2007 (7) TMI 418 - HC - Companies Law

Penalty - wrongful withholding of property - Held that - From the factual narrative itself the original owner (M/s. Texmaco Ltd.) entered into a scheme of compromise arrangement which was sanctioned by this court. Thereafter, the successor entity closed down operations and sought to recover the other premises. In these circumstances, it would be imprudent for the court in exercise of its inherent power to virtually short cut and forestall a trial (where the parties have contested) and virtually allow the complaint. Undoubtedly, Parliamentary intention in enacting section 630 of the Companies Act was to ensure a speedy resolution of disputes relating to possession of the company s immovable properties. Yet that does not mean that what ordinarily should be done at the final stage, ought to be done at the interim stage. Thus recourse to such interlocutory power should be in exceptional situations and not in all cases. In these circumstances, where the dispute itself pertains to entitlement of the property and its possession, the court should slow in exercising its powers under section 452. In view of the above, it is not persuaded by the submissions on behalf of the petitioner that the trial court s approach or the impugned order was either illegal or in any manner improper.

Summary

Issues:
1. Interpretation of section 452 of the Code of Criminal Procedure.
2. Application of section 630 of the Companies Act for retrieval of company property.
3. Consideration of inherent powers under section 482 of the Code of Criminal Procedure.

Interpretation of Section 452 of the Code of Criminal Procedure:
The petitioner filed an application under section 452 of the Code seeking possession of premises pending proceedings under section 630 of the Companies Act. The trial court dismissed the application, emphasizing the legislative intent of section 630(1) and (2) of the Companies Act, providing a specific mode for retrieving company property from past employees. The court held that allowing the application under section 452 would nullify the provisions of section 630 and defeat the purpose of summary procedures for property retrieval under the Companies Act.

Application of Section 630 of the Companies Act for Retrieval of Company Property:
The petitioner argued that section 630 of the Companies Act is beneficial and intended to provide swift relief for property retrieval. Citing judgments from the Calcutta High Court, the petitioner contended that the company's right to reclaim its property is statutory under section 630. However, the trial court found that the proceedings had not concluded, and the petitioner had yet to establish certain facts regarding the property dispute. The court also considered objections raised about the petitioner's standing to file the complaint under section 630.

Consideration of Inherent Powers under Section 482 of the Code of Criminal Procedure:
The High Court analyzed previous judgments where the Calcutta High Court utilized inherent powers under section 482 to direct ex-employees to vacate premises. However, the High Court noted that those cases did not address the interaction between section 452 of the Code and section 630 of the Companies Act, as done by the trial court in the present matter. The High Court emphasized that interim orders for possession should be exceptional and not a general practice, especially when disputes involve property entitlement and possession.

In conclusion, the High Court found that the trial court's approach and the order were not illegal or improper. The High Court emphasized the need for caution in exercising powers under section 452, especially in cases where disputes relate to property entitlement and possession. Therefore, the petition was dismissed without costs.