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CASE NO.:

Appeal (crl.) 87 of 2001

PETITIONER:

J.K.(BOMBAY) LTD.

RESPONDENT:

BHARU MATHA MISHRA AND ORS.

DATE OF JUDGMENT: 18/01/2001

BENCH:

K.T. THOMAS & R.P. SETHI

JUDGMENT:

JUDGMENT

2001 (1) SCR 439

The Judgment of the Court was delivered by SETHI, J. Leave granted.

Whether the family members of an employee or an ex-employee of a company

can be proceeded with in a criminal court, convicted and sentenced for the

commission of offence under Section 630 of the Companies Act? (hereinafter

referred to as "the Act") is the question of law to be determined by us in

this appeal. Relying upon the judgment of this Court in Abhilash Vinod

Kumar Jain (Smt.) v. Cox & Kings (India) Ltd. & Ors., [1995] 3 SCC 732, it

has been argued on behalf of the company that the expression "officer or

employee" appearing in Section 630 of the Act would include all his family

members.

The admitted facts of the case are that one Mata Harsh Mishra, who is the

husband of respondent No. 1 and father of respondent No. 2, joined the

employment of the appellant-company as Trainee Supervisor in its plant, He

was allotted Flat No. 8 in Anil Co-operative Housing Society Ltd., and

possession delivered to him for the purpose of his residence during the

course of employment while he was in the service of the company. It was

made clear to the said employee that he was to remain in possession of the

premises only during his employment with the company and had to vacate the

flat as and when he ceased to be the employee of the company. The said Shri

Mishra tendered his resignation on 31st March, 1994 which was accepted with

effect from 4.4.1994 vide letter of the company dated 23.4.1994. He was

directed to hand over the charge of his work to the Production Manager and

vacate the flat in his possession given to him by virtue of his employment.

Despite notice, the erstwhile employee did not vacate the premises on the

pretext that as he had not been paid his dues, he had a right to remain in

occupation. On 16.5.1995, a complaint under Section 630 of the Act was

filed by the appellant in the court of Judicial Magistrate, Thane, against

said Shri Mishra, its ex-employee and the respondents 1 and 2 herein. The

respondents herein moved an application in the court of the Magistrate for

recall of the order of process. Their application was rejected by the Court

of the Judicial Magistrate, First Class, Thane on 12.4.1995. Revision

petition filed by them was also dismissed by the Additional Sessions Judge,

Thane which compelled the aforesaid respondents to file writ petition in

the High Court of Bombay which has been allowed vide the order impugned

herein. Section 630 of the companies Act Reads:

"630. Penalty for wrongful withholding of property,-(1) If any officer or

employee of a company-

(a) wrongfully obtains possession of any property of a company; or

(b) having any such property in his possession, wrongfully withholds it

or knowingly applies it to purposes other than those expressed or directed

in the articles and authorised by this Act;

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he shall, on the complaint of the company or any creditor or contributory

thereof, be punishable with fine which may extend to one thousand rupees.

(2) The Court trying the offence may also order 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, or suffer imprisonment, for a term which may

extend to two years."

The divergence of opinion between various High Courts regarding

interpretation of the expression "an officer or employee of a company"

appearing in Sub-section (1) of Section 630 of the Act was resolved by this

Court in Baldev Krishna Sahi v. Shipping Corporation of India, [ 1987] 4

SCC 361 holding that the expression "officer or employee of a company"

applies not only to existing officer or employee but also includes past

officers or employees where such officer or employee; either (a) wrongfully

obtains possession of any property, or (b) wrongfully withholds the same

after the termination of his employment. Explaining the position of law

this Court held:

"The beneficient provision contained in Section .630 no doubt penal, has

been purposely enacted by the legislature with the object of providing a

summary procedure for retrieving the property of the company (a) where, an

officer or employee of a company wrongfully obtains possession of property

of the company, or (b) where having been placed in possession of any such

property during the course of his employment, wrongfully withholds

possession of it after the termination of his employment. It is the duty of

the court to place a broad and liberal construction on the provision in

furtherance of the Object and purpose of the legislation which would

suppress the mischief and advance the remedy.

Section 630 of the Act which makes the wrongful withholding of any property

of a company by an officer or employee of the company a penal offence, is

typical of the economy of language which is characteristic of the

draughtsman of the Act, The Section is in two parts. Sub-s.(l) by clauses

(a) and (b) creates two distinct and separate offences. First of these is

the one contemplated by clause (a), namely, where an officer or employee of

a company wrongfully obtains possession of any property of the company

during the course of his employment, to which he is not entitled. Normally,

it is only the present officers and employees who can secure possession of

any property of a company. It is also possible for such an officer or

employee after termination of his employment to wrongfully take away

possession of any such property. This is the function of clause (a) and

although it primarily refers to the existing officers and employees, it may

also take in past officers and employees. In contrast, clause (b)

contemplates a case where an officer or employee of a company having any

property of a company in his possession wrongfully withholds it or

knowingly applies it to purposes other than those expressed or directed in

the articles and authorised by the Act It may well be that an officer or

employee may have lawfully obtained possession of any such property during

the course of his employment but wrongfully withholds it after the

termination of his employment. That appears to be one of the functions of

clause (b). It would be noticed that clause (b) also makes it an offence in

any officer or employee of a company having any property of the company in

his possession knowingly applies it to purposes other than those expressed

or directed in the articles and authorised by the Act. That would primarily

apply to the present officers and employees and may also include past

officers and employees. There is therefore no warrant to give a restrictive

meaning to the term 'officer or employee' appearing in Sub-section (1) of

Section 630 of the Act. It is quite evident that clauses (a) and (b) are

separated by the word 'or' and therefore are clearly disjunctive."

Again, this Court in Amritlal Chum v. Devoprasad Dutta Roy, [1988] 2 SCC

269; (Three Judge Bench), Atul Mathur v. Atul Kalra, [ 1989] 4 SCC 514 and

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Gokak Patel Vokart Ltd. v. Dundayya Gurushiddaish Hiremath, [1991] 2 SCC

141, interpreted the position of law and approved the dictum of this Court

in Baldev Krishna Sahi's case, In Abhilash Vinod Kumar Jain's case (supra)

this Court was concerned with the prosecution of the Segal representatives

of the deceased employee and in that context, it held;

"The logical deduction of the analysis of Section 630 of the Act in the

light of the law laid down by this Court is that:

(i) Clause (a) of the Section is self-contained and independent of clause

(b) with the capacity of creating penal liability embracing the case of an

existing employee or an officer of the company and includes a past officer

or a past employee of the company;

(ii) Clause (b) is equally independent and distinct from clause (a) as

regards penal consequences and its squarely applies to the cases of past

employees or officers;

(iii) the entitlement of the officer or employee to the allotted property

of the company is contingent upon the right and capacity of the officer of

the employee by virtue of his employment to continue in possession of the

property belonging to the company, under authority of the company and the

duration of such right is coterminous with his/her employment.

Thus, inescapably it follows that the capacity, right to possession and the

duration of occupation are all features which are integrally blended with

the employment, and the capacity and the corresponding rights are

extinguished with the cessation of employment and an obligation arises to

hand over the allotted property back to the company, where the property of

the company is held back whether by the employee, past employee or anyone

claiming under them, the retained possession would amount to wrongful

withholding of the property of the company actionable under Section 630 of

the Act. The argument of the learned counsel for the appellants that since

the provisions of Section 630 of the Act are penal in nature the same must

be strictly construed and, the parties which have not been expressly

included by the legislature in Section 630(1) of the Act, cannot by any

interpretative extension be included in the said provision, ignores the

situation that by a deeming Fiction, the legal representatives or heirs of

a past employee or officer, in occupation of the property of the company,

would continue to enjoy the personality and status of the employee or the

officer only.

This Court further held that Section 630 of the Act is intended to provide

speedy relief to the company where its property wrongfully obtained or

wrongfully withheld by an "employee or a officer" or a past employee and

officer" or "legal heirs or representative" deriving their colour and

content from such an employee or officer, in so far as the occupation of

the property belonging to the company, is concerned. The beneficial

provision would be defeated if the legal heirs or family members who

continue in possession of the allotted premises, are permitted to remain in

possession despite the cessation of the relationship of deceased employee

with the company. Answering the question referred to it, the Court held:

"Thus, our answer to the question posed in the earlier part of this

judgment is in the affirmative and we hold that a petition under S.630 of

the Act is maintainable against the legal heirs of the deceased

officer/employee for retrieval of the Company's property wrongfully

withheld by them after the demise of the employee concerned."

Stretching further the verdict of the Court in Abhilash Vinod Kumar Jain's

case, the learned counsel appearing for the appellant has submitted that as

legal heirs of the erstwhile employee can be prosecuted, the other family

members of such employee, living with him cannot escape their liability of

prosecution. The argument, though attractive on the face of it, is devoid

of any force when examined in depth in the light of the constitutional

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mandate and the legal provisions applicable in the case. The penal law

cannot be interpreted in a manner to cover within its ambit such persons

who are left out by the legislature. The position of the legal heirs of the

deceased employee cannot be equated with the family members of an erstwhile

employee against whom, admittedly, the criminal prosecution is launched and

pending. In criminal cases the law which entails conviction and sentence,

liberal construction, with the aid of assumption, presumption and

implications cannot be resorted to for the purpose of roping in the

criminal prosecution, such persons who are otherwise not intended to be

prosecuted or dealt with by criminal court. Accepting the contention of the

appellant would amount to the violation of fundamental right of personal

liberty as enshrined under Article 21 of the Constitution which declares

that no person shall be deprived of his life or personal liberty except

according to the procedure established by law. The paramount object of

Article 21 is to prevent the encroachment of the right of a person with

respect to his life and liberty, save in accordance with the procedure

established by law and in conformity with the provisions thereof. Personal

liberty envisaged under this Article means freedom from physical restraint

of a person by incarceration or otherwise. Agreeing with the plea of the

appellant would also be against the public policy, inasmuch as under

similar circumstances the companies would be authorised to resort to

harassment tactics by having recourse of arraigning minors and old members

of the family of its officer or employee in office or even past.

We are of the firm opinion that all the family members of an alive

'officer' or 'employee' of a company cannot be proceeded with and

prosecuted under Section 630 of the Act. The order impugned does not suffer

from any illegality, requiring our interference.

There is no merit in this appeal, which is accordingly dismissed.