1993 (4) TMI 219 - HC - Companies Law

Summary

Issues Involved:
1. Whether the employee, whose wife has purchased the premises, can be ordered to restore possession to the company.
2. The nature of the offence under section 630 of the Companies Act, 1956.
3. The implications of the employee's wrongful withholding of the company's property.
4. The legal consequences of the employee's actions and the appropriate punishment.

Detailed Analysis:

1. Ownership and Restoration of Possession:
The court addressed whether an employee, whose wife subsequently purchased the premises, can still be ordered to restore possession to the company, which remains the tenant. It was held that the restoration of possession is a necessary relief under section 630 of the Companies Act, 1956, regardless of the change of ownership. The court found the argument that the accused cannot be ordered to restore possession because the flat now belongs to his wife to be fallacious. As long as the tenancy rights are alive, the company is entitled to an order for restoration of possession.

2. Nature of the Offence:
The court elaborated on the anatomy of the offence under section 630 of the Companies Act, stating that it is a continuing offence. The offence recurs for the period during which it continues, and the penalty should be in consonance with the number of times the offence is repeated. The court emphasized that the offence must be treated as recurring from month to month, and the accused is liable for a fine for every month starting from April 1, 1977, until the date of restoration of possession.

3. Wrongful Withholding of Property:
The court highlighted that the accused retained possession of the premises for over 16 years, depriving the company of its use. It was noted that the accused's actions were brazen and that awarding a fine of Rs. 1,000 in such a case would be irrational. The court pointed out that the accused's argument that he could not be ordered to restore possession because the flat now belongs to his wife was an attempt to take advantage of his own wrong, which is against accepted canons of criminal jurisprudence.

4. Legal Consequences and Punishment:
The court found that the accused wrongfully withheld the company's property and that the offence continues until the property is restored. The court ordered the accused to hand over vacant possession of the premises to the company by September 30, 1993. The court also imposed a fine of Rs. 1,000 per month from April 1, 1977, until the date of restoration of possession. In default of compliance, the accused would be liable to a sentence of two years' rigorous imprisonment.

The court emphasized that section 630 of the Companies Act is intended to provide speedy relief to a company when its property is wrongfully retained or withheld. The court also laid down guidelines to ensure the expeditious disposal of such cases and to prevent the misuse of legal proceedings to delay the restoration of possession.

Conclusion:
The appeal was allowed, the judgment and order of the trial court were set aside, and the accused was convicted under section 630 of the Companies Act. The accused was ordered to pay a fine and directed to restore possession of the premises to the company. In case of default, the accused would face rigorous imprisonment.