http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 13  

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.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 13  

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-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 13  

             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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 13  

             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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 13  

             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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 13  

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 763 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 13  

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 764 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-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 13  

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