Full Judgment Text
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PETITIONER:
JAGDISH CHANDRA NIJHAWAN
Vs.
RESPONDENT:
S.K.SARAF -
DATE OF JUDGMENT: 27/11/1998
BENCH:
G.T. NANAVATI, S.P KURDUKAR.
ACT:
HEADNOTE:
JUDGMENT:
J U D G M E N T
NANAVATLI, J.
This appeal arises out of the judgment and order
passed by the High Court of Calcutta allowing Criminal
Revision No.624 of 1986 and setting aside the order of
discharge passed by the Court of Judicial Magistrate, Ahpur,
in Criminal Case No.C/194/1985. The learned Magistrate had
discharged the appellant on the ground that the complaint
filed by the respondent and the material-on-record disclose
that the dispute is really of a civil nature.
Sometime before 29.4.1983, the appellant retired as
a Chairman and Managing Director of Andrew Yule & Co. Ltd.
ABC Products Ltd. (for short ’ABC’) desired to employ him
as its President and put him in overall charge of
management. It therefore, entered into an agreement with
the appellant on 29.4.1983 and appointed him as the
President. Under the agreement the appellant was to be
provided with rent-free furnished flat described in the
Schedule to that agreement. ABC Consultants (P) Ltd..
stated to be a sister concern of ABC, was the lessee of that
flat. As the ABC wanted to employ the appellant as
President, it requested ABC Consultants (P) Ltd. to grant
to it and the appellant permission to use and occupy the
said flat. On 29th April, 1983 ABC Consultants (P) Ltd.
granted that permission with a condition that the appellant
was allowed to use it till he remained with ABC. The
appellant joined ABC on 16.5.1983 and was put in possession
of the said flat On 1.11.1983. ABC passed a Resolution
appointing the appellant as Managing Director of the
Company. The terms and conditions of appointment were as
mentioned in the draw agreement prepared in that behalf.
The appellant’s term under the said draft agreement was for
a period of 5 years from 1.11.1983. On 21.1.1985, the
Company Law Board approved the appointment of the appellant
as Managing Director not for the full term of 5 years but
for 11 months only. The decision of the Company Law Board
was communicated to the appellant 5.2.1985. On 11.3.1985 he
was again informed by ABC that in view of further limited
extension of his term by the Company Law Board, he is
treated as having ceased to be the Managing Director of the
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Company w.e.f 1.10.1984 and as his employment thus stood
terminated, he was called upon to hand-over possession of
the flat to it. As the appellant did not comply with the
request, ABC lodged a complaint on 12.7.1985 through its
Commercial Manager - Mr. Saraf - against the appellant for
offences punishable under Section 630 of "the Companies Act
and Sections 406, 408 and 409 of the Indian Penal Code. ABC
also filed a suit on 9.12.1985 against the appellant for
recovery of possession of the flat. On 6.1.1986 the learned
Magistrate discharged the appellant holding that the dispute
between the parties is of civil nature. It was against that
order that ABC filed a revision petition before the High
Court.
The High Court held that the material on record
discloses a prima facie case under Section 630 of the
Companies Act and. therefore, the learned Magistrate acted
illegally in discharging the accused. As regards the charge
under Sections 408 and 409 IPC, the High Court was of the
view that prima facie the Company has not made out any case
of criminal misappropriation or criminal breach of trust,
warranting framing of a charge under Sections 406, 408 and
409 IPC. With this observation, it has left that question
open for consideration by the learned Magistrate. Taking
this view. the High Court, allowed the revision
application, quashed the order of discharge and remanded the
case back to the learned Magistrale for disposal in
accordance with law.
Mr. R.F. Nariman, learned senior counsel appearing
for the appellant, contended that the High Court has
misconstrued the nature of the allegation made in the
complaint and it has wrongly held that the said complaint
and the material-on-record prima facie disclose that the
appellant is wrongly withholding the property of the
complainant- company. After going through the
matcrial-on-rccord and the judgment of the High Court, we
are of the view that the High Court should not have
interfered with the order of discharge passed by the learned
Magistrate.
It is not in dispute that the appellant was put in
possession of the flat pursuant to the agreement dated
29.4.1983. The agreement discloses that the appellant
joined ABC mainly because he was offered a flat in "Triveli
Court". That becomes apparent from the conditions contained
in Paragraphs 6.1, 6.1.1. 7.2, 7.2.1 and 7.2.4 of the
agreement and the assurance obtained by the appellant from
ARC Consultants (P) Ltd. before joining. The relevant
paragraphs of the agreement are as under :-
"6.1 In case the date of termination be earlier than 30
months from the date of commencement, then :
i)If such termination be at the instance of the
company, then the employee and/or the employee’s wife shall
continue to enjoy rent-free accommodation during their
respective lives but only until the employee takes up any
other profession, vocation or business;
ii)If the termination be due to the resignation of the
employee, then the employee shall within 30 days from the
date of termination hand over to the company vacant
possession of the said flat together with all fixtures and
fittings;
(iii) In the event of the death of the employee or in case
of the termination be due to physical or mental disability
of the employee, the employee and/or his Wife shall continue
to enjoy such rent free accommodation on the same term and
conditions as contained in clause (i) herein above;
6.1.1In case the date of termination be after 30 months
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from the date of commencement, then. irrespective of the
reason of such termination the employee and his wife shall
be entitled to rent free accommodation during the period of
their natural lives; but only until the time the employee
takes up any other employment, business, profesion or
vocation.
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7.2Regarding the Flat :
7.2.1It is clarified that extending accommodation by
company as stipulated hereinabove is one of the primary
considerations due to which the employee has agreed to take
up company’s employment and the same is and shall be the
essence of the contract.
xxxxxx
7.2.4In case however, the company loses the right of
tenancy and/or occupancy of the said flat due to any reason
whatever and the employee and/or his wife continue to be
entitled to the benefit thereof in terms hereof, then and in
such event, the company shall arrange an alternative
accommodation of a similar nature, locality and covered area
for the employee and/or his wife."
Though the initial appointment of the appellant was
as President of ABC subsequently by mutual consent he was
appointed as Managing Director of ABC. The appellant’s
tenure as the Managing Director came to an end as the
Company Law Board agreed to his appointment for a limited
period only. The appellant had neither resigned nor taken
up any employment elsewhere. It is also not alleged that
lie had started any business, profession or vocation. It
was ABC which informed the appellant that his employment
stood terminated with effect from 1.10.84. Therefore, prima
facie sub-paragraph (i) of Paragraph 6.1 would apply to the
facts of this case. The contention raised on behalf of ABC
that when the appellant became the Managing Director of ABC
he should be deemed to have resigned as the President of ABC
does not prima facie appear to be correct. We are not
dealing with this aspect any further as the civil suit filed
by ABC against the appellant is still pending and we do not
want our observations to prejudice the case of either party.
We only say that the trial court was right in holding that
the dispute between the parties is of civil nature and that
in view of the facts and circumstances of the case, it is
not possible to say that the appellant has wrongfully
withheld the property of ABC in his possession. An
important circumstance which came into existence meanwhile
is that the appellant purchased the flat from its owner on
12.11.1984 and has thus become an owner of it. It is also
significant to note that ABC was not the lessee of the flat
and except for the permission granted by ABC Consultants (P)
Ltd. to it and the appellant, it has no right, title or
interest in that flat. ABC Consultants (P) Ltd. has not
chosen to revoke the licence in favour of the appellant or
Take any action against him. In case of the appellant
ceasing to be entitled to occupy the flat. ABC has prima
facie no right of occupying or using it independently. All
these material aspects have not been properly appreciated by
the High Court. Therefore, the judgment and order passed by
the High Court deserves to be set aside.
We, therefore, allow this appeal, set aside the
order passed in Criminal Revision No. 62 4 of i986 and
restore the order of discharge passed by the Court of
Judicial Magistrate, Allpur, in Crl.Case No.C/194/1985.