Full Judgment Text
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PETITIONER:
ATUL MATHUR, DIVISIONAL SALES MANAGER OFJENSON AND NICHOLSON
Vs.
RESPONDENT:
ATUL KALRA AND ANR.
DATE OF JUDGMENT08/08/1989
BENCH:
NATRAJAN, S. (J)
BENCH:
NATRAJAN, S. (J)
PANDIAN, S.R. (J)
CITATION:
1989 SCR (3) 750 1989 SCC (4) 514
JT 1989 (3) 350 1989 SCALE (2)239
ACT:
Companies Act 1956--Section 630---Officer or employee
of Company--Refusing to vacate flat after resignation from
service-Prosecution on complaint--Whether maintainable.
HEADNOTE:
The appellant-Company took a fiat No. 84, Mehr-Dad,
Cuffe Parade, Bombay, from its owner Mehdi Mandil on leave
and licence basis for the residence of its Officers’/Employ-
ees’. The first Respondent, Divisional Manager of the Compa-
ny at Bombay, acted as power of attorney of the Company and
executed the agreement with the land-lord for leave and
licence initially for a period of 11 months renewable for a
total period of 66 months. The agreement also provided for
an advance payment of Compensation amounting to Rs. 16,500
monthly compensation of Rs. 1500 and a deposit of
Rs.3,50,000 to be returned at the end of the licence period
free of interest. The company complied with all the terms of
the agreement.
On 1.11.80, the appellant Company allowed the first
Respondent to occupy the flat as company’s employee. Three
years later i.e. on 23.3.84, the first Respondent filed a
suit in the Court of Small Causes Bombay against the Company
and the owner of the flat for a declaration that he was the
actual licencee of the flat and for a permanent injunction
to restrain the defendants from interfering with his posses-
sion of the flat. He based his claim as a licencee on the
basis of two letters dated 25.1.84 and 1.2.84 written by the
Manager of the Company, one Mr. Jain. Three days after
filing the said suit, first Respondent resigned and his
letter of resignation was accepted by the company on
27.3.84.
Since the first Respondent, ex-employee of the company
did not vacate the flat, the company filed a complaint
against him under Section 630 of the Companies Act before
the_ Addl. Chief Metropolitan Magistrate, Bombay. The Com-
plaint was filed by Mr. Atul Mathur, as attorney of the
company, who by then had taken over the place vacated by the
first respondent.
751
The trial Magistrate found the first respondent guilty
under Section 630 of the Company’s Act and sentenced him to
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pay a fine of Rs. 1,000 and directed to deliver vacant
possession of the fiat to the company. In lieu of payment of
fine aforesaid, first respondent was directed to undergo
simple imprisonment for 3 months.
The first respondent preferred an appeal to the Session
Court against the order of the Trial ’Magistrate. By his
order dated 22.10.86, the Addl. Sessions Judge, Greater
Bombay dismissed the appeal. Thus both the trial court as
also the first appellate Court concurrently found that the
company was the real licencee.
Thereupon the first Respondent filed a Petition under
Article 227 of the Constitution before the High Court, which
later, he was permitted to convert as one under Sec. 482 of
the code of criminal procedure. The first Respondent con-
tended before the High Court:
(i) That the complaint was not properly filed inasmuch
as the complainant was not duly authorised by the company
which irregularity vitiated the proceedings; (ii) That the
Addl. Chief Judl. Magistrate had no jurisdiction to adjudi-
cate such a complicated matter in summary proceedings under
Section 630 of the Companies Act, and (iii) The Addl. Ses-
sions Judge had wrongly cast the burden of proof on the
accused.
The High Court rejected the contentions (1) and (3) and
came to the conclusion that the letters written by Mr. Jain
afforded basis for the first respondent to bona fide dispute
the company’s claim for possession of the flat. The High
Court also took the view that the first respondent having
filed civil suit earlier in point of time, the Criminal
Court ought to have stayed its hand and allowed the Civil
Court to adjudicate upon the issue.
Damodar Das Jain v. Krishna Charan Chakraborti & Anr.,
[1985] 57 Com. Cases.
Aggrieved by the High Court’s order allowing the first
Respondent’s Writ Petition, the company has filed this
appeal by special leave and the question that fails for
determination by the Court is whether the High Court was
right in reversing the Judgments of the Courts below in a
matter arising under Section 630 of the company’s Act in
exercise of its powers under section 482, Cr.P.C.
Allowing the appeal and granting time to the first Respond-
ent till
752
30.9.89 to vacate the flat in question, this Court,
HELD: The term "Officer or Employee" m Section 630 of
the Company’s Act applies not only to existing officers or
employees but also to past employees or officers if such
officer or employee either wrongfully obtains possession of
any property or having obtained the possession during his
employment withholds the same after the termination of his
employment. Sh. Baldev Krishna Sahi v. Shipping Corpn. of
India Ltd., [1987] IV SCC 361 and Amrit Lal Chum v.Devo
Prasad Dutta Roy, [1988] 2 SCC 269. [758C]
Merely because the first respondent had schemingly filed
a suit before tendering-his resignation, it can never he
said that the Civil Court was in seisin of a bona fide
dispute between the parties and as such the Criminal Court
should have stayed its hands when the company filed a com-
plaint under Section 630. If a view is mechanically taken
that whenever a suit has been flied before a complaint is
laid under Section 630, the Criminal Court should not pro-
ceed with the complaint, it would not only lead to miscar-
riage of justice but also render ineffective the salutory
provisions of Section 630. [763E-F]
What has to he seen in a complaint under Section 630 is
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whether there is "no dispute or no bona fide dispute" re-
garding a property claimed by the company between the compa-
ny and its employee or ex-employees. It is needless to say
that every dispute would not become a bona fide dispute
merely because the company’s claim to possession is refuted
by an employee or ex-employee of the company. As to when a
dispute would amount to a bona-fide dispute would depend
upon the facts of each case. [764E]
The Court set aside the judgment of the High Court and
restored those of the Additional Chief Metropolitan Magis-
trate and the Addl. Sessions Judge. [766C]
Damodardas v. Krishna Charan Chakraborti & Anr., [1988]
4 Judgment Today p. 714. and Ballavdas Agarwala v. Shri J.C.
Chakravarty, [1960] 2 S.C.R. 739, referred to.
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 549
of 1987.
From the Judgment and Order dated 23.2.87 of the Bombay
High Court in Crl. W.P. No. 96 of 1986.
753
Anil B. Divan, V.P. Vashi, Ms. Naina Kapur and K.J. John
for the Appellant.
H.M. Jagtiani, S. Mullik, A.S. Bhasme, Ms. Kamini Jais-
wal and A.M. Khanwilkar for the Respondents.
The Judgment of the Court was delivered by
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 Sec. 482, Cr.P.C.
The facts are as under:--Messers 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 Ist 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
the Ist respondent acted on behalf of the company under a
Power of Attorney executed in his favour by the company. The
leave and licence was for an initial period of 11 months but
subject to renewal for a total period of 66 months. The
agreement provided for payment of advance compensation of
Rs. 16,500 for 11 months and a monthly compensation of Rs.
1,500 and a deposit of Rs.3,50,000 free of interest to be
returned at the end of the licence period. The company paid
the deposit and the advance compensation and was paying the
monthly compensation of Rs. 1,500 thereafter. On taking
possession of the flat on 1.11.1980, the company allowed the
1st respondent to occupy it as an employee of the company.
More than three years later, i.e. on 23.3.1984, the Ist
respondent filed a suit (Suit No. 1360/84) in the Court of
Small Causes, Bombay against the company and the owner of
the flat for a declaration-that he is the actual licencee of
the flat and for permanent injunction to restrain the de-
fendants from interfering with his possession of the flat.
The Ist respondent claimed to be the licencee of the flat on
the basis of two letters dated 25.1.1984 and 1.2.1984 writ-
ten to him by a junior employee of the company, viz. one Mr.
Jain who was the Officer Manager of the company at Bombay
and working under the Ist respondent. In those letters Mr.
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Jain has made it appear that the Ist respondent was the
tenant of the flat. Besides the reliefs-of declaration and
injunction, certain other reliefs such as fixation of stand-
ard rent etc. were also asked for in the suit against the
owner of the flat. Three days after the
754
filing of the suit i.e. on 26.3.1984, the Ist respondent
tendered a letter of resignation to the company and his
resignation was accepted by the Management on 27.3.84. In
accordance with his claim to be the licencee of the flat,
the Ist respondent offered to reimburse the company the
deposit amount of Rs.3,50,000 but the company declined the
offer and asserted that it was the licencee of the flat and
not the Ist respondent.
As the Ist respondent failed to vacate the flat after
resigning his post, the company filed a complaint against
him under Section 630 of the Companies Act in the Court of
the Additional Chief Metropolitan Magistrate, Bombay. The
complaint was filed on behalf of the company by its power of
attorney Mr. Atul Mathur who had been appointed as Division-
al Sales Manager, Bombay in place of the Ist respondent
after his resignation. The Additional Chief Metropolitan
Magistrate took the complaint on file and after trial found
the Ist 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 compa-
ny on or before 15.6.87 in default to suffer S.I. for three
months. Against the said judgment, the Ist respondent pre-
ferred an appeal to the Sessions Court but by judgment dated
22.10.1986, the Addl. Sessions Judge, Greater Bombay dis-
missed the appeal. The Trial Magistrate as well as the
Appellate Court concurrently’ held that the company was the
licencee of the flat, that the Ist respondent had acted only
as the power of attorney of the company in entering into the
agreement, that his occupation of the fiat was only as an
employee of the company and consequently the Ist respondent
was in unlawful occupation of the flat after he ceased to be
an employee of the company. The Ist respondent was therefore
directed to deliver possession of the flat to the company.
Despite the concurring judgments rendered against him,
the Ist respondent filed a petition before the High Court
under Article 227 of the Constitution but at the time of
arguments, he was permitted to convert the petition into one
under Section 482, Code of Criminal Procedure. Three conten-
tions as under were urged before the High Court to assail
the judgments of the Courts below:
1. The complaint had been filed by a person
without due authority to act on behalf of the
company and this irregularity vitiated the
entire proceedings,
2. The Additional Session Judge had wrongly
cast the burden of proof on the accused and he
wrong approach has vitiated the judgment of
the First Appellate Court.
755
3. Since complicated questions of title were
involved, the Additional Chief Metropolitan
Magistrate had no jurisdiction or competence
to adjudicate the matter in summary proceed-
ings under Section 630 of the Companies Act.
The first two contentions did not find favour with the
High Court. On the first contention, the High Court held
that though the power of attorney conferred only special
powers on Mr. Atul Mathur to act on behalf of the company
only in civil suits, sales tax proceedings and excise mat-
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ters. Mr. Atul Mathur could still validly file the complaint
as he was an officer of the company in the rank of Manager
and could therefore validly act on behalf of the company.
The High Court further held that even if Mr. Atul Mathur did
not have the requisite competence to file the complaint, the
irregularity was a curable one under Section 465 of the Code
of Criminal Procedure. As regards the second contention, the
High Court held that the Addl. Sessions Judge hag nowhere
cast the burden of proof on the accused in dealing with the
appeal and hence the appellate judgment did not suffer from
any perversity or illegality. The High Court, however,
sustained the third contention of the 1st respondent and set
aside the sentence of fine and the direction to the Ist
respondent to deliver possession of the flat to the company.
In giving its acceptance to the third contention, the High
Court felt influenced by the two letters Exs. 3 & 4 written
by Mr. Jain and felt that the letters afforded basis for the
Ist respondent to bona fide dispute the company’s claim for
possession of the flat. The High Court was also of the view
that since the Ist respondent had filed a suit even before
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
Ckakraborti, [1985] 57 Com. Cases 115.
The aggrieved company is now before us. Mr. Anil Divan,
learned senior counsel appearing for the company argued that
the High Court, after having held t. hat 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 only be adjudicated
upon by a civil court and not by a criminal court in summary
proceedings under Section 630 of the Companies Act. Mr. Anil
Divan 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
re-appreciating
756
or re-appraising the evidence. Two Courts
below have come to concurrent findings of
fact, and I see no reason for interfering with
the conclusions arrived at by the Courts
below. "
It was therefore urged by the counsel that once the concur-
rent findings of the Courts below found acceptance with the
High Court, there was no justification for the High Court to
set aside the judgments of the two Courts. The learned
counsel further submitted that Section 630 of the Companies
Act has been provided with an intent and purpose and its
scope and ambit have been set out by this Court in reported
decisions, but the High Court has failed to notice them and
construed Section 630 in an unrealistic manner and this had
led to mis-carriage of justice, Mr. Divan also invited our
attention to the leave and licence agreement entered into by
the company with the owner of the flat as well as an affida-
vit and letter given by the first respondent at the time of
the agreement and submitted that in the face of these
clinching documents, there was absolutely no room for the
first respondent to contend that he was the licencee and not
the company of the fiat in question. He also commented upon
the conduct of the Ist respondent in getting two letters Ex.
Nos. 3 and 4 written by a junior employee of the company
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without the knowledge of the Directors of the company and
filing a suit on the basis of those letters and resigning
his post three days later and refusing to vacate the flat.
It was finally urged by Mr. Divan that the High Court went
wrong in applying the ratio in Damodar Das Jain (supra)
because there was no bona fide dispute between the Ist
respondent and the company regarding the flat occupied by
the Ist respondent.
Mr. Jagtiani, learned counsel for the first respondent
who had appeared for him before the High Court also contend
on the other hand that the High Court has acted rightly in
exercising its power under Section 482 Cr. P.C. and in
setting aside the judgments of the lower courts and the High
Court’s judgment does not suffer from any error of law which
needs correction by this Court. The arguments of Mr. Jagtia-
ni may briefly be summarised as under:
1. Proceedings under Section 630 of the Compa-
nies Act are in the nature of criminal pro-
ceedings and consequently the burden of proof
is upon the complainant. Besides, the accused
is entitled to the benefit of doubt on all
matters not proved beyond reasonable doubt.
Moreover any weakness in the accused’s case
set up by way of defence cannot be relied upon
to fill up the lacuna in the prosecution case.
757
2. The letters Exs. 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 licencee 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 respond-
ent’s plea that a bona fide dispute existed
between the parties regarding the licence
rights over the flat and refrained from adju-
dicating upon the rights of the parties in the
complaint filed under Section 630.
5. Damodar Das Jain’s case sets out the cor-
rect ratio and the High Court was fully justi-
fied in applying the said ratio to this case.
Before we deal with the contentions of the parties, we
may refer to Section 630 of the Companies Act and the deci-
sions of this Court on the scope and ambit of the Section.
Section 630 reads as under:
"S. 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 know-
ingly applies it to purposes other than those
expressed or directed in the articles and
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authorised by the Act;
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
758
officer or employee to deliver up or refund,
within a time to be fixed by the Court, any
such property wrongfully obtained or wrongful-
ly withheld or knowingly misapplied, or in
default, to suffer imprisonment for a term
which may extend to two years."
There was a divergence of opinion between the Bombay High
Court and the Calcutta High Court regarding the interpreta-
tion of the words "any officer or employee of a company",
the Bombay High Court giving a broader interpretation to the
words and the Calcutta High Court giving a narrow interpre-
tation. The controversy was set at rest by this Court in
Baldev Krishna Sahi v. Shipping Corpn. of India Ltd., [1987]
(IV) SCC 361 by holding that the term "officer or employee"
of a company applies not only to existing officers or em-
ployees but also to past officers or employees if such,
officer or employee either (a) wrongfully obtains possession
of any property, or (b) having obtained possession of such
property during his employment, wrongfully withholds the
same after the termination of his employment. It was pointed
out that wrongful obtainment of possession would attract
Section 630(1)(a) and wrongful withholding of possession of
company’s property would attract Section 630(1)(b) of the
Act. It is therefore clear that the purpose of enacting
Section 630 is to provide speedy relief to a company when
its property is wrongfully obtained or wrongfully withheld
by an employee or ex-employee.
In a later case Amritlal Chum v. Devo Prasad Dutta Roy,
[1988] 2 SCC 269 which arose directly from the decision of
the Calcutta High Court in Amritlal Chum v. Devi Ranjan Jha,
[1987] 61 Company Cases 211 the view taken in Baldev Krishan
Sahi (supra) 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 1.11.
1980. The deed specifically states that the licencee is
Messrs Jenson and Nicholson (India) Ltd. having its regis-
tered office at Calcutta and Executive office at Bombay and
that the company shall have the flat "for the use and occu-
pation as residence by its bona fide employee/employees
and/or his/their families" and shall not be transferred to
anyone else (vide clauses 11 & 12). The agreement was en-
tered into by the first respondent as the power of attorney
agent of the company and he has contemporaneously executed
an affidavit on 1.11. 1980 wherein he has affirmed as fol-
lows:
759
"I say that for the purpose of secur-
ing a flat on leave and licence basis for
providing residence for the employees of the
company, I have entered into negotiations on
behalf of the company, with Shri Mehdi Mandil
the owner of flat No. 84 on the 8th floor of
the building known as ’Mehr Dad’ at Cuffe
Parade, Bombay, to allow the company the use
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and occupation of the said flat under a leave
and licence to be executed between the said
Mehdi Mandil and the said company."
(Emphasis supplied).
In para 3 of the affidavit, the first respondent has given
an assurance that the flat "would be made use of for the
purpose of residence only by the bona fide employees of the
company and/or their/families." In para 4, the first re-
spondent has affirmed "that neither the company nor any
employee of the company who may be in occupation of the flat
would claim any rights/title or interests or any rights of
tenancy other than the right to use and occupy the said flat
purely as a licencee under and in accordance with the terms
and conditions of the leave and licence agreement." On 5.11.
1980, the Ist respondent, acting for the company, has writ-
ten a letter to the licenser Mr. Mehdi Mandil stating inter
alia as under:
"The flat being given to the company, it would
be occupied by only the bona fide official
employee of the company."
"Yours faithfully,
Jenson & Nicholson
(India) Ltd.
Sd/-Atul Kalra
Divisional Sales Manag-
er, Bombay."
These documents clinch the issue and prove beyond a shadow
of doubt that the flat was taken on leave and licence basis
by the company only for providing accommodation to its
employee or employees during their term of employment in the
company. It was purely on that basis the first respondent
who was the Divisional Sales Manager was allowed to occupy
the flat and he was allowed to occupy the flat till he
resigned his post on 26.3. 1984. It is pertinent to mention
here that it was the company which had given the deposit of
Rs.3,50,000 to the licenser and had been paying the licence
fees, advance and monthly, all through.
Notwithstanding this incontrovertible position, the first
respon-
760
dent developed ideas to cling to his possession of the flat
even after ceasing to be an employee of the company. Conse-
quently, he contrived to obtain two letters dated 25.1.1984
and 1.2. 1984 from Mr. Jain who was only working as Office
Manager at Bombay. In the first letter, Mr. Jain has formal-
ly written to say (though he and the Ist 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 be-
tween you and the landlord. Please therefore
deal with the letter as you deem fit."
(Emphasis
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supplied).
Yours faithfully,
Jenson & Nichol-
son (India) Ltd.
Sd/-
(A.S
.
JAIN)
Office
Manager, Bombay.
On 30.1. 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
standard, rent by the Court as the landlord was charging
exorbitant rent. Digressing for a moment, it has to be
noticed that the Ist respondent had come to realise the rent
to be exorbitant only after 3 years and 2 months and just
before he wanted to claim tenancy rights for himself. Re-
verting back to the correspondence, Mr. Jain has sent a
reply on 1.2.1984 to state that the company will have no
objection to legal proceedings being taken for fixation of
standard rent of your flat at 84, Mehr Dad, Cuffe Parade,
Bombay but however he (1st respondent) alone will have to
bear the expenses including the court fees and advocate’s
fees and the company will not be liable to re-imbuse him. It
is on the footing of these two
761
letters the first respondent sought to build up a case that
he was the actual licensee of the flat and not the company.
Before considering the explanation given by Mr. Jain as
to his writing the letters, it will be worthwhile to notice
certain factors. In the first place, Mr. Jain was only a
junior employee of the company viz. Office Manager, Bombay
and could not therefore have directed the Ist respondent to
attend to the matter of furnishing information to the corpo-
ration authorities about the rateable value of the flat.
Secondly, Mr. Jain and the first respondent were both work-
ing in the same office and as such it is inconceivable that
Mr. Jain would have carried on a correspondence with the 1st
respondent instead of merely placing the alleged letter of
the corporation before the first respondent for suitable
action by him. Thirdly, Mr. Jain joined the services of the
company only in July 1983 i.e. long after the company had
taken the flat on licence and as such he could not have
known what were the terms of the leave and licence agreement
and who was the actual licensee of the flat. Fourthly, even
if Mr. Jain had purported. to act on behalf of the company,
he would have sent copies of the letters to the Head Office
at Calcutta but he had not done any such thing and on the
other hand he had suppressed information from the Head
Office about the correspondence. The Ist respondent too had
not brought the matter to the notice of the Head Office at
Calcutta. The Ist respondent resigned his post on 26.3.84
and in order to forestall the company from seeking his
eviction, he had filed a suit on 23.3.84 to seek the reliefs
of declaration and injunction. All these factors lead to the
unmistakable conclusion that the first respondent had some-
how prevailed upon Mr. Jain to give the letters Exs. 3 & 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 1st respondent to
sign the letters without knowing the implications. He has
also given evidence to the same effect in the trial of the
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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-examina-
tion viz. that the 1st 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 company and affording material to
the 1st
762
respondent to contend that he was the real licensee of the
flat. We are unable to find any merit in this contention.
Even assuming for arguments sake that Mr. Jain had not
written the letters under threat, the Ist respondent’s case
will not stand advanced in any manner. A junior employee of
the company cannot relinquish the rights of the company in
favour of the 1st respondent especially when the Ist re-
spondent himself had categorically stated in the leave and
licence agreement as well as in his affidavit and letter
that the company was the licencee of the flat and the em-
ployees are not entitled to claim any tenancy rights for
themselves.
Fully realising, the weakness in his case, the Ist
respondent has made an attempt to authenticate the letters
Exs. 3 and 4 by contending that Mr. Roy, Director of the
Company had instructed Mr. Jain from Calcutta to write the
letters and hence the letters were fully binding upon the
company. The story invented by the Ist respondent was right-
ly disbelieved by the Trial Court and the Appellate Court
because it is inconceivable that Mr. Roy would have asked a
junior officer like Mr. Jain to write the letters instead of
asking some one from the Head Office itself to write the
letters. No suggestion was put to Mr. Jain in the witness
box that he wrote the letters under the instructions of Mr.
Roy. There is also no mention in the letters that they were
being written as per the instructions received from the Head
Office. Another strange feature is that a copy of the let-
ters has not been sent to the Head Office. Such would not
have been the case if the letters had really been written by
Mr. Jain under directions from the Head Office.
Mr. Jagtiani sought to discredit the affidavit and the
evidence of Mr. Jain on the ground that Mr. Jain had given
his affidavit after consulting the company’s lawyer and
secondly he had not been punished by the company for his
misconduct. The arguments of the counsel in this behalf have
no merit in them because Mr. Jain was duty bound to explain
to the company the circumstances in which he had arrogated
powers to himself and written the letters Exs. 3 and 4 to
the Ist respondent. Naturally therefore he would have sought
the guidance of the company’s counsel as to how the affida-
vit is to be formally worded. As regards the company not
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
Ist respondent to write the letters in question.
All these factors have unfortunately escaped the notice of
the
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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
licencee of the flat. We have already referred to the rele-
vant portions of the leave and licence agreement and the
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affidavit and letter of the Ist respondent wherein he has
categorically accepted that the company was the licencee of
the flat. Secondly, the evidence projected by the Ist re-
spondent 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 Ist respondent without knowing the implica-
tions of his act. Leaving aside these factors, even if we
are to take that Mr. Jain had of his own accord written the
letters, can it ever be said that the letters afford scope
for the Ist respondent to contend that he is bona fide
entitled to dispute the company’s claim to possession of the
flat. The sequence of events also go to show that the Ist
respondent had formulated a plan for clinging to his posses-
sion of the flat even after resigning his post and in ac-
cordance with that plan he had obtained the letters Exs. 3
and 4 and then filed a suit in order to forestall the compa-
ny from proceeding against him under Section 630 of the
Companies Act. Merely because the Ist respondent had schem-
ingly filed a suit before tendering his resignation, it can
never be said that the Civil Court was in seisin of a bona
fide dispute between the paries and as such the Criminal
Court should have stayed its hands when the company filed a
complaint under Sec. 630. If a view is mechanically taken
that whenever a suit has been filed before a complaint is
laid under Section 630, the Criminal Court should not pro-
ceed with the complaint, it would not only lead to miscar-
riage of justice but also render ineffective the salutory
provisions of Section 630.
So much for the bona fides of the alleged dispute pro-
jected by the Ist respondent regarding the company’s claim
to possession of the flat. Coming now to the question of
law, the High Court has invoked the ratio in Damodar Das
Jain, (supra). The facts therein were very different and it
was with reference to those facts, the High Court held that
a bona fide dispute existed between the parties therein.
This may be seen from the question posed for consideration
by the High Court, viz. "whether on the facts and circum-
stances of the case, the Magistrate could himself, under
Section 630, determine the dispute as to the title to the
property." On the evidence before it, the High Court held
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and rightly so that there was a genuine dispute between the
parties and the said dispute required adjudication by a
Civil Court in the suit filed by the ex-employee. While
rendering its judgment, the High Court had construed Section
630 properly and observed that "the magistrate’s jurisdic-
tion thereunder (under Section 630) would extend only to
those cases 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 Damodardas Jain (supra) was affirmed by this Court
in Damodardos v. Krishna Charan Chakraborti & Anr., [1988] 4
Judgment Today page 7 14. He fails to notice that the ac-
ceptance 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. "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 ques-
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tion 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’s claim to possession is
refuted by an employee or ex-employee of the company. As to
when a dispute would amount to a bona fide dispute would
depend upOn the facts of each case. In the present case the
High Court has realised this position and observed that
"while considering whether the plea of tenancy is a bona
fide plea, it is always necessary to examine and consider
the transaction on the basis of which the plea is based"
(vide para 39). While stating the position correctly, the
High Court went wrong in holding that the serf-serving
documents produced by the 1st respondent gave a touch of
bona fides to his defence. The High Court was therefore not
fight in thinking that the ratio in Damodar Das Jain (supra)
was attracted to the case in as much as the defence put
forward by the Ist respOndent was patently an incredible
story.
Another contention of the 1st respOndent to thwart the
proceedings under Section 630, which has been repelled by
all the Courts including the High Court, is regarding the
competence of PW-1 Mr. Atul Mathur, the present Divisional
Sales Manager of the company, to
765
file the complaint on behalf of the company. Belatedly, the
Ist respondent has filed a memorandum of cross-objections
against the finding of the High Court on this question. The
appellant’s counsel objected to the memorandum of cross-
objections being entertained as it has been filed belatedly
and furthermore, the appellant has not been given notice or
furnished copies of the cross-objections. Leaving aside the
technical pleas, we find the cross-objections to be worth-
less even on merit. The Ist respondent would say that the
power of attorney in favour of Mr. Atul Mathur empowers him
to act on behalf of the company only in civil suits, sales
tax proceedings, and excise matters and does not empower him
to file criminal complaints on behalf of the company. The
Ist respondent’s contentions suffer from a misconstruction
of the terms of the power of attorney executed by the compa-
ny. The power of attorney, read as a whole, is seen to
confer general powers on Mr. Atul Mathur and not merely
special powers. It has been engrossed on stamp papers of the
value of Rs.50 and it is indicative of the nature of the
deed. Though specific reference is made in the power of
attorney only to the filing of suits and to matters relating
to sales-tax and Central 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 & 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 authorise 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
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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 Officer of the
Company- We do not therefore find any substance in the
contention of the Ist respondent that the complaint suffered
from a material irregularity not curable under Section 465
Cr.P.C. Incidentally, we may observe that in spite of con-
tending that the complaint suffered from an irregularity,
the Ist respondent has neither pleaded nor proved that a
failure of justice has been occasioned on account of the
alleged irregularity.
766
Learned counsel for the Ist respondent relied upon
Ballavdas Agarwala v. Shri J.C. Chakravarty, [1960] 2 SCR
739 in support of his contention that the company’s com-
plaint suffered from an irregularity not curable under
Section 465 Cr.P.C. In the view we have taken of the matter
viz. that Mr. Atul Mathur had the requisite authority to
file the complaint on behalf of the company, the question
does not survive for consideration. The cross-objections
must therefore fails even if entertained.
For the aforesaid reasons, the judgment of the High
Court is not sustainable. We therefore, allow the appeal,
set aside the judgment of the High Court and restore the
judgments of the Additional Chief Metropolitan Magistrate
and the Additional Sessions Judge. However, the first
respondent is given time till 30.9.89 to deliver possession
of the flat to the company failing which the sentence of
imprisonment awarded to him would be enforced.
Y.Lal Appeal
allowed.
767