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TMI Blog2004 (9) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and yet nothing was placed on record as to whether the occupants of the Chawls have vacated the said Chawls. The Official Liquidator was, therefore, directed to issue notices to all the occupants of the Chawls for vacating the rooms. The Court has further made it clear that there was no question of allowing them to buy the said Chawls at present, and as and when the entire property belonging to the Company (In Liquidation) was sold off, the said question could be considered by the Court. The Court has further observed that if the occupants were not vacating the Chawls, the Official Liquidator was directed to take appropriate actions in the matter for getting the vacant possession of the said Chawls from the concerned occupants. 4. Pursuant to the aforesaid order passed by this Court on 16-12-2002, the Official Liquidator has issued notice of eviction to about 77 occupants and in respect of remaining occupants whose premises were closed, notices were affixed. 5. On 23-12-2002, C.A. No. 203 of 2002 was filed by the Amruta Mills Tenaments Occupier Association seeking impleadment of the applicant as respondents in Company Application No. 249 of 2001. 6. After hearing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of Textile Labour Association - the applicant in Company Application No. 249 of 2001, Mr. D.S. Vasavada, learned advocate appeared and has submitted that ever since the Company went into liquidation, the Official Liquidator has not taken the possession of the 72 Chawls which were in fact owned by the erstwhile management of the Company in liquidation. He has further submitted that these 72 Chawls were the properties of the Amruta Mills Company (In Liquidation) and, therefore, the Official Liquidator should take the possession of all the 72 Chawls. About 72 workmen are residing in these Chawls and they are actually using these Chawls for the purpose of their residence. The Official Liquidator may be directed to negotiate with the occupants of the Chawls and to dispose of the Chawls with the permission of this Court so that the poor workmen may get the property at the reasonable price and the legal formalities may also be completed. 13. On behalf of the occupants, Mr. T.R. Mishra, learned advocate appeared for Amruta Mills Tenaments Occupier Association, Mr. A.S. Vakil, learned advocate appeared on behalf of the applicants in Company Application Nos. 21 of 2003 and 64 of 2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l has submitted that even thereafter several orders were passed by this Court in Company Application No. 249 of 2001 and the applicants have never been heard on the question whether the Official Liquidator was entitled to take back the possession of the Chawls/premises. All decisions have been taken by this Court in absence and without hearing the applicants or without ascertaining their rights, title and interest in the said Chawls. Even purported verification of the ownership of the Chawls undertaken by the Official Liquidator was behind the back of the applicants and that was undertaken during the time when the city of Ahmedabad was experiencing one of the worst communal riots. The order passed by this Court on 16-12-2002 was inconsistent with the order dated 12-2-2002 and as per the prayer (A) of judges summons of Company Application No. 249 of 2001, the Official Liquidator was straightaway directed to issue notices to all the occupants of Chawls for vacating the same, without there being any adjudication or hearing on prayer (A). This Court has observed that there was no question of allowing the occupants of the Chawls including the applicants to buy the said Chawls at present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake back the possession from the applicants without hearing them and such a decision is palpably wrong and not tenable at law. In this connection, he has relied on the decision of the Hon ble Supreme Court in the case of H.L. Trehan v. Union of India [1989] 1 SCC 764 wherein it is held that "The post-decisional opportunity of hearing does not subserve the rules of natural justice. Once a decision has been taken, there is a tendency to uphold it and a representation may not yield any fruitful purpose. The authority who embarks upon a post-decisional hearing will naturally proceed with a closed mind and there is hardly any chance of getting a proper consideration of the representation at such a post-decisional opportunity". He has, therefore, submitted that the order passed by this Court on 16-12-2002 in Company Application No. 249 of 2001 should appropriately be modified and the possession of the applicants be protected till the rights, title and interest of the Chawls are properly adjudicated or decided by the Competent Court. 19. Mr. R.M. Desai, learned advocate appearing for the Official Liquidator has submitted that the occupants of the Chawls have no right whatsoever to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such Officer or employee to deliver up or refund, within a time to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years. He has further submitted that the scope and ambit of section 630 of the Act has come up before the various Courts. 21. Mr. Desai has relied on the decision of the Bombay High Court in the case of Govind T. Jagtiani v. Sirajuddin S. Kazi [1984] 56 Comp. Cas. 329 wherein the Court has observed that : "Section 630 applies not merely to existing officers and employees of a company but also to ex-employees and ex-officers. The features and deduction which flow logically and inescapably on an analysis of section 630 are that : ( i ) Clause ( a ) of section 630 is self-contained and independent of clause ( b ) with the capacity of creating penal liability embracing the case of an existing employee or officer of the company. ( ii ) Clause ( b ) is equally independent and distinct from clause ( a ) as regards penal consequences squarely covering the case of a past employee or officer. ( iii ) The entitlement of an officer to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing officers or employees of a company but also to past officers or employees, if such officer or employee either ( a ) wrongfully obtains possession of any property of the company, or ( b ) having obtained such property during the course of his employment, withholds the same after the termination of his employment." (p. 1) 24. Mr. Desai has further relied on the decision of the Madras High Court in the case of P.V. George v. Jayems Engg. Co. (P.) Ltd. [1990] 2 Comp. LJ. 62 (Mad.) wherein it is held as under: "The term property used in section 630 of the Act is not at all defined by any of the provisions contained therein. It is, therefore, necessary to find out the real meaning that could be ascribed to the term property in the context in which it was used in the aforesaid section. For better understanding of the meaning of the word property as used in the section, one must have to understand the beneficent provisions adumbrated in that section. Accommodation is provided by the company as a condition of service to attract the best of talents. Therefore, once a person is lawfully employed in the company, he is given office accommodation for efficient discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r whether paying rent or not. If the company decides to seek possession under section 13(1) of the 1947 Bombay Act against the employee-tenant the company has to pursue the remedies before a competent court as provided under section 28 of the 1947 Bombay Act. The provisions of section 630 of the Companies Act, 1956, also provide a special remedy which is summary in nature against a person who ceases to be in the employment of the company who was given possession of the premises out of such service relation. The company has an option either to pursue the remedy provided under section 630 of the Companies Act or under section 13(1)( f ) under the 1947 Bombay Act. There are thus two remedies open to companies. Both provisions give different but concurrent remedies to companies. Even in the case of tenancy, the provisions of section 630 of the Companies Act are available to a company. The provisions of the 1947 Bombay Act and the provisions of section 630 of the Companies Act are required to be interpreted harmoniously so that the object of both the statutes is advanced and not defeated. To say that the provisions of section 630 cannot be invoked in a case of tenancy would be to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r employee of a company being possessed of company s property wrongfully withholds it from the general use and benefit of the company, he would be liable for prosecution. It is trite to state that this section applies equally to employees, past and present. Even if there are some doubts as to whether this provision would have application to a company in liquidation they would have application to a company in liquidation they would stand dispelled by Rule 9 of the Companies (Court) Rules, 1959 read with sections 446 and 456(2) of the Act, which states that all properties and assets of the company shall be deemed to be in the custody of the Court from the date of the order for the winding up of the company. Thereafter section 468 further specifies that the Court may, at any time after making a winding up order, inter alia require any officer or other employee of the company to deliver, surrender or transfer forthwith or within such time as the Court may direct to the Official Liquidator, any other property in his custody or under his control which the company prima facie entitled to. Keeping these provisions in mind, the Court has directed the Official Liquidator in this case to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction conferred on the High Court under section 446(2) of the Act, the Court has held that the object of section 446 of the Act is to save the company which is being wound up from unnecessary litigation and expenses and to protect its assets for equitable distribution amongst its creditors and its shareholders. The Court has further held that the contention that the applicant should be called upon to file a separate suit for recovering the property and cannot seek remedy by way of this application requires to be stated only to be rejected in light of the aforesaid settled legal position. As held by this Court the provision of sections 446(2) and 446(3) of the Act have been specifically incorporated to ensure that the Liquidator in course of winding-up is not required to file suits for recov- ering properties of the Company as otherwise it will become virtually impossible to order winding-up of a Company (in liquidation). The Court has further observed that under section 446 of the Act, the legislative intent to permit the High Court from initiating proceedings straightway as if they were proceedings of the Court of an appropriate jurisdiction is clear; that there should be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations making such prayers should be rejected forthwith. 33. Mr. A.C. Gandhi and Mr. Sandeep Singhi, learned advocate appearing for the Secured Creditors have also supported the stand taken by the Official Liquidator as well as by the I.F.C.I. Limited. 34. After having heard learned advocates appearing for the respective parties and after having considered the relevant statutory provisions of the Companies Act, 1956 as well as after considering the decided case law on the subject, the Court is of the view that the occupants of the Chawls shall not have any right to occupy their respective Chawls once the company goes into liquidation. Since their occupation was based on the employer-employee relationship and as soon as the Company goes into liquidation, as per the provisions contained in section 445(3) of the Companies Act, 1956, that relationship has come to an end. Section 468 of the Companies Act, 1956 provides a summary procedure for enabling the liquidator to avoid expensive litigation in discharge of one of his primary duties, namely, collection of the assets of the Company. When the company is prima facie entitled to any property, there is no reason why the Court s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amounting to illegally or unlawfully withholding the properties of the company in liquidation and the duty is cast upon them to hand over the vacant and peaceful possession to the Official Liquidator. Over and above this, section 630 specifically states that it would amount to a criminal offence for which they are liable to be criminally prosecuted. Even for getting eviction, the Liquidator has not to file any suit for eviction or initiate any other proceedings. On an application filed by the liquidator or by any creditor or by the contributory of the Company, the Court can pass such order of eviction. In the present case, the Textile Labour Association representing workers being Creditors having pari passu charge over the assets of the Company have filed Company Application No. 249 of 2001 wherein this Court has issued notice for eviction and while exercising the powers under section 446 of the Companies Act, 1956, the Court has every power to issue suitable direction looking to the facts involved in the matter. Even while court exercises its power under section 446 of the Act, the pendency of proceedings before other forums such as Civil Courts would not prevent this Court fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( supra ) that the person who is in occupation of the premises belonging to the Company, even after the termination of its employment with the Company is a trespasser and the proceedings under section 446 of the Act are due process of law , and the trespasser as such can be directed to be evicted, and such direction can never be said to be without due process of law. 38. This Court is in complete agreement with the above guiding principles and holds that the possession of the occupants of the Chawls is an illegal possession and no protection can be granted to them for retaining such illegal possession. This Court has an ample power to issue direction to evict the occupants from such Chawls while exercising its original jurisdiction in an application moved either by the Official Liquidator or by any Creditor or contributory of the Company in liquidation and for that purpose, the Company in liquidation through its liquidator, has neither to file any suit nor criminal complaint. The Court, therefore, does not see any infirmity in issuance of direction to the Official Liquidator to take possession of the Chawls from the occupants forthwith and for that purpose, he is also permitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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