Delhi District Court
In Re vs M/S K. K. Sharma & Co on 15 October, 2016
IN THE COURT OF SH. HARISH KUMAR : ADDL. DISTRICT
JUDGE -13 : CENTRAL DISTRICT ; TIS HAZARI COURTS : DELHI
M. No. 61219/16
In re :-
Devender Gupta
S/o Sh. P.R. Gupta
R/o 522, Sector 15A,
Faridabad
...... Applicant
Versus
1. M/s K. K. Sharma & Co.
61/C Kalu Sarai
Sarvapriya Vihar
New Delhi
2. Sh. Kiran Kumar Sharma
S/o Sh. G.S. Sharma
National Hospital
Village Sahali Purjaman
Post Raipur Sadat
Tehsil Nagina
District Bijnaur (UP)
3. Sh. K. Swaroop
Senior General Manager
Delhi Stock Exchange Association Ltd.
West Plaza I.G. Stadium
New Delhi
4. Sh. S.S. Sodhi
Executive Director
Delhi Stock Exchange Association Ltd.
West Plaza I.G. Stadium
New Delhi
...... Respondents
Application Under Section 340 Cr. PC filed by Applicant/Plaintiff
defendant no. 3 primarily against Respondents/accused No. 3 & 4 for
initiation of Criminal Proceedings U/s 193/34 IPC
AND
Application under Order 47 Rule 1 filed by Non-applicant/Respondent No.4
M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 1 of 13
Date of institution of application : 28.10.1999
Date of receiving in this court : 26.09.2016
Date of reserving order : 28.09.2016
Date of Judgment : 15.10.2016
ORDER
1. Present order shall dispose of the application U/s 340 Cr. PC filed by Sh. Devender Gupta against the respondents and an application for review of order dt 25.08.2014 filed by respondent No.4 Sh S.S.Sodhi.
2. In the application under Section 340 Cr. PC it has been stated that applicant as a plaintiff had filed suit for recovery of Rs 9,95,000/- against defendant M/s K. K. Sharma and Sh. Kiran Kumar Sharma which was pending initially before the Hon'ble High Court. In the said suit plaintiff moved an application U/o 1 Rule 10 (2) read with U/o 6 Rule 17 read with 151 CPC bearing I.A. No. 4569/96 for impleading Delhi Stock Exchange Associate Ltd, New Delhi 9 hereinafter referred to as DSE). In the said suit, plaintiff also filed application U/o 38 Rule 5 read with U/o 39 Rule 1 and 2 CPC bearing I.A. No. 3159/96 whereby praying for attachment before judgment of the funds which was balance of sale proceed of membership card of Delhi Stock Exchange sold by defendant no. 1 and which was lying under the control of Delhi Stock Exchange Associate Ltd, New Delhi. It has been mentioned that notice of the said application was issued to the defendants along with proposed defendant i.e. DSE. It has been further mentioned that proposed defendant DSE at the instigation and in connivance with defendant no. 1 and 2 filed an affidavit of one Sh. K. Swaroop, the respondent no. 3 herein, claiming himself to be the Senior General Manager of DSE and in his affidavit he alleged that defendant no. 1 through its sole proprietor defendant no. 2 sold the membership card of DSE held in the name of defendant no. 1 to one Sh. Ashok Kumar Sehgal (jointly with Smt. Kavita Sehgal). It was further alleged in the said affidavit that sell of this membership card by defendant no. 1 was approved in the meeting of Board of M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 2 of 13 DSE held on 02.09.1993 and the sell proceeds did not at all nor they were expected to come in the hand of DSE and as such application of the plaintiff for impleading the DSE was misconceived.
3. It has been further mentioned in the application that on 20.02.1997 same K. Swaroop had signed one circular bearing no. 20/97 dated 20.02.1997 and had asked the members of DSE to collect their cheques from him (Mr. K. Swaroop) towards the settlement of their claims against M/s K. K. Sharma and Co. It has been further mentioned in the application that in furtherance of that, one meeting of Board of Directors and Senior Executive including Mr. K. Swaroop was held with several creditors of M/s K. K. Sharma and Co. on 06.03.1997 and in which the creditors of M/s K. K. Sharma and Co. were assured that the DSE would clear the claims of member creditors by 15.03.1997. It has been further mentioned in the application that on having knowledge of all this developments plaintiff filed one contempt petition bearing CCP No. 30/97 before the Hon'ble High Court praying that action be taken against the respondents according to the provisions of contempt of Court Act 1971 and also under Article 215 of the Constitution of India.
4. It has been further mentioned that in reply to the petition U/s 10 and 12 of Contempt of Court Act the same K. Swaroop filed another affidavit in which he categorically admitted that sum of Rs. 20 lakh was adjusted by said Sh. Ashok Kumar Sehgal and that said K. Swaroop further concocted story stating that money (reserved fund) was meant for settling the claims of members and investors of Sh. K. K. Sharma and Company and not for private claims. It has been further mentioned in the application that alleged Senior General Manager of DSE in para 5 of his affidavit filed in reply to the CCP had gone further to justify and admire the stand of Delhi Stock Exchange that the balance amount would not belong to the stock exchange but would be returned to the Ashok Kumar Sehgal. It has been further mentioned that the said version was again expressed in para 8 of the affidavit filed by General Manager on behalf of DSE. It was further M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 3 of 13 mentioned that despite the knowledge that application U/o 38 Rule 5 and U/o 39 Rule 1 and 2 CPC bearing I.A. No. 3159/96 was pending before the Hon'ble Court and also having knowledge about CCP no. 30/97, DSE had paid a huge amount of Rs. 10 lakh to the defendant no. 2 through cheque dated 09.06.99 signed by respondent No.4 payable in account no. 1501 maintained with Delhi Stock Exchange Branch of Canara Bank. It has been further mentioned that action of DSE (Sh. K. Swaroop) was not only contemptuous, derogatory, scandalous but also false within the ambit of Section 196 of IPC for filing false affidavit as such the Executive Director of Delhi Stock Exchange along with K. Swaroop and defendant no. 2 deserves to be punished and penalised and Executive Director Sh. S. S. Sodhi and Sh. K. Swaroop be ordered to be taken into custody and sent to concerned Court with a complaint for initiating criminal proceedings for their prosecution according to law. The petition bearing CCP No. 30/97 was withdrawn 13.10.1999 with liberty to file application under Section 340 Cr.PC.
5. Respondent no. 4 has filed reply to the application U/s 340 Cr. PC whereas it was orally requested by the Ld. Counsel for respondent no. 3 that reply to the CCP filed by the respondent no. 3 be taken to be the reply on behalf of the respondent no. 3. In reply by respondent no. 4, it has been pointed out that application was the abuse of process of law and no case was made out against the respondent no. 4 and no role whatsoever was assigned to respondent no. 4 rendering him liable for any proceedings U/s 340 Cr. PC. Present suit already stands decreed vide judgment dated 20.10.2006 after which there was no cause for the applicant to continue with the present application. On merit it was submitted that the facts pertaining to judicial record were matter of record and it was denied that respondent no. 4 was liable for any action and it was further submitted that term of respondent no. 4 with DSE ended on February 2001 and since then respondent no. 4 had no association with said DSE and respondent no. 4 was not in possession of any record to admit or deny the allegation made in the paragraph under reply. It has been prayed that application be dismissed.
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6. In the reply by respondent no. 3 which was in fact reply filed by the respondent no. 3 to the contempt petition bearing CCP no. 30/97 wherein it was specifically denied by the respondent no. 3 that there was any collusion between DSE and Defendant no. 1 and 2 and it was further submitted that defendant no. 1 and 2 had sold their membership card with DSE to Sh. Ashok Kumar Sehgal and said Sh. Ashok Kumar Sehgal had given an undertaking dated 01.12.1993 to the DSE to settle the claims against defendant no. 1 which had arisen as per the rules, regulations and by-laws of DSE. Accordingly, claims of certain members of the DSE and investors were apparently directly settled by Sh. Ashok Kumar Sehgal and for settlement of balance claims lodged with DSE, Sh. Ashok Kumar Sehgal deposited Rs. 20 lakh with DSE for being utilised to settle claims which have arisen as per the rules, regulations and by-laws of DSE. This amount was not being utilised nor can it be utilised to settle private claims such as those of the plaintiff. It was in this context the stand of DSE had to be appreciated. In other words, any balance amount could not belong to stock exchange but could be returned to Sh. Ashok Kumar Sehgal. Any meeting on 06.03.1997 was denied and it was submitted that respondent no. 3 was on tour to Mumbai on 6.03.19997 and he placed on record the air ticket. It was further submitted that claims of members of DSE were being settled out of the amount deposited by Sh. Ashok Kumar Sehgal who had given the undertaking to settle the claims received by the exchange against defendant no. 1 which had arisen as per the rules, regulations and by-laws of the exchange. It was further mentioned that amount deposited by Sh. Ashok Kumar Sehgal could be utilised only for the purpose of settling claims of investors and members of DSE and not for any other purpose such as settling claims of any outsides or for such matters which do not arise as per the rules and regulations and by laws of the exchange which appeared to be the case of plaintiff. It was reiterated that no funds from the sale proceeds of membership ticket which was previously held in the name of defendant no. 1 had come or was likely to come into the hands of the Delhi Stock Exchange and any balance remaining amount of Rs. 20 lakh deposited would be returned only to Sh. Ashok M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 5 of 13 Kumar Sehgal and to nobody else.
7. Vide order dated 25.08.2014, Ld. Predecessor of this Court was pleased to frame an issue to the following effect:-
"Whether the acts of Sh. K. Swaroop, General Manager and Sh. S. S. Sodhi, Executive Director of Delhi Stock Exchange, the respondent no. 3 and 4 is contemptuous, derogatory, scandalous and false within the ambit of section 196 IPC to call for a action U/s 340 Cr. PC (though typed CPC)?.
8. Aggrieved from order dated 25.08.2014, respondent no. 4 filed review application on 24.09.2014 and has also preferred a CM(M) 16/2015 before the Hon'ble High Court which was withdrawn on 27.01.2016 with liberty to press the review application filed before this Court. By way of review application it has been contended that since there was no material allegation against the respondent no. 4, therefore, there was no ground to proceed against the respondent No. 4 nor respondent No.4 made any statement before this case nor is such contention of the petitioner/applicant in the application u/s 340 Cr.PC. and therefore, order dated 25.08.2014 be reviewed. The said application is also being taken into consideration in the present order.
9. Arguments heard on the application under Section 340 Cr. PC as well as review application filed by the Respondent No.4.
10. First application of the respondent No.4 for review of order dt 25.08.2014 is taken up. The allegation against respondent No.4 is that he signed the cheque dt 09.06.99 of Rs 10 lacs on behalf DSE in favour of defendant No.2 despite knowing the fact that an application under Order 1 Rule 10 CPC bearing I.A. No. 4569/96 and application under Order 38 Rule 5 CPC bearing I.A. No. 3159/96 were pending. The allegation itself is insufficient even to issue notice of application under Section 340 Cr.PC because merely one is expected to become party in a suit does not prevent it/him from running its operation/functioning or discharging it function. Secondly admittedly there was no order of attachment or M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 6 of 13 stay from releasing funds to any one. Admittedly, said official did not place on record any material or did not make statement in any capacity so as to allege any perjury against. If Court goes by the proposition of applicant then why not other responsible officers of DSE be also asked to face action under Section 340 CrPC. Hence, application under Section 340 Cr.PC is not at all maintainable against the respondent No.4 and therefore, the application of the Respondent No.4 is hereby allowed.
11. Next is the application under Section 340 Cr.PC against the Respondents particularly against respondent No.3. It has been contended by the Ld. Counsel for plaintiff/applicant that in view of the stand taken by DSE through K. Swaroop that no money was lying with or was likely to come to DSE, the application U/o 1 Rule 10 CPC bearing I.A. No. 4569/96 seeking impleadment of DSE was not pressed and was withdrawn on 13.10.1999. Subsequently ex-parte decree was passed against the defendants K. K. Sharma and Co. and Kiran Kumar Sharma vide judgment/decree dt 20.10.2006 and present application was directed to be taken up as a separate miscellaneous file.
12. During the course of argument Ld. Counsel for the applicant submitted that the false affidavit sworn by K. Swaroop had affected the administration of justice because if he had not sworn the false affidavit in that eventuality DSE could have been made party and could have been made to retain the funds of defendant no. 1 and 2 against whom suit for recovery was filed and therefore, plaintiff could have enjoyed the decree easily. It has been further submitted by him that despite the decree he could not execute the decree against the defendant no. 1 and 2 as the said defendants have left the jurisdiction of this Court after disposing of their property and have shifted to Bijnor, UP and had become a goon element and therefore DH/plaintiff/applicant was afraid of executing the decree against him and now the limitation thereof was also nearing expiry. It has been further argued by him that it was the act of the respondent no. 3 which had impeded in the administration of justice and therefore, it was M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 7 of 13 expedient in the interest of justice to initiate criminal proceedings against the respondent no. 3 for offense.
13. On the contrary it has been argued by the Ld. Counsel for the respondent no. 3 that the application U/s 340 Cr. PC is not maintainable at all against K. Swaroop for the reason that K. Swaroop did not swear the affidavit in his personal capacity rather the affidavit and averment was made on behalf of DSE on the basis of record available with the DSE. It has been further contended that the entire allegation in the application U/s 340 Cr. PC was against the DSE but said DSE has not been made party in the present petition and in the absence of principal, the agent cannot be punished even if it is held that there was any false representation. It has been further contended that even if it is held that K. Swaroop filed false representation, in that eventuality also there was no impediment in the administration of justice because plaintiff did get decree in his favour vide judgment/decree dt 20.10.2006 and if plaintiff had not executed the said decree, it was his choice for any reason whatsoever. It was further contended that no one is above the law of land and therefore, if plaintiff have chosen not to execute the decree against the Judgment Debtor by filing execution petition for any fearful reason, for that reason plaintiff/applicant cannot be permitted to directly harass the innocent person to compensate for monetary loss of plaintiff, if any.
14. It was also submitted by the Ld. Counsel for K. Swaroop from his personal information that he happened to be present in the Court room of Justice A. K. Pathak on 23.09.2016 on which date a criminal revision petition filed by the plaintiff/applicant against the defendant no. 1 and 2 was listed and in the said proceedings it transpired that plaintiff/applicant had received a sum of Rs. 13,00,000/- against the defendant no. 1 and 2 and that amount and transaction relates to the present recovery matter. He has further submitted that applicant/plaintiff was telling lie to the Court that he had not received any money out of the transaction involved in the present civil suit and which transaction also M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 8 of 13 gave rise to criminal complaint under Section 138 of NI Act. Ld. Counsel for the plaintiff/applicant at bar submitted that not a single penny/amount was received under the transaction involved in the present civil suit and the said 138 NI Act proceedings.
15. Ld. Counsel for the non-applicant/respondent no. 3 has filed on record (after obtaining from the counsel of respondent in the said criminal revision proceedings, who happens to be friend of present counsel for K Swaroop) photocopy of the office copy of the said criminal revision petition bearing no. 738/2014 filed under the signature of plaintiff Devender Gupta and his counsel Sh. Rajesh Goswami wherein in the list of dates and events it has been mentioned that Respondents therein (respondent/defendant No.1 & 2 herein) had deposited sum of Rs. 7 lakh with the trial court and a sum of Rs. 6 lakh by way of DD and the plaintiff has received challan and DD for the aforesaid amount from the trial court record. It has been further submitted that said criminal revision petition bearing no. 738/2014 is pending in the Hon'ble High Court.
16. Perusal of the said revision petition reflects that plaintiff/applicant had initiated a complaint U/s 138 NI Act in respect of the same transaction which were the subject matter of the present civil suit. However, the said aspect of payment received by plaintiff/applicant in the criminal case under section 138 NI Act out of the same transaction which gave rise to the present civil suit, is not being taken into consideration here for the disposal of the application under Section 340 Cr. PC.
17. It has been contented by the Ld. Counsel for the plaintiff/applicant that on account of affidavit filed by K. Swaroop on behalf of DSE, plaintiff did not press his application U/o 1 Rule 10 CPC bearing I.A. No. 4569/96 for impleadement of DSE. But the said contention is not supported by the record. It is a matter of record that the said application U/o 1 Rule 10 CPC was withdrawn M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 9 of 13 by the plaintiff on 13.10.1999 but by that time plaintiff had already filed the petition U/s 10 and 11 of Contempt of Court Act bearing CCP no. 30/97 dt 12.03.1997. In the said CCP petition, plaintiff/applicant had narrated the entire allegation which has been alleged in the present application U/s 340 Cr. PC. It is also matter of record that CCP No. 30/97 was withdrawn by the plaintiff vide order dated 13.10.1999. When plaintiff/ applicant had already moved petition bearing CCP No. 30/97 how plaintiff could have acted upon the said representation in withdrawing the application u/o 1 Rule 10 CPC bearing I.A. No. 4569/96. Plaintiff by the time being aware of alleged contemptuous act of DSE through K Swaroop should not have withdrawn the application bearing I.A. No. 4569/96 on the stand of DSE rather he should have insisted upon impleadement of DSE citing this particular reason. Hence, to say that plaintiff withdrew the said application for impleadment bearing I.A. No. 4569/96 on the representation of DSE (K. Swaroop) otherwise he could have been successfully in getting the amount attached, is not sustainable. In fact, withdrawal of application for impleadment of DSE goes to show that plaintiff/applicant did not believe in his own allegation of alleged contemptuous act on the part of DSE through K Swaroop otherwise he would not have withdrawn the said application.
Moreover, since 12.03.1997 plaintiff never impressed upon the Court to dispose of his application under Order 38 Rule 5 bearing I.A. No 3159/96 citing this particular alleged contemptuous act.
18. There is no dispute that K. Swaroop filed the affidavit in his official capacity on behalf of the DSE. Delhi Stock Exchange has not been impleaded as a party in the present petition. On asking as to why DSE was not impleaded as party in the present application, Ld Counsel for plaintiff/applicant fairly conceded that as he was new entrants to the profession and whatever little he knew of law by that time, he impleaded all concerned according to his that little knowledge. Meaning thereby he admitted that present petition is bad for non impleadement of DSE. The petition U/s 340 Cr. PC refers to the alleged contemptuous act of Delhi Stock Exchange through K. Swaroop. In the light of M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 10 of 13 averment/allegation made in the application under Section 340 Cr.PC, Delhi Stock Exchange was the necessary party but no action was sought against DSE rather present application was filed against K. Swaroop in his personal capacity describing him as Sr. General Manager of DSE and admittedly K Swaroop did not file affidavit in his personal capacity.
19. In Aneeta Hada v. M/s Godfather Travels & Tours, (2012) 5 SCC 661, Hon'ble Supreme Court after analyzing entire law on the subject observed that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons whether juristic entities or individuals, unless they are arrayed as accused. In view of law laid down, there is an irresistible conclusion that for maintaining the prosecution arraigning of a company as an accused is imperative. Said principles applies in the present case also.
20. It is the settled preposition of law that before initiating any inquiry U/s 340 Cr. PC it is necessary to see that two ingredients are fulfilled, first condition being that a person has given false affidavit in a proceeding before the court and secondly, in the opinion of the court it is expedient in the interest of justice to make an enquiry against such a person in relation to the offence committed by him. It is settled legal proposition that prosecution for false affidavit should be sanctioned by courts only in those cases where it appears to be deliberate and conscious and the conviction is reasonably probable or likely. Admittedly in the present case affidavit filed by K. Swaroop on behalf of Delhi Stock Exchange has not been an impediement in the way of plaintiff getting the decree in his favour passed by the Court. In fact in passing of the decree or in other words in the adjudication of plaintiff's right/claim against defendants No.1 & 2, DSE had no role to play in it and therefore, the affidavit filed even if for argument sake is considered to be false in that eventuality that has not obstructed the smooth functioning of judicial administration. Court was not adjudicating M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 11 of 13 question whether DSE had payments or not of defendant No.1 & 2 but was called upon to adjudicate plaintiff's claim of amount against the defendant No. 1 and 2 and in deciding such question DSE had no role to play as an witness nor as claimant nor as defendant. In fact for attachment of defendant's property before judgment under Order 38 Rule 5 CPC, it was not at all necessary to implead DSE as defendant. Supposedly if defendant is maintaining a bank account with sufficient amounts to satisfy the decree that may be passed against the defendant in a suit, court can upon satisfaction of condition laid down in Order 38 Rule 5 CPC attach before judgment the said amount directing the bank accordingly without impleading the Bank as party. A person is required to be impleaded as party in the suit either when relief is claimed against him or when his presence is necessary and without which no effective relief could be passed in the suit. Thus, the presence of DSE was not required at all.
21. Now, the question arises whether in these circumstance it is expedient to initiate action against respondent no. 3 and 4. Admittedly respondent No.3 filed affidavit on the basis of record and not from his personal knowledge in personal capacity. DSE is not a party in the present application. The matter has already become 17 years old and respondent No.3 and 4 have retired from Delhi Stock Exchange. They have no control over the records maintained by Delhi Stock Exchange and after lapse of 17 years it may not be possible for them to have access to records enabling them to prove and substantiate the stand taken by them before the Court. Delhi Stock Exchange has not been impleaded as a party and therefore, Delhi Stock Exchange could not be expected to have retained the record in expectation that the same might be required for such proceedings. In fact, notice of the application of U/s 340 Cr. PC was issued only on 17.07.2008 almost after 10 years. In these circumstances, even if it is held that affidavit filed by K. Swaroop was false, it is not expedient in the interest of justice to make inquiry U/s 340 Cr.PC. Since, the first aspect for initiating proceeding under Section 340 Cr.PC i.e. it is expedient in the interest of justice, is not satisfied, this Court is specifically refraining itself from recording any finding if any false M No. 61219/16 Devender Gupta v. K. .K. Sharma & Co. Page No. 12 of 13 affidavit was filed by DSE through K Swaroop.
22. Before parting with the order it will not be out of place to refer to the case of Santosh Singh v. Izhar Hussain AIR 1973 SC 2190 wherein Hon'ble Supreme Court explained as to what expedient in the interest of justice mean, in the following words:-
"........... In any event, considering the entire statement if the appellant it is not understood how it can be considered expedient in the interest of justice to direct the appellant's prosecution. Every incorrect or false statement does not make it incumbent on the court to order prosecution. The court has to exercise judicial discretion in the light of all the relevant circumstances when it determines the question of expediency. The court orders prosecution in the larger interest of the administration of justice and not to gratify feelings of personal revenge or vindictiveness or to serve the ends of private party. Too frequent prosecutions for such offenses tend to defeat its very object. It is the only in glaring cases of deliberate falsehood where conviction is highly likely that the court should direct prosecution. The High Court......"
23. In view of the discussion above, the application under Section 340 Cr.PC hereby stands dismissed.
Miscellaneous file as well as the main file be consigned to Record Room after due compliance.
(Harish Kumar)
Announced in the open Court ADJ-13 (Central)/THC
(Order contains 13 pages) Delhi/15/10/2016
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