The Kerala High Court has clarified a critical jurisdictional issue under the Companies Act, 2013, holding that criminal courts retain exclusive jurisdiction to try offences under Section 452 for wrongful withholding of company property. The judgment sets aside a magistrate's order returning a complaint on the erroneous premise that such offences fall under the purview of an Adjudicating Officer, reaffirming the penal nature of the provision and the role of criminal courts in adjudicating it.
Background & Facts
The Dispute
The petitioner, Tata Coffee Limited, filed a complaint before the Chief Judicial Magistrate, Thrissur, alleging that the first respondent, a former employee, wrongfully withheld residential accommodation provided by the company. Despite repeated demands, the respondent refused to vacate the premises, prompting the company to invoke Section 452 of the Companies Act, 2013, which penalizes wrongful withholding of company property.
Key Facts
The first respondent was a former employee of Tata Coffee Limited, provided with residential accommodation during her tenure
The company issued repeated demands for vacation of the premises, which were ignored
The complaint was filed under Section 452 of the Companies Act, 2013, seeking penal action for wrongful withholding of property
The residential accommodation was allegedly retained beyond the termination of employment
Procedural History
13.02.2026: The Chief Judicial Magistrate, Thrissur, returned the complaint (Crl.M.P.(Complaint) No. 1006/2026), holding that criminal courts lacked jurisdiction to try offences under Section 452 post-amendment
23.06.2026: The revision petition was heard by the Kerala High Court
01.07.2026: The High Court allowed the revision petition, setting aside the lower court's order
Relief Sought
The petitioner sought:
Setting aside of the order dated 13.02.2026 returning the complaint
Direction to the Chief Judicial Magistrate to take cognizance of the complaint and proceed in accordance with the Bharatiya Nagarik Suraksha Sanhita, 2023
The Legal Issue
The central question was whether criminal courts retain jurisdiction to take cognizance of offences under Section 452 of the Companies Act, 2013 after the amendments introduced in 2020, or whether such offences are exclusively triable by an Adjudicating Officer appointed under Section 454 of the Act.
Arguments Presented
For the Petitioner
Argued that Section 452 is a penal provision, and its adjudication inherently falls within the jurisdiction of criminal courts
Contended that the amendments to the Companies Act in 2020 did not decriminalize Section 452 or divest criminal courts of jurisdiction
Highlighted that Section 452(2) expressly empowers courts to impose imprisonment for non-compliance, a power exclusive to criminal courts
Emphasized that Section 452 was expressly excluded from the purview of Special Courts under Section 435, reinforcing its criminal nature
For the Respondent/State
The first respondent did not appear despite service of notice
The State, represented by the Public Prosecutor, did not contest the petitioner's arguments
The Court's Analysis
The Court undertook a detailed examination of Section 452 and the amendments to the Companies Act, 2013, to determine the jurisdictional scope of criminal courts. Key observations included:
Nature of Section 452: The Court noted that Section 452 is a penal provision, prescribing punishment for wrongful withholding of company property. The punishment includes a fine of not less than Rs. 1,00,000, extending to Rs. 5,00,000, and imprisonment up to two years for non-compliance with court orders to deliver back the property. This dual punishment structure underscores the provision's criminal character.
Amendment Act 29 of 2020: The Court clarified that the 2020 amendment introduced a proviso to Section 452(2), restricting imprisonment for wrongful possession of a dwelling unit if the company had failed to pay provident fund, gratuity, or other entitlements. However, this amendment did not alter the substantive penal nature of Section 452 or divest criminal courts of jurisdiction.
"Except for the aforesaid change of inclusion of a proviso, the Amendment Act 29 of 2020 had not made any change to Section 452 of the Companies Act, 2013."
Section 454 and Adjudicating Officers: The Court distinguished between penalties under Section 454 and penal offences under Section 452. Section 454 empowers Adjudicating Officers to impose penalties for non-compliance with statutory requirements, which are administrative or civil in nature. In contrast, Section 452 deals with criminal offences, requiring adjudication by a criminal court.
"The penalties provided thereunder were in no way related to the penal offences envisaged under the Companies Act... Those provisions relating to penalties are generally related to administrative, civil or contractual contexts, and not about the penal consequences of acts which amount to criminal offence."
Exclusion from Special Courts: The Court highlighted that Section 452 is expressly excluded from the jurisdiction of Special Courts constituted under Section 435 of the Companies Act. This exclusion reinforces that Section 452 offences are to be tried by criminal courts, as Special Courts are designated for speedy trial of other offences under the Act.
"The express exclusion of the offence under Section 452 from the purview of the Special Courts would make it clear that it is the competent Judicial Magistrate empowered to impose the fine... which is to try the aforesaid offence."
Magistrate's Jurisdiction: The Court held that the Chief Judicial Magistrate erred in returning the complaint on jurisdictional grounds. The magistrate's conclusion that Section 452 was decriminalized or that criminal courts lacked jurisdiction was baseless and unsustainable.
The Verdict
The Kerala High Court allowed the revision petition, setting aside the order dated 13.02.2026 of the Chief Judicial Magistrate, Thrissur. The Court directed the magistrate to receive the complaint and proceed in accordance with the Bharatiya Nagarik Suraksha Sanhita, 2023. No specific monetary relief or compliance timeline was prescribed, as the matter was remanded for fresh adjudication.
What This Means For Similar Cases
Criminal Courts Retain Exclusive Jurisdiction Over Section 452 Offences
Practitioners must note that Section 452 of the Companies Act, 2013 remains a penal provision, triable exclusively by criminal courts
The amendments to the Companies Act in 2020 did not decriminalize Section 452 or alter its jurisdictional scope
Companies seeking redressal for wrongful withholding of property by former employees or officers can continue to approach criminal courts under this provision
Adjudicating Officers Cannot Impose Imprisonment
Section 454 of the Companies Act empowers Adjudicating Officers to impose penalties for non-compliance with statutory requirements, but these penalties are administrative or civil in nature
Only criminal courts can impose imprisonment under Section 452(2) for failure to comply with orders to deliver back property
This distinction is critical for framing legal strategies - companies must choose the appropriate forum based on the relief sought (penal action vs. administrative penalty)
Special Courts Exclusion Reinforces Criminal Nature
The express exclusion of Section 452 from the purview of Special Courts under Section 435 of the Companies Act underscores its criminal character
This exclusion serves as a guiding principle for interpreting similar provisions - where a provision is excluded from Special Courts, criminal courts retain jurisdiction
Practitioners should scrutinize the Companies Act for other penal provisions excluded from Special Courts to determine the correct forum for adjudication
