2003 (1) TMI 527 - HC - Companies Law

Summary

Issues:
1. Whether the petitioner wrongfully withheld assets of the company.
2. Whether the matter is purely a civil dispute or falls under section 630 of the Companies Act.

Analysis:

Issue 1:
The petitioner, a former director and Chief Executive Officer of the complainant company, was accused of wrongfully withholding company assets after his termination. The company demanded payment for assets valued at Rs. 8,00,450 through debit notes and legal notices, which the petitioner did not respond to. The petitioner disputed the value of assets and claimed the company owed him money, but the court held that lawful possession turns unlawful for non-payment. The respondent contended that until the asset value is paid, the petitioner is wrongfully withholding the assets.

Issue 2:
The petitioner argued that the dispute was a civil matter and not covered under section 630 of the Companies Act, citing a previous court decision. However, the court differentiated the present case from the precedent, stating that no evidence was presented to show a bona fide dispute between the parties. The court emphasized that the matter should be decided by the Trial Court after recording evidence, and it was premature to quash the proceedings at that stage. Despite the technical nature of the offense, the Trial Court was advised to consider allowing the petitioner representation by a pleader. Ultimately, the petition was dismissed, and related applications were closed.