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Hooghly Mills Company Ltd v. The State of West Bengal

Criminal Appeal · 2019 INSC 1159Decided 17 Oct 2019
Criminal Appeal No. 1571 of 2019
Justice Mohan M. Shantanagoudar · Justice Ajay Rastogi

Background

The appellant company agreed to buy a flat from the legal heirs of a deceased person, and under the agreement was put into possession pending full payment. A former director of the company, who had been using the flat and was later voted out as director, refused to vacate it, claiming a separate oral understanding with the original (now deceased) owner that he would eventually get the property. The company filed a criminal complaint under Section 630 of the Companies Act (wrongful withholding of company property) and separately sought an interim order under Section 630(2) directing him to hand over possession while the complaint was still pending; the trial Magistrate and Sessions Judge both granted this interim relief, but the Calcutta High Court quashed it using its inherent powers under Section 482 CrPC, reasoning the property was never allotted to him as a perquisite of service and the company had no proven title.

Decision Breakdown

The Supreme Court held the High Court was wrong to quash the interim possession order. It ruled that pendency of a related civil suit (where a temporary injunction maintained status quo) does not bar a Section 630 criminal complaint or interim relief under Section 630(2), since the two proceedings address different questions, and a temporary injunction in a civil suit does not defeat the company's right to pursue criminal remedies. The Court also held Section 630(2) relief can be granted before the main complaint is finally decided, that Section 630 does not require the company to prove full legal title to the property, and that there is no requirement the property have been given to the ex-director specifically as a service perquisite: what matters is that he held it in his capacity as an officer and continued to withhold it without an independent legal right after ceasing to be a director. Finding no exceptional illegality that would justify the High Court's use of its inherent Section 482 powers against this interlocutory order, the Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the interim order directing recovery of possession, while directing the underlying Section 630(1) trial be completed quickly and clarifying that if the civil suit is later decided in the ex-director's favour, possession would have to be restored to him.

Lesson Learnt

A company can use the Companies Act's summary criminal procedure to recover property wrongfully withheld by a former officer even while a related civil ownership dispute is pending elsewhere, and High Courts should not use their inherent powers to quash interim orders in such proceedings absent genuine illegality or jurisdictional error: a mere factual disagreement with a lower court's assessment is not enough.

Official source (sci.gov.in)View Judgment (PDF)

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