Applicability of Perjury Provisions (340 of CrPC) in NCLT Proceedings

False oral submissions  or affidavit with false averment  (perjury) is too often  encountered which not only cuts at the root of the proceedings but gives a subtle  advantage to the perjurer unless  the Tribunal comes down heavily against  them. Often than  not the Tribunal responds  ‘we will see the issue of perjury – at the end…’ handing  the perjurer an unintended advantage – at times prolonging  the case and the honest  litigant is left frustrated to his wits, forced to undertake compromise  inclined or weighing in favour of the perjurer – justice and faith in judiciary is the obvious casualty striking the roots of an orderly society.

This article  is pin focussed  to the  offence  of perjury in Tribunal proceedings, hence  at the  outset  it is fundamental to ascertain  whether  the offence of perjury which is cognizable  under section  340 of Cr PC can at all be tried by NCLT/NCLAT; in other words whether  or not NCLT is a court to take cognizance  of offence of perjury within the ambit of Sec 340 of Cr PC. The answer  lies in Section  195 (3) of Cr PC – wherein  in clause  (b) of sub section  (1), the  term” Court” means  a Civil, Revenue  or Criminal Court, and includes  a tribunal  constituted by or under a Central, Provincial or State Act if declared  by that Act to be a Court for the purposes  of this section. The riddle is settled vide Section 424 (4) of the Companies Act, 2013 – profitable to extract  the same:

All proceedings before  the  Tribunal  or the  Appellate  Tribunal  shall  be  deemed  to  be  judicial proceedings within the meaning  of sections  193 and 228, and for the purposes  of section  196 of the Indian Penal Code, and the Tribunal and the Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter  XXVI of the Code of Criminal Procedure, 1973.

Thus from the standpoint of statute, it is settled that  NCLT/NCLAT is competent rather  duty bound  to take cognizance  of the  offence  of perjury like any other  court – Recognising  the  menace  of perjury even the NCLT e-filing link just after login itself warns the would be offender  of the consequences of perjury. Given the loud and clear intent  and mandate of the statute, and at-times in the face of crying evidences  of perjury which can actually decide the fate of the case, the Judicial Officers more often than not are reluctant to take cognizance  of the offence of perjury – ‘thereby prolonging  the litigation’, thereby  rendering  an unintended fall-out  of gifting the  offender/perjurer an unfair advantage. To curb such menace  perjury/profiting from delays of judicial proceedings, the Full Bench of Hon’ble Supreme Court in Dnyandeo Sabaji Naik v. Pradnya Prakash Khadekar, (2017) 5 SCC 496 ruled: Para 13. This Court must  view with disfavour  any attempt by a litigant  to abuse  the  process.  The sanctity  of the judicial process  will be seriously eroded  if such attempts are not dealt  with firmly. A litigant who takes liberties with the truth or with the procedures of the Court should be left in no doubt about the consequences to follow. Others should not venture along the same path in the hope or on a misplaced expectation of judicial leniency. Exemplary costs are inevitable, and even necessary, in order to ensure that in litigation, as in the law which is practised in our country, there is no premium on the truth.

The procedural  part of handling  perjury application,  interalia is laid out by Bombay High Court in the matter of Keneth Desa V/s Gopal Leeladhar Narang Criminal Application  No.1115 of 2007  leaving  little  or no discretion  in refusing to adjudicate perjury application.

Para 7: Whenever an application under  Section  340 of Code of Criminal Procedure  is filed, the Civil Manual Chapter XIX para 337 requires  that it should be registered as Miscellaneous  Judicial Case i.e. a case where a Judicial Enquiry is contemplated. Section 340 of Code of Criminal Procedure  reads thus – (1) When upon an application made to it in this behalf or otherwise any Court is of 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 subsection (1) of Section 195, which appears  to have been committed  in or 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, such Court may, after  such preliminary  inquiry, if any, as it thinks necessary  –

(a) record a finding to that effect ;
(b) make a complaint  thereof  in writing;
(c) send it to a Magistrate  of the first class having jurisdiction;
(d) take sufficient security for the appearance for the accused  before such Magistrate,  or if the alleged  offence  is non-bailable and the Court  thinks it necessary  so to do send the accused in custody to such Magistrate  ; and
(e) bind over any person to appear  and give evidence  before such Magistrate.

The spirit of the afore-said  ruling is affirmed in T. Dhinakaran & Anr. V/s V. Ranganathan & Ors. 2017  SCC OnLine Mad 30109: Para 12. The scrutiny of the particular  provision would show “any Court is of opinion,” so when any application is filed under Section 340 of Cr.P.C., the Court has to record its opinion that it is expedient in the interest of justice to hold an enquiry. So, the opinion of the Court is very much essential.  At the same  time, the  Court cannot  mechanically  draw the  opinion  as to whether  the  petition  filed under Section 340 of the Code of Criminal Procedure  is entertainable or not. Each case has its own facts and circumstances.  Hence, the Court concerned has the duty to apply its mind and come to the conclusion the said application is entertainable. So, no cryptic and order cannot be passed while disposing of an application filed under section 340 of Code of Criminal Procedure.

The section  emphasises, the court should be of opinion that an enquiry should be held. Even for forming an opinion, there  should be some evidence  and not mere surmises. If there is a prima facie evidence, the court must enter into an enquiry and record a finding as to whether an offence referred to in Section 195 of Code of Criminal Procedure is committed.

De-fragmenting the ratio of Kenneth Desa’s  and T. Dhinakaran ruling it emerges  – an application for perjury preferred  as an Interlocutory  Application (IA) in the main Company Petition  (CP) – be registered as a separate case and  may proceed  simultaneously – the word ‘may’ as is commonly understood in legal connotation has to read as ‘shall’ – In any case if there is a prima facie evidence, the court must enter into an enquiry and record a finding as to whether an offence referred to in Section 195 of Code of Criminal Procedure is committed – the mandate is clear that  an enquiry has to be made  and a decision  to be rendered either  for directing  the NCLT/NCLAT registry to make a complaint  to the criminal court of appropriate jurisdiction  or declining  the request  of perjury by way of a reasoned order.

A divergence  of opinion  is prevalent,  whether  or not an application of perjury takes  precedence over the main proceedings from which it emanates – the controversy has largely been addressed by the Constitution Bench of Supreme  Court in the matter  of Iqbal Singh Marwah V/s Meenakshi Marwah (2005)  4 SCC 370 the relevant excerpts  opens the latches  to the doors to this controversy  – Para 11 of the  ruling infers Section  195(1) mandates a complaint  in writing to the  court for taking cognizance  of the offences enumerated in clauses  (b)(i) and (b)(ii) thereof.  Sections 340 and 341 CrPC which occur in Chapter XXVI of Cr PC, heading  of this Chapter is “Provisions as to Offences Affecting the Administration of Justice”. Thus is a clear pointer  to the legislative  intent  that  the offence committed should be of such type which directly affects the administration of justice (deflects the course of justice) viz. which is committed  after the document is produced  or given in evidence  in court. Simply stating a forged document or a false affidavit unless produced in evidence in the court can’t be said to be an offence affecting the administration of justice.

Para 14 of Iqbal Singh Marwah’s ruling refers to a Full Bench ruling of the Allahabad High Court in Emperor V/s Kushal Pal Singh [AIR 1931 All 443] which considered the scope of the perjury provision and held, that  clause  (c) of Section 195(1) applies  only to cases  where  an offence is committed  by a party, as such, to a proceeding to any court in respect  of a document which has been  produced  or given in evidence  in such proceeding.  A person who does not become a party after the commission of the offence, cannot be within the scope of Sec 340  of Cr PC.  The underlying  purpose  of enacting Sections  195(1) (b) and (c) and Section 476 of Cr PC (corresponding to the present Section 340 of Cr PC) seems  to  be  to  control  the  temptation on the  part  of the  private  parties  to  start criminal prosecution on frivolous vexations  or insufficient  grounds  inspired by a revengeful  desire to harass or spite their opponents. These offences have been selected for the court’s control because  of their direct impact on the judicial process. It is the judicial process or the administration of public justice which is the direct and immediate  object or the victim of these  offences. As the purity of the proceedings of the court is directly sullied by the crime of perjury, the court is considered to be the only party entitled to consider the desirability of complaining against the guilty party.
So far as sequence of precedence in respect  of the perjury application and the main proceedings from which the perjury application has emanated, the same is answered in para 32 of Iqbal Singh Marwah which in turn relies on another  Constitution  Bench ruling of MS Sherief V/s State of Madras AIR 1954  SC 397, which gives a complete  answer to the problem which proceedings are to be dealt in precedence – Coming to the last contention that an effort should be made to avoid conflict of findings between the civil and  criminal  courts,  it is necessary  to point  out  that  the  standard of proof required  in the  two proceedings are entirely  different. Civil cases are decided  on the basis of preponderance of evidence  while in a criminal case the entire  burden  lies on the prosecution and proof beyond reasonable doubt  has to be given. There is neither any statutory provision nor any legal principle that the findings recorded in one proceeding may be treated as final or binding in the other, as both the cases have to be decided on the basis of the evidence adduced therein. Para 15 & 16 of MS Sherief states  – As between the civil and the criminal proceedings we are of the opinion that the criminal matters should be given precedence. There is some difference  of opinion in the High Courts of India on this point. No hard-and-fast rule can be laid down but we do not consider  that  the possibility of conflicting  decisions  in the civil and criminal courts is a relevant consideration. The law envisages  such an eventuality when it expressly  refrains from making the decision of one court binding on the other,  or even relevant,  except  for certain  limited purposes,  such as sentence or damages.  The only relevant  consideration here  is the  likelihood  of embarrassment. Another factor which weighs with us is that a civil suit often drags on for years and it is undesirable that a criminal prosecution should wait till everybody concerned has forgotten all about the crime. The public interests demand that criminal justice should be swift and sure; that the guilty should be punished while the events are still fresh in the public mind and that the innocent should be absolved as early as is consistent with a fair and impartial trial. Another reason is that it is undesirable to let things slide till memories have grown too dim to trust. This, however,  is not a hard-and-fast rule. Special considerations obtaining in any particular  case might make some other  course  more expedient and just. For example, the civil case or the other criminal proceeding may be so near its end as to make it inexpedient to stay it in order to give precedence to a prosecution ordered under Section 476.  But in this case we are of the view that the civil suits should be stayed till the criminal proceedings have finished.

It would be fair to state  that  the  menace  of perjury in NCLT proceedings is very much prevalent,  as an instance  cited  an order by NCLT Mumbai in M.A. 2775/2019 & M.A. 2347/2019 IN C.P. 1356/  2019, the relevant  is extracted hereunder: We are of the prima facie opinion, after hearing  the professional  representing the petitioner, that the respondent no. 2, 3 and 6 had indulged  in illegal  activity by filing false affidavit before  this bench which amounts  to perjury. In case respondents failed to appear on the next date of hearing and file their defense  to the said application. This bench would proceed against them under the relevant provisions of law by remitting the matter to the criminal court to try the offence of perjury against the said respondent.

The afore order of NCLT is apposite  of its intent;  however  giving the accused  an opportunity of defense  is against  the binding precedents of the Supreme  Court, where the Court having formed a prima facie opinion of perjury can’t let the accused-respondent to tender  any defense  until the Magistrate  calls the accused  to appear.  The ruling of Full Bench ruling of Supreme  Court in Pritish V/s State  of Maharashtra  (2002)  1 SCC 253, extracted for reference:

Para 12. Thus, the person  against  whom the complaint  is made has a legal right to be heard whether he should be tried for the offence or not, but such a legal right is envisaged only when the Magistrate calls the accused to appear before him. The person  concerned  has then  the right to participate in the pre-trial  inquiry envisaged  in Section 239 of the Code. It is open to him to satisfy the Magistrate  that the allegations against  him are groundless and that he is entitled to be discharged.

Para 17. Learned  Senior Counsel cited  the  decision  of a Single Judge of the  High Court of Andhra Pradesh  in Nimmakayala Audi Narrayanamma v. State  of A.P. [AIR 1970 AP 119 : 1970 Cri LJ 443] in which the learned Judge observed that it is just and proper that the court issues a show-cause notice to the would-be accused as to why they should not be prosecuted. This was said while interpreting the scope of Section 476 of the old Code of Criminal Procedure  (which corresponds with Section 340 of the present Code). The following is the main reasoning of the learned  Single Judge: (AIR p. 121)

“The proceedings under  Section  476  Criminal Procedure  Code being  judicial and criminal in nature,  the  interpretation that  should  be placed  in construing  the  section  should  be just, fair, proper  and  equitable and  must  be in accordance with  the  principles  of natural  justice.  By adopting such interpretation and procedure, the aggrieved party would be afforded with an adequate opportunity to show and satisfy the court that it was not in the interests of justice, to launch the prosecution and thereby avoid further proceeding. That apart,  the  appellate court also would be in a position  to appreciate the reasons  assigned  in each case and would have the advantage of coming  to its own conclusion  without  any difficulty about  the  justification  or otherwise of launching  the  prosecution in a particular  case. When once  the  prosecution had been launched,  the accused  will not be having an opportunity thereafter to raise the question of expediency  in the interests of justice to launch the very prosecution itself. The case thereafter will have to be gone into on the merits.”

NCLT Mumbai in M.A. 2775/2019 & M.A. 2347/2019 in letting  the  accused  to have his say/defense have accorded  its order largely corresponding the ruling stated in the preceding  para, Supreme  Court however disapproved  Nimmakayala Audi’s ruling in para 18 of Pritish judgment,  extracted as under :

Para 18. We are unable to agree with the said view of the learned Single Judge as the same was taken under the impression that a decision to order inquiry into the offence itself would prima facie amount to holding him, if not guilty, very near to a finding of his guilt. We have  pointed  out  earlier  that  the  purpose  of conducting preliminary inquiry is not for that  purpose  at all. The would-be accused is not necessary for the court to decide the question of expediency in the interest of justice that an inquiry should be held. We have come across  decisions  of some  other  High Courts which held  the  view that  the  persons  against  whom proceedings were  instituted have  no  such  right  to  participate in  the  preliminary  inquiry  (vide M. Muthuswamy v. Special Police Establishment [1985 Cri LJ 420 (Mad)] ).

The offence of perjury constitutes a separate offence and an offence against  the Court, where the accused does not have any say as to whether  or not he should be tried is further accentuated by the Bombay High Court in the matter  of Union of India V/s Haresh Milani in Writ Petition (St.) No. 4899  Of 2017  wherein  it was ruled:

Thus in so far as section 340 of Code of Criminal Procedure is concerned, it is not necessary for the Judge to hear other side, but he may hear the applicant. It is not a requirement to hear the person against whom the proceedings are going to be initiated. It is entirely  upto  the  Court to decide  whether  to initiate  the proceedings under  section  340 of Code of Criminal Procedure.  Thus the  proceedings of the  application under section  340 of Code of Criminal Procedure  are Kangaroo Baby proceedings within the civil trial and still it is of an independent character  and therefore, for the purpose  of the said inquiry the powers under Code of Criminal Procedure  can be enjoyed the Civil Court. NCLT rightly having recognised the menace  of perjury, it is, but earnestly  looked forward that prospectively NCLT comes down far more frequently  and heavily against  the offenders of perjury, sending  a stern message of zero tolerance against  deceit deflecting  the course of justice delivery.