Telangana High Court
S. Subhrahmanyam Naidu vs The State Of Telangana on 8 March, 2022
Author: K. Lakshman
Bench: K.Lakshman
1
THE HON'BLE SRI JUSTICE K.LAKSHMAN
CRIMINAL PETITION No.10552 OF 2018
ORDER:
This Criminal Petition is filed under Section - 482 of the Code of Criminal Procedure, 1973 ( for short, 'the Cr.P.C.') to quash the proceedings in C.C. No. 2172 of 2018 pending on the file of III Additional Metropolitan Magistrate at Hyderabad.
2. Heard Sri J.Prabhaker, learned Senior Counsel for the petitioner and Sri Dida Vijaya Kumar, learned counsel appearing for the 2nd respondent and Sri Khaja Vizarath Ali, learned Asst.Public Prosecutor for the respondent No.1-State and perused the record.
3. FACTS OF THE CASE:
i. The Petitioner herein is the Managing Director of Yeses Infrastructure Pvt. Ltd. (hereinafter called 'Petitioner's company') and is accused in C.C. No. 2172 of 2018. Respondent No. 2 is a company which was awarded a contract on 13.09.2009 for construction of underground drainage system of Shimoga city by Karnataka Urban Water Supply and Drainage Board.2
ii. Respondent No. 2 sub-contracted the work to the Petitioner herein under an agreement titled "Agreement to Back to Back" dated 07.01.2010. As per the said agreement, the Petitioner was to complete the work to the tune of Rs. 20 crores within 8 months. The Petitioner under the agreement agreed to issue a bank guarantee of 1% of the total work i.e., Rs. 20 lakhs.
iii. However, according to the Petitioner, a subsequent agreement was entered into on the same day on a stamp paper and an arbitration clause was incorporated in the said agreement. The entering of the second agreement is disputed by Respondent No. 2 and it is alleged that the second agreement is forged and fabricated. iv. Disputes arose between the parties regarding payments and the agreement between them was terminated and Respondent No. 2 engaged another sub-contractor. The Petitioner herein invoked the alleged arbitration clause in the second agreement and filed Arbitration O.P. No. 2492 of 2011 on 02.12.2011 on the file of the Motor Vehicles 3 Accidents Claims Tribunal-cum-II Additional Chief Judge, City Civil Court, Hyderabad.
v. In the said O.P. No 2492 of 2011, the Petitioner herein sought an interim direction under Section 9 of the Arbitration and Conciliation Act, 1996 to restrain Respondent No. 2 from invoking the bank guarantee. An interim injunction was granted on 02.12.2011 and on 16.04.2013 an order was passed granting permanent injunction.
vi. Subsequently, the Petitioner herein filed Arbitration Application No. 59 of 2013 before this Court seeking appointment of an arbitrator. This Court vide order dated 13.09.2013 appointed an arbitrator. A Review Application No. 974 of 2013 was preferred by Respondent No. 2 against the order dated 13.09.2013 on the ground that the second agreement is forged and fabricated. The said review application was dismissed vide order dated 01.11.2013 on the ground that no provision for review is provided under Section 11 of the Arbitration and Conciliation Act, 1996. 4 vii. The order dated 01.11.2013 was challenged before the Supreme Court in Civil Appeal No. 909 of 2014. The Hon'ble Supreme Court vide order dated 24.01.2014 and subsequently vide 03.02.2014 (modified the order) allowed the appeal and set aside the order dated 01.11.2013. The Hon'ble Supreme Court, further, directed the High Court to decide the Review Application No. 974 of 2013 within 8 weeks from the date of receipt of order. The High Court vide order dated 04.04.2014 dismissed Review Application No. 974 of 2013 and held that there was no case of fraud and forgery.
viii. The original order dated 13.09.2013 appointing the arbitrator was also challenged by Respondent No. 2 herein vide Civil Appeal No. 908 of 2014. The said civil appeal was dismissed as infructuous based on the submission of the Appellant therein (Respondent No. 2 herein). ix. Respondent No. 2 filed another writ petition W.P. No. 7088 of 2017 challenging the order dated 13.09.2013. The said writ petition was dismissed and this Court held that the Petitioner cannot say in the Hon'ble Supreme Court that the 5 matter is infructuous and later challenge the same before the High Court.
x. While the above litigation was pending, Respondent No. 2 filed a complaint dated 29.07.2013 alleging offences under Sections 420, 468, and 471 of IPC. In the said complaint, Respondent No. 2 has alleged that the Petitioner to escape the invocation bank guarantee, the Petitioner forged the second agreement by adding an arbitration clause and forged the signatures of one K. Latha Rani who was the authorised signatory of Respondent No. 2.
xi. The Police, Banjara Hills Police Station had registered a case based on the complaint of Respondent No.2 and filed a charge sheet and the case was numbered as C.C. No. 2172 of 2018. Thus, the Petitioner herein has challenged the proceedings in C.C. No. 2172 of 2018.
4. CONTENTIONS OF THE PETITONER:-
i. The Petitioner is innocent and is not connected with the alleged crimes.6
ii. Respondent No. 2 in its counter in Arbitration O.P. No. 2492 of 2011 never alleged that the second/subsequent agreement dated 07.01.2010 was forged or fabricated or any fraud was committed. The allegation of forgery and fraud is an afterthought.
iii. The review petition filed by Respondent No. 2 was disposed by this Court wherein the Court rejected the contention of non- existence of the second agreement and categorically held that there is no denial on the part of Respondent No. 2 regarding the execution of the subsequent agreement containing the arbitration clause.
iv. In all rounds of litigation, Respondent No. 2 never denied the execution of two agreements and only after lodging the private complaint that the contention of forgery and fraud was raised. v. The orders passed by the MACT-cum-II Additional Chief Judge, City Civil Court, Hyderabad, this Court and the Hon'ble Supreme Court have attained finality. Only the arbitration proceedings are pending which have to decide the civil disputes between the parties.
7vi. The allegation of forgery of K. Latha Rani's signature is raised after 3 years and the said K. Lata Rani has not lodged any complaint.
5. CONTENTIONS OF RESPONDENT No. 2:-
i. The subsequent agreement containing the arbitration clause is forged and fabricated by the Petitioner to avoid the bank guarantee.
ii. There cannot be two agreements for one work executed on the same day.
iii. If any changes or corrections are to be made in contract that can be rectified by replacing the papers enclosed to the stamp paper and not by replacing the stamp paper itself. Therefore, subsequent stamp paper was forged with the signatures of Petitioner's employee by incorporating the arbitration clause. iv. Respondent No. 2 only allocated the work to the tune of Rs. 20 crores and not Rs. 36 crores. That is the reason why according to the first agreement 1% of the work amount i.e., Rs. 20 lakhs were given as bank guarantee by the Petitioner. If the subsequent agreement was executed then the bank guarantee 8 amount should have been 1% of Rs. 36 crores which would have been Rs. 36 lakhs. Therefore, this shows that the subsequent agreement was forged.
v. Further, in relation to the agreements two e-mails were addressed by the Petitioner to Respondent No. 2. The first e-mail was sent in the month of January, 2010 which pertained to the first agreement which contained no arbitration clause. The second e-mail was sent in February, 2010 which was regarding the subsequent agreement which contained the arbitration clause. This clearly shows that the second agreement was fabricated as the Petitioner forged the second agreement and sent it in the month of February as if it was executed in January. If both the agreements were executed on the same day, the second agreement should have been shared with Respondent No. 2 on the same day.
vi. Therefore, prima facie, offence of forgery is made out. FINDINGS OF THE COURT:-
6. A perusal of the contentions raised by both the parties clearly indicates that the whole dispute revolves around the second/subsequent 9 agreement allegedly entered into between the parties. The Petitioner claims that the second agreement was entered into and the same included the arbitration clause. Respondent No. 2 claims that the second agreement was forged by the Petitioner to incorporate the arbitration clause. Therefore, the question that arises is whether the second/subsequent was forged and fabricated.
7. It is relevant to note that the parties were involved in earlier rounds of litigation which started with filing the Arbitration O.P. No. 2492 of 2011 and ended up before the Hon'ble Supreme Court. Further, Arbitration Application No. 59 of 2013 was filed before this Court to appoint an arbitrator which was allowed. Challenging the said appointment, Review Application No. 974 of 2013 was filed. In the said review application, it was contended by Respondent No. 2 herein that the subsequent agreement was forged and fabricated and no arbitration clause existed between the parties. This Court vide order dated 04.04.2014 dismissed the Review Application No. 974 of 2013 and held that Respondent No. 2 herein had specifically admitted the existence of the arbitration agreement. The relevant portion of the order dated 04.04.2014 is extracted below:
10
"Learned counsel for the respondent applicant in the original application, has appropriately drawn my attention to the admission made in the counter affidavit while opposing the application filed under Section 9 of the Act before the appropriate forum. In paragraph 10 of the said counter, it was stated as follows:
"The respondent No.1 submits that agreements for back to back work (2) of even dated 07.01.2010 was executed between the respondent No.I and the petitioner on such terms and conditions stipulated therein and further the Repondent No.1 prays leave of this Hon'ble Court to read clauses 8, 9, 10, 12 26 of the said agreement as replied to para 5 of the petition."
I, noting aforesaid admission, held and hold that there is existence of two agreements and there is no denial of execution of the subsequent agreement containing arbitration clause. Moreover, I notice that the review applicant while replying to the letters dated 21.01.2012 of the applicant in the application for appointment of arbitrator vide his letter dated 04.02.2012 has categorically admitted as follows:
"It is not out of tune to state that as per your oral assertions made by you in para No. 2 of your letter cited under reference No.5 that work was entrusted by us after lapse of 10 months is without any substance as you have entered into n second agreement by including an arbitration clause.........."
The aforesaid admission has not been explained nor it has been denied and disputed. It is settled position of law that if the admission is not explained, the same is a conclusive proof of the fact in issue. Therefore, I hold that 11 the plea of forgery and fabrication is absolutely an afterthought. I do not find any reason to review my earlier order in view of above discussion. (emphasis added).
The decisions of the Supreme Court cited above by Smt. Chidambaran are net applicable to this case, as I have held that there is no case of forgery and fraud, rather there is an admission on their part accepting the subsequent agreement containing arbitration clause. (emphasis added).
The review application is accordingly dismissed."
8. It is also relevant to note that Arbitration Application No. 59 of 2013 again came up before this Court for appointment of substitute arbitrator. During the course of the proceedings in that case, it was contended on behalf of Respondent No. 2 that a substitute arbitrator cannot be appointed as only one agreement was entered into and the second agreement containing the arbitration clause was forged. This Court vide order dated 03.06.2019 rejected the said contention of Respondent No. 2 herein and held as follows:
"17. The Chief Justice held in the said order dt.04.04.2014 that in the counter affidavit filed by the respondent opposing the application filed under Section 9 of the Act before the appropriate Forum, the respondent had admitted the execution of two back to back work agreements dt.07.01.2010 by the parties; 12 that he had relied upon the said admission and held that there are in existence two agreements and there is no denial of execution of the subsequent agreement containing the arbitration clause; and that the respondent while replying to a letter dt.21.01.2012 of the applicant for appointment of Arbitrator vide its letter dt.04.02.2004, admitted about the second agreement including the arbitration clause. It held that the admissions of the respondent are not explained and so it is a conclusive proof of the fact in issue. The Chief Justice therefore rejected the plea of forgery and fabrication as an after thought and refused to review his earlier order.
18. This order dt.04.04.2014 in the review application No.974 of 2013 has not been challenged by the respondent in the Supreme Court and has thus attained finality.
19. The respondent is therefore precluded by the principle of res judicata from contending again that the second agreement with Sl.Ndo.115 stamp paper was never executed by the parties and it is a forgery. (emphasis added)."
9. It is clear from both the orders dated 04.04.2014 and 03.06.2019 that this Court did not accept the contention of Respondent No. 2 that the second agreement was forged. This Court on both occasions noted that Respondent No. 2 had admitted the execution of the second agreement. Respondent No. 2 cannot contend that no second agreement was entered into in the light of its admissions. Therefore, this 13 Court is of the view that the allegations regarding the forgery of the second agreement against the Petitioner is not sustainable.
10. Further, the root of the problem between the parties are civil disputes regarding payments for which arbitration proceedings have already been initiated. The Supreme Court has time and again held that the courts should desist allowing civil disputes to be converted into criminal cases.
CONCLUSION:-
11. In light of the aforesaid discussion, this Criminal Petition is allowed and the proceedings in C.C. No. 2172 of 2018 pending on the file of III Additional Metropolitan Magistrate at Hyderabad, are quashed against the petitioners herein.
Miscellaneous Petitions, if any, pending, shall also stand closed.
__________________ K. LAKSHMAN, J Date: 08.03.2022 Vvr.