HOOGHLY MILLS COMPANY LTD. versus THE STATE OF WEST BENGAL AND ANR.

Citation: [2019] 13 S.C.R. 406 · Decided: 17-10-2019 · Supreme Court of India · Bench: MOHAN M. SHANTANAGOUDAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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406
SUPREME COURT REPORTS
[2019] 13 S.C.R.
HOOGHLY MILLS COMPANY LTD.
v.
THE STATE OF WEST BENGAL AND ANR.
(Criminal Appeal No. 1571 of 2019)
OCTOBER 17, 2019
[MOHAN M. SHANTANAGOUDAR AND
AJAY RASTOGI, JJ.]
Companies Act, 1956 :
s.630(1) and (2) – Criminal complaint by complainant
Company – Against the accused alleging that he was not delivering
the possession of the residential premises (which he was given in
the capacity of Director of the Company) even after ceasing to be
Director of the Company – Also filed application for dispossessing
the accused – Plea of the accused was that there was oral
understanding between him and the original owners of the property
that the same would be transferred to him, when he would pay the
sale consideration – Thereafter, accused filed a suit against the
vendors praying for specific performance and for permanent
injunction – Temporary injunction was issued in the suit directing
status quo in respect of possession – Application u/s. 630(2) allowed
directing dispossession of the accused – Revisional Court affirmed
the order passed in application u/s 630(2) – High Court in petition
u/s. 482 Cr.P.C. set aside the findings of the Court below – Appeal
to Supreme Court – Held : Pendency of civil suit would not bar
complaint u/s 630 with respect to same property, even if between
same parties, if there is no bona fide dispute regarding the company’s
right over the property – In the present case, there is no bona fide
dispute as the claim of the accused is based on oral understanding
– Mere issuance of temporary injunction would not make the dispute
bona fide – Therefore, pendency of civil suit and interim reliefs
granted therein would not bar criminal prosecution u/s 630 – Section
630 has to be given liberal interpretation so as to facilitate
expeditious recovery of the Company’s property – There is no error
in allowing application u/s 630(2), during pendency of substantive
criminal proceedings – Specific Relief Act, 1963 – s. 41(b) and (d).
   [2019] 13 S.C.R. 406
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Code of Criminal Procedure, 1973 :
s.482 – Inherent powers – Scope of, vis-a-vis s.397(2) – Held
: High Court in exercise of its inherent powers u/s 482, can set
aside an interlocutory order, notwithstanding the bar u/s 397(2).
Allowing the appeal, the Court
HELD : 1.1 A company has a separate legal personality.
Hence even if it is accepted that the appellant company is owned
and controlled by the vendors themselves, any orders issued in
the civil suit between 2nd respondent and the vendors would not
be binding upon the appellant company as it is not a party to the
suit. It is true that in some cases the Court may pierce the
‘corporate veil’ and look at the reality behind the entity if it is
found that the device of incorporation has been used to perpetrate
some illegality or fraud. However no such illegality or fraud has
been pleaded and proved in the present case. In any case, the
pendency of a civil suit in respect of a property, would not bar a
complaint under Section 630 of Companies Act, 1956 with respect
to the same property, even if it is between the same parties, if
there is no dispute or no bona fide dispute regarding the
company’s right over the property. The mere fact that the accused
employee has refuted the company’s claim to possession would
not make the dispute bona fide. [Para 8] [418-A-D]
1.2 In the present case, there is no bona fide dispute, in as
much as the 2nd respondent’s entire claim to the disputed property
is based on an oral agreement/‘understanding’, as to the terms
of which no documentary evidence has been produced. Whereas
the appellant company has at least been put into symbolic
possession of the property by Clause 6 of the agreement for sale
dated 26.4.2008, which 2nd respondent has not disputed. [Para 8]
[418-E-F]
1.3 In a case such as the present complaint, where there
was only an oral agreement in favour of the accused employee
for purchase of the property, but the civil court has issued a
temporary injunction directing status quo, the accused will
nevertheless acquire the right to possess the disputed property
lawfully only if he is successful in obtaining a decree in his favour
HOOGHLY MILLS COMPANY LTD. v. THE STATE OF WEST
BENGAL AND ANR.
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408
SUPREME COURT REPORTS
[2019] 13 S.C.R.
in the civil suit. The mere issuance of a temporary injunction by
the civil court directing maintenance of status quo in respect of
the disputed property do

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