Delhi District Court
M/S Paramount Coaching Centre Pvt. Ltd. vs . Neetu Singh on 20 July, 2020
IN THE COURT OF VIPLAV DABAS
ADDL. CHIEF METROPOLITAN MAGISTRATE (Spl. Acts)
CENTRAL TIS HAZARI COURTS, DELHI
CC No. 541887/2016
U/s 452 of the Companies Act, 2013
M/s Paramount Coaching Centre Pvt. Ltd. Vs. Neetu Singh
JUDGMENT
(a) Name of complainant : M/S Paramount Coaching Centre Pvt.Ltd.
704, First Floor Dr. Mukherjee Nagar, Delhi.
Through its Authorized
Representative
(b) Name, parentage & : Ms. Neetu Singh,
address of accused Director, M/s K. D. Campus Pvt. Ltd.
Office at:
2007, Outram Lines,
Dr. Mukherjee Nagar, Delhi.
Residence at:
2691, Dr. Mukherjee Nagar,
Delhi110009
(c) Offence complained : U/s 452 of the Companies Act, 2013.
(d) Plea of accused : Pleaded not guilty.
(e) Final order : Convicted
Date of Institution : 24.10.2016
Date of reserving judgment : 20.07.2020
Date of Judgment : 20.07.2020
Brief facts and reasons for the decision:
1. The complainant is a limited Indian Company, duly incorporated under the Companies Act, 1956 and having its registered office at 701, Second Floor, Dr. Mukherjee Nagar, Delhi110009. It is submitted that accused person was a codirector of the complainant company and is also the wife of the founder and director of the complainant company Mr. Rajeev CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 1/15 Saumitra but presently she is having strained relations with the complainant and her husband. It is submitted that accused was issued 50 % shares of the company as a gesture of goodwill by the complainant without any capital contribution. It is further submitted that complainant's company is the registered owner of car make "Porsche Cayenne" bearing registration no. HR51AR0001. It is further stated that Neetu Singh was the Codirector of the complainant company but she has resigned from the complainant company in view of order dt. 21.03.2016 passed by the Hon'ble High court of Delhi in FAO (OS) No. 60/2016, that now Neetu Singh is not having any relationship with the complainant company and while Neetu Singh was acting as a codirector of the complainant company, she was using the aforesaid car in the capacity of Codirector. It is further averred that now she is neither the Director of the company nor having any relationship with the company and that despite repeated request by the company, she has been illegally withholding the said car and misusing the same by renting it out without the consent of the complainant company. The complainant company has requested the accused/respondent to return the aforesaid car to the company but she has refused to return the same to the company. The complainant company also served a legal notice to accused Neetu Singh, requesting her to return abovesaid car, but she has outrightly denied to return the same. The accused Neetu Singh has no right to retain the aforesaid car, so this Court is requested to pass an order against accused Neetu Singh to handover the said car to the complainant company with damages.
2. Complainant examined Sh. Rajeev Saumitra, Director of complainant company as CW1 in presummoning evidence who deposed CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 2/15 that he is the Director of the complainant company M/s Paramount Coaching Centre Pvt. Ltd which is a private Ltd. Company incorporated under the Companies Act vide certificate of incorporation dated 08.12.2009 issued by the Registrar of the Companies, NCR, Delhi & Haryana with CIN No. U80903DL2009TC196739 Ex. CW1/A (OSR) (colly) and logo Ex. CW1/B (OSR), that a Board resolution Ex. CW 1/C (OSR) was duly passed at the meeting of the Board of Directors of the aforesaid company in his favour dated 04.10.2016, through which he has been duly authorized to appear, sign and execute, move and file necessary documents and to do all the actions required for filing legal case against Neetu Singh, that Complainant company is the registered owner of car make "Porsche Cayenne" bearing registration no. HR51 AR0001 vide the Copy of registration certificate marked as 'MarkA' and the Original RC is lying in possession of the accused , that Neetu Singh was the CoDirector of the complainant's company but she resigned from the complainant company in view of the order dated 21.03.2016 passed by Hon'ble High Court of Delhi in FAO (OS) No. 60/2016, marked as 'MarkB', that now Neetu Singh is not having any relationship with the complainant company and that while Neetu Singh was acting as a codirector of the complainant company, she was using the aforesaid car in the capacity of Codirector, but now she is neither the Director of the company nor having any relationship with the company. It is further deposed that despite repeated request by the company, she has been illegally withholding the said car and misusing the same by renting it out without the consent of the complainant company, that complainant company has requested the accused to return the aforesaid car to the company but she has refused to return the same to the company and that the complainant company also served a CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 3/15 legal notice to accused Neetu Singh, requesting her to return abovesaid car, but she has outrightly denied to return the same and the copy of the legal notice and its postal receipt, courier receipt and delivery receipt are Ex. CW1/D (colly). On the basis of material brought on record, Ld. Predecessor summoned the accused for the offence punishable u/s 452 of Companies Act, 2013.
3. After service of summons, notice U/s 251Cr.P.C for the offence punishable u/s. 452 of the Companies Act, 2013 (u/s 630 of Companies Act, 1956) was served upon the accused to which she pleaded not guilty and claimed trial.
4. In the post summoning evidence, the Director of complainant CW 1 Sh. Rajeev Saumitra adopted his pre summoning evidence.
5. During cross examination conducted on behalf of accused, he admitted that there are many other cases pending between him and the accused, that a suit no. 2528/2015 was pending disposal before the Hon'ble High Court against the K.D. Campus Pvt. Ltd. and the accused, that there was an order dt. 27.01.2016 against which he preferred an appeal bearing no. FAO(OS) 60/2016 in which a consent order dt. 21.02.2016 was passed, that so far as valuation report of the company was concerned in the consent order before the Hon'ble high court of Delhi broadly two issues were involved, one was regarding the valuation of company and the other was goodwill value (the same has not been done so far), that there are many vehicles in the name of the company and only the vehicle involved in the present litigation was in the custody of the accused and that he does not recollect the exact valuation of the CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 4/15 company made by Sh. S. R. Dinodia. He admitted that accused was entitled to 50 % shareholding in the company and that after the evaluation of shares, he has not paid anything to the accused and volunteered that the matter is subjudice before the Hon'ble High court.
6. On 05.12.2017, statement of accused was recorded u/s 313 Cr.P.C wherein accused denied the correctness of complainant's version and stated that the car was gifted to her by Sh. Rajiv Saumitra on 12.03.2013 on the occasion of their marriage anniversary. The accused stated that she was using the car being spouse of Rajiv Saumitra and not as director and that she had received the legal notice Ex. CW1/D .The accused choose to lead evidence in her defence and the matter was listed for defence evidence.
7. In her defence evidence, the accused examined herself as DW1 on allowing of application u/s.315 Cr.P.C. and deposed that she was the Director of the complainant company since 2009 which was a Pvt. Ltd. Company with 50% share holding, that the car in the present case was gifted to her on 12.03.2012 by Rajiv Saumitra her estranged husband on the occasion of their marriage anniversary and he said that this car will be for her personal use, that another car Range Rover having Registration Number of Delhi with the last 4 digits as 0001 was also bought by him for his own personal use, that later she came to know that the car bought for her was in the name of Paramount Coaching Centre and that for him was in his own personal name but that hardly mattered for her at that time and when she resigned as the Director of PCC, she was supposed not to use, the name 'Paramount' and she started K.D. Publication, that in the consent order, in which she agreed CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 5/15 not to use Paramount for her personal benefit, it was consented by both the parties that her name will be removed from all the liabilities of PCC and also from all the guarantees and within one year from March, 2016 the case will be finalized and the value of her share holding will be released to her subject to the finalization of the case, that her shareholding value has been estimated around 17.5 Cr and that till date the case has been pending and she has not received any amount though it was a clear order that the case must be finalized within one year and it has been two years now.
8. During cross examination conducted on behalf of complainant, accused deposed that she is a law graduate, that she is aware that company is a separate legal entity as per Companies Act, that she had resigned from the complainant company as a CoDirector on 21.03.2016 as per the order passed by Hon'ble Mr. Justice Badar Durrez Ahmad and Mr. Justice Sanjeev Sachdeva in case titled as Rajeev Sumitra Vs Nitu Singh in case FAO No. 60/2016, that since 21.03.2016, she was not having any kind of relation with the complainant company and voluntarily stated that her 50 % share was still existing in the company, that she had not placed any document on record in respect of the fact that the vehicle in question was gifted to her by her husband, that she did not remember whether she had disclosed in respect of the said fact regarding the gifting of vehicle in question to her by her husband during the litigation either before Hon'ble High Court of Delhi or any other Court and that the vehicle in question was in the name of the complainant company. The witness denied the suggestion that the vehicle in question was not gifted to her on 12.03.2012 by Rajiv Sumitra her estranged husband on the occasion of her marriage anniversary and CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 6/15 he said that this car will be for her personal use and that on 12.03.2012 the said car was not gifted to her by the company and she had cooked a false story in order to avoid returning the car and payment of damages to the complainant company. She replied the question as to whether company had given a notice dated 16.08.2016 which was duly served to her in respect of returning the vehicle in question to the company after 21.03.2016, by saying that it is a matter of record. She denied the suggestion that after receiving of legal notice, the vehicle in question was illegally kept by her and the same was being used by her for her personal use and also being let out on rent. The witness further denied that the Porsche Car bearing registration no. HR 51 AR 0001 in question was never purchased on 12.03.2012 and stated that on 12.03.2012 it was her marriage anniversary and she saw it on her door on that day. The witness denied the suggestion that the car in question has been willfully and knowingly withheld by her illegally despite being intimated to return the same by way of various notices as well as despite resigning from the company since 21.03.2016, that she had brought a false and fabricated defence with respect to the other cars and money transaction etc as mentioned in her examination in chief as nothing of that sort were ever part of the litigation and that her entire defence version was a cooked version with ulterior motive of not returning the car in question.
9. Thereafter, the defence evidence was closed and matter was listed for final arguments.
10. This Court has given thoughtful consideration to the submissions advanced on behalf of parties and perused the records as well as the relevant provisions of law and written arguments.
CC No.541887/2016M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 7/15
11. Before proceeding further, it is worthwhile to reproduce Section 452 of the Companies Act, 2013 which provides as under: "(1) If any officer or employee of a company
(a) wrongfully obtains possession of any property, including cash of the company; or
(b) having any such property including cash in his possession, wrongfully withholds it or knowingly applies it for the purposes other than those expressed or directed in the articles and authorised by this Act, He shall, on the complaint of the company or of any member or creditor or contributory thereof, be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. (2) The Court trying an offence under subsection (1) may also order such officer or employee to deliver up or refund, within a time to be fixed by it, any such property or cash wrongfully obtained or wrongfully withheld or knowingly misapplied, the benefits that have been derived from such property or cash or in default, to undergo imprisonment for a term which may extend to two years."
12. It is settled law that the scope of inquiry in a proceedings u/s 452 of Companies Act, 2013 is extremely restricted in law and the case is to be confined within those narrow ambit's without permitting any delay. The provision contained in Section 452 has been purposely enacted by the legislature with the object of providing a summary procedure for retrieving the property of the company. It is the duty of the Court to place a broad and liberal construction on the provisions in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy. It was held in "1989 (4) SC 514, Atul Mathur vs Atul Kalra and Another" that the purpose of enacting Section 452 is to provide speedy relief to a company when its property is wrongfully obtained or wrongfully withheld by an employee or an ex CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 8/15 employee.
13. While dealing with the case U/s 630 of Companies Act (which is similar to the provision under Section 452 of Companies Act, 2013), this court is guided by law laid down by the Hon'ble Bombay High Court in "1993 CRI. L.J. 2791 " K.G.K. Nair v. P.C. Juneja".
"The provisions of S.630 are intended to provide speedy and efficacious redress in cases where company's property is wrongfully withheld and therefore the following guidelines are required to be observed: That the complaints be taken up and disposed of on a priority basis, the accent being on the avoidance of any unwarranted delay.
That the trial Courts should address themselves to the fact that the scope of the enquiry in a proceeding under Section 630 is extremely restricted in law and, consequently, the parties be confined within those narrow ambits without being permitted to dilate or protract the proceeding through extraneous avenues. That no frivolous application for adjournment, stay of proceedings, etc., should be permitted by the trial Courts because the history of those proceedings indicate that each of such states is responsible for further litigation and years of delay. The pendency of other civil proceedings is no bar to the decision of an application under S. 630 which fact should be taken cognizance of in such situations.
That the appeal, i.e., Court of Session, in the first instance, must judiciously scrutinize and vigorously examine the revision applications and appeal before granting stay orders.
That applications for discharge on frivolous and untenable pleas are required to be speedily and effectively disposed of and are not to be used as handles for protracting the litigation".
14. In the case of "S.K. Sarma v. Mahesh Kumar Verma, AIR 2002 SC 3294 = 2002 AIR SCW 3827" the case pertained to Section 138 of CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 9/15 Railways Act which is somewhat similar to section 630 of the Companies Act and which provides a procedure for summary delivery to railway administration, of property, detained by a railway servant. It was observed as follows:
"The object of the aforesaid Section is to provide speedy summary procedure for taking back the railway property detained by the railway servant or his legal representative. Properties include not only dwelling house, office or other building but also papers and any other matters. This would mean that the Section embraces in its sphere all unlawful detention of any railway property by the railway servant............The word 'discharge' used in context is of widest amplitude and would include cessation of relationship of employer and employee, may be retirement, resignation, dismissal or removal. This Court in "Union of India v. B.N. Prasad [(1978) 2 SCC 462]" considered Section 138 and held that a close perusal of the section clearly reveals that the provisions has widest amplitude and takes within its fold not only a railway servant but even a contractor who is engaged for performing services to the railway, and the termination of his contract by the Railway amounts to his discharge, as mentioned in Section 138. The Court also observed that the said provision is in public interest and must be construed liberally, broadly and meaningfully so as to advance the object sought to be achieved by Railways Act........"
15. So, considering the aforestated legal propositions, in order to establish the guilt of the accused for the offence punishable u/s 630 of Companies Act 1956 (452 Companies Act 2013) the prosecution is bound to prove the following ingredients:
i) That the complainant company is duly incorporated under the Companies Act;
ii) That the complainant company is the owner of car in question and there exists/existed the CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 10/15 relationship of officer(director/manager etc.) / employee between the complainant company and accused ;
iii) That the accused was permitted to use the car in question being the officer /employee of the complainant company;
iv) That the accused ceased to be officer/employee of the complainant company and she is wrongfully withholding the car in question after cessation of her status of officer/employee.
16. Ld. Counsel for complainant argued that it is proved that car in question belongs to the complainant company, that the car was being used by the accused in her capacity of codirector of the company, that the accused resigned from the company on 21.03.2016 and her right to use the car also came to an end upon her resignation and that the accused did not return the car after her resignation which is a property of the complainant company despite various requests and notice. It is further argued that accused is taking the defence of pendency of other proceedings for delaying the present matter and car in question is not a subject matter of those proceedings.
Ld. Counsel for accused argued that the car in question was gifted to the accused by her estranged husband who is a director of the complainant company on their marriage anniversary on 12.03.2012 for personal use and that she is entitled to 50% shares in the complainant company after resignation on 21.03.2016 but she has not received anything qua that share and the matter is still pending before the Hon'ble High Court. It is further argued that husband of the accused did not comply with the consent order/ settlement pursuant to which the accused resigned and considering the same claim of the complainant company qua the car in question should be rejected.
CC No.541887/2016M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 11/15
17. It is settled proposition of law that facts admitted need not be proved. Perusal of record and the testimonies show that factum of complainant being a private limited company incorporated under the Companies Act is not disputed which establishes that complaint is a company duly incorporated under the Indian Companies Act and this fact is further established from the unrebutted certificate of incorporation Ex. CW1/A brought on record by CW1. So, it is proved that company is duly incorporated company under the Indian Companies Act. It is admitted by the accused that she resigned from the complaint company as a codirector on 21.03.2016. This admission proves that accused was a codirector in the complaint company and she resigned as codirector on 21.03.2016. It is also admitted by the accused that the car in question was in the name of the complaint company. It establishes that the complaint company is the owner of the car in question which is in tune with the unrebutted certificate of registration of car Mark A, wherein the complaint is mentioned as owner of the car.
18. Record shows that it is not disputed by the accused that the car was used by her prior to her resignation and is still in her possession. Perusal of the testimony of CW1 shows that his version that accused was using the car in question in her capacity of codirector prior to her resignation has gone unrebutted as neither any question nor any suggestion to challenge the said version was put to him. The cross examination of CW1 further shows that the defence version that the car in question was gifted to her for personal use on their marriage anniversary by her estranged husband, was not put to him. These material omissions show that the said defence version is an afterthought CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 12/15 and can not be believed which implies that complainant company's version that car was used by the accused in her capacity of codirector and not in personal capacity, is clearly established.
19. Record reflects that accused introduced the aforesaid defence version at the time of recording of her statement u/s 313 Cr.P.C and further at the time of recording of her evidence. The factum of introduction of this version at these stages without confronting the complainant with the same at the time of recording of complainant's evidence and not disclosing anything about that version at the time of framing of notice when the accused had ample opportunity to say about this defence, creates grave doubt upon the authenticity and reliability of this defence version as no reasonable person would have avoided to bring forth such a defence at the very first opportunity, if the said version was truthful. Furthermore, in the cross examination the accused deposed that she has not placed any document on record in respect of the fact that the vehicle was gifted to her by her husband and that she does not remember whether she disclosed about this fact in other litigations before Hon'ble Delhi High Court or other Courts. This failure of accused to place any document substantiating the said defence version and to tell about disclosure of the said version in other litigations involving the complainant company and her estranged husband, shows that the said defence version is not creditworthy and has been introduced in this litigation just to avoid liability arising u/s 452 of Companies Act qua the car in question.
20. It is argued by Ld. Defence Counsel that the accused resigned from the complainant company in view of the consent order but the husband CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 13/15 of the accused did not comply with the terms of the said order and contempt proceedings have been initiated against him. Ld. Counsel for accused stated that considering the said conduct of husband of accused and pendency of other proceedings between the parties, the resignation of accused can not be treated as cessation of her relation with the complainant company and thus the present complaint should be dismissed.
It is evident that there is no stay on present proceedings or pronouncement of judgment in this case. No proceeding is stated to be pending wherein the very existence of complainant's company or the resignation of accused from the complainant company is under challenge and an order qua stay of present case has been passed. In these circumstances, this court is of the view that resignation of accused has attained finality and the alleged conduct of the husband of accused in not complying the terms of consent order can not be agitated in the present proceedings. Furthermore, it is a settled proposition that company is a separate legal entity. So, any dispute between the erstwhile directors can not come in the way of enforcing the rights of the complainant company to retrieve its property from the erstwhile co director i.e. accused. So, the mere fact that share holding issue is pending adjudication or that husband of accused has not yet paid the value of accused's share does not mean that assets of complainant company i.e. car in question should be retained as set off or otherwise by the accused who has resigned from complainant company .
21. It is evident from the aforesaid observations and analysis of testimonies that it is established that car in question belongs to the complainant company, that the car was being used by the accused in her CC No.541887/2016 M/s Paramount Coaching Centre Pvt. Ltd.
Vs. Neetu Singh Page No. 14/15 capacity of codirector of the company, that the accused resigned from the company on 21.03.2016 and her right to use the car also came to an end upon her resignation and that the accused did not return the car after her resignation which is a property of the complainant company despite various requests and service of legal notice dated 16.08.2016 Ex.CW1/D. It is further clear that accused failed to establish that the car in question was gifted to the accused by her estranged husband who is a director of the complainant company on their marriage anniversary on 12.03.2012 for personal use. It is not disputed by the accused that the car was used by her prior to her resignation and is still in her possession despite resignation and service of legal notice which shows that accused is in possession of the complainant company's car without any right as she has ceased to be a director in the complainant company by virtue of which she was permitted to use the said car. It is settled law that offence u/s 452 of Companies Act is continuing offence and thus bar of limitation, which is not attracted as such in the present facts, also can not apply. So, it can be said that accused has been wrongfully withholding the car of the complainant company. Thus, it is held that complainant has proved its case against the accused beyond reasonable doubt. Accordingly, accused is held guilty and convicted for the offence u/s 452 of the Companies Act 2013 (u/s 630 of Companies Act, 1956).
22. Let the convict be heard on the point of sentence.
Announced in open Court (VIPLAV DABAS)
on 20.07.2020 ACMM(Special Acts) CENTRAL
TIS HAZARI COURTS DELHI
CC No.541887/2016
M/s Paramount Coaching Centre Pvt. Ltd.
Vs.
Neetu Singh Page No. 15/15