Case: Shubh Shanti Services Ltd Vs. Manjula S. Agarwalla

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. 15. 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.16. 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 companys 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 companys 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 companys 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.

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

Explanation:
1[ds]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 beof 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 theShri Goenka to Respondent No.1 the said flat is being occupied by theShri 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.16. 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 companys 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 companys 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 companys 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 thedoes 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 1997M/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.