2008 (7) TMI 567 - HC - Companies Law

Penalty for wrongful withholding of property - Held that - Under section 48 of the Companies Act, 1956, a Company may, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place either in or outside India. A deed signed by such an attorney on behalf of the company and under his seal where sealing is required, shall bind the Company and have the same effect as if it were under its common seal. Thus, taking any view of the matter, the complaint filed by the power of attorney is a valid complaint and the learned Magistrate has rightly entertained and taken the cognizance of the said complaint. Agreement Exh. 54 is in the nature of an undertaking given by the accused and contents of such agreement are self-explanatory. The signature of the accused on the agreement is not in doubt or dispute and even if such dispute is raised, it is mala fide one and rightly rejected by the trial court. The witnesses who have been examined on behalf of the complainant have categorically stated on the basis of the records available that the premises in question belong to the Company and the same was given to the accused when he was in the employment. Hence, all objections raised by Mr. Majmudar in this regard are untenable and they are deserved to be rejected and are, accordingly, rejected. Appeal dismissed.

Issues Involved:
1. Authority to File Complaint
2. Nature of Allotment of Quarters
3. Validity of Complaint Filed by Power of Attorney Holder
4. Concurrent Findings of Lower Courts
5. Applicability of Section 630 of the Companies Act, 1956

Detailed Analysis:

1. Authority to File Complaint:
The petitioners contended that the complaints should have been filed by the Director or Chairman of the company, not by a Manager who is also an employee. They argued that the employee of the company has no authority or right to lodge a complaint against another employee. However, the court rejected this argument, stating that the company, being a corporate entity, acts through human agency. The power of attorney given under the common seal of the company pursuant to a resolution passed by its Board of Directors was deemed valid. The court cited precedents to support that a power of attorney holder can file a complaint.

2. Nature of Allotment of Quarters:
The petitioners argued there was no contract stipulating that the quarters were to be vacated after their service tenure. They asserted that the quarters were given on rent, and monthly rent was deducted from their salaries, implying a landlord-tenant relationship. The court, however, emphasized that the provisions of section 630 of the Companies Act, 1956, were clear. Once the petitioners ceased to be employees, they had no right to retain possession of the company's quarters. The court referenced previous judgments, including the Supreme Court's decisions, to affirm that section 630 applies even if the employee claims tenancy.

3. Validity of Complaint Filed by Power of Attorney Holder:
The petitioners challenged the validity of the complaint filed by the power of attorney holder, arguing that it was not registered and the power of attorney holder was not examined. The court dismissed these arguments, stating that the power of attorney was valid and given under the common seal of the company. The court also referenced legal provisions and case law to affirm that a complaint filed by a power of attorney holder is maintainable.

4. Concurrent Findings of Lower Courts:
The court noted that both the Judicial Magistrate First Class and the Additional Sessions Judge had passed judgments based on proper appreciation of evidence and correct understanding of the law. The concurrent findings of the lower courts were deemed correct, and the court found no reason to interfere with these findings in its revisional jurisdiction.

5. Applicability of Section 630 of the Companies Act, 1956:
The court provided a detailed analysis of section 630 of the Companies Act, 1956, which penalizes wrongful withholding of company property. The court referenced various judgments, including those of the Supreme Court, to affirm that the section applies to both movable and immovable property. The court rejected the petitioners' reliance on certain Supreme Court decisions, stating that those cases were not applicable to the present facts. The court concluded that the petitioners wrongfully withheld the company's property and were liable under section 630.

Conclusion:
The court rejected the criminal revision applications, upholding the judgments of the lower courts. The petitioners were permitted to retain the quarters until 30-11-2008, provided they hand over vacant possession by that date. An undertaking to this effect was required to be filed by the petitioners. The order regarding the sentence was suspended until 30-11-2008, with a clear warning that failure to comply would result in contempt of court and enforcement of the sentence.

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