Legal Procedures for Retrieving Company Property in India: A Comprehensive Guide for Employers
The procedure for confiscating office property in India due to an employee's failure to return it is typically governed by employment contracts, company policies, and relevant labour laws. However, outright confiscation without following the legal procedures may expose the employer to legal liabilities. It is crucial to adhere to lawful methods to reclaim company property.
Review Employment Contract and Company Policies:
Examine the employment contract and company policies to identify clauses related to the return of company property.
Send a Formal Notice:
Issue a formal written notice to the employee, requesting the immediate return of company property. Clearly state the consequences of non-compliance.
Follow Company Disciplinary Procedures:
Adhere to the company's disciplinary procedures, as outlined in the employment contract or company policies. This may involve warnings, counselling, or other progressive disciplinary measures.
Legal Consultation:
Seek legal advice to ensure compliance with Indian labour laws. An attorney can guide you on the appropriate legal steps to take.
File a Police Complaint:
If the employee continues to withhold the property, consider filing a police complaint. Provide evidence of the employee's refusal to return the company property.
Legal Notice:
Send a legal notice through an advocate, reiterating the demand for the return of company property. This legal notice can act as a formal communication before initiating legal proceedings.
Initiate Civil Proceedings:
If all else fails, file a civil suit in the appropriate court seeking the return of the company property. The specific court and applicable laws will depend on the value of the property.
Relevant Legal Provisions:
Section 7 of the Payment of Wages Act, 1936: As per the said provision [9], an employer can deduct up to 50% of the wage payable to an employee when he fails to return the company assets on grounds of damage or loss of goods expressly entrusted to the employed person for custody.
Contract Act, 1872: Sections 73 and 74 provide for remedies in case of a breach of contract, allowing for compensation.
Indian Penal Code, 1860: Sections 403 and 405 deal with criminal misappropriation and criminal breach of trust, respectively.
Code of Criminal Procedure, 1973: Section 156(3) allows the filing of a criminal complaint before the Magistrate.
Case Laws:
Date of Judgement 21/03/1995
In the case of "Smt. Abhilash Vinodkumar Jain vs. Cox And Kings (India) Ltd." (decided on 13 December 1993), the Supreme Court of India addressed the issue of whether a petition under Section 630 of the Companies Act is maintainable against the legal heirs of a deceased officer or employee for the retrieval of company property wrongfully withheld by them. The court concluded that such a petition is indeed maintainable.
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Case History:
The case involved legal heirs who were the appellants in both instances and were the successors of an employee or officer who had died while in service with the respective respondent company. The deceased employees had been allotted premises during their service, and after their demise, the legal heirs failed to hand over vacant possession of the allotted premises. Consequently, prosecutions were initiated against them under Section 630 of the Companies Act.
The legal heirs approached the High Court seeking the quashing of proceedings, arguing that Section 630 of the Act could not be invoked against legal heirs of a deceased employee. The High Court dismissed their petitions filed under Section 482 of the Criminal Procedure Code, leading to the appeals.
Conclusion:
The Supreme Court, in its judgment, affirmed that a petition under Section 630 of the Companies Act is maintainable against the legal heirs of a deceased officer or employee for the retrieval of company property wrongfully withheld by them after the employee's demise. The court emphasized that legal representatives holding company property after the termination of the deceased employee's employment are obligated to return the property to the company, and failure to do so renders them liable under Section 630.
The decision underscored the broader and purposive interpretation of Section 630, emphasizing the legislative intent to provide a speedy remedy for the retrieval of company property wrongfully withheld by employees, including their legal heirs. The court dismissed the appeals, upholding the High Court's decision.
In this case, Section 630 of the Companies Act incorporates a simple provision whereby a criminal court is empowered to direct the restoration of the property to the company and to impose a fine and, in appropriate cases, a jail sentence as a penalty for defaulting. The section applies to any employee of a company who commits the offence of wrongfully withholding company property and it is well-settled law that the Legislature is empowered to make separate provision for a class of such persons.
2. M/S. Zee News Ltd vs Romila Mayak Sharma
Date of Judgement: 27/08/2018
Case History:
Background: The complainant, M/s. Zee News Ltd., filed a complaint against Ms. Romila Mayak Sharma, alleging that after her employment termination on March 31, 2009, she failed to return the company's property. The listed items included a Maruti Car (registration no. UP16V0894), two laptops, two mobile handsets (including a BlackBerry handset), and an outstanding advance of Rs.10 lacs taken on September 11, 2008. The complainant also asserted its ownership of the Maruti Car, which was subject to a loan agreement with Kotak Mahindra Prima Ltd.
Loan Agreement Dispute: The lender bank filed a petition under Section 9 of the Arbitration & Conciliation Act, 1996, seeking possession of the Maruti Car. The court ordered the seizure of the vehicle, leading to an arbitration award in favour of the bank. To avoid further dispute, the complainant settled the matter by paying Rs.4,80,475/- to the bank, though the car was still in the accused's possession.
Legal Allegations: The complainant accused Ms. Romila Mayak Sharma of offences under Sections 403, 405, 406, and 420 of the Indian Penal Code (IPC) and Section 630 of the Companies Act, claiming that she dishonestly converted and withheld company property for personal use.
Legal Proceedings: After pre-summoning evidence, the accused was summoned initially under Section 630 (1) of the Companies Act. However, the order was modified on appeal, and the accused was summoned for offences punishable under Section 406 IPC as well.
Examination of Witnesses: Mr. Gulshan Kumar Sachdeva (CW-1), representing the complainant, testified that the accused did not return the specified properties after the employment termination. He presented documents, including the termination letter, loan agreement, and arbitration award, as evidence.
Court's Analysis: Upon careful consideration, the court evaluated the evidence and legal contentions. It found that the Maruti Car was co-owned by the accused as per the loan agreement, and the complainant's payment to settle the loan did not confer exclusive ownership. The court also observed that the Rs.10 lacs advanced to the accused was a loan, not company property.
Charge Framing: The court concluded that there was a prima facie case under Section 630 of the Companies Act for withholding laptops and mobile phones. However, it dismissed charges under Section 406 IPC due to insufficient evidence.
Conclusion:
The appellant/plaintiff sought to challenge the termination of her services by the respondent/defendant, which was conveyed through a Termination Letter dated 15.4.2009. The trial court rejected the plaint under Order VII Rule 11 CPC, ruling it as time-barred since the suit was filed on 7.1.2013, beyond the three-year limitation period from the receipt of the Termination Letter on 27.5.2009.
Despite the appellant's argument invoking Section 14 of the Limitation Act based on an earlier application in a separate suit, the court found that the application seeking leave to amend the written statement was filed on 6.8.2012, also exceeding the three-year limit from the termination date. Consequently, even if the exclusion under Section 14 was considered, it would not bring the present suit within the prescribed period.
In light of these findings, the appeal was dismissed, affirming the trial court's decision to reject the plaint as time-barred.
References:
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3 个月What should be referred against Indian Penal Code, 1860: Sections 403 and 405 which dealt with criminal misappropriation and criminal breach of trust, respectively in the new BNS Codes.
Associate at Lawsikho | Contracts | Corporate Litigation| Legal Researcher
10 个月Congrats Kanika Sharma ???????????? Amazing work!