Judgment:
1. This appeal is directed against the judgment and order dated 19.2.2010 passed in CP no. 363 of 2007 by which a company petition for winding up of an appellant company was allowed with cost assessed at 5000 gms. and the Registrar, Original Side was directed to file a complaint against deponent of the company’s affidavit before a Magistrate of competent jurisdiction for making a false and frivolous defence before the company court.
2. Before dealing with the respective contentions raised by the parties it would be pertinent to bring on record that the parties before us have reached the settlement and have withdrawn the claim and rival claims so raised before the company court.
3. Since the monitory claim of the petitioning creditor is satisfied, the appellant company had assailed such portion of an order and judgment whereby and whereunder the company court directed the Registrar, Original Side to lodge a complaint before the competent authority against the appellant company for being tried before the Magistrate for making a false defence against the claim of the petitioning creditor and also the imposition of onerous cost by the company court.
4. The matter appears to have gained some interest because of the defence set up by the appellant company in reply to a statutory notice sent by the petitioning creditor under section 433 and 434 of the Companies Act, 1956.
5. The factual backdrop which leads to filing the company petition for winding up by the petitioning creditor is that the petitioning creditor supplied gunny jute bags to the appellant company and raised invoices for the price which was accepted by the appellant company. According to the petitioning creditor a sum of Rs. 43,43,933/- is due and payable by the appellant company being the price of the said gunny jute bags sold and delivered by the petitioning creditor to the appellant company. It is the further case of the petitioning creditor that the appellant company issued seven several cheques covering the said amount towards the full and final payment of he price of the goods sold and delivered. It is alleged by the petitioning creditor that the appellant company has failed and neglected to pay the said sum and thus is liable to be wound up under the provisions of the Companies Act.
6. Prior to filing the present company petition, the petitioning creditor filed earlier company petition being CP no. 416 of 2006 on the basis of the statutory notice issued prior to the initiation of the said company petition.
7. Although the appellant company did not reply to the statutory notice but an affidavit was exchanged therein where the appellant company categorically took stand that the said statutory notice has not been served. It appears that no document evidencing the service of the said statutory notice was annexed to the said earlier company petition which resulted into dismissal of the said writ petition by the company court with a liberty to take further steps in accordance with law.
8. Admittedly, on the same day when the earlier writ petition was dismissed another statutory notice was issued by the petitioning creditor and the same was duly replied by the appellant company taking a multifarious defence including a defence as to the issuance of a debit note in one of the letters relating to charging an excessive rates and also substitution of three of seven several cheques issued earlier.
9. The defence which has been set up in reply to the statutory notice has weighed much to the company court who having found the same to be a moonshine defence having smack of falsehood.
10. Mr. P.C. Sen, learned Senior Advocate appearing for the appellant company argues that merely the defence which was set up by the appellant company was found by the company court to be untenable, does not confer power upon the court to invoke section 191 of the Indian Penal Code. He further argues that because of reply to a subsequent statutory notice been given and reply to an earlier statutory notice was not given, does not make the defence based on falsity.
11. He strenuously argues that the company court has proceeded on a mere presumption and assumption without recording its positive finding of fabrication manufacture and creation of a document in order to deceive not only the other party but to court. He relies upon several judgments of the apex court in support of his contention that the court not only should hold that the offence is committed by a party but should also record its finding as to the expediency in the interest of justice to start prosecution upon a reasonable foundation of likelihood of conviction namely Iqbal Singh Marwah & Anr. v. Meenakshi Marwah & Anr. reported in (2005) 4 SCC 370, Pritish v. State of Maharashta & Ors. reported in (2002) 1 SCC 253, B.K. Gupta v. Damodar H. Bajaj & Ors. reported in (2001) 9 SCC 742, Sachida Nand Singh v. State of Bihar reported in (1998) 2 SCC 493, K.T.M.S. Mohd. v. Union of India reported in AIR 1992 SC 1831, Chajoo Ram v. Radhey Shyam & Anr. reported in AIR 1971 SC 1367 and two Division Bench judgments in case of Jadu Nandan Singh v. Emperor reported in ILR 37 Cal 250 and Keramat Ali v. Emperor reported in ILR 45 Cal 1312.
12. Mr. Susanta Dutta, learned Advocate appearing for the petitioning creditor was also unanimous with the submission of the appellant company in contending that the court should not have directed the Registrar, Original Side to lodge a complaint for taking cognizance against the appellant company for making a deceitful moonshine defence.
13. From the facts narrated above, the parties have settled the dispute relating to monitory claim and thus are not aggrieved by such portion of an order where the direction for payment of the money as claimed in the company petition was made. Thus the point which emerges is whether the company court was justified in holding that the appellant company have knowingly made a false statement and thus committed an act of forgery under section 191 of the Indian Penal Code and directed the Registrar, Original Side to lodge a complaint before the authority for taking cognizance of the offence alleged to have been committed.
14. From the very beginning till its final conclusion the company court has embarked its journey on the defence taken by the appellant company in reply to a statutory notice. What has weighed much to a company court is that such defence has been taken at a point of time when legal assistance has been rendered. The company court has proceeded that the earlier statutory notice upon which the earlier company petition was founded was not replied. It is only after the dismissal of the earlier company petition on a technical ground of service of statutory notice as by that time the advocates have intervened the reply to a subsequent statutory notice has been shown the light of the day.
15. Admittedly, the petitioning creditor could not annexed a sheet of paper evidencing the service of the statutory notice upon the appellant company in an earlier company petition. The appellant company has categorically denied to have received any such statutory notice. If it is a specific defence taken by the appellant company that such statutory notice has not been received and the petitioning creditor could not proved satisfactorily that such notice has been served, there is no occasion on the part of the appellant company to have replied such statutory notice which has not been served upon it.
16. The company court has further proceeded that the story of issuing the debit note is not probable as audits are done at the interval of every financial year. The company court has put much stress on the fact that once having confirmed the balance the appellant company could not have raised any dispute as to the difference in rates of the price of the goods so sold and delivered. It is further recorded that there is no explanation forthcoming as to why such objection was raised after the confirmation of the balance.
17. Such defence cannot be said to be absolutely irrational and/or illegal and leads to the conviction without any reasonable doubt. The defence may be untenable or may not appeal to the court as the company court or a civil court proceeds on a preponderance of an evidence unless an evidence so tendered appears to the court to be false to the knowledge of the person adducing it.
The Apex Court in case of Pritish (Supra) held that before directing an enquiry to be made for an offence committed, the Court should form an opinion about commission of such offence on preliminary enquiry and the Court was pre-satisfied that on the basis of the fact situation it is expedient in the interest of justice that the offence should further probed into.
18. In case of B.K.Gupta (Supra), the Apex Court was considering the false statement made on oath in a writ proceeding which the deponent knew to be false and fabricated. The Apex Court observed:
“From the above, it follows that there are two conditions on fulfillment of which a complaint can be filed against a person who has given a false affidavit or evidence in a proceeding before a court. The first condition being that a person has given a 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 no doubt true that the High Court has recorded a finding that the appellant has made a false statement on oath and has also used evidence known to be false and fabricated. On a perusal of the record we do not find any material on record to show that there was any application of mind by the court that it was expedient in the interest of justice to make an enquiry and file a complaint against the appellant. We have also perused the judgment in Writ Petition No. 1442 of 1983 and the judgment does not show that the Court applied its mind regarding the second condition as to whether it is expedient in the interest of justice to make an enquiry into the false evidence given by the appellant and a complaint is to be filed. In the absence of application of mind in regard to expediency for filing complaint against the appellant, the order passed by the High Court directing the Prothonotary and Senior Master of the High Court to file a complaint against the appellant was vitiated.”
19. On some what similar facts, the Apex Court in case of K.T.M.S. Mohd. And another (Supra) held that mere contradiction in statement itself does not justify the prosecution in following words:-
“The mere fact that a deponent has made contradictory statements at two different stages in a judicial proceeding is not by itself always sufficient to justify a prosecution for perjury under Section 193, IPC but it must be established that the deponent has intentionally given a false statement in any stage of ‘judicial proceeding’ or fabricated false evidence for the purpose of being used in any stage of the judicial proceeding. Further, such a prosecution for perjury should be taken only if it is expedient in the interest of justice.”
20. The three Judges Bench of the Supreme Court in case of Chajoo Ram (Supra) held that the prosecution for forgery should be sanctioned by the Courts in those cases where it appears to the Court that the same has been made deliberately and consciously and there is reasonable possibility of conviction.
21. The law is settled as has been laid down by the five-judge Bench of the supreme Court in case of Iqbal Singh Marwah (supra) in following words :
“23. In view of the language used in section 340 Cr.P.c. the court is not bound to make a complaint regarding commission of an offence referred to in section 195(1)(b), as the section is conditioned by the words “court is of opinion that it is expedient in the interest of justice”. This shows that such a course will be adopted only if the interest of justice required and not in every case. Before filing of the complaint, the court may hold a preliminary enquiry and record a finding to the effect that it is expedient in the interests of justice that enquiry should be made into any of the offences referred to in Section 195(1)(b). This expediency will normally be judged by the court by weighing not the magnitude of injury suffered by the person affected by such forgery or forged document, but having regard to the effect or impact, such commission of offence has upon administration of justice. It is possible that such forged document or forgery may cause a very serious or substantial injury to a person in the sense that it may deprive him of a very valuable property or status or the like, but such document may be just a piece of evidence produced or given in evidence in court, where voluminous evidence may have been adduced and the effect of such piece of evidence on the broad concept of administration of justice may be minimal. In such circumstances, the court may not consider it expedient in the interest of justice to make a complaint. The broad view of clause (b)(ii), as canvassed by learned counsel for the appellants, would render the victim of such forgery or forged document remediless. Any interpretation which leads to a situation where a victim of a crime is rendered remediless, has to be discarded.
24. There is another consideration which has to be kept in mind. Sub-section (1) of section 340 Cr.P.C. contemplates holding of a preliminary enquiry.
Normally, a direction for filing of a complaint is not made during the pendency of the proceeding before the court and this is done at the stage when the proceeding is concluded and the final judgment is rendered. Section 341 provides for an appeal against an order directing filing of the compliant. The hearing and ultimate decision of the appeal is bound to take time. Section 343(2) confers a discretion upon a court trying the complaint to adjourn the hearing of the case if it is brought to its notice that an appeal is pending against the decision arrived at in the judicial proceeding out of which the matter has arisen. In view of these provisions, the complaint case may not proceed at all for decades specially in matters arising out of civil suits where decisions are challenged in successive appellate for a which are timeconsuming. It is also to be noticed that there is no provision of appeal against an order passed under section 343(2) whereby hearing of the case is adjourned until the decision of the appeal. These provisions show that, in reality, the procedure prescribed for filing a complaint by the court is such that it may not fructify in the actual trial of the offender for an unusually long period. Delay in prosecution of a guilty person comes to his advantage as witness become reluctant to give evidence and the evidence gets lost. This important consideration dissuades us from accepting the broad interpretation sought to be placed upon clause (b)(ii).”
22. The Division Bench of this court in case of Jadu Nandan Singh (supra) held that no sanction should be granted or prosecution directed, unless there is a reasonable probability of conviction. Great care and caution are required before the criminal law is set in motion and there must be a reasonable foundation for the charge in resect of which a prosecution is sanctioned or directed.
23. It has been cautioned by a Division Bench of this court in case of Keramat Ali (supra) that a person should not be prosecuted merely on the basis of a contradiction in evidence and have held such procedure to be doubtful.
24. Merely that the defence is not found favourable by the company court does not render such defence in falsity so that it can be tried under the criminal law. The court must record its reasonableness as to the conviction of an offence committed by the erring litigant and it is expedient in the interest of justice that a cognizance should be taken for such an offence.
25. We do not find that the defence which has been taken by the appellant company is of such nature which makes expedient in the interest of justice to be referred for being tried under the criminal law.
26. As we have already indicated above that the parties have settled their dispute in relation to monitory claim and as such we record the satisfaction of the petitioning creditor.
27. We hereby set aside that portion of an order by which the company court directed the Registrar, Original side to lodge a complaint for taking cognizance of an offence alleged to have been committed by the appellant company.
28. No costs.