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TMI Blog1993 (7) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... or, in the case of rented premises, that the tenancy would be surrendered in favour of the occupant. This contention is pleaded in all seriousness and it is contended that the accused is entitled to enforce his rights by insisting on specific performance by the company and that, consequently, the ingredient of wrongful retention or withholding of the premises is absent. Litigations are commenced in the civil courts for a declaration that the accused should be declared a tenant or that he is entitled to enforce the sale at book value to himself for a totally unreal consideration on the ground that he is an intending purchaser, apart from other parallel proceedings in various courts, and the criminal prosecution instituted by the company is sought to be stayed on the ground that the accused has raised issues which are within the exclusive jurisdiction of a civil court where the accused can confidently assure himself that the first round of litigation will not be over for at least two decades if the requisite dilatory tactics are resorted to. The courts in this country, and in particular the apex court, have held with consistent regularity that section 630 of the Companies Act is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the proposal. The accused, who had in the meanwhile retired, continued to reside in the premises without making any payments whatsoever to the company and the company had to prosecute him under section 630 of the Companies Act. Criminal Case No. 2199/S of 1989 was filed by the company in the court of the learned Additional Chief Metropolitan Magistrate, 37th Court, Esplanade, Bombay, charging the accused with having committed an offence punishable under section 630 of the Companies Act. The accused has filed a suit, which is pending in the High Court, being Suit No. 2187 of 1992 on May 20, 1992, wherein he has prayed for a decree of specific performance against the company for compelling it to sell the flat to the accused at book value. The accused contends through some involved and difficult process of reasoning that he is entitled to enforce the assurance given to this effect and that the adjudication of the case is purely within the ambit of the civil court. Simultaneously, he states that by canvassing such a plea he is entitled to claim total immunity in the criminal prosecution because he is legally justified in retaining possession of the premises and is, therefore, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of charges against him was unjustified and once again pleading the point regarding promissory estoppel. The matter was finally heard by the Court of Sessions and the honourable judge Deshpande by his judgment dated March 1, 1993, upheld the plea raised by the accused. The revision was allowed, the order of the Metropolitan Magistrate dated November 23, 1992, was set aside and the accused was discharged. It is against this order that the company has approached the High Court through the present petition. When this petition came up for admission, after hearing learned counsel on both the sides and on a consideration of the order dated March 1, 1993, passed by the Court of Sessions, it appeared that the case did require reconsideration. Shri Vashi, on behalf of the petitioner, had pointed out to me that in the year 1991, the Supreme Court had directed that the proceeding be disposed of within six months, that the order of the Supreme Court was dated January 12, 1991, and was binding on the courts below, that almost two years had passed and the proceeding had not yet terminated in the trial court. Learned counsel pointed out to me that the accused has retired from the services of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel on behalf of the company that in this very case on an earlier occasion when the matter had been taken to the Supreme Court in appeal, their Lordships, after hearing learned counsel for the accused, informed him that if he desired an order on the merits the same was bound to adversely affect him at the trial, at which time the accused sought the leave of the court to withdraw the appeal. The learned Magistrate has yet to hear the parties and to decide as to whether the accused is liable to be convicted and in these circumstances it appeared indiscreet to invite an order on the merits from the High Court. Shri Shah stated that after considering the matter and after obtaining the instructions from his client they desired that the matter be disposed of on the merits and that this court should hear the parties completely and indicate its decision. Shri Shah stated that he was confident of succeeding in the case and if he did not, that his client would like to carry the matter higher and that he has considered the implications of an order on the merits being passed at this stage and that he would like a total adjudication of the matter on the merits. It does often happen in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far more serious is the fact that virtual allegations of bias and pre-conceived notions have been attributed to the judge which, apart from being false and unfair, prima facie constitute contempt of court. Regardless of the tactics adopted by the learned advocate, I have at all times been fair and absolutely impartial to both the parties and shall continue to do so. Having read the compilation, I have taken the trouble to ensure that everything which the accused desires to point out through his learned counsel will be considered on the merits. In so far as the misconduct is concerned, it is necessary to uphold the need for proper behaviour in the course of judicial proceedings and not to permit unhealthy and dishonest practices and to this extent, therefore, appropriate proceedings under the Contempt of Courts Act in respect of the compilation are being adopted separately. Shri Vashi, learned counsel appearing on behalf of the petitioners, and Shri Sudhir Shah, learned counsel appearing on behalf of respondent No. 1, have presented their respective cases with a degree of thoroughness that is commendable. Learned counsel are agreed on one aspect, namely, that the correspondenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to allow him to buy the company's flat at book value and stating that he would like to buy the flat immediately and requesting him to arrange to take steps to effect the sale. (9) September 25, 1986. The accused wrote to the managing director of the company informing him that the company secretary and the accused had met the company's tax consultant Mr. D.M. Harish on September 22, 1986, to find out about the feasibility of effecting the sale of the said flat by the company to accused at book value, the suggestions given by Mr. Harish and requesting that the required resolution be passed at the board meeting to be held on September 29, 1986. (10) October 3, 1986. Reply from the managing director to the accused pointing out that there had been dramatic change in the real estate prices and, therefore, he finds it difficult to approach the board with a proposal that the flat be sold at book value to the accused. The managing director had offered an alternative proposal regarding another flat with which, if approved, the managing director was to go to the board and work out the formula. The managing director had expressed confidence that he would be able to persuade the boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the High Court at Bombay, being Suit No. 2187 of 1992 against the company for specific performance of the agreement to sell the flat and the garage at its book value. (22) December 17, 1992.‑The company filed a suit in the Small Causes Court at Bombay against the accused and his family members for obtaining vacant possession of the flat. The above essentially represents the correct sequence of events. Shri Vashi, on behalf of the petitioners, points out to me that there could be no ambiguity about the fact that the request for sale of the flat to the accused at book value had come from him at a time when he was contemplating premature retirement. Shri Vashi states that all this had transpired in the mid-seventies at which time many of the better companies used to permit some of the senior executives the facility of purchasing used items like cars, furniture, etc., at book value which the companies in any case were disposing of. As far as the flats are concerned, since it was always a problem for companies to find sufficient accommodation for their executives, such proposals could not be acceded to. When the accused conveyed his request to the managing director, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the formula. Shri Vashi emphasised the fact that Shri Kerkar clearly informed the accused that he would not be able to help if he insisted on buying the present flat and that the only recommendation, which he could even put up, was that it be offered to the accused at a price 10 per cent, less than the market value. The accused was still persistent with his request and on April 28, 1987, Shri Kerkar once again recorded the fact that the unforeseen rise in the cost of housing in Bombay, which he himself had not foreseen earlier, virtually precluded him from approaching the board to sell the flat to respondent No. 1. On May 30, 1987, the managing director had even written to him again that he should accept some other flat. Shri Vashi explains that the managing director of the company just could not consider a proposal to dispose of the flat at a throw-away price, quite apart from the fact that it was improper and illegal and the law itself would not permit it. It would be very damaging to the interest of the company as it would be the loss of a valuable asset and would involve the company in huge expenditure when a replacement had to be bought. He states that though not obligatory, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stopped his client from purchasing another flat, I asked Shri Shah to substantiate this statement from anything on record, but apart from making this statement in the air, he was totally unable to do so. Shri Shah then adverted to the fact that since his client had "understood that he was getting the flat and since Shri Kerkar kept him in hopes, his client did not purchase another flat at a point of time when he was in a position to do so." The first part of the submission is contrary to the record and as far as the second part of it is concerned, if the accused for whatever reason did not purchase a flat of his own, I see no justification in his trying to insist on the company providing him accommodation at a later point of time. This demand is not only illogical but it is absurd. I have devoted considerable time both in the court room and while deciding this case to a meticulous examination of the record because Shri Shah's contention is that his client is entitled to spell out an agreement to sell from the correspondence and the events that transpired and that, in these circumstances, he is justified in his demand for specific performance of what he termed an agreement to sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public policy. Viewed at from any angle, therefore, the record of this case apart, there is no justification even to the remotest extent for the application of the doctrine of promissory estoppel. Even in those of the cases, where such promises are pleaded or even established, a court of law will have to ignore them. I do not see any merit whatsoever in this plea and the detailed reasoning set out by the learned Sessions Judge upholding this contention is not only a wrong appraisal of the record but a total misreading of the law. As regards the justification for framing of charges, Shri Vashi clearly points out that the accused was permitted residence in the premises in his capacity as employee of the company and that, consequently, on his ceasing to be an employee of the company, i.e. , when he retired from service, he was legally obliged to restore the company's property and in not doing so, he has wrongfully withheld the same. Shri Vashi points out to me that the accused has no locus standi to be in the premises which, admittedly, belongs to the company and he is in wrongful occupation of it even after he is repeatedly called upon to hand over possession. He submits that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see how in a prosecution under section 630 of the Companies Act the learned advocate expects this court to go behind the board decision on all sorts of frivolous and unsustainable pleas. The hollowness of the arguments presented is aptly illustrated by the next submission whereby it was contended that the board completed 16 items in 45 minutes and that, therefore, the directors did not apply their minds to the subjects. The fact that they could have read the material earlier and dealt with each item on the agenda without any loss of time is totally overlooked. The present proposal itself was so inherently unacceptable that I do not visualise the board of any responsible company spending more than half a minute to consider it. Again, Shri Shah argued that some of the employee-directors were junior to Shri Kerkar, that some of the senior directors had not attended and that had Shri Kerkar so desired, he could have persuaded the board to accept the proposal because Shri Kerkar is a senior and a highly respected director and the board would normally go by his advice. Shri Shah contends that in Shri Kerkar not having voted in favour of the proposal and having abstained from voting, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues involved are such that it is inadvisable or impermissible for a criminal court to decide them, and secondly, whether there is any bar for doing so. A complicated question of title such as a case in which there is a substantial dispute on the facts supported by evidence as to whether at all the character of the property is such that it conforms to the legal definition of company property and where, for instance, the person in occupation has already asked for a declaration from the competent civil court that he is, in fact, the de facto and de jure owner of the premises; the question of title could best be adjudicated by a civil court rather than by a Magistrate in a proceeding under section 630 of the Companies Act. Another instance could perhaps arise where there is substantial material to support a bona fide plea of tenancy. I have been guarded in using the words substantial and bona fide because I do not have in mind the numerous cases where a frivolous plea is put up merely in order to delay the bad day. What is contemplated is a genuine case where the Court of Small Causes may be the only competent forum to finally decide the status of the party in which case a criminal cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, contended that the courts while considering applications under section 630 of the Companies Act are very much concerned about the case from the angle of the company which pleads that it has been deprived of the user of the property, that loss has been caused, that it requires the same back, etc., but that unfortunately the other half of the picture has not been given sufficient weight. It was, therefore, his request that the court should view the matter from the opposite angle for purposes of appreciating his arguments. It was unnecessary for him to make such a request because any court which includes this one must necessarily take cognizance of every aspect, more so the one in which the accused is placed particularly in a criminal prosecution. Shri Shah pointed out to me that the accused joined the company in the year 1956 and. worked there for 34 years until his retirement in 1989. The learned advocate got a bit emotional while stating that his client has given his life for the company, that he is today an old man retired from service and that his client virtually feels cheated and let down. He projected the view that the insistence on the part of his client that the flat be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not for being gifted away or bartered because the law does not sanction this. Again, it would be a most improper and unhealthy practice because it would give rise to a situation whereby certain employees who have towed the line of the management would go home with a huge bonanza ; whereas those who have been principled and required to take unpleasant decisions at times being sent home without such rewards. In any event, that issue just does not arise in the present proceeding because the company has not offered the flat to the accused, but on the contrary is aggrieved by the fact that he is not returning it and requests for legal redress by way of an order for its recovery. In the course of his arguments, Shri Shah was particularly severe on Shri Kerkar, the managing director of the company. He not only attacked him but he even made direct allegations against him. He sought to contend that Shri Kerkar has defrauded his client, that he has acted dishonestly and that he has even avoided coming to give evidence. On a perusal of the material before me, I am of the view that these accusations were thoroughly unjustified. To my mind, the company and Shri Kerkar have shown not only a v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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