2023 (7) TMI 420 - HC - Companies Law

Wrongful withholding of laptops (after resignation) which is punishable under Section 452 of the Companies Act, 2013 - HELD THAT - This Court finds that it is well settled that the offence under Section 452 of the Act, which is pari materia with Section 630 of the Companies Act, 1956 is quasi criminal. It is also well settled that the provision is intended to provide a speedy mechanism for recovery of any property belonging to the company withheld wrongfully by any person. The Act provides that the Court trying an offence may order an employee to deliver the wrongfully withheld property, and the failure to comply with the said order is punishable with imprisonment and fine. In the instant case, the petitioners admittedly delivered the property said to have been withheld by them. The respondent cannot refute the communications and the receipt of the laptops. From the facts and circumstances, it cannot be said that the petitioners had wrongfully withheld the property. The petitioners have returned the property and since, in the facts and circumstances, it cannot be said that they had initially wrongfully withheld the property, the continuation of the impugned prosecution would be an abuse of process of law. Therefore, this Court is of the view that the impugned prosecution is liable to be quashed. Petition allowed.

Summary

Issues involved:
The petition to quash a complaint filed under Section 452 of the Companies Act, 2013 for wrongfully withholding laptops by the petitioners after resigning from the company.

Details of the Judgment:

Issue 1: Allegation of wrongfully withholding laptops:
The petitioners were accused of wrongfully withholding laptops belonging to the respondent company after resigning, which is punishable under Section 452 of the Companies Act, 2013.
- The petitioners had resigned and returned the laptops, but the respondent initially refused to accept them.
- The respondent's complaint was deemed malicious as the laptops were eventually returned, and the refusal to accept them was seen as an attempt to harass the petitioners.
- The respondent alleged that the laptops contained trade secrets and intellectual property, justifying the accusation of wrongful withholding.

Issue 2: Interpretation of Section 452 of the Companies Act, 2013:
The Court clarified the nature of the offence under Section 452, emphasizing its quasi-criminal nature and purpose of providing a speedy mechanism for recovery of wrongfully withheld property.
- The provision allows the Court to order the delivery of wrongfully withheld property, with non-compliance punishable by imprisonment and fine.
- Citing previous judgments, the Court highlighted that the provision is not strictly penal but aims at retrieving company property, and the failure to return property within a fixed time is what constitutes the offence.

Decision:
- The Court found that since the petitioners had returned the laptops, the allegation of wrongful withholding was not substantiated.
- Considering that the petitioners did not wrongfully withhold the property and the continuation of the prosecution would be an abuse of process, the Court quashed the complaint filed under Section 452 of the Companies Act, 2013.
- The Criminal Original Petition was allowed, and the complaint pending before the XVI Additional City Civil Court, Chennai, was quashed, with connected Miscellaneous Petitions closed.