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Govind T. Jagtiani Vs. SirajuddIn S. Kazi Another - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai High Court
Decided On
Judge
Reported in1983(2)BomCR155; (1983)85BOMLR203; [1984]56CompCas329(Bom); [1984]150ITR12a(Bom); 1983MhLJ529
Acts Companies Act, 1956 - Sections 2(30), 630 and 630(1); Public Premises (Eviction of Unauthorised Occupants) Act, 1971 - Sections 16
AppellantGovind T. Jagtiani
RespondentSirajuddIn S. Kazi Another
Excerpt:
.....and validity of section 630 of act i of 1950 -- section whether applicable to ex-employees and ex-officers of company -- classification made under section 630 and object of provision -- section 830 whether infringes article 14 of constitution.;if the word 'proceedings' used in section 15 of the act 40 of 1971 is construed to include criminal proceedings, section 11 of the act will become nugatory and redundant. section 15 deals with an order of eviction and not with any offences and penalties. therefore it would not he proper to construe the world 'proceedings' in section 15 to mean criminal proceedings also. ;section 630 of the companies act is applicable not only to existing officers and the employees but also to ex-employees or ex-officers. an ex-employee can be prosecuted if he..........as an officer cannot be prosecuted even if the wrongfully withholds any property of the company. shri noorani tried to persuade me to take a different view, as is taken y kotawal j. in his judgment dated september 11, 1980, in criminal revision application no. 494 of 1980, harkishin lakhimal gidwani v, achyut kashinath wagh [1982] 52 com cas. 1. in the said, case a question directly arose as to whether the provisions of s. 630 of the companies act would apply to the present employees or the ex-employees. after going through the judgment, i am in respectfully agreement with the view taken by kotal j. in the said case. it is held that the features and deductions which flow logically and inescapably on an analysis of s. 630 are that : (i) clause (a) of the section is self-.....
Judgment:

1. This application is filed under s. 482 of the Cr. PC, for quashing an order dated May 19, 1982, passed by the learned Metropolitan Magistrate, 14th Court, Giraum, Bombay, issuing process against the petitioner-accused on a complaint dated May 14, 1982, filed by respondent No. 1-complainant on behalf of the Indian Oil Corporation (hereinafter referred to as 'the Corporation').

2. The complaint filed by respondent No.1 in the Metropolitan Magistrate's Court states that the petitioner was working as an officer on special duty in the Aviation Department of the Western Region of the Corporation. He had been employed by the Corporation since May, 1962, under a letter of appointment issued by the Corporation. His services were covered by the rules and regulations of the Corporation, which were then in force and as amended from time to time.

3. A lease dated April 4, 1962 was executed between the Corporation and one Smt. Sheila B. Tolani in respect of flat No. 401 situate at Prabhu Kunj. Peddar Road, Bombay on a monthly fee of Rs. 800 on the terms and conditions mentioned in the said lease. It is the contention of respondent No. 1 that the said lease was for a period of two years and even thereafter the Corporation continued in possession of the said flat and continued to pay the rent. Respondent No.1 alleged that the corporation had acquired the said flat for housing the officials and employees of the Corporation by allotment of the said flat according to their eligibility.

4. Respondent No.1 alleges that where the Corporation leased flats, the lease fees or rental was always paid directly by the Corporation to the owners of the flats and only 10 per cent. of the basic pay of such allottees was deducted from their salary. In all such cases the corporation continued to the owner or the lessee of the said flats irrespectiveof the allottees or employees occupying the same. The petitioner was accordingly allotted the flat and he was put in possession thereof on behalf of the Corporation.

5. The petitioner continued to be in possession of the said flat since 1962 till his retirement dated February 28, 1682, as an allottee of the Corporation. As per the rules applicable to the allottees the petitioner was bound and liable to vacate the said flat within two months from the date thereof and to hand over vacant possession of the said flat allotted to him on his retirement. The petitioner, however, failed and neglected to hand over the said flat and continued to occupy the same wrongfully and withheld the same. It appears that the Corporation from time to time called upon the petitioner orally and in writing to hand over the said flat. The petitioner however did not accede to the request of the Corporation and continued to wrongfully withhold the said flat. Ultimately the Corporation by its advocate's notice dated May 6, 1982, called upon the petitioner to hand over the flat to the Corporation. The petitioner , However, has not complied with the said notice and has not handed over the flat to the Corporation. According to respondent No.1 the petitioner has committed an offence under section 630 of the Companies Act, 1956 and therefore he is liable to be prosecuted and convicted in accordance with law.

6. The learned Metropolitan Magistrate took cognizance of the compliant and issued process against the petitioner. The legality and correctness of the said order of issuing the process against the petitioner is challenged in this petition.

7. Shri A.G.Noorani, learned counsel appearing in support of this petition raised three contention namely (1) that in view of the provision of s. 15 of the Public Premises (Eviction of unauthorisedOccupants) Act, Magistrate had no jurisdiction to take cognizance of the complaint and issue process against the petitioner; (2) that s. 630 of the Companies Act applies only to the existing employees or officers of a company and it will not apply to an ex-employee or officer who has either resigned or retired from the service of the company; and (3) that the said s. 630 is ultra vires art. 14 of the Constitution as it discriminates between employees of the company and other employees. It must be mentioned here that in the course of the arguments Shri Noorani wanted to challenge the legislative competency of parliament to enact the said section. Since the point is not raised in this petition, I did not allow Shri Noorani to raid any new point which is not taken up or set out in this petition. Now I Proceed to consider each of the contentions raised in this petition by learned counsel.

8. It is contended by Shri Noorani that in view of the definition of 'public premises' given in cl. 2(i) of s. 2(e) of the Act, the learned Metropolitan Magistrate has no jurisdiction to take cognizance of the complaint or issue process on such complaint in view of the provisions of s. 15 of the Act. section 15 of the Act bars jurisdiction of other courts to entertain any suit or proceedings in respect of matters covered by that section. section 4 of the act lays down that if the estate officer is of opinion, that any persons are in unauthorisedoccupation of any public premises and that they should be evicted, the estate officer shall issue in the manner provided a notice in writing calling upon all person concerned to show cause why an order of evictionshould not be made. The notice shall specify the ground on which the order of eviction is proposed to made. Sub-s. (4) of s. 1 lays down that where the estates officer knows or has reason to believe that any persons are in occupation of the public premises, then, without prejudice to the provision of sub-s. (3), he shall cause a copy of the notice to be served on every such person by post or by delivering or tendering it to that person or in such other manner as may be prescibed. Section 5 of the act lays down that, if after considering the cause, if any, shown by any person in pursuance of a notice under s. 4 and any evidence produced by him in support of the same and after personal hearing, if any, given under cl. (b)_ of sub- s. (2) of s. 4, the estate officer is satisfied that the public premises are in unauthorised occupation, the estate officer may make an order of eviction, for reasons to be recorded therein, directing that the public premises shall be vacated, on such date as may be specified in the order, by all persons who may be in occupation thereof, an cause a copy of the order to be affixed on the outer door or some other conspicuous part of the public premises. the procedurelaid down by s. 4 is to be followed by the estate office, and, s. 5 empowershim to pass an order of eviction. after hearing the parties in respect of the public premises. As stated above,s.15 of the Act ousts the jurisdiction of all courts to entertain any application for eviction in respect of unauthorised occupation of a person from public premises.

9. What is contended by Shri Noorani, learned counsel appearing for the petitioner, is that the learned Metropolitan Magistrate had no jurisdiction to entertain the complaint for eviction of the petitioner from the permises. Since a special status is enacted for the purpose of eviction of persons and in view of the clear ouster of jurisdiction of the court, the complaint filed by respondent No.1 will not be maintainable in the court of the metropolitan Magistrae. It is further contend by shri Noorani that by s. 15 of the Act not only the jurisdiction of the civil courts is ousted but also of the criminal courts. Emphasis is laid on the words 'suit or proceedings in respect of the eviction of any person' in s. 15. It is argued that the word 'proceedings': should be construed to mean criminal proceedings also, and it is in view of the said submission, the complaint filed by respondent No. 1 is not maintainable an dis liable to be qushed. Shri K.M.Desai, learned counsel appearing on behalf of respondents No.1, pointed out that s. 11 of the Act specifically deals with cognizable offenses. the said section lays down that if any person who has been evacuated from any public premises under the Act again occupies the premises without authority for such occupation, he shall be punishable with imprisonment for a term which may extant to one year, or with fine which may extent to one thousand rupees, or with both. Sub- section (2) of the said section 11 vests jurisdiction to entertain such complaint by a magistrate. The said sub-section lays down that any magistrate convicting a person sunder sub-s., (1) may order for evicting that person summarily and he shall be liable to such eviction without prejudice to any other action that may be taken against him under the Act. Shri desai submitted that so far as the offenses are concerned, under s. 11 the jurisdiction is vested in the magistrate to deal with offenses and penalties of any person who has committed such offense or offenses, Accordingly, Shri Desai submitted that the word 'proceedings' used in s. 15 of the Act cannot be construed with reference to a suit and not to criminal proceedings field before a magistrate.

10. I am unable to persuade myself to accept the submissions of Shri Noorani that the word 'proceedings' used in s. 15 of the Act means and includes criminal proceedings. A well-settled rule of construction of a statute is that it should be construed harmoniously so that any other provision of an Act odes not become nugatory or reducnadant., if the word 'proceedings' in the said s. 15 is constured to included criminal proceedings, in my view, s. 11 will come nugatory and redundant. Affiances and penalties are covered by s. 11, and, therefore, the jurisdiction is vested in the magistrate to entertain and application and record the conviction and pass sentence according to the said provisions.

11. Section 15 if the Act deals with an order of eviction against the person who is in unauthorisedoccupation of public premises. I does not deal with any offenses and penalties. Therefore, it will not be proper to constured the word 'proceedings' used in s. 15 to mean criminal proceedings also. In view of this construction of the said section, it must be held that there is no ouster of jurisdiction of a criminal court to entertain the complaint filed by respondent No.1 in the Court of the Metropolitan Magistrate at bombay.

12. As stated above, s. 15 of the Act ousts the jurisdictionof court is respect of eviction of any person who is in unauthorised occupation of any public premises save and except as satisfiedin that section.

13. The present compliant above s, 15. of the Act ousts the jurisdiction of courts in respect of eviction of any person who is in unauthorised occupation of any public premises save and except as specified in that section.

14. The present complaint filed against the petitioner is under s. 630 of the Companies Act. The said section does not deal with an order of eviction from the public premises. The section lays down that if any officer or employee of a company wrongfully obtains possession, wrongfully withholds, it or knowingly apples it to purposes other than those expressed or directed in the articles and authorised by the said Act, such a person shall, on the complaint of the company or any creditor or contributory thereof, by punishablewith the fine which may extent to one thousand rupees. The officer covers by s. 630 is the wrongful withholding of the property of a company by an officer or employee by an officer or employee of the company. Sub-section (2) of the said section further lays down that the court trying the offence may also order such officer or employee to deliver up or refund within the time to be fixed by the court, any such property wrongfully obtained or wrongly withheld or knowingly misapplied, or in default to suffers imprisonment for a term which may extend to two years. Sub-section 92) of s. 630 thus empowers the magistrate trying the offence to pass an order to deliver up or refund the property within the time to be fixed by the court. For defiance of the said order, the magistrate is further empowered to pass a sentence to suffers imprisonment for a term which may extent to two years. A plain reading of s. 630 clearly indicates that if an offers or employee wrongfully withholds any property belonging to a company, it is and euphonic punishable with a fine of Rs. 1,000. Sub-section (2) of the said section further directs the court trying the offence to pass and order directing such officer or employee to deliver up or refund, within the time to be fixed by the court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied. the said sub-section further makes it clear that disobedience of the order of the court is made punishable, and a sentence of suffers imprisonment for a term of two years is provided. Although there is an order of eviction from the property within the time to be fixed by the court and an officer or employee may not by the order of the court, in such eventualitythe court can pass an order of imprisonment for a term of two years. It is only the disobedienceof the order of the court that is made an offence wherein imprisonment is prescribedfor a periods of two years. An officer or employee of a company may not vacate the premises as directed by the court and may undergo imprisonment for a period of two years, allowing his family members to enjoy the property. In such eventuality, there cannot be any order of eviction from the property of the company under s. 630. The two enactments refereed to above meet with differed situations. they cannot be read together. In one Act there is a power in the court to pass an order or employee of the company wrongfully obtains possession of any property of the company or having such property in his possession wrongly withholds or knowingly applies it to purpose other than those expressed or directed in the articles and authorised by the said Act, such person shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees. It is in this view of the matter it cannot be said that the action or a complaint under s. 630 is identical with the jurisdiction or power of a court envisaged by s. 5 of the Act. IT is on this ground also the contention raised by the learned counsel for the petitioners cannot be sustained. The present complaint is field under s. 630 in respect of offence different from the offenses envisaged by the provisions of the said Act. It is, therefore, the contention that the complaint filed by respondent No.1 is not maintainable cannot be accepted.

15. It is then argued by Shri Noorani that the provisions of s. 630 of the Companies Act applies only to existing officers and the employees of the company and would not be applicable to ex-employees or ex- officers. Admittedly, the petitioner on the date of filing of the complaint was not in the employment of the Corporation, since he retired on February 28, 1982. reliance is placed by shri Noorani on the definition of term 'officer' given in s. 2(30) of the companies Act, and it is contended that the said definition is an inclusive definition and it includes all those officers who are holding the post of officer in the Corporation. According to Shri Noorani, in section 630, wherever the word 'officer' has been used, it should be treated as an existing officer of the company or who who holds an officer's post in the said company. It is submitted that the company could file a complaint under s. 630 against officers and employees of the company who are actually working in the company. An ex-employee as an officer cannot be prosecuted even if the wrongfully withholds any property of the company. Shri Noorani tried to persuade me to take a different view, as is taken y kotawal J. in his judgment dated September 11, 1980, in Criminal Revision application No. 494 of 1980, Harkishin Lakhimal gidwani v, Achyut Kashinath Wagh [1982] 52 Com Cas. 1. In the said, case a question directly arose as to whether the provisions of s. 630 of the Companies Act would apply to the present employees or the ex-employees. After going through the judgment, i am in respectfully agreement with the view taken by kotal J. in the said case. It is held that the features and deductions which flow logically and inescapably on an analysis of s. 630 are that : (i) Clause (a) of the section is self- contained and independent of cl. (b) with the capacity of creating penal liability embracing the case o fan existing employee or officer of the company. (ii) Clause (b) is equally independent and distinct from cl. (a) as regard penal consequences squares;y covering the case of past employee of officer. (iii) the entitlement of an officer to the property of the company is contingent on the right and capacity of the officer by virtue of his employment which is transformed into the actual possession of the property and the duration of such right would be co-terminus with the terms of employment. Therefore the capacity, rights to possession and duration of it being features integral blended with the termination of the employment the capacity and the corresponding right are extinguishedwith the obligation to hand over the property back to the company. If the property i should 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 through the possession sit process the act of retention or withholding may be wrangle in the present case. Kotwal J. so considered the legislative intent of the said provisions and observed that the Legislature has employed deliberately the word 'or ', which joins cls. (a) and (b) of s. 630(1) of the companies Act and the commencing words of cl. (b), namely, 'having any such property in his procession', make it manifest that the legislature itself contemplated a situation where the property might be in the possession of a person not necessarily co-terminus with the possession under cl. (A), which is in the present tense, and the use of the words 'any such property' in sub-s. (2) of s. 630 as under cl. (b) of s. 630(1) also furnishes a clue, per-qualify in the existences of three further contingences of wrongful obtainment, wrongful withholding and knowingly misapplication and this is merely to tag a label or characterise the property as belonging to the company. With great respect, I entirely agree with the view taken by kotal J. and, accordingly, I need not elaborate this point any further.

16. This takes me to the last submissions made by Shri Noorani that s. 630 of the Companies Act is ultra vires art. 14 of the Constitution. Ground No.4 specifically taken in the petition is as follows :

'The petitioner respectfully submits that s. 630 of the companies Act is ultra vires art. 14 of the constitution of india. The section discriminates between employees of companies on the one had and employees of private individuals sole, proprietorship concerns and partnerships on the other. The employees of the latter category face no risk of prosecution for an office similar to that under s. 630 of the Companies Act which penalises employees of the companies. Further, the said discrimination is not a reasonable criteria for differential reasonably connected with the subjects of the companies Act.'

17. This is the only statement or objection taken up in the petition. Shri Noorani strongly relied upon the principles which ought to be followed in determining the validity of the classification in the cases set out in paragraph73 of the judgment in special courts bill 1978, In re : [1979]2SCR476 , and contended that on the basis of the said principles, s. 630 of the Companies ACt can be held be ultra vires art. 14 of the Constitution . In the first place, it must be stated that the principle of equality does not mean that every law must have universal application for all persons who are not, by nature, attainment or circumstances in the same position as varying needs of different classes of person often require different treatment. It is not open to charge of denial of equalprotection on the ground that the act has no application to other persons. It is well settled that the class legislation cannot be valid under art. 14 of the Constitution, but a classification on reasonable grounds is permissible. The classification must be a reasonable and retinal classfiction. The supreme Court in numerous case has laid down the twin test to be fulfilled, namely, (1) that the classification must be founded on an intelligible different which distinguishes those that are gripped together from others, and (2) that that different must have a rational relation to the object sought to be achieved by the Act. There is nothing in the petitioner challenging the classification made by s. 630. What is contended is that the section discriminates between the employment of companies on the one hand and partnerships on the other. the employees of the latter category face no risk of prosecution for offences similar to those under s. 630 which penalises employees of a company, is not founded on an intelligible differential which distinguishes those that are put together from others. The companies Act, 1956, deals with company's affairs incorporated under the said Act. a classification is made in respect of offers and employees of the company. By no stretch of imagination the said s. 630 could have conceived of officers and employees of other private individuals or sole proprietorship concerns and partnerships. those who are charged with the duty to protect and manage the affairs of the company are grouped together for their treatment in th e statute, in case they commit breach of the conditions of the said section. That cannot be the case of other employees. As stated above, the principle of equality of law and equalprotection of law does to means that every law must have a universal application for all persons who re not by nature, attainment or circumstances in service in the same position or situate in similar circumstances. In paragraph 73(4) of the judgment of the supreme court in the said case of Special Courts Bill, 1978, : [1979]2SCR476 , it is observed by the Supreme Court that the principle underlying the guarantee of art. 14 is not that the same rule of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of different of circumstances. It only means that all persons similarly circumstance shall be treated alike both in privileges conferred and liabilities imposed. equal laws would have to be applied to all in the same situations and there should be no discrimination between on person and another if as regards the subject-matter of the legislation their position is substantially the same. It is further observed by the Supreme Court in paragraph 73(5) that by the process of classification the State has the power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject. This power, no doubt, in some agree is likely to produce some inequality; but if a law deals with the liberties of a number of well- defined classes, it is not open to the charge of denial of equal protection on the ground that it has no application to other persons. Classification thus means segregation in classes which have a systematic relation, usually found in common properties and characteristics. It postulates a rational basis and does not mean herding together of certain persons and classes arbitrarily.

18. In view of these clear observations, it is not possible to hold that the proposition that the officers and employees of the company, classified together for the purpose of treatment under s. 630 of the Companies Act, is not founded on an intelligible differential which distinguishes them from others. The second thing that has to be seen is as to whether the Companies Act has a rational relation to the objects sought to be achieved by the ACt. Now, it is very clear that the object of the Companies Act, and particularly the provisions of s. 630,. has a direct nexus with the the object to be achieved under the companies act. The object of the Companies Act is to control the management and protect the property of a company. The intent of s. 630 of the companies Act appears to be to control the administration and protect the property of the company. If officers and employees of the company wrongfully withhold the properties belong to the company, then there is nothing illegal to provide such a provision to protect the properties of the company. The object is very obvious that, in case the officers and employees obtain wrongful possession of movable or immovable properties of the company, then the company must resort to a legal remedy as provided by the ACt. Having regard to the said provision, it is clear that there is a rational relation to the objects sought to be achieved by the ACt. In my view, the principles laid down in the case of special courts Bill, 1978, : [1979]2SCR476 , do not in any way help the petitioner. Therefore, the challenge to s. 630 is not sustainable and, accordingly, the said section cannot be held to be ultra veers art. 14 of the Constitution, and accordingly, the contention cannot be sustained. It is in this view of the matter that the application must fail.

19. In the result, the application is demised and the rule is discharged. The learned Metropolitan Magistrate 14th Court, Girgaum, Bombay is directed to expedite the hearing of this case as early as possible and dispose to the matters in accordance with law as expeditiously as possible.

20. At this stage, Shri Noorani, learned counsel for the petitioner- accused, orally requests for leave to appeal to the Supreme Court, which is hereby rejected.

21. Shri Noorani prayed for stay of the operation of this order for a period of 15 days. The operation of the order need not be stayed but for the leaned Metropolitan Magistrate shall not start trial of the proceedings for 15 days from today.


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