2018 (8) TMI 1841 - HC - Indian Laws

Whether it was expedient in the interest of justice that an enquiry should be made into an offence which may come within Clause (b) of sub-section 1 of Section 195 of the 1973 Code? - HELD THAT - The decision of the Supreme Court in the case of PRITISH VERSUS. STATE OF MAHARASHTRA ORS. 2001 (11) TMI 1017 - SUPREME COURT lays down in substance that principle of natural justice is not breached in the event the Court does not give opportunity of hearing to a proposed accused person at the time of formation of opinion as contemplated in Section 340 of the 1973 Code. But in an appropriate case in my opinion the Court can choose to hear the accused at the stage of formation of opinion itself and that would not be in violation of the provisions of the Code. The power or jurisdiction of the Court has not been curtailed in Section 340 of the 1973 Code. The authorities cited by Mr. Khosla lay down that the proposed accused has no right to be heard at the initial stage of proceeding under Section 340 of the 1973 Code. But that principle cannot be stretched to mean that Court is barred from hearing them at all at the stage of formation of opinion under the aforesaid provision. I do not find any error apparent on the face of the record or any other ground which would warrant review of my order passed on 18th April, 2017. Petition dismissed.

Issues Involved:
1. Review of an order under Section 340 of the Code of Criminal Procedure, 1973.
2. Bar on hearing the proposed accused persons at the initial stage.
3. Allegations of making false statements in judicial proceedings.
4. Jurisdictional questions regarding transfer of proceedings to the National Company Law Appellate Tribunal.
5. Interpretation of Section 340 of the Code of Criminal Procedure, 1973, and related case law.

Issue-wise Detailed Analysis:

1. Review of an order under Section 340 of the Code of Criminal Procedure, 1973:
The applicant sought a review of an order dated 18th April 2017, where the court decided to hear the persons against whom the applicant wanted to initiate proceedings before forming an opinion on whether an inquiry should be made into an offence under Section 195(1)(b) of the Code of Criminal Procedure, 1973.

2. Bar on hearing the proposed accused persons at the initial stage:
The applicant's counsel argued that there was a bar on hearing the proposed accused persons at the initial stage, relying on four authorities: Pritish Vs. State of Maharashtra, Godrej & Boyce Manufacturing Co (P) Ltd. Vs. Union of India, Madan Lal Sharma Vs. Punjab & Haryana High Court, and Devinder Mohan Zakhmi Vs. Amritsar Improvement Trust. The counsel contended that these authorities supported the proposition that the accused should not be heard before the court forms an opinion on initiating an inquiry.

3. Allegations of making false statements in judicial proceedings:
The applicant alleged that false statements were made in four different pleadings related to a company petition (C.P. No. 33 of 1988) and subsequent applications. The specific false statements included claims about the applicant's shareholding in Turner Morrison Ltd. and the recognition of those shares by the company. The applicant sought an inquiry into offences under various sections of the Indian Penal Code, 1860, and the initiation of contempt proceedings.

4. Jurisdictional questions regarding transfer of proceedings to the National Company Law Appellate Tribunal:
The court noted that the Companies Act 2013 had become operational, and a notification dated 1st June 2016 mandated the transfer of certain proceedings to the National Company Law Appellate Tribunal. The court expressed a prima facie view that applications related to C.P. No. 33 of 1988 should be transferred to the Tribunal. The applicant's counsel argued that the petition under Section 340 of the 1973 Code should stand independently and not be affected by the transfer.

5. Interpretation of Section 340 of the Code of Criminal Procedure, 1973, and related case law:
The court analyzed the ratio of the four authorities cited by the applicant's counsel. It observed that none of these authorities explicitly barred the court from hearing the proposed accused at the initial stage. The court emphasized that while the proposed accused do not have a right to a prior hearing, the court has the discretion to hear them if it deems necessary for forming an opinion. The court distinguished between the pre-summoning inquiry under Section 202 of the 1973 Code and the inquiry under Section 340, noting the civil nature and adversarial features of the latter.

The court concluded that hearing the proposed accused at the stage of forming an opinion under Section 340 does not violate the provisions of the Code. It found no error apparent on the face of the record or any other ground warranting a review of the order dated 18th April 2017. Consequently, the petition for review was dismissed.

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