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CASE NO.:

Appeal (crl.) 712 of 2005

PETITIONER:

SHUBH SHANTI SERVICES LTD.

RESPONDENT:

MANJULA S.AGARWALLA & ORS

DATE OF JUDGMENT: 11/05/2005

BENCH:

P. VENKATARAMA REDDI & P.P. NAOLEKAR

JUDGMENT:

J U D G M E N T

(Arising out of SLP (Crl.) No. 4247 of 2004)

P.P. NAOLEKAR J.

Leave granted.

This appeal is directed against the judgment and order dated

8.4. 2004 passed by the High Court of Bombay in Crl. Appeal

No. 48 of 2000 acquitting the respondents Mrs. Manjula S.

Agarwalla, Respondent No.1 and Ms. Anisha S. Agarwalla,

Respondent No.2 of the offence punishable under Section 630

of the Companies Act,1956.

The complainants, viz., Herdillia Chemicals Ltd., non-

chemical business was de-merged and vested in Shubh Shanti

Company Ltd., by a Scheme of arrangement, approved by the

Bombay High Court. Hence,, M/s. Shubh Shanti Services

Limited came to be substituted in place of M/s. Herdillia

Chemicals Ltd. as appellants during the pendency of the

appeal before High Court.

Brief facts of the case are that the complaint was filed by the

Company on 13.1.95 on the allegation that one Shri Suresh

Chander Agawalla, husband of Respondent No.1 and father of

respondent No.2 was employed with the appellant Co. since

1971 till his death on 2nd of November 1992. He was appointed

Managing Director of the appellant Co. for a period of five

years with effect from 15th of June 1988. Flat No.25 in a

building called "Sonmarg" at 7B, Jagmohandas Marg,

Mumbai, owned and possessed by the appellant-company was

allotted to late Shri S.C. Agarwalla on 10th of March 1975 to be

used for residential purpose for himself and members of his

family during the period he was in service of the appellant.

Board of Directors had extended the term of Shri S.C.

Agarwalla as Managing Director of the Company upto 14th of

June 1993. However, unfortunately, on 2nd of November 1992,

Shri S.C. Agarwalla died when he was whole time Managing

Director of the appellant-company. Respondents 1 and 2 were

residing with him in Sonmarg flat being members of his family.

Even after the death of Shri Agarwalla, they continued to

occupy the said flat. It was alleged in the complaint that after

the death of Shri Agarwalla, respondents were bound to vacate

and handover the vacant possession of the said flat to the

appellant-company but because of the critical health conditions

of Respondent No.1, the appellant, on humanitarian grounds,

did not take any step to get the flat vacated for some time .

The appellant-company by its letter dated 28th of December

1993 demanded possession of the flat within 45 days of the

receipt of the letter from the respondents. In response,

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Respondent No.1 by her letter dated 7th February 1994,

addressed to the Secretary & Financial Controller of the

appellant-company informed the appellant-company that she

was staying in the flat because the Chairman had asked her to

do so till the flat in another building was made available to her.

The respondent by a subsequent communication addressed to

the Chairman, referred to the assurance given to her that she

would not be called upon to vacate the Sonmarg flat till the sale

of Blue Heaven flat is executed as per separate agreement dated

10th of February 1978, entered into between Shri S.C.

Agarwalla and the Company for purchase of Blue Heaven flat

and informed that her late husband had the right to purchase the

Blue Heaven flat and that the assurance given by the Chairman

should be adhered to, by the appellant, to permit her to remain

in possession of the Sonmarg flat till the sale deed is executed

in respect of Blue Heaven flat.

The appellant Co., thereafter, again by a registered letter

dated 9th of November1994, addressed to both the respondents,

called upon them to vacate the flat and handover the

possession. By this communication, the appellant also

specifically conveyed to the first respondent about its decision

that Blue Heaven flat cannot be sold and transferred. As the

respondents did not comply with the request made by the

appellant, a complaint was filed in the Court of Addl. Chief

Metropolitan Magistrate, 40th Court at Girgaum, Bombay under

Section 630 of the Companies Act, 1956 alleging that

respondents being the legal heirs of late Shri S.C. Agarwalla

who was allotted the property of the company for residential

purpose for himself and members of his family whilst he was in

service of the said company, have wrongfully withheld and

continued to withhold wrongfully by refusing to vacate and

handover possession thereof. Thus, they have committed an

offence, punishable under Section 630 of the Companies Act

read with Section 109 of the Indian Penal Code.

From the case set up by the respondent and the evidence led,

the case of the respondents is that there were discussions

between them and the Chairman of the Board of Directors of

the appellant and the Chairman, Board of Directors has assured

them to continue to stay in Sonmarg flat until such time as the

contract in respect of sale of Blue Heaven flat was

implemented and therefore the possession of the respondent of

Sonmarg flat is not unauthorized or wrongful.

Before complaint was filed, a Civil Suit No.7 of 1995 was

filed by Respondents 1 and 2 against appellant company on

23.12.1994 in the High Court for specific performance of the

contract dated 10th of February 1978 for sale, transfer and to

hand over possession of Flat No.33, 3rd Floor, Blue Heaven

Cooperative Housing Society Ltd., Mount Pleasant Road,

Bombay. In the suit further relief claimed is that the defendants

be ordered and decreed not to dispossess or interfere with the

occupation and residence of the 1st plaintiff and her family in

Sonmarg flat, Napean Sea Road, Bombay until such time as the

Defendant company transfer and handover vacant possession of

aforesaid Blue Heaven flat. In the said civil suit the High Court

on 10th of January 1995 passed an interim order "counsel for

the defendant has made a statement that the plaintiff shall not

be dispossessed from the premises in question except by due

process of law. The statement is accepted".

Subsequent to the complaint filed under Section 630,

appellant company has also filed a suit in the High Court (Suit

No. 2391 of 1997) for possession of Sonmarg flat and other

reliefs against the respondents. The High Court by its order on

16th of November 1998 passed an order for appointment of the

Court Receiver for Flat No.67-B, 25 Sonmarg, Nepean Sea

Road, Mumbai and Receiver was placed in possession of the

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flat. It was agreed between the parties that Respondent No.1

was in possession of the flat. The High Court directed that the

Court Receiver shall take symbolic possession of the flat from

Respondent No.1. The Court Receiver shall appoint

Respondent No.1 as his agent to be in actual possession of the

flat during the pendency of the suit. The Court Receiver shall

fix the amount of royalty payable by Respondent No.1 for

occupation of the flat. While fixing the royalty, the Court

Receiver shall take into consideration of the contentions urged

by both the parties. Pending fixation of the amount of royalty

by the Court Receiver, an ad hoc amount of royalty is fixed at

Rs.25,000/- per month. The respondent shall deposit the arrears

of royalty at the ad hoc rate from June 1997 to November 1998.

By this order the possession of the Respondent No.1 was

recognized of the Sonmarg flat and the Court Receiver was

given symbolic possession of the flat and possession of the

Respondent No.1 was to be treated as the agent of the Receiver

to remain in actual possession of the flat during the pendency of

the suit.

After issuance of summons both parties led evidence. The

Magistrate dismissed the complaint holding that the

respondents are in possession of Sonmarg flat as they have not

handed over possession of the Blue Heaven flat for which they

were required to file a suit for specific performance. The

respondents are under bonafide impression that they have right

to continue in the said flat in Sonmarg till they get possession

of the flat in Blue Heaven as per assurance given by Chairman

of the Company and thus it cannot be said that they have

wrongfully withheld the property of the company. It was

further held that the matter is pending consideration before the

civil court and, therefore, the Court cannot pass order of

restoration of possession to the appellant Co. till rights of the

parties are ascertained.

The appellant-company preferred an appeal before the High

Court. The High Court dismissed the appeal holding that the

respondents have made out a bona fide, probable and plausible

defence that they were allowed to occupy the flat at Sonmarg

by the Chairman of the Board of Directors till the flat in Blue

Heaven is made available to them. Respondents shall

ultimately succeed in the suit for specific performance or not is

another matter. The respondents have made out a case that an

assurance was so given and thus the appellant has failed to

prove that the respondents are in wrongful possession of the flat

in Sonmarg. Apart from this, the High Court has further held

that a suit for recovery of the possession of the flat in Sonmarg

filed by the appellant-company, a Court Receiver has been

appointed and the respondent has been appointed as an agent of

the Court Receiver and therefore also it cannot be held that the

respondents are in wrongful possession of the premises nor can

it be said that the respondent have no right to continue in

occupation of the flat in Sonmarg. The High Court has said that

in a suit for specific performance of the agreement filed by the

respondents, the High Court has granted an injunction

prevented the respondents from being dispossessed except by

due process of law and Section 630 proceedings being, penal in

nature, cannot be said to be the "due process of law". Any

order in the proceedings initiated by the appellant-company for

recovery of possession of the Sonmarg flat from the

respondents would be in breach of express injunction order

issued by the Court. The High Court has dismissed the appeal

filed by the appellant company. Consequently complaint filed

by the appellant stands dismissed.

Learned counsel for the appellant-company has urged that the

High Court has not properly understood the scope and ambit of

Section 630 of the Companies Act and thereby committed an

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error in holding that the proceedings under Section 630 of the

Companies Act could not be encompassed within its fold "due

process of law" not being civil proceedings. The provision

being penal in nature cannot be taken recourse to for

possession of the flat when the matter relating to flats in

question are pending in the Court.

Before we embark upon the discussion, we may first notice

the scope of language of Section 630 of the Companies Act.

The said Section reads as under:

"S.630:- Penalty for wrongful withholding of property \026

(1) If any officer or employee of the 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 authorized by this

Act;

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

contributory thereof, be punishable with fine which may extend

to ten 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, to

suffer imprisonment for a term which may extent to two years"

From the bare reading of the Section, it is apparent that Sub-

S.(1) is in two parts. Sub-s.(1) of clauses (a) and (b) creates

two different and separate offences. Clause (a) contemplates a

situation wherein an officer or employee of the company

wrongfully obtains possession of any property of the company

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

whereas clause (b) contemplates a case where an officer or

employee of the company having any property of the company

in his possession , wrongfully withholds it or knowingly applies

it to purposes other than those expressed or directed in the

Articles and authorized by the Company. Under this provision,

it may be that an officer or an employee may have lawfully

obtained possession of any property during the course of his

employment, still it is an offence if he wrongfully withholds it

after the termination of his employment. Clause (b) also makes

it an offence , if any officer or employee of the 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 authorized by the Act. This Section

does not make any difference between the movable and

immovable property. The property in Section 630 includes

both movable and immovable property. Sub-s.(2) of Section

630 authorizes the Court trying the offence, in its discretion to

order any such officer or employee of the company which

includes past or present, or his or her legal representative, to

deliver, within a specified time, possession of such property

which has been wrongfully obtained or wrongfully withheld or

knowingly misapplied. In default, the Court may impose a

punishment of imprisonment for a term which may extend to

two years.

In the matter of Baldev Krishna Sahi vs. Shipping

Corporation of India Ltd. (1987) 4 SCC 361 this Court

resolved the conflict and has held that the expression `officer'

or `employee' of the company applies not only to the existing

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officer or employee but also includes past officer or employee

where such officer or employee either wrongfully obtained or

wrongfully withheld or knowingly misapplied any property

after the termination of his employment. This decision was

approved by a Three Judge Bench of this Court in Amrit Lal

Chum vs. Devoprasad Dutta Roy (1988) 2 SCC 269 where

it is held that Section 630 of the Act makes it an offence if an

officer or employee of the company who was permitted to use

the property of the company during his employment wrongfully

retains or occupies the same after the termination of his

employment and that there is no warrant to give a restrictive

meaning to the term "officer or employee" appearing in sub-

s.(1) of Section 630 of the Act as meaning only an existing

officer or an existing employee and not those whose

employment had been terminated or had otherwise come to an

end.

While interpreting and laying down the object of the

provision of Section 630 of the Companies Act, this Court in

the matter of Atul Mathur vs. Atul Kalra (1989) 4 SCC 514

has emphasized that the object of the provision of Section 630

of the Act is to retrieve the property of the company and that

even though the provisions are penal in nature, the object of

the provision is required to be given a purposive interpretation

so as not to choke the beneficent provision.

In the matter of Abhilash Vinodkumar Jain (Smt.) vs Cox

& Kings (India) Ltd. and others (1995) 3 SCC 732, a

Division Bench of this Court explained the object of Section

630 of the Companies Act and said: (Para 15 at Page 740)

"Even though Section 630 of the Act falls in Part XIII of the

Companies Act and provides for penal consequences for

wrongful withholding of the property of the company, the

provisions strictly speaking are not penal in the sense as

understood under the penal law. The provisions are quasi-

criminal. They have been enacted with the main object of

providing speedy relief to a company when its property is

wrongfully obtained or wrongfully withheld by an employee or

officer or an ex-employee or ex-officer or anyone claiming

under them."

The Court has explained and interpreted the term `officer' or

`employee' of the Company in Section 630 of the Companies

Act and said that it would include the legal heirs and

representatives of the employee or the officer concerned,

continuing in occupation of the property of the company after

the death of the employee or the officer.

A Three Judge Bench of this Court in Lalita Jalan and

Another vs. Bombay Gas Co. Ltd. and others (2003) 6

S.C.C. 107 has drawn a distinction between the provisions of

the Statute which are purely of a penal nature and the

Companies Act, particularly provisions of Section 628 to

Section 631 of the Companies Act and held: (Paragraphs 17

and 19)

"The purpose of criminal justice is to award punishment. It is a

method of protecting society by reducing the occurrence of

criminal behaviour. It also acts as a deterrent. Where the

punishment is disabling or preventive, its aim is to prevent a

repetition of the offence by rendering the offender incapable of

its commission. The Companies Act is entirely different from

those statutes which basically deal with offences and

punishment like the Indian Penal Code, the Terrorist and

Disruptive Activities (Prevention) Act etc. It makes provision

for incorporation of the companies, its share capital and

debentures, management and administration, allotment of

shares and debentures, constitution of Board of Directors,

prevention of oppression and mismanagement, winding up of

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the company etc. The heading of Part XIII of the Companies

Act is "General" and a few provisions therein, namely, Section

628 to 631 create offences and also prescribe penalty for the

same. Having regard to the purpose for which Section 630 has

been enacted viz. to retrieve the property of the company and

the salient features of the statute (Companies Act) it is not

possible to hold it as a penal provision as the normal attributes

of crime and punishment are not present here. It cannot be said

to be an offence against the society at large nor is the object of

awarding sentence preventive or reformative. In such

circumstances the principle of interpretation relating to criminal

statutes that the same should be strictly construed will not be

applicable"

"Even otherwise as shown earlier, the wrongful withholding of

property of the company has been made punishable with fine

only. A substantive sentence or imprisonment can be awarded

only where there is a non-compliance with the order of the

court regarding delivery or refund of the property. Obviously,

this order would be passed against a specific person or persons

whether an employee, past employee or a legal heir or family

member of such an employee and only if such named person

does not comply with the order of the court, he would be liable

to be sentenced which may extend to imprisonment for two

years. At this stage, namely, where the court would award a

substantive sentence of imprisonment for non-compliance with

its order the question of enlarging or widening the language of

the section cannot arise as the order would be directed against a

specifically named person"

From above narration of authorities, it is absolutely clear that

Section 630 of the Companies Act, does not only cover cases of

the present employee or officer of the company and this

provision strictly speaking is not penal in the sense as

understood under penal law. The main purpose to make action

an offence under Section 630 is to provide a speedy and

summary procedure for retrieving the property of the company

where it has been wrongly obtained by the employee or officer

of the company or where the property has been lawfully

obtained but unlawfully retained after termination of the

employment of the employee or the officer and to impose a fine

on the officer or employee of the company if found in breach of

the provision of Section 630 of the Companies Act and further

to issue direction if the Court feels it just and appropriate for

delivery of the possession of the property of the company and

to impose a sentence of imprisonment when there is non

compliance of the order of the Court regarding delivery or

refund of the property of the company.

On 23.12.1994, Respondents 1 and 2 filed a civil suit No.7 of

1995 for specific performance of the contract for transfer of the

flat at Blue Heaven Cooperative Housing Society. The High

Court had passed an order with the consent of the parties that

the plaintiff i.e. Respondent No.2 shall not be dispossessed

from the premises i.e. flat at Sonmarg except with due process

of law. The proceedings taken up by the appellant in the Court

under Section 630 of the Companies Act were held not to be the

proceedings under due process of law. We have already seen

that Section 630 of the Companies Act provides for summary

legal remedy for seeking possession of the property of the

company. Due process of law in the present context would

ordinarily mean such an exercise of power by the parties as the

settled principles of law permit and/or a course of legal

proceedings, according to those rules and principles which have

been established in our systems of jurisprudence for the

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enforcement and protection of private rights. Due process of

law would in short mean a procedure established by law, which

is a procedure fixed or laid down in law. When the High Court

has passed an order of injunction, in the aforesaid terms, what is

meant by the High Court is, that the Company shall not take

forceable possession of Sonmarg flat during the pendency of

the suit and Company was given liberty to take steps for

possession as is permissible under law including the provisions

of any Statute giving right to obtain possession to the company

in the facts and circumstances of the case. The company can

prove the unlawful possession of the property by the employee

or his or her legal representative after the demise of the

employee or an officer of the company. The company has the

remedy to initiate action under Section 630(1) and on

conviction by the Competent Criminal Court it can approach

the same Court for directing delivery of possession which sub-

Section (2) of Section 630 of the Companies Act provides. The

remedy is provided in the Statute itself and the High Court's

order by no stretch of imagination can be read to mean that the

Company has to necessarily approach the civil court only for

obtaining possession of the Sonmarg flat and that the remedy

available under the Companies Act cannot be resorted. In our

opinion the decision of the High Court that Section 630 of the

Companies Act being penal in nature, the proceeding

thereunder cannot be construed to be a proceeding taken in due

process of law, cannot be sustained. Filing of civil suit for

possession by the Company does not deprive the Company of

the right to institute prosecution under the Companies Act and

incidentally get an order for delivery of possession. It is stated

that the civil suit was filed by way of abundant caution as well

as to obtain reliefs which cannot cannot be granted by a

Criminal Court trying an offence under Section 630.

The next important question is whether the possession of

respondents of the property belonging to the company,

namely, the Sonmarg flat, after the death of Shri S.C.

Agarwalla, is unlawful and unauthorized and therefore

wrongful. Both the Courts, namely, the Court of Magistrate

and the High Court on appreciation of the material placed

before them have clearly held that after the death of Shri

Agarwalla, on the basis of assurance given by the Chairman of

the Board of Directors of the appellant-company, Shri Goenka

to Respondent No.1 the said flat is being occupied by the

Respondents. We have summarized the High Court's ultimate

finding on this issue on the question of assurance given by

Chairman Shri Goenka to Respondent No.1. The learned

counsel for the appellant took us through the judgment of High

Court and the record in considerable detail for the purpose of

disputing this finding. Counsel for the appellant could able to

point to scarcely any error in this finding based on evidence on

record. He, however, submitted, that, in relying on this finding,

the Judge has drawn entirely wrong inference. The substance

of his full and careful argument in this context may be

summarized as follows:

It is urged by the learned senior counsel for the

appellant that the High Court has failed to appreciate that the

permission, if any, given to Respondent No.1 to live in

Sonmarg flat till the possession of the flat at Blue Heaven was

delivered to respondents, by the Chairman Shri Goenka, being

without any authority of law and being outside the powers

vested in the Chairman, would not be binding on or

enforceable against the company. It is submitted that those

powers could only be exercised by the Board of Directors or by

Chairman only with specific authorization to that effect by the

Board of Directors. Countering this argument, it is urged by

the learned counsel for Respondents 1 and 2 that the findings

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arrived at by both the courts below that possession of

Respondents 1 and 2 is permissible and not wrongful as the

respondents have been assured by the Chairman of the

Company to continue to live in the flat at Sonmarg till the

possession of the flat at Blue Heaven is delivered to them is

based on proper assessment of relevant material on record and

does not warrant any interference by this Court. The

respondents' possession of the flat being permissive cannot be

held to be wrongful to attract the provisions of Section 630 of

Companies Act.

The question really is whether the Chairman of the Board of

Directors of the Company has the authority to give such an

assurance to Respondents 1 and 2 when he met them at the

condolence meeting after the demise of Shri S.C. Agarwalla,

which could bind the company and thereby could it be taken as

a permission given by the company to respondents 1 and 2 to

reside in Sonmarg flat and thereby their possession could be

said to be a lawful possession. In the matter of company

affairs, Directors act as a body and collectively as a Board.

Any Director acting individually has no power to act on behalf

of the company in respect of any matter except to the extent to

which any power or powers of the Board have been delegated

to him by the Board within the limit permitted by the

Companies Act or any other law. The position of the Chairman

of the Board of Directors is not substantially different from an

individual Director. Under the Companies Act, Chairman of

the company does not have any special or extraordinary rights

to be exercised by him without being authorized by the Board

of Directors. The Board of Directors of course have an

authority to delegate the power or authority to act for and on

behalf of the company to the Chairman of the Board of

Directors.

Section 291 of the Companies Act authorizes the Board of

Directors of the Company to exercise such powers or of such

acts or things as the company is authorized to exercise and do

such acts or things, except in the matter where the power is to

be exercised by the company in general meeting. The exercise

of the powers by the Board shall be subject to the provisions

contained in the Companies Act or any other Act or in the

Memorandum or Articles of the company. Therefore, under

Section 291 of the Companies Act, the action of the Board of

Directors should be in conformity with the provisions of the

Company Law or any other enactment or in conformity with

the memorandum or articles of association of the company. It

is the specific case of the respondents which has been found

correct by the Courts that they are holding possession of the

company's flat at Sonmarg on the oral assurance given by Shri

Goenka, Chairman of the Board of Directors that they can

continue to reside in the said flat until the possession of the flat

at Blue Heaven Cooperative Society is given to them.

Admittedly the flat at Sonmarg belongs to the Company. Shri

S.C. Aggarwalla, husband of Respondent No.1 and father of

Respondent No.2 was the ex employee of the Company. He

expired when he was in the employment of the company and

respondents 1 and 2 were residing in the flat after the demise of

Shri Aggarwalla as his heirs. Thus it is for Respondents 1 and

2 to show the authority of Shri Goenka to bind the company on

the basis of the oral assurance given to them by him to retain

the possession of the flat. The High Court has not referred to

any evidence to that effect led by the respondents, nor there is

any finding that the Board of Directors have authorized the

Chairman Shri Goenka to give such an assurance for and on

behalf of the company.

On 28th of December 1993 a letter was sent by appellant

requesting Respondent No.1 to vacate the premises and

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handover peaceful possession of the premises within 45 days of

the receipt of the letter. The contents of the letter are that Shri

S.C. Agarwalla was occupying the premises as a facility

granted to him by the company until he was in the employment

of the company. On account of the demise of Shri Agarwalla,

the company deferred the request for vacation of the said

premises; that more than a year has lapsed since the demise of

Shri Agarwalla, it is essential for the company to take

possession of the same. The correspondence placed on record

by parties also does not indicate that the Chairman of the

Company Mr. Goenka gave an assurance on the basis that he

has been authorized to do so by the Board of Directors. In the

absence of any authority to the Chairman by the Board of

Directors to act for and on behalf of the company, the assurance

given by him to the respondents would not bind the company,

nor it will create a binding agreement between the parties,

namely, Respondents 1 and 2 and the company to permit the

respondents to remain in possession even after the death of Shri

Agarwalla, of the flat in Sonmarg. Apart from this, the Board

of Directors itself could exercise the powers in accordance with

the memorandum of association or the articles of the company.

Any power exercised beyond the memorandum or the articles

of the company would not bind the company. Any assurance

given by the Board of Directors either should be authorised

object of the company by the memorandum of association or

the articles of the company or its purpose should be reasonably

ancillary or incidental to carrying on the companies business.

Evidence produced on record indicates that agreement was

entered into between the company and husband of the

respondent No. 1 regarding Blue Heaven flat. Late Shri

Agarwalla was old employee of the company since 1971. He

expired on 2.11.1992 and assurance was given by the chairman

to widow of ex employee with whom he had long standing

relation, when he went to see her to console her on 4.11.92,

barely two days after the death of Shri Agarwalla. Such

evidence in our opinion irresistibly point, predominant, if not,

the only consideration operating in the mind of chairman was

to console the widow and to permit her to live in the flat for

some time. The assurance given to respondents 1 and 2 by the

chairman of the company has more at a gratuitous and

compassionate flavour and less to do with the interest of the

company in mind. Moreover, it is difficult to comprehend how

the chairman could promise on behalf of the Company that the

respondents will be permitted to remain in flat till delivery of

flat of Blue Heavan, when he himself was not sure of the time

the company would get the possession of the Blue Heaven flat.

That apart, the act of the Chairman cannot be construed to be

one done incidental to the business of the Company or as a

matter of necessity.

After the death of Shri Agarwalla on 2.11.1992, the

respondents 1 and 2 remained in possession of the company's

Sonmarg flat. Admittedly they were not in employment of the

company nor company has authorized them to remain in

possession of the same particularly after notice dated 9.11.1994

to vacate the premises and handover the possession to the

company. The possession of the company's flat by the

Respondents, after the service of notice to vacate the premises

by the company, is wrongful withholding of the property of the

company. The respondents by having wrongfully withheld the

possession of the company's flat and not delivering the

property to the company, have committed an offence. The

interim order of the High Court dated 16.11.1998 in the civil

suit filed by the appellant-Company does not wipe out the

offence committed already for which criminal complaint was

filed. Subsequent to that order, the possession may not be

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wrongful, but on the date of complaint and till the date of that

order, the Respondents did wrongfully withhold that property,

attracting the offence under Section 630(1). Having regard to

the factual position of the case, we think that imposition of fine

of Rupees One thousand each would be a proper punishment

for wrongful withholding the Sonmarg flat. Accordingly,

respondents 1 and 2 are sentenced to pay fine of Rupees one

thousand each. We would like to make it clear that so long as

order of the High Court dated 16.11.1998 in Civil Suit No.2391

of 1997 \026 M/s. Herdillia Chemicals Ltd. versus Smt. Manjula

Agarwala and others, appointing the Court Receiver and

delivering him symbolic possession, and actual possession as

agent of Receiver to Respondent No.1 stands, no direction can

be given under Section 630(2) for delivery of actual possession

of Sonmarg flat to appellant. It is of course open to the

petitioner to approach the Civil Court for suitable orders. The

High Court may dispose of both the suits viz., Suit No.7/95 and

2391/97 expeditiously, as far as possible within one year.

For the aforesaid reasons, the appeal is partly allowed.

The judgment and order of the High Court and that of the Addl.

Chief Metropolitan Magistrate, 40th Court at Girgaum, Bombay

are set aside. However, in the facts and circumstances of the

case, we direct the parties to bear their own costs.