1. This application under Section 482 of the Cr. PC by the accused-petitioner is directed against an order dated May 12, 1981, passed by the learned Chief Metropolitan Magistrate in Case No. C/1231 of 1981. By the order, he has purported to take cognizance of an offence under Section 630(1)(b) of the Companies Act, 1956, alleged against the accused-petitioner and has directed issue of process.
2. The petitioner has been residing in the disputed premises at No. 1/81, Church Road, P. S. Fort Cochin. He was the managing director and subsequently adviser of M/s. J. Thomas & Co. Pvt. Ltd., No. 11, R.N. Mukherjee Road, P. S. Hare Street, Calcutta, the complainant before the learned Chief Metropolitan Magistrate. The petitioner and his wife had considerable shareholding in the complainant company. A civil suit by the complainant against the petitioner for a claim of Rs. 5,00,000 as damages is pending in the Original Side of the High Court at Calcutta. The petitioner has also made a claim of nearly ten lakhs of rupees against the company in the said suit. On the application of the complainant company in the said suit, Mr. Justice Dipak Kumar Sen passed an order directing the complainant company not to disturb the petitioner's possession in the premises mentioned therein and also restrained the petitioner from taking any further steps in Suit No. O. S. 180 of 1981 and I.A. No. 1050 of 1981 filed before the Court of Munsif at Cochin. Against the above background, the complainant company filed a petition of complaint against the petitioner in the Court of the Chief Metropolitan Magistrate, Calcutta, under Section 406, IPC, and Section 630(1)(b) of the Companies Act, 1956, on May 12, 1981. The principal allegation of the complainant company was that the petitioner was allowed by the company to reside in the disputed premises, namely, 1/81, Church Road, Cochin, fitted with furniture and fixtures, initially in his capacity as managing director and subsequently as adviser of the company, but on temination of the said employment as adviser, the petitioner failed to deliver vacant possession of the disputed premises to the company. The learned Chief Metropolitan Magistrate in consideration of the initial deposition and materials produced before him by the complainant took cognizance of the offence under Section 630(1)(b) of the Companies Act, 1956, but refused to take cognizance of the offence alleged under Section 406, IPC.
3. The petitioner challenges the order of the learned Magistrate taking cognizance of the offence and on his behalf it is contended that the learned Magistrate had no jurisdiction, particularly territorial, for taking cognizance of the offence. It is alleged that the petition of complaint did not lay foundation of an offence under Section 630(1)(b) of the Companies Act. It is strenuously urged that the petitioner on the date of alleged commission of the offence was not an officer of the company and the provisions of Section 630 of the Companies Act were not attracted. It is alleged that the petition of complaint was liable to be thrown out for suppression of material facts.
4. Mr. Dhar, the learned advocate for the petitioner, in the course of his argument by way of preface, pinpoints the following facts:
5. The petitioner was an employee of the company from 1950. He was the managing director of the company at Cochin from 1966 to March 31, 1980 and the last contract for such appointment was from April 1, 1979, to March 31, 1980. There are two annexures to the affidavit-in-opposition. In annexure ' A ' in the affidavit-in-opposition at pp. 10 to 16, terms of appointment are given. Suffice it to say that emoluments were high and perquisites were enviable. On March 31, 1980, the petitioner retired from service as managing director with a very decent pension. From April 1, 1980, to March 31, 1981, the petitioner was appointed as adviser at Cochin by the chairman of the company on terms mentioned at p. 157 of the affidavit-in-opposition, annexure B. Mr. Dhar emphasises that the petitioner's remuneration was described as fee of Rs. 1,500 per month. The petitioner accepted the appointment as adviser with effect from April 1, 1980. On December 19, 1980, the complainant company wrote a letter to the petitioner at Cochin terminating arrangement for advisership and stating that the petitioner's accounts and dues, if any, would be settled and asked the petitioner's advocate to vacate the said premises. The petitioner made a claim for Rs. 5,00,000 for his remuneration. In 1981, the petitioner submitted a notice under Section 434 of the Companies Act upon the company demanding legal dues stating that in defult of payment, application for winding up would be filed. On January 16, 1981, the company filed a suit being Suit No. 51 of 1981 in the Original Side of the High Court at Calcutta claiming damages and in that suit the company obtained an order of injunction to the effect earlier mentioned. On March 31, 1981, the petitioner filed a suit, namely, O.S. No. 180 of 1981, before the learned Munsif at Cochin for continuous possession of the disputed premises and obtained an order of ad interim injunction. On April 6, 1981, the company admitted the petitioner's claim for roughly Rs. 9,50,000 in Suit No. 51 of 1981.
6. Mr. Dhar took considerable pains to establish that the petitioner has a higher money claim against the complainant company and that claim is admitted. He wants arguing that suppressing all those things the complainant company filed a petition of complaint and obtained an order simply to harass and humiliate the petitioner, who is a man of status generally residing at Cochin. Mr. Dhar argues that the filing of the petition of complaint was a mala fide act. I do not go deep into the merits of the contention because at the time of trial, the learned Magistrate will have an opportunity to consider the plea. On a perusal of the said petition of complaint, it does not appear that the complainant company suppressed any fact which was material to the complaint made. In para. 15 of the petition of complaint, reference has been made to Original Suit No. 51 of 1981 pending in the Original Side of the High Court and order passed therein. In para. 16 of the petition of complaint, reference has been made to the suit pending in the Court of Munsif at Cochin. From a perusal of the petition of complaint, the anxiety of the complainant to suppress anything does not become evident. From the huge claim and counter-claim made by the parties to the proceeding against each other, it is dangerous to infer mala fides. The plea is, therefore, disposed of with liberty given to the trial court to consider the plea in depth if that is considered necessary.
7. It has already been pointed out that the learned Magistrate has taken cognizance of the offence under Section 630(1)(b) of the Companies Act. He has ordered issue of process under the said section giving liberty to the complainant company to file separate proceedings against the accused under Section 406, IPC, if the company is so advised. Mr. Dhar takes exception to the above point. It is to be seen if the petition of complaint and the initial deposition of the complainant's witness discloses prima facie commission of an offence under Section 630 of the Companies Act. While we proceed to examine the petition of complaint, it will be proper for us to bear in mind the case of Nagawwa v. Veeranna Shivalingappa Konjalgi : 1976CriLJ1533 , which lays down that on which points a Magistrate is required to be satisfied before ordering issue of summons and on which point the enquiry under Section 202, Cr. PC. is limited. The said case spells out what is to be found in a petition of complaint before cognizance of an offence is taken.
8. According to Section 630(1)(b) of the Companies Act, if an officer or employee of a company having property of the 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, he shall, on complaint of the company or any creditor thereof, be punishable with fine which may extend to Rs. 1,000. Sub-section (2) is also important, in so far as it provides that the court trying the offence may also order such officer or employee to deliver up or refund within a time to be fixed by the court any such property wrongfully obtained or wrongfully withheld or knowingly misapplied or in default to suffer imprisonment for a term which may extend to two years. The term ' officer ' used in the above section has been defined in Section 2(30) of the Act to include any director, managing agent, secretaries, treasurers, manager or secretary or any person in accordance with whose direction or instruction the board of directors or any one or more of the directors is or are accustomed to act. In para. 4 of the petition of complaint, it is stated that under agreement dated April 1, 1976, the accused was appointed managing director of the company for a period of three years from February 6, 1976, to February 5, 1979, and, according to the terms of appointment as an officer of the company, the accused was to occupy the furnished residential house at Cochin. In the next paragraph of the petition, it is alleged that the company purchased premises No. 1/81, Church Road, Cochin, together with furniture and fixtures and in terms of the agreement aforesaid, the accused started occupying a portion of the said premises as his residence and in the remaining portion of the premises was situate the office of the advisory division of the company. It is alleged that the company purchased further items of furniture and fixtures and the same were kept in the premises. In para. 8 it is alleged that pursuant to the second agreement executed on May 24, 1979, the accused continued as managing director of the company from April 1, 1979, to March 31, 1980. Next it is alleged in para. 9 that after tenure of office as managing director came to an end on the basis of correspondence, particularly letters dated April 12, 1980, and July 8, 1980, addressed by the company, the accused accepted the office of adviser of the company with effect from April 1, 1980, as evidenced by his letter dated September 12, 1980, addressed to the company. The company by its letter dated July 12, 1980, offered the accused occupation of a part of premises No. 1/81, Church Road, where the advisory division of the company was located. It is the case of the company that the employment of accused-complainant as adviser was terminated in Calcutta by letter dated December 19, 1980, with immediate effect. It is the contention of the company that immediately on the termination of his employment as adviser, the complainant was liable to give up possession of the aforesaid portion of the premises at 1/81, Church Road, Cochin, to the company and having failed to do so, the accused was liable to be prosecuted of an offence under Section 630 of the Companies Act. In the petition of complaint, express reference has been made to letter dated December 19, 1980, aforesaid in para. 11 and a copy of the said letter is on the record. In the said letter, it has been stated that in view of the cessation of the arrangement, the accused became liable to vacate the portion of the Advisory Division's Office at 1/81, Church Road, Cochin, which had been made available to him under the said agreement and the company expected the accused to vacate the same forthwith. In reply letter dated January 3, 1981, the accused admitted that his vacating the premises would arise only on March 31, 1981. In his letter dated January 14, 1981, addressed to the company, the accused is alleged to have admitted that when the time came to vacate the house, the same would be vacated and all the company's articles lying there would be handed over to the representative of the company. Reference to such correspondence and admissions have been made in paras. 11, 12, 13 and 14 of the petition. In para. 21 of the petition of complaint, it has been categorically stated that the head office or registered office of the company is situate at Nilhat House, No. 11, R.N. Mukherjee Road, Calcutta. The accused was appoinled at Calcutta. His remuneration was paid at Calcutta and with respect to matters, the accused was accountable to the company at its Calcutta office. Being satisfied prima facie as to commission of the offence as alleged, the learned Magistrate took cognizance of the offence by ah order referring in detail to the complainant's case. Mr. Dhar contends that the learned Magistrate was wrong and there was absolutely no reason to hold that a prima facie case transpired from the petition of complaint and examination of the complainant's witness on solemn affirmation. To drive home his contention, Mr. Dhar took considerable pains to compare the amenities the accused enjoyed at the time he was managing director of the company and the emoluments he enjoyed as adviser of the company. Comparing the emoluments, perquisites and pension attached to the two posts, Mr. Dhar attempts to build up an argument that the accused was not an officer of the company and he was simply rendering a professional service to the company as adviser. Mr, Dhar accordingly argues that the petitioner was not an officer as defined in the Act and was not liable to be prosecuted under the Act. Mr. Dhar emphasizes that the term 'adviser' is not mentioned in Section 2(30) of the Act defining officer. He contends that there is absolutely no material on record to indicate that, according to the directions or instructions given by the petitioner, the board of directors of the company or any one or more of the directors is or are accustomed to act. This is not the appropriate time to clearly formulate the nature of duties to be discharged by a person in relation to a company if he is to come within the mischief of Section 2(30) of the Companies Act. It will only be noticed that the definition begins with the words ' includes ', which implies that the terms used in the definition like ' managing agent', ' secretary ', etc., are only illustrative and not exhaustive. So non-inclusion of the term ' adviser ' in the definition does not entitle the petitioner to an order of quashing of the proceeding at this stage. A very careful consideration of this contention will be undertaken at the time of trial by the learned Magistrate when the parties will be in a position to adduce evidence regarding the nature of the duty discharged by the accused as 'adviser' and as to the binding character of the same on the board of directors. That stage has not yet been reached. In any way, from a reading of the petition of complaint and examination of the complainant's witness, it does not appear that the learned Magistrate was wrong in inferring that a prima facie case under Section 630(1)(b) of the Companies Act was made out against the accused to justify an order of issue of summons. Discussion on the contention in greater detail is deliberately avoided so that the complainant is not prejudiced at the time of trial and the court trying the case is not influenced by any observation made herein.
9. Mr. Dhar contends that that the principal intention of the complainant company is to evict the accused from the premises in question and to get back possession of the same. He contends that to forestate that the accused obtained an order from the Court of Munsif at Cochin. He contends that the present petition of complaint is in a way mala fide and illegal. This argument has very little to commend itself for acceptance. The occasion for demanding possession of the property under Section 630(2) may not arise if the accused, in the event of his conviction under Section 630(1)(b), gives up possession of the premises. It is worthy of note that the penalty to be imposed under Section 630(1)(b) is a fine of Es. 1,000. Under Section 468 of the Cr. PC. the period of limitation for an offence with such penalty, is only six months. There was, therefore, great urgency in filing the petition of complaint on May 11, 1981, when according to the petition of complaint, the offence was committed on April 1, 1981. From the mere filing of the complaint against the background of civil suits, mala fide conduct on the part of the complainant company cannot be inferred.
10. Mr. Dhar next comes to the question of jurisdiction of the court. It is obvious that the property is situate far away from the jurisdiction of the court of the Chief Metropolitan Magistrate, Calcutta. The property of which the accused is alleged to be in wrongful possession as an officer of the company is situate at Cochin. The learned Magistrate taking cognizance was not unmindful of this aspect of the case. The complainant in para. 21 of the petition of complaint referred to in Section 181(4) of the Cr. PC to invoke the jurisdiction of the court. The learned Magistrate has considered this aspect and has made express reference to Section 181(4) of the Cr. PC to arrive at the conclusion that he had jurisdiction to take cognizance of the offence. Section 181(4) of the Cr. PC provides : ' Any offence of criminal misappropriation or of criminal breach of trust may be enquired into or tried by a court within whose local jurisdiction the offence was committed or any part of the property which is the subject of the offence was received or retained, or was required or to be returned or accounted for, by the accused person '. Mr. Dhar contends that the essence of the offence, namely, wrongful retention of the property, occurred at Cochin and only a court at Cochin could take cognizance of the offence. He lays emphasis in this connection on the provision of Section 177, Cr. PC. laying down ' Every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed'. Mr. Dhar argues that in view of Section 177 read with Section 181(4) of the Cr. PC. the learned Magistrate should have straightaway held that he had no jurisdiction to try the case or to take cognizance of the offence. He argues that it will be extremely inconvenient and harassing for the accused to defend himself in a court at Calcutta. In Section 181(4) an offence of criminal misappropriation or of criminal breach of trust has been mentioned but we have noticed that the learned Magistrate has not issued any process against the accused under Section 406, IPC, although the said offence has been mentioned in the petition of complaint. This does not create much difficulty. The provisions regarding place of investigation and trial of offence are contained in Section 4 of the Cr. PC. In the absence of anything to the contrary in the Companies Act, the place of enquiry for the offence under the Companies Act is to be determined with reference to Section 4 of the Cr. PC. The Companies Act does not expressly or impliedly confer jurisdiction on criminal courts in respect of acts punishable under that Act. So using Section 4 of the Cr. PC. as key, the learned Magistrate was perfectly justified in resorting to the provisions of Section 181 of the Code. Ordinarily, under Section 177 of the Cr. PC. an offence is to be tried by the court within whose local jurisdiction the offence was committed. ' Ordinarily ' in Section 177 means except as otherwise provided in the Code. From Section 177 an inference is permissible that an offence shall not invariably without exception be tried by the court within whose jurisdiction the offence was committed. Such an interpretation of Section 177 was made in the case of Purushottamdas Dalmia v. State of West Bengal : 1961CriLJ728 . An offence under Section 630(1)(b) of the Companies Act has obvious similarities with an offence of criminal misappropriation or of criminal breach of trust defined in the IPC. Now, Section 181(4) of the Cr. PC. after making reference to offence of criminal misappropriation and criminal breach of trust, provides that such offence will be enquired into or tried by a court within whose local jurisdiction the offence was committed or any part of the property which is the subject of the offence as received or retained or was required to be returned or accounted for by the accused person.
11. Replying to the contention of Mr. Dhar, Mr. Dutt, on behalf of the complainant opposite party, lays emphasis on the last portion of the above sub-section. Mr. Dutt argues that the accused was appointed as officer by virtue of correspondence carried on from the head office of the company at Calcutta. He argues that pursuant to the correspondence, the accused continued in possession of the premises in question subsequent to the termination of his appointment as managing director of the company upon his assumption of office as adviser of the company. In the above background the accused was liable to return possession of the premises in question to the company by sending the key of the property to the company at Calcutta. Mr. Dutt contends that the accused was accountable to the company at its head office at Calcutta for delivery of possession of the property in question subsequent to the termination of his office as adviser; and this he could do by sending a note stating that he had delivered possession of the disputed property to an authorised agent of the company posted at Cochin. Mr. Dutt argues that in any event the learned Magistrate cannot be said to have been wrong in assuming jurisdiction. Having considered the provisions of Sections 177 and 181(4) and the averments made in para. 21 of the petition of complaint, no reason is found for holding that the learned Magistrate was wrong in assuming jurisdiction. The correspondence on record indicates strongly that the accused was appointed as adviser pursuant to exchange of letters and was given delivery of possession of the premises in question pursuant to such exchange of letters. It follows, therefore, that subsequent to termination of the appointment as adviser of the company, he became accountable to the company for delivery of possession of the property situate at Cochin and he could discharge his obligation by sending a letter to the company at its head office at Calcutta noting that he had delivered possession. In token thereof, he could perhaps send the key of the property to the head office. The question of inconvenience and costs to be incurred by the accused in defending the proceeding at Calcutta while he is residing at Cochin does not appear to be insurmountable. The provisions of ` 205, Cr. PC. are well known and from the order of the learned Magistrate dated July 17, 1981, it appears that accused has already filed such a petition and order is awaited thereon. Giving careful and anxious consideration to the arguments advanced on behalf of the petitioner accused, I do not find any reason to quash the proceedings or to find fault with the learned Magistrate for the order he has passed. The learned Magistrate appears to have passed a detailed order taking into consideration the long petition of complaint and the initial deposition of the complainant's witness in support thereof. There are sufficient and cogent reasons for the learned Magistrate to take cognizance of the offence and to issue process. The petition will, therefore, fail. But it is made clear that the contentions raised by the accused petitioner touch the case both in the matter of territorial jurisdiction of the court and in the matter of his being or not being an officer of the company. So, the accused petitioner will have the liberty to reagitate the points after evidence has been adduced at the trial and the learned Magistrate will consider the points in depth upon evidence.
12. Subject to the above observations, the rule is discharged on contest. The order of 'stay earlier issued is vacated.
13. The records be sent down to the court concerned forthwith.