Punjab-Haryana High Court

United Bank Of India And Anr vs State Of Haryana And Ors on 22 March, 2024

                                       Neutral Citation No:=2024:PHHC:042380




CRM-M-38759-2018                                                            1

      IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                               CHANDIGARH

                                      ***

114                              CRM-M-38759-2018
                                 Reserved on: 01.03.2024
                                 Date of Pronouncement: 22.03.2024

UNITED BANK OF INDIA AND ANR.                               -PETITIONERS

                                      V/S

STATE OF HARYANA AND ORS.                                   -RESPONDENTS

CORAM: HON'BLE MR. JUSTICE KULDEEP TIWARI

Present:     Mr. R.S. Cheema, Sr. Advocate assisted by
             Mr. Arshdeep Singh Cheema, Advocate
             for the petitioners.

             Mr. Abhinash Jain, D.A.G., Haryana.

             Mr. Adhirath Singh, Advocate with
             Ms. Raymon Singh, Advocate and
             Mr. R.D. Gupta, Advocate
             for the respondents No.2 and 3.

                                      ***

KULDEEP TIWARI, J.

1. Through the instant petition, as instituted under Section 482 of

the Cr.P.C., the petitioner No.1-Bank, which is a body corporate constituted

under the Banking Companies (Acquisition of Transfer of Undertakings)

Act, 1970, and, the petitioner No.2, who is Deputy General Manager of the

petitioner No.1- Bank, yearn for grant of the hereinafter extracted relief(s):-

"Set aside the order dated 12.02.2018, whereby, the learned Additional Sessions Judge concerned has, after allowing the appeal, as preferred by the respondents No.2 and 3 herein, against the dismissal of their application under Section 340 of the Cr.P.C., set aside the order dated 16.07.2016 and remitted the respondents concerned to the learned trial Court

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concerned, with a direction to the latter to hold further enquiry and to proceed with the matter, as per law."

FACTUAL MATRIX

2. Owing to dishonour of cheque(s), which was issued by the

authorized signatory of M/s Lakhani India Limited (hereinafter referred to

as "accused firm"), in lieu of his firm's outstanding liability, the petitioner

No.1, through petitioner No.2, i.e. its then Chief Manager, instituted a

complaint under Section 138 of the Negotiable Instruments Act, 1881

(hereinafter referred to as the 'N.I. Act') against the firm (supra). In the

complaint (supra), apart from other Directors of the accused firm, the

respondents No.2 and 3 herein were also arrayed as accused Nos.7 and 5, in

the capacity of Directors of the accused firm. Moreover, in support of the

complaint (supra), the petitioner No.2, i.e. the then Chief Manager of the

petitioner No.1 furnished an affidavit in preliminary evidence.

3. During pendency of the complaint (supra), the respondents

No.2 and 3 herein moved an application under Section 340 of the Cr.P.C.

before the learned trial Court concerned, thereby seeking prosecution of the

present petitioners under Sections 191, 192, 193, 196, 199, 200 and 420 of

the IPC. What triggered the respondents concerned to make the application

(supra), was that, despite the petitioners being well acquainted with their

designation/status in the accused firm, i.e. "Independent Non-Executive

Directors", yet they were deliberately arrayed as accused in the complaint

(supra) in the capacity of Directors, on the allegations that, they along with

other Directors, used to accept and undertake to make the payment of

proceeds to the petitioner-Bank. The respondents further averred in their

application (supra) that they had neither executed any security document in

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favour of the petitioner-Bank, nor had given any undertaking to make

payment to it, however, despite that, the petitioner No.2 furnished a false

affidavit carrying the hereinafter extracted incorrect averments, in support

of the complaint (supra):-

"a. That the accused no. 1 being the principal borrower company through accused no. 2 to 7 being the Directors and touching daily affairs of the company's business, have been enjoying the "Suppliers Bill Discount" credit limit from the complainant bank to the tune of Rs. 5,00,00,000/- against the security documents executed by the accused no. 2 to 7 for and on behalf of accused no. 1 company on 06th January 2009. On the request of accused no. 2 to 7 being the Directors for and on behalf of accused no. l company, the complainant bank further accommodated the accused in granting ad-hoc "Supplier Bill Discount" financial assistance to the tune of Rs. 1,25,00,000/- on 30th October 2010 against the security documents executed by the accused no. 2 to 7 for and on behalf of accused no. 1 Company. (As per point no. 2).

b. That the accused no. 1 to 7 used to discount the bills with the complainant bank, so raised by the suppliers of material to the accused. As a result thereof, the complainant bank used to make payment against such instruments to the supplier and the accused no. 1 to 7 used to accept and undertake to make the payment of such proceed to the complainant bank As a matter of arrangement, the accused no. 1 to 7 also used to issue and tender the cheque(s) favouring the complainant bank A/c reference supplier (As per point no.3)."

4. The learned trial Court concerned, after examining the record

available before it, proceeded to dismiss the application (supra) vide order

dated 16.07.2016.

5. Since the dismissal order (supra) caused pain to the respondents

No.2 and 3 herein, they assailed its validity by instituting a statutory

criminal appeal thereagainst, before the learned Additional Sessions Judge,

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Faridabad. This criminal appeal resulted in the drawing of the impugned

order dated 12.02.2018, whereby, the learned Additional Sessions Judge

concerned has allowed the appeal, set aside the order dated 16.07.2016 and

remitted the respondents No.2 and 3 herein/ appellants therein to the learned

trial Court concerned, with a direction to the latter to hold further enquiry

and to proceed with the matter, as per law.

6. Fetching grievance from the impugned order dated 12.02.2018,

the petitioners have now accessed this Court, through the instant petition,

for redressal of their grievance.

SUBMISSIONS OF THE LEARNED SENIOR COUNSEL FOR THE

PETITIONERS

7. The learned senior counsel representing the petitioners has

argued that the affidavit, which was filed as preliminary evidence in support

of the complaint (supra) and which is alleged to be false, was in fact

furnished by the petitioner No.2 after collecting material in methodical

manner. To substantiate his above made argument, and, to submit that the

details enumerated in the complaint/affidavit (supra) tally with the

information furnished by the accused firm, he has drawn attention of this

Court towards Annexure P-7, which encloses the list of Directors of the

accused firm, as provided by its the then Company Secretary, and wherein,

the designation of the respondents No.2 and 3 has been recited as Directors.

In the above regard, he has further placed reliance upon Annexure P-8,

which is a 'Due Diligence Certificate', to argue that even the Manager

concerned of the petitioner-Bank had obtained confirmation from an

overseas bank, through exchange of information, regarding the details of

Directors of the accused firm. Consequently, he argues that, in view of what

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had surged forth in the documents (supra) qua designation of the

respondents No.2 and 3, they have rightly been arrayed as accused in the

complaint (supra) along with other Directors and authorized signatory of the

accused firm, who are not a party herein before this Court.

8. The learned senior counsel for the petitioners has, on the

bedrock of the above made arguments, submitted that neither the petitioners

have furnished any false evidence, as alleged, nor there was any intentional

arraignment of the respondents No.2 and 3, rather the respondents

concerned have rightly and in a bona fide manner been arrayed as accused

in the complaint (supra).

9. Concluding his arguments, the learned senior counsel for the

petitioners has argued that prosecution under Section 340 of the Cr.P.C. has

to be resorted to only in specific circumstances and in cases where (i)

perjury appears to be deliberate and conscious; (ii) conviction is likely; (iii)

launching of prosecution is expedient in the interest of justice. Such

prosecution shall not be launched for vindication of private grievances.

10. In support of his arguments, the learned senior counsel for the

petitioners has placed reliance upon the following judgments, whose

relevant extracts are also extracted hereinafter.

"AIR 1978 SC 290: K.KARUNAKARAN VS. T.V.EACHARA WARRIER PARA 20: The reasons recorded in the principal case, in which a false statement has been made, have a great bearing and indeed action is taken having regard to the overall opinion formed by the Court in the earlier proceedings.

PARA 21: At an enquiry held by the court u/s 340(1) Cr.P.C. irrespective of the result of the main case, the only question is whether a prima facie case is made out which, if unrebutted, may have a reasonable likelihood to establish the specified offence and

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whether it is also expedient in the interest of justice to take such action.

PARA 25: An enquiry when made, u/s 340(1) Cr.P.C., is really in the nature of affording a locus paenitentiae to a person and if at that stage the court chooses to take action, it does not mean that he will not have full and adequate opportunity in due course of the process of justice to establish his innocence.

(2002) 1 SCC 253: PRITISH VS. STATE OF MAHARASHTRA & ORS.

PARA 2: The reference court conducted an inquiry on being told that the documents produced were forged.

PARA 9: Hub of S.340(1) Cr.P.C. is formation of opinion by the court that it is expedient in the interest of justice that an inquiry should be made into an offence which appears to have been committed.

Even where court forms an opinion it is not mandatory that the Court should make a complaint.

Preliminary inquiry contemplated in the sub-section is not for finding whether any person is guilty or not, it is only to decide whether it is expedient in the interest of justice to inquire into the offence which appears to have been committed. PARA 12: The person against whom a 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.

AIR 1971 SC 1367: CHAJOO RAM VS. RADHEY SHYAM:

PARA 7: Prosecution for perjury should be sanctioned where perjury appears to be deliberate and conscious and conviction reasonably probable or likely.

Only when it is considered expedient in the interest of justice to punish the delinquent and not because there is some inaccuracy.

AIR 1978 SC 1753: DR. S.P.KOHLI VS. THE HIGH COURT PARA 16: Prosecution for perjury should be sanctioned where perjury appears to be deliberate and conscious and conviction reasonably probable or likely.

PARA 19: It is desirable and necessary that portions of witnesses'

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statement in regard to which he has perjured himself should be specifically set out so that accused is in a position to furnish an adequate and proper reply thereto and also meet the charge."

SUBMISSIONS OF THE LEARNED COUNSEL FOR THE

11. The arguments advanced by the learned senior counsel for the

petitioners have vociferously been opposed by the learned counsel for the

respondents No.2 and 3. He has argued that, based upon a sweeping and

misleading statement made by the petitioner No.2 on oath that the

respondents No.2 and 3 are Directors of the accused firm and are

responsible for its day-to-day affairs, the learned trial Court concerned, vide

order dated 16.04.2012, erred in summoning them in the complaint (supra),

and as a result whereof, the respondents No.2 and 3 have been facing

rigmarole of trial for the past 12 years.

12. The learned counsel for the respondents No.2 and 3 has further

argued that, despite the petitioners being well cognizant that the respondents

No.2 and 3 do not fall within the ambit of Section 138 read with Section

141 of the N.I. Act, inasmuch as, their designation/status in the accused firm

is "Independent Non-Executive Directors" and they do not have any

pecuniary relationship or control over day-to-day affairs of the accused

firm, yet they were deliberately arrayed as accused in the complaint (supra)

in the capacity of Directors, on false allegations.

13. Lastly, defending the validity of the impugned order dated

12.02.2018, the learned counsel for the respondents No.2 and 3 has argued

that since the petitioners have, with the sole intention to obstruct and affect

the administration of justice, committed perjury, therefore, it is expedient in

the interest of justice to take action against them.

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14. The learned counsel for the respondents No.2 and 3 has, in

support of his arguments, made dependence upon the hereinafter judgments,

whose relevant extracts are also reproduced hereinafter.

            "(1978)     1    SUPREME            COURT      CASES       18:     K.
            KARUNAKARAN VS. T.V. EACHARA WARRIER AND
            ANOTHER

19. Chapter XXVI of the Code of Criminal Procedure 1973 makes provisions as to offences affecting the administration of justice.

Section 340 Criminal Procedure Code, 1973 with which the chapter opens is the equivalent of the old Section 476 Criminal Procedure Code, 1898. The chapter has undergone one significant change with regard to the provision of appeal which was there under the old section 476-B, Criminal Procedure Code, 1973 Under section 476- B, Criminal Procedure Code, 1973 (old) there was a right of appeal from the order of a subordinate court to the superior court to which appeals ordinarily lay from an appealable decree or sentence of such former court. Under Section 476-B (old) there would have ordinarily been a right of appeal against the order of the High Court to this Court. There is, however, a distinct departure from that position under Section 341, Criminal Procedure Code, 1973 (new) with regard to an appeal against the order of a High Court under Section 340 to this Court. An order of the High Court made under sub-section (1) or sub-section (2) of Section 340 is specifically excluded for the purpose of appeal to the superior court under Section 341 (1), Criminal Procedure Code, 1973 (new). This is, therefore, a new restriction in the way of the appellant when he approaches this Court under Article 136 of the Constitution.

20. Whether, suo motu, or on an application by a party under Section 340 (1), Criminal Procedure Code, 1973 a court having been already seized of a matter may be tentatively of opinion that further action against some party or witness may be necessary in the interest of justice. In a proceeding under Section 340 (1), Criminal Procedure Code, 1973 the reasons recorded in the principal case, in which a false statement has been made, have a great bearing and indeed action is taken having regard to the overall opinion formed by the court in the earlier proceedings.

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21. At an enquiry held by the court under Section 340 (1), Criminal Procedure Code, 1973 irrespective of the result of the main case, the only question is whether a prima facie case is made out which, if unrebutted, may have a reasonable likelihood to establish the specified offence and whether it is also expedient in the interest of justice to take such action.

XX XX XX XX

26. It is well settled that this Court under Article 136 of the Constitution would come to the aid of a party when any gross injustice is manifestly committed by a court whose order gives rise to the cause for grievance before this Court. Even when two views are possible in the matter it will not be expedient in the interest of justice to interfere with the order of the High Court unless we are absolutely certain that the two pre-conditions which are necessary for laying a complaint after an enquiry under Section 340 are completely absent. The two pre-conditions are that the materials produced before the High Court make out a prima facie case for a complaint and secondly that it is expedient in the interest of justice to permit the prosecution under Section 193 Indian Penal Code...."

ANALYSIS

15. Before embarking upon the process of gauging the validity of

the impugned order 12.02.2018, and, before penning down any opinion

upon the arguments advanced by the learned counsels for the contesting

litigants, it is deemed imperative to first advert to the legal provisions,

which are of utmost significance for adjudication of the instant lis.

16. Since the gravamen of the application moved by the

respondents No.2 and 3 lies in prosecution of the petitioners under Section

340 of the Cr.P.C., therefore, provisions of this Section are reproduced

hereunder:-

"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

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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 of 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; 1[(b) in any other case, by the presiding officer of the Court or by such officer of the Court as the Court may authorise in writing in this behalf.] (4) In this section, "Court" has the same meaning as in section

195."

17. The keynote in the hereinabove extracted provision is "It is

expedient in the interest of justice that an enquiry should be made".

Therefore, before a Court can start the proceeding contemplated under this

provision of law, against a private individual, it must be clearly told to the

latter that, his prosecution is in the interest of justice. The prosecution for

perjury should only be initiated in those cases, where perjury appears to be

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deliberate and conscious, and, where conviction is reasonably probable or

likely. Merely because there is some inaccuracy in the statement, which

may be innocent or immaterial, the Court may refrain from initiating

prosecution under the ibid provision.

18. The above principle gains strength from a judgment rendered

by the Hon'ble Supreme Court, in case titled as "Chajoo Ram v. Radhey

Shyam and Anr.", AIR 1971 Supreme Court 1367. The relevant extract of

this judgment is reproduced hereinafter:-

"The prosecution for perjury should be sanctioned by courts only in those cases where the perjury appears to be deliberate and conscious and the conviction is reasonably probable or likely. No doubt giving of false evidence and filing false affidavit is an evil which must be effectively curbed with a strong hand but to start prosecution for perjury too readily and too frequently without due care and caution and on inconclusive and doubtful material defeats its very purpose. Prosecution should be ordered when it is considered expedient in the interests of justice to punish the delinquent and not merely because there is some inaccuracy in the statement which may be innocent or immaterial. There must be prima facie case of deliberate falsehood on a matter of substance and the court should be satisfied that there is reasonable foundation for the charge......"

19. On the touchstone of the law (supra), this Court has arrived at a

conclusion that the narrations made in the affidavit, as sworn by the

petitioner No.2 in support of his complaint (supra), and, which resulted in

summoning of the respondents No.2 and 3, are indeed based upon the

information received by the executant from the quarter(s) concerned and he

did not have any personal vendetta against the respondents concerned.

Moreover, neither has it anywhere been the case of the respondents No.2

and 3 that, owing to any individual grievance, the petitioners have

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deliberately and wrongfully arrayed them as accused in the complaint

(supra), nor the record encompasses any material even remotely suggestive

that the petitioner No.2 had, under the garb of performing his official

functions as Chief Manager, any intention to commit perjury or forgery.

20. Moreover, when in paragraph No.3 of the application filed by

the respondents No.2 and 3, thereby seeking prosecution of the petitioners

under Section 340 of the Cr.P.C., it has itself been mentioned that the

management of the Bank rests with the Managing Director & CEO and

supported by Executive Directors, therefore, it can safely be concluded that

even if there was any perjury, the same was neither deliberate, nor with

conscious mind, and as such, launching of prosecution cannot be termed as

expedient in the interest of justice.

21. This Court has also examined the order rendered by the learned

trial Court, thereby declining to prosecute the petitioners under Section 340

of the Cr.P.C. This dismissal order was anchored upon the observations that

provisions of Section 340 of the Cr.P.C. are not meant for individualistic

vendetta, and that, there is nothing on court file to suggest that

administration of justice is affected or any offence is constituted for taking

action under Section 340 of the Cr.P.C. The relevant extract of this

dismissal order is extracted hereinafter:-

".... At this stage, it is also relevant to mention here that it is no more res-integra that provision of Section 340 Cr.P.C. cannot be allowed to be restored for the satisfaction of private vendetta.......this Court is of the view that merely because applicants were not the authorized signatory of accused company is not a ground to presume that false complaints has been filed by respondent No.1. It is not required that every director must be the authorized signatory. Mere submissions in the application cannot

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inclined this Court to grant permission to enquire into the allegations made by the complainant in their complaints. There is nothing on the court file to have affect the administration of justice or to have constituted any offence for taking legal action under Section 340 Cr.P.C...."

22. Insofar as the impugned order is concerned, this Court has

examined the same also, however, does not find any reasons recorded

therein, which could satisfy the prerequisite of Section 340 of the Cr.P.C.

that "how it is expedient, in the interest of justice, to enquire into the

alleged offence", and/or, "how an offence affecting the administration of

justice has been committed", and/or, "how perjury appears to be deliberate

and conscious".

FINAL ORDER

23. For all the reasons (supra), this Court believes that the

impugned order dated 12.02.2018 does not pass the test of legality and

warrants inference. Consequently, the instant petition is allowed, and, the

impugned order (supra) is hereby set aside.