Calcutta High Court
Hungerford Investment Trust Limited vs Turner Morrison & Company Limited on 9 August, 2018
Equivalent citations: AIRONLINE 2018 CAL 1065
Form No. J(2)
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
BEFORE:
THE HON'BLE JUSTICE ANIRUDDHA BOSE
Company Application No. 502 of 2017
Hungerford Investment Trust Limited
Vs.
Turner Morrison & Company Limited
And
Hungerford Investment Trust Limited
Date : 9th August, 2018
Mr. Deepak Khosla, Adv., Fatena Nissa Adv. for the applicant
Anunoy Basu, Adv. Srinjoy Bhattacharya, Adv for the respondent
ANIRUDDHA BOSE J.,:-
1. In this application the applicant seeks review of an order passed by this Court on 18th April, 2017 in a proceeding taken out by the applicant under Section 340 of the Code of Criminal Procedure, 1973. I had chosen to pass an order for hearing the persons against whom the applicant wants to initiate the proceeding before I formed my opinion as to whether it was expedient in the interest of justice that an enquiry should be made into an offence which may come within Clause (b) of sub-section 1 of Section 195 of the 1973 Code.
2. Argument of Mr. Khosla, learned Counsel for the applicant, in substance was that there was a bar on hearing the proposed accused persons at that stage. He relied on the four authorities in support of this proposition. 1
"i) Pritish Vs. State of Maharashtra (AIR 2002 SC
236)
ii) Godrej & Boyce Manufacturing Co (P) Ltd. Vs. Union of India (1192 Cri LJ 3752)
iii) Madan Lal Sharma Vs. Punjab & Haryana High Court (2000 Cri LJ 1512)
iv) Devinder Mohan Zakhmi Vs. Amritsar Improvement Trust [2002 Cri LJ 485 (4487) (P&H)]."
3. The context in which the aforesaid application under Section 340 was taken out would appear in the following passages of my order passed on 18th April, 2017:
"1. This application, supported by Judge's summons has been taken out by Hungerford Investment Trust, (the applicant) seeking an enquiry under Section 340 of the Code of Criminal Procedure, 1973. Prayers have also been made for initiation of contempt proceeding in relation to making of false statements in four different pleadings in proceedings registered 2 as C.A. No. 493 of 2006, counter-affidavit to C.A. No. 106 of 2015, counter-affidavit to C.A. No. 109 of 2015 and supplementary counter-affidavit to C.A. No. 360 of 2015. The applicant further seeks an inquiry into offences alleged to have been committed under Section 195(1)(b) of the 1973 Code, against the persons whose names have been disclosed in paragraphs 81 and 82 of the application and recordal of finding thereof and also direction upon an officer to be appointed by this Court for making complaint into the offences under Sections 191, 192, 193, 199, 200, 202, 209 and 120B of the Indian Penal Code, 1860 and for sending such complaint to the Magistrate having jurisdiction in relation to such complaint. There are other directions which the applicant has made prayer for in this application, which include referring the matter for criminal contempt of the Court to a Division Bench of this Court in exercise of power under Section 15(2) of the Contempt of Courts Act, 1971. Direction has also been sought for providing the applicant with a sum of Rs.2,50,000/- being legal costs and expenses in connection with this 3 application, in exercise of power of this Court under Section 382 of the 1973 Code.
2. The substance of the allegations of the applicant in relation making false statements in the aforesaid four pleadings is in connection with an application registered as C.P. No. 33 of 1988. That application, instituted under Sections 397 and 399 of the Companies Act, 1956 was dismissed by a learned Single Judge of this Court on 21st June 2007, and the order of dismissal was sustained by an Hon'ble Division Bench of this Court. Subsequently, Hungerford Investment Trust (H.I.T.) had taken out an application on 2nd July 2006, registered as C.A. No. 491 of 2012 seeking to substantiate control over Turner Morrison & Co. Ltd. and its subsidiaries, and various directions were prayed for in that regard. The main ground for dismissal of the petition under Sections 397 and 399 of the Companies Act, 1956 was lack of locus on the part of the applicant and it was found by the Court that the applicant had lost the eligibility criteria. A petition seeking to review the dismissal order of the Appellate Bench was also 4 dismissed by a Division Bench of this Court on 7th April, 2015.
3. The specific plea of the applicant is making of false statements have been outlined in paragraph 2(a) of the subject application. The facts narrated in the aforesaid pleadings, which according to the applicant constitutes false statements, are:- i. "That the applicant company's entire shareholding in Turner Morrison of 2295 shares have been sold by auction in 1994. ii. That the 12 shares registered in the names of 4 individuals do not belong to the applicant company, iii. That Turner Morrison Ltd has never recognised the right of the applicant Company over these 12 shares. iv. That by sale of shares by auction in 1994, the applicant is now left with no shares in Turner Morrison Ltd."
The allegations made by the applicant of making false statements appear to have a bearing on the reasoning based on which the applicant's petition for mismanagement and oppression was dismissed. The judgments and orders of dismissal of the applicant's appeal (APOT No. 440 of 2007) and the Review 5 Petition were, however, not appealed against before any superior forum.
4. The applicant has named nine individuals and a firm of Advocates & Solicitors against whom it seeks to initiate criminal prosecution for perjury. In my order of 17th June 2016, I had directed service of copy of this application upon learned counsel for Turner Morrison & Co. Ltd. No service, however, has been effected upon the other persons whom the applicant seeks to prosecute. At this stage, Mr. Khosla, learned counsel for the applicant has submitted that no notice ought to be issued against those persons. His submission on such service is that there is bar on this Court in issuing such notice while examining an application under Section 340 of the 1973 Code at the initial stage. He has relied on four judgments in this regard being (i) Pritish Vs. State of Maharashtra (AIR 2002 SC 236), (ii) Godrej & Boyce Manufacturing Co (P) Ltd. Vs. Union of India (1992 Cri LJ 3752), (iii) Madan Lal Sharma Vs. Punjab & Haryana High Court (2000 Cri LJ 1512) and (iv) Devinder Mohan Zakhmi Vs. Amritsar Improvement Trust [2002 Cri LJ 485 (4487) (P&H)].
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5. The Judge's summons in the present application was taken out on 18th February 2016. In my order passed on 4th February 2016, I had adjourned hearing of applications in connection with C.P. 33 of 1988, and the following order, inter alia, was passed in respect of two applications, being C.A. No. 714 of 2015 and C.A. No. 708 of 2015, both taken out in connection with C.P. No. 33 of 1988:-
"In the event, however, any affidavit or application is there in support of the aforesaid two applications, such affidavits or applications will be heard together. I also want to make it clear that it is not possible for this Court to fix a specific date for hearing of applications in connection of CP No. 33 of 1988, as I am in the midst of hearing of another application in which, there are some contesting sides who are common to the both sets of litigants, the said proceeding being CP No. 90 of 1983. The applications involving CP No.33 of 1988 would be posted for hearing after conclusion of the proceedings taken out in connection with CP No. 90 of 1983 and for that purpose liberty is given to the learned Counsel for the parties to mention the same before this Court for 7 listing after the proceedings arising out of CP 90 of 1983 are concluded."
Subsequently, this application was called on for hearing at the instance of Mr. Khosla.
6. The Companies Act 2013 has become operational in the meantime. By a notification dated 1st June 2016 bearing no. S.O. 1933 (E), issued by the Central Government, the National Company Law Appellate Tribunal has become functional. A further notification has been issued by the Ministry of Corporate Affairs on 7th December 2016 in exercise of powers under Sections 434 (1 & 2) of the Companies Act, 2013 read with Section 239 (1) of the Insolvency and Bankruptcy Code, 2016. Clause 3 of this notification stipulates :-
"3. Transfer of pending proceedings relating to cases other than Winding up.-All proceedings under the Act, including proceedings relating to arbitration, compromise, arrangements and reconstruction, other than proceedings relating to winding up on the date of coming into force of these 8 rules shall stand transferred to the Benches of the Tribunal exercising respective territorial jurisdiction:
Provided that all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred."
So far as different applications instituted in connection with C.P. 33 of 1988 is concerned, my prima facie view is that those applications ought to be treated as part or extension of C.P. 33 of 1988, and those applications ought to be transferred to the Tribunal. In an unreported judgment of a Coordinate Bench, delivered on 22nd March 2017 (in C.A. 563 of 2013 with C.P. 611 of 1988, CC 43 of 2014 - Prasanta Kumar Mitra & Ors. Vs. India Steam Laundry (P) Ltd. & Ors.), similar view has been expressed in relation to a pending petition pertaining to allegations of oppression and mismanagement. Operation of that judgment had been stayed by the Coordinate Bench initially for a period of three weeks, and in course of hearing today, Mr. Bose, learned Senior counsel has apprised this Court that the order of stay has been 9 directed to continue by the Coordinate Bench for two more weeks, and that an appeal has been preferred against that judgment. The opinion I am expressing in this order, I must re-iterate, is my prima facie view. Mr. Khosla's submission is that a petition under Section 340 of the 1973 Code stands independently and cannot be affected by transfer of other applications for the reason that the false statements alleged by him to have been made were in pleadings filed before this Court only. He has also submitted that under the law, the recall petition also ought not to be transferred, and question of transfer would not arise until the order is recalled. But having regard to the nature and scope of the present application, no elaborate argument has been advanced on that count."
4. So far as the ratio of the four authorities is concerned, I had observed:
"7. Under the aforesaid provisions of the 1973 Code, the Court is required to make a preliminary inquiry and come to a prima facie finding about the 10 offence alleged and Mr. Khosla's submission, as I have already recorded, is that no service of notice ought to be effected on the persons in respect of whom his client wants proceedings to be commenced. None of the four authorities cited by Mr. Khosla, however, lays down that a Court considering an application brought under Section 340 of the 1973 Code is enjoined from hearing any of the accused persons, against whom inquiry is asked for. These authorities lay down the proposition that the persons against whom an inquiry is contemplated do not have the right of prior opportunity of hearing before such an inquiry is directed. The legislature has not provided in what manner an inquiry contemplated in Section 340 of the 1973 Code is to be conducted. It is for the Court making preliminary inquiry for the purpose of formulation of opinion that it is expedient in the interests of justice that an inquiry should be made to decide in what manner such preliminary inquiry ought to be made. If the Court at that stage considers it necessary to issue notice to any of the proposed accused persons to clarify on certain aspects of the controversy involved for the purpose of 11 forming its opinion, I do not think in such a situation the Court would go beyond its jurisdiction.
8. In the present case, jurisdictional question is likely to arise on the question as to whether false statements alleged to have been made in connection with an application, whose maintainability before this Court is under cloud having regard to the above- referred notification stipulating transfer of proceedings to the Tribunal can be subject-matter of a proceeding under Section 340 of the 1973 Code instituted in this Court. Moreover, facts involved in this case are complex, with the litigation itself having a long history, though Mr. Khosla sought to argue that it is a straightforward case of there being false statements in affidavits filed before this Court. In my opinion, before considering whether a direction should be issued for registering a complaint, hearing of each of the persons against whom the applicant wants this Court to proceed is necessary, and in this case such hearing would form part of the preliminary inquiry on the part of this Court. I must make it clear that such hearing would be to test the allegations of the applicant against the persons accused by him 12 would be at the surface level only. Two other authorities were cited by Mr. Khosla to contend that the initial proceeding under Section 340 of the 1973 Code is civil in nature. But I do not consider it necessary to refer to those two authorities for the purpose of deciding whether I should hear the contemplated accused persons at this stage or not.
9. In these circumstances, I propose to hear the persons against whom the applicant wants to initiate proceeding before I form my opinion as to whether it is expedient in the interests of justice that an inquiry should be made into an offence which may come within Clause (b) of sub Section (1) of Section 195of the 1973 Code. Let service of a copy of this petition be effected on each of the persons specified in paragraphs 81 and 82 of the application, so that I can consider their stand on the next date of hearing. As regards prayer of the applicant for initiation of proceeding for contempt, that plea is also founded on the same set of allegations. I shall examine the prayer of the applicant on that count after hearing the aforesaid individuals. Let this matter be listed on 10th May 2017."
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5. In this application it has been argued by Mr. Khosla that in the order of 18th April, 2017 I have misconstrued the ratio of the four authorities relied upon by him. He has referred to Paragraph 7 (of the report) in the case of Madan Lal Sharma, (supra), which reads:
"7. A reading of Section 340, Cr. P.C. shows that the Court is empowered to make such preliminary inquiry as it thinks necessary. The very word used in Section 340, Cr. P.C. contemplates that it is always for the Court to hold a preliminary inquiry. The Section does not envisage hearing of the accused before filing a complaint. It is always open to the accused to raise all the defences that are open to him under Law before the Magistrate in whose Court the complaint has been filed. The principle of audi- alteram-partem only means that no party should be condemned unheard. It does not postulate that before making complaint, a party should be heard. The petitioner has not been condemned of any act or omission. This Court prima-facie took the view that a forged document has been used for the purpose of showing that the appeal filed by the appellants in the 14 first appeal in land acquisition matter was within limitation. Whether any forgery was committed or not; whether the petitioner is responsible for committing the forgery and whether the petitioner is guilty of any offence, are all matters to be gone into during the trial of the case. The first contention of the learned counsel for the petitioner is, therefore, devoid of any merit and the same is rejected."
6. Mr. Khosla emphasized on observation of the Court in the case of Madan Lal Sharma (supra) that the aforesaid section does not envisage hearing the proposed accused before filing of complaint. But what the section does not emphasize cannot be interpreted to mean that it prohibits hearing the proposed accused at that stage. I have indicated in my order the complexity of the case in which the provisions of Section 340 of the 1973 Code is sought to be invoked. The decision of the Supreme Court in the case of Pritish (supra) lays down in substance that principle of natural justice is not breached in the event the Court does not give opportunity of hearing to a proposed accused person at the time of formation of opinion as contemplated in Section 340 of the 1973 Code. But in an appropriate case in my opinion the Court can choose to hear the accused at the stage of formation of opinion itself and that would not be in violation of the provisions of the Code. Ratio in the case of Pritish (supra) and the three other authorities relied upon by Mr. Khosla do not lay down such absolute principle of law. I am conscious of the legal position in the 1973 Code that in a situation 15 where the Court upon taking cognizance postpones issue of process till further enquiry is made, the accused is not heard. But distinction must be made between pre-summoning enquiry under Section 202 of the 1973 Code, which is an enquiry under the Code itself and an enquiry under Section 340 of the 1973 Code which has the characteristics of a civil nature with its in-built adversarial features at the stage of formation of opinion. There is a Bench decision of this Court dealing with a similar provision under the 1898 Code [Sambhu Nath Sadhukhan Vs. Meghesh Kumar (1981 CRI.L.J.1102)], in which the civil element in proceedings of this nature has been recognised. Thus, in such a situation principle of civil law may be attracted and the Court may choose to hear the proposed accused at the stage of formation of opinion. That power or jurisdiction of the Court has not been curtailed in Section 340 of the 1973 Code. The authorities cited by Mr. Khosla lay down that the proposed accused has no right to be heard at the initial stage of proceeding under Section 340 of the 1973 Code. But that principle cannot be stretched to mean that Court is barred from hearing them at all at the stage of formation of opinion under the aforesaid provision. I do not find any error apparent on the face of the record or any other ground which would warrant review of my order passed on 18th April, 2017.
7. The petition is accordingly dismissed.
(Aniruddha Bose, J.) 16