WHETHER COMPANY LAW BOARD CAN SEND IMPUGNED DOCUMENTS TO FORENSIC SCIENCES DEPARTMENT FOR COMPARISON?

[Mr. M. GOVINDARAJAN]

The Central Government constituted a Board called as Company Law Board by virtue of Section 10E of the Companies Act as substituted by the Companies (Amendment) Act, 1988. The Company Law Board shall exercise and discharge such powers and functions as may be conferred on it or under the Companies Act or any other law and shall also exercise and discharge such other powers and functions of the Central Government under the Companies Act or any other laws as may be conferred on it by the Central Government by notification in the Official Gazette under the provisions of the Companies Act or that other laws.

The Company Law Board is quasi judicial body and summary trial is adopted in dealing with the company matters. In 'CDS Financial Service (Mauritius) Ltd., V. BPL Communications Ltd.,' (2004) 62 CLA 46 the Hon'ble High Court held that in case any claim is based on some seriously disputed civil rights or title, denial of any transaction or any other basic facts which may be the foundation to claim to be a member and if the court feels that such claim does not constitute to be a rectification but instead seeking adjudication on basic facts falling outside the rectification, it has discretion to send a party to seek his relief before the civil court first for the adjudication of such facts. Thus in case the matter is required to be inquired in detail the only remedy is available with civil courts not the Company Law Board.

The main question be discussed in this article is in the case of forged documents involved in company petitions and such forgery documents are to be decided in the course of the case whether the Company Law Board can send such documents to Forensic Sciences Department for comparison.  The issue of forgery involves complicated question of facts and serious controversies which necessitated detailed investigations.  In 'Ansar Khan V. Finecore Cables (P) Ltd., (2007) 79 CLA 412 the Company Law Board, Chennai Bench observed that the disputed involve substantial rights of the parties and where the allegations are forgery and fabrication of records, which could only be resolved by oral  testimony tested by cross examination of witnesses cannot  be resolved on the strength of the averments made in the affidavits filed by the parties, defeating the purpose and object of the summary procedure prescribed by Section 397/398.

In 'Jiwan Mehta V. Emmbros Forging (P) Ltd., (2008) 84 CLA 206 it was held by the Board that in the absence of any specific allegation, this SC cannot adjudicate on such allegations which require trial. Issues of forgery cannot be decided by the Company Law Board in summary proceedings under Section 397/398 of the Act, as held by the Company Law Board and the Hon'ble Supreme Court in a number of judgments.

In 'S.N. Harish and Another V. PODS Biotech (P) Ltd., and another' - (2009) 90 CLA 195 (CLB) the appeal is filed seeking direction of the Board to send the share transfer form and resignation letter dated 24^th February, 206 to the Forensic Sciences Department for the purpose of verification and comparison of signatures of the second application in the said documents. The following are the submissions of the applicants:

The second respondent has illegally removed the second applicant as a director and as a shareholder by filing a resignation letter dated 24^th February, 2006 and the share transfer deed with forged signatures;

The second applicant neither resigned nor transferred her 5000 shares in the first respondent company to any other person and the same are forged and fabricated;

The second respondent removed the second applicant both from directorship and membership by adopting illegal means and methods by way of filing forged and fabricated documents and acted with a mala fide intention to oppress the applicants and hijacked the first respondent company;

The Company Law Board has power under Sec. 10E(5) of the Companies Act and under Regulation 44 of the Company Law Board Regulations, 1991 to send the documents to the Forensic Sciences Department for its opinion in the interest of service.

The respondents filed detailed counter wherein it was submitted that the Bench cannot decide the issue of forgery in a summary proceedings under Section 397/398 of the Companies Act as it involves complicated question of facts and serious controversies which necessitated detailed investigation which would defeat the object of the summary remedy under Section 397/398 of the Companies Act. It was further submitted that in the interest of justice and equity the Bench may summon and examine the witness to share transfer deed to verify the authenticity of the signature at most but the bench should not send the documents to the Forensic Sciences Department for its opinion.

The applicant, in response to the counter of the respondents, submitted that it is not the first occasion where the documents are being sent to the Forensic Sciences Department for its expert opinion in case of disputed signatures. Unless the documents with the disputed signatures are sent to the Forensic Sciences Department for comparison with the admitted signatures the truth will not come out and the applicants will be put to hardship with irreparable loss.

The Board after hearing both sides held that insofar as the examination of witnesses is concern the bench has unequivocally has powers to examine them under the Act. It is of course not mandatory that whenever allegations of fabrication of records are made the parties should be relegated to a civil suit. The bench held that the Company Law Board has adequate jurisdiction and powers to enquire into the allegation of management including allegations of mala fide and grant reliefs as held by the Apex Court in 'Ammonia Supplies Corporation (P) Ltd., V. Modern Plastic Containers (P) Ltd.,' - (1998) 30 CLA 355.

The Board further held that sending documents to the Forensic Sciences Department is also a part of enquiry while dealing matters under Section 397/398 of the Act. The definition of forgery has been given under the Indian Penal Code. In the present case it was submitted that the said documents are forged where it was denied by the respondent. In these circumstances, it is to be ascertained by the Bench, whether such forgery has been committed or not. Further the Forensic Sciences Department after comparing the signatures of the admitted documents with other documents will only give its report whether the signature is genuine or not. The said department will not decide whether the signature is forged or fabricated. Therefore the Board is agreeable to send the documents of resignation letter and the share transfer deed to Forensic Sciences Department for comparison with the admitted signatures of the second applicant for its opinion. The expenses of the Forensic Sciences Department will be borne by the applicants.