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Informative

Delhi High Court on Wrongful Withholding of Company Property by Ex-Managing Director under Section 452 Companies Act, 2013.

Update / Judgement Date

27 Oct 2025

Source

WCP News Bulletin

Author

Sakshi Bhardwaj — WCP Legal Desk

Reading Time

4 min read

Civil LawOther Legal Matters
Delhi High Court on Wrongful Withholding of Company Property by Ex-Managing Director under Section 452 Companies Act, 2013.
WCP News Bulletin
Headnote:

The Delhi High Court dismissed a petition under Section 482 Cr.P.C. seeking to quash proceedings under Section 452 of the Companies Act, 2013. The Court held that once an officer ceases to hold office, continued possession of company assets becomes unlawful. Section 452 is a strict liability provision that does not require proof of entrustment. Therefore, the ex-Managing Director’s refusal to return company property justified the framing of notice for the offence.


Background:

• The respondent company, Explorers Travel & Tour Pvt. Ltd., was incorporated in 1989. The petitioner, Punita Khatter, held 35% shares and was appointed Managing Director in 1995.

• She was removed from her post by a Board Resolution dated 11.04.2016 following alleged irregularities.

• On the same day, she was asked via email to return all company assets including:

  1. Keys to office and chambers
  2. Company cars (BMW, XUV 500, Toyota Corolla, Innova)
  3. Mobile phone and credit cards
  4. Financial and management records, data, and passwords.
  5. • The petitioner allegedly refused, leading to a complaint under Section 452 Companies Act, 2013, filed on 26.04.2016 before the ACMM, New Delhi.
  6. • The ACMM, after considering CW1 Arjun Mehta’s testimony and the Local Commissioner’s report confirming recovery of company documents from the petitioner, framed notice under Section 452.
  7. • The petitioner challenged the notice, claiming she was still a Director on 26.04.2016 and hence not wrongfully withholding company property.


Petitioner’s Contentions:

• She continued as Director till 09.06.2016; thus, her possession was lawful.

• The complaint lacked specificity — no details of articles, IMEI numbers, or serial numbers were mentioned.

• Entrustment was not proved; documents lacked a valid Section 65B Evidence Act certificate.

• Letters demanding return of articles were invalid without a board resolution.

• All items were returned by 30.06.2016 post her resignation.


Respondent’s Submissions:

• The petitioner deliberately withheld company property despite removal as Managing Director.

• Section 452 covers past and present employees and does not require entrustment.

• Relied on precedents including:

  1. Baldev Krishna Sahi v. Shipping Corporation of India Ltd. (1987) 4 SCC 361
  2. Abhilash Vinodkumar Jain v. Cox & Kings (India) Ltd. (1995) 3 SCC 732
  3. Lalita Jalan v. Bombay Gas Co. Ltd. (2003) 6 SCC 107
  4. Gopika Chandrabhushan Saran v. XLO India Ltd. (2009) 3 SCC 342
  5. The Local Commissioner’s report established possession of company documents by the petitioner.


Court’s Observations:

• The summoning order (30.07.2016) was never challenged; hence, the challenge to the notice (16.03.2017) was belated.

• Even if she remained a Director till 09.06.2016, once removed as Managing Director, her possession of company assets was no longer lawful.

• Section 452 Companies Act, 2013 imposes strict liability — once employment ceases, assets must be returned immediately.

• The email dated 11.04.2016 was not vague; asking for “all financial records, accounts, and data” constituted a sufficient notice.

• The ACMM rightly concluded that prima facie an offence under Section 452 was made out.


Decision:

• The Court found no illegality or infirmity in the framing of notice.

• Held that the petitioner was required to return all company property upon cessation as Managing Director.

• Section 452 does not require proof of entrustment — only wrongful withholding after cessation of employment.

• The petition under Section 482 Cr.P.C. was dismissed.


Legal Provisions Discussed:

• Section 452, Companies Act, 2013 – Punishment for wrongful withholding of company property by officers or employees.

• Section 482, Code of Criminal Procedure, 1973 – Inherent powers of High Court to prevent abuse of process.

• Section 65B, Indian Evidence Act, 1872 – Admissibility of electronic records.

Citation: 2025:DEL:84517

Case: Punita Khatter v. Explorers Travel & Tour Pvt. Ltd.

Court: High Court of Delhi at New Delhi

Coram: Hon’ble Ms. Justice Neena Bansal Krishna