Case: Abhilash Vinodkumar Jain Vs. Cox &amp; Kings (India) Ltd.

2. The admitted facts, which alone are relevant for the purpose of these appeals and are not in dispute are that the appellants in both the cases are the legal heirs of the employee/officer who died in harness while serving with the respective respondent company. The concerned employees in both the cases had been allotted premises during their service by their respective employer (respondent company) and on the failure of the appellants to hand over the vacant possession of the allotted premises after the demise of the employee/officer concerned prosecutions were launched against them (legal heirs) under Section 630, of the Companies Act, 1956 (hereinafter referred to as the Act). The appellants approached the High Court through petitions under Section 432 Cr.P.C. seeking quashing of the proceedings on the ground that the provisions of Section 630, of the Act cannot be invoked against them under Section 630, of the Act was not maintainable. The High Court dismissed their petitions filed under Section 432 Cr.P.C. Hence, these appeals.

Reasoning:
11. Thus, it would be seen that this Court has consistently taken the view and repeatedly emphasised that the provisions of Section 630, of the Act have to be given purposive and wider interpretation and not restrictive interpretation. In the four cases referred to above, however, this Court was not required to directly consider and deal with the question whether the provisions of Section 630, of the Act can be invoked against the legal heirs, for wrongfully withholding the property of the company, on the death in harness of an employee or officer of the company to whom the property was allotted. In these two appeals that precisely is the issue which invites our attentionWe are in respectful agreement with the above view and are of the opinion that the legal representatives or the heirs of the deceased employee or officer would squarely fall within the ambit of Section 630, of the Act. To exclude them, by giving a restrictive interpretation to the provisions would defeat the very object of the provision which declares the wrongful withholding of the property of the company to be an offence. It is immaterial whether the wrongful withholding is done by the employee or the officer or the past employee or the past officer or the heirs of the deceased employee or the officer or anyone claiming their right of occupancy under such an employee or an officer. It cannot be ignored that the legal heirs or representatives in possession of the property had acquired the right of occupancy in the property of the company, by virtue of being family members of the employee or the officer during the employment of the officer or the employee and not on any independent account. They, therefore, derive their colour and content from the employee or the officer only and have no independent or personal right to hold on the property of the company. Once the right of the employee or the officer to retain the possession of the property, either on account of termination of services, retirement, resignation or death, gets extinguished, they (persons in occupation) are under an obligation to return the property back to the company and on their failure to do so, they render themselves liable to be dealt with under Section 630 of the Act for retrieval of the possession of the property14. Even though Section 630, of the Act falls in Part XIII of the Companies Act and provides for penal consequences for wrongful withholding of the property of the company, the provisions strictly speaking are not penal in the sense as understood under the penal law. The provisions are quasi-criminal. They have been enacted with the main object of providing speedy relief to a company when its property is wrongfully obtained or wrongfully withheld by an employee or officer or an ex-employee or officer or anyone claiming under them. In our opinion, a proper construction of the Section would be that the term officer or employee of a company in Section 630, of the Act would by a deeming fiction include the legal heirs and representatives of the employee or the officer concerned continuing in occupation of the property of the company after the death of the employee or the officer15. Under sub-section(I), of Section 630, for the wrongful obtaining of the possession of the property of the company or wrongfully withholding it or knowingly applying it to a purpose other than that authorised by the company, the employee or the officer concerned is punishable with fine which may extend to one thousand rupees. The fine under this sub-section is to be understood in the nature of compensation for wrongful withholding of the property of the company. Under sub-section (2) what is made punishable is the disobedience of the order of the Court, directing the person, continuing in occupation, after the right of the employee or the officer to occupation has extinguished, to deliver up or refund within a time to be fixed by the Court, the property of the company obtained or wrongfully withheld or knowingly misapplied. Thus, it is in the event of the disobedience of the order of the Court, that imprisonment for a term which may extend to two years has been prescribed. The provision makes the defaulter, whether an employee or a past employee or the legal heir of the employee, who disobeys the order of the Court to hand back the property to the company within the prescribed time liable for punishment16. The object of the Companies Act inter alia is to regulate the affairs of the companies including the control of the management and protection of the property of the company. The object of Section 630 of the Act has, thus, a direct nexus with the object of the Act. It is precisely for this reason that in Gokak Patel Volkarts case (1991 AIR SCW 505) (supra) this Court held the offence under Section 630, of the Act to be a continuing offence17. Section 630, of the Act provides speedy relief to the company where its property is wrongfully obtained or wrongfully withheld by an employee or an officer or a past employee or an officer or legal heirs and representatives deriving their colour and content from such an employee or officer in so far as the occupation and possession of the property belonging to the company is concerned. The failure to deliver property back to the employer on the termination, resignation, superannuation or death of an employee, would render the holding of that property wrongful and actionable under Section 630, of the Act. To hold that the legal heirs would not be covered by the provisions of Section 630 of the Act would be unrealistic and illogical. It would defeat the beneficent provision and ignore, the factual realities that the legal heirs or family members who are continuing in possession of the allotted property, had obtained the right of occupancy with the concerned employee in the property of the employer only by virtue of their relationship with the employee/officer and had not obtained or acquired the right of possession of the property in any other capacity, status or right. The legislature, which is supposed to know and appreciate the needs of the people, by enacting Section 630, of the Act manifested that it was conscious of the position that today in the corporate sector - private or public enterprise - the employees/officers are often provided residential accommodation by the employer for the use and occupation of the concerned employee during the course of his employment. More often than not, it is a part of the service conditions of the employee that the employer shall provide him residential accommodation during the course of his employment. If an employee or a past employee or anyone claiming the right of occupancy under them were to continue to hold the property belonging to the company, after the right to be in occupation has ceased for one reason or the other, it would not only create difficulties for the company, which shall not be able to allot that property to its other employees, but would also cause hardship for the employee awaiting allotment and defeat the intention of the legislature. The Courts are therefore obliged to place a broader, liberal and purposeful construction on the provisions of Section 630, of the Act in furtherance of the object and purpose of the legislation and construe it in a wider sense to effectuate the intendment of the provision. The heirs and legal representatives of the deceased employee have no independent capacity or status to continue in occupation and possession of the property, which stood allotted to the employee or the officer concerned or resist the return of the property to the employer, in the absence of any express agreement to the contrary entered with them by the employer. The Court, when approached by the employer for taking action under Section 630, of the Act, can examine the basis on which the petition/complaint is filed and if it is found that the companys right to retrieve its property is quite explicit and the stand of the employee, or any one claiming through him, to continue in possession is baseless, it shall proceed to act under Section 630, of the Act and pass appropriate orders. Only an independent valid right, not only to occupation but also to possession of the property belonging to the company, unconnected with the employment of the deceased employee can defeat an action under Section 630, of the Act if it can be established that the concerned deceased employee had not wrongfully nor knowingly applied it for purposes other than those authorised by the employer. In interpreting a beneficent provision the Court must be forever alive to the principle that it is the duty of the Court to defend the law from clever evasion and defeat and prevent perpetration of a legal fraud18. Thus, our answer to the question posed in the earlier part of this judgment is in the affirmative and we hold that a petition under Section 630, of the Act is maintainable against the legal heirs of the deceased officer/employee for retrieval of the companys property wrongfully withheld by them after the demise of the employee concerned.