Kuttiah Vs. Federal Bank Ltd. - Court Judgment

Thottathil B. Radhakrishnan, J.

1. The petitioner in this application under Article 227 of the Constitution of India, is one of the defendants in an Original Application before the Debts Recovery Tribunal, 'DRT' for short, constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the Act').

2. During the course of the said proceedings, the petitioner filed Ext.P6 petition requesting the DRT to conduct an enquiry against the second respondent therein, the Chief Manager of the Bank, under Section 340 Cr.P.C. and to make a complaint to the Magistrate of the First Class having jurisdiction to initiate proceedings. That petition was supported by an affidavit. The allegations in the said affidavit require to be referred to, without prejudice to the contentions before the DRT, for the sole purpose of noting the broad features of the allegations of the writ petitioner, which are as follows:

Upon production of certain documents, the fraud and the perjury committed on the DRT by the bank and its officers have come to light. The bill discounting account produced along with the original application and bill discounting account produced pursuant to the order on I.A. 1229 of 2002 are totally at variance with each other. The major disparities and discrepancies in the two accounts statements, as are alleged, are as detailed in paragraph No. 5 of the said affidavit. The cash credit account is also deliberately and purposefully prepared for production before the DRT. The last but one page in the cash credit account is numbered as 296 and continued from 295 whereas the last page is 341 and is continued from page 340. This mistake can never occur in the computer printout of an account statement. The mistakes are not accidental and are deliberately manipulated to suit the bank's case and to mislead the DRT. Both the statements are certified to be the entries in the ordinary books and original data of accounts as stored in an electronic storage device made in the usual and ordinary course of business. The totally different statement of accounts produced by the bank pertaining to a single account would clearly reveal that there has been a concerted and deliberate attempt to hoodwink the DRT. The Chief Manager of the Bank, in his proof affidavit, had termed the bill discounting statement produced along with the original application as such, but when the discrepancies were pointed out by the defendants an attempt was made to explain away the manipulation by terming the bill discounting account produced along with the original application as the statement of bills over due position which was purchased on an earlier date without mentioning the date. The statements made in the counter affidavit in O.P. No. 30148 of 2002, before the High Court run contrary to the statement made in the original application, proof affidavit, as well as the evidence tendered by the Chief Manager before the DRT. There has been a deliberate and concerted effort to give false evidence before the DRT, by producing false documents and giving false statements. As per Section 191 of I.P.C., whoever being legally bound by an oath or by an express provision of law to state the truth, or being bound by law to make a declaration upon any subject, makes any statement which is false and which he either knows or believes to be false or does not believe to be true is said to give false evidence. The respondent in the application has deliberately produced two documents purported to be bill discounting statement and also a cash credit statement which are mutually contradictory and which does not reflect the true and correct entries. The said statements have been produced with the knowledge that they are not true accounts and with this knowledge the respondent has given evidence that they are true account statement. By his said act the respondent has committed an offence punishable under Section 191 of I.P.C. The offence being one committed in relation to a proceeding in the DRT, interest of justice demands that an enquiry be conducted as envisaged under Section 340 Cr.P.C. and if there is a prima facie evidence of commission of the offence, to make a complaint and send it to a Magistrate of the 1st Class having jurisdiction.

3. The application of the petitioner was opposed.

4. The DRT passed the impugned Ext. P7 order to the following effect:

Heard both sides. This is an application filed by the defendants to initiate proceedings under Section 340 Criminal Procedure Code. According to them, some of the documents were forged and later on produced before this Tribunal. It is well settled that if a document is forged before its production before court no proceedings can be initiated under Section 340 Criminal Procedure Code. If any authority is required we find the same in Sachida Nand Singh v. State of Bihar reported in : 1998CriLJ1565 . Hence this IA is only to be dismissed.

In the result, this IA is dismissed. No costs.

(emphasis supplied)

5. I have heard counsel for parties.

6. Contending, on behalf of the petitioner, that the DRT ought not to have dismissed the petition merely on the ground that no proceedings can be initiated under Section 340 Cr.P.C, it is urged that the situation in hand is one where the offences pointed out are ones falling under Clause (b)(i) of Section 195(1) Cr.P.C. and that the decisions of the Apex Court in Sachida Nand Singh's case (1998) 2 SCC 493 referred to in the impugned order and in lqbal Singh Marwah's case : 2005CriLJ2161 , approving the law laid in the former, govern only the application of Clause (b)(ii) of Section 195(1) and not Clause (b)(i) thereof, of Cr.P.C.

7. Section 195 Cr.P.C. deals with three distinct categories of offences. Clauses (a), (b)(i) and (b)(ii), respectively, relate to (1) contempt of lawful authority of public servants, (2) offences against public justice, and (3) offences relating to documents' given in evidence. Clause (b)(iii) depends on Clause (b)(i) or (b)(ii), as the case may be, and governs criminal conspiracy or attempt to commit any offence specified under Clause (b)(i) or (b)(ii), as well as abetment of such offences. Clause (a) deals with offences which directly affect the functioning of or discharge of lawful duties of a public servant and are punishable under Sections 172 to 188 IPC which occur in Chapter X of the IPC with the heading, 'Of Contempts Of The Lawful Authority Of Public Servants'. Clause (b)(ii) of Section 195(1) applies to cases where the allegations relate to offences enumerated therein which fall under Chapter XVIII of IPC, which deals with 'Offences relating to documents and to property marks'. In contrast thereto, Clause (b)(i) of Section 195(1) Cr.P.C. governs offences punishable under Sections 193 to 196 (both inclusive), 199, 200, 205 to 211 (both inclusive) and 228, all of which fall under Chapter XI of IPC, relating to 'False Evidence and Offences against Public Justice', spanning from Sections 191 to 229 (both inclusive). Sections 193 to 195 IPC deal with giving or fabricating false evidence in judicial proceedings or in any other case, either with or without the intent to cause any person to be convicted of a capital offence, whether or not an innocent person has been thereby convicted and executed; or with imprisonment as described. Sections 199 and 200 IPC deal with making false statements in any declaration which is by law receivable as evidence and using such declaration as true, knowing it to be false. Sections 205 and 206 IPC deal with false personation and fraudulent removal or concealment of property to prevent its seizure. Section 207 IPC deals with fraudulent claim to property, to prevent its forfeiture. Section 208 IPC deals with fraudulently suffering decree for sum not due. Sections 209 and 210 IPC deal with dishonestly making false claim in court and fraudulently obtaining decree for sum not due. Section 211 IPC deals with false charge of offence made with intent to injure. Section 228 deals with intentional insult or interruption to public servant sitting in judicial proceeding. Among the aforesaid, the offence punishable under Section 199 IPC relates to making of false statement in declaration, which is by law receivable as evidence and using of such a declaration which is known to be false, as true. The making of false statement in any declaration includes a declaration in writing, in which event, the use of such declaration may amount to an offence punishable under Section 200 IPC. The offences mentioned in Clause (b)(i) of Section 195(1) Cr.P.C. relate to giving or fabricating false evidence or making a false declaration in any judicial proceeding or before a Court of Justice or before a public servant who is bound or authorised by law to receive such declaration, and also to some other offences, which have a direct co-relation with the proceedings in a Court of Justice.

8. Chapter XXVI of Cr.P.C, wherein fall Sections 340 and 341 and other attendant provisions, deals with 'Provisions as to Offences affecting the Administration of Justice'. Section 340 provides that when any Court is of the opinion that it is expedient in the interest of justice that an inquiry should be made into any offence referred to in Clause (b) of Sub-section (1)of Section 195, which may appear to have been committed in relation to a proceeding in that Court or, as the case may be, in respect of a document produced or given in evidence in a proceeding in that Court, the Court may proceed to act in accordance with the different clauses under Section 340(1), after such preliminary inquiry, if any, as it thinks necessary. This is eloquent enough a legislative material to note that the embargo in Section 195(1) is absolute and any prosecution for offences enumerated therein could be only by following the procedure prescribed in Section 340. Section 195(1) imposes an inhibition on a Court to take cognizance of the different offences as enumerated therein except upon satisfaction of the conditions laid down therein. Section 195 and Section 340 insulate persons from criminal prosecutions by all and sundry and by persons actuated by personal malice or ill-will. This is ensured by insisting on there being prosecutions, only when the interest of public justice renders it necessary. The said provisions effectively interdict prosecutions when public interest cannot be served. They provide protection to persons from prosecutions on insufficient grounds and ensure that there shall be prosecution only when the Court, after due consideration, is satisfied that there is a proper case to put a party to trial. At the same time, if offences affecting the administration of justice are committed, then the offender ought not to escape from the due process of law. Striking a balance between the public requirement to bring an offender against public justice to face the consequences and to insulate misuse of the law, is the legislative wisdom in providing the mechanism available by a conjoined application of Section 195 and Section 340 Cr.P.C.

9. The offences falling under Clause (b)(i) of Section 195(1), as already noticed, are those Which relate to false evidence and offences against public justice, included as Chapter XI in IPC. The bunch of offences which are dealt with under the said Chapter are such that they are intricately connected with the administration of justice. It would be wholly unsafe to allow a private litigant to put the law in motion in relation to an offence falling under Chapter XI IPC. So much so, it is the predominant requirement of the public justice system that the prosecution of an alleged offender, referable to Chapter XI IPC, has to be determined by the justice delivery system itself. This is the reason why the court before which an offence under Chapter XI is seen, shown or alleged, to have been committed, would have to prima facie come to the conclusion as to whether it is a fit case to put an alleged offender to trial and whether such a prosecution is necessary in the interest of justice. It is after this process of sifting, would such prosecutions be initiated by the institution of a complaint or other modes as provided under Section 340 Cr.P.C.

10. It would not be acceptable as a sound proposition of law, that even cases where offences under Sections 199 and 200 are seen, shown or alleged, to have been committed, should be left for being proceeded against on a private complaint. This is all the more so because whether a particular statement made in a declaration is false and whether such a declaration has been rendered or used in evidence and the manner in which the use of such material had impaired the course of justice, are matters for the court before which such an exercise is undertaken, to consider, at the first instance. If such authority is conceded as not available to that court, it would lose credit of its majesty of being part of the public justice system. So much so, when an offence is seen, shown or alleged, to have been committed, which offence falls under Chapter XI IPC, there cannot be a private complaint and such a complaint can be only by the Court as provided in Section 340 Cr.P.C., specifically in relation to offences enumerated in Clause (b)(i) of Section 195(1). A judicial sieve is legislatively put, through which, only such prosecutions as are necessary in the larger interest of justice reach the court competent to try.

11. It is in this context that the decisions of the Apex Court in Iqbal Singh Marwah's case and Sachida Nand Singh's case assume importance. In the said decisions, the Apex Court has authoritatively laid down that when the allegation is as to commission of offences described in Section 463 or punishable under Section 471, Section 475 or Section 476 IPC, going by the policy of law contained in Clauses (a) and (b)(i) of Section 195(1), the inhibition under Section 195(1)(b)(ii) would apply only when such offences are committed in respect of a document produced or given in evidence in a proceeding in any Court thereby meaning, that such offence is alleged to have been committed after production of the document or after it has been given in evidence in a court. This is, pithily, what is stated in Iqbal Singh Marwah 's case and Sachida Nand Singh's case. The said decisions are not intended to cover those matters in relation to which offences enumerated under Clause (b)(i) of Section 195 (1) are seen, shown or alleged, to have been committed, namely, those punishable under Sections 193 to 196 (both inclusive), Sections 199, 200, 205 to 211 (both inclusive) and Section 228 of IPC. This is all the more so because the embargo created by Section 195(1)(b)(i) is adjectived by the statute itself, specifically stating that the embargo works when the offence is alleged to have been committed in. or in relation to a proceeding in any Court, The provision in the last limb of Clause (b)(ii) of Section 195(1) is to the effect that the embargo created thereby would apply only when the offence is alleged to have been committed in respect of a document produced or given in evidence in a proceeding in any Court. This provision has been interpreted by the Apex Court to mean that such embargo will apply only when the offence has been committed in relation to a document after it has been produced or given in evidence. In contradistinction, the last limb of Clause (b)(i) of Section 195(1) creates an embargo as regards offences enumerated therein and alleged to have been committed in. or in relation to, any proceedings in any Court. Going by the offences enumerated in Clause (b)(i) of Section 195(1), the ingredients of which have been analysed and referred to earlier in this judgment, though a part of the incriminating acts constituting such offences would be committed even before the concerned material/materials is/are produced in Court, the completion of the commission of such offences is only before the Court and only in, or in relation to, any proceedings in any Court. So much so, though the offences enumerated in Clause (b)(ii) of Section 195(1) would be completed even before the production of the documents in Court (as held by the Apex Court in Iqbal Singh Marwah's case and in Sachida Nand Singh's case), the completion of offences enumerated in Clause (b)(i) of Section 195(1) is only before the Court and therefore, it is for that Court, and for only that Court, to initiate proceedings, if it deems necessary under Section 340 Cr.P.C.

12. The underlying purpose of Section 195(1)(b) is to control the temptation on the part of the private parties to start criminal prosecution on frivolous, vexatious or insufficient grounds, inspired by a revengeful desire to harass or spite their opponents. Certain offences have therefore been selected for the court's control because of their direct impact on the judicial process. As the purity of the proceedings of the court is directly sullied by the crime, the court is considered to be the only party entitled to consider the desirability of complaining against the guilty party. The observation to this effect made by the Full Bench of the Allahabad High Court in Emperor v. Kushal Pal Singh AIR 1931 All. 443 was quoted with approval by the Apex Court in Iqbal Singh Marwah's case (supra). Section 195(1)(b)(ii) was considered in Sachida Nand Singh's case (supra) to state that it is difficult to interpret the said provision as containing a bar against the initiation of prosecution proceedings merely because the document concerned was produced in a court albeit the act of forgery was perpetrated prior to its production in the court. It was construing the scope of the preliminary enquiry envisaged in Section 340(1) Cr.P.C. in the backdrop of the said finding that it was laid down in Sachida Nand Singh's case (supra) that the scope of the preliminary enquiry is to ascertain whether any offence affecting administration of justice has been committed in respect of a document produced in court or given in evidence in a proceeding in that court. The question as to whether there could be no prosecution at all at the instance of the court for offences referable to Section 195(1)(b)(i) in relation to documents in the nature of affidavits and evidence tendered with support of affidavits and falling within the domain of those offences enumerated in Section 195(1)(b)(i), did not fall for consideration either in Sachida Nand Singh's case (supra) or in Iqbal Singh Marwah's case (supra). The order impugned in this writ petition has been passed by holding that 'it is well settled that if a document is forged before its production before court no proceedings can be initiated under Section 340 of the Criminal Procedure Code'. The proceedings under Section 340 Cr.P.C. is a preliminary enquiry to find out whether a prosecution proceedings in relation to the offences to which the bar under Section 195(1)(b) of the Code is attracted, has to be initiated by the filing of a complaint. The embargo created by Section 195(1) is only to take cognizance of the offences except on satisfaction of the conditions prescribed therein.

13. Even in relation to offences which are not enumerated under Section 195, if the Court is of the opinion that such offences have been committed in relation to any proceedings in any court, the law does not prevent the making of a complaint by that court before the competent court under the Code, though the enquiry under Section 340 is required to be followed only in relation to those offences enumerated under Section 195(1)(b) of the Code.

14. The allegation made by the petitioner as noticed, among other things, is that in the proof affidavit filed in the proceedings before the DRT, certain statements are made, which run contrary to the materials on record and that the materials show that there was a concerted effort to give false evidence before the DRT by producing false documents and giving false statements. Tendering evidence by affidavit is on oath. I refer to the said averments in the affidavit only to pinpoint that this was not a case where the application seeking proceedings under Section 340 should have been dismissed at the threshold, by referring to precedent, which directly holds the field only as regards offences enumerated in Clause (b)(ii) of Section 195(1) Cr.P.C. The view in the impugned Ext.P7 that no proceedings can be initiated under Section 340 Cr.P.C. if a document is forged before its production before a court would not apply in a case where an offence under Section 199 or Section 200 IPC is made out during consideration of the application under Section 340. In this view of the matter, the impugned order does not stand. The same is accordingly quashed.

15. May be that, a consideration of the petitioner's application could have been only along with the final proceedings or after the culmination of the final proceedings. Hence, it is directed that the DRT will take back Ext. P6 petition to file and consider the same in accordance with law, in the light of what is stated above, as regards the law, and having regard to the entire facts and circumstances of the case, in accordance with Section 195 and Section 340 Cr.P.C.

The Writ Petition is allowed as above. No costs.