2. The issue that arises for consideration in the present appeal is with regard to the scope of and ambit of the provisions of Section 630 of the Companies Act, 1956, more specifically, as to whether the proceedings under the said provisions would cover within its purview only an employee of the company or also persons claiming a right through him or under him.
One Mr. Chandra Bhushan Saran, father of appellant No. 1 and maternal grandfather of appellant no. 2 was allotted third floor residential premises of the building ‘Devonshire House’. Since he was appointed as a Director and Technical Advisor of one M/s. Automobile Products of India Ltd. (‘API Ltd.’). The suit premises was owned by Her Highness Vijaya Raje Scindia Maharani of Gwalior and was taken on lease by API Ltd. for residential needs of its employee.
Subsequent to Mr. C. B. Saran’s resignation he was appointed as the Managing Director of XLO Ltd., respondent No. 1 herein. Mr. C. B. Saran was entitled to rent-free accommodation and for the sake of convenience, the API Ltd. executed a licence agreement in respect of the suit premises in favour of respondent no. 1. Accordingly, Mr. C. B. Saran along with his family, which consisted of his wife, son and daughter, continued to occupy the said premises.
Mr. C. B. Saran expired in Germany and on his demise his son Mr. Sanjay Saran, by virtue of his employment with respondent No. 1, the suit premises was allotted in his favour.
It is pertinent to mention here that in the year 1976, API Ltd. filed a suit before the Small Causes Court against the respondent no. 1 and Mr. C. B. Saran disputing the tenancy right in relation to the suit property. After the demise of Mr. C. B. Saran his legal heirs were substituted in the said suit.
The respondent no. 1 instituted a proceeding under Section 630 of the Act against the present appellants. The Additional Chief Metropolitan Magistrate vide order dated 26.06.2007 found the appellants guilty under Section 630 of the Act. The appellants were directed to vacate the suit premises within 4 months from the date of the said order and in default to suffer simple imprisonment for 4 months.
The appellants filed a criminal appeal before the Sessions Judge which was dismissed. Against the said dismissal, the two appellants preferred a criminal revision application before the High Court of Bombay, which was also dismissed. It is against the said order that the appellants have approached the Apex Court.
The Hon’ble Court observed that the main purpose to make action an offence under Section 630 is to provide a speedy and summary procedure for retrieving the property of the company where it has been wrongly obtained by an employee or officer of the company or where the property has been lawfully obtained but unlawfully retained after termination of the employment of the employee or the officer. Sub-section (1) is in two parts. Clauses (a) and (b) of sub-section (1) create two different and separate offences. Clause (a) contemplates a situation wherein an officer or employee of the company wrongfully obtains possession of any property of the company during the course of his employment to which he is not entitled, whereas clause (b) contemplates a case where an officer or employee of the company having any 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 company. Under this provision, it may be that an officer or an employee may have lawfully obtained possession of any property during the course of his employment, still it is an offence if he wrongfully withholds it after termination of his employment. Clause (b) also makes it an offence, if any officer or employee of the 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. In terms of sub-section (2), the Court is empowered to impose a fine on the officer or employee of the company if found in breach of the provision of Section 630 of the Companies Act and further to issue direction if the Court feels it just and appropriate for delivery of the possession of the property of the company.
The capacity, right to possession and the duration of occupation are all features which are integrally blended with the employment. Once the right of the employee or the officer to retain the possession of the property gets extinguished either on account of termination of services, retirement, resignation or death, 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 property.
