companys lawful right ofon the aforementioned discussion, it can be concluded that the principle laid down in Atul Mathur (supra) would also extend to cases Under Section 630 where a civil court has, in spite of there being no bona fide dispute, issued an order of temporary injunction in respect of the disputed property. In such a case, the pendency of the civil suit and any interim reliefs granted therein would not bar criminal prosecution Under Section 630.Similarly, with respect to the second issue, we are of the considered opinion that where the Magistrate has found that prima facie the company has a right to possession of the disputed property, he may grant interlocutory relief Under Section 630(2) prior to conclusion of the trial Under Section 630(1). Courts have time and again observed that Section 630 has to be given a liberal interpretation so as to facilitate expeditious recovery of the companysgiven that the primary object of Section 630 is to provide a speedy mechanism for restoration of wrongfully withheld property to companies, we find that the provision should be construed as far as possible to facilitate a remedy in favour of the aggrieved company and to prevent the wrongful retention of the property for an unduly long period by theis no stipulation in Section 630(2) that an order for delivery of wrongfully withheld property must be made only after the Accused has been convicted Under Section 630(1). Rather, it says the Court trying the offence may direct the delivery of such property, which indicates that such an order may be passed at any stage by the trial court. This Court in Baldev Krishna Sahi (supra) upon finding that a case Under Section 630(1) was prima facie made out. directed the Petitioner therein to vacate the disputed premises during pendency of the substantive complaint Under Section 630(1). Therefore in the present case, the courts below have not committed any error in allowing the Appellant Companys application Under Section 630(2) during pendency of substantive criminal proceedings.With respect to the third and fourth issues, we find that the High Court has gone against the spirit of the provision, as enunciated by this Court in Baldev Krishna Sahi (supra), by strictly interpreting Section 630 to mean that the Appellant company must have title by way of ownership to the disputed property and that the Accused should have been in possession of the flat as a perquisite of his2nd Respondent has admitted that after the death of Arun Kumar Bajoria, the disputed property was inherited by the vendors who subsequently transferred possession to the Appellant company by the agreement dated 26.4.2008. The 2nd Respondent also handed over the title deeds of the property to the Appellant company. Therefore, till the time that the 2nd Respondent does not prove in the civil suit that the vendors were required to have sold the property to him, it is the company which has the exclusive right to possess the property atit is true that in the majority of cases falling under the ambit of Section 630, it has been that property possessed by the company was allotted to an employee for the purposes of residential accommodation, etc. as an incidence of his service, at the first instance itself. In the present case, the 2nd Respondent has been a director of the company since 1988, and claims to be in permissive possession of the disputed property as per the alleged understanding between him and his relative, the deceased Arun Kumar Bajoria, since 1994. However the company acquired the disputed property only in 2008. Be that as it may, the 2nd Respondent has failed to rebut the fact that as of 26.4.2008 it is the company which has acquired the exclusive right to possess the property, and the company handed over possession to him w.e.f. 1.5.2008 only in his capacity as the director of the company. Whatever may have been the situation prior to 26.4.2008, on and after that date the company became entitled to recover possession of the disputedfind no substance in the 2nd Respondents argument that he was misled into delivering the title documents of the disputed property by his sister-in-law on the ground that they were required for updation of records. The 2nd Respondent, being an office bearer in the company, could have got the records updated on his own or could have delivered it to the vendors, if it was on their insistence that he handed over the documents. However the letter dated 9.6.2008 shows that the title documents were delivered to a representative of the Appellant company. This shows that the 2nd Respondent acknowledged that title was to be transferred to the company vide the agreement dated630 nowhere stipulates that the property should have been allotted by the company to the Accused as a perquisite of service. There may be a number of purposes for which the Accused may be given lawful possession of the companys property during the course of employment for example, for safe custody of the property or for maintenance thereof. The purpose for which and the time at which possession was given is irrelevant. What is sufficient is that the Accused was put into possession of the property in their capacity as an officer/employee of the company and continued to withhold such property without having any independent right, title or interest thereto even after cessation of his employment. As we have found in the discussion supra, mere oral agreement or understanding would not be sufficient to establish such an independent right.Coming to the final issue, Section 397(2) of the Code of Criminal Procedure provides that the High Courts powers of revision shall not be exercised in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceeding. Whereas Section 482 of the Code of Criminal Procedure provides that nothing in the Code of Criminal Procedure will limit the High Courts inherent powers to prevent abuse of process or to secure the ends of justice. Hence the High Court may exercise its inherent powers Under Section 482 to set aside an interlocutory order, notwithstanding the bar Under Section 397(2). However it is settled law that this can only be done in exceptionalis, for example, where a criminal proceeding has been initiated illegally, vexatiously or without jurisdiction (See Madhu Limaye v. State of Maharashtra, (1977) 4 SCCthe present case, the order of the Magistrate Under Section 630(2) was an interlocutory relief based on a prima facie assessment of facts and did not conclusively decide the ongoing trial Under Section 630(1). If the Magistrate finds that the Appellant company has been unable to prove that the 2nd Respondent was wrongfully withholding possession of the property, such interlocutory relief shall stand vacated. In light of the above discussion, it is clear that there was no exceptional case of illegality or lack of jurisdiction in the interlocutory order of the lower court calling for the exercise of the inherent powers of the High Court Under Section 482, Code of Criminalwe are in agreement with the High Courts direction that the trial Under Section 630(1) ought to be completed as soon as possible. Further, it is needless to say that if the civil court passes a decree in favour of the 2nd Respondent in Suit No. 2126/2009, such decree must be honoured and possession of the disputed property may be restored to him accordingly.