Case: Baldev Krishna Sahi Vs. Shipping Corporation Of India Limited &amp; Anr

The petitioner, Baldev Krishna Sahi, was an Under Secretary to the Government of India in the Ministry of Shipping and Transport and on May 21, 1974, accepted employment as Joint Manager in the Mogul Line Limited, a Government of India undertaking, after obtaining release from government service. He was first allotted service quarter. In 1975 the company purchased a spacious flat, being flat No. 151 in Jolly Maker Apartment III at 119, Cuffe Parade and the petitioner being the seniornmost executive was allotted the flat for his residence. The petitioner retired from the service of the company on or about September 30, 1984. Prior to that, i.e. On September 26, 1984 he addressed a letter requesting the company to permit him to continue to live in the companys premises during the period of his accumulated leave after his retirement, i.e. for a period of six months, undertaking to vacate the flat as early as possible. It appears that the company on humanitarian grounds acceded to this request and permitted the petitioner to stay on in the companys flat for six months after his retirement and in accordance with the companys rules, he was required to pay compensation for the use of the premises. After the expiry of the said period of six months, the company addressed a letter dated April 26, 1985 requesting the petitioner to vacate the premises stating that if he failed to do so, he would be liable to pay higher compensation as per the companys rules. Since the petitioner failed to vacate the flat, the company initiated proceedings for his eviction under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. The estate officer by order dated December 2, 1985, directed the eviction of the petitioner. The petitioner carried an appeal to the City Civil and Sessions Court, Bombay but the same was dismissed by the Principal Judge, City Civil Court, by his order dated January 16, 1986. He then preferred a revision to the High Court and the High Court by its order dated January 28, 1986 allowed the same, set aside the eviction order and directed the Estate Officer to give a personal hearing to the petitioner. Instead of availing of that opportunity, the petitioner on March 3, 1986 moved the High Court by a petition under Article 226 of the Constitution and obtained ad interim stay of the proceedings before the Estate Officer. A few days thereafter, i.e. On March 7, 1986 the petitioner instituted a suit being Civil Suit No. 1382/86 in Small Causes Court, Bombay seeking a declaration that he was a tenant of the disputed flat, which is nowIn view of this, the company was constrained to lodge a complaint against the petitioner under Section 630 of the Act in the Court of the Additional Chief Metropolitan Magistrate, 37th Court, Esplanade, Bombay, alleging that he was wrongfully withholding the flat in question which had been given to him for his residence during the period of his employment and thereby committed an offence punishable under Section 630. The learned Magistrate by his order dated May 22, 1986 took cognizance of the complaint against the petitioner and directed issue of process. On June 30, 1986 the company merged with the Shipping Corporation of India and all its assets and liabilities were taken over by the Corporation. The Corporation in the counter-affidavit, inter alia has pleaded that there is acute shortage of housing accommodation in the Metropolitan City of Bombay and it becomes necessary for the Corporation with a view to attract good talent to provide suitable housing accommodation to its officers and employees, and that due to acute financial liquidity, it is not possible for the Corporation to buy property in Bombay for this purpose. It is further pleaded that the petitioner was given the flat for his residence during the period of his employment and that he was bound to vacate the same after his retirement. It is asserted that the petitioner with a dishonest intention is wrongfully withholding the flat and has instituted false and frivolous proceedings with the ulterior object of protracting and delaying the eviction proceedings. We are informed that the petitioner has been deliberately and dishonestly withholding the flat covering an area of 1750 square feet in Cuffe Parade which is a posh area, valued at approximately Rs. 30 lakhs and putting it to his own use contrary to the terms of his employment

Court's reasoning:
8. Section 630 of the Act which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draftsman of the Act. The section is in two parts. Sub-section (1) by clauses (a) and (b) creates two distinct and separate offences. First of these is the one contemplated by clause (a), namely, where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment, to which he is not entitled. Normally, it is only the present officers and employees who can secure possession of any property of a company. It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property. This is the function of clause (a) and although it primarily refers to the existing officers and employees, it may also take in past officers and employees. In contrast, clause (b) contemplates a case where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment. That appears to be one of the functions of clause (b). It would be noticed that clause (b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. That would primarily apply to the present officers and employees and may also include past officers and employees. There is therefore no warrant to give a restrictive meaning to the term officer or employee appearing in sub-section (1) of Section 630 of the Act. It is quite evident that clauses (a) and (b) are separated by the word or and therefore are clearlyThe High Court of Calcutta in Amritlal Chum case ((1987) 61 Com Cas 211) obviously fell into an error in seeking to curtail the ambit of Section 630 (1)(b) by giving a restrictive meaning to the term officer or employee which must take its colour from the context in which it appears. The whole object of enacting sub-section (1) of Section 630 is the preservation of the property of a company by the creation of two distinct offences by clauses (a) and (b) which arise under different sets of circumstances, and it would be rendered nugatory by projecting clause (a) into clause (b). There is also no warrant for the construction placed by the High Court of Calcutta on the words any such property occurring in clause (b) as applicable to such property of a company, possession of which is wrongfully obtained by an officer or employee of the company i.e. refers to the whole of clause (b). According to the plain construction, the words any such property in clause (b) relate to any property of a company as mentioned in clausethe property is held back, the retained possession would amount to wrongful withholding of the property of the company. While the existence of the capacity, right and possession would be during employment, the withholding may be even after the termination of the employment and though the possession as it precedes the act of retention or withholding may be rightful in the past affording an opportunity to withhold, the withholding may be wrongful in the presentlearned Judge (Ashok Agarwal J.) observes that that has been the consistent view of the High Court and has referred to the subsequent decisions of Khatri J. and Kurdukar, J. In our considered opinion, the construction placed by the High Court on the provisions contained in Section 630(1) is the only construction possible. We accordingly uphold the view of the High Court of Bombay that the term officer or employee of a company applies not only to existing officer or employees but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property, or (b) having obtained such property during the course of his employment, withholds the same after the termination of his employment. The decision to the contrary of the High Court of Calcutta in Amritlal Chum case ((1987) 61 Com Cas 211) does not lay down good law and is overruled