2014 (5) TMI 120 - HC - Indian Laws

Wrong withholding of property - father of petitioner had joined service of M/s Birla Cotton Spinning and Weaving Mills Ltd and on 28.12.1978 had been allotted quarter - There was an application to handover the vacant and peaceful possession of the quarter but he failed to do so - After death of her father, the petitioner did not vacate the quarter; she wrongfully withheld the same - Respondent filed complaint under Section 630 - Appellant contends that Respondent did not have the locus standi to file the complaint - Held that - Section 630 of the said Act had been engrafted in the Legislature to provide speedy relief to a company where its property is wrongfully obtained or wrongfully withheld by an employee or an officer or a past employee or an officer or legal heirs and representatives deriving their colour and content from such an employee or officer in so far as the occupation and possession of the property belonging to the company is concerned. The failure to deliver property back to the employer on the termination, resignation, superannuation or death of any employee, would amount to wrongful withholding that property giving rise to an actionable claim under Section 630 of the said Act. A broader, liberal as also a purposeful interpretation has to be given to Section 630 in furtherance of the object and purpose for which this legislation has been engrafted. The scheme clearly shows that respondent has become the owner of the quarter in question as also the employer of the father of the petitioner; all rights and liabilities of the transferor-company stood vested with the transferee-company, i.e., respondent - This Court has already returned a finding on the first issue i.e. M/s Texmaco Limited being the transferee company and having taken over all assets and liabilities of the said Mill which has been approved not only by the Delhi High Court but also by the Kolkata High Court, it was well within its right to file this complaint. - time period could be extended for vacation of the quarter but he declined the offer and sought an order on merits stating that this revision petition be decided on its merits - Decided against Petitioner.

Summary

Issues Involved:
1. Validity of the complaint filed by M/s Texmaco Limited.
2. Locus standi of M/s Texmaco Limited to file the complaint.
3. Applicability of pending Crl. Appeal No.1214/2012 on the current case.
4. Legality of the conviction under Section 630 of the Companies Act, 1956.

Issue-wise Detailed Analysis:

1. Validity of the complaint filed by M/s Texmaco Limited:
The petitioner challenged the validity of the complaint filed by M/s Texmaco Limited, arguing that the scheme of arrangement merging the Mill with M/s Texmaco Limited required approval from both the Delhi High Court and the Kolkata High Court. The petitioner contended that no such order from the Kolkata High Court had been placed on record, rendering the complaint void ab initio. However, the respondent provided the approval from the Kolkata High Court, evidencing that the scheme of arrangement dated 03.01.1983, passed by the Delhi High Court, was indeed approved by the Kolkata High Court on 20.12.1982. Consequently, the court found that M/s Texmaco Limited had the right to file the complaint as the transferee company.

2. Locus standi of M/s Texmaco Limited to file the complaint:
The court examined the scheme of arrangement, which was proved as Ex.PW-1/4, and concluded that M/s Texmaco Limited had acquired all rights and liabilities of the transferor company, including the quarter in question. The relevant extract of the scheme indicated that all property, rights, and powers of the transferor company were transferred to M/s Texmaco Limited. The court cited Smt. Kamla Rani v. Texmaco Ltd., where it was established that M/s Texmaco Limited was the successor in interest of the Mill. Thus, M/s Texmaco Limited had the locus standi to file the complaint.

3. Applicability of pending Crl. Appeal No.1214/2012 on the current case:
The petitioner argued that the pending Crl. Appeal No.1214/2012, which questioned the locus standi of M/s Texmaco Limited to institute complaints against ex-employees, should affect the current case. However, the court clarified that the orders passed in that appeal would only apply to the facts of that specific case. The court referenced a previous order in Crl. L.P. No.26/2011, which stated that the stay of trial in that case would not extend to other complaints filed by M/s Texmaco Limited. Therefore, the pending appeal had no bearing on the current case.

4. Legality of the conviction under Section 630 of the Companies Act, 1956:
The court reviewed the provisions of Section 630 of the Companies Act, which penalizes wrongful withholding of company property. The court emphasized the intent of the legislation to provide speedy relief to companies where property is wrongfully withheld by employees or their legal heirs. The court noted that both the Magistrate and Sessions Judge had found the petitioner guilty under Section 630, and the court, sitting in revisional jurisdiction, could only interfere if there was a patent illegality or glaring perversity. The court found no such issues and upheld the conviction, stating that M/s Texmaco Limited had the authority to file the complaint and that the petitioner had wrongfully withheld the quarter.

Conclusion:
The court dismissed the petition, affirming the validity of the complaint filed by M/s Texmaco Limited, the company's locus standi, and the legality of the conviction under Section 630 of the Companies Act, 1956. The court also clarified that the pending appeal in Crl. Appeal No.1214/2012 had no impact on the current case.