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Damodar Das JaIn Vs. Krishna Charan Chakraborti and Another - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai High Court
Decided On
Case NumberCriminal Writ Petition No. 259 of 1984 and Criminal Application No. 806 of 1984
Judge
Reported in1985(1)BomCR479; [1985]57CompCas115(Bom); 1984MhLJ952
Acts Constitution of India - Article 227; Code of Criminal Procedure (CrPC) , 1973 - Sections 378(4) and 482; Companies Act - Sections 630 and 630(1); Indian Penal Code (IPC), 1860 - Sections 381 and 408; Indian Easements Act, 1882 - Sections 52
AppellantDamodar Das Jain
RespondentKrishna Charan Chakraborti and Another
Excerpt:
.....writ petition under section 482 challenging order of validity of judgment and order of acquitting accused - company itself claiming to be tenant in premises having allowed accused to occupy same as term of his employment - cause of claiming to be tenant of premises was of purely civil nature which could be best left to civil court to determine - court right in holding that such dispute between parties fell outside ambit of enquiry envisaged under section 630 and same fell within jurisdiction of civil court. - indian succession act (39 of 1925), section 63: [s.b. sinha & cyriac joseph, jj] will validity - deceased, was a very wealthy person - he floated several companies - he left behind his daughters, s and j - he was suffering from various diseases including some neurological ones..........till october, 1979, charging him under s. 630 of the companies act for wrongfully withholding the company's property being flat no. 6 at 'shirin' colaba, bombay, 400 005, converting the same to his own use and also under ss. 408 and 381 of i.p.c. for removing the records of the company. the said complainant came to be filed under the following circumstances :the accused was an employee of the said company having joined its service at calcutta in 1943. in 1947. in 1947 he was transferred to the bombay branch where he continued to work as the company's salesman till may, 1969, and, thereafter continued in the employment of the company as manager and officer till 1979. in may, 1979, he was again transferred to calcutta but he did not join his duties there. the company there upon terminated.....
Judgment:

Rege, J.

1. These two matters arising out of the same proceeding and against the same judgment of the learned Sessions Judge dated April 23, 1984, can be disposed of by a common judgment.

2. Criminal Writ Petition No. 259 of 1984 under article 227 of the Constitution and also under s. 482 of the Criminal Procedure Code is by the complainant company challenging the validity of the judgment and order of the learned Sessions Judge dated April 23, 1984, acquitting respondent No. 1, the accused, of the charge under s. 630 of the Companies Act by reversing in appeal the judgment and order of the learned Metropolitan Magistrate dated November 30, 1983, convicting the accused of the said offence under s. 630 of the Companies Act and sentencing him to pay a fine of Rs. 500 an in default one month's simple imprisonment.

3. Criminal Application No. 806 of 1984 is filed for seeking leave of this court to file an appeal against the said order of acquittal of the accused by the said Sessions Judge. The said application was directed to be kept along with the write petition.

4. At the outset, the learned counsel for the accused has contended that a write petition under art. 227 of the Constitution against the orders of acquittal cannot be maintained in view of the remedy by way of appeal against the said order of acquittal being provided for under s. 378(4) of the Criminal Procedure Code. It was also contended by the learned counsel that in view of the specific provisions of s. 401(3) of the Criminal an order of acquittal into an order of conviction, the petition under, s. 482 of the Criminal Procedure Code, involving inherent powers of this court, also cannot be maintained. The learned counsel for the complainant company had no satisfactory answer to the said contentions. In; may opinion, in view of the said provisions of the Criminal Procedure Code, neither the writ petition under art, 227 of the Constitution nor an application under s. 482 of Criminal Procedure Code involving inherent powers of this court was maintainable. The result, therefore, was that the rule granted in Write Petition No. 259 of 1984 would stand discharged.

5. Being aware of these difficulties in the cases of the write petition, the complainant company has also filed an application under s. 378(4) of the Criminal Procedure Code being Criminal Application No. 806 of 1984 seeking leave to appeal against the said order of acquittal by the learned Sessions Judge. Since I heard in this matter full arguments of the learned counsel on both sides, while dealing with the said writ petition as regards the criminal court's power under s. 630 of the Companies Act, I thought it proper to condone the delay of 7 days in filing the said application, grant leave, admit the appeal and treat the arguments advanced as being the arguments advanced in the appeal itself.

6. In this case proceedings commenced on a complaint by a company called Indian Textile Company (Pvt.) Ltd. (hereinafter called 'the company') with its office at Banners and branches at Bombay and Calcutta, against the accused - Respondent No. 1 - who was in the employment of the company till October, 1979, charging him under s. 630 of the Companies Act for wrongfully withholding the company's property being flat No. 6 at 'Shirin' Colaba, Bombay, 400 005, converting the same to his own use and also under ss. 408 and 381 of I.P.C. for removing the records of the company. The said complainant came to be filed under the following circumstances :

The accused was an employee of the said company having joined its service at Calcutta in 1943. In 1947. In 1947 he was transferred to the Bombay Branch where he continued to work as the company's salesman till May, 1969, and, thereafter continued in the employment of the company as manager and officer till 1979. In May, 1979, he was again transferred to Calcutta but he did not join his duties there. The company there upon terminated his services and the accused by his letter dated December 1, 1979, in intimated to the company his acceptance of agreement in writing between the company and the accused setting out the terms and conditions of the service of the accused with the company. Thereafter on January 22, 1980, the accused filed a dispute with the labour Court calming certain dues from the company by reason of wrongful termination of this services, which dispute is pending.

7. It seems that during his employment with the complainant in Bombay till 1973, the accused was allowed to occupy the company's flat at Esplanade Mansion, opposite Kala Ghoda, Bombay. Thereafter some time in July, 1973, the company through its director, one Mahendrakumar Gupta (since deceased), entered into an agreement termed as 'Paying Guest' agreement in respect of Flats No. 6 in a building called 'Shirin', Colaba, Bombay, 400 005, with its owner, one R. L. Rodrigues (since deceased) for a period of 9 months from April 1, 1973 with an option to renew the same on the same terms and conditions for the same period. Another agreements of the same date for the use of fixtures and furniture was also executed between the parties simultaneously. It was not disputed that the accused has countersigned the said agreements and that the said agreements in terms permitted the company as a paying guest to allow the accused by his name to use and occupy to the said flat on purely paying guest basis. Accordingly the accused came to occupy the said premises. The Said agreement were thereafter renewed only twice one on September, 6, 1974, and again on April 1, 1975, for period of 9 months each, the period under the 2nd agreement dated April 1, 1975, expiring on December 31, 1975. Admittedly after the expiry of the said second agreement, no further agreement was executed although the continued to occupy the said premises. The company also did not pay compensation charges payable in respect of the said permits thereafter till April 10, 1982. Although the services of the accused were terminated as far back as October, 1979, it was for the first time that the company by its letter dated September 24, 1981, had demanded possession of the premises from the accused. As aforesaid, as the accused refused to hand over possession, the company through its director filed a complainant against the accused being Case No. 114/S/1981 charging the accused under s. 630 of the Companies Act as also under ss. 408 and 381 of I.P.C. alleging that the accused had wrongfully withheld the company's premises and had dishonestly converted the premises to his own use and for removing the records of the company. However, as the company did not press for charges under ss. 408 and 381, the Companies Act and issues process against the accused in respect of the said charge.

8. The accused denied the charge. His case, first, was that the premises were not the property of the company. Secondly, he contended that he was in possession of the premises in his own right and was a tenant of the premises directly from the landlord and, thirdly, he conceded that not being an employee of the company at the date of complaint, the charge under s. 630 of the Companies Act cannot be sustained.

9. Pending criminal proceedings, the accused has also filed a suit in the Court of Small Causes at Bombay being Declaratory Suit No. 1366 of 1983, against the company and the owner of the premises, for a declaration that he was a tenant which suit was pending hearing and had obtained an interim injunction against eviction, which was at present in operation.

10. At the hearing, on behalf of the company various witnesses were examined and documents produces. The learned Magistrate by his judgment and order dated November 30, 1983, inter alia, held on the interpretation of the agreements produced, The company was a lassies under the said agreements and that in view of there being no agreement between the parties after the agreement of April 1, 1975, expiring on December 31, 1975, the company had become tenant of the premises. The court further held that the accused was given the premises while he was in service on an understanding that he should occupy the same till such time as he was in service of the company. He negatived the claim of the accused as being a tenant of the premises based on the letter dated April 9, 1973 (Ex. J), on the company's letter-head under the admitted signature of company's then director Mahendrakumar Gupta, inter alia, stating that the company had no right or claim on the said premises, on the ground that the said letter was forged as being subsequently written by stealing a bland letter-head of the company containing the signature of the company's said director. He also negatived the other contentions of the accused. In the result, the learned Magistrate convicted the accused of the charge under s. 630 of the Companies Act and sentenced him to pay fine of Rs. 500, in default on month's simple imprisonment. He also granted time till March 31, 1984, to the accused to vacate the premises and in default to suffer simple imprisonment for 6 months.

11. Against the said judgment and order of the learned Magistrate, the accused file an appeal to the Sessions Court, Bombay, being Criminal Appeal No. 463 of 1983.

12. The learned Sessions Judge mainly addressed himself to the question whether on the evidence on record it was possible to come to a definite conclusion that the concerned premises were the property of the company, to give jurisdiction to the learned Magistrate to deal with the complaint to give jurisdiction to the learned Magistrate to deal with the complaint under s. 630 of the Companies Act. The court held that s. 630(1) presupposed that the property of the company musts be a definite one and should not be a subject-matter of controversy, as the procedure under s. 630 was a summary procedure. The court also pointed out that on the expiry of the last agreement dated April 1, 1975, no fresh agreement having been executed, the company had no existing right in the premises and that was why in the company had no existing right in the premises and that was why in reply to the landlord's letter dated October 28, 1976 (Ex. 11), the company court also, on the interpretation of the agreements between the company and stated to the landlord that it was willing to advocate the premises. The court also, on the interpretation of the agreements between the company and the landlord specifically termed as 'Paying Guest' agreement, held that the said agreements being mainly licence agreements, they would not create any interest in the premises in favour of the company and that it was difficult to say that the company had any existing interest in the disputed premises. The court further found that the real dispute between the parties was as to the nature of the agreements which was purely of a the parties was as to the natures of the agreement which was purely of a civil nature and the question whether the company had become a tenant of the premises by virtue of the agreements or not, was entirely a question the premises by virtue of the Civil Court. The court, therefore, by its order and judgment dated April 23, 1984, allowed the appeal and set aside the order of the learned Magistrate and acquitted the accused:

It was this orders of the learned Sessions Judge that is challenged in this appeal filed with the leave of the court.

13. The main question in this case was whether, on facts and circumstances of the case, the Magistrate could himself, while exercising jurisdiction under s. 630 of the Companies Act, determine the dispute as to the title to or property in the suit premises between the complainant company and the accused or was require to leave its determination to the civil court.

14. Section 630 of the Companies Act, so far as is relevant under which the accused in the present case was charged provided as under :

'Section 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 authorised 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 one thousand rupees.'

15. On a plain reading of the said section, particularly whereas a complaint thereunder could be also at the instance of a creditor or a contributory of the company. It appears that the Magistrate's jurisdiction thereunder would extent only to those cases where there was no dispute, or in any event no bona fide dispute that the property involved was the property of the company. In cases where there is such a dispute particularly involving title to the property, which would be purely of a civil nature, the Magistrate cannot and should not venture to determine the same in exercise of this jurisdiction under the said section, which determination could only be so a summary nature. The courts have looked with disfavour at attempts made by the creditors to convert deputed purely of a civil nature which could be more appropriately decided by; a civil court into a criminal dispute. Further, as was pointed out by the Supreme Court in its decision in the case of Karamchand Ganga Pershad v. Union of India [1971] Cr. LJ 1072, referred to by the learned Sessions of civil courts were binding on the criminal courts but the converse was not true. In may view, therefore, if such a bona fide dispute, as regards title to the property were to exist between the parties, where the accused were to claim that the property involved was not the property of the company and the company were to contend to the contrary, the said dispute would be purely of a vessel nature and Magistrate before exercising jurisdiction under the said s. 630 of the Companies Act will be required to allow the vessel court which was a proper forum for the purpose, to required to allow the civil court which was a proper forum for the purpose, to determine the said dispute as to the title to the property involved.

16. Then the question was whether in this case such a bona fide dispute existed between the parties as to the suite premises being the property of the company. The main dispute was as to the interpretation of three agreement between the landlord and the company, were styled as 'Paying Guest' agreements each being for a period of 9 months, permitting the company to allow the accused by; his name to use the same as a paying guest. The question was whether on a proper interpretation of the said agreements, the company was a licensee or tenant in the premises. Admittedly, after the expiry of the agreement dated April 1, 1975, on December 31, 1972, there was no fresh agreement between the landlord and the company with the result that if the said earlier agreements were interpreted only as licence agreements, then after the expiry of the last agreements, the company could have no interest in the premises but if the earlier agreements were interpreted as tenancy agreements, the consequences would be different. Further, the accused has also based his claim as being a direct tenant of the Landlord in the premises and the company had no interest therein, on a letter dated April 9, 1973, Ex. (E), by the company to the accused admittedly on the letter-head of the companioned under the signature of the company's then director, Mahendrakumar Gupta (since deceased) stating, inter alia, that it was mutually agreed that as the employer, the company will not have any right and claim on the said flat No. 6 in any manner whatsoever. The accused had supported his claim by further correspondence between the landlord and the company wherein the company had, in reply to the Landlord's letter dated October 28, 1976 (Ex. 11), claiming compensation, stated that they were prepared to vacate the said flat. The company has alleged that the said letter was forged as being subsequently got typed by the accused after stealing from the company a bland letter-head under the signature of the company's director which some of the director used to keep. The learned Magistrate, accepting the said case of the complainant company, held the said letter must not be genuine.

17. I am not much concerned at this stage with the said finding of the learned Magistrate excepting just mentioning that from the reasoning of the learned Magistrate, he appears to have arrived at the said finding by a process of reasoning which could not be accepted under the Criminal Law. However, the afore-stated circumstances were sufficient to indicate that the dispute between the parties as to the title to the premises was bona fide, viz., the company itself claiming to be the tenant in the premises having allowed the accused to occupy the same as a term of the his employment, while the caused claiming himself to be the tenant of the premises was of a purely civil nature which could be best left to the civil court to determine. Furthermore, in this case, it appears to be more imperative for the learned Magistrate to have said so, as the suit filed by the accused in the court of Small Causes at Bombay for declaration of his tenancy was already pending and an injunction obtained against eviction was in operation. On the facts and circumstances of this case, therefore, the learned Sessions Judge appears to be right in holding that such a dispute between the partners fell outside the ambit of the inquiry envisaged under s. 630 of the Companies Act and the same fell within the jurisdiction of the civil court.

18. The danger of leaving such disputed questions of purely civil nature, as regards the title to the premises as involved in this case, to be summarily dealt with by the criminal court, is well highlighted in this case from the propositions of civil law propounded by the learned Magistrate in his judgment which are foreign to civil law.

19. Firstly, while dealing with the three agreements between the company and the landlord, merely by the label given to the agreements as 'Paying Guest Agreements' and without going into the other clauses of the agreement and the intention of the parties thereto, the learned Magistrate came to the conclusion that they were leave and licence agreements and thereunder the company was a licensee in the premises. This the civil court would not ordinarily do. Further, strangely enough while holding that under the said agreements the company was merely a licensee holding that under the said agreements the company was merely a licensee in the premises, by reason of the fact that the said agreements were not renewed and/or no agreement was entered into between the parties thereafter, the court held that court held that company had become a tenant in the premises. It was difficulty to see how a in such a result could ever come about. Further, even after holding that the company had become a tenant in the premises, the learned Magistrate continued to deal with the case on the basis that as a licensee the company had interest in the premises and the company's said property was being with held by the accuses to be liable under s. 630 of the Companies Act. This contention appears to have been based on the ignorance of the court about the difference between a lease and a licence. While it is well known that lease created interests in the property, by the very definition of a licence under s. 52 of the Indian Easements Act, 1882, the licence was a mere permission to occupy the premises and created no interest in the property.

20. The learned counsel for the company in support of his contention that, while acting under s. 630 of the Companies Act, the criminal courts could deal with the disputed questions of purely civil nature, has relied upon two decisions of this court, viz., (1) in the case of Suresh Venkatrao Nerlekar v. Sharanghdhar Pandurangh Nadkarni : 1982(1)BomCR867 and (2) in the case of Harkishan Lakhimal Gidwani v. Achyut Kashinath Wagh [1982] 52 Com Cas 1. The said decisions cannot be availed of by the company as they do not deal with the point at issue before me in this case.

21. In the first decision in the case of Nerlekar : 1982(1)BomCR867 , the court was dealing with the question of stay of criminal proceedings by a company against its employee under s. 630 of the Act pending the civil proceedings, i.e., suit filed by the accused employee for declaration of his tenancy. Firstly, in that case, there was no dispute as to the property concerned being the Priority of the company - the company being admittedly a tenant thereof. The only question was whether the employee was the tenant of the premises as claimed by him. Secondly, in that case there was a written agreement between the company and the employee showing that the premises were given by the company who was admittedly a tenant thereof to the employee in the course of his employment with the company, with an express condition that the employee was to return the same to the company on his ceasing to be the company's who was admittedly a tenant there of to the employee in the courses of his employment with the company, with an express condition that the employee was to return the same to the company on his ceasing to be the company's employees. The court in its decision, negotiating the employees application for stay of the criminal proceedings, had observed that in that cases it was not necessary for the criminal court to determine the state of the employee at all. In this case the fact and the point at issue being different, the said decision can be of no help.

22. In the second decision of Gidwani v. Wagh [1982] 52 Com Cas 1 the main question was whether a person, not an employee of the company at the date of the complainant, was covered under s. 630 of the Companies Act, the court holding on the wording of the said section that he was equally liable under the said section for withholding company's property. The said decision equally has no application to the point at issue before me.

23. Under the circumst, the finding of the learned Session Judge was correct. The appeal would stand dismissed.

24. Declaratory Suit No. 1366 of 1983 filed by the accused against the company in the court of mall Caused at Bombay, claiming to be a tenant of the premises, is expedited. So also the dispute before the Labour Court, being I.D.A. No. 199 of 1980 by the accused, is also expedited.


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