Section 452 of Companies Act, 2013 Remains a Criminal Offence — Kerala High Court Sets Aside Magistrate's Order Returning Complaint
Case Background
Tata Coffee Limited Vs Ramla (Kerala High Court)
In this significant ruling, the Kerala High Court intervened to correct a legally untenable position taken by the Chief Judicial Magistrate Court, Thrissur, which had returned a complaint filed by a private limited company against its former employee. The complaint, registered as Crl.M.P. (Complaint) No.1006/2026, was filed under Section 452 of the Companies Act, 2013, alleging that the former employee had wrongfully withheld possession of a residential accommodation provided by the company and persistently refused to vacate despite multiple demands.
The Magistrate, after conducting a preliminary hearing on the question of maintainability, returned the complaint on the ground that following the 2020 amendment to the Companies Act, the jurisdiction to adjudicate penalties under Section 452 vested exclusively with the Adjudicating Officer appointed under the Act, and that no criminal court retained the power to take cognizance of such complaints. This order dated 13.02.2026 was subsequently challenged before the Kerala High Court by way of a revision petition.
The Core Question Before the High Court
The central legal issue that the High Court was called upon to decide was whether Section 452 of the Companies Act, 2013 had been effectively decriminalised by the Amendment Act 29 of 2020, and whether the adjudicatory machinery under Section 454 had displaced the jurisdiction of criminal courts in matters falling under Section 452.
Statutory Text: Section 452 of the Companies Act, 2013
The High Court extracted and examined Section 452 in its current form, which reads as follows:
"452. Punishment for wrongful withholding of property.—
(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 sub-Section (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 withholds 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.
[Provided that the imprisonment of such officer or employee, as the case may be, shall not be ordered for wrongful possession or withholding of a dwelling unit, if the court is satisfied that the company has not paid to that officer or employee, as the case may be, any amount relating to—
(a) provident fund, pension fund, gratuity fund or any other fund for the welfare of its officers or employees, maintained by the company;
(b) compensation or liability for compensation under the Workmen's Compensation Act, 1923 (19 of 1923) in respect of death or disablement.]"