Ajay Vij and Anr. Vs. Mr. Abhishek Dutta - 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.

 NCLAT (2025.02.28) in Ajay Vij and Anr. Vs. Mr. Abhishek Dutta [(2025) ibclaw.in 158 NCLAT, Company Appeal (AT)(Ins) No. 726 & 728 of 2021 with Company Appeal (AT)(Ins) No. 818-819 of 20211] held that;

• But even if it is presumed just for the arguments’ sake that an offence of perjury stands committed, then also the impugned order dated 04.08.2021 r/w impugned order dated 17.05.2021 permitting the Liquidator to file complaint u/s 340 Cr.P.C is not sustainable there being admittedly no finding recoded to the effect “that it is expedient in the interest of justice a complaint should be filed. In the absence of a finding to the above effect which is a sine qua non under S. 340(1)(a) Cr.P.C, the impugned order dated 04.08.2021 is not sustainable in law.

• 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.”

• The court orders prosecution in the larger interest of the administration of justice and not to gratify feelings of personal revenge or vindictiveness or to serve the ends of a private party.

• Notwithstanding anything in the Code of Criminal Procedure, 1973 (2 of 1974), offences under this Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 (18 of 2013).

• Even otherwise, there are no averments qua commission of an offence u/s 68(i)(a) IBC in IA No. 1248/ND/2020 filed by the RP as a matter of record. Moreso, there is no finding in the impugned order dated 17.05.2021 as to how the said offence is attracted in the present case.

Excerpts of the Order;

These appeals are filed against impugned orders dated 17.5.2021 and 4.8.2021 passed by the Ld. Adjudicating Authority, National Company Law Tribunal, New Delhi in IA No.1248/2020 and IA No.3341/2021. The appellant is aggrieved of the fact that per impugned order, the appellants have been held guilty of perjury and have been imposed a fine of Rs.2 lakh on each of the appellant. The Ld. NCLT had also directed the RP to initiate proceedings for perjury against Mr Ajay Vij per para 10 of the impugned order. The impugned order is as under:-

• 9. After hearing the parties and perusing the documents, the conversion of the corporate debtor from a company to LLP is analyzed via a vis the provisions of the Companies Act and Limited Liability Partnership Act, 20008. We find that company has intentionally taken steps to convert the entity of the corporate debtor from the private limited company to LLP.to escape the rigors of insolvency code and to shrug off the liabilities of the creditors of the corporate debtor. As also it is evident that neither at the time of passing of the order nor during CIRP. the LLP partner have come forward for compliance of Section 56 and shown any willingness to accept the liability of the corporate debtor and pay its creditors. Considering that LLP partners were also appearing before the bench and had actively participated while handing over the possession of the units to the lessor which were taken on lease by the corporate debtor The Registrar of Companies in its reply has given the details of the directors of the corporate debtor prior to conversion into LLP as well as the list of designated partners of the LLP. We find Mr. Naveen Gambhir as a common name in both the entities. The chronology of the incidents reveal that the management of the corporate debtor has played a fraud on this bench and is guilty of perjury. Mr. Pankaj Gambhir has acted in the entire design as an active participant It is seen from the records that two insolvency applications were filed against the corporate debtor in mid, 2018 and reply in both the application were filed by Mr. Ajay Vij in October 2018, who is reflected as the director of the private limited company. The document submitted for conversion of LLP, as produced before us, shows the date of submission of Form No.18 to Registrar of Companies as 03.11.2019, which was filed by Mr. Ajay Vij. The said Form No. 18 comprising of clause 15 which reads as under:

• whether any proceeding by or against the company is pending in any court or any other authority

• The answer to this statement was replied in negative by Mr. Ajay Vij on behalf of the corporate debtor. This clearly proves the act of perjury by Mr. Ajay Vij in connivance with all the directors of the corporate debtor. It cannot be believed that other directors which includes Mr. Naveen Gambhir and Mr. Ajay Vij were unaware about the insolvency proceeding against the corporate debtor or were ignorant about the information filed in Form No 18 specifically in clause 15. Moreover, it is found that in the present application Mr.Pankaj Gambhir filed an affidavit being the designated partner of LLP declaring that the units under the possession of corporate debtor which were lease hold units were handed over to the parties as back as in December 2016 and Mr. Pankaj Gambhir was unaware about the proceedings of insolvency pending against the corporate debtor. Whereas the Id. counsel appearing for the LLP before the bench on 18.09.2019 admitted that the lease hold units will be handed over to the parties. which were till then, in possession of the corporate debtor/ alleged LLP and further undertook to hand over the same as recorded in the said order. The order further records the statement of the corresponding unit holder of handing over of the possession of respective units. Mr.Naveem Gambhir is the common person being the director in the company and designated partner in alleged LLP has not come forwards for the explanation before the bench.

• 10. The above facts does not leave any doubt in our mind that the management of the corporate debtor in connivance with the alleged LLP partners have acted to defraud the creditors and to make their claims infructuous. We see strong reason to initiate perjury proceedings against the management of the corporate debtor specifically Mr. Ajay Vij. 1 who has submitted incorrect and wrong information while applying for LLP. to RoC. We direct Resolution Professional to immediately initiate appropriate proceedings for perjury against Mr. Ajay Vij. We fail to understand that without any formal agreement/documents/MOU between the corporate debtor and the proposed LLP with respect to the status of creditors, debtors, rights and liabilities, the conversion of accounts and all other formalities with respect to transfer of share capital, how merely on filling Form No. 18 with Registrar of Companies can change/convert the legal status of an entity into entirely different entity especially when both the entities fall under the governance of different statutes The Registrar of Companies is directed to take a cognizance of such kind of conversion on merely filling a single form in the Form No. 18. along with required fees to convert the entity which will have vast and grave repercussions on the public in general, in absence of any detailed document deciding the rights and liabilities of the parties concerned as well as the third parties who will be affected by such simplicit or conversion.

# 2. Thus the reason for holding the appellant guilty for perjury is two fold (a) the appellants have given wrong information to the ROC in Form No.18 required for converting a company into LLP wherein they had stated no proceedings are pending against the company but whereas an Insolvency petition under Section 9 IBC was pending against the company; and (b) the appellants had filed an affidavit wherein the appellants had deposed the units were handed over to the parties way back in December, 2016 but whereas their learned counsel stated the units will be handed over to the parties.

# 3. It was submitted by the Ld. Counsel of the Appellants that the Ld. NCLT has no power to convict the appellants under Section 68 of the IBC since such conviction can be done only by Ld. Special Court established under the Companies Act.

# 4. We have gone through the record of the Ld. NCLT and we find the Ld. NCLT had found the appellant guilty of perjury and had rather invalidated the conversion of company into LLP and by subsequent impugned order dated 4.8.2021, the liquidator was permitted to file a complaint and to take further steps as are required under the provisions of Section 340 of Cr PC.

# 5. Admittedly the impugned order dated 17.05.2021 has held the appellants guilty of act of perjury only on account of a declaration in Form 18 filed before the ROC (see Page 194 of the Appeal Paper Book). In the said declaration, against point No.15 viz whether any proceedings by or against the company is pending in any court or tribunal or any authority, the answer given by one Mr Ajay Vij, i.e. the appellant No.1 was NO. It is fairly conceded by the learned counsel for the appellant that declaration/Form 18 dated 03.11.2018 was incorrect since by that time i.e. on 25.04.2018 an application under Section 9 IBC stood filed against Corporate Debtor. Further CIRP commenced later on 14.3.2019.

# 6. It is the case of the appellants such wrong answer was inadvertently given by Ajay Vij, a Director of the company while filing declaration/Form 18. It is argued even if it is to be considered as has been intentionally done by one of the directors then also offence of perjury could be attracted only when false declaration touches any material fact. Heard.

# 7. We agree to the submission of the learned counsel for the appellant that Form No.18 was only required to facilitate conversion of the company to LLP, though such declaration filed was not material for such conversion. Further per law the conversion of a company into LLP shall have no effect to the pending proceedings by and against the company since per Section 58(4)(b) of LLP Act, 2008; upon conversion of a company into LLP, all assets, interest, rights, privileges, liabilities, obligation relating to the company and whole of the undertaking of the company stood transferred to the LLP. Clause 6(b) of the 3rd Schedule of LLP Act also supports the same. Even per Section 58(3) read with Clause 8 of third schedule of LLP Act, all proceedings by and against the company pending before any Court, tribunal or other authority can be continued, completed and enforced by or against the LLP.

3 8. Therefore, it is amply clear on conversion to LLP, the Appellants could not have evaded insolvency proceedings, thus the observation made by the Ld. NCLT viz the company has intentionally taken steps to convert the entity of the corporate debtor from private limited company to LLP, to escape the rigors of insolvency code and to shrug off the liabilities of the creditors of the corporate debtor is based on misreading. Thus a wrong declaration in Form 18 allegedly made inadvertently before the ROC cannot be said to be material in the context of conversion from a Company into LLP so as to fall within the definition of perjury u/s 199 IPC. Thus holding the Appellants guilty of an act of perjury deserves to be set aside on this ground alone; and consequential impugned order dated 04.08.2021 permitting the Liquidator to file complaint u/s 340 Cr.P.C also deserves to be set aside.

# 9. Admittedly such declaration in Form 18 was never made/filed before the Ld. NCLT but before the ROC; therefore, it was not for the Ld. NCLT/Liquidator to move u/s 195 Cr.P.C for initiating action on such account.

# 10. Secondly an observation in the impugned order dated 17.05.2021 viz there exists a discrepancy in affidavit of Mr. Pankaj Gambhir/Appellant No. 1 in CA(AT)(Ins.) No. 818 & 819/2021) wherein he deposed ‘lease hold units were handed over to the parties as back as in December 2016’, and statement of their counsel made before the bench on 18.09.2019 wherein the averment ‘lease hold units will be handed over to the parties’, would indicate those are conflicting statements is also factually incorrect on a plain reading of para 5 of the affidavit dated 16.07.2019 where the deponent Mr. Pankaj Gambhir did not use the expression ‘handed over’ but all that he had deposed was the Company had ‘already vacated’ the said premises in December, 2016. Thus, there was no conflict between these two expressions ‘already vacated’ and ‘will be handed over’ used respectively by Mr. Pankaj Gambhir (designated partner of LLP) in his affidavit and the counsel appearing for the LLP before the Ld. NCLT. It is alleged some times a tenant vacates the premises but on actual possession is not taken over by landlord, may be because of pending dispute.. That apart, this statement has no material bearing on the subject of conversion of the Company into LLP because of S. 58(4)(b) of the LLP Act. Thus the impugned orders dated 17.05.2021 and 04.08.2021 deserve to be set aside on this ground too.

# 11. Thus we are of the considered view no act of perjury has been committed by the Appellants. But even if it is presumed just for the arguments’ sake that an offence of perjury stands committed, then also the impugned order dated 04.08.2021 r/w impugned order dated 17.05.2021 permitting the Liquidator to file complaint u/s 340 Cr.P.C is not sustainable there being admittedly no finding recoded to the effect “that it is expedient in the interest of justice a complaint should be filed. In the absence of a finding to the above effect which is a sine qua non under S. 340(1)(a) Cr.P.C, the impugned order dated 04.08.2021 is not sustainable in law.

# 12. The Hon’ble Supreme Court in Chajoo Ram v. Radhey Shyam (1971) 1 SCC 774 has held:

• “7. .… 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.”

# 13. Further the Hon’ble Supreme Court in Santokh Singh v. Izhar Hussain (1973) 2 SCC 406 held:

• “11. ….. Every incorrect or false statement does not make it incumbent on the court to order prosecution. The court has to exercise judicial discretion in the light of all the relevant circumstances when it determines the question of expediency. The court orders prosecution in the larger interest of the administration of justice and not to gratify feelings of personal revenge or vindictiveness or to serve the ends of a private party. Too frequent prosecutions for such offences tend to defeat its very object. It is only in glaring cases of deliberate falsehood where conviction is highly likely, that the court should direct prosecution.”

# 14. The above propositions of law were also reiterated by the Hon’ble Supreme Court in Narendra Kumar Srivastava v. State of Bihar (2019) 3 SCC 318. Further these judgements have also been relied upon by this Appellate Tribunal in its judgment dated 18.12.2020 titled M/s KVR Industries Pvt. Ltd. v. M/s PP Bafna Ventures Pvt. Ltd.

3 15. Further we are also of the view Ld. NCLT has no jurisdiction to convict a person for an offence under Section 68 under Chapter VII of Part II IBC in view of the express provision contained in S. 236(1) IBC to the following effect:

• “Notwithstanding anything in the Code of Criminal Procedure, 1973 (2 of 1974), offences under this Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 (18 of 2013).”

Further S. 236(2) read:

• “No Court shall take cognizance of any offence punishable under this Act, save on a complaint made by the Board or the Central Government or any person authorized by the Central Government in this behalf.”

# 16. The Principal Bench of this Tribunal in its judgment dated 04.02.2022 titled as Writers Business Services Pvt. Ltd. & Ors. v. Ashutosh Agrawala, RP for Cox & Kings Ltd. has categorically held an act which is termed as offence within specific provisions of Chapter VII of Part II IBC could not be dealt with even indirectly by the Adjudicating Authority by imposing a fine. Thus the impugned order dated 17.05.2021 convicting the Appellants u/s 68(i)(a) IBC and imposing a fine of Rs. 2 lac on each Appellant deserves to be set aside on this ground itself. Even otherwise, there are no averments qua commission of an offence u/s 68(i)(a) IBC in IA No. 1248/ND/2020 filed by the RP as a matter of record. Moreso, there is no finding in the impugned order dated 17.05.2021 as to how the said offence is attracted in the present case.

# 17. We have also examined the notification dated 27.7.2016 as under:-

• S.O. 2554(E).-In exercise of the powers conferred by sub-section (1) of section 435 of the Companies Act, 2013 (18 of 2013), the Central Government hereby, with the concurrence of the Chief Justice of the High Court of Delhi, designates the following Court as Special Court for the purposes of providing speedy trial of offences punishable under the Companies Act, 2013 with imprisonment of two years or more under the Companies Act, 2013, namely:-

• 
  

Sl. No	Existing Court	Jurisdiction as Special Court
(1)	(2)	(3)
	Court of Additional Sessions Judge-03, South-West District, Dwarka	National Capital Territory of Delhi

• 2.The aforesaid Court mentioned in column number (2) shall exercise the jurisdiction as Special Court in respect of jurisdiction mentioned in column number (3).

# 18. Thus there exists a Special Court per Section 236 of the Companies Act, 2013, hence the Ld. NCLT has no power to convict the appellants and impose a fine and as such the conviction and the fine imposed by Ld. Adjudicating Authority is hereby set aside.

# 19. The appeals are thus allowed. Pending applications are also disposed of.

--------------------------------------------------------

Anil Kumar Ojha Vs. CS C Ramasubramaniam - That the Adjudicating Authority has a power to act on the terms of Section 340 of Cr. P. C. which has to be read in harmony to the Provisions Section 195 of the Code of Criminal Procedure and thus the Court can hold a preliminary enquiry for the purpose of drawing an opinion as to whether an act of forgery which has been complaint was at all committed.

  NCLAT (2024.04.24) in Anil Kumar Ojha Vs. CS C Ramasubramaniam [Company Appeal (AT) (CH) (Ins) No.328/2023] held that;

• That the Adjudicating Authority has a power to act on the terms of Section 340 of Cr. P. C. which has to be read in harmony to the Provisions Section 195 of the Code of Criminal Procedure and thus the Court can hold a preliminary enquiry for the purpose of drawing an opinion as to whether an act of forgery which has been complaint was at all committed. 

Excerpts of the order;.

# 1. Very short issue which is involved consideration, herein before this Tribunal, is regards maintainability of proceedings as drawn under Section 340 of Cr.P.C., before the learned Adjudicating Authority. The Appellant herein being aggrieved against the rejection of IA/1126/2023, had preferred this Company Appeal. By virtue of the Impugned Order dated 24.07.2023, as a consequence of the impugned decision rendered by the learned Adjudicating Authority, on the aforesaid Interlocutory Application, on 24th July 2023, the National Company Law Tribunal, has taken a view that IA as preferred by the Appellant under Section 340(1) Cr. P. C. before it, would not be sustainable before the Tribunal by drawing an opinion, that the Tribunal since being a Special Court, as per the Provisions contained under Section 236(1) of Insolvency and Bankruptcy Code, hence, the same would lack the power to draw the proceedings of Contempt under Section 340 of the Code of Criminal Procedure.

 

# 2. Heard the Appellant in person and the Learned Counsel for the Respondent, after having perused the Impugned Judgment dated 24.07.2023 under challenge, and the entire records.

 

# 3. The contention of the Appellant in person, is that the view expressed by the Learned Tribunal while limiting its power of not to conduct a trial or enquiry, regards the penalties as per the Powers vested, in it is limited to under Chapter VII of IBC of 2016, would absolutely be contrary to the general principles of law as applicable in the context of the Provisions contained under Section 340 of the Code of Criminal Procedure. The view expressed, that as under Section 236(1) of IBC of 2016, the offences could be only tried by the Special Court, which would be the offences falling to be under Chapter 20 of the Companies Act, and not otherwise, is not acceptable by the Appellant.

 

4. The simple reason is that and as it has been argued by the Appellant in person, that on the basis of the provisions contained under sub section 3 of Section 195 of the Code of Criminal Procedure, it deals with as to what the term ‘Court’ would mean in a legal corollary. The court under Sub Section 3 of Section 195 of Cr.P.C., would be inclusive of the Tribunals as are constituted under the Central or the State Act, and since the Tribunal are declared by the Act to be the adjudicating body and a creation of Statute, which are for the purposes of adjudicating a right as per Law. It is contended by the Appellant that under Sub Section 4 of Section 424 of the Companies Act, that the NCLT and NCLAT are the “Courts” since, they are holding a Judicial Proceedings within the meaning of Section 193 of I.P.C. and thus in the light of the provisions contained under Section 196 of Indian Penal Code. The NCLT and the NCLAT will be deemed to be a Civil Court for the purposes of Section 195 under Chapter 26 of the Cr.P.C., which contains provisions under Section 340 of the Cr.P.C. which will grant an adjudicatory power to the NCLT itself to deal with the Application under Section 340 of Cr.P.C. The logic behind it is that, if the provisions contained under Section 340 of Cr.P.C, which is the general Criminal Procedure is taken into consideration, the legislature has used the word, that the Proceedings under Section 340 of Cr.P.C., in the cases as included under Section 195 can be drawn by the “Court itself” the question with regards to the act complained is, whether act would be covered under Section 195 and has been committed. That is why the Legislature in its wisdom has used the word “any Court”. The language used under the procedural law contained under the code of Criminal Procedure would hereby include the NCLT also where the proceedings under Section 340 of Cr.P.C. could have been drawn.

 

# 5. The Powers under Section 340 of the Code of Criminal Procedure is considered for drawing the proceedings for the cases which would be falling under Section 195. If the language used under Section 340 of the Code of Criminal Procedure is considered, it uses the word `Court’, meaning thereby, it means that the `Court’ before which, the offences of non-compliance of order, falling within the ambit of Section 195, is being committed, can take cognisance by the same Court for the purposes of drawing of the Contempt Proceedings on a complaint to be made by the person, before that Court itself.

 

# 6. Though Section 340 refers too, to be made applicable in relation to the cases which would be falling under Section 195 of Cr.P.C. but, if Section 195 of Code of Criminal Procedure, is taken into consideration which deals with certainty, it provides so that the power to punish a person for commission of offences, would be as contained in it.

 

# 7. Provisions of Section 195 uses the word `Court’ and if it is read in the context of the cognisance of the offences by the Court of Session, it is contemplated to exercise its powers under Section 193 of the Code of Criminal Procedure. Reference here would made is to that of a Court of Original Jurisdiction, but unfortunately, the Code of Criminal Procedure does not contain the definition of ‘Court’ the interpretation as to what would be the legal connotation for the ‘Court’ would mean, has have to be drawn from the powers which Court exercises, as it vested to it under the governing Statute.

 

# 8. In the instant case, if we read Section 425 of the Company Act, it empowers the Tribunal and the Appellate Tribunal, to have the same Jurisdiction, in context of Contempt of themselves, as the High Court exercises its powers, under the Contempt of Courts Act, 1971.

 

# 9. To bring the Tribunals created under the Companies Act, to fall within the ambit of definition of Court, under Section 340 of the Code of Criminal Procedure, is to be read in reference provisions contained under Section 424 of the Companies Act, which becomes inevitable.

 

# 10. Section 424 of the Companies Act, provides for that the Tribunals as created under it, would be principally governed by the Procedures, laid down by the Code of Civil Procedure, 1908 and it provides too for that it should have the same powers for the purposes of discharging their functions under the Companies Act, and the powers thus to be discharged by the Tribunals created under Companies Act, would be the same powers as are vested in a Civil Court, under the Code of Civil Procedure, meaning thereby Section 424 is read in its whole and particularly in relation to Sub Section 4 of Section 424, it had held that the Tribunal(s) or the Appellate Tribunal(s) as constituted therein, would be the ‘Courts’ which have a right of adjudication and it would be deemed to be a “judicial proceedings”, within Section 193 and Section 228 of and thus for the purposes of Section 196 of the Indian Penal Code.

 

# 11. Sub Section 4 of Section 424 of the Companies Act, is extracted hereunder;

• ``(4) 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 (45 of 1860), 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 (2 of 1974)’’.

# 12. If Sub Section 4 of Section 424 of the Companies Act, is taken into consideration, it has a blend, to satisfy the need of Section 340 of Code of Criminal Procedure, drawing the proceedings of Contempt, under the Code of Criminal Procedure, which is exclusively vested with the Courts holding Judicial Proceedings. The question which was debated is to that, whether, the Tribunal(s) or the Appellate Tribunal(s), created under the Companies Act, which holds a “judicial proceedings”, will be deemed to be a Civil Court for the purposes of Section 195 of Chapter 26 of the Code of Criminal Procedure and thus would be the “judicial proceedings” which are held by the Tribunal(s) and the Appellate Tribunal(s), shall be deemed to be a Civil Court for the purposes of Section 195. If that be so, the interpretation to Section 435 as it has been given by the Impugned Order, about limiting the powers for the purposes of exercising its Jurisdiction under Section 340 of Code of Criminal Procedure in the context of being the Special Courts, within its ambit, it would be limited to the ambit of exercise of powers, as contained therein, thus it would be a too narrow determination of the words “Court” and “Judicial Proceedings” made by the Impugned Order.

 

# 13. We are of the view that when Section 340 confers enough power upon the Court to determine the Contempt Proceedings, as per Section 195 and particularly when they are the judicial proceedings, held by the Tribunal(s) or the Appellate Tribunal(s) or by the Civil Courts as determined by Sub Section 4 of Section 424 of the Companies Act, the Tribunal(s) and the Appellate Tribunal(s), hence would be a Civil Court, which are holding the judicial proceedings and thus an IA preferred, under Section 340, before the Adjudicating Authority, would be maintainable.

 

# # 14. This Court holds that judicial proceedings in the context of its comparative analysis as to whether judicial proceedings could be dealt to be a proceeding held before the Court, has been an issue which has been widely dealt with in the matter of ``Laljil Haridas Vs. State of Maharashtra’’, where though it was an issue decided in the context of Income Tax Act, as dealt with, as to what interpretation could be given to the “judicial proceedings”, and upto to what extent the Authorities of the Courts holding the judicial proceedings are required to be dealt to be a Judicial Court to bring it within the ambit of Section 340 of the Code of Criminal Procedure, the same basic principles would be applicable in the instant case too since legally being same ratio, and thus, in the light of the provisions contained under Sub Section 4 of Section 424, since the Tribunal(s) and the Appellate Tribunal(s), being a Civil Court holding a judicial proceedings they will be falling well within the ambit of Section 340 of the Code of Criminal Procedure for the purposes of dealing with the proceedings falling within the ambit of Section 195 of Code of Criminal Procedure.

 

# 15. The Appellant in person submits that in view of the pronouncement of the Hon’ble Apex Court wherein it has observed in the matter of “Laljil Haridas vs State of Maharashtra”, that the Judicial Proceedings as per Section 193 of the IPC, would include any proceedings before any court as included and covered under Section 195(1)(b) of the Code of Criminal Procedure. The relevant paragraph deals with the aforesaid aspect as to what would be the parameters to determine “court”, falling within the ambit of section 195 for the purpose of drawing the proceedings under Section 340 Cr. P. C. Relevant Paragraph is extracted hereunder:-

• ``The expression "judicial proceeding" is not defined in the Indian Penal Code, but we have the definition of the said expression under s., 4(m) of the Cr. Procedure Code. Section 4(m) which provides that "judicial proceeding" includes any proceeding in the course of which evidence is or may be legally taken on oath. The expression "Court" is not defined either by the Cr. P.C. or the I.P.C. though ’Court of Justice’ is defined by s. 20 of the latter Code as denoting a Judge who is empowered by law to act judicially alone, or a body of Judges which is empowered by law to act judicially as a body, when such Judge or body of Judges is acting judicially. Section 3 of the Evidence Act defines a "Court" as including all Judges and Magistrates, and all persons except the Arbitrators, who are legally authorised to take evidence. Prima facie, there is some force in the conten-tion that it would not be reasonable to predicate about every, judicial proceeding that it is a proceeding before a Court, and so, it is open to the appellant to urge that though the proceeding before an Income-tax Officer may be a judicial proceeding under s. 193, I.P.C., it would not follow that the said judicial proceeding is a proceeding in a Court as required by s.  195(1)(b), Cr. P.C. It is somewhat remarkable that though section 193, I.P.C., refers to a judicial proceeding, section 195, Cr. P.C. refers to a proceeding in any Court; it does not say a judicial proceeding in any Court. Mr. Desai contends that reading section 193 I.P.C. and s. 195(1)(b) Cr. P.C., together. it would not be unreasonable to hold that proceedings which are judicial under the former, should be taken to be proceedings in any Court under the latter. The whole basis of providing for a higher sentence in regard to offences committed at any stage of a judicial proceeding appears to be that the legislature took the view that the said offences were more serious in character, and so, it distinguished the said offences from similar offences committed at any stage of other proceedings. The argument is that while providing for a higher sentence in respect of this more serious class of offences committed at any stage of judicial proceedings, the legislature intended that there should be a safeguard in respect of complaint as regards the said offences and that safeguard is provided by s. 195(1)(b), Cr.P.C. In other words, an offence which is treated as more serious by the first paragraph of s. 193, I.P.C. because it is an offence committed during the course of a judicial proceeding should be held to be an offence committed in any proceeding in any Court for the purpose of s. 195(1)(b) Cr.P.C. On this argument, it is necessary to consider whether the Income-tax Officer is a Court or not, for, in substance, the contention is that as soon as s. 37(4) of the Act was enacted, the proceedings before an Income-tax Officer became judicial proceedings for the purpose of s. 193, I.P.C. and since they are classed under the first paragraph of the said section, they attract the protection of s. 195(1)(b), Cr.P.C. In our opinion, there is considerable force in this argument, and, on the whole. we are inclined to prefer the construction suggested by Mr. Desai to that pressed before us by the learned Additional Solicitor-General. It is true, the Additional Solicitor-General has mainly relied upon the relevant provisions of several statutes in support of his construction and in so far as it appears that certain provisions in some of the said statutes in terms extend the application of s. 195, Cr. P.C. to the proceedings to which they relate, the argument does receive support, but we hesitate to hold that the omission to refer to s. 195(1) (b), Cr. P.C. in s. 37(4) of the Act necessarily means that the intention of the legislature in enacting s. 37(4) was merely and solely to provide for a higher sentence in regard to the offence under s. 193, I.P.C. if it was committed in proceedings before the Income-tax Officer. It is plain that if the argument of the Additional Solicitor-General is accepted, the result would be that a complaint like the present can be made by any person and if the offence alleged is proved, the accused would be liable to receive hi-her penalty awardable under the first paragraph of s. 193, I.P.C. without the safeguard correspondingly provided by s. 195(1)(b), Cr. P.C. Could it have been the intention of the legislature in making the offence committed during the course of a proceeding before an Income-tax Officer more serious without affording a corresponding safeguard in respect of the complaints which -can be made in that behalf? We are inclined to hold that the answer to this question must be in the negative. That is why after careful consideration. we have come to the conclusion that the view taken by the Bombay High Court should be upheld though for different reasons. Section 37(4), of the Act makes the proceedings before the Income-tax Officer judicial proceedings under s. 193 I.P.C. and these judicial proceedings must be treated as proceedings in any Court for the purpose of s. 195(1)(b), Cr. P.C.’’

# 16. After having gone through the ratio laid down there and coupled with the decision taken by the NCLAT on 18th December 2020 in the matters of “KVR Industries Pvt. Ltd. vs M/s. P.P. Bafna Ventures Pvt. Ltd.” it has been held in para 17 (extracted hereunder) that the Adjudicating Authority has a power to act on the terms of Section 340 of Cr. P. C. which has to be read in harmony to the Provisions Section 195 of the Code of Criminal Procedure and thus the Court can hold a preliminary enquiry for the purpose of drawing an opinion as to whether an act of forgery which has been complaint was at all committed. The relevant paragraph of the Judgment rendered in the matters of KVR Industries Pvt. Ltd. vs M/s. P.P. Bafna Ventures Pvt. Ltd. As extracted above deals with this aspect:-

• “Section 195(3) of Cr. P. C. referred above shows that the term “Court” used in the Section includes the Tribunal constituted by or under Central, Provincial or State Act if declared by that Act to be a Court for the purposes of this Section. We have already seen Section 424 which in Sub-Section 4 has included the National Company Law Tribunal and National Company Law Appellate Tribunal under the Companies Act and proceedings before these Tribunals have to be deemed to the Judicial Proceedings within the meaning of Section 193 and 228 and for the purposes of Section 196 of the Indian Penal Code and the NCLT this Tribunal shall be deemed to be Civil Court for the purposes of Section 195 and Chapter XXVI of Cr.P.C. Chapter XXVI contains Section 340 of Cr.P.C. As per Section 5(1) of IBC the ‘Adjudicating Authority’ for the purposes of Part-II of IBC, means National Company Law Tribunal constituted under Section 408 of the Companies Act, 2013. Under Section 61 of IBC any person aggrieved by the order of the Adjudicating Authority may prefer an Appeal to National Company Law Appellate Tribunal. These Provisions make it clear that Adjudicating Authority was not right in its observations that it did not have jurisdiction to order Prosecution. In our view in appropriate case, the Adjudicating Authority has powers to act in terms of Section 340 of Cr. P. C. read with Section 195 of Cr. P. C. Under Section 340 of Cr. P. C. the Adjudicating Authority can hold preliminary inquiry if it is “of opinion that it is expedient in the Interest of Justice that an inquiry should be made” into the any offence referred 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, i.e., Adjudicating Authority, here.’’

# 17. In view of the aforesaid there cannot be any doubt that as far as the NCLT is concerned, since being the creation of a Statute and having the status of being a Court and having an adjudicatory power, they will very well fall to be within the ambit of definition of “Court” having the “judicial power”, to adjudicate upon rights and since being a court under Law would certainly also have a power to entertain/consider an application preferred under Section 340 of the Criminal Procedure Code exclusively on its own merit by holding enquiry limited for the purposes of allegations contained in Section 340 Application. 

 

# 18. For the aforesaid reason, since having held that NCLT being a Tribunal and an Adjudicating Body will be Court under Law, it will be open to it to exercise power under Section 340 of Cr.P.C. the view drawn by the Impugned Order, that the penalties which could be imposed by Tribunal since are covered under Chapter VII of IBC Code, could be only be limited to the ambit of exercise of powers by the Tribunal. It means that the Tribunal has confined its exercise of powers for the purposes of dealing with the offences and penalties in the context of its limitation prescribed under Section 236 without venturing into the aspect as to whether the NCLT which happens to be a Tribunal and since it is a court and is having an adjudicatory right and is a “Court” under Law, as it has been observed in the aforesaid judgments, the excerpts of which it had been extracted above. Owing to the aforesaid reasons, we are of the opinion that the rejection of Application under Section 340(1) of Cr. P. C. by the Adjudicating Authority, holding it to be non-sustainable is contrary to the law laid down by the Hon’ble Apex Court, the Judgment rendered by the NCLAT, as referred above.

 

# 19. As a result, thereto, the Company Appeal (AT)(CH)(Ins) No.328 of 2023 would stand allowed and the Impugned Order dated 24.07.2023 would hereby stand quashed. The matter would be remitted back to the NCLT Bench-1, Chennai to deal with the Application of the Appellant in person on merits as preferred under Section 340(1) exclusively in accordance with law, based on the respective contentions raised by the parties.

-------------------------------------------