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TMI Blog1989 (8) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... 87 - - - Dated:- 8-8-1989 - S. NATARAJAN AND S. RATNAVEL PANDIAN, JJ. Anil B. Divan, V.P. Vashi, Ms. Naina Kapur and K.J. John for the Appellant. H.M. Jagtiani, S. Mullik, Kamini Jaiswal and A.M. Khanwilkar for the Respondent. JUDGMENT Natarajan, J. What falls for consideration in this appeal by special leave is whether the High Court has erred in law in setting aside the judgments of the courts below in a matter arising under section 630 of the Companies Act in exercise of its powers under section 482 of the Criminal Procedure Code, 1973. The facts are as under: Jenson and Nicholson (India) Ltd. (appellant company) had secured a flat in Bombay (No. 84, Mehr-Dad, Cuffe Parade) belonging to one Mehdi Mandil, on leave and licence basis for the residential occupation of the flat by its officers/employees. The leave and licence agreement was entered into on behalf of the company by the first respondent who was then the Divisional Sales Manager of the company at Bombay, the registered office of the company being at Calcutta. It is common ground that the first respondent acted on behalf of the company under a power of attorney executed in his favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manager, Bombay, in place of the first respondent after his resignation. The Additional Chief Metropolitan Magistrate took the complaint on file and after trial found the first respondent guilty under section 630 of the Companies Act and sentenced him to pay a fine of Rs. 1,000 and also directed him to deliver possession of the flat to the company on or before June 15, 1987, in default to suffer simple imprisonment for three months. Against the said judgment, the first respondent preferred an appeal to the Sessions Court, but by judgment dated October 22, 1986, the Additional Sessions Judge, Greater Bombay, dismissed the appeal. The Trial Magistrate as well as the appellate court concurrently held that the company was the licensee of the flat, that the first respondent had acted only as the power of attorney agent of the company in entering into the agreement, that his occupation of the flat was only as an employee of the company and consequently the first respondent was in unlawful occupation of the flat after he ceased to be an employee of the company. The first respondent was, therefore, directed to deliver possession of the flat to the company. Despite the concurring judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the complaint was filed, the civil court was in seisin of the matter and, therefore, the criminal court "ought to have stayed its hand and allowed the civil court to adjudicate upon the issue".. In support of its view, the High Court invoked the ratio in Damodar Das Jain v. Krishna Charan Chakraborti [1985] 57 Comp Cas 115 (Bom.). The aggrieved company is now before us. Mr. Anil Diwan, learned senior counsel appearing for the company, argued that the High Court, after having held that there were no reasons to interfere with the concurrent findings of the courts below, ought not to have gone back on its view and rendered a finding that a bona fide dispute was involved in the proceedings and the dispute could be adjudicated upon only by a civil court and not by a criminal court in summary proceedings under section 630 of the Companies Act. Mr. Anil Diwan referred to the acceptance of the findings of the first two courts by the High Court in its judgment in the following terms: "I do not think that there is any scope for reappreciating or reappraising the evidence. Two courts below have come to concurrent findings of fact and I see no reason for interfering with the conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case set up by way of defence cannot be relied upon to fill up the lacuna in the prosecution case. 2.The letters, exhibits 3 and 4, written by Mr. Jain on behalf of the company, have not been convincingly disproved by the company and as such a bona fide doubt exists as to who is the actual licensee of the flat and the said dispute can be resolved only by a civil court and not by a criminal court. 3.A civil suit had already been filed by the first respondent and it was pending in the civil court and as such the criminal court should not have adjudicated upon the rights of the parties but should have directed them to seek their remedies before the civil court. 4.The explanation offered by Mr. Jain that he had written the letters under duress and coercion has been falsified by his admissions in cross-examination and hence the criminal court should have accepted the first respondent's plea that a bona fide dispute existed between the parties regarding the licence rights over the flat and refrained from adjudicating upon the rights of the parties in the complaint filed under section 630. 5. Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom), sets out the correct ratio and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1988] 63 Comp Cas 839; [1988] 2 SCC 269, which arose directly from the decision of the Calcutta High Court in Amritlal Chum v. Devi Ranjan Jha [1987] 61 Comp Cas 211, the view taken in Baldev Krishna Sahi, AIR 1987 SC 2245 ; [1988] 63 Comp Cas 1 was affirmed and the High Court's judgment was reversed. Coming now to the question whether the licence for occupation of the flat was obtained by the company or the first respondent, we may refer to three crucial documents. The first one is the leave and licence agreement dated November 1, 1980. The deed specifically states that the licensee is Jenson and Nicholson (India) Ltd. having its registered office at Calcutta and executive office at Bombay and that the company shall have the flat "for use and occupation as residence by its bona fide employee/employees and/or his/their families" and shall not be transferred to anyone else (vide clauses 11 and 12). The agreement was entered into by the first respondent as the power of attorney agent of the company and he has contemporaneously executed an affidavit on November 1, 1980, wherein he has affirmed as follows: "I say that for the purpose of securing a flat on leave and licence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter, Mr. Jain has formally written to say (though he and the first respondent were working in the same office) that the company has received a letter from the municipal corporation regarding the rateable value of the flat and that the first respondent may deal with the matter. Instead of stopping with that, Mr. Jain has gone on to say as follows: "We are forwarding the said letter to you. to deal with the same as you are the tenant of the flat and you are in possession of the same. The flat was taken by you from the landlord, but the landlord had insisted to have the agreement in the name of the company merely. The company will not be liable if the rateable value of the flat is increased and if there is any consequential increase in the property taxes. All the matters will be between you and the landlord. Please therefore deal with the letter as you deem fit". (emphasis supplied). Yours faithfully, Jenson and Nicholson (India) Ltd., (Sd.) A.S. Jain, Office Manager, Bombay". On January 30, 1984, the appellant has acknowledged the letter and agreed to deal with the corporation authorities and has in addition stated that he will also take steps for fixation of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1984, to seek the reliefs of declaration and injunction. All these factors lead to the unmistakable conclusion that the first respondent had somehow prevailed upon Mr. Jain to give the letters, exhibits 3 and 4, with the ulterior motive of filing a suit and then tendering his resignation. Now, coming to the explanation offered by Mr. Jain for writing the two letters, he has sworn to an affidavit that he was "pressurised and threatened" by the first respondent to sign the letters brought by him and that he signed the letters without knowing the implications. He has also given evidence to the same effect in the trial of the case before the Additional Chief Metropolitan Magistrate. Mr. Jagtiani strenuously contended that Mr. Jain's statement that he gave the letters under coercion has been disproved by the answers elicited from Mr. Jain in his cross-examination, viz ., that the first respondent did not actually threaten him but he construed the commanding manner in which he made the demand as containing a threat. Mr. Jagtiani's argument was that once Mr. Jain's explanation for giving the letters stood falsified, then the letters must be treated as genuine documents binding on the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t awarding any punishment to Mr. Jain, it was open to the company to pardon him for the folly of his action when it came to know that he had been unwittingly made use of by the first respondent to write the letters in question. All these factors have unfortunately escaped the notice of the High Court and the omission has led the High Court to accept the first respondent's contention that there was a bona fide dispute between him and the company as to who was the actual licensee of the flat. We have already referred to the relevant portions of the leave and licence agreement and the affidavit and letter of the first respondent wherein he has categorically accepted that the company was the licensee of the flat. Secondly, the evidence projected by the first respondent to lay claim to licence rights over the flat is his own creation without the knowledge of the company. The two letters in question had been obtained from a junior employee who had joined the company long after the flat was taken on rent and who knew nothing of the agreement between the company and the owner of the flat. The author of the letters has himself confessed that he had signed the letters at the behest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where there was no dispute, or in any event no bona fide dispute, that the property involved was the property of the company". (emphasis supplied). Mr. Jagtiani pointed out that the decision of the High Court in Damodar Das Jain's case [1985] 57 Comp Cas 115 (Bom.) was affirmed by this court in Damodar Das v. Krishna Charan Chakraborti [1988] 4 JT 714; [1990] 67 Comp Cas 564 (SC). He fails to notice that the acceptance of the High Court's view was with reference to the facts of the case. This may be seen from the following observation in the judgment of this court (at page 566): "The High Court felt that the disputes raised by the respondent herein were bona fide disputes. Before us, it has not been disputed that this view of the High Court was correct as far as the question whether the company could be held to be a tenant of the flat is concerned".. Therefore, what has to be seen in a complaint under section 630 is whether there is "no dispute or no bona fide dispute" regarding a property claimed by the company between the company and its employee or ex-employee. It is needless to say that every dispute would not become a bona fide dispute merely because the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral excise, there is a general clause which reads as follows: "And the company hereby agrees that all acts, deeds and things lawfully done by the attorney shall be construed as acts, deeds and things done by it and the company undertakes to ratify and confirm all and whatsoever that its said attorney shall do or cause to be done by virtue of powers hereby given". The power of attorney has been executed just before the complaint was filed and it is stated in the complaint that Mr. Atul Mathur was filing the complaint on behalf of the company and he was duly authorised to do so. The High Court was, therefore, not right in construing the power of attorney as conferring only special powers and not general powers on Mr. Atul Mathur. Be that as it may, the High Court has held, and very rightly, that as Mr. Atul Mathur was the Divisional Sales Manager of the company at Bombay, he was certainly competent to file the complaint on behalf of the company as per instructions given to him from the head office of the company. We do not, therefore, find any substance in the contention of the first respondent that the complaint suffered from a material irregularity not curable under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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