Magistrate's Misinterpretation of Companies Act, 2013 Corrected; Criminal Courts to Handle Offences Under Section 452
In a significant legal development, the Kerala High Court has clarified the jurisdiction of criminal courts concerning offences under Section 452 of the Companies Act, 2013. The judgment, delivered by Justice G. Girish, overturned a previous decision by the Chief Judicial Magistrate Court in Thrissur, which erroneously held that criminal courts lacked jurisdiction in such matters due to amendments to the Companies Act.
The case arose from a dispute involving Tata Coffee Limited and its former employee, Ramla. The company alleged that Ramla wrongfully withheld residential accommodation provided by the company, an offence under Section 452, which deals with the wrongful withholding of property by company officers or employees.
The Chief Judicial Magistrate initially returned Tata Coffee's complaint, believing that the 2020 amendment to the Companies Act had decriminalized Section 452 offences, relegating them to the purview of an Adjudicating Officer. However, the High Court noted that the amendment only added a proviso about imprisonment related to unpaid employee benefits and did not remove the criminal nature of the section.
Justice G. Girish emphasized that Section 452 has not been decriminalized and criminal courts retain jurisdiction over such cases. The court clarified that a Judicial Magistrate, not below the rank of Chief Judicial Magistrate, is empowered to impose fines and imprisonment under this section.
Furthermore, the court highlighted that offences under Section 452 are explicitly excluded from the jurisdiction of Special Courts under Sections 435 and 436 of the Companies Act, reinforcing the role of competent Judicial Magistrates in these matters.
The High Court directed the Chief Judicial Magistrate Court to accept Tata Coffee's complaint and proceed according to the Bharatiya Nagarik Suraksha Sanhita, 2023. This judgment reaffirms the role of criminal courts in upholding the provisions of the Companies Act, ensuring that alleged offences involving wrongful possession of company property are duly addressed.
Bottom line:-
Section 452 of the Companies Act, 2013 has not been decriminalized by the Amendment Act of 2020, and criminal courts retain jurisdiction to take cognizance of allegations under this provision. The competent Judicial Magistrate, not below the rank of Chief Judicial Magistrate, is empowered to impose punishments under this section.
Statutory provision(s): Companies Act, 2013 Section 452, Section 435, Section 436; Bharatiya Nagarik Suraksha Sanhita, 2023
Tata Coffee Limited v. Ramla, (Kerala) : Law Finder Doc id # 2935814
