1983 (3) TMI 208 - HC - Companies Law

Penalty for wrongful withholding of property, Section 630 also applies to ex-employees and its application is not confined to present employees

Summary

Issues Involved:
1. Jurisdiction of the Metropolitan Magistrate under section 15 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971.
2. Applicability of section 630 of the Companies Act to ex-employees.
3. Constitutionality of section 630 of the Companies Act under article 14 of the Constitution.

Detailed Analysis:

1. Jurisdiction of the Metropolitan Magistrate under section 15 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971:
The petitioner contended that the Metropolitan Magistrate lacked jurisdiction to entertain the complaint due to section 15 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, which bars jurisdiction of other courts in eviction matters. The court examined sections 4 and 5 of the Act, which outline the procedure for eviction by the estate officer, and section 11, which deals with cognizable offences and vests jurisdiction in the magistrate for criminal proceedings. The court concluded that the word "proceedings" in section 15 does not include criminal proceedings, as such an interpretation would render section 11 redundant. Therefore, the Metropolitan Magistrate had jurisdiction to entertain the complaint under section 630 of the Companies Act.

2. Applicability of section 630 of the Companies Act to ex-employees:
The petitioner argued that section 630 applies only to current employees and officers, not ex-employees. The court referred to the definition of "officer" in section 2(30) of the Companies Act and noted that section 630 penalizes wrongful withholding of company property regardless of the person's current employment status. The court endorsed the judgment in Harkishin Lakhimal Gidwani v. Achyut Kashinath Wagh, which held that section 630 applies to both current and former employees. The court emphasized that wrongful withholding of company property by an ex-employee constitutes an offence under section 630.

3. Constitutionality of section 630 of the Companies Act under article 14 of the Constitution:
The petitioner claimed that section 630 violates article 14 by discriminating between employees of companies and those of private individuals or partnerships. The court reiterated that classification under article 14 must be based on an intelligible differentia and have a rational relation to the object sought by the Act. The court found that the classification of company employees under section 630 is reasonable and aimed at protecting company property, which is a legitimate objective of the Companies Act. The court cited the Supreme Court's principles in Special Courts Bill, 1978, AIR 1979 SC 478, affirming that the classification serves the Act's purpose and does not violate article 14.

Conclusion:
The court dismissed the petition, upheld the Metropolitan Magistrate's jurisdiction, confirmed the applicability of section 630 to ex-employees, and rejected the constitutional challenge under article 14. The court directed the Metropolitan Magistrate to expedite the trial and denied the petitioner's request for leave to appeal to the Supreme Court, while granting a 15-day stay on the trial proceedings.