Section 629
PENALTY
FOR FALSE EVIDENCE
[2000] 27 SCL 51 (Ker.)
v.
Boby Varghese, Director, St. Mary’s Finance Ltd.
G.
SASIDHARAN, J.
COMPANY
APPLICATION NO. 218 OF 1999
IN COMPANY PETITION NO. 18 OF 1999
Section 629 of the Companies Act, 1956 read
with article 21 of Constitution of India - Offences - Penalty for false
evidence - Whether procedure established by law for trial of offences under
Indian Penal Code as well as other laws is that in Code of Criminal Procedure
and, hence, trial of offence mentioned in Act, except offence for which special
procedure has been provided for in Act which contains penal provisions, will
have to be as provided in Code of Criminal Procedure - Held, yes - Whether
Company Court can take cognizance of offence punishable under section 629 -
Held, no
Section 446 of the Companies Act, 1956 -
Winding up - Suits stayed on winding up order - Whether term ‘proceedings’
mentioned in section 446(2) can mean criminal proceedings - Held, no
Words & phrases - ‘Proceedings’ occurring
in section 446 of Companies Act, 1956
The petitioner filed a petition, in the
winding up petition, alleging that the respondent managing director of the
Company filed affidavits and counter affidavits in the case containing false
statements with the intention of subverting justice. The petitioner prayed for
an order to take cognisance of the offence committed by the respondent under
section 629. There was further prayer in the petition to conduct an inquiry
under section 340 of Criminal Procedure Code about the offences allegedly
committed under section 193, read with sections 51, 191 and 199 of the Indian
Penal Code and to direct an officer of the court to make a complaint under
section 340 to the magistrate having jurisdiction.
The question which arose for consideration was
whether High Court could take cognizance of the offence punishable under
section 629 alleged to have been committed by the respondent. Incidentally,
the question whether the Company Court could try the offences punishable under
section 629 also arose for consideration since if it was found that this Court
could take cognizance of the offence, the trial of the case in which the
allegation was that the respondent committed offence punishable under section
629 also would have to be conducted in this court.
A reading of section 4 of Code of Criminal
Procedure would indicate that the general law is that all offences under the
Indian Penal Code and any other law shall be investigated, inquired into, tried
and otherwise dealt with according to the provisions of the Code. But in cases
in which there are specific provisions in any enactment in respect of
investigation, inquiry or trial, those matters will be governed by those
provisions under the Act and not by the provisions of the Code. So, the offence
mentioned in various provisions of the Code of Criminal Procedure means any act
or omission made punishable by any law for the time being in force. The
definition of offence takes in any act or omission made punishable by the
provisions in the Indian Penal Code as well as by the provisions in any other
law for the time being in force.
The term ‘offence’ is defined in section 40 of
the Indian Penal Code and as per the above definition, the word ‘offence’
denotes a thing made punishable by the Indian Penal Code. It is also mentioned
in section 40 that in respect of certain sections mentioned therein, the word
‘offence’ denotes a thing punishable under the Indian Penal Code or under any
special or local law. In section 3(38) of the General Clauses Act, the word
‘offence’ means any act or omission made punishable by any law for the time
being in force.
What has to be understood from the above
provisions in the different statutes is that the offence mentioned in the Code
of Criminal Procedure will take in the offences made punishable by the
provisions of any other law. Offence under any law has to be tried as per the
provisions of the Code of Criminal Procedure unless and until a different procedure
is envisaged under the provisions of the Act which contains penal provisions.
Coming to sub-section (2) of section 4, in case a complete procedure is
provided in any enactment for the trial of an offence under a special or local
law, that procedure will have to be followed for the trial of the offence.
Trial of the offence under such a statute need not be conducted as per the
provisions of the Code of Criminal Procedure. There may be cases in which a
special or local law provides special procedure only for some matters. In such
cases with regard to those matters alone, special procedure mentioned in the
statute have to be followed and in regard to other matters in respect of which
no provision is made in the special statute, the provisions contained in the
Code of Criminal Procedure will have to be followed. That being the position of
law, the question to be considered was whether there is any special procedure in the Companies Act for trial of the
offences mentioned in that Act. If any special procedure is mentioned in the
Act in respect of certain matters, then that special procedure has to be
observed or followed only in respect of those matters and in respect of the
other matters trial of the offence will have to be conducted as per the
provisions of the Code of Criminal Procedure. In case complete procedure is
provided under the Act, trial of the offence will have to be conducted as per
that procedure mentioned in the Act.
Special procedure is provided in the Act for
the trial of offences under section 454. That is a special provision which
says about the procedure to be followed in the trial of an offence punishable
under section 454(5). There also, the provision is that the Court by which the
winding up order is made can take cognizance of the offence and also try the
offence. Trial of the offence has to be made in accordance with the procedure
laid down in the Code of Criminal Procedure for trial of summons cases by the
Magistrate. So there is no ambiguity regarding the procedure to be followed for
the trial of the offence punishable under section 454(5).
There is no special procedure provided for in
the Act for the trial of offence. The only provision which says regarding trial
of offence is section 622 which provides that no Court inferior to that of a
Presidency Magistrate or a Magistrate of the first class shall try any offence
against the Act. The above provision in section 622 would indicate that the
trial of offence will have to be in the Criminal Court. If the intention of the
Legislature were to have trial of the offence in the Company Court, there would
have been no necessity for making a provision which says that no Court inferior
to that of a Presidency Magistrate or a Magistrate of the first class shall try
any offence against the Act. Trial of offence under the Companies Act, no
doubt, will have to be conducted in accordance with the provisions of the Code
of Criminal Procedure subject to the condition that no Court inferior to that
of a Presidency Magistrate or a Magistrate of the first class shall try any
offence against the Act.
Since there is no special procedure mentioned
in the Act for trial of offences under that Act, as provided in section 4, the
offences under the Act have to be tried as per the provisions of the Code. Regarding
taking cognizance of the offence, section 621 says that cognizance of the
offence can be taken only on a complaint in writing of the Registrar, or of a
shareholder of the company or of a person authorised by the Central Government
in that behalf. In respect of the offences mentioned in the Indian Penal Code,
provision is made in Schedule I of Code of Criminal Procedure regarding the
Court which can try the offence. In column (6) of Schedule I, mention is made
about the Court which can try the various offences mentioned in the Indian
Penal Code. Schedule II of Code of Criminal Procedure deals with classification
of offences against other laws. As per Schedule II, offences against other laws
if punishable with death, imprisonment for life or imprisonment for more than
seven years have to be tried by the Court of Sessions. If the offence is
punishable with imprisonment for three years and upwards, but not more than
seven years, the offence is triable by a Magistrate of the first class and if
the offence is punishable with imprisonment for less than three years or with
fine only, it is triable by any Magistrate. The last provision in Schedule II
of the Code of Criminal Procedure is not applicable in respect of offences
under the Companies Act for the reason that in section 622 it is stated that no
Court inferior to that of a Presidency Magistrate or a Magistrate of the first
class shall try any offence against this Act. Classification of offences as
mentioned in Schedule II of Code of Criminal Procedure is applicable to
offences under the Act subject to the rider that no Court inferior to that of a
Presidency Magistrate or a Magistrate of a first class shall try any offence
against that Act.
When a person is sentenced to undergo
imprisonment, there is deprivation of his personal liberty. Article 21 of the
Constitution of India provides that no person shall be deprived of his life or
personal liberty except according to procedure established by law. The object
of article 21 is to prevent encroachment upon personal liberty of a person
save in accordance with law and in conformity with the provisions thereof. So,
article 21 of the Constitution has to be understood as a provision which says
how the personal liberty of a person can be deprived. It can be done only as
per the procedure established by law. Any procedure followed for depriving the
personal liberty of a person strictly in accordance with the provisions of
natural justice cannot be said to be done in accordance with the procedure
established by the law. The law has to be made by the Legislature providing
the procedure to be followed for depriving a person of his personal liberty. If
there are provisions in an Act which provide for the procedure to be followed
for trial of offences under that Act, then it can be said that the trial of
offence conducted as per the procedure provided for in the Act and the
conviction of the person against whom trial is conducted and the sentence
awarded to him by which his personal liberty is curtailed, is made in
accordance with the procedure established by the law. Insofar as there is no
procedure mentioned in the Act, trial of offence, conviction of the offender
and sentencing him to undergo imprisonment can be made only in accordance with
the procedure established by law. The procedure established by law for the
trial of offences under the Indian Penal Code as well as other laws is the Code
of Criminal Procedure and, hence, trial of offences mentioned in the Act except
the offence for which special procedure has been provided for in the Act will
have to be as provided in the Code of Criminal Procedure. As regards the Court
which can try the offence under the Act except the offence mentioned in section
454, that has to be decided on the basis of the provisions in the Code. There
is no provision in the Act or in the Code which says that offences under the
Act can be tried by the Company Court. What is stated in section 446(2) is that
the Court which is winding up the company shall, notwithstanding anything
contained in any other law for the time being in force, have jurisdiction to
entertain or dispose of any suit or proceeding by or against the company.
There the term ‘proceeding’ can only mean proceeding similar to a suit and in
the light of the provisions in the Act and the Code of Criminal Procedure,
which have already been referred to, the term ‘proceeding’ mentioned in section
446(2) cannot mean criminal proceedings. The Company Court cannot take
cognizance of an offence punishable under section 629. So, the prayer in the
petition that this Court had to take cognizance of the offence under section
629, alleged to have been committed by the managing director, could not be allowed.
There was also request in the petition that this Court might record the finding
that it was expedient in the interest of justice to hold an inquiry into the
offence alleged to have been committed by the Managing Director of the company
under section 193 read with sections 191, 199 and 51 of Indian Penal Code and
also to direct an officer of this Court to make a complaint under section 340.
Since this Court was not in a position to take cognizance of the offence
alleged to have been committed by the Managing Director of the Company under
section 629 the petition had to be dismissed without prejudice to the right of
the petitioner to file a separate petition alleging commission of offence in
respect of which inquiry can be conducted for filing a complaint under section
340 of Code of Criminal Procedure.
Khosla Fans (India) P. Ltd. in Liquidation, In
re [1983] 53 Comp. Cas. 858 (Punj. & Har.).
Jacob Mathew Manalil for the Applicant. K.J. Kuriachan and Mathew
Zacharia for the Respondent.
1. Can
the High Court take cognizance of all the offences under the Companies Act,
1956 (‘the Act’) and try those offences is the question which arises for
consideration. A petition is filed by the petitioner in the winding up petition
C.P. No. 18 of 1999 praying that this Court may take cognizance of the offence
alleged to have been committed by the managing director under section 629 of
the Companies Act (‘the Act’). There is a further prayer in the petition to
conduct an enquiry as envisaged under section 340 Cr. P.C. about the alleged
commission of the offence under section 193 read with sections 191, 199 and 51
I.P.C. and also to direct an officer of this Court to make a complaint to a
magistrate having jurisdiction.
2. According
to the petitioner, the managing director of the company filed affidavits and
counter affidavits in the case containing false statements made with the
intention of subverting justice. In the affidavit filed in support of the
petition, certain statements contained in the affidavits and counter affidavits
are mentioned which according to the petitioner are false statements. The
respondent filed a counter affidavit denying the allegations made against him
by way of filing the petition.
3. One of the
prayers in the petition being to take cognizance of the offence punishable
under section 629 of the Act, the question which arises for consideration is
whether this Court can take cognizance of the offence, punishable under the
above section, alleged to have been committed by the respondent. Incidentally,
the question whether the Company Court can try the offence punishable under
section 629 also arises for consideration since if it is found that this Court
can take cognizance of the offence, the trial of the case in which the
allegation is that the respondent committed offence punishable under section
629 also has to be conducted in this Court.
4. According
to the learned counsel appearing for the petitioner, the company court can take
cognizance of the offence punishable under section 629 and also conduct trial
of the case. It is maintained by the learned counsel that since section 446
gives powers to the High Court to entertain or dispose of any suit or
proceedings by or against the company, this Court can entertain criminal
proceedings by or against the company. In support of the above stand taken by
the petitioner, a decision of the Punjab and Haryana High Court in Khosla Fans
(India) P. Ltd., (in Liquidation), In re [1983] 53 Comp. Cas. 858 was cited in
which it was held that section 446 is a special provision which has vested the
High Court with jurisdiction to entertain or dispose of any suit or proceedings
by or against the company and that the prosecution sought to be launched by the
official liquidator on behalf of the company is a proceeding by the company
against the acts of the office bearers. On making the above observation, the
Punjab and Haryana High Court held that the High Court can exercise jurisdiction
in suits and proceedings including criminal proceedings in appropriate cases by
or against the company filed by the official liquidator. A reading of the
judgment of the above High Court would indicate that the court held the view
that criminal proceedings also can be had in the Company Court on the basis of
what is stated in section 446.
5. In
the above case which came up for consideration before the Punjab and Haryana
High Court it was contended that the words ‘in suit or proceedings by or
against the company’ are wide enough to include criminal proceedings launched
by way of a complaint at the instance of the official liquidator. The Court
considered the question whether the provisions of section 446(2) do not vest
any special jurisdiction in the Company Court to entertain or dispose of
complaints which are filed for violation of the provisions and for the offences
committed under the Act. In rendering the above decision, the Court observed
that the prosecution sought to be launched by the official liquidator on behalf
of the company is a proceeding by the company against the acts of the office
bearers and, hence, the High Court can exercise jurisdiction in suits and
proceedings including criminal proceedings.
6. Section
4 of the Code of Criminal Procedure provides for trial of offences under the
Indian Penal Code and other laws. Section 4(1) of the Code of Criminal
Procedure says that all offences under the Indian Penal Code shall be
investigated, inquired into, tried, and otherwise dealt with according to the
provisions contained in the code. It is in sub-section (2) of section 4 that
the provision is made regarding trial of offences under other laws. That
sub-section enjoins that all offences under any other law shall be
investigated, inquired into, tried, and otherwise dealt with according to the
same provisions in the code, but subject to any enactment for the time being in
force regulating the manner or place of investigating, inquiring into, trying
or otherwise dealing with such offences.
7. A
reading of section 4 would indicate that the general law is that all offences
under the Indian Penal Code and any other law shall be investigated, inquired
into, tried and otherwise dealt with according to the provisions of the code.
But in cases in which there are specific provisions in any enactment in respect
of investigation, inquiry or trial, those matters will be governed by those
provisions under the Act and not by the provisions of the code.
8. In
this context, it is pertinent to refer to the definition of ‘offence’ contained
in section 2(n) Code of Criminal Procedure which reads as follows :
‘offence means any act or omission made punishable by any law for the
time being in force and includes any act in respect of which a complaint may be
made under section 20 of the Cattle Trespass Act, 1871 (1 of 1871)’
So, the offence made mention of in various
provisions of the Code of Criminal Procedure means any act or omission made
punishable by any law for the time being in force. The definition of offence
takes in any act or omission made punishable by the provisions in the Indian
Penal Code as well as by the provisions in any other law for the time being in
force.
9. The
term ‘offence’ is defined in section 40 of the Indian Penal Code and as per the
above definition, the word ‘offence’ denotes a thing made punishable by the
Indian Penal Code. It is also mentioned in section 40 Indian Penal Code that in
respect of certain sections mentioned therein, the word ‘offence’ denotes a
thing punishable under the Indian Penal Code or under any special or local law.
In section 3(38) of the General Clauses Act, the word ‘offence’ is defined as
follows :
‘offence’ shall mean any act or omission made
punishable by any law for the time being in force.
10. What
has to be understood from the above provisions in the different statutes is
that the offence made mention of in the Code of Criminal Procedure will take in
the offences made punishable by the provisions of any other law. Offence under
any law has to be tried as per the provisions of the Code of Criminal Procedure
unless and until a different procedure is envisaged under the provisions of the
Act which contains penal provisions.
11. Coming
to sub-section (2) of section 4, in case a complete procedure is provided in
any enactment for the trial of an offence under a special or local law, that
procedure will have to be followed for the trial of the offence. Trial of the
offence under such a statute need not be conducted as per the provisions of the
Code of Criminal Procedure. There may be cases in which a special or local law
provides special procedure only for some matters. In such cases with regard to
those matters alone, special procedure mentioned in the statute have to be
followed and in regard to other matters in respect of which no provision is
made in the special statute, the provisions contained in the Code of Criminal
Procedure will have to be followed. That being the position of law, the
question to be considered is whether there is any special procedure made
mention of in the Act for trial of the offences mentioned in that Act. If any
special procedure is mentioned in the Act in respect of certain matters, then
that special procedure has to be observed or followed only in respect of those
matters and in respect of the other matters trial of the offence will have to
be conducted as per the provisions of the Code of Criminal Procedure. In case
complete procedure is provided under the Act, trial of the offence will have
to be conducted as per that procedure made mention of in the Act.
12. Section
621 says that no Court shall take cognizance of any offence against that Act
(other than an offence with respect to which proceedings are instituted under
section 545) which is alleged to have been committed by any company or any
officer thereof, except on the complaint in writing of the Registrar, or of a
shareholder of the company, or of a person authorised by the Central Government
in that behalf. Section 622 provides that no Court inferior to that of a
Presidency Magistrate or a Magistrate of the first class shall try any offence
against the Act. Section 624 says that notwithstanding anything in the Code of
Criminal Procedure, every offence against this Act shall be deemed to be
non-cognizable within the meaning of the said code.
13. Special
procedure is provided in the Act for the trial of offences under section 454.
Section 454(5) provides that if any person, without reasonable excuse, makes
default in complying with any of the requirements of this section, he shall be
punishable with imprisonment for a term which may extend to two years, or with
fine which may extend to one hundred rupees for every day during which the
default continues, or with both. Section 454(5A) provides that the Court by
which the winding up order is made or the provisional liquidator is appointed,
may take cognizance of an offence under sub-section (5) upon receiving a
complaint of facts constituting such an offence and trying the offence itself
in accordance with the procedure laid down in the Code of Criminal Procedure
for the trial of summons cases by Magistrates. That is a special provision
which says about the procedure to be followed in the trial of an offence
punishable under section 454(5). There also, the provision is that the Court by
which the winding up the order is made can take cognizance of the offence and
also try the offence. Trial of the offence has to be made in accordance with
the procedure laid down in the Code of Criminal Procedure for trial of summons
cases by the Magistrate. So there is no ambiguity regarding the procedure to be
followed for the trial of the offence punishable under section 454(5).
14. There
is no special procedure provided for in the Act for the trial of offences. The
only provision which says regarding trial of offence is section 622 which
provides that no Court inferior to that of a Presidency Magistrate or a
Magistrate of the first class shall try any offence against the Act. The above
provision in section 622 would indicate that the trial of offence will have to
be in the criminal court. If the intention of the Legislature were to have
trial of the offence in the Company Court, there would have been no necessity
for making a provision which says that no Court inferior to that of a
Presidency Magistrate or a Magistrate of the first class shall try any offence
against the Act. Trial of offence under the Companies Act, no doubt, will have
to be conducted in accordance with the provisions of the Code of Criminal
Procedure subject to the condition that no Court inferior to that of a
Presidency Magistrate or a Magistrate of the first class shall try any offence
against the Act.
15. Since
there is no special procedure made mention of in the Act for trial of offences
under that Act, as provided in section 4, the offences under the Act have to be
tried as per the provisions of the code. Regarding taking cognizance of the
offence, section 621 says that cognizance of the offence can be taken only on a
complaint in writing of the Registrar, or of a shareholder of the company or of
a person authorised by the Central Government in that behalf. In respect of
the offences mentioned in the Indian Penal Code, provision is made in Schedule
I Code of Criminal Procedure regarding the court which can try the offence. In
column (6) of Schedule I, mention is made about the court which can try the
various offences mentioned in the Indian Penal Code. Schedule II of the Code of
Criminal Procedure deals with classification of offences against other laws.
As per Schedule II, offences against other laws if punishable with death,
imprisonment for life or imprisonment for more than seven years have to be
tried by the Court of Session. If the offence is punishable with imprisonment
for three years and upwards, but not more than seven years, the offence is
triable by a Magistrate of the first class and if the offence is punishable
with imprisonment for less than three years or with fine only, it is triable by
any Magistrate. The last provision in Schedule II of the Code of Criminal Procedure
is not applicable in respect of offences under the Companies Act for the reason
that in section 622 it is stated that no Court inferior to that of a Presidency
Magistrate or a Magistrate of the first class shall try any offence against
this Act. Classification of offences as mentioned in Schedule II Cr. P.C. is
applicable to offences under the Act subject to the rider that no Court inferior
to that of a Presidency Magistrate or a Magistrate of a first class shall try
any offence against that Act.
16. When
a person is sentenced to undergo imprisonment, there is deprivation of his
personal liberty. Article 21 of the Constitution provides that no person shall
be deprived of his life or personal liberty except according to procedure
established by law. The object of article 21 is to prevent encroachment upon
personal liberty of a person save in accordance with law and in conformity with
the provisions thereof. So, article 21 has to be understood as a provision
which says how the personal liberty of a person can be deprived. It can be done
only as per the procedure established by law. Any procedure followed for
depriving the personal liberty of a person strictly in accordance with the
provisions of natural justice cannot be said to be done in accordance with the
procedure established by the law. The law has to be made by the Legislature
providing the procedure to be followed for depriving a person of his personal
liberty. If there are provisions in an Act which provide for the procedure to
be followed for trial of offences under that Act, then it can be said that the
trial of offence conducted as per the procedure provided for in the Act and the
conviction of the person against whom trial is conducted and the sentence
awarded to him by which his personal liberty is curtailed, is made in
accordance with the procedure established by law. In so far as there is no
procedure mentioned in the Act, trial of offence, conviction of the offender
and sentencing him to undergo imprisonment can be made only in accordance with
the procedure established by law. The procedure established by law for the
trial of offences under the Indian Penal Code as well as other laws is the Code
of Criminal Procedure and hence trial of offences mentioned in the Act except
the offence for which special procedure has been provided for in the Act, will
have to be as provided in the Code of Criminal Procedure. As regards the court
which can try the offence under the Act except the offence mentioned in section
454, has to be decided on the basis of the provisions in the Code. There is no
provision in the Act or in the code which says that offences under the Act can
be tried by the Company Court.
17. The
Punjab and Haryana High Court rendered the decision in Khosla Fans (India) P.
Ltd. (In liquidation) In re v. Ramesh Khosla
[1983] 53 Comp. Cas. 858 without taking into account the above
provisions in the Act as well as in the Cr. P.C. The decision of the above High
Court was that the term ‘proceeding’ used in section 446(2) would take in
criminal proceedings also. What is stated in section 446(2) is that the Court
which is winding up the company shall, notwithstanding anything contained in
any other law for the time being in force, have jurisdiction to entertain or
dispose of any suit or proceeding by or against the company. There the term
‘proceeding’ can only mean proceeding similar to a suit and in the light of the
provisions in the Act and the Code of Criminal Procedure, which had already
been referred to, the term ‘proceeding’ mentioned in section 446(2) cannot
mean criminal proceedings. The company court cannot take cognizance of an
offence punishable under section 629. So, the prayer in the petition that this
Court has to take cognizance of the offence under section 629, alleged to have
been committed by the managing director cannot be allowed.
18. There is also request in the petition that this Court may record the finding that it is expedient in the interest of justice to hold an inquiry into the offence alleged to have been committed by the managing director of the company under section 193 read with sections 191, 199 and 51 of the Indian Penal Code and also to direct an officer of this Court to make a complaint under section 340 Cr. P.C. Since this Court is not in a position to take cognizance of the offence alleged to have been committed by the managing director of the company under section 629 the petition has to be dismissed without prejudice to the right of the petitioner herein to file a separate petition alleging commission of offence in respect of which inquiry can be conducted for filing a complaint under section 340.
Gujarat
High Court
Companies
act
[2005]
62 scl 160 (guj.)
v.
Premo Leasing
& Finance (P.) Ltd.
K.A.
Puj, J.
Company
Petition No. 336 of 1997
April 20,
2005
Section 433 of
the Companies Act, 1956 - Winding up - Circumstances in which a company may be wound
up - Petitioner filed a petition under section 433 for winding up of
respondent-company on ground that respondent-company had failed to make payment
of certain amount to petitioner - Whether since petitioner had failed to place
on record any documentary evidence that advertisement of admission of petition
had been duly published, petition was liable to be dismissed only on ground of
non-observance of statutory requirements - Held, yes
Section 629 of
the Companies Act, 1956 - Penalty - For false evidence - Petitioner, in
petition filed under section 433, submitted that averments made in
affidavits-in-reply filed by respondent-company through its director S were
absolutely false and frivolous and S knew same to be false and frivolous and,
therefore, criminal proceedings be initiated against S for committing offence
of perjury - Whether although defence raised by respondent-company might not be
found favour with Court or Court might not be inclined to accept such defence
but that by itself would not give rise to an offence of perjury - Held, yes -
Whether only after complete appreciation of documents and evidence, Court may
come to definite conclusion and till such exercise was undertaken, it was not
possible for Court to arrive at conclusion that an offence of perjury was
committed merely on basis of some averments made in affidavit filed before
Court - Held, yes - Whether since there was nothing on record to suggest that S
knew that facts stated and averments made in affidavits were not true and
correct or that they were false or frivolous, petitioner’s claim for initiation
of criminal proceedings against S was liable to be rejected - Held, yes
According to the petitioner, it advanced a sum of Rs. 5 lakhs to the respondent company in the form of three cheques and the respondent towards part payment of the said liability had issued cheque of Rs. 2,50,000 and the balance amount of Rs. 2,50,000 along with the interest had not been paid by the respondent to it despite repeated requests. Since it was persistently demanding the amount, the respondent issued two cheques for Rs. 1 lakh each towards further part payment of the outstanding amount but said cheques were dishonoured, and, therefore, petitioner issued statutory notice making the demand of Rs. 4,93,000 as being outstanding amount of Rs. 2,50,000 towards principal and Rs. 2,43,000 towards interest. However, neither any reply was given by the respondent nor any payment was made and, therefore, the petitioner filed petition under section 433. The respondent-company through its director, namely, S filed its affidavit-in-reply stating that it was dealing in the business of finance, sales promotion, etc.; that it had assisted in procuring the total business of Rs. 40 lakhs in favour of the petitioner against which the petitioner had paid only Rs. 5 lakhs as commission and brokerage for the business of 5 years; that the petitioner after getting the order for 5 years was of short finance for carrying out the business commitments and, therefore, it assured finance to the petitioner subject to execution of necessary documents, guarantee, mortgage etc.; that post-dated cheques were drawn up on assurance that the necessary documents would be carried out for securing finance; that since the necessary documents were not executed by the petitioner, the petitioner was called upon to return the original post-dated cheques but instead of returning the said cheques, the petitioner had presented the said cheques in the bank with a dishonest intention and, therefore, it had instructed the paying bankers to dishonour the cheques; and that based on this returning of those cheques, the present winding up petition was filed with an intention that the amount of commission and brokerage should not be paid by the petitioner to the respondent-company. Thereafter, the petitioner filed an affidavit-in-rejoinder submitting that the respondent-company had concocted a story; that the defence raised by the respondent-company clearly constituted perjury and it was required to be dealt with strictly; that there was no practice of paying any commission or brokerage by the petitioner to any person much less the respondent company with regard to any transaction; that the fact regarding the payment of any commission or brokerage was not reflected in any of the books of account or financial transaction; that the petitioner was never in need of any finance and, therefore, there was no question of making any request for short-term finance of Rs. 4.50 lakhs by the petitioner, that this was another fabricated story made by the respondent-company; and that the cheques were dishonoured on the ground of insufficiency of fund and not on the ground of stop payment made by the respondent-company.
The respondent-company through its director S
had filed another affidavit, wherein the facts stated in the earlier affidavit
were reiterated.
Schedule VII of the balance sheet as on
31-3-1995 of the respondent-company clearly showed that the respondent-company had
acknowledged the dues of the petitioner to the tune of Rs. 2.50 lakhs as part
of the current liability. However, the name of the petitioner-company did not
appear in Schedule V where the names of the debtors of the respondent-company
were mentioned. Therefore, the Court had directed S, director of the
respondent-company to show-cause as to why the Court should not pass order for
initiating proceedings against him for perjury. [Para 6]
Neither any case for winding up of the
respondent-company was made out nor any case for filing criminal complaint
against the director of the respondent-company for the alleged offence of
perjury was made out. It was true that despite the defence raised by the
respondent-company against the petitioner’s claim, a statement was made before
the Court that the matter had been amicably settled and, hence, even if the
Court ignored the said defence for the purpose of passing up/winding up order
against the respondent-company, the fact still remained that the
petitioner-company had not complied with the statutory condition. A statement
was made before the Court that the petition was admitted and duly advertised on
19-7-1999. The counsel appearing for the petitioner had undertaken before the
Court to verify record and place the same in record if necessary affidavit for
the same had not been filed. The Court had gone through the entire record and
also verified from the office and yet neither any affidavit in support of the
publication of advertisement was on record nor the relevant newspaper cutting
containing said advertisement was placed on record. Even after the said order
was passed on 3-5-2004, nothing was placed on the record so as to convince the
Court that the advertisement had already been published. In the absence of any
documentary evidence placed on record, the Court was not in a position to
accept the oral submission that the advertisement had been duly published on
19-7-1999. Therefore, without adjudicating the issue as to whether defence
raised by the respondent-company was a genuine and bona fide dispute the
instant petition was to be dismissed only on the ground of non-observance of
statutory requirements. [Para 20]
Though, the petitioner had strongly submitted
that the averments made in the two affidavits-in-reply filed by the
respondent-company through its director S were absolutely false and frivolous
and the deponent S knew the same to be false and frivolous, the Court could not
come to the conclusion straightway without recording evidence in this regard
and without undergoing necessary trial for that purpose that the facts stated
and averments made therein were false and they were made only with a view to
mislead the Court and same amounted to perjury under the provisions of Indian
Penal Code. The respondent-company had every right to raise its defence in
winding up petition filed against the company. The respondent-company was also
well within its purview to raise all plausible contentions before the Court.
The Court had to see as to whether such defence raised or such contentions
canvassed were merely sham, bogus, moonshine or illusory or there was any scope
for consideration of the Court to examine such defence and/or contention raised
before it. It was altogether a different thing that the defence raised by the
respondent-company might not be found favour with the Court or the Court might
not be inclined to accept such defence. But, that by itself would not give any
rise to an offence of perjury. Whether an amount of Rs. 5 lakhs was given by
the petitioner to the respondent-company by way of loan or whether the said
amount was given towards payment of commission or brokerage for getting orders
from the sister concern or whether the cheques given by the respondent-company
to the petitioner were towards payment of the loan given by the petitioner to
the respondent-company or the same were towards the fresh loan given by the
respondent-company to the petitioner or whether bouncing of cheques was the
outcome of insufficiency of fund in the bank account or it was because of the
stop payment made by the respondent-company were the issue for which detailed
inquiry and investigation was required and necessary evidence was to be led.
Accounting entries might throw some light on this issue, but they were not
conclusive proof. The High Court, while exercising its original jurisdiction
under the Act, does not undertake such exercise. It is left to the competent
civil court before whom trial takes place and evidence are led. Only after
complete appreciation of the documents and evidence, the Court may come to the
definite conclusion. Till such exercise was undertaken, it was not possible for
the Court to arrive at the conclusion that an offence of perjury was committed
merely on the basis of some averments made in the affidavit filed before the
Court. There was nothing on record which suggested that the deponent knew that
the facts stated and averments made in the affidavits were not true and correct
or that they were false and frivolous. That motive could be attributed only
after undergoing full-fledged trial. The discrepancies which were pointed out
by the petitioner with regard to other proceedings before BIFR did not lead the
petitioner’s case any further. First of all the present deponent had not filed
the affidavit or produced the details before BIFR towards which the attention
of the Court was drawn and even otherwise the Court could not take cognizance
of those materials which were produced before the other adjudicating
authorities. [Para 21]
Therefore, notice issued by the Court earlier
for initiation of the criminal proceeding for the alleged offence of perjury
was discharged. [Para 22]
Re Suo Moto Proceedings against Mr. R.
Karuppan, Advocate AIR 2001 SC 2204 (para 15).
D.V. Parikh for the Petitioner. N.K. Majmudar
for the Respondent.
1. The petitioner, viz., Plachem Industries has filed this
petition under sections 433 and 434 of the Companies Act, 1956 for winding up
of the respondent-company on the ground that the respondent-company has failed
to make the payment of Rs. 4,93,000 to the petitioner.
2. It is the case of the petitioner that the respondent-company
required loan on short-term basis for an amount of Rs. 5 lakhs and hence the
request was made to the petitioner. The petitioner accordingly advanced a sum
of Rs. 5 lakhs in the form of three cheques on 7-11-1994, 12-11-1994 and
19-11-1994 for an amount of Rs. 3 lakhs, Rs. 1 lakh and Rs. 1 lakh
respectively. The respondent-company, towards part payment of the said
liability has issued cheque of Rs. 2,50,000 on 5-12-1994 and the balance amount
of Rs. 2,50,000 along with the interest has not been paid by the
respondent-company to the petitioner despite repeated requests, the
respondent-company has failed to make said payment either under one or another
pretext. Since the petitioner was persistently demanding the amount, the
respondent-company issued two cheque Nos. 355540 and 355541 dated 7-2-1995 and
8-2-1995 for Rs. 1 lakh each towards further part payment of the outstanding
amount. The said cheques were however dishonoured, the petitioner therefore
issued statutory notice on 1-8-1997 making the demand of Rs. 4,93,000 as being
outstanding amount of Rs. 2,50,000 towards principal and Rs. 2,43,000 towards
interest. Neither any reply was given by the respondent-company nor any payment
was made and, hence, the petitioner has no other alternative remedy but to file
the present winding up petition before this Court.
3. The respondent-company filed its affidavit-in-reply on
22-2-1993 wherein the facts stated and averments made in the petition were
denied. The respondent-company raised the contention in the said
affidavit-in-reply that the respondent-company was dealing in the business of
finance, sales promotion etc. The petitioner-company was intending to have the
business with the employer Company of the Managing Director of the
respondent-company, viz., M/s. Esskay Pharmaceutical and as per the practice of
granting commission and brokerage in sales promotion the petitioner had assured
the commission and brokerage to the respondent-company. The respondent-company
has assisted in procuring the total business of Rs. 40,00,000 in favour of the
petitioner against which the petitioner had paid only Rs. 5 lakhs as commission
and brokerage for the business of 5 years. It is further stated that the
petitioner-company after getting the order for 5 years was of short finance for
carrying out the business commitments. The respondent-company, therefore,
assured finance to the petitioner subject to execution of necessary documents,
guarantee, mortgage, etc. The respondent-Company through its Managing Director
assured the petitioner to render finance and post-dated cheques were drawn up
on assurance that the necessary documents would be carried out for securing
finance. Since the necessary documents were not executed by the petitioner, the
petitioner-company was called upon to return the original post-dated cheques
and instead of returning the said cheques the petitioner had presented the said
cheques in the Bank. It is further stated that since there existed a dispute
arising out of non-execution of security documents and arising out of recall of
cheques by the drawer and withholding of cheques by payee with a dishonest
intention the respondent-company had instructed the paying bankers to dishonour
the cheques. Based on this returning of cheque, the present winding up petition
was filed, with an intention that the amount of commission and brokerage should
not be paid by the petitioner to the respondent-company.
4. It is further stated that in the years 1994-95 and 1995-96,
the petitioner had sent bulk drugs worth Rs. 40 lakhs to M/s. Esskay
Pharmaceutical and, therefore, the commission in respect of said amount was
required to be deposited in the respondent-company and therefore, as per agreed
terms the said amount of commission being Rs. 5 lakhs was sent by cheque and
credited in the account of respondent-company. It is, therefore, stated that
the payment of Rs. 5 lakhs was towards commission in respect of delivery of the
pharmaceutical drugs which was as per agreement arrived at between the parties.
It is further stated that after the said cheques were submitted by the
petitioner to the respondent-company the petitioner was in need of finance and
therefore the respondent-company being a finance company and due to the
relationship between the parties has given two cheques to the petitioner. It
is, therefore, stated that both these transactions are absolutely different and
they have no connection with each other. It is, therefore, submitted that the
respondent-company had issued cheques to the petitioner and lent Rs. 2.50 lakhs
by issuing the cheques on 5-12-1994 towards part payment of agreed loan of Rs.
4.50 lakhs. However, for the remaining amount of the finance which the petitioner-company
wanted, Rs. 2 lakhs were to be paid by the respondent-company and therefore,
two post-dated cheques were issued on 7-2-1995 and 8-2-1995 for an amount of
Rs. 1 lakh each. It is, therefore, submitted that no amount is due and payable
by the respondent-company to the petitioner and, hence, the petition is
required to be dismissed.
5. The petitioner had filed affidavit-in-rejoinder on 3-7-1998.
It was submitted in the said rejoinder that the respondent-company has
concocted a story and misused the dual capacity of Mr. Sanjay K. Dhumal as
Purchase Manager of Esskay Pharmaceuticals Ltd., and as Director of the
respondent-company. It is also instance
of Mr. Sanjay K. Dhumal but at the instance of Mr. Kirit Jain, Managing
Director and Chairman of M/s. Esskay Pharmaceutical Ltd., and Director of the
respondent-company. It is further submitted that the petitioner has sold bulk
drugs and chemicals to the aforesaid two Companies, however there was no
question of payment of any commission or brokerage. The defence raised by the
respondent-company clearly constitutes perjury and it is required to be dealt
with strictly. It is further stated that there was no practice of paying any
commission or brokerage by the petitioner to any person much less the aforesaid
two Companies with regard to any transaction. It is, further stated that the
petitioner had filed Company Petition No. 289/1997 against the Esskay
Pharmaceutical Ltd., and nowhere it is stated that any commission or brokerage
was payable by the petitioner to the said two Companies. The fact regarding the
payment of any commission or brokerage was not reflected in any of the books of
account or financial transaction. The petitioner was never in need of any
finance and, therefore, there is no question of making any request for
short-term finance of Rs. 4.50 lakhs by the petitioner. It is stated that this
was another fabricated story made by the respondent-company. It is further
stated that the cheques were dishonoured on the ground of insufficiency of fund
and not on the ground of stop payment made by the respondent-company.
6. Since the false and frivolous dispute was alleged to have
been raised by the respondent-company in the affidavit of its Director, this
Court has passed an order on 4-9-1998 taking on record a photostat copy of true
copy of Director’s report dated 31-5-1995 of the respondent-company, with its
balance sheet as on 31-3-1995. Schedule-VII to the balance sheet clearly shows
that the respondent-company has acknowledged the dues of the petitioner to the
tune of Rs. 2.50 lakhs as part of the current liability. However, the name of
the petitioner-company does not appear in Schedule-V where the names of the
debtors of the respondent-company are mentioned. It is, therefore, submitted on
behalf of the petitioner before the Court that the affidavit-in-reply filed by
Mr. Sanjay K. Dhumal, Director of the respondent-company contained statements
which are false to the knowledge of the deponent. In view of the said
submissions, the Court has directed the said Mr. Sanjay K. Dhumal, Director of
the respondent-company to show cause on 18-9-1998 as to why this Court should
not pass order for initiating proceeding against him for perjury.
7. No order was passed for perjury on 18-9-1998. Thereafter, an
order was passed by this Court on 14-10-1998 in this petition and Company
Petition No. 289 of 1997 recording statement of Mr. N.K. Majmudar, learned
advocate for the respondent-company, in the presence of and under the
instructions of Director - Mr. Sanjay K. Dhumal, that an overall settlement has
been arrived at in respect of the claims made in both these petitions whereby
an overall sum of Rs. 16 lakhs was to be paid to the petitioning creditor.
Furthermore, it was also agreed and so stated that the interest at the rate of
21 per cent per annum shall be payable on the aforesaid amount on the
diminishing balance. It was also clarified that further and incidental terms of
the settlement shall be worked out later. It was on the basis of the said
statement made and accordingly recorded, that learned counsel for the
petitioning creditor agreed to an adjournment to 4-11-1998.
8.
Instead of making any payment, the respondent-company through its Director Mr.
Sanjay K. Dhumal has filed another affidavit on 27-9-1998, wherein the facts
stated in the earlier affidavit were reiterated. It was further stated that the
deponent has not made any incorrect statement before this Court and had not
even intended to misguide the Court. It is further stated that the entries in
the balance sheet were made as per the practice and procedure for maintaining
the books of account. There was no intention to make any incorrect statement.
It was further stated that the allegations with regard to perjury are
absolutely baseless and incorrect. The deponent has also tendered unconditional
apology to this Court, if the Court has developed any feeling that he has made
any incorrect statement before this Court, it was further stated that the
deponent has never intended to make any incorrect statement.
9. This Court has admitted petition on 1-4-1999 and also passed
an order regarding publication of notice of admission of the petition in
“Indian Express” and “Jansatta-Loksatta” both of Baroda Edition after
19-4-1999. The Court has also observed in the said order that further hearing
of notice of perjury would also take place on 3-5-1999 and it was clarified
that the Court has not expressed any opinion on the merits of the issue of
perjury. The Court, thereafter, extended time for publication of advertisement
up to 22-7-1999. However, it has not come on record that the publication of
advertisement was effected as directed by this Court. The Court, there-after,
on 18-4-2001 dismissed the Company Petition after observing that though the
matter was listed 59 times learned advocate for the petitioner was not present
and, hence, the petition stood dismissed for default.
10. The petitioner, thereafter, moved Misc. Civil Application No.
8/2003 before this Court for restoration of the Company Petition No. 336/1997.
However, the said application was also rejected by an order dated 7-2-2003 on
the ground that there was inordinate delay of more than 600 days and no
sufficient reason was shown for condonation of such delay.
11. The said order was challenged by the petitioner in OJ Appeal
No. 7/2003 before this Court and the Division Bench vide its order dated
28-2-2003 has allowed the said Appeal and restored the Company Petition No.
336/1997 to the file so as to decide the same in accordance with law.
12. After restoration of the above petition, it has been notified
for further hearing on different occasions. The Court has passed an order on
4-12-2003 and observed that in spite of the fact that the Company Petition was
admitted in the year 1999 and the Court had even issued perjury notice on
4-9-1998, the respondent-company has not made any payment of the petitioner’s
dues nor was Mr. Sanjay Dhumal, deponent of the affidavit-in-reply present
before the Court. The Court, therefore, issued a bailable warrant for the sum
of Rs. 5,000 for securing personal presence of Mr. Dhumal. After service of the
said bailable warrant, Mr. Dhumal remained personally present before the Court
on 24-12-2003. The Court, thereafter, passed further order on 3-5-2004 and
observed that in light of the order dated 1-4-1999 whereby the petition has
been admitted and the direction for publication of advertisement has been made,
Mr. D.V. Parikh, learned advocate appearing for the petitioner, has stated that
accordingly advertisement has already been published on 19-7-1999. Mr. Parikh
has further undertaken to verify the record and to place the same on record, if
necessary affidavit for the same has not been filed.
13. In the above view of the matter, this petition is taken up for
final hearing and also to decide the question regarding launching of criminal
prosecution against Mr. Dhumal for the alleged offence of perjury. Mr. Parikh,
learned advocate appearing for the petitioner, has submitted that the
petitioner is not much concerned about the winding up of the respondent-company
though the dues of the petitioner have not been paid till this date. He,
however, insisted that this Court should direct the Registrar to launch the
criminal prosecution for committing an offence of perjury against Mr. Dhumal,
Director of the respondent-company, as he has filed false affidavits before
this Court and misled the Court by placing false facts. He has further
submitted that Mr. Dhumal was well aware about the fact that the
respondent-company had to pay an amount of Rs. 2,50,000 to the petitioner and
still he has put up his defence in the affidavit-in-reply that the
respondent-company has to recover the like amount from the petitioner, as the
petitioner has agreed to pay commission and brokerage on the contracts received
from the sister concern, with the help of the respondent-company. He has
further submitted that false facts were placed not only before this Court but
also before the BIFR. Though Mr. Dhumal has made statement before this Court on
14-10-1998 with regard to settlement of the claim of the petitioner against the
respondent-company as well as its sister concern M/s. Esskay Pharmaceutical
Ltd., in Company Petition No. 289/1997 and Company Petition No. 336/1997, it
was stated before BIFR by letter dated 23-7-2002 that Mr. Sanjay Dhumal was
neither a Director on Board of M/s. Esskay Pharmaceutical on 14-10-1998 nor he
committed anything on behalf of M/s. Esskay Pharmaceutical Ltd. He has further
submitted that though Mr. Nitin Shah was the shareholder of M/s. Esskay
Pharmaceutical, it was stated before the Department of Company Affairs vide
letter dated 24-9-1998 that the complainant Mr. Nitin Shah was not a
shareholder of the company and hence the complaint filed by him was no longer
valid. As a matter of fact said Mr. Nitin Shah was very much shareholder of the
company and holding 500 shares bearing Distinctive Nos. 3955501 to 3956000.
Regarding false defence raised before this Court by Mr. Dhumal on behalf of the
respondent-company, Mr. Parikh has submitted that the Court has already
recorded these facts in its order dated 4-9-1998 and on that basis perjury
notice was issued on Mr. Sanjay Dhumal. He has therefore submitted that this is
the fit and appropriate case for issuing the direction to the Registrar to file
criminal complaint against Mr. Sanjay Dhumal for committing offence of perjury.
14. Mr. Parikh in support of his submission has relied on the
decision of Hon’ble Supreme Court in the case of Dhananjay Sharma v. State of
Haryana in AIR 1995 SC 1795, wherein it is observed that “any conduct which has
the tendency to interfere with the administration of justice of the due course
of judicial proceedings amounts to the commission of criminal contempt. The
swearing of false affidavits in judicial proceedings not only has the tendency
of causing obstruction in the due course of judicial proceedings but has also
the tendency of impede, obstruct and interfere with the administration of
justice. The filing of false affidavits in judicial proceedings in any Court of
law exposes the intention of the concerned party in perverting the course of
justice. The due process of law cannot be permitted to be slighted nor the
majesty of law be made a mockery by such acts or conduct on the part of the
parties to the litigation or even while appearing as witnesses. Anyone who
makes an attempt to impede or undermine or obstruct the free flow of the
unsoiled stream of justice by resorting to the filing of false evidence,
commits criminal contempt of the Court and renders himself liable to be dealt
within accordance with the Act. Filing of false affidavits or making false
statement on oath in Courts aims at striking a blow at the Rule of law and no
Court can ignore such conduct which has the tendency to shake public confidence
in the judicial institutions because the very structure of an ordered life is
put at stake. It would be a great public disaster if the fountain of justice is
allowed to be poisoned by anyone resorting to filing of false affidavits or
giving of false statement and fabricating false evidence in a court of law”.
15. Mr. Parikh has further relied on decision of Hon’ble Supreme
Court in Re Suo Moto Proceedings against Mr. R. Karuppan, Advocate AIR 2001 SC
2204, wherein it is held that “it is not disputed that an affidavit is evidence
within the meaning of section 191 of the Indian Penal Code. The Court further
observed that the respondent in that case being legally bound by an oath to
state the truth in his affidavit accompanying the petition is prima facie held to
have made a false statement which constitutes an offence of giving false
evidence as defined under section 191, IPC punishable under section 193, IPC.
With the object to eradicating the evil of perjury, the Court empowered the
Registrar General of the Hon’ble Supreme Court to depute an officer of the rank
of Deputy Registrar or above of the Court to file a complaint under section 193
of the Indian Penal Code against the respondent before a Magistrate of
competent jurisdiction at Delhi. Mr. Parikh has, therefore, submitted that
following the said decision of Hon’ble Supreme Court, this Court should also
direct the Registrar to file criminal complaint against Mr. Sanjay Dhumal for
committing an offence of perjury before the Criminal Court of competent jurisdiction”.
16. Mr. N.K. Majmudar, learned advocate appearing for the
respondent-company, has submitted that as far as Company Petition is concerned,
the disputed question of facts are involved and the respondent-company has
filed its affidavit through its Director stating that there was no amount due
and payable by the Company to the petitioner, on the contrary the Company has
to recover the amount from the petitioner. He has further submitted that though
the order of admission and advertisement was passed by this Court and though
the petitioner has undertaken to place these facts on record, publication of
advertisement, till this date nothing has been produced and hence it is clear
that no advertisement has been published by the petitioner. The petition therefore
deserves to be dismissed only on the ground of want of prosecution and in any
case since disputed question of facts are involved the winding up petition
would not survive.
17. As far as perjury notice is concerned, Mr. Majmudar has
submitted that Mr. Dhumal in his affidavit on 27-9-1998 made it very clear that
the petitioner was required to release the amount of instalment with interest
at the rate of 18 per cent per annum on the aforesaid amount of Rs. 2,50,000
and since the petitioner did not make the payment of aforesaid amount with
interest, as a last resort the respondent informed the petitioner not to
deposit two cheques of Rs. 1 lakh each. Mr. Majmudar has further submitted that
due to the relationship between the petitioner and respondent and since the
petitioner was in need of Rs. 4,50,000 without execution of proper documents,
the said amount was sent. He has further submitted that the amount of Rs.
2,50,000 was sent by an Account-Payee cheque which itself suggests that the
said amount was sent by the respondent to the petitioner towards the amount of
loan which the petitioner had requested for. He has further submitted that
since there was no document in support of the aforesaid amount of loan
transaction, as per the advise of Company’s auditor, the amount of Rs. 5 lakhs
which was received by the respondent-company towards commission and brokerage
and which was shown in Schedule-VII to current liability, includes the advances
also and, therefore, the aforesaid amount of Rs. 2,50,000 which was sent by
respondent to the petitioner towards the loan amount was adjusted in
Schedule-VII of current liability and only with a view to maintain proper
account from Rs. 5 lakhs the said Rs. 2,50,000 was deducted and, therefore, an
entry of Rs. 2,50,000 was posted in Schedule-VII of current liability. He has
further submitted that an amount of Rs. 2,50,000 which is shown as current
liability in Schedule-VII is not an amount which is alleged by the petitioner
in Company Petition as well as in affidavit-in-rejoinder. However, the said
amount of Rs. 2,50,000 was the remaining amount of total commission of Rs. 5
lakhs which was to be adjusted in the current liability and advances in
Schedule-VII after adjusting Rs. 2,50,000. With regard to the Schedule-V of the
balance sheet, he has submitted that the said amount of Rs. 2,50,000 was given
by the respondent-company to the petitioner. However no written documents were
executed in this regard and therefore the auditor has correctly treated the
said amount in the single account while preparing balance sheet and shown the
annual balance of Rs. 2,50,000 in the current liability. Further explaining the
aforesaid accounting position Mr. Dhumal has stated in his affidavit that he
has not made any incorrect statement before this Court and never even intended
to misguide this Court. Even without admitting the alleged charge of perjury he
has tendered his unconditional apology if the Court has developed the feeling
that he has made any incorrect statement before this Court.
18. Mr. Majmudar has further submitted that Mr. Dhumal has filed
further affidavit on 28-10-2004, wherein he has stated that he has resigned
from the Company vide communication dated 29-3-2003. He has further submitted
that while he was Director of the Company, the present Company Petition came to
be filed and he had filed affidavit-in-reply on behalf of the
respondent-company and considering the averments made in the winding up
petition as well as the stand taken by the respondent-company, this Court has issued
notice for showing cause as to why the proceedings for commission of offence of
perjury should not be initiated. He has further submitted that pursuant to the
said notice he has filed detailed affidavit on 27-9-1998, wherein he has
tendered unconditional apology. In this affidavit he has also again tendered
unconditional apology and prayed to shower mercy on him without going into the
merits of the matter. He has further submitted that even at the relevant time
after discussing the said stand with other Directors; affidavit came to be
drafted and he has sworn for and on behalf of the Company. He, therefore,
requested to the Court to drop the proceedings for an offence of perjury. He
has also reiterated that he has never made any incorrect statement intentionally
before this Court. He has submitted that considering the ingredients of the
offence of perjury even otherwise, no such ingredients were said to have been
found and therefore he has requested to drop the proceedings. He has further
submitted that he has now already resigned and accepted the job in another
company and he has to discharge the liability of looking after his wife and two
kids and also of looking after the aged parents. Considering the fact that no
intentional misstatement was ever made by him, the Court should shower mercy on
him and drop the proceedings.
19. Considering the contents of the aforesaid two affidavits, Mr.
Majmudar has strongly urged that the notice issued by this Court for the alleged
offence of perjury against Mr. Dhumal, the then Director of the Company should
be discharged.
20. After having heard the learned advocates appearing for the
respective parties and after having gone through their pleadings as contained
in main Company Petition, affidavit-in-reply, further affidavit,
affidavit-in-rejoinder and after having given serious thoughts to the
petitioner’s request to prosecute the Director of the respondent-company for
the alleged offence of perjury for making false statement in the affidavit
filed before this Court, in light of the judgment of Hon’ble Supreme Court as
referred to hereinabove, the Court is of the view that neither any case for
winding up of the respondent-company is made out nor any case for filing
criminal complaint against the Director of the respondent-company for the
alleged offence of perjury is made out. It is true that despite the defence
raised by the respondent-company against the petitioner’s claim, a statement
was made before this Court that the matter has been amicably settled and hence
even if the Court ignores the said defence for the purpose passing up winding
up order against the respondent-company, the fact still remains that the
respondent-company has not complied with the statutory condition. A statement
was made before the Court that the petition was admitted and duly advertised on
19-7-1999. Mr. Parikh, learned advocate appearing for the petitioner, has
undertaken before this Court to verify record and place the same in record if
necessary affidavit for the same has not been filed. The Court has gone through
the entire record and also verified from the office and yet neither any
affidavit in support of the publication of advertisement is on record nor the
relevant newspaper cutting containing said advertisement are placed on record.
Even after the said order passed on 3-5-2004, nothing is placed on the record
so as to convince the Court that the advertisement has already been published.
In absence of any documentary evidence placed on record the Court is not in a
position to accept the oral submission that the advertisement has been duly
published on 19-7-1999. The Court, therefore, without adjudicating the issue as
to whether defence raised by the respondent-company is a genuine and bona fide dispute,
the Court dismisses this petition only on the ground of non-observance of
statutory requirements.
21. This will now lead to another issue which is hotly contested
before the Court and that is with regard to filing of criminal complaint
against the Director of the respondent-company for the alleged offence of
perjury. Though Mr. Parikh has strongly submitted that the averments made in
the two affidavits-in-reply filed by the respondent-company through its
Director Mr. Sanjay Dhumal on 22-2-1998 and 27-9-1998 are absolutely false and
frivolous and the deponent Mr. Dhumal knew the same to be false and frivolous,
the Court cannot come to the conclusion straightway without recording evidence
in this regard and without undergoing necessary trial for that purpose, that
the facts stated and averments made therein are false and they are made only
with a view to mislead this Court and same amounts to perjury under the
provision of Indian Penal Code. The respondent-company has every right to raise
its defence in winding up petition filed against the company. The
respondent-company is also well within its purview to raise all plausible
contentions before the Court. The Court has to see as to whether such defence
raised or such contention canvassed are merely sham, bogus, moonshine or
illusory or there is any scope for consideration of the Court to examine such
defence and/or contention raised before it. It is altogether a different thing
that the defence raised by the respondent-company may not be found favour with
the Court or the Court may not be inclined to accept such defence. But, this by
itself would not give any rise to an offence of perjury. Whether an amount of
Rs. 5 lakhs was given by the petitioner to the respondent-company by way of
loan or whether the said amount was given towards payment of commission or
brokerage for getting orders from the sister concern or whether the cheques
given by the respondent-company to the petitioner are towards repayment of the
loan given by the petitioner to the respondent-company or the same were towards
the fresh loan given by the respondent-company to the petitioner or whether
bouncing of cheques was the outcome of insufficiency of fund in the bank
account or it was because of the stop payment made by the respondent-company -
are the issues for which detailed inquiry and investigation is required and
necessary evidence are to be led. Accounting entries may throw some light on
this issue but they are not conclusive proofs. This Court while exercising its
original jurisdiction under the Companies Act does not undertake such exercise.
It is left to the competent Civil Court before whom trial takes place and
evidence are led. Only after complete appreciation of the documents and
evidence, the Court may come to the definite conclusion. Till such exercise is
undertaken it is not possible for the Court to arrive at the conclusion that an
offence of perjury is committed merely on the basis of some averments made in
the affidavit filed before this Court. The Court, therefore, is of the view
that there is nothing on record which suggests that the deponent knew that the
facts stated and averments made in the affidavits are not true and correct or
that they are false and frivolous. This motive can be attributed only after
undergoing full-fledged trial. The discrepancies which are pointed out by the
petitioner with regard to other proceedings before BIFR do not lead the
petitioner’s case any further. First of all the present deponent has not filed
the affidavit or produced the details before BIFR towards which the attention
of this Court was drawn and even otherwise the Court cannot take cognizance of
those materials which are produced before the other adjudicating authorities.
The decisions of the Hon’ble Supreme Court which are cited before the Court and
are heavily relied upon, are also not of much assistance to the petitioner, as
in those cases the Court has come to a definite conclusion that false
statements were made to the knowledge of the deponent in the affidavit filed
before the Court and on the basis of the observations made by the Hon’ble
Supreme Court, as in the present case the Court is unable to arrive at such a
conclusion.
22. Considering the entire facts and circumstances of the case and
considering the broad parameter which are laid down for the purpose of
initiation of criminal prosecution for the alleged offence of perjury, the
Court is of the view that no such case is made out before the Court and notice
issued by this Court earlier for initiation of the criminal proceeding for the
alleged offence of perjury is hereby discharged.
23. This
petition is, accordingly, disposed of without any order as to costs.