S. Palaniswamy and others vs Sree Janardhana Mills Ltd.

Janarthanam, J.—The petitioners in all these matters are respectively accused in C. C. Nos. 115 to 118 of 1991 on the file of the Chief

Judicial Magistrate, Coimbatore, facing prosecution for the alleged offence u/s 630 of the Companies Act, 1956, for wrongful withholding of the

premises of Shri Janarthana Mills Limited, Uppilipalayam Post, Coimbatore 641 015, the respondent herein (allotted to them during their tenure of

office), even subsequent to their retirement, which event respectively occasioned on December 30, 1987, August 30, 1988, March 30, 1989, and

October 30, 1988. Subsequent to their retirement, the respondent issued notices calling upon them to vacate the premises and hand over vacant

possession, giving them reasonable time. Since they did not comply with the same, the respondent had been impelled to resort to prosecution as

aforesaid.

All the petitioners, it is said, approached a civil forum for filing a suit for a bare injunction and, on an interlocutory application filed therein,

obtained orders for maintenance of status quo.

After receipt of process, all the petitioners came forward with the present action invoking the inherent jurisdiction of this court to quash the

criminal proceedings initiated against them.

Learned counsel appearing for the petitioners would vehemently contend that, in the face of the orders of the civil court for maintenance of the

status quo in the civil suit filed by them, the proper course to be adopted is that the prosecutions launched before the criminal court are liable to be

quashed, inasmuch as it is the established law that the criminal courts are bound to respect the orders of the civil courts.

The submission of learned counsel appears to be luminous and attractive at first sight. But the utter untenability of this submission, however, gets

exposed by delving deep into the facts and circumstances of the case.

There is no pale of controversy that the premises in question belong absolutely to the respondent. All the petitioners were permitted to occupy

the premises during their tenure of office as an incident of service. In such a situation, the entitlement to possession of the premises enures to their

benefit during their tenure of office and the moment their employment gets terminated for whatever reason, it goes without saying that they have to

vacate the premises and h and over possession of the same for the benefit of their successors. There is no question of any relationship of landlord

and tenant in such cases. It is rather obvious that the civil court before which a suit appears to have been filed for a bare injunction, on the basis of

the claim of tenancy, does not appear to have been properly apprised of the legal position arising from the factual foundation of the petitioners

having been allotted the premises by the respondent, as an incident of service, creating no relationship of landlord and tenant. It is apparent and

quite evident, in the face of the salutary provisions adumbrated u/s 630 of the Companies Act that the moment the employment ceases, the

employee is not entitled to remain in possession of the premises allotted to him and the withholding of the premises, after cessation of the

employment, amounts to wrongful withholding, punishable as an offence by the criminal court, besides his being required to vacate and hand over

possession to the company which allotted the premises to him. It is thus clear that the offence of wrongful withholding of the premises becomes

complete the moment there is cessation of employment.

A situation similar to the one on hand arose for consideration in the case in Krishan Avtar Bahadur v. Col. Irwin Extross [1986] 59 Comp Cas

417 wherein a learned judge of the Bombay High Court expressed (page 426) :

The plea of tenancy is not at all open on the facts of this case. The flat in question belonging to the company was occupied by the petitioner during

the term of his employment with the company and he was entitled to occupy it only during his employment with company. After the termination of

his services with the company, he could not claim to continue to occupy the premises on the ground that he was a tenant thereof. 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 of

tenancy is based and if on those facts no plea can be raised, such a plea cannot be entertained. Consequently, I reject the contention of learned

counsel for the petitioner accused that the criminal court has no jurisdiction to entertain the complaint u/s 630 of the Companies Act, as the

petitioner claims to be a tenant thereof.

I respectfully agree with the view expressed by learned judge. In this view of the matter, it cannot be stated that the launching of prosecution for

the offence u/s 630 of the Companies Act is is incompetent even in the face of the pendency of the civil litigation between the parties.

For the reasons stated above, all the petitions deserve to be