G RANGASWAMI Vs. COIMBATORE PIONEER MILLS LIMITED

JUDGEMENT

(1.) THE petitioner is seeking quashing of the proceedings in s. T. C. No. 594 of 1995 on the file of the Judicial Magistrate No. VI, Coimbatore. THE respondent herein has filed a complaint for an offence under section 630 of the Companies Act, 1956, alleging that the petitioner herein was once the managing director of the complainant-company and resigned his office on September 26, 199 4 , which came into effect from September 30, 1994 , and thereafter he ceased to be the managing director. THE petitioner is residing in "pioneer House", which was till recently the property of the respondent-company. By means of an agreement dated October 3, 1994, this "pioneer House" was exchanged with another house called "chandra house", which belonged to Chandra Textiles, a joint stock company, registered under the Companies Act. THE agreement dated October 3, 1994, has been entered into between the complainant company on the one hand and Chandra textiles Limited on the other. By virtue of the agreement, the property "pioneer House" has become the property of Chandra Textiles. THE petitioner herein is one of the directors in Chandra Textiles and as such he continues to reside in Pioneer House. THE petitioner, while he was the managing director of the respondent-company, was given certain perquisites and amenities to be enjoyed by him. Item No. 4 in the schedule attached to the complaint is a hindusthan Contessa car, bearing registration No. PY-018-7155, which was purchased by the respondent-company and given to the petitioner for his use as managing director, Item No. 5 is a diesel generator set, which was erected in pioneer House, which was the property of the respondent-company. Items Nos. 4 and 5 still continue to be in the possession of the petitioner, notwithstanding the fact that he ceased to be the managing director of the respondent-company. Items Nos. 2 and 3 in the schedule are computers, whereas item No. 1 is an automatic exhaust gas analyser. According to the respondents, these three items were purchased by the respondent company from its funds. THEy have been housed in the automobile division of the respondent-company, which is functioning under the name and style of "pioneer Power System". This automobile division was established by the respondent-company on June 29, 1995, as per the resolution of the board meeting dated June 29, 1995. Items Nos. 1 and 2, which were in the premises of the respondent-company, were removed to the premises of sri Ranga Vilas Ginning and Oil Mills in Pappanaickenpalayam by the petitioner. Sri Ranga Vilas Ginning and Oil Mills is a partnership firm of which the petitioner is one of the partners. Likewise item No. 3 has been removed from the premises of the respondent-company, namely, Pioneer Power System, to the registered office of Chandra Textiles Limited, Avanashi Road, Coimbatore, by the petitioner. THE petitioner is a director in Chandra Textiles Limited and according to the respondent, the peti tioner has no right whatsoever to remove these three items from the premises of the respondent-company, which are under his control. THEse three items have been removed by the petitioner on September 19, 1994, when he was one of the managing directors of the respondent-company, even without a gate pass. THE case of the respondent herein is that the petitioner cannot hold those properties, when he ceased to be the managing director of the respondent-company. In spite of requests, his not handing over the properties is bad in law and his possession becomes wrongful. Besides items nos. 1 to 3, mentioned in the schedule, are the properties which have been removed without even a gate pass and he is using items Nos. 1 and 2 in Sri ranga Vilas Ginning and Oil Mills, of which he is one of the partners and likewise he is using item No. 3 in the premises of the head office of Chandra textiles. THErefore, it becomes apparent that he knowingly uses those articles for purposes other than those for which they are expressly meant. THEse articles have been purchased by the respondent-company only for and on behalf of the company and for its own use and not for the use of anybody else. THErefore, it is clear that the petitioner has committed an offence under section 630 of the Companies Act. It is further alleged that these articles are very costly articles and continued wrongful retention of these articles by the petitioner has resulted in a great loss to the respondent-company. THE respondent has also denied in paragraph 16 that the matter is seized by the arbitrator and K. Rajagopal is an arbitrator, and also denied the averment regarding suppression of facts and contended that the complaint has been taken on file by the court on February 27, 1995, and Mr. K. Rajagopal's decision is said to have been made on March 7, 1995, which is subsequent to the complaint. Repelling these averments, the petitioner contended that the complaint smacks of mala fides and it is an abuse of the process of the court and of law and it has been filed merely to enable the respondent to harass, and coerce the petitioner and contended that this is a matter of civil wrong at best and in view of the memorandum of understanding dated July 15, 1994, the petitioner has rights and it is a matter to be adjudicated in accordance with law in arbitration proceedings. Learned counsel for the petitioner invited my attention to paragraph 17 of the memorandum dated July 15, 1994. THE point for consideration is whether the complaint of the respondent herein is liable to be quashed under section 482 of the Code of criminal Procedure " In the complaint, the complainant has alleged that the petitioner ceased to be the managing director, he had no right to retain the properties mentioned in the schedule, he had stealthily removed those properties without the gate pass, he had no right to retain those properties and they were purchased from the funds of the complainant-company and meant for the use of the company and not for anybody else. Since the petitioner ceased to be the managing director, he has no right to use any of the properties and on the other hand retention of the properties in his custody attracts section 630 of the Companies Act. Section 630 of the Companies Act reads as follows :