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TMI Blog2020 (12) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... 020 mentioned above seeking to initiate Criminal Proceedings against Mr. Praful Prakash Bafna, the authorized signatory of Financial Creditor under Section 340 read with Section 195 (1) (b) (i) of Cr. P.C. read with Section 193 of Indian Penal Code, 1860 (Penal Code in short), after conducting preliminary inquiry and to call Mr. Praful Prakash Bafna for cross-examination. The Corporate Debtor claimed that the signatures on I.A. Nos. 41 and 42 of 2020 by which Applications Financial Creditor sought restoration of Company Petition and restoration of Interim Orders passed earlier in the Company Petition C.P. (I.B) No. 204/7/AMR/2019 (CP/204/2019 in short) were forged. The Adjudicating Authority accepted Memo filed by Financial Creditor and I.A. Nos. 41 and 42 of 2020 were dismissed as not pressed; disposed I.A. Nos. 51 and 52 of 2020 with observations that the Corporate Debtor may approach appropriate forum for redressal; I.A. No. 62 of 2020 (which was filed by Corporate Debtor to bring on record the report of Forensic Expert) was dismissed as infructuous; and Adjudicating Authority suo motu restored CP/204/2019 (which had earlier been disposed by Adjudicating Authority when Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Petition. The Operational Creditor M/s. Eshwar Enterprises and the Corporate Debtor reached an out of court settlement and filed I.A. No. 37 of 2020 (in the other Company Petition) for withdrawal of the said Company Petition. This Authority by an order dated 21.02.2020 allowed the IA No. 37 of 2020 and permitted withdrawal of the other Company Petition. 3. The basis of the order dated 13.02.2020 in the present Company Petition thus having set at naught, the Financial Creditor accordingly filed IA No. 41 of 2020 seeking restoration of the present Company Petition and IA No. 42 of 2020 seeking restoration of the interim order dated 02.12.2019 of this Authority. The Respondent (CD) filed his counter to both the IAs. At the same time it also filed two applications namely, IA Nos. 51 of 2020 and 52 of 2020 alleging forgery of the signature of the Applicant(FC) in IA Nos. 41 and 42 of 2020. Counters were sought and the matter was listed for hearing. On 13.03.2020 the CD filed another application vide IA No. 62 of 2020 praying to receive the forensic examination report of the signatures (of the Applicant) appearing in IA Nos . 41 and 42 of 2020 with the admitted signature of the depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd above developments are reflected in the Appeal Memo also. The Adjudicating Authority in the chronology missed making reference that the Financial Creditor filed I.A. No. 69 of 2020 on 05th May, 2020 with identical prayers as in I.A. Nos. 41 and 42 of 2020; and that, when Memo dated 29th May, 2020 was filed the Financial Creditor had also filed Affidavit reverifying the contents of the Affidavit in I.A. No. 41 of 2020. 6. It appears that the Financial Creditor claimed before the Adjudicating Authority that by raising disputes with regard to I.A Nos. 41 and 42 of 2020 the Corporate Debtor was creating obstruction in the restoration of CP/204/2019 with other motives with regard to the property of the Corporate Debtor so as to defeat the claims of the Financial Creditor. Thus, the I.A. Nos. 41 and 42 of 2020 were being withdrawn with liberty to file fresh I.A. The Adjudicating Authority recorded following reasons to suo motu restore CP/204/2019: "6 The Financial Creditor made the Applications IA Nos. 41 and 42 of 2020 soon after the order dated 21.02.2020 allowing the IA No. 37 of 2020 was passed. The Order of disposal of the present Company Petition and direction to the Financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no reason before me to allow withdrawal of the Application and at the same time grant liberty to file another. The withdrawal simpliciter can however be permitted. The reverifying affidavit has no bearing on the issues raised in the IA Nos. 51 and 52 of 2020. Therefore, it needs no consideration." 7. The Adjudicating Authority recorded further reasons that the Financial Creditor could not be left without remedy as there was no negligence on the part of the Financial Creditor, when the Company Petition was disposed because the other Petition of M/s. Eshwar Enterprises was admitted. The Adjudicating Authority recorded that the Financial Creditor had a right to file the Company Petition and was entitled to get the same decided on merits. Relying on the dicta that procedure is the handmaiden of Justice the Adjudicating Authority granted the relief suo motu. 8. The Adjudicating Authority observed that although the Applications (I.A. No. 41 and 42 of 2020) are not pressed the Petitioner can not be left without remedy and for reasons recorded restored the Company Petition to file and relegated the same to date of hearing as on 11th February, 2020. The Corporate Petition was posted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Section 195 (1)(b)(i) of Cr. P.C. has to be followed. It is argued that submitting forged affidavit means to giving forged evidence under Section 193 of IPC. For offence of perjury, the Judicial Proceeding has to be initiated by the same Court and according to the Learned Counsel complaints should have been filed after holding preliminary inquiry. 11. Against this, the case put up by the Financial Creditor/Respondent is that discrepancies in the signatures of the Interim Applications, if any, were entirely inadvertent, accidental and due to sheer chance or ignorance (see Written-Submissions of Respondent Diary No. 23599). The Respondent has also filed Reply Diary No. 21564. The Argument of Respondent/Financial Creditor is that Mr. Praful Bafna had filed Affidavit dated 09th May, 2020 before the Adjudicating Authority reaffirming the contents of I.A. No. 41 and 42 of 2020. It is argued that the Corporate Debtor maliciously raised contentions that Mr. Praful Bafna's signatures were forged and Criminal Proceedings under Section 340 of Cr. P.C. should be initiated, with intention to delay the proceedings before the Adjudicating Authority to avoid legal obligations to repay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 SCR Supl. (2) 585). The Financial Creditor has submitted that to order prosecution of perjury there must be prima facie case of deliberate falsehood and matter of substance and Court has to be satisfied that there is reasonable foundation for the charge. Mere inaccurate statement can not be basis for charge of perjury. It is argued that I.A. Nos. 41 and 42 of 2020 were filed with bona fide intention to restore CP/204/2019 and to restore earlier order dated 2nd December, 2019. It is further argued that under Section 340 of Cr. P.C. Court is not bound to make a complaint regarding commission of offence referred in Section 195 (1) (b) (i) as the Section is conditioned by the words "Court is of opinion that it is expedient in the Interest of Justice" to initiate proceedings. Suo Motu Restoring of C.P.(IB) 204/7/AMR/2019 12. Having heard Learned Counsel for parties and having gone through the record as has been placed before us, firstly we look into the Impugned Order suo motu restoring CP/204/2019. We have gone through the reasons recorded by the Adjudicating Authority and part of which we have reproduced above. There is no dispute with regard to the fact that the Financial Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Rule 11 of the National Company Law Tribunals Rules, 2016 to make such Orders as may be necessary for meeting ends of justice or to present abuse of the process of the Tribunal. If the Adjudicating Authority in order to cut short the delay which was being caused due to the controversies raised by the Corporate Debtor and consequential abuse of process suo motu restored CP/204/2019 we do not find that it committed any error. The Interest of Justice and the facts and circumstances of the matter required such suo motu action on the part of the Adjudicating Authority. We thus maintain this part of the order of the Adjudicating Authority. Such action for Criminal Prosecution should have been taken? 13. The Adjudicating Authority in the impugned Order observed that no order of prosecution of the person verifying the affidavit can be ordered by the Authority and it was outside the realm of jurisdiction of the Authority. For such reasoning, the Adjudicating Authority without going into the merits of I.A. No. 51 and 52 of 2020 proceeded to observe that the Corporate Debtor may approach the appropriate forum for redressal. It observed that, it would be venturing into jurisdiction of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain. (4) All proceedings before the Tribunal or the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code, and the Tribunal and the Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)." (Emphasis Supplied) 14. Now Section 195 of IPC requires reference. The same reads as follows: "(1) No Court shall take cognizance- (a) (i) of any offence punishable under sections 172 to 188 (both inclusive) of the Indian Penal Code (45 of 1860 ), or (ii) of any abetment of, or attempt to commit, such offence, or (iii) of any criminal conspiracy to commit such offence, except on the complaint in writing of the public servant concerned or of some other public servant to whom he is administratively subordinate; (b) (i) of any offence punishable under any of the following sections of the Indian Penal Code (45 of 1860 ), namely, sections 193 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half or otherwise, any Court is of opinion that it is expedient in the interests of justice that an inquiry should be made into any offence referred to in clause (b) of subsection (1) of section 195, which appears to have been committed in or in relation to a proceeding in that Court or, as the case may be, in respect of a document produced or given in evidence in a proceeding in that Court, such Court may, after such preliminary inquiry, if any, as it thinks necessary,- (a) record a finding to that effect; (b) make a complaint thereof in writing; (c) send it to a Magistrate of the first class having jurisdiction; (d) take sufficient security for the appearance of the accused before such Magistrate, or if the alleged offence is non- bailable and the Court thinks it necessary so to do, send the accused in custody to such Magistrate; and (e) bind over any person to appear and give evidence before such Magistrate. (2) The power conferred on a Court by sub- section (1) in respect of an offence may, in any case where that Court has neither made a complaint under sub- section (1) in respect of that offence nor rejected an application for the making of such complaint, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to National Company Law Appellate Tribunal. These Provisions make it clear that Adjudicating Authority was not right in its observations that it did not have jurisdiction to order Prosecution. In our view in appropriate case, the Adjudicating Authority has powers to act in terms of Section 340 of Cr. P.C. read with Section 195 of Cr. P.C. Under Section 340 of Cr. P.C. the Adjudicating Authority can hold preliminary inquiry if it is "of opinion that it is expedient in the Interest of Justice that an inquiry should be made" into the any offence referred in Clause 'b' of Sub-Section 1 of Section 195, which appears to have been committed in or in relation to a proceeding in that Court or, as the case may be, in respect of a document produced or given in evidence in a proceeding in that Court, i.e.-Adjudicating Authority, here. 18. The Learned Counsel for the Appellant/Corporate Debtor has argued that without Adjudicating Authority holding preliminary inquiry and going through the procedure as prescribed under Section 340, it is not possible for the Appellant to file private complaint before any Magistrate for the Act complained as there is bar created under Section 195 of Cr. P.C. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively curbed with a strong hand but to start prosecution for perjury too readily and too frequently without due care and caution and on inconclusive and doubtful material defeats its very purpose. Prosecution should be ordered when it is considered expedient in the interests of justice to punish the delinquent and not merely because there is some inaccuracy in the statement which may be innocent or immaterial. There must be prima facie case of deliberate falsehood on a matter of substance and the court should be satisfied that there is reasonable foundation for the charge." 19. In Santokh Singh V. Izhar Hussain (1973) 2 SCC 406 : 1973 SCC (Cri) 828", this Court has held that every incorrect or false statement does not make it incumbent on the court to order prosecution. The court has to exercise judicial discretion in the light of all the relevant circumstances when it determines the question of expediency. The court orders prosecution in the larger interest of the administration of justice and not to gratify the feelings or personal revenge or vindictiveness or to serve the ends of a private party. Too frequent prosecutions for such offences tend to defeat its very object. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signatures on I.A. Nos. 41 and 42 of 2020. The Financial Creditor filed I.A. No. 69 of 2020 (Annexure P9 Page 148) which shows that the Financial Creditor opposed the I.A. Nos. 51 and 52 of 2020 of the Corporate Debtor as well as the I.A. No. 62 of 2020 (Annexure P8) that the same was filed to create procedural and technical hurdles and to divert attention of the Tribunal making false and baseless allegations against the Financial Creditor. The Application sought to restore the CP/204/2019 and the earlier order dated 2nd December, 2019. Similar averments were made in subsequent Memo (Annexure P10 page 154) and Financial Creditor claimed that with regard to I.A Nos. 41 and 42 of 2020 wrongful contentions issues are raised causing unreasonable delay and deviations and that to expedite hearing of the Petition it wants to withdraw the I.A. Nos. 41 and 42 of 2020 with liberty to file fresh Interim Applications recapitulating the contents of the Interim Applications. 23. The I.A. No. 62 of 2020 (Annexure P8) shows that the Corporate Debtor acted on its own to get forensic report. Paragraphs 6 and 7 of the said Annexure P8 may be reproduced which read as under: "6 It is respectfully s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h can be cured at any time irrespective of the limitation or other procedural hurdles. These unwarranted and fictitious accusations are a feeble attempt by the Appellant to mislead the Hon'ble Appellate Tribunal and create hurdles to delay the progress of CP (I.B) 204/7/AMR of 2019 pending before the Hon'ble Tribunal. It is also not the case of the Appellant that any unfair advantage or a dishonest gain or profit has been made by the Respondent in not deliberately appending his signatures on the aforementioned applications. The Offences complained of by the Appellant necessarily entail mensrea, in the absence of an intent the offence is not made out. Moreover, no unfair advantage or dishonest gain has been made by the Respondent by not reproducing the exact same signatures on the aforementioned applications. Furthermore, no injury, loss, harm or damage whether pecuniary or otherwise has been caused to the Appellants. 25. We find substance in the defence taken by the Financial Creditor to the I.As 51 and 52 of 2020. The Appellant/Corporate Debtor has not shown us that the Financial Creditor would have any advantage or benefit of putting false signatures. The prayer of I.A. No 51 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required under Section 340 of Cr.P.C.) In the facts of the matter it does not appear to us that it is expedient in the Interest of Justice that an inquiry should be made under Section 340 of Cr. P.C. No such case was made out before the Adjudicating Authority and the Appellant has not convinced us that Interest of Justice required an inquiry to be held and so the order of Adjudicating Authority should be interfered with. 27. We have taken note of the relevant circumstances and the reasons for the Financial Creditor to move I.A. Nos. 41 and 42 of 2020 and the controversy raised by the Corporate Debtor and it appears to us that there is an element of frivolity in the disputes being raised by the Corporate Debtor. From the facts of the matter, we are unable to form opinion that it is expedient in the interest of justice that inquiry as sought by the Appellant should be made. 28. The Appellant is right in claiming that the Adjudicating Authority could not have directed the Appellant to approach appropriate forum for redressal and that on this count it had jurisdiction under Section 340 of Cr. P.C. However Appellant fails to convince us that facts and circumstance of the matter requ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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