Delhi High Court
Purshottam Iron & Steel ... vs Rajneesh Gupta on 14 July, 2016
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 14th July, 2016
+ CRL. A. 99/2012
PURSHOTTAM IRON & STEEL INDUSTRIES
(PVT). LTD. ..... Appellant
Through Mr Rajesh Khanna, Adv.
versus
RAJNEESH GUPTA ..... Respondent
Through Respondent in person
%
CORAM:
HON'BLE MS. JUSTICE SUNITA GUPTA
JUDGMENT
: SUNITA GUPTA, J.
1. Challenge in this appeal is to a judgment dated 21.04.2010 of learned
Additional Chief Metropolitan Judge, Delhi in Case No. 136/3 arising out of complaint
u/s 630 of the Companies Act,1956,filed by the appellant against the respondent, by
which respondent was acquitted.
2. The complainant case, as unfolded during trial is, that the complainant is a
registered company dealing in iron and steel business. The present complaint u/s 630 of
the Companies Act 1956 (hereinafter referred to as 'Act') is filed by Sh. Vinay Gupta,
the AR of the company. The company had its offices at the following addresses viz.
(A) 459/60, Khari Baoli, Delhi;
(B) H-2/7, First Floor, Model Town, Delhi;
(C) Room no.524,"Giri Raj", Sant Tukaram Street, Carnac Bundar,
Mumbai,(Maharashtra);
(D) Room No.31, Vithal Wadi, Panchi Bhai Trust Building,
108/116, Kalba Devi Road, Mumbai (Maharashtra);
(E) 1,Quinton Road, Lucknow (U.P.);
(F) 356, Jawahar Marg, Indore, (Madhya Pradesh);
(G) 28/29, Ministers Road, Secundarabad (Andhra Pradesh);
(H) Room No.225-77/79, N.S. Road, Kolkata (Regd. Office);
(I) 29, Stand Road, Calcutta (Regd. Office);
(J) Residential accommodation for Directors at Hyderabad at 8-2-
686B/A, Road No. 12, Banjara Hills, Hyderabad (A.P.).
Besides the above mentioned properties, the complainant also had,
Manufacturing unit/factory at A-3 & A-6, Co-operative Industrial Estate, Bala Nagar,
Hyderabad, Andhra Pradesh. It is claimed by the complainant that the respondent was
appointed as an Executive Director of the company, on 03.09.1983, in addition to Sh.
Harish Chander Gupta (father of the accused), vide a resolution passed in that regard.
On the appointment of the respondent as an Executive Director, he was allegedly
provided with furnished residential accommodation at Hyderabad and the respondent
was made custodian of all the properties of the company, to look after the affairs of the
company, at the head office of the company and its branches and factories. It is also
claimed that the accused had in his possession the company's statutory registers; share
holder's registers; minute's book with regard to the board of Director's meeting; annual
general meeting with attendance registers; all account books (since inception of the
company); audited balance sheets; company seal; original license pertaining to the
factories of the company at Hyderabad, Indore and Vishakhapatnam; certificate of
incorporation and, all other papers and records, files, documents, pertaining to affairs of
the company. It is claimed that the accused forcibly removed and usurped those records
from the company's registered office at Calcutta, and the accused also forcibly and
wrongfully took possession of the properties mentioned at SI. nos. 4, 5 & 6 in the
complaint. It is also claimed that accused transferred the property no. A-6 at Co-
operative Industrial Estate, Bala Nagar, Hyderabad, Andhra Pradesh, without any
authority, and in connivance with his father H.C.Gupta, who was also one of the
directors of the company, as he was acting against the interest of the company and, the
accused in an affidavit dated 12.9.1991 filed before the Company Law Board(CLB in
short), admitted that he was not a director after July 1988 and, therefore, the accused
was bound to return the properties of the company as well as the records of the
company.
3. The respondent was summoned on this complaint u/s 630 of the Companies Act.
Thereafter, in terms of Section 251 Cr.P.C., a notice for the said offence was framed
against the accused on 03.12.2001 for wrongful withholding of propertynos: A-3 and
A6, Co-operative Industrial Estate, Bala Nagar, Hyderabad including plant machinery
and fixtures; premises nos.28 & 29, Ministers Road, Secundarabad; premises no.
459/60, Ground Floor, Khari Baoli, Delhi; premises no. H- 2/7, First Floor, Model
Town, Delhi; Room No.31, Vithal wadi, Panchi Bhai Trust Building, 108/116, Kalba
Devi Road, Mumbai, Room No, 524, Giriraj, Sant Tukaram Street, Carnac Bundar,
Bombay and residential premises at 8-2-686B/A, Road No. 2, Banjara Hills; premises
no.1 Quinton Road, Lucknow and also for the records and documents of the company.
The respondent pleaded not guity and claimed trial.
4. In support of its case, the complainant examined one witness i.e. PW1 the
complainant himself, who deposed that he was authorised, vide resolution dated
25.4.1992 Ex. PW1/1, to file the present complaint and to prosecute the accused. He
further deposed on the same line as was provided in the facts of the complaint and we
are not reproducing the same for the sake of brevity.
5. At the conclusion of complainant evidence, all the incriminating evidence was
put to the accused in his examination u/s 313 Cr.P.C., where he denied of having been
custodian of the properties or records of the company, including plant and machinery or
furniture, fixtures and fittings ever.
6. After appreciation of evidence and considering the submissions made by the
counsel for the parties, the learned Trial Court, vide impugned judgment acquitted the
respondent on the ground that the appellant had miserably failed to prove that the
accused in any manner wrongfully withheld any of the property or books or records of
the company. Feeling dissatisfied, present appeal has been preferred by him.
7. Learned counsel for the appellant Mr. Rajesh Khanna argued that the Learned
Trial Court started with an erroneous approach that it being a criminal proceeding,
burden is on prosecution to prove its case beyond reasonable doubt. The Trial Court
overlooked the fact that S. 630 of the Companies Act is not penal in nature. The Trial
Court failed to appreciate the mandate of S. 630 of the Companies Act and for that
placed reliance upon Smt. Abhilash vinod Kumar Jain vs Cox & Kings (India) Ltd.
AIR 1995 SCC 1592; Baldev Krishna Sahi vs Shipping Corporation of India Ltd.
And another AIR 1987 SC 2245; Shubh Shanti Services Ltd. Vs Manjula S.
Agarwala & Ors. AIR 2005 SC 2506; Gopika Chandrabhushan Saran & anr vs XLO
India Ltd. & anr IT (2009) SLT 615. Chaundru Sri Hari Rao vs Vijaya Engine
Valves, 1999 Cr.L. J. 2319 and K.G.K. Nair v P.C. Juneja, 1993 Crl. L. J 2791.
8. Learned counsel for the appellant also argued that the trial court has failed to
appreciate that the burden of establishing any special issue raised by the accused rest
upon him. Section 106 Evidence Act says that the burden of proving facts which are
especially within the knowledge of any person, lies upon him. For that he has placed
reliance upon the authority Smith vs E. 43 IC 605: 19 Crl. L J 189 wherein the court
has held that-
"Under section 106 Evidence Act, burden of proving a fact
would be upon the accused person if the subject of the
averments, whether affirmative or negative, is peculiarly within
his knowledge. An accused person is always entitled to held his
tongue, but where the only alternative theory to his guilt is a
remote possibility, which, if correct, he is in a position to
explain, it is for him to prove that alternative theory and if he
does not do so, the omissions will be considered in determining
whether the alternative theory should be disregarded or taken
into account".
9. The Learned counsel for the appellant further argued that the Learned Trial
Court failed to appreciate that an adverse inference u/s 114 of the Evidence Act has to
be drawn against the accused for not producing the best evidence available with him in
form of witness or document. For that he placed reliance upon the decision of Hon'ble
Delhi High Court Allora Electric and Cable Co. Vs M/s Shiv Charan & Bros. And
Ors. 72 (1998) DLT 761 wherein the court has held that-
"Even if the burden of proof does not lie on a party, the court
may draw an adverse inference, if he withholds important
documents in his possession which can throw light on the facts
and issue. It is not, in our opinion a sound practice for those
desiring to rely upon a certain state of facts to withhold them
from the court, the best evidence which is in their possession
which could throw light upon the issue in controversy and to
rely upon the abstract doctrine of onus of proof ".
10. It has been submitted by the Learned Counsel for the appellant that the
company is not disputing the ownership rights of the property in the present
complaint as the question of ownership of all the properties held in the name of
different family members is subjudice before this Court in a partition suit. However,
the company is seeking restoration of the office premises held by the company in the
said properties except the ownership of the factory premises at A - 6, Cooperative
Industrial Estate, Balanagar, Hyderabad, Andhra Pradesh.
11. On the other hand, respondent in person supported the impugned judgment
passed by the trial court and contended that respondent is innocent and has been
falsely implicated in the present case as complainant failed to bring forward any
material on record to suggest any wrongful withholding of any of the property or
books or records of the company.
12. I have bestowed my considerable thoughts to the respective submissions of
learned counsel for the parties and have perused the record.
13. In order to examine the contentions raised by learned Counsel for the parties,
it will be convenient to set out the provisions of Section 630 of the Companies Act,
1956, which read as under:
630. Penalty for wrongful withholding of property.--
"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;
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."
14. The purpose behind the provision of section 630 has been explained by the
Hon'ble Supreme Court in case of Shubh Shanti Services Ltd. (supra) wherein the
Apex Court has held that-
"The main purpose to make action an offence under section 630
of the Act is to provide a speedy and summary procedure for
retrieving the property of the company where the property has
been lawfully obtained but unlawfully retained after termination
of the employment of 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 Act and further to
issue a 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".
15. Again in Gopika Chandrabhushan Saran & anr (supra), it was observed as
under:
"13.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. From the bare reading of the
section, it is apparent that sub-section (1) is in two parts.
Clauses (a) and (b) of sub-section (1) create 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 authorised 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 authorised by the Act. In terms of sub- section
(2) the court is empowered 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 with the order of the court
regarding delivery or refund of the property of the
company.
14. In Abhilash Vinodkumar Jain v. Cox & Kings (India)
Ltd., (1995) 3 SCC 732 this Court had occasion to deal
with scope and ambit of the provisions of Section 630 of the
Act. This Court analyzed Section 630 and drew a logical
deduction in para 13, which is as follows: "13. 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 it
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 or 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. In para 14 this Court further laid
down the Scope and ambit of Section 630:
14. 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.An argument quite similar in nature was raised
in Baldev Krishna Sahi case (1987) 4 SCC 361 also while
resisting the extension of the provisions of Section 630 of
the Act to the past employee or past officer and rejecting
the same, this Court opined: (SCC pp. 365-66, para 6)
"The first and foremost argument of learned counsel for the
petitioner is that the provision contained in Section 630 of
the Act is a penal provision and therefore must be subject
to a strict construction and there is no room for
intendment. It is submitted that on a true construction, the
scope and effect of the section was limited to such property
of the company which was wrongfully obtained by an
officer or employee of the company. Emphasis was placed
upon the words `any such property' in clause (b) of sub-
section (1) for the contention that clause (b) does not stand
by itself but is interconnected with clause (b) (sic) and
therefore both clauses (a) and (b) must be read together. In
essence, the submission is that sub- section (1) of Section
630 of the Act makes it an offence where any officer or
employee of a company wrongfully withholds possession of
such property of the company. Secondly, it is contended
that the legislature never intended to include past officers
and employees of a company within the ambit of Section
630 of the Act which provides for prosecution of an officer
or employee of a company for wrongfully withholding the
property of the company inasmuch as it has used different
languages where it was so intended, namely, in Sections
538 and 545. The entire argument of the learned counsel is
based upon the judgment of the High Court of Calcutta in
Amritlal Chum case [(1987) 61 Comp Cas 211 (Cal)]. We
are afraid, we find it difficult to subscribe to the narrow
construction placed by the High Court of Calcutta on the
provision contained in sub-section (1) of Section 630 of the
Act which defeats the very purpose and object with which it
had been introduced."
We are in respectful agreement with the above view and
are of the opinion that the legal representatives or the heirs
of the deceased employee or officer would squarely fall
within the ambit of Section 630 of the Act. To exclude them
by giving a restrictive interpretation to the provisions
would defeat the very object of the provision which
declares the wrongful withholding of the property of the
company to be an offence. It is immaterial whether the
wrongful withholding is done by the employee or the officer
or the past employee or the past officer or the heirs of the
deceased employee or the officer or anyone claiming their
right of occupancy under such an employee or an officer. It
cannot be ignored that the legal heirs or representatives in
possession of the property had acquired the right of
occupancy in the property of the company, by virtue of
being family members of the employee or the officer during
the employment of the officer or the employee and not on
any independent account. They, therefore, derive their
colour and content from the employee or the officer only
and have no independent or personal right to hold on to the
property of the company. Once the right of the employee or
the officer to retain the possession of the property, either
on account of termination of services, retirement,
resignation or death, gets extinguished, they (persons in
occupation) are under an obligation to return the property
back to the company and on their failure to do so, they
render themselves liable to be dealt with under Section 630
of the Act for retrieval of the possession of the property.
15. The ratio of Abhilash Vinodkumar Jain (supra) was
reiterated by another larger bench in Lalita Jalan (supra),
wherein it laid down the main ingredients of Section 630 in
para 6 and 7, the same are extracted hereunder:
"6. The question which requires consideration is
whether the appellants, having not vacated the flat
after the death of Shri N.K. Jalan to whom it was
allotted in his capacity as director of the company,
come within the ambit of Section 630 of the Act. The
main ingredient of the section is wrongful
withholding of the property of the company or
knowingly applying it to purposes other than those
expressed or directed in the articles and authorised
by the Act. The dictionary meaning of the word
"withholding" is to hold back; to keep back; to
restrain or decline to grant. The holding back or
keeping back is not an isolated act but is a
continuous process by which the property is not
returned or restored to the company and the
company is deprived of its possession. If the officer
or employee of the company does any such act by
which the property given to him is wrongfully
withheld and is not restored back to the company, it
will clearly amount to an offence within the
meaning of Section 630 of the Act. The object of
enacting the section is that the property of the
company is preserved and is not used for purposes
other than those expressed or directed in the
articles of association of the company or as
authorised by the provisions of the Act. On a literal
interpretation of Section 630 of the Act the wrongful
withholding of the property of the company by a
person who has ceased to be an officer or employee
thereof may not come within the ambit of the
provision as he is no longer an officer or employee
of the company. In Baldev Krishna Sahi v. Shipping
Corpn. of India Ltd. (1987) 4 SCC 361 the Court
was called upon to consider the question whether
the words "officer or employee" existing in sub-
section (1) of Section 630 should be interpreted to
mean not only the present officers and employees of
the company but also to include past officers and
employees of the company. It was held that a
narrow construction should not be placed upon sub-
section (1) of Section 630, which would defeat the
very purpose and object with which it had been
introduced but should be so construed so as to make
it effective and operative. The Court held as under
in para 7 of the Report: (SCC p. 366) "7. The
beneficent 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."
7. The Court went on to observe that it is only the
present officers and employees who can secure possession
of any property of a company and it is possible for such an
officer or employee to wrongfully take away possession of
any such property after termination of his employment.
Therefore, the function of clause (a) though it primarily
refers to the existing officers and employees, is to take
within its fold an officer or employee who may have
wrongfully obtained possession of any such property
during the course of his employment, but wrongfully
withholds it after the termination of his employment. It was
further held that Section 630 plainly makes it an offence if
an officer or employee of the company who was permitted
to use any property of the company during his employment,
wrongfully retains or occupies the same after the
termination of his employment and that it is the wrongful
withholding of the property of the company after the
termination of the employment, which is an offence under
Section 630(1)(b) of the Act".
This Court further laid down in paras 22 and 23 as follows:
"22. The view expressed in J.K. (Bombay) Ltd. (2001) 2
SCC 700 runs counter to the view expressed in Abhilash
Vinodkumar Jain (1995) 3 SCC 732 wherein it has been
clearly held that the object of Section 630 of the Act is to
retrieve the property of the company where wrongful
holding of the property is done by an employee, present or
past, or heirs of the deceased employee or officer or
anyone claiming the occupancy through such employee or
officer.
The view expressed in Abhilash Vinodkumar Jain (1995) 3
SCC 732 clearly subserves the object of the Act which is to
the effect of recovering the possession of the property
belonging to the company. If it is held that other members
of the family of the employee or officer or any person not
connected with the family who came into possession
through such employee would not be covered by Section
630 of the Act, such a view will defeat the quick and
expeditious remedy provided therein. The basic objection to
this view is that the aforesaid provision contained in
Section 630 of the Act is penal in nature and must be
strictly construed and therefore the actual words used
should not be given any expansive meaning. A provision of
this nature is for the purpose of recovery of the property
and if, in spite of demand or subsequent order of the court,
the possession of the property is not returned to the
company, the question of imposing penalty will arise.
Similar provisions are available even under the Code of
Civil Procedure. In execution of a decree for recovery of
money or enforcement of an injunction, the judgment-
debtor can be committed to a prison. Such a provision by
itself will not convert the civil proceeding into a criminal
one. Even assuming that the said provision is criminal in
nature, the penalty will be attracted in the event of not
complying with the demand of the recovery of the
possession or pursuant to an order made thereof. The
possession of the property by an employee or anyone
claiming through him of such property is unlawful and
recovery of the same on the pain of being committed to a
prison or payment of fine cannot be stated to be
unreasonable or irrational or unfair so as to attract the
rigour of Article 21 of the Constitution. If the object of the
provision of Section 630 of the Act is borne in mind, the
expansive meaning given to the expression "employee or
anyone claiming through him" will not be unrelated to the
object of the provision nor is it so far fetched as to become
unconstitutional. Therefore, with profound respects the
view expressed in J.K. (Bombay) Ltd. (2001) 2 SCC 700 in
our opinion is not correct and the view expressed in
Abhilash Vinodkumar Jain (1995) 3 SCC 732 is justified
and should be accepted in interpreting the provision of
Section 630 of the Act.
23. If an erstwhile or former employee is prosecuted
under Section 630 of the Act on account of the fact that he
has not vacated the premises and continues to remain in
occupation of the same even after termination of his
employment, in normal circumstances it may not be very
proper to prosecute his wife and dependent children also as
they are bound to stay with him in the same premises. The
position will be different where the erstwhile or former
employee is himself not in occupation of the premises either
on account of the fact that he is dead or he is living
elsewhere. In such cases all those who have come in
possession of the premises with the express or implied
consent of the employee and have not vacated the premises
would be withholding the delivery of the property to the
company and, therefore, they are liable to be prosecuted
under Section 630 of the Act. This will include anyone else
who has been inducted in possession of the property by
such persons who continue to withhold the possession of
the premises as such person is equally responsible for
withholding and non- delivery of the property of the
company".
16. The capacity, right to possession and the duration of
occupation are all features which are integrally blended
with the employment. Once the right of the employee or the
officer to retain the possession of the property, either on
account of termination of services, retirement, resignation
or death, gets extinguished, they (persons in occupation)
are under an obligation to return the property back to the
company and on their failure to do so, they render
themselves liable to be dealt with under Section 630 of the
Act for retrieval of the possession of the property.
17. The ratio laid down in the above said two cases
makes it explicitly clear that Section 630 of the Act will
cover within its ambit not only the employee or officer but
also the past employee or the past officer or the heirs of the
deceased employee or anyone claiming under them in
possession of the property. The legal heirs or
representatives in possession of the property acquire the
right of occupancy in the property of the company, by
virtue of being family members of the employee or the
officer during the employment of the employee or the
officer and not on any independent account. They,
therefore, derive their colour and content from the
employee or the officer only and have no independent or
personal right to hold on to the property of the company."
16. This being the legal position, it is to be seen whether the respondent is in
possession of the properties and the record which, according to the complainant he is
wrongfully withholding. The entire oral evidence and documentary evidence in respect
of each property and record was analyzed by the Trial Court carefully and for better
appreciation it will be advantageous to reproduce the findings as under:
"19. The complainant claims that the complainant has
proved that the company had its office/branch at House
No.459/60, Khari Baoli, Delhi, which address is mentioned
in the list of controlled stock holders Delhi, in the monthly
bulletin issued by Iron & Steel Controller, Government of
India, Ministry of Steel, Mines and Fuel, Department of
Iron and Steel, dated May, 1961, and also in the similar
monthly bulletin no.44 of October, 1963, which is proved
as Ex. PW1/15. Complainant also claims that the
complainant has proved through document Ex. PW1/38 to
PW1/57 and PW1/60 & PW1/61, that the company had
its branch office in this premises from 1964 to 1973. It is
claimed by the complainant that this property was
purchased in the name of Smt. Tara Devi on 05.6.1965 vide
sale deed Ex. PW1/26 for a total sale consideration of
Rs.49, 000/-. It is claimed that this consideration was paid
by the complainant company in October, 1962. The
accused in answer of question no.33 of his statement,
admitted that the company had its office at this address, but
he claimed that the office at this address existed only till
January, 1976. The complainant has not proved the cheque
or any other document to show that this property was
belonging to the company and the consideration was paid
by the company. No one from the bank has been examined,
cheque is not proved and thus payment of consideration by
the company is not proved. Accused denied that this
property was purchased by the company in the name of
Tara Devi. In proceedings u/s.630 of the Companies Act,
1956 this Court cannot be called upon to determine
ownership of the property. Even if, the documents Ex.
PW1/15, PW1/38 to PW1/57 and PW1/60 and PW1/61 are
relied upon, still these do not show that the company had
its branch office at this address in 1983, when the accused
was appointed as a director, or any time thereafter. For
proving a case u/s.630 of the Companies Act, 1956 it was
required that the complainant proves that this office existed
between September, 1983 till July, 1988, or that thereafter,
the accused was wrongfully withholding it. The
complainant has failed to prove it and possession/existence
of this office between September, 1983 to July, 1988, with
the company is not proved, nor is it proved that the accused
thereafter was wrongfully withholding it. On the basis of a
suggestion given by the accused in the cross examination of
CW1, that Smt. Tara Devi rented out this property to the
company free of cost, and another suggestion that the
company vacated the premises as it was unable to pay rent,
the complainant wants this Court to believe that the
accused admits the case of complainant. These two
suggestions go to prove nothing, even if taken to be
admitted. It is claimed that accused alongwith his mother
Tara Devi are occupying this premises through their
tenants since 1985. None of the tenants have been
examined as to when, how and by whom the tenants were
inducted or whether company existed at the address
between 1983 till 1985. As mentioned above, admittedly the
property is in the name of Tara Devi and if the company
claims it to be owned by the company, the company had
appropriate remedies available in law to obtain such a
declaration, but the company cannot expect this Court to
give a finding that company and not Tara Devi is the owner
or this property and that this property is wrongfully
withheld by the accused. Accordingly, the complainant has
miserably failed to show that this property was wrongfully
withheld by the accused upon cessation as a director.
20. Regarding the property i.e. first floor of House No.
H-2/7, Model Town, Delhi, it is claimed by the complainant
that this property was used by the company as a guest
house since 1968 for visiting directors of the company.
From the document Ex. PW1/34, which are proceedings
u/s.107/150 Cr.P.C, initiated under DD no.7A, dated
26.10.1986 Police Station Kingsway Camp, the
complainant wants this Court to believe that the company
was existing and having its guest house in this property in
1986. Similarly, from the Local Commissioner's report Ex.
PW1/36 dated 21.11.1986; the complainant wants this
Court to believe existence of the company's guest house at
this address. Ex. PW1/34 is merely a Kalandra (complaint)
prepared by a police officer u/s.107/150 of Cr.P.C on the
basis of which, preventive proceedings were initiated. This
Kalandra is not per se admissible in law as to its contents.
No witness has been examined by the complainant to prove
the fact that the accused or its staff tried to forcibly take
possession of this property. No eye witness of the incident
has been examined. Admittedly, the incident did not take
place in the presence of PW1, and, therefore, his version is
nothing but hearsay. Similarly, the report of LC Ex.
PW1/36 is not per se admissible as to its contents and as to
on what basis the LC opined it to be in illegal occupation.
Local Commissioner has not been examined. Therefore, the
complainant company has failed to show anything on
record that the complainant company was having
possession of this premises. Admittedly, this property is in
the name of H.C. Gupta i.e. father of accused. Question of
ownership of this property is admittedly pending in Hon'ble
High Court vide Suit No.2365 of 1986 and which will be
decided there. Admittedly, this is a residential property.
The complainant claims that documents Ex. CW1/X2 and
CW1/X3 filed by the accused claiming ownership of this
property are manufactured. I have already mentioned
above that the question of ownership is not to be gone into
or determined by this Court. Ownership of property can't
be gone into or decided by this Court. Therefore, the
complainant fails to prove that any guest house of the
company existed in this property at any point of time or
that accused in any manner wrongfully withheld it.
21. Regarding property at No.1 Quinton Road,
Lukhnow, UP, it is claimed by the complainant that the
company had its office there, which was registered as
stockist vide Ex. PW1/15, and as mentioned in a bulletin
issued by Iron & Steel Controller. It is also claimed that the
accused, in answer to question no.4 in his statement,
admitted that the company had its branch at this office till
March, 1985. It is claimed by the complainant that even
this property, although was purchased in the name of Usha
Rani w/o. Prahlad Chand Gupta, who was also one of the
directors of the company and brother of Ghanshyam Dass,
but it belongs to the company as the consideration for this
property was also paid by the company. Even this matter is
subject matter of a suit for partition before Hon'ble High
Court. It is claimed that the accused is occupying this
premises through Rahul Gupta, son of another director
Prahlad Chand Gupta. Admittedly, Ex. PW1/15 is of
October, 1963, and for the reasons mentioned above it does
not go to show that this property was occupied by the
company between 1983 to 1988 or thereafter by the
accused, much less wrongfully. Although, the accused
admitted in his statement that office of company existed in
this premises till 1985, but admittedly at that time, accused
was Executive Director of the company and if at that time,
the company decided to vacate the premises, it is binding
on the company and now the company cannot ask its Ex
Director to return the same. Had the accused done this
after July, 1988, then things might have been different.
Nothing is proved on record to show that office of the
company existed at this address from March, 1985 till 1988
or, thereafter. Admittedly this property is in the name of
Usha Rani, wife of one of the director of the company
namely Prahlad Chand Gupta. This Court cannot establish
title that this property was purchased by the company in the
name of Usha Rani. Complainant has appropriate remedies
in law seeking establishment of this right. Admittedly, a suit
for partition is pending in the Hon'ble High Court and this
Court cannot determine the ownership in favour of the
company. Even otherwise, had the company's office been
working at this working till the accused ceased to be a
director and then had the accused vacated the property or
wrongfully withheld it against the wishes of the company,
the proceedings would have been maintainable, but not
otherwise. But in absence of any proof that the company
office existed at this address till cessation of services of
accused as director, it can't be claimed by the company
that the accused is wrongfully withholding it. Admittedly,
one Rahul, who is son of another director namely Prahlad
Chand Gupta, is occupying the premises and the premises
is in the name of his mother. In such circumstances, it is
beyond comprehension as to how the present accused can
be held to be liable for wrongfully withholding the same.
22. Regarding property i.e. Room No.524, Giriraj (Sant
Tukaram Road), Carnac Bandar, Mumbai, it is claimed by
the complainant that the accused admitted in his statement
that the company had its sales office at this address till
March, 1976. It is claimed that the premises is still in
occupation of the accused and he allowed another director
Prakash Chand Gupta and Manju Devi Gupta to use this
property and accused failed to produce Mr. P.C. Gupta as
a witness and thus suppressed material witness. As
mentioned above, in a criminal trial burden to prove its
case is on the complainant and not on the accused. Even if
the accused admitted that office existed at this address till
March, 1976, the burden was on the complainant to show
that the office existed at this address between September,
1983 till July, 1988 (when the accused was a director) or
thereafter, or that the accused wrongfully withheld it.
Company's possession of this property, from March, 1976
till 1988, is not proved, nor wrongful withholding is proved
in any manner. Even present wrongful withholding of
possession of the property is not proved. Even it is not
proved that Prakash Chand Gupta or Manju Devi Gupta
are using it under the directions of the accused. If the
accused failed to call P.C. Gupta or anybody else as
witness, the complainant could have called them, but it was
not done. No adverse inference needs to be drawn against
the accused on this count and the judgment relied upon by
the complainant in 72(1998) DLT 761 - Allora Electronics
& Cable Co. Vs. M/s. Shiv Charan & Bros. & ors., is not
helpful to the complainant being distinguishable on facts.
The complainant did not lead any evidence to prove
possession of the accused. This Court cannot proceed on
assumption that the possession of this property is of
accused through Prahlad Chand Gupta or somebody else.
What if P.C. Gupta or somebody else is withholding it?
P.C. Gupta was also a director of the company. What if,
P.C. Gupta or his LRs are withholding the property being
director? Such proceedings should have been initiated
against P.C. Gupta or his LRs and merely on the
assumption that accused is withholding it through Rahul or
anybody else; this Court cannot hold the accused guilty.
23. Turning to the property no.31, Vithalwadi, 108/116,
Kalba Devi Road, Mumbai, it is claimed by the
complainant that the accused admitted in his statement that
even at this place, the company had an accounts office till
March, 1976. Complainant claims that the accused has
failed to prove any documentary document as to how and
under what circumstances, this account office was
surrendered and it is claimed that this premises is still in
occupation of accused, who has allowed Sunil Khandelwal
s/o. Manohar Lal, who was one of the founding director of
the company, to use it. It is again claimed that Sunil
Khandelwal was named as a witness but was not examined
by the accused and, therefore, adverse inference needs to
be drawn against the accused. For the reasons mentioned
above regarding property no. 524, Giriraj, Mumbai, even
the present property is not proved to be in any manner
wrongfully withheld by the accused. There is no proof that
company had its office at this address after March, 1976,
more particularly between September, 1983 till July, 1988
or, thereafter. No witness is examined to show possession.
No date of surrender or parting possession of this property
has been put forth, nor any witness examined to show who
surrendered this office, when and how. Burden was on the
complainant and not on the accused. This Court cannot
proceed on presumption that Sunil Khandelwal was
withholding this property on the instructions of accused.
Accordingly, the complainant failed to show wrongfully
withholding of even this property.
24. Turning to property no.356, Jawahar Marg, Indore,
MP, it is claimed that the accused admitted in his statement
that the company had an account office at this place till
December, 1974 and the accused in the cross examination
of complainant admitted this fact. It is also claimed that
Punjab National Bank filed a suit for recovery against the
company at this address. It is claimed that the stand of the
accused that this premises was surrendered to the landlord
is false and it was still withheld by the accused. It is also
claimed that Purushottam Dass, an Ex Director of the
company is still in possession of the property and the
accused did not examine him, although he was named as a
witness, therefore, adverse inference needs to be drawn
against the accused. Again, the complainant has failed to
show that the company existed at this address at any time
after December, 1974, more particularly, between
September, 1983 till July, 1988 or thereafter. Burden was
on the complainant and not on the accused. There is no
admission by the accused in the cross examination of the
complainant that the company existed at this address in
1986. No suit or other proceedings, pending before Ld.
DRT, is proved to show that company's office existed at this
address during the relevant period. Admittedly,
Purushottem Dass, who is claimed to be in possession of
this property was also a director of the company and what
if Purushottam Dass is wrongfully withholding the
property? The complainant wants this Court to proceed on
mere presumption that accused is withholding this property
through Purushottam Dass. The complainant could have
examined Purushottam Dass, especially, when the burden
was on the complainant, but it was not done. Therefore, the
complainant failed to prove wrongful withholding of even
this property.
25. Turning to the property no.225, 77/79, N.S. Road
Calcutta, the complainant once again claims that accused
in his statement admitted that registered office of the
company existed at this address till December, 1991. It is
claimed that accused failed to show as to how, when and
under whose authority, this property was parted with after
1991. Complainant claims that accused is in possession of
this property and is liable to restore it to the company.
Except bare averment that this property was parted with by
the accused in 1991, no evidence has been led by the
complainant to show how and when this property was
parted with and by whom. Even if, the accused admits that
only registered office of the company existed at this address
till December, 1991, still that admission nowhere suggests
an inference to be drawn that the accused was wrongfully
withholding it till December, 1991 or that it was the
accused who parted with this property. No evidence has
been led to show that accused was in possession of this
property from September, 1983 till July, 1988 or thereafter.
No evidence is led to show that after July, 1998 till
December, 1991, the accused retained this property or
parted with this property. No one has been examined from
the premises or the office of company to show that it was
the accused who handed over the possession to anybody or
retained the possession of the property. How can this Court
presume that accused retained this property or parted with
its possession? Admission of accused in his statement, at
the most show, that till December, 1991 the office was
functioning. Nothing much can be read in this admission,
much less that it was in possession or control of accused in
any manner. Accordingly, even this property is not proved
to be wrongfully withheld by the accused.
26. Regarding property no. A-6, Cooperative Estate, Bala
Nagar, Hyderabad, it is claimed that the accused
transferred this property in the name of Southern Industrial
Cooperation, which is a proprietorship concern of the
accused himself. It is claimed that accused in his statement
admitted that company had a factory in a rented portion of
A-6, Cooperative Industrial Estate, Bala Nagar,
Hyderabad, till June, 198 and the accused denied presence
of the company at premises no. A-3, Cooperative Industrial
Estate. Regarding property no.28/29, Minister Road,
Secunderabad, the accused admitted that the company had
its sales office at that place till March, 1986. Regarding
property no.686A, Road No.10, Banjara Hills, Hyderabad,
accused admitted that 1/3rd of this property was provided
by the company for residential purposes to Late H.C.
Gupta and him from January, 1985 to June, 1989. The
complainant claims that vide Ex. PW1/30 dated 30.6.1973,
which is an official communication by Regional Iron &
Steel Controller, Hyderabad, to Iron & Steel Controller of
India and vide Ex. PW1/4 written by Sh. Ghanshyam Dass,
MD of the company on 02.6.1986, the complainant has
proved that a factory with plant and machinery existed at
premises no. A-6 & accused was called upon to hand over
the management and assets, which he failed to do and
refused vide Ex. PW1/6. Accused has not denied Ex. PW1/4
and PW1/6 in his statement, but it does not prove that plant
and machinery were installed in this premises. Court
cannot presume the existence of plant and machinery and it
ought to have been proved by the complainant. Ex. PW1/30
also does not prove anything about plant and machinery or
its value in the year 1986 or thereafter. A perusal of the
records reveal that a document has been proved as Ex.
CW1/D1 which are minutes of meetings of board of
directors held on 11.8.1975, and in the said meeting
it was resolved that because of recession in iron and steel
and for avoiding heavy losses, the machinery, plant and
buildings and lands were authorised to be disposed of. This
resolution was passed way back in 1975 i.e. much prior to
the accused becoming an Executive Director. If the
property is disposed of in pursuance of this meeting, the
accused cannot be prosecuted u/s. 630 of the Companies
Act, 1956. In such summary proceedings, this Court cannot
determine that this resolution was passed deliberately or
malafide to cause losses. The transfer of property cannot be
challenged now and if it is the case of complainant that this
resolution was passed in conspiracy to dispose of
machinery, plant, buildings and lands, the complainant had
appropriate remedies to challenge it, but this Court cannot
be called upon to call it malafide at this stage in the present
summary proceedings.
27. It is claimed by the complainant that sale of property
no. A-6, by the company to accused was without any
resolution of the board of directors or shareholders, to the
effect that the company can sell it to the accused, is useless
at this stage as the resolution is in favour of H.C. Gupta, to
sell the same due to recession. If the complainant claims
that a fraud has been committed vide this resolution dated
11.8.1975, the complainant had appropriate remedies
available to it for criminal prosecution or forgery or
getting it declared as a nullity, but this was never done and
now this Court cannot be called upon to question the
genuineness of resolution passed way back in 1975 i.e.
much prior to the accused becoming a Managing Director.
The genuineness of such resolution by the company cannot
be questioned u/s. 630 of the Companies Act, 1956. The
documents Ex. CW1/D1 to D6 are much prior to the
accused becoming director and this Court has no reason to
doubt its authenticity. Thus, the transfer of plant,
machinery or building cannot be called as malafide or
fraudulent, nor it can be called as wrongfully withheld by
the accused. The transfer of the property no. A-6, is not
questioned by the complainant in any Civil Court or
appropriate forum. As mentioned, title cannot be decided
by this Court. Calling the accused to wrongfully withhold
this property would virtually tentamount to deciding title of
the property now. Therefore, the complainant fails to prove
even this count. The document Ex. PW1/16, which is proved
by none other than the complainant shows that there was a
tripartite agreement between the Cooperative Industrial
Estate Ltd., the complainant and the Southern Industrial
Cooperation, regarding leasing out a portion of A-6, on a
rent of Rs.800 per month for five years from July, 1977. It
is claimed that the accused rented out the said premises to
seven tenants and earned Rs.40,000/- per month. No
evidence whatsoever has been led by the complainant to
substantiate this allegation. This Court cannot decide that
the transfer of this property was sham or bogus because of
the above said reasons.
28. Regarding property no. A-3, Cooperative Industrial
Estate, Hyderabad, the complainant claims that from the
cross examination of complainant witness, the accused is
deemed to have admitted that the company existed at this
address. Perusal of the cross examination of complainant
would reveal that regarding this property, there are no
such suggestion of the accused to the witness, but
regarding this property, it was the complainant, who took a
stand that the property was in the name of somebody else
and thereafter when the said owner took a loan from the
company and failed to repay, the said owner opened a firm
under the proprietorship of the company and property
remained with the company. The complainant did not lead
any evidence to prove this version. There is no admission of
accused regarding this. It was for the company to have
proved that this property is of company, especially when
the accused categorically denied that company had
anything to do in this property. In absence of any proof led
by the complainant, the possession of company in this
property, at any point of time, is not proved. Even
otherwise, the complainant's claim is that this property was
transferred by the father of the accused in the year 1981 in
the name of M/s. Harrison Enterprises. Therefore, this
transfer took place much prior to his becoming an
Executive Director in 1981. Fraudulent transfer of a
property if at all, before accused became Executive
Director, cannot be now determined in favour of the
complainant that the accused is wrongfully withholding the
property. Again it would be tentamounting to deciding title
of this property which this Court cannot do and
complainant ought to have challenged it in Civil Court. If
the complainant claims it to be a forgery, the complainant
had appropriate remedies available in law. Therefore, the
complainant has miserably failed to prove that this
property was of company or that the accused wrongfully
withheld the same. Similarly, there is no evidence led by the
complainant to show that the property no.28/29,
Secunderabad, or property no.686-A, Banjara Hills,
Hyderabad, was in any manner, wrongfully withheld by the
accused.
29. Similarly, turning to the allegations that the accused
was wrongfully withholding the documents of the company,
there is absolutely no proof or evidence led by the
complainant to show that the accused was in any manner
entrusted with the said things, and he was withholding it.
This Court cannot presume that those things were entrusted
to the accused or that he was withholding the same. In the
end, net result is that the complainant has miserably failed
to prove that the accused in any manner wrongfully
withheld any of the property or books or records of the
company and, therefore, the complaint is dismissed and the
accused is acquitted."
17. The aforesaid findings go to show that learned Trial Court extensively dealt
with each property by analyzing the evidence available on record. That being so, there
was no occasion to take recourse to S. 106 and 114 of the Evidence Act for raising an
adverse inference against the respondent. In fact, the findings do not suffer from any
infirmity which calls for interference.
18. Moreover, this is an appeal against an acquittal order and the law regarding
appeal against acquittal is by now well settled. In [email protected] and Another v.
State of Karnataka, (2014) 5 SCC 730, Hon'ble Supreme Court referred to the earlier
decisions in para 10,11,12, and 13 which are reproduced as under:-
10. Lord Russell in Sheo Swarup v. King Emperor , AIR 1934 PC 227],
highlighted the approach of the High Court as an appellate court hearing the
appeal against acquittal. Lord Russell said, "... the High Court should and will
always give proper weight and consideration to such matters as (1) the views
of the trial Judge as to the credibility of the witnesses; (2) the presumption of
innocence in favour of the accused, a presumption certainly not weakened by
the fact that he has been acquitted at his trial; (3) the right of the accused to
the benefit of any doubt; and (4) the slowness of an appellate court in
disturbing a finding of fact arrived at by a Judge who had the advantage of
seeing the witnesses." The opinion of the Lord Russell has been followed over
the years.
11. As early as in 1952, this Court in Surajpal Singh v. State , AIR 1952 SC
52] while dealing with the powers of the High Court in an appeal against
acquittal under Section 417 of the Code of Criminal Procedure observed,
"..........the High Court has full power to review the evidence upon which the
order of acquittal was founded, but it is equally well settled that the
presumption of innocence of the accused is further reinforced by his acquittal
by the trial court, and the findings of the trial court which had the advantage
of seeing the witnesses and hearing their evidence can be reversed only for
very substantial and compelling reasons."
12. The approach of the appellate court in the appeal against acquittal has
been dealt with by this Court in Tulsiram Kanu v. State , AIR 1954 SC 1],
Madan Mohan Singh v. State of U.P., AIR 1954 SC 637], Atley v. State of
U.P. , AIR 1955 SC 807],Aher Raja Khima v. State of Saurashtra , AIR
1956 SC 217], Balbir Singh v. State of Punjab , AIR 1957 SC 216],M.G.
Agarwal v. State of Maharashtra , AIR 1963 SC 200], Noor Khan v. State of
Rajasthan, AIR 1964 SC 286],Khedu Mohton v. State of Bihar, (1970) 2 SCC
450], Shivaji Sahabrao Bobade v. State of Maharashtra , (1973) 2 SCC
793], Lekha Yadav v. State of Bihar ,(1973) 2 SCC 424], Khem Karan v. State
of U.P. , (1974) 4 SCC 603],Bishan Singh v. State of Punjab , (1974) 3 SCC
288], Umedbhai Jadavbhai v. State of Gujarat ,(1978) 1 SCC 228], K. Gopal
Reddy v. State of A.P. ,(1979) 1 SCC 355], Tota Singh v. State of Punjab :
(1987) 2 SCC 529],Ram Kumar v. State of Haryana , 1995 Supp (1) SCC
248], Madan Lal v. State of J and K , (1997) 7 SCC 677],Sambasivan v. State
of Kerala , (1998) 5 SCC 412], Bhagwan Singh v. State of M.P. ,(2002) 4
SCC 85], Harijana Thirupala v. Public Prosecutor, High Court of A.P. ,
(2002) 6 SCC 470], C. Antony v. K.G. Raghavan Nair , (2003) 1 SCC 1],
State of Karnataka v. K. Gopalakrishna , (2005) 9 SCC 291], State of Goa
v. Sanjay Thakran , (2007) 3 SCC 755] and Chandrappa v. State of
Karnataka , (2007) 4 SCC 415]. It is not necessary to deal with these cases
individually. Suffice it to say that this Court has consistently held that in
dealing with appeals against acquittal, the appellate court must bear in mind
the following: (i) There is presumption of innocence in favour of an accused
person and such presumption is strengthened by the order of acquittal passed
in his favour by the trial court, (ii) The accused person is entitled to the
benefit of reasonable doubt when it deals with the merit of the appeal against
acquittal, (iii) Though, the power of the appellate court in considering the
appeals against acquittal are as extensive as its powers in appeals against
convictions but the appellate court is generally loath in disturbing the finding
of fact recorded by the trial court. It is so because the trial court had an
advantage of seeing the demeanor of the witnesses. If the trial court takes a
reasonable view of the facts of the case, interference by the appellate court
with the judgment of acquittal is not justified. Unless, the conclusions reached
by the trial court are palpably wrong or based on erroneous view of the law or
if such conclusions are allowed to stand, they are likely to result in grave
injustice, the reluctance on the part of the appellate court in interfering with
such conclusions is fully justified, and (iv) Merely because the appellate court
on re-appreciation and re-evaluation of the evidence is inclined to take a
different view, interference with the judgment of acquittal is not justified if
the view taken by the trial court is a possible view. The evenly balanced views
of the evidence must not result in the interference by the appellate court in the
judgment of the trial court.
13. In Ghurey Lal v. State of U.P. , (2008) 10 SCC 450], the Court has culled
out the principles relating to the appeals from a judgment of acquittal which
are in line with what we have observed above."
19. Keeping in view the aforesaid settled law coupled with the discussion made
above, there is no warrant for interference in the findings of the learned Trial Court.
Accordingly, appeal is dismissed. Pending application, if any, also stands disposed of.
Trial Court record be sent back.
(SUNITA GUPTA)
JUDGE
JULY 14, 2016/rd
