Jagdish
Chandra Nijhawan Vs. S.K. Saraf [1998] INSC 567 (27 November 1998)
G.T.
Nanavati, S.P Kurdukar. Nanavatli, J.
ACT:
HEAD NOTE:
This
appeal arises out of the judgment and order passed by the High Court of
Calcutta allowing Criminal Revision No.624 of 1986 and setting aside the order
of discharge passed by the Court of Judicial Magistrate, Ahpur, in Criminal
Case No.C/194/1985. The learned Magistrate had discharged the appellant on the
ground that the complaint filed by the respondent and the material-on-record
disclose that the dispute is really of a civil nature.
Sometime
before 29.4.1983, the appellant retired as a Chairman and Managing Director of
Andrew Yule & Co. Ltd. ABC Products Ltd. (for short 'ABC') desired to
employ him as its President and put him in overall charge of management. It
therefore, entered into an agreement with the appellant on 29.4.1983 and
appointed him as the President. Under the agreement the appellant was to be
provided with rent-free furnished flat described in the Schedule to that
agreement. ABC Consultants (P) Ltd.. stated to be a sister concern of ABC, was
the lessee of that flat. As the ABC wanted to employ the appellant as
President, it requested ABC Consultants (P) Ltd. to grant to it and the
appellant permission to use and occupy the said flat. On 29th April, 1983 ABC Consultants (P) Ltd. granted
that permission with a condition that the appellant was allowed to use it till
he remained with ABC. The appellant joined ABC on 16.5.1983 and was put in
possession of the said flat On 1.11.1983. ABC passed a Resolution appointing
the appellant as Managing Director of the Company. The terms and conditions of
appointment were as mentioned in the draw agreement prepared in that behalf.
The
appellant's term under the said draft agreement was for a period of 5 years
from 1.11.1983. On 21.1.1985, the Company Law Board approved the appointment of
the appellant as Managing Director not for the full term of 5 years but for 11
months only. The decision of the Company Law Board was communicated to the
appellant 5.2.1985. On 11.3.1985 he was again informed by ABC that in view of
further limited extension of his term by the Company Law Board, he is treated
as having ceased to be the Managing Director of the Company w.e.f 1.10.1984 and
as his employment thus stood terminated, he was called upon to hand-over
possession of the flat to it. As the appellant did not comply with the request,
ABC lodged a complaint on 12.7.1985 through its Commercial Manager - Mr. Saraf
- against the appellant for offences punishable under Section 630 of "the
Companies Act and Sections 406, 408 and 409 of the Indian Penal Code. ABC also
filed a suit on 9.12.1985 against the appellant for recovery of possession of
the flat. On 6.1.1986 the learned Magistrate discharged the appellant holding
that the dispute between the parties is of civil nature. It was against that
order that ABC filed a revision petition before the High Court.
The
High Court held that the material on record discloses a prima facie case under
Section 630 of the Companies Act and. therefore, the learned Magistrate acted
illegally in discharging the accused. As regards the charge under Sections 408
and 409 IPC, the High Court was of the view that prima facie the Company has
not made out any case of criminal misappropriation or criminal breach of trust,
warranting framing of a charge under Sections 406, 408 and 409 IPC. With this
observation, it has left that question open for consideration by the learned
Magistrate. Taking this view. the High Court, allowed the revision application,
quashed the order of discharge and remanded the case back to the learned Magistrale
for disposal in accordance with law.
Mr.
R.F. Nariman, learned senior counsel appearing for the appellant, contended
that the High Court has misconstrued the nature of the allegation made in the
complaint and it has wrongly held that the said complaint and the
material-on-record prima facie disclose that the appellant is wrongly
withholding the property of the complainant- company. After going through the matcrial-on-record
and the judgment of the High Court, we are of the view that the High Court
should not have interfered with the order of discharge passed by the learned
Magistrate.
It is
not in dispute that the appellant was put in possession of the flat pursuant to
the agreement dated 29.4.1983. The agreement discloses that the appellant
joined ABC mainly because he was offered a flat in "Triveli Court". That becomes apparent from
the conditions contained in Paragraphs 6.1, 6.1.1. 7.2, 7.2.1 and 7.2.4 of the
agreement and the assurance obtained by the appellant from ARC Consultants (P)
Ltd. before joining. The relevant paragraphs of the agreement are as under :-
"6.1 In case the date of termination be earlier than 30 months from the
date of commencement, then :
i)If
such termination be at the instance of the company, then the employee and/or
the employee's wife shall continue to enjoy rent-free accommodation during
their respective lives but only until the employee takes up any other
profession, vocation or business;
ii)If
the termination be due to the resignation of the employee, then the employee
shall within 30 days from the date of termination hand over to the company
vacant possession of the said flat together with all fixtures and fittings;
(iii)
In the event of the death of the employee or in case of the termination be due
to physical or mental disability of the employee, the employee and/or his Wife
shall continue to enjoy such rent free accommodation on the same term and
conditions as contained in clause (i) herein above;
6.1.1In
case the date of termination be after 30 months from the date of commencement,
then. irrespective of the reason of such termination the employee and his wife
shall be entitled to rent free accommodation during the period of their natural
lives; but only until the time the employee takes up any other employment,
business, profesion or vocation.
7.2Regarding
the Flat :
7.2.1It
is clarified that extending accommodation by company as stipulated hereinabove
is one of the primary considerations due to which the employee has agreed to
take up company's employment and the same is and shall be the essence of the
contract.
xxxxxx
7.2.4In case however, the company loses the right of tenancy and/or occupancy
of the said flat due to any reason whatever and the employee and/or his wife
continue to be entitled to the benefit thereof in terms hereof, then and in
such event, the company shall arrange an alternative accommodation of a similar
nature, locality and covered area for the employee and/or his wife."
Though the initial appointment of the appellant was as President of ABC
subsequently by mutual consent he was appointed as Managing Director of ABC.
The appellant's tenure as the Managing Director came to an end as the Company
Law Board agreed to his appointment for a limited period only. The appellant
had neither resigned nor taken up any employment elsewhere. It is also not
alleged that lie had started any business, profession or vocation. It was ABC
which informed the appellant that his employment stood terminated with effect
from 1.10.84. Therefore, prima facie sub-paragraph (i) of Paragraph 6.1 would
apply to the facts of this case. The contention raised on behalf of ABC that
when the appellant became the Managing Director of ABC he should be deemed to
have resigned as the President of ABC does not prima facie appear to be
correct. We are not dealing with this aspect any further as the civil suit
filed by ABC against the appellant is still pending and we do not want our
observations to prejudice the case of either party.
We
only say that the trial court was right in holding that the dispute between the
parties is of civil nature and that in view of the facts and circumstances of
the case, it is not possible to say that the appellant has wrongfully withheld
the property of ABC in his possession. An important circumstance which came
into existence meanwhile is that the appellant purchased the flat from its
owner on 12.11.1984 and has thus become an owner of it. It is also significant
to note that ABC was not the lessee of the flat and except for the permission
granted by ABC Consultants (P) Ltd. to it and the appellant, it has no right,
title or interest in that flat. ABC Consultants (P) Ltd. has not chosen to
revoke the licence in favour of the appellant or Take any action against him. In
case of the appellant ceasing to be entitled to occupy the flat. ABC has prima
facie no right of occupying or using it independently. All these material
aspects have not been properly appreciated by the High Court. Therefore, the
judgment and order passed by the High Court deserves to be set aside.
We,
therefore, allow this appeal, set aside the order passed in Criminal Revision
No. 62 4 of i986 and restore the order of discharge passed by the Court of
Judicial Magistrate, Allpur, in Crl. Case No.C/194/1985.
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