Holding

A petition under Section 630 of the Companies Act is maintainable against the legal heirs of a deceased officer/employee for retrieval of the company's property.

Summary

The heirs of an employee who died while in service were prosecuted by the employer under Section 630 of the Companies Act, 1956 for refusing to vacate premises allotted to the deceased. The heirs filed petitions under Section 482 of the Cr.P.C. seeking to quash the proceedings, arguing that the provision did not apply to them. The High Court dismissed the petitions, and the matter went to the Supreme Court. The Court examined the language and purpose of Section 630, holding that the term "officer or employee" includes past officers, employees and their legal heirs who continue to occupy the property. It ruled that the heirs are liable for wrongful withholding of the company's property and that the petition under Section 630 is maintainable against them. Consequently, the Supreme Court affirmed the High Court’s decision and dismissed the appeals.

Issues considered

Whether Section 630 of the Companies Act, 1956 is applicable to the legal heirs of a deceased employee/officer for wrongful withholding of company property.
Whether a petition under Section 482 of the Cr.P.C. to quash proceedings under Section 630 is maintainable.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Companies Act, 1956s. 630

Subjects

Section 630Companies Act 1956legal heirswrongful withholding of propertyquash proceedingsCrPC Section 482interpretation of statutesoccupancy of company premisespenal provisioncontinuing offence

Judgment

SMT. ABHILASH VU-JODKUMAR JAIN ETC. A
-1
v.
COX AND KINGS (INDIA) LTD. AND ORS. ETC.

MARCH 21, 1995

(A.S. ANAND AND K.S. PARIPOORNAN, JJ.] B

Companies Act, 1956:

S.63lr-Allotment of premises by Company to its employeej-
Employees dying in hamess-Failure of legal heirs to hand, over vacant C
possession-Company launching prosecution for retrieval of company's
property-Maimainability of-Ambit and scope of S.63o-Quashing of the
proceedings-Power of the High Court-Cr.P.C.-S.482.

Interpretation of Statutes:
D
Beneficient provision-Interpretation of-Duty of Court to defend the

- law from clever· evasion and defeat and to prevent perpetration of a legal
fraud-Court to be ever alive to this principle.

The appellants, legal heirs of the Respondent's employee who died
in harness, were proceeded against by the respondent-employer under E
S.630 of the Companies Act, 1956 for their failure to hand over vacant
possession of the premises allotted to the said employee.

The appellant filed petitions under S.482 Cr.P.C•. seeking quashing
of the proceedings on the ground that the provisions of S.630 of the
Companies Act cannot be invoked against the legal heirs of a deceased F
employee who died in harness and as such the complaint against them
under S.630 of the Act was not maintainable. The High Court dismissed
their petitions filed under S.482 Cr.P.C. Hence these appeals.

Dismissing the appeals, this Court.
G
J HELD:l.1. A petition under Section 630 of the Companies Act is
maintainable against the legal heirs of the deceased officer/employee for
retrieval of the company's property wrongfully withheld by them after the
demise of the employee concerned. The High Court was, therefore, right in
dismissing the petitions filed by the appellants under Section 482 Cr.P.C. H
873
874 SUPREME COURT REPORTS [1995] 2 S.C.R.

.A and declining to quash the proceedings initiated by the employer of the
deceased employees for retrieval of the company's property under Section '..___
630 of the Act. [886-E]

1.2. Clause(a) of Section 630.(1) is self-contained and independent of
Clause(b) with the capacity of creating penal liability embracing the case
B of an existing employee or officer of the company and includes a past
officer or. a past employee of the company. Clause(b) is equally inde-
pendent and distinct from Clause(a) as regards penal consequences and
it squarely applies (o the cases of past employees or officers. The entit~e
ment of the officer or employee to the allotted property of the company is
C contingent upon the right and capacity of the officer or the employee by
virtue of his employment to continue in possession of the property belong-
ing to the company, under authority of the company and the duration of
such right is co-terminus with his/her employment. [881-G-H, 882-A-B]

D 1.3 Th.e legal representatives of the heirs of a 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 withhold-
ing 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
E 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 occupan~ in the
property of the company, by virtue of being family members of the employee
F of 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 have no and indep.endent 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
G 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. [883-D-H]

H 1.4 Even though Section 630 of the Act falls in Part- XIII of the
.
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:: , \. • A.V.JA1~v.COXANDKINGS(I)LID., 875
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Companies Act provides for penal conseqnences for wrongful withholding A
, of tbe property of the Company, the provi~ioos strictly speaking are not
penal in the sense as understood under the penal law. The provisions are
quasi- criminal They have been enacted with the main object of providing
speedy relief to a company when its property is wrongfully obtained or
wrongfully withhold by an employee or officer or an ex-employee or officer, B
or anyone claiming under them. A proper construction of the Section
would rn; that the term "officer or employee' or a company in Section 630
or the Act would by a deeming fiction include the legal heirs and repre-
sentatives or the empioyee or the officer concerned continuing in occupa-
tion or the property or the company after the death 'or the employee or the
officer. [884-A-C] , , ,, C
1.5 The object of the Companies Act interalia Is to regulate the afJairs
of the compa~ies iodudiog the control orthe management, and protection or
the property of the company. Tb: object or Section 630 or the Act has, thus,
a direct nexus ;,;th the oliiector the Act. It provides speedy relief t<>::U,e
company where its property is wrongfully obtaine-d or wrongfully withheld D
by an "employee or a'o officer" or a "past employee or an officer" or 1egal
heirs and representativ~s' deriving their colour and content from such~
employ..i or officer" In so far as the_ occupation and -possession of the
property belonging to the company' Is concerned. The failure to deliver
property back to the employer on the termination, resignation, superannua- E
tioo or death or an employee, would render, the "holding" or that property
wrongful and actionable under'Section 630 of the AcL To hold that the 1egal
heirs' would not be covered by the provisions or Section 630 orthe Act would
be unrealistic and illogical [884-H, 885-A·CJ
F
1.6 The legislature which Is supposed to know and appreciate the
needs of the people, by enacting Section 630 of the Act manifested that It was -
conscious or the position that today in the corporate sector - private or
public enterprise - the employees/officers are often provided residential
accommodation by the employer for the _'use and occupation' or the con-
cerned employee during the course of his employmeoL More often than not, - G
it is a part or the conditions or service or the employee that the employer
shall provide him residential accommodation during the course or his ·
employmeoL Ir an employee or a past employee or any one claiming the
right or occupancy under them, were to continue to 'hold' the property
belonging to the company, after the right to be in occupation has ceased for
876 SUPREME COURT REPORTS [1995) 2 S.C.R.

A . one reason or the other, it would not only create difficulties for the company,
which shall not be able to allot that property to its other employees, but
would also cause hardship for the employees awaiting allotment and defeat
the intention of the legislature. The courts are therefore obliged to place a
broader, libet"al and purposeful construction on the provisions. (885-D-F]

B 1.7 In interpreting a beneficent provision, the Court must be for ever
alive to the principle that it is the duty of the court to defend the law from
clever evasion and defeat and prev~nt perpetration of a legal fraud. (886-D]

1.8 The Court, when approached by the employer for taking action
under Section 630 of the Act, can examine the basis on which · the peti·
C tion/complaint is filed and if it is found that the company's right to retrieve
its property is quite explicit and the stand of the employee, or any one
claiming through him, to continue in possession is baseless, it shall proceed
to act under Section 630 of the Act and pass appropriate orders. Only an
independent valid right, not only to occupation but also to possession of
D the property belonging to the company, unconnected with the employment
of the deceased employee can defeat an action under Section 630 of the Act
if it can be established that the concerned deceased employee had not
wrongfully nor knowingly applied it for purposes other than those
authorised by the employer. (886-A-C]

E Baldev Krishna Sahi v. Snipping Corporation of India Limited andAnr.,
(1988) 1 SCR 168; Amrit Lal Chum v. Devoprasad Dutta Roy and Anr. etc,
. (1988) 2SCR183;Atul Mathurv.Atul Kalra and Another, (1989] 4 SCC 514
and Gokak Patel Vo/kart Ltd. v. Dundayya GulUShiddaiah Hiremath and
Others, (1991) SCC 144, relied on.
\
F Harkishin Lakhimal Gidwani v. Achyut Kashinath Wagh, (1982) 52
Company Cases 1, Govind T. Jagtiani v. Shajuddin S. Kazi andAnr., (1984)
56 Company cases 329, approved•

. Amrit Lal Chum v. Devi Ranjan Iha, (1987) 61 Company Cases 211
G and Beharilal and another v. Binod Mills Company Limited, (1987) 3 Comp
U 246 (MP), disapproved.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
400 of 1995 etc.

H From the Judgment and Order dated 13.12.93 of the Bombay High
AV. JAIN v. COX AND KINGS (I) LID. [DR. ANAND, J.) 877

Court in Crl.W.P. No. 414 of 1992. A
D. Dave, N.M. Sakhardande, AM. Khanwilkar, K.V. Vishwanathan
and Anil Agarwalla for L.P. Aggarwal & Co. for the Appellants.

V.P. Vashi, K.J. John and A.S. Basme for the Respondents.
B
The Judgment of the Court was delivered by

DR. J. ANAND, J. Leave granted.

Both these appeals raise a common question of law and are being
disposed of by this common judgment. C
The admitted facts, which alone are relevant for the purpose of these
appeals and are not in dispute are that the appellants in both the cases are
the legal heirs of the employee/officer who died in harness while serving
with the respective respondent company. The concerned employees in both
the cases had been allotted premises during their service by their respective D
employer (respondent company) and on the failure of the appellants to
handover the vacant possesseon of the allotted premises after the demise
of the employee/officer concerned, prosecutions were launched against
them (legal heirs) under Section 630 of the Companies Act, 1956
(hereinafter referred to as 'the Act'). The appellants approached the High E
Court through petitions under Section 432 Cr.P.C. seeking quashing of the
proceedings on the ground that the provisions of Section 630 of the Act
cannot be invoked against the legal heirs of a deceased employee, who had
died in harness, and as such the complaint against them under Section ~30
of the Act was not maintainable. The High Court dismissed their petitions F
filed under Section 482 Cr.P.C. Hence, these appeals.

I.,- The meaningful question and as a matter of fact the only question
which has been canvassed before us is: whether a petition under Section
630 of the Act is maintainable against the legal heirs of a deceased officer
or an employee for retrieval of the company's property? G
With a view to answer the question, it is desirable that we may first
notice the provisions of Section 630 of the Act. The said Section reads :-

630. Penalty for wrongful withholding of property. - (1) If any
officer or employee of a company - H
878 SUPREME COURT REPORTS (1995) 2 S.C.R.

A (a) wrongfully obtains possession of any pro~erty of a company;
or

(b) having any such property in his possession, wrongfully with-
holds it or knowingly applies it to purposes other than thDse
expressed or directed in the articles and authorised by this Act;
B
he shall, on the complaint bf the company or any creditor or
contributory thereof, be puni~hable with fine which may extend to
one thousand rupees.

(2) The Court trying the offence· may also order such officer or
c employed to deliver up or refund, within a time to be fixed by the
Court, any such property wrongfully obtained or wrongfully with-
held or knowingly misapplied, or in default, to suffer imprisonment
for a term which may extend to two years.

D There was a divergence of opinion between various High Courts
regarding the interpretation of the expression "any officer or employee of
a company'' occurring in Clause (1) of Section 630 of the Act. The Bombay
High Court in Harkishin Lakhimal Gidwani v. Achyut Kashinath Wagh,
(1982) 52 Company Cases 1 gave a broader interpretation to the words and
E held that the expression would include an ex-officer or an ex-employee of
the company also while the Calcutta High Court inAmrit Lal Chum v. Devi
Ranjan Iha, ((1987) 61 Company Cases 211) gave a narrow interpretation
and opined that an ex-officer or an ex-employee is not included in the said
expression and that the applicability of the provisions is rectricted to an
existing employee or officer. The High Court of Madhya Pradesh in
F Beharilal And Another v. Binod Mills Company Limited, (1987] 3 Comp U
246 (MP) following the Calcutta High Court view held that the provisions
embodied in Section 630 (1) of the Act do not contemplate criminal
proceedings being launched against relatives of an erstwhile employee or
officer for recovering the possession of the property of the company.
G This Court while hearing an appeal against the judgment of the
Bombay High Court in Baldev Krishna Sahi v. Shipping Corporation of India
Limited & Anr., [1988) 1 SCR 168) resolved the conflict and set the
controversy at rest. It has hold that the expression "officer" or "employee"
of a company applies not only to existing officers or employees but also
H includes past officers or employees, where such officer or employee either
A.V.JAINv. COX AND KINGS(I) LTD. [DR. ANAND,J.) 879

(a) wrongfully obtains possession of any property, or (b) having obtained A
possession of such properly during his employment, wrongfully withholds
the same after the termination of his employment. The Court opined:

"The beneficient provision contained in s.630 no doubt penal, has
been purposely enacted by the legislature with the object of provid-
ing a summary procedure for retrieving the property of the com-
B
pany (a) where an officer or employee of a company wrongfully
obtains possession of property of the 2ompany, 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 C
a broad and liberal constrnction on the provision in furtherance of
the object and purpose of the legislation which would suppress the
mischief and advance the remedy.

Section 630 of the Act which makes the wrongful withholding of D
any property of a company by an officer or employee of the

- company a penal offence, is typical of the economy of language
which is characteristic of the draftsman of the Act. The section is
in two parts. Sub-s (1) by clauses (a) and (b) creates two distinct
and separate offences. First of these is the one contemplated by
cl. (a), namely, where an officer or employee of a company wrong- E
fully obtains possession of any property of the company during the
course of his employment, to which he is not entitled. Normally, it
is only the present officers and employees who can secure posses-
sion of any property of a company. It is also possible for such an
officer or employee after termination of his employment to wrong- F
fully take away possession of any such property. This is the function
of cl. (a) and although it primarily refers to the existing officers
and employees. In contract, cl.(b) contemplates a case where an
officer or employee of a company having any property of a
company in his possession wrongfully withholds it or knowingly
applies it to purposes other than these expressed or directed in G
the articles and authorised by the Act. It may well be that an officer
or employP.e may have lawfully obtained possession of any such
property during the course of his employment but wro~gfully with-
holds it after the tennination of his employment. That appears to be
one of the functions of cl.(b). It would be noticed that cl.(b) ·also H
T

880 SUPREME COURT REPORTS (1995) 2 S.C.R.
!

A makes it an offence if any officer or employee of a 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 b.y the Act. That would primarily apply to
the present officers and employees and may also include past
officers and employees. There is therefore no wa"ant to give a
B restrictive meaning to the them 'officer or employee' appearing in
sub-s. ( 1) of s.630 of the Act. It is quite evident that clauses (a) and
(b) and separated by the word 'or' and therefore are clearly
disjunctive." (Emphasis supplied)

·C This Court then hold that the decision of the Calcutta High Court in '----+--
Amrit Lal Chum's case (supra) as erroneous and over- ruled the same. It
was opined that the restrictive meaning to the term 'officer or employee'
which must take its colour from the context in which it appears wowd
defeat the object of the provisions of Section 630 of the Act viz. preserva-
. D - tion of the property of a company by the creation of two distinct offences
by clauses (a) and (b) which arise under different set of circumstances. The
Bench noticed with approval the judgment of the Bombay High court in
'
Harkishin Lakhimal Gidwani v.Achyut Kashinath Wagh &Anr. (supra) and
Govind T. Jagtiani v. Sirajuddin S. Kazi & Anr., [1984) 56 Company Cases
E 329.

A three Judge B.ench later on inAmrit Lal Chum v. Devoprasad Dutta
Roy & Anr. etc., [1988] 2 SCR 783, while hearing an appeal from the
judgment of the Calcutta High Court in Amrit Lal Chum's case (supra)
F · held that Section 630 of the Act plainly makes it an offence if an officer
or employee of a company who was permitted to use the property of the
company during his employment wrongfully retains or occupies the same
after the termination of his employment. It was opined that it is the
wrongful holding of the property of the company after the termination of
the employment which is an offence under Section 630 (1) of the Act and
1 G that there is no warrant to give a restrictive meaning to the term.'officer
of employee' appearing in Sub-section (1) of Section 630 of the Act as
meaning only an existing officer or an existing employee and not those
whose employment bad been terminated or had otherwise come to an end.
The Bench approved the law laid down by this Court in Baldev Krishna
H Sahi's case (supra).
AV.JAIN\'. COX AND KINGS (I) LTD. [DR.ANAND,J.] ·881

In At11/ Mathur v. At11/ Katra and Another, (1989] 4 SCC, 514 this A
Court once again emphasised that the object of the provisions of Section
630 of the Act is to retrieve _the property ~f the company and that even
though the provisions are penal in nature, the object of the provision is
required to be given a purposive interpretation so as not to choke the
beneficient provision. The Division Bench once again followed the judg- B
ment in Ba/dev Krishna Sahi's case (supra).

In Gokak Patel Vo/kan Ltd. v. Dundayya Gurnshiddaiah Hiremath "
And Others, (1991) 2 SCC, 141, the Division Bench reviewed the previous
judgments rendered by this Court and relying upon the law laid down in
Baldev Krishna Sahi's case (supra) and Amrit Lal Chum's case (supra) C
hold that the offence under Section 630 of the Act is not such as can be
said to have consummated once for all and that the offence continues until
the officer or employee delivers up or refunds the property of the company
when ordered by the Court to do so within a time fixed by the Court and
in default to suffer the term of imprisonment as may be imposed by the
court. It was hold that 'officer of employee' under Section 630 of the Act D-
includes both present and past officers and employees.

Thus, it would be seen that this Court has consistently taken the view
and repeatedly emphasised that the provisions of Section 630 of the Act
have to be given purposive and wider interpretation and not restrictive E
interpretation. In the four cases referred to above, however, this Court was
not required to directly consider and deal with the question, whether the
provisions of Section 630 of the Act can be invoked against the legal heirs,
for wrongfully withholding the property of the compcmy, on the. death in
harness of an employee or officer of the company to whom the property
was allotted. In these two appeals that precisely is the issue which invites F
our attention.

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
G
Clause (b) with the capacity of creating penal liability embracing the case
> of an existing employee or 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) H
'
882 SUPREME COURT REPORTS [1995) 2 S.C.R.

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 proper-
ty of the company is contingent upon the right and capacity of the office
or the employee by virtue of his employment to continue in possession of
B the property belonging to the company, under authority of the company
and the duration of such right is co-terminus with his/her employment.

""
Thus, inescapably it follows that the capacity, right to possession and
the duration of occupation are all feature_s, which are integrally blended
C with the employment and the capacity and the corresponding rights are
existinguished with the cessation of employment and an obligation arises
to handove_~JJie allotted property back to the company. Where the proper-
ty of the COIJ!pany is hold back whether by the employee, past employee or
any one clairiijng under them, the retained possession would amount to
D wrongful withholding of the property of the company, actionable under
Section 630 of the Act. The argument of the learned counsels 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 interpretive extension be included in the said provision,
E 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's case (supra) also while resisting the exten-
F sion of the provisions of Section 630 of the Act to the past employee or past
officer and rejecting the same, this Court opined:

"The first and foremost argument of learned counsel for the
petitioner is that the provision contained in s.630 of the Act is a
penal provision and therefore must be subject to a strict construc-
G tion 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 cl. (b) of sub-s. (1) for the
H contention that cl.(b) does not stand by itself but is inter-connected
AV.JAINv. COX AND KINGS (I) LTD. [DR. ANAND,J.) 883
with cl.(a) and therefore both clauses (a) and (b) must be read /'..
together. In essence, the submissions is that sub-s. (1) of s.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
B
within the ambit of s.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 ss.538 and 545. The
entire argument of the learned counsel is based upon the judgment
of the High Court of Calcutta in Amrit Lal Chum's case. We are c
afraid, we find it difficult to subscribe to the narrow construction
placed by the High Court of Calcutta on the provision contained
in sub- s.(1) of s.630 of the Act which defeats the very purpose
and object with which it had been introduced."
D
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 im- E
material 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 F
occupancy in the property of the company, by virtue of being family
members of the employee 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 G
termination of services, retirement, resignation or death, gets extinguished,
they (persons in occupation) are under an obligation to return t~e 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. H
884 / SUPREME COURT REPORTS (1995] 2 S.C.R.

A Even though Section 630 of the Act falls in Part XIII of the Com-
panies Act and provides for penal consequences for wrongful withholding
of the property of the company, the provisions strictly speaking arc not ~-
penal in the sense as understood.under the penal law. The pro\"isions are
quasi-criminal. They have been enacted with the main object of providing
B speedy r,lief to a company when its property is wrongfully obtained or
wrongfully withhold by an employee or officer or an ex-employee or officer
o~ anyone claiming under them. In our opinion, a proper construction of
the Section would be that the term "officer or employee" of a company in
Section 630 of the Act would by a deeming fiction include the legal heirs
and representatives of the employee or the officer concerned continuing in
. C occupation of the property of the company after the death of the employee
or the officer.

Under sub-section (1) of Section 630 for the wrongful obtaining of
the possession of the property of the company or wrongfully withholding
D it or knowingly applying it to a purpose other than that authorised by the
company, the employee or the officer concerned is "punishable with fine
which may extend to one thousand rupees". The "fine" under this sub-Sec-
tion is to be understood in the nature of "compensation" for wrongful
withholding of the property of the company. Under sub-Section (2) what
E is made punishable is the disobedience of the order of the Court, directing
the person, continuing in occupation, after the right of the employee; or the
officer to occupation has extinguished, to deliver up or refund within a time
to be fixed by the Court, the property of the company obtained or wrong-
fully withhold or knowingly misapplied. Thus, it is in the event of the
disobedience of the order of the Court, that imprisonment for a term which
F · may extend to two years has been prescribed. The provision makes the
defaulter, whether an employee or a past employee or the legal heir of the
employee, who disobeys the order of the Court to hand back the property
to the company within the prescribed time liable for punishment.

G The object of the Companies Act inter alia is to. regulate the affairs
of the companies including the control of the management and protection,
of the property of the company. The obje<1t of Section 630 of the Act has,
thus, a direct nexus with the object of tlre Act. It is precisely for this reason
that in Gokak Patel Vo/kart's case (supra) this Court held the offence
H under Section 630 of the A.ct to be "a continuing offence".
AV. JAIN 1·. COX AND KINGS (I) LTD. [DR. ANAND, .I.) 8S5
Section 630 of the Act pnwides speedy relief to the company where A
/ it property is wrongfully obtained or wrongfully withheld by an "employee
or an officer" or a "past employee or an officer" or "legal heirs and
representati\·es" driYing their colour and content from such an employee
or officer" in so far as the occupation and possession of the property
belonging to the company is concerned. The failure to deliver property
back to the employer on the termination, resignation, superannuation or
B
death of an employee, would render the "holding" of that property wrongful
and actionable under Section 630 of the Act. To hold that the "legal heirs"
would not be covered by the provisions of Section 630 of the Act would be
unrealistic and illogical. It would defeat the "beneficient" provision and
ignore, the factual realities that the legal heirs or family members who are c
continuing in pos!;ession of the allotted property, had obtained the right of
occupancy with the concerned employee in the property of the employer
only by virtue of their relationship with the employee/officer and had not
obtained or acquired the right to possession of the property in any other
capacity, status or right. The legislature, which is supposed to know and D
appreciate the needs of the people, by enacting Section 630 of the Act
manifested that it was conscious of the position that today in the corporate
sector - private or public enterprise - the employees officer are often
provided ·residential accommodation by the employer for the 'use and
occupation' of the concerned employee during the course of his employ-
ment. More often than not, i~ is a part of the service conditions of the E
employee that the employer shall provide him residential accommodation
during the course of his employment. If an employee or a past employee
or anyone claiming the right of occupancy under them, were to continue
to 'hold' the property belonging to the company, after the right to be in
occupation has ceased for one reason or the other, it would not only create
F
difficulties for the company, which shall not be able to allot that property
to its other employees, but would also cause hardship for the employee
awaiting allotment and defeat the intention of the legislature. The courts
are therefore obliged to place a broader, liberal and purposeful construc-
tion on the provisions of Section 630 of the Act in furtherance of the object
and purpose of the legislation and construe it in a wider sense to effectuate G
the intendment of the provision. The "heirs and legal representatives" of
the deceased employee have no independent capacity or status to continue
in occupation and possession of the property, which stood alloted to the
employee or the officer concerned or resist the return of the property to
H
886 SUPREME COURT REPORTS (1995) 2 S.C.R.

A the <:mploycr, in the absence of any express agreement to the contrary \
entered with them by the employer. The Court, when approached by the
employer for taking action under Section 630 of the Act, can examine the
basis on which the petition/complaint is filed and if it is found that the
company's right to retrieve its property is quite explicit and the stand of
B the employee, or any one claiming through him, to continue in possession
is baseless, it shall proceed to act under Section 630 of the Act and pass
appropriate orders. Only an independent valid right, not only to occupation
but also to possession of the property belonging to the company, uncon-
nected with the employment of the deceased employee can defeat an action
under Section 630 of the Act if it can be established that the concerned
C deceased employee had not wrongfully nor knowingly applied it for pur-
poses other than those authorised by the employer. In interpreting a
beneficient provision, the Court must be for over alive to the principle that
it is the quty of the court to defend the law from clever evassion and defeat
and prevent perpetration of a legal fraud.

D Thus, our answer to the question posed in the earlier part of this
judgment is in the affirmative and we hold that a1 petition under Section
630 of the Act is maintainable against the legal heirs M the deceased
officer/employee for retrieval of the company's property wrongfully with-
hold by them after the demise of the employee concerned. The High Court
E was, therefore, right in dismissing the petitions filed by the appellants
under Section 482 Cr.P.C. and declining to quash of the proceedings
initiated by the employer of the, deceased employee for retrieval of the
company's property under Section 630 of the Act. These appeals conse-
quently fail and are dismissed. No costs.

G.N. ' Appeals dismissed.