Important Point
Where as per agreement of employment employee and his wife would be entitled to live, until their natural death, in the flat provided to employee even if Company terminates his employment, criminal prosecution for wrongful withholding of flat could not be maintained against employee as dispute is civil in nature.

Headnote:Companies Act, 1956-Section 630-Offences and prosecution-Wrongful withholding of Company’s Property-Appellant was appointed as President and later on as M.D. by an agreement between Company and appellant which would be inforce for five years-Main consideration for appellant accepting appointment was rent free accommodation of a flat-Appellant and his wife would be entitled to live therein until their respective natural death except when appellant resigns on his own and further accepts any other employment or do business or vocation-Company Law Board accepted appoint only for 11 months-Company informed appellant his service stood terminated on expiry of 11 months-Prosecution launched on ground that appellant failed to handover vacant possession of flat-Trial Court discharged appellant holding dispute civil in nature-High Court set aside discharge order holding that prima facie case u/s 630 made out-Whether correct : Held, No-Materials on record show that dispute civil in nature-Order of High Court set aside. (Paras 3 to 5)

Judgment

Nanavati, 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, Alipur, 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.

2. Sometime before 29.4.1983, the appellant retired as a Chairman and Managing Director of Andrew Yule and 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 draft agreement prepared in that behalf. The appellant’s term under the said 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 on 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 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 Magistrate 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 m

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