Fired employee must return company property
The Delhi High Court ruled that when an employee is fired from a job for any reason, they must return all company property including items like laptops and phones. Not returning company property is a violation of Section 452 of the Companies Act, 2013. This Section states that if a company officer or employee wrongfully keeps company property, they can face legal consequences.
Why did this company file a criminal complaint under Section 452 of the Companies Act?
The case arose from a petition filed by Khatter, who had served as the Managing Director (MD) of a company incorporated in 1989. Khatter, who owned 35% of the company’s shares, was removed from her position through a board resolution on April 11, 2016, after certain irregularities were allegedly found in her work. On the same day, the company asked her via email to return official assets, including a laptop, mobile phone, credit card, and important documents. However, she failed to hand them back immediately, leading the company to file a criminal complaint under Section 452 on April 26, 2016.
What did the Delhi High Court decide regarding the Section 452 case?
The High Court declined to dismiss the lawsuit after considering the case and concluding that there was sufficient evidence to move on. The court noted that Section 452 imposes strict liability, which means that storing corporate property after employment ends may be illegal regardless of the reason for doing so. The Court also rejected, which decided that once she was no longer the MD, her possession of those assets became illegal.
Key takeaways for employees
The judgment serves as an important reminder for all professionals. Company property, whether devices, documents, data, or cash, must be returned immediately upon resignation or termination. Employees should ensure that the handover process is documented and acknowledged in writing.
Delhi High Court judgement
“Needless to say, that the observations made herein does not tantamount to expression on the merits of the case. There is no merit in the present Petition, which is hereby dismissed along with pending Applications.”