1984 (11) TMI 258 - HC - Companies Law

Summary

Issues Involved:
1. Legislative competence of Parliament to enact Section 630 of the Companies Act, 1956.
2. Stay of criminal proceedings pending the decision of the declaratory suit.
3. Jurisdiction of the criminal court to entertain the complaint under Section 630 of the Companies Act, 1956.
4. Suppression of facts by the petitioner in the present petition.

Issue-wise Detailed Analysis:

1. Legislative Competence of Parliament to Enact Section 630 of the Companies Act, 1956:

The primary issue in this case was whether Section 630 of the Companies Act, 1956, is ultra vires the legislative competence of Parliament as it applies to the immovable property of a company. The petitioner contended that Parliament lacked the legislative competence to legislate regarding immovable property of a company situated within a State, arguing that such legislation falls under entry 18, List II-State List of the Seventh Schedule to the Constitution. The petitioner relied on the decision in *Elliot Wand and Hill P. Ltd. v. Life Insurance Corporation [1981] Bom. CR 590*, where it was held that the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, was outside the legislative competence of Parliament.

The court, however, rejected this contention, stating that Parliament is competent to legislate in respect of companies and their affairs under entries 43 and 44 of List I-Union List of the Seventh Schedule to the Constitution. Section 630 of the Companies Act deals with the wrongful withholding of property by employees of a company, which falls within the affairs of a company. The court emphasized the principle of "pith and substance" and held that the provisions of Section 630 could not be struck down for want of legislative competence merely because they slightly transgress the area of immovable property. The court concluded that Section 630 is within the legislative competence of Parliament.

2. Stay of Criminal Proceedings Pending the Decision of the Declaratory Suit:

The petitioner sought a stay of the criminal proceedings pending the decision of the declaratory suit filed in the Court of Small Causes at Bombay, where he sought a declaration that he is a tenant of the premises. The court referred to the decision in *Dr. Suresh Venkatrao Nerlekar v. Sharanghadar Pandurang Nadkarni [1982] 1 Bom. CR 867*, which held that criminal proceedings should not be stayed merely because a civil suit is pending on the same issue. The court found it neither expedient nor necessary to stay the criminal proceedings pending the decision of the declaratory suit.

3. Jurisdiction of the Criminal Court to Entertain the Complaint under Section 630 of the Companies Act, 1956:

The petitioner argued that the criminal court had no jurisdiction to entertain the complaint under Section 630 of the Companies Act, as the Court of Small Causes at Bombay had exclusive jurisdiction to decide the tenancy dispute. The court rejected this contention, noting that the plea of tenancy was not bona fide. The flat in question was allotted to the petitioner for his occupation during his employment with the company, and he was not entitled to continue occupying the premises after his services were terminated. The court held that the criminal court had jurisdiction to entertain the complaint under Section 630.

4. Suppression of Facts by the Petitioner in the Present Petition:

The respondent's counsel pointed out that the petitioner had earlier filed a similar application under Section 482, Cr PC, for quashing the criminal proceedings and had withdrawn it. The petitioner, however, did not mention this fact in the present petition. The court emphasized that a petitioner invoking the extraordinary jurisdiction must be candid and not suppress material facts. Although the court found that the petitioner should have disclosed the earlier petition and its withdrawal, it did not dismiss the present petition solely on this ground. Instead, the court dismissed the petition on its merits.

Conclusion:

The court dismissed the petition and discharged the rule, holding that Section 630 of the Companies Act, 1956, is within the legislative competence of Parliament, the criminal proceedings need not be stayed pending the declaratory suit, the criminal court has jurisdiction to entertain the complaint, and the petitioner's suppression of facts did not warrant dismissal of the petition but was noted as improper conduct. The petitioner was ordered to pay the costs of respondent No. 1 and bear his own costs.