Indraprastha Power Generation ... vs Faheem Baig & Ors
2015 Latest Caselaw 143 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                      Date of decision: 9th January, 2015.

+      LPA No.8/2015, CM No.385/2015 (for condonation of 17 days
       delay in filing the appeal)

       INDRAPRASTHA POWER GENERATION
       CO. LTD.                               ............ Appellant
                   Through: Mr. A.S. Dateer, Adv.

                                   Versus

    FAHEEM BAIG & ORS                  ..... Respondents
                  Through: None.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. This intra-court appeal impugns the order dated 13th August, 2014 of

the learned Single Judge of this Court of dismissal of CM No.13032/2012

under Section 340 of the Code of Criminal Procedure, 1973 (CrPC) filed by

the appellant in Cont. Cas.(C) No.484/2011 filed by the respondent no.3

herein i.e. Ajmera Steel Pvt. Ltd. against the officers of the appellant. This

appeal is accompanied with an application for condonation of delay of 17

days in filing thereof and is listed subject to office objection as to the

maintainability thereof.

2. As far as the aspect of maintainability of the appeal is concerned, the

Full Bench of this Court in Weizmann Ltd. Vs. Ms. Shoes East Ltd. 200

(2013) DLT 257 has held that a decision either way on an application filed

under Section 340 of the CrPC decides valuable rights of parties and

therefore an appeal would lie under Clause 10 of the Letters Patent, as

applicable to this Court. Office objection qua maintainability of the appeal is

thus overruled.

3. However being prima facie of the opinion, though for reasons other

than those given by the learned Single Judge, that there is no merit in the

application filed by the appellant under Section 340 of the CrPC, we have

without regard to the application for condonation of delay heard the counsel

for the appellant at length on the admissibility of this appeal.

4. The factual position may be stated thus. Certain disputes and

differences arose between the appellant and the respondent no.3 Ajmera

Steel Pvt. Ltd. with respect to a contract containing an arbitration clause.

Respondent no.3 invoked the arbitration clause and also filed OMP

No.632/2010 and OMP No.186/2011 in this Court under Section 9 of the

Arbitration and Conciliation Act, 1996. Vide order dated 20 th May, 2011 in

OMP No.186/2011, certain interim measures were ordered and the objection

of the appellant that the respondent no.1 herein namely Faheem Baig who

had on behalf of the respondent no.3 invoked the arbitration as well as

signed and filed the said OMPs was not authorized and competent to do so,

was kept open for decision by the Arbitral Tribunal. The respondent no.3

acting through the respondent no.1 then filed Cont. Cas.(C) No.484/2011

supra against the officials of the appellant alleging them to be in violation of

the interim measures ordered on 20th May, 2011 in OMP No.186/2011.

Notice of the said contempt case appears to have been ordered to be issued

to the said officials of the appellant.

5. In the meanwhile, the Arbitral Tribunal upheld the objection of the

appellant that the respondent no.1 was not authorized by the respondent no.3

and was thus not competent to invoke the arbitration or to sign and file the

claim petition. Accordingly vide order dated 14 th August, 2012 the

arbitration proceedings were closed with liberty however to the respondent

no.3 to in accordance with law initiate arbitration afresh.

6. The Advocate appearing for the respondent no.3 in the contempt

petition sought discharge and was discharged vide order dated 9 th October,

2012 and since none else had appeared for the respondent no.3 (who was the

petitioner in the contempt petition), Court notice was ordered to be issued to

the respondent no.3. In the meanwhile, the appellant filed the application

aforesaid under Section 340 of the CrPC. On 1st April, 2013 none appeared

in the contempt case aforesaid and accordingly the contempt case filed by

the respondent no.3 as well as the application of the appellant under Section

340 of the CrPC were dismissed in default. Thereafter the appellant applied

for restoration of the application under Section 340 of the CrPC and which

was allowed on 22nd May, 2013 and notice of the said application under

Section 340 of the CrPC was issued to the respondents herein namely Sh.

Faheem Baig,, Shri Hari Lal, Ajmera Steel Pvt. Ltd., Shri Sushil Ajmera and

Shri Gaurav Ajmera. However none of the respondents appeared.

7. The case of the appellant in the application under Section 340 of the

CrPC is that the respondents herein, in the Cont. Cas.(C) No.484/2011 filed

by them, falsely averred that the officials of the appellant were in violation

of the interim measures ordered on 20th May, 2011 in OMP No.186/2011

with the intent to pressurize the appellant and its officials to allow the

respondents what they were not entitled to under the contract.

8. The learned Single Judge, notwithstanding the respondents having not

appeared to defend the application of the appellant under Section 340 of the

CrPC, has dismissed the said application finding / observing / holding:-

(i) though the respondent no.3 acting through the respondent no.1

had alleged violation by the officials of the appellant of the

interim measures ordered on 20th May, 2011 in OMP

No.186/2011 but had not pursued the same;

(ii) the Courts are not to be used as platforms by the parties to

satisfy their personal grudges;

(iii) the Courts are inundated with cases and are finding it difficult

to grapple with the huge backlog; in such a contingency,

entertaining the application under Section 340 of the CrPC

would amount to luxurious litigation and set a wrong precedent;

and,

(iv) if the officials of the appellant are still aggrieved, they are free

to put the criminal justice machinery into motion by filing a

private complaint rather than burdening the Court to hold an

enquiry into the matter and then prosecute the respondents.

Accordingly the application of the appellant under Section 340 of the

CrPC was dismissed with liberty to the appellant to take such recourse in

law as may be available to it.

9. In the face of the aforesaid reasoning of the learned Single Judge, the

star argument of the counsel for the appellant of course is that the learned

Single Judge was under a misconception of law that the appellant by filing a

private complaint can seek redressal of its grievance, of the respondents

having indulged in falsehood on oath in filing the contempt case. Attention

is invited to Section 195 of CrPC which prohibits a private complaint in

such matters except on complaint in writing of that Court in which falsehood

has been pleaded on oath.

10. There can be no dispute qua the said position and we have no

hesitation in stating that the learned Single Judge erred in proceeding on the

premise that it was open to the appellant to file a private complaint in

relation to an offence committed in relation to a proceeding in the Court. We

also do not approve of another reasoning given by the learned Single Judge

for not entertaining the application of the appellant i.e. of the Courts being

inundated with cases and finding it difficult to grapple with the huge

backlog. That, to say the least, cannot be a reason for not entertaining the

application or a proceeding if otherwise maintainable in law.

11. It is however not on every application under Section 340 of the CrPC

complaining, of a party to a litigation having committed an offence within

the meaning of Section 340 of the CrPC, that the Court in which the offence

is stated to have been committed is bound to make an enquiry and to make a

complaint to the Magistrate of the offence committed. For the Court to act

under Section 340 of the CrPC formation of an opinion, that making of an

enquiry and if necessary of a complaint to the Magistrate thereafter is

expedient in the interests of justice, is essential. Section 195 CrPC prohibits

private complaints in the said subject matter and requires the Court, in

relation to a proceeding before which the offence is alleged to have been

committed, to make a complaint. Thus, complaint of offences covered by

Section 340 CrPC lies not when offence is committed but only when the

Court, in a proceeding before which the offence is committed, is of the

opinion that it is expedient in the interest of justice that such complaint be

made.

12. Whether or not prosecution is expedient in the interest of justice has

to be determined with reference to the facts and circumstances of each case.

The question whether it is worthwhile in public interest or not to prosecute

can be decided even before conducting an enquiry under Section 340 of the

CrPC. The Supreme Court in Pritish Vs. State of Maharashtra (2002) 1

SCC 253 held that hub of Section 340 is formation of an opinion by the

Court that it is expedient in interest of justice that an enquiry should be

made into an offence which appears to have been committed; in order to

form such an opinion, the Court is empowered to hold a preliminary

enquiry; it is not peremptory that such a preliminary enquiry be held; even

without such preliminary enquiry the Court can form such an opinion; the

purpose of the preliminary enquiry is only to find whether it is expedient in

the interest of justice to enquire into the offence which appears to have been

committed. It is not every false declaration or statement that is intended to

be the subject matter of prosecution. Reference in this regard can be made to

Rugmini Ammal Vs. Narayana Reddiar (2007) 12 SCC 611. The purpose

of Section 340 CrPC is to provide a safeguard against vexatious or frivolous

prosecution. Section 340 is not permitted to be employed as handmaid of

private persons to achieve their revengeful attitude against another person.

Care has to be taken that a Court of law is not employed as a tool by litigants

for achieving their own ends. The Court has to see whether prosecution is

undertaken in the interest of justice and not to satisfy the private grudge of

litigant. Before setting the criminal law into motion the Court has to exercise

great care and caution and has to arrive at a satisfaction that there is

reasonable foundation for the charge in respect of which prosecution is

directed. No prosecution is to be directed unless there is reasonable

probability of conviction. The legislature by using the words "appears to

have been committed" in Section 340 of the CrPC has shown an intention

that there must be sufficient material before the Court to show that an

offence within the meaning of Section 340 of the CrPC is likely to have

been committed. Proceedings under Section 340 of the CrPC are not to be

resorted to, to hamper the fair trial of a civil dispute.

13. This Bench in judgment dated 2nd September, 2014 in LPA

No.322/2014 titled Mr. Vishal Kapoor Vs. Mrs. Sonal Kapoor it was held,

(i) that an application under Section 340 of the CrPC ought to be normally

considered at the time of final decision of the case only and not at the

interim stage; (ii) the very genesis of Section 340 of the CrPC is to prevent

complaints being filed of offences having been committed in relation to the

Court proceedings; it was felt that if such complaints are permitted to be

filed, the same may be used to force the other party into giving up its

claim/defence or to dissuade witnesses from appearing before the Courts

under threat of criminal prosecution; (iii) proceedings under Section 340 of

the CrPC should not be resorted to when the criminal case is calculated to

hamper fair trial of issue before the Civil Court where it would probably go

on for longer; (iv) a prosecution for perjury should not be ordered by the

Court before the close of the proceedings in the case in which false evidence

is given; it is highly wrong for a Court to take action under the said

provision against a witness or a party for giving false evidence when trial is

underway; (v) the existence of mens rea or criminal intention behind act

complained of will have to be looked into and considered before any action

under Section 340 of the CrPC is recommended; (vi) before setting the

criminal law into motion, the Court should exercise great care and caution

and it must be satisfied that there is reasonable foundation for the charge in

respect of which prosecution is directed; (vii) in criminal prosecution

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;

(viii) that re-course under Section 340 of the CrPC is to be on only if the

interest of justice requires and not in every case; (ix) expediency would

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; and, (x) where the forged document or forgery

may cause a very serious or substantial injury to a person but where such

document is just a piece of evidence, where voluminous evidence may have

been adduced and the effect of such piece of evidence on the broad concept

of administration of justice is minimal, the Court may not consider it

expedient in the interest of justice to make a complaint.

14. If we apply the aforesaid principles, we find that though the

respondent no.1 acting for the respondent no.3 did file the contempt case

supra alleging violation of the interim orders during the pendency of

arbitration by the officials of the appellant but chose not to pursue the same.

The counsel for the appellant, in all fairness also informs that the respondent

no.3 after the order dated 14th August, 2012 supra of the Arbitral Tribunal,

has invoked arbitration afresh and which is now underway. The interim

order during the pendency of arbitration was of preservation of certain items

which the respondent no.3 was claiming to be belonging to the lot of goods /

machinery auctioned by the appellant and purchased by the respondent no.3

and which according to the appellant did not belong to the said lot. It

appears to have been the case of the respondent no.3 in the contempt case

filed through the respondent no.1 that the officials of the appellant despite

the said interim order had removed and sold the said items. The appellant of

course denied the same.

15. It was the case of the appellant in the application under Section 340

CrPC, (i) that the respondent no.1 in the claim before the Arbitral Tribunal

had falsely pleaded being authorized to act on behalf of the respondent no.3

and which had been found to be false by the Arbitral Tribunal; (ii) that it

was further the case of the respondent no.3 acting through the respondent

no.1 before the Arbitral Tribunal that some of the goods purchased by the

respondent no.3 in auction from the respondent no.1 were missing; however

in the visit by the Arbitrator it had been found otherwise; and, (iii) that the

Arbitral Tribunal in the visit to the site had also found that the goods with

respect to which interim restraint had been obtained by the respondent no.3

did not belong to the lot purchased by the respondent no.3.

16. We are of the view that since the arbitral proceedings are still

underway and further since the respondent no.3 acting through the

respondent no.1 though in the contempt case alleged violation of the interim

order by the officials of the appellant but did not choose to pursue and prove

the same, the magnitude of the falsehood even if any practised by the

respondent no.1 acting on behalf of the respondent no.3 is not such which

makes it expedient to order prosecution of the respondents. There is nothing

to show that the opinion formed by the respondent no.1, acting on behalf of

the respondent no.3, that the appellant and its officials were in violation of

the interim order, was not bona fide.

17. Further, merely because the respondent No.3 failed to prove that it

had authorised respondent No.1 to act on its behalf is not reason enough to

order prosecution for having falsely claimed that he was so authorised,

particularly when such actions, under the law, are permitted to be ratified

and from a reading of the order dated 14 th August, 2012 of the Arbitral

Tribunal indicates that the respondent No.3 had so ratified the actions of the

respondent No.1. This is also evident from the respondent No.3 having

thereafter invoked arbitration afresh.

18. We therefore, instead of for the reasons given by the learned Single

Judge, for the reasons aforesaid, are of the opinion that no case of

proceeding under Section 340 of the CrPC is made out. We however tend to

agree with the learned Single Judge that the application under Section 340 of

the CrPC was the outcome of the assault on their dignity perceived by the

officials of the appellant by filing erof the contempt petition against them.

We can only observe that the said officials need not be so sensitive.

19. The appeal is dismissed.

No costs.

RAJIV SAHAI ENDLAW, J.

CHIEF JUSTICE JANUARY 09, 2015 „pp‟..