GOPIKA CHANDRABHUSHAN SARAN & ANR. versus M/S. XLO INDIA LTD. & ANR.

Citation: [2009] 2 S.C.R. 256 · Decided: 13-02-2009 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed
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Judgment (excerpt)

[2009] 2 S.C.R. 256 
A 
GOPIKA CHANDRABHUSHAN SARAN & ANR. 
V. 
MIS. XLO INDIA LTD. & ANR. 
Criminal Appeal No.295 Of 2009 
B 
FEBRUARY 13, 2009 
(S.8. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.) 
Companies Act, 1956: S.630 : 
Scope and ambit of - Whether the proceedings cover 
t 
.. _ 
c within its purview only the employee of the compa_ny or also 
the persons claiming a right through him or under him - Held: 
S. 630 will cover within its ambit not only the employee or of-
ficer but also the past employee or the past officer or the heirs 
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of the deceased employee or anyone claiming under them in 
D possession of the property. 
The scope ambit of the provisions of s.630 of the 
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Companies Act, 1956, more specifically as to whether the 
proceedings under the said provision would cover within 
its purview only the employee of the company or also the 
E persons claiming a right through him or under him is the 
issue that arose for consideration by the Court. 
Dismissing the appeal, the Court 
HELD: 1.1 The main purpose to make action an of-
, 
F fence under Section 630 of the Companies Act, 1956 is to 
provide a speedy and summary procedure for retrieving 
the property of the company where it has been wrongly 
obtained by the employee or officer of the company· or 
where the property has been lawfully obtained but un-
G lawfully retained after termination of the employment of 
the employee or the officer. From the bare reading of the 
section, it is apparent that sub-section (1) is in two parts. 
.. 
Clauses (a) and (b) of sub-section (1) create two different 
( 
and separate offences. Clause (a) contemplates a situa-
H 
256 
GOPIKA CHANDRABHUSHAN SARAN & ANR. V. MIS. 257 
XLO INDIA LTD. & ANR. 
tion wherein an officer or employee of the company A 
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wrongfully obtains possession of any property of the 
company during the course of his employment to which 
he is not entitled whereas clause (b) contemplates a case 
where an officer or employee of the company having any 
property of the company in his possession, wrongfully B 
withholds it or knowingly applies it to purposes other than 
those expressed or directed in the articles and authorised 
by the company. Under this provision, it may be that an 
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officer or an employee may have lawfully obtained pos-
I 
session of any property during the course of his employ- c 
ment, still it is an offence if he wrongfully withholds it af -
ter the termination of his emP.loyment. Clause (b) also 
makes it an offence, if any officer or employee of the com-
pany having any property of the company in his posses-
sion knowingly applies it to purposes other than those D 
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expressed or directed in the articles and authorised by 
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the Act. In tertns of sub-section (2) the court is empow-
ered to impose a fine on the officer or employee of the 
company if found in breach of the provision of Section 
630 of the Companies Act and further to issue direction if 
E 
the court feels it just and appropriate for delivery of the 
possession of the property of the company and to impose 
a sentence of imprisonment when there is non-compli-
ance with the order of the court regarding delivery or re-
fund of the property of the company. [Para 13) [264-C, D, 
E, F, G, H; 265-A] 
F 
1.2 The capacity, right to possession and the dura-
tion of occupation are all features which are integrally 
blended with the employment. Once the right of the em-
ployee or the officer to retain the possession of the prop-
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erty, either on account of termination of services, retire-
ment, resignation or death, gets extinguished, they (per-
sons 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 H 
258 
SUPREME COURT REPORTS 
[2009] 2 S.C.R. 
A Section 630 of the Act for retrieval of the possession of 
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the property. [Para 16] [272-D, E] , 
,........ 
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1.3 Section 630 of the Act will cover within its ambit 
not only the employee or officer but also the past em-
B ployee or the past officer or the heirs of the deceased 
employee or anyone claiming under them in possession 
of the property. The legal heirs or representatives in pos-
session of the property acquire the right of occupancy in 
the property of the company, by virtue of being family 
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members of the employee or the officer during the em-
. 
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c ployment of the employee or the officer and not on any 
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indepe
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