Formosa Plastics Corpn. Usa vs Lt. Governor & Ors.
2011 Latest Caselaw 4647 Del

        HIGH COURT OF DELHI AT NEW DELHI

+                              Crl.M.A.6746/2006

                                           in

                          W.P.(Crl.) No.299/2001


                                      Date of Decision: 21.09.2011


FORMOSA PLASTICS CORPN. USA       ... Petitioner
               Through: Mr.Vinay Garg &
                        Mr.Rajesh Yadav, Advs.
                        For Applicant in Crl.M.A.
                        No.6746/2006.

                                Versus



LT. GOVERNOR & ORS.               ...Respondents
                Through: Mr.Sunil Sharma, APP.


CORAM :
HON'BLE MR. JUSTICE V.K. SHALI

1.     Whether Reporters of local papers may be
       allowed to see the judgment?                          Yes
2.     To be referred to the Reporter or not?                Yes
3.     Whether the judgment should be reported
       in the Digest?                                        Yes




Crl.MA. 6746/06 in W.P. (Crl.) No.299/01                  Page 1 of 28
 V.K. SHALI, J.

1. This order shall dispose of Criminal Miscellaneous

Application bearing No.6746/2006, filed by one Arun

Chauhan, under section 340 read with section 195

Cr.P.C. for initiating action against respondents/non-

applicants, namely, Susan Wang, Director, Formosa

Plastics Corporation of USA, Alice Nightingale, Assist.

Vice-President, Legal Division & James A.Tidmarsh.

2. Briefly stated, the facts, leading to the filing of the

present application are that petitioner/Formosa Plastics

Corp., is alleged to have entered into a contract for

supply of material S-PVC to M/s.Kunstoplast Inc., an

American Company. It is alleged to have delivered

material to the said company worth about 50 million US

Dollars in Asia and Europe between 13.10.93 to

01.09.94. Ashok Chauhan is purported to have executed

personal guarantees for all the claims of the petitioner

against the American Company. It is alleged that the

guarantees were executed only with an intention to

cheat the petitioner-company and the contracts, which

were signed by Ashok Chauhan, on behalf of the said

company. These documents were without any intention

to fulfill the same. On 04.03.1994, it is alleged that the

representatives of the petitioner-company met Ashok

Chauhan in Germany to sort out the differences

regarding non-payment of dues, whereupon Ashok

Chauhan again represented to the petitioner-company

that the company to which the goods were supplied was

solvent and he himself had assets all over the world,

which would be utilized as a guarantee for paying off the

debts of the petitioner. Pursuant to this representation

on 25.03.94, Ashok Chauhan is further purported to

have executed guarantees afresh, i.e., just five days

prior to his alleged fleeing away from Germany and

three days before the seizure of his bank accounts and

properties. It is alleged that the fact of fleeing away and

the seizure of the properties and bank accounts of Ashok

Chauhan clearly showed his intention to cheat the

petitioner-company. It is alleged that in April, 1994, a

warrant of arrest was issued by the Criminal Court of

Germany against Ashok Chauhan and his brother, Arun

Chauhan. Fearing their arrest, it is alleged that both

Ashok Chauhan and Arun Chauhan fled from Germany.

The intention to defraud is further, stated to have been

fortified from the fact that the Bills of Exchange and

personal guarantees issued by these persons were not

honoured. On 24.10.97, the petitioner is purported to

have obtained a judgment from Civil Court both against

Ashok Chauhan and the American company from

Houston, Texas Court, which was subsequently alleged

to have been made the judgment of English Courts.

3. In April, 1995, the petitioner-company filed a

complaint to respondents No.2 & 3, i.e., Commissioner

of Delhi Police and DCP, Economic Offences Wing, Delhi

for registration of a criminal case against Ashok Chauhan

for offences of cheating etc. but no action was stated to

have been taken by them, as a consequence of which

petitioner-company filed a writ petition bearing

No.299/2001, titled, Formosa Plastics Corporation, USA

Vs. Lt.Governor & Ors., seeking mandamus, against

Lt.Governor of Delhi/Respondent No.1, Commissioner of

Delhi Police/Respondent No.2, DCP, Economic Offences

Wing, Delhi/Respondent No.3 and Union of India,

through Secy. of Home Affairs, Ministry of Home

Affairs/Respondent No.4 to register an FIR against the

aforesaid persons.

4. This writ petition was filed on behalf of the

petitioner-company, through James Tidmarsh, a resident

of Geneva, Switzerland along with an affidavit in support

of the petition. A copy of Special Power of Attorney,

purported to have been executed by one Ms.Alice

Nightingale, working as a Corporate Secretary of the

petitioner-company, in favour of James Tidmarsh

authorizing him to pursue all the claims and legal

interests of the company throughout the world, had also

been filed.

5. This petition came up for hearing for the first time

on 19.03.2001, on which date, it was adjourned to

21.03.2001, whereupon a notice to show cause as to

why the petition may not be admitted was issued. The

respondents filed their reply affidavits and contested the

claim. Ultimately, on 13.08.2007, the learned counsel for

the petitioner in view of the judgments of the Apex Court

in Aleque Padamsee & Ors. Vs. Union of India & Ors.,

2007 (9) Scale 275, sought permission to withdraw

the petition with liberty to avail any such remedy as may

be available to them in law. Before withdrawal of the

writ petition, the aforesaid application No.6746/2006

was filed by the applicant/Arun Chauhan for initiation of

action under section 340 read with section 195 Cr.P.C.

against Alice Nightingale, Corporate Secretary, James

Tidmarsh, Attorney and Susan Wang, Director of the

petitioner-company.

6. This application came up for hearing on

31.08.2007, when the matter was directed to be listed

for arguments on the maintainability of the application.

Since 31.08.2007, the application has been pending for

final disposal. The order sheets shows that despite the

plea having been taken by the learned counsel for the

applicant that the question of maintainability of the

application has already been considered and decided and

notices were directed to be issued to the three

respondents against whom action was sought to be

taken under section 340 read with section 195 Cr.P.C.

yet, prima facie, there is no speaking order on record,

which would show that any such consideration has been

given by the Court at any given point of time, except the

fact that notice has been issued to the respondents. The

respondents are also stated to have been served. In any

case, at this point of time, I feel that it would be

necessary to go into the question of maintainability of

the application, both on the question of locus as well as

on merits so as to consider as to whether the application

deserves to be proceeded ahead.

7. I have heard the learned counsel for the applicant.

8. The main contention of the learned counsel for the

applicant is that the respondents in the application,

namely, James Tidmarsh (through whom the present

writ petition was filed), Alice Nightingale, who has

delegated her authority to James Tidmarsh as well as

Susan Wang, Director of the petitioner-company have

committed an offence under section 195(1)(b)(i) of

Cr.P.C. and, therefore, the said offence need to be dealt

with by this Court under section 340 Cr.P.C.

9. Learned counsel, in order to support his

submission, has contended that the present writ petition

was essentially filed by the petitioner seeking a direction

to the respondents to register an FIR against the

applicant and Ashok Chauhan on account of the alleged

offence of cheating and fraud having been committed by

them, but a perusal of the affidavit as well as the power

of attorney, on the basis of which, James Tidmarsh is

purported to have derived his authority, would clearly

show that he did not have any such authority. The only

authority, which he had, was to act, bear, sign, verify or

present the pleadings, replication, appeals, cross-

objections, petitions, execution, review, revision,

restoration or other petitions or affidavits or other

documents as may be deemed necessary or proper for

the prosecution of any case filed by the Company

against any person in respect of the claim of the

Company against its debtors (emphasis added) in India.

10. It was, therefore, contended since James Tidmarsh

did not have any specific authority to initiate any

criminal action, he could not have filed the present

petition.

11. Secondly, it was contended that James Tidmarsh,

as an attorney, only had a power to file a petition

against its debtors in India, while as the applicant or his

brother were not the debtors and, therefore, such a

petition was filed against them on the basis of false

documents and false information. It is contended that

though no FIR was directed to be registered against the

applicant or his brother by this Court and the petition

was dismissed as withdrawn with liberty, as prayed for,

yet on account of incorrect and false information being

given by the petitioner's attorney and the other two

persons, namely, Alice Nightingale and Susan Wang, the

offence of perjury was complete and, therefore, they

deserve to be prosecuted under the aforesaid two

sections.

12. So far as the question of locus is concerned, it has

been contended by the learned counsel for the applicant

that the offence of perjury or making a public servant to

act on the basis of an information, which is false or

incorrect, is an offence which can be activated either on

the application as envisaged under section 340 Cr.P.C.

or by the Court suo motu. It is contended that it is not

the requirement of law that such an application should

be filed by a person, who is a necessarily a party to the

petition. In this regard, learned counsel for the applicant

has placed reliance on Patel Laljibhai Somabhai Vs. The

State of Gujarat, 1971 SCC (Crl.) 548 and N.Natarajan

Vs. B.K. Subba Rao, 2003 (2) SCC 76.

13. Learned counsel for the applicant in order to show

that an action under the aforesaid two sections deserves

to be taken against the petitioner's attorney and his two

other associates, viz., Alice Nightingale and Susan Wang,

has placed reliance on Iqbal Singh Marwah Vs.

Meenakshi Marwah, 2005 (4) SCC 370 and Pritish Vs.

State of Maharashtra & Ors., 2002 (1) SCC 253 as well

as Suo Motu Proceedings against R.Karuppan, Advocate:

In Re, 2001 (5) SCC 289 to urge that the Apex Court,

in all the three cases, has taken a very serious view of

the matter stating that, where the purity stream of

justice is sought to be polluted by a party by giving

wrong information, they deserves to be dealt with

sternly.

14. I have carefully considered the submissions made

by the learned counsel for the applicant. I do not have

the opportunity of hearing any submissions from the side

of the non-applicants, as none has appeared either in

person or through counsel despite service, therefore, the

matter is being decided on the basis of the submissions

made by the learned counsel for the applicant and after

perusing the judgments of the Apex Court cited by the

learned counsel for the applicant and the provisions of

law.

15. Before dealing with the question as to whether an

action deserves to be taken against the petitioner's

attorney and his two associates, as urged by the learned

counsel for the applicant, it would be worthwhile to

reproduce the relevant provisions under which the action

is sought to be taken by the Court against the said

persons. Section 195(1)(b)(i)&(iii) reads as under:

"195. Prosecution for contempt of lawful authority of public servants, for offences against public justice and for offences relating to documents given in evidence.-

(1) No court shall take cognizance-

       (a)     XXX XXX

       (b)

(i) of any offence punishable under any of the following sections of the Indian Penal Code (45 of 1860), namely,

sections 193 to 196 (both inclusive), 199, 200, 205 to 211 (both inclusive) and 228, when such offence is alleged to have been committed in, or in relation to, any proceeding in any court, or

(ii) XXX XXX

(iii) of any criminal conspiracy to commit, or attempt to commit, or the abetment of, any offence specified in sub- clause (i) or sub-clause (ii), [except on the complaint in writing of that court or by such officer of the Court as that Court may authorize in writing in this behalf, or of some other court to which that court is subordinate]."

16. Similarly, section 340 Cr.P.C. deals with the

procedure and reads as under:

"340. Procedure in cases mentioned in section 195:

(1) When upon an application made to it in this behalf or otherwise, any court is of opinion that it is expedient in the interests of justice that an inquiry should be made into any offence referred to in clause (b) of sub-section (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.

(2) The power conferred on a Court by sub-section (1) in respect of an offence may, in any case where that Court has neither made a complaint under sub-section (1) in respect of that offence nor rejected an application for the making of such complaint, be exercised by the Court to which such former Court is subordinate within the meaning of sub- section (4) of section 195.

(3) A complaint made under this section shall be signed, -

(a) where the court making the complaint is a High Court, by such officer of the Court as the Court may appoint;

(b) in any other case, by the presiding officer of the Court or by such officer of the Court as the Court may authorize in writing in this behalf;

(4) In this section, "Court" has the same meaning as in section 195."

17. A perusal of the section 340 Cr.P.C., would show

that before any action under section 195 Cr.P.C. is

taken, the Court must form an opinion that it is

expedient in the interest of justice that an inquiry should

be made into an offence referred to in clause (b) of sub-

section (1) of section 195 Cr.P.C., which appears to have

been committed in or in relation to a proceeding before

the Court in respect of a document produced or given in

evidence. Therefore, firstly, the Court must form an

opinion as to whether, it is expedient in the interest of

justice that an inquiry must be held before proceeding

under section 195(1)(b)(i)&(iii) and after holding

preliminary inquiry, the Court can give a finding to that

effect or can make a complaint thereafter in writing or

send the matter to the Magistrate of First Class having

the jurisdiction or take sufficient security for the

appearance of the person before the Magistrate etc.

18. In the light of the aforesaid provisions of law, I feel

before considering as to whether it is expedient to hold

an inquiry in the instant case of the alleged offence of

perjury having been committed by the respondents/non-

applicants, it would be pertinent to refer to two

judgments of the Apex Court in Patel Laljibhai

Somabhai's case (supra) and N.Natarajan's case (supra),

which deals with the locus of the applicant under section

340 Cr.P.C.

19. In Patel Laljibhai Somabhai's case (supra), the

appellant, i.e., Patel Laljibhai Somabhai had instituted a

civil suit against the complainant for recovery of a sum

of Rs.2,000/- on the basis of a forged cheque. The suit

was dismissed for being false and thereafter a complaint

was filed under sections 467 & 471 IPC in respect of

which the Magistrate refused to take cognizance under

section 195(1)(c), without there being a complaint by a

Civil Court. It was observed by the Apex Court that the

underlying purpose for enacting section 195(1)(b)&(c)

and section 340 Cr.P.C. (section 476 of old Cr.P.C.)

seems to be to control the temptation on the part of the

private parties considering themselves aggrieved by the

offence mentioned in those sections to start a criminal

prosecution on frivolous, vexatious or insufficient

grounds inspired by a revengeful desire to harass or

spite their opponents.

20. Similarly, in N.Natarajan's case (supra), the Court

took note of the fact that under criminal law a complaint

can be lodged by anyone, who is aware of a crime

having been committed and thereby set the law into

motion and in respect of offences adverted to under

section 195 Cr.P.C. There is a restriction that the same

cannot be entertained unless a complaint is made by a

Court because the offence is stated to have been

committed in relation to the proceedings in that Court. It

has been further observed that in ordinary crimes not

adverted to under section 195 Cr.P.C., if in respect of

any offence, the law can be set into motion by any

citizen of this Country, we fail to see how any citizen of

this country cannot approach under section 340 Cr.P.C.

21. Reference was made to the language of section 340

Cr.P.C. and it was observed that the Court has to act in

the interest of justice on the basis of a complaint or

otherwise and to that extent it was observed that the

respondents in that case, who would be the applicants in

the present case reported, were competent and have the

locus to file the complaint.

22. So far as the law laid down by the Apex Court in

these two authorities is concerned, there can be no

dispute about the same. In N.Natarajan's case (supra),

the Court has rightly observed that under criminal law

anybody can be complainant, who may be aware of the

offence. In the instant case also, the action under

section 195, which is a substantive action, can be taken

in terms of the procedure laid down under section 340

Cr.P.C., which can be activated by anybody on an

application or by the Court suo motu but the primary

purpose of initiation of such an action is that the Court

must form an opinion that it is expedient to hold a

preliminary inquiry.

23. So far as the filing of an application by any person

is concerned, it would obviously mean filing of an

application provided there is an adjudication and a prima

facie finding that the order has been obtained or passed

or refused either on the basis of a false evidence or on

the basis of documents produced by the party, which are

false documents. This gets fortified by the judgment of

the Apex Court in Patel Laljibhai Somabhai's case

(supra), where suit for recovery was dismissed by

observing that the suit was filed on the basis of a forged

cheque.

24. Coming back to the facts of the present case, even

if it is assumed for the sake of argument that applicant

has the locus even then I feel that this is not a case

where the Court on the basis of the affidavit and the

Special Power of Attorney, relied upon by the petitioner's

attorney/James Tidmarsh has gone into the merits of the

case and decided the question in either way by giving

the direction to the police to register an FIR or

dismissing the prayer. The petition itself was dismissed

as withdrawn in the light of the law laid down by the

Apex Court in Aleque Padamsee's case (supra), which is

now re-affirmed by the Apex Court in Sakiri Basu Vs.

State of U.P. & Ors., (2008) 2 SCC 409 case which lays

down that a party who wants an FIR to be registered

must approach the police either under Section 154(1)

Cr.P.C. or under section 154(3) Cr.P.C. and if still the

FIR is not registered, he can have appropriate remedies

either by resorting to section 156(3) Cr.P.C. or by filing

a criminal complaint under section 200 Cr.P.C.

25. It is, in this light, the writ petition was dismissed as

withdrawn with liberty as prayed for. Under these

circumstances, to initiate an action, when the applicant

himself is not aware as to whether the present petitioner

has thereafter initiated any criminal action against the

applicant or not, would only show that the present

application is being filed with a view to deter them from

taking any action against the alleged offenders. This in

the language of the Supreme Court Patel Laljibhai

Somabhai's case (supra) is a frivolous, vexatious

prosecution by the present applicants which is inspired

by a revengeful desire to harass or spite their opponents

namely, the James Tidmarsh and others. Therefore, I

feel that the filing of the present application at this stage

is premature.

26. Secondly, if one sees the affidavit and the power of

attorney, the main contention, which has been urged

before this Court is that the power of attorney, which

was relied upon by James Tidmarsh was essentially for

initiating a suit or a petition against debtors and not for

the purpose of filing of the criminal complaint and since

the power of attorney has been relied upon by the

petitioner, therefore, not only he but the person, who

has conferred that power of attorney as well as Susan

Wang, Director, are guilty of having filed a case on the

basis of a false document. I do not subscribe to this

view that the petitioner is guilty of filing the petition on

the basis of a false information by relying upon the

power of attorney which allegedly does not confer upon

them to file the present writ petition. This would be

evident in case the entire document is read in its

entirety. The recital of the power of attorney clearly

show that James Tidmarsh had been appointed as an

attorney by Alice Nightingale, Corporate Secretary of the

petitioner-company for and on behalf of the company to

pursue the claims of the petitioner-company against all

the debtors throughout the world. All the legal interests

have been purposefully highlighted by him, which would

show that in case the petitioner-company is alleged to

have been cheated by any person and any action is

necessitated to bring the guilty to the book it will fall

within the terminology legal interests of the petitioner-

company. Therefore, the recital makes it clear that the

petitioner's attorney/James Tidmarsh was appointed for

the purpose of protection of the legal interests of the

company and for this purpose he was permitted to file

the petition under Clause 1 of the power of attorney. In

the said power of attorney, he was authorized to make

statements on their behalf in Court of law, sign petitions,

act and instruct legal practitioners and to approach all

courts, original or appellate, therefore, the sum and

substance of the entire power of attorney was to clothe

the attorney James Tidmarsh to take all such similar

criminal actions, which may be permissible in local law of

India to protect the interests of the petitioner-company,

which he has actually done. I do not find that by any

stretch of imagination, it can be said that the intention of

the petitioner's attorney was to base its claim either on

the false documents or false averments sworn in the

affidavit.

27. On the contrary, I get the impression that the

application filed by the applicant, under section 340

Cr.P.C. read with section 195 Cr.P.C., is being used by

the applicant only as a shield to deter the rightful

processes of law to have their own course. Merely

because the applicant has the capacity to engage a

counsel and fight a legal battle, he has chosen ingenious

method of embarking on a speculative litigation so as to

deter the petitioner-company.

28. I, therefore, in the aforesaid facts and

circumstances feel that it is not expedient to conduct any

preliminary inquiry in the matter as the writ petition

itself has not been decided on merits. I am of the view

that the present application has been purposefully filed

against James Tidmarsh/respondent No.1 and his two

other associates/respondents No.2 & 3, viz., Alice

Nightingale and Susan Wang so as to keep the

Damocles' sword hanging on their head. I, accordingly,

feel that the present application is neither maintainable

nor is it expedient so as to warrant holding of an inquiry

under section 340 Cr.P.C.

29. So far as the other three judgments1, which have

been referred by the learned counsel for the applicant

are concerned, I have gone through the same. There is

no dispute about the proposition of law laid down in the

said judgments, however, merely because the Apex

Court has observed that the offence of perjury is a

serious act and in a given case an action has been

initiated against the party under section 195 read with

section 340 Cr.P.C. does not necessarily mean that in

other case where alien allegation is being made, the

2005 (4) SCC 370; 2002 (1) SCC 253; 2001 (5) SCC 289

Court must embark on such an inquiry with a view to

satisfy the whims and fancies of a party. Notable in all

the judgments is the judgment of Suo Motu Proceedings

against R.Karuppan's case (supra) where the affidavits

were filed with regard to the date of birth of the Ex-Chief

Justice, wherein certain observations made by the Apex

Court can certainly cannot be made applicable to the

facts of the present case, where the applicant is a

private party and not holder of high public office.

30. For the reasons, mentioned above, I feel that the

application filed by the applicant is totally misconceived

and accordingly, the same is dismissed.

31. Since continuance of this application, by keeping

the application alive for almost four years after

withdrawal of the writ petition on 13.08.2007, has

resulted in wastage of considerable time of the Court

and as well as that of the Registry, I feel that the Court

must impose costs to deter not only the applicants or the

persons of such proclivities and having resources to

indulge in speculative litigation to keep their opponents

at bay from initiating legal action. Accordingly, I impose

costs of Rs.1 lakh on the applicants, which shall be

deposited by them with the Delhi High Court Legal

Services Committee within a period of four months,

failing which the matter will be placed before Registrar

(Criminal), who may effect recovery of the aforesaid

amount in terms of section 421 Cr.P.C.

V.K. SHALI, J.

st September 21 , 2011 SS