1991 (2) TMI 330 - SC - Companies Law

Whether the offence under section 630 (1) (b) of the Companies Act is a continuing offence for the purpose of limitation? Held that - Appeal allowed. The impugned orders are set aside and the cases are remanded to the trial court for disposal in accordance with law. The offence continues until the property wrongfully obtained or wrongfully withheld or knowingly misapplied is delivered up or refunded to the company. For failure to do so, sub-section (2) prescribes the punishment. This, in our view, is sufficient ground for holding that the offence under section 630 of the Companies Act is not a one-time but a continuing offence and the period of limitation must be computed accordingly, and when so done, the instant complaints could not be said to have been barred by limitation. The submission that when the first respondent, upon his retirement, failed to vacate and deliver possession of the company s quarter to the company, the offence must be presumed to have been complete, has, therefore, to be rejected.

Issues Involved:
1. Whether the offence under section 630(1)(b) of the Companies Act is a continuing offence for the purpose of limitation.
2. Whether the complaints filed by the appellant company were barred by limitation.

Issue-Wise Detailed Analysis:

1. Whether the offence under section 630(1)(b) of the Companies Act is a continuing offence for the purpose of limitation:

The primary question in these appeals was to determine if the offence under section 630(1)(b) of the Companies Act is a continuing offence. According to Black's Law Dictionary, a "continuing offence" means an offence that endures and is not terminated by a single act or fact, subsisting for a definite period or intended to cover successive similar obligations or occurrences. The court noted that a continuing offence is committed over a span of time, and the last act of the offence controls the commencement of the limitation period.

The court examined the concept of trespass in tort law, noting that trespass by remaining on land is a continuing injury lasting as long as the presence of the wrongdoer. Similarly, in criminal law, section 441 of the Indian Penal Code defines criminal trespass to include unlawfully remaining on property with intent to intimidate, insult, or annoy the person in possession. The court observed that the offence would be continuing as long as the trespass is not lifted or vacated.

Section 630 of the Companies Act penalizes wrongful withholding of company property. The court interpreted that both wrongfully obtaining and wrongfully withholding company property are offences that continue until the property is delivered up or refunded. The court concluded that the offence under section 630(1)(b) is a continuing offence because wrongful withholding of property continues until the property is returned.

The court referred to the Supreme Court's decision in Bhagirath Kanoria v. State of Madhya Pradesh, which held that non-payment of employer's contribution to the provident fund was a continuing offence. The court applied the same reasoning to section 630(1)(b) of the Companies Act, stating that the wrongful withholding of property is not consummated once for all but continues until the property is delivered up or refunded.

2. Whether the complaints filed by the appellant company were barred by limitation:

The trial court and the High Court had dismissed the appellant company's complaints on the ground that they were barred by limitation, as they were filed more than six months after the respondents' retirement. The courts relied on the decision in W.M.I. Cranes Ltd. v. G.G. Advani, which held that the offence under section 630(1) of the Companies Act was not a continuing offence.

The appellant company's counsel argued that the offence under section 630(1)(b) is a continuing offence and the courts below erred in holding otherwise. The respondents' counsel contended that the offence was complete upon the respondents' failure to vacate the company's quarters upon retirement, and the right to adverse possession would accrue thereafter.

The Supreme Court disagreed with the lower courts' interpretation and held that the offence under section 630(1)(b) is a continuing offence. The court noted that the wrongful withholding of property continues until the property is returned, and therefore, the limitation period begins with the cessation of the wrongful act. Consequently, the complaints filed by the appellant company were not barred by limitation.

Conclusion:

The Supreme Court concluded that the offence under section 630(1)(b) of the Companies Act is a continuing offence, and the period of limitation should be computed accordingly. The impugned orders were set aside, and the cases were remanded to the trial court for disposal in accordance with the law in light of the observations made by the Supreme Court.

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