2024 (4) TMI 177 - HC - Companies Law

Delhi HC overturns criminal charges dismissal in digital signature fraud case involving illegal share allotment

Shiv Raj Singh Versus State of NCT of Delhi & Ors.

Delhi HC set aside trial court's order in criminal proceedings involving illegal share allotment and directorship appointment through misuse of digital ... Maintainability of Criminal proceedings - Violation of principles of natural justice - facts as mentioned in the chargesheet as well as other material placed on record were not taken into consideration - illegal allotment of shares - illegal appointment of petitioner as a director and transfer of shares by misusing the digital signatures of the petitioner - HELD THAT:- Without going into the details of the present case, this Court is of the considered opinion that the learned Trial Court while passing the impugned order did not take into consideration the facts as mentioned in the chargesheet as well as other material placed on record by the Investigating Officer. So far as the reliance placed by respondent no. 2 to 4 on the judgment of Hon’ble Supreme Court in Satish Mehra [1996 (7) TMI 555 - SUPREME COURT] is concerned, it is relevant to note that the said judgment has been overruled by the Hon’ble Supreme Court in STATE OF ORISSA VERSUS DEBENDRA NATH PADHI [2004 (11) TMI 564 - SUPREME COURT], wherein it has been recorded in our view, clearly the law is that at the time of framing charge or taking cognizance the accused has no right to produce any material. Satish Mehra case holding that the trial court has powers to consider even materials which the accused may produce at the stage of Section 227 of the Code has not been correctly decided. So far as the ground that the petitioner did not specifically deny the execution of the MoU in the proceedings before the learned NCLT is concerned, it is pertinent to note that the rejoinder filed on behalf of the petitioner before the Company Law Board was placed on record wherein in paragraph 2 thereof, it was categorically stated that the MoU is a forged and fabricated document and does not bear the true signatures of the petitioner. It is also pertinent to note that the material placed by the Investigating Officer along with the chargesheet filed before the learned Trial Court was not placed on record before the learned NCLT. The impugned order dated 17.08.2019 passed by the Learned Trial Court is set aside. The matter is remanded back to the learned Trial Court for fresh consideration on the point of charge. The learned Trial Court shall give opportunity to the parties and thereafter pass appropriate orders in accordance with law - Petition allowed. Issues Involved:1. Validity of the discharge order of respondents no. 2 to 4 by the learned Chief Metropolitan Magistrate.2. Consideration of documentary evidence and statements at the stage of framing charges.3. Jurisdiction of the National Company Law Tribunal (NCLT) and its impact on criminal proceedings.Summary of the Judgment:Issue 1: Validity of the Discharge OrderThe petition u/s 397 read with u/s 401 of the CrPC challenges the order dated 17.08.2019 by the Chief Metropolitan Magistrate, Rohini, Delhi, which discharged respondents no. 2 to 4 in FIR No. 177/2013 u/s 420/406/468/471/384 read with u/s 120B of the IPC. The learned Trial Court observed that the facts in the chargesheet were also subject to C.P. No. 104/ND/2011 before the NCLT, which found no fraudulent resignation or illegal transfer of shares by the petitioner. The NCLT's findings, upheld by higher courts, influenced the discharge decision. The Trial Court relied on Radheshyam Kejriwal vs. State of West Bengal, (2011) 3 SCC 581, concluding that criminal prosecution cannot continue if civil adjudication exonerates the accused on merits.Issue 2: Consideration of Documentary Evidence and StatementsThe petitioner argued that the Trial Court misinterpreted the NCLT's order and failed to consider the chargesheet and accompanying documents u/s 207 of CrPC. The Trial Court allegedly relied on documents not part of the chargesheet, violating the principle in Surinder Kumar Yadav And Ors. Vs Suvidya Yadav And Anr., 31 (1987) DLT 13, which restricts consideration to prosecution documents at the charge-framing stage. The petitioner highlighted that the resignation letter and annual returns were filed using the petitioner's digital signatures without his consent, supported by the statement of company secretary A.K. Popli.Issue 3: Jurisdiction of the NCLT and Its Impact on Criminal ProceedingsRespondents argued that the NCLT's exclusive jurisdiction over company matters, as per Section 430 of the Companies Act, 2013, precludes criminal court jurisdiction. They cited SAS Hospitality Pvt Ltd v. Surya Constructions Pvt Ltd., 2018 SCC Online Del 11909 and Shashi Prakash Khemka v. NEC Micon, (2019) SCC OnLine SC 223, reinforcing the NCLT's authority. However, the petitioner contended that criminal proceedings are distinct and not barred by civil adjudication, supported by Kishen Singh v. Gurpal Singh 2010 (8) SCC 775 and State of Orissa v. Debendra Nath Padhi, (2005) 1 SCC 568, which overruled Satish Mehra v. Delhi Administration AND Another, (1996) 9 SCC 766.Analysis and FindingsThe Court found that the Trial Court did not adequately consider the chargesheet and material evidence. The reliance on the NCLT's findings was misplaced, as criminal proceedings require a higher standard of proof. The Court emphasized that at the charge-framing stage, only prosecution materials should be considered, as per State of Orissa v. Debendra Nath Padhi. The petitioner's denial of the MoU's authenticity and the chargesheet's evidence were not adequately addressed by the Trial Court.ConclusionThe petition is allowed, and the impugned order dated 17.08.2019 is set aside. The matter is remanded back to the learned Trial Court for fresh consideration on the point of charge, ensuring adherence to legal principles and proper evaluation of the chargesheet and evidence. The parties are directed to appear before the Trial Court on 22.04.2024.