[S.452 Companies Act] 'Strict Liability' Of Employee To Return Company Property Once Employment Ends: Delhi High Court
The Delhi High Court has held that an employee is strictly liable under Section 452 of the Companies Act 2013 to return company property, at the end of his/ her employment.Section 452 provides that if an officer or employee of a Company having in his possession property including cash wrongfully withholds the same, is liable for punishment.“Section 452 of Companies Act, 2013 does not talk...
The Delhi High Court has held that an employee is strictly liable under Section 452 of the Companies Act 2013 to return company property, at the end of his/ her employment.
Section 452 provides that if an officer or employee of a Company having in his possession property including cash wrongfully withholds the same, is liable for punishment.
“Section 452 of Companies Act, 2013 does not talk of entrustment. It is in a sense, a strict liability provision which mandates the return of the property of the Company as soon as the possession of such articles with the employee, becomes unlawful,” Justice Neena Bansal Krishna clarified.
The observation was made while dealing with the plea moved by a former Managing Editor of the Respondent-company, to quash the notice for offence under Section 452 issued to her.
Petitioner was removed from the post because of alleged irregularities in discharge of her duties. The Chairperson of the Company had then requested her to hand over the certain articles, including keys of the Chamber, Office, Cars and Financial Records, Accounts, Management Accounts, etc.
Since allegedly, the Petitioner refused to return the articles, the impugned notice came to be issued.
Petitioner claimed that the Company was first liable to prove entrustment of property to her, to invoke Section 452.
The Respondent-company on the other hand argued that Section 452 does not envisage proving of entrustment of properties of the Company to its officer or employee.
It is in this backdrop that the High Court held that proof of 'entrustment' is not essential under Section 452.
Next, the Petitioner argued that even after being removed from the post of MD, she was still holding the post of Director in the Respondent Company and thus, the question of wrongful withholding of any article, does not arise and no offence was made out under Section 452 Companies Act.
Disagreeing with this contention, the High Court said,
“It is pertinent to observe that assets and documents that were sought to be returned by the Petitioner had been in her possession by virtue of she holding a post of Managing Director. Therefore, as soon as she seized to be the Managing Director, it was imperative for her to comply with the e-mail Notice dated 11.04.2016 and handover all the articles. Even if she continued as a Director till 09.06.2016, it did not give her any right to retain the articles/documents of which she was in possession, being a Managing Director.”
As such, the Court refused to interfere in the matter.
Appearance: Mr. Bharat Chugh, Mr. Rajul Jain, Mr. Maanish M. Choudhary, Ms. Poorvi Rewalia, Ms. Kavya Dhankar, Mr. Abhinav Agarwal and Mr. Pushp Sharma, Advocates for Petitioner; Mr. Rakesh K. Khanna, Senior Advocate with Mr. Sachin Bansal and Ms. Arushi Jindal, Advocates for Respondent
Case title: Punita Khatter v. Explorers Travel & Tour Pvt Ltd
Citation: 2025 LiveLaw (Del) 1374
Case no.: CRL.M.C. 1637/2017