1993 (7) TMI 247 - HC - Companies Law

Summary

Issues Involved:
1. Wrongful retention of company property under Section 630 of the Companies Act, 1956.
2. Application of the doctrine of promissory estoppel.
3. Jurisdiction of criminal versus civil courts in adjudicating the matter.
4. Validity of the board's decision regarding the sale of the flat.
5. Procedural conduct and propriety in judicial proceedings.

Detailed Analysis:

1. Wrongful Retention of Company Property under Section 630 of the Companies Act, 1956:
The accused, an ex-employee of the company, was allotted a residential flat and garage during his employment. Upon his retirement, he continued to occupy the premises without any legal entitlement or payment, leading to a criminal prosecution under Section 630 of the Companies Act. The court emphasized that Section 630 is a penal provision designed to provide a swift and effective remedy for the recovery of company property wrongfully withheld by employees or ex-employees. The accused's continued occupation of the premises constituted wrongful retention, justifying the framing of charges against him.

2. Application of the Doctrine of Promissory Estoppel:
The accused contended that he was promised the flat at book value by the company's managing director, which led him to not acquire other residential accommodation. He argued that this promise should be enforceable under the doctrine of promissory estoppel. However, the court found no evidence of a concluded agreement or binding promise. The managing director's indication was always subject to the board's approval, which never materialized. The court held that promissory estoppel was inapplicable as there was no clear and unequivocal promise, and even if there were, such a transaction would be illegal and against public policy.

3. Jurisdiction of Criminal versus Civil Courts:
The accused argued that the matter should be adjudicated by a civil court, given his pending suit for specific performance. The court rejected this contention, stating that the issues involved did not preclude the criminal court from deciding the matter. The plea of promissory estoppel and the claim of being an intending purchaser were deemed frivolous and insufficient to justify the wrongful retention of the premises. The court emphasized that criminal proceedings under Section 630 should not be delayed by parallel civil litigation.

4. Validity of the Board's Decision:
The board of directors had rejected the accused's proposal to purchase the flat at book value, citing the dramatic rise in real estate prices and the fiduciary duty to act in the company's best interest. The court upheld the board's decision, noting that the sale of the flat at a fraction of its market value would be detrimental to the company's interests and illegal. The court dismissed the accused's arguments regarding procedural flaws in the board's decision-making process, affirming that the board acted correctly and lawfully.

5. Procedural Conduct and Propriety in Judicial Proceedings:
The court addressed the improper conduct of the accused's counsel, who attempted to submit a voluminous compilation of written arguments without the court's permission. This act was seen as an attempt to mislead the court and protract the proceedings. The court condemned such tactics and initiated separate contempt proceedings to uphold judicial propriety. Despite this, the court ensured a fair consideration of all arguments and evidence presented by the accused.

Conclusion:
The High Court set aside the order of the Sessions Judge, who had discharged the accused, and reinstated the proceedings before the trial court. The court directed the trial to proceed on a priority basis, emphasizing the need for a swift resolution in accordance with the guidelines laid down in relevant precedents. The accused's arguments of promissory estoppel and procedural impropriety were found to be without merit, reaffirming the company's right to recover its property.