Case Laws on companies act.

GOPIKA CHANDRABHUSHAN SARAN & ANR. V. XLO INDIA LTD. & ANR. [(2009) 148 COMP CAS 130 (SC)] S.B.Sinha & Dr.Mukundakam Sharma, JJ.

Companies Act, 1956 – Section 630 – House allotted to MD – Legal heirs of the MD – Whether company claim house from them – Held, Yes. 

Brief Facts : The appellants are the legal heirs of the deceased managing director of the respondent company.  The respondent allotted the house to its managing director and he since died, demanded the house from the appellants. After contending before various lower courts the issue ultimately came before the Supreme Court. 

Decision: Appeal dismissed. 

Reasons: Section 630 of the Act will cover within its ambit not only the employee or officer but also the past employee or the past officer or the heirs of the deceased employee or anyone claiming under them in possession of the property. 

The legal heirs or representatives in possession of the property acquire the right of occupancy in the property of the company, by virtue of being family members of the employee or the officer during the employment of the employee or the officer and not on any independent account. 

They, therefore, derive their colours and content from the employee or the officer only and have no independent or personal right to hold on to the property of the company.

Regards.

Yogesh Bhatt.