2015 (2) TMI 1045 - HC - Companies Law

High Court restores perjury application under Section 340 CrPC, clarifies CLB's authority.

The High Court set aside the Company Law Board's decision and restored the application under Section 340 CrPC for perjury proceedings. The Court clarified ... Jurisdiction of Company Law Board (CLB) - Jurisdictional bar in entertaining application under Section 340 of Code of Criminal Procedure, 1973 - Forged and fabricated document - Succession of Shares - Held that:- The Company Law Board in the present case has not been approached with an application under section 340 CrPC as a Second Court but as the First Court before which a forged and fabricated document has been filed and made the basis of the petition. In the case of Kuldeep kapoor [2005 (12) TMI 553 - DELHI HIGH COURT], held that a document, which is tampered or forged and is produced during the Court proceedings, the Court would have jurisdiction to conduct an inquiry under Section 340 of the Code and decide whether the bar contained under Section 195 partially or in its entirety is attracted in the facts and circumstances of the case or not. An offender cannot take advantage of its own offence and wrongs committed, and give an interpretation of the provisions of law, which is destructive of the legislative intent and spirit of the statute. This Court has thus held that even if a document was tampered/forged prior to institution of the legal proceedings, the Court will have jurisdiction to entertain an application under section 340 of the Code if the document has been produced in Court proceedings. Further it is laid down that making of false averment in the pleading pollutes the stream of justice. It is an attempt at inviting the Court into passing a wrong judgment and that is why it must be treated as an offence. Where a verification is specific and deliberately false, there is nothing in law to prevent a person from being proceeded for contempt. The Company Law Board was not barred from entertaining the application under section 340 CrPC and has thus erred in refusing to entertain the application filed by the Appellant.The impugned order is accordingly set aside. - Decided in favour of appellant. Issues Involved:1. Jurisdictional bar under Section 195(1)(b)(ii) CrPC.2. Maintainability of the application under Section 340 CrPC for initiating perjury proceedings.3. Misapplication of Supreme Court judgments by the Company Law Board.4. Powers and jurisdiction of the First Court (Company Law Board) versus the Second Court.Detailed Analysis:1. Jurisdictional Bar under Section 195(1)(b)(ii) CrPC:The Company Law Board (CLB) dismissed the application for perjury and contempt, relying on the Supreme Court judgments in IQBAL SINGH MARWAH V. MEENAKSHI MARWAH and SACHIDA NAND SINGH VS. STATE OF BIHAR. The CLB interpreted that Section 195(1)(b)(ii) CrPC applies only when offences are committed with respect to a document after it has been produced or given in evidence in any court during the time it was in custodia legis. The CLB held that it would be strained thinking to consider any offence involving forgery of a document committed far outside the court's precincts as affecting the administration of justice merely because the document later reaches the court.2. Maintainability of the Application under Section 340 CrPC:The Appellant's application for prosecuting the Respondent for perjury was based on the assertion that the Respondent knowingly filed a forged document to induce the court to believe in a higher shareholding. The Respondent admitted the document was forged but claimed it was handed over by the Appellant, believing it to be correct. The core issue was whether the court would be barred from entertaining an application under Section 340 CrPC even if the party filing the pleadings was aware that the document was forged and fabricated.3. Misapplication of Supreme Court Judgments by the Company Law Board:The CLB misapplied the Supreme Court judgments in IQBAL SINGH MARWAH and SACHIDA NAND SINGH. The Supreme Court in these cases dealt with the powers of the Second Court and not the First Court. The judgments clarified that the bar under Section 195 CrPC would be attracted only when the offences enumerated have been committed with respect to a document produced or given in evidence in a proceeding in any Court. The Supreme Court emphasized that an enlarged interpretation of Section 195(1)(b)(ii) could lead to misuse, where a person could avoid prosecution by simply filing a forged document in court.4. Powers and Jurisdiction of the First Court (Company Law Board) versus the Second Court:The High Court clarified that Section 195(1)(b)(i) & (ii) CrPC create a bar on the Second Court from taking cognizance of offences related to documents produced in the First Court, but do not restrict the First Court's powers. The First Court is not barred from entertaining an application under Section 340 CrPC regarding documents forged before being filed in court. The High Court held that the CLB, as the First Court, was not barred from considering the application for perjury concerning documents forged before filing.Conclusion:The High Court set aside the impugned order, restoring the application under Section 340 CrPC for consideration on merits by the CLB. The Court clarified that the merits of the allegations of forgery were not considered in the present judgment. The CLB was directed to consider the application on merits in accordance with the procedure laid down in Section 340 CrPC.