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2020 (12) TMI 759 - AT - Insolvency and BankruptcyPrayer to initiate criminal proceedings against Mr. Praful Prakash Bafna under Section 340 read with Section 195 of Cr. P.C. and Section 193 of the Penal Code - Forged and fabricated signature - Appellant submitted that the Interlocutory Applications were filed allegedly under the signature of Mr. Praful Kumar Bafna for the Financial Creditor and the Corporate Debtor found that the signatures were forged and fabricated - HELD THAT - The Appellant/Corporate Debtor has not shown us that the Financial Creditor would have any advantage or benefit of putting false signatures. The prayer of I.A. No 51 of 2020 (The Appeal Page 118) claims that the I.A. Nos. 41 and 42 of 2020 are not signed by the authorized signatory Mr. Praful Prakash Bafna and prayer is to initiate criminal proceedings against Mr. Praful Prakash Bafna under Section 340 read with Section 195 of Cr. P.C. and Section 193 of the Penal Code. If Mr. Praful Prakash Bafna has not signed his prosecution is being sought. The Corporate Debtor appears to have bulldozed when without asking the Adjudicating Authority to pick and send the admitted and disputed signatures for report of Handwriting Expert, on its own it sent documents which were in its possession and then brandished the said Report filing I.A. No. 62 of 2020 asking the Adjudicating Authority to take it on record. What the conclusion of that Report can be seen from Paragraph 8 of I.A. No. 62 of 2020 (Annexure P8 Page 141 at 144). The Corporate Debtor claimed that the Report dated 2nd March, 2020 conclusively found that the signature of Mr. Praful Prakash Bafna in I.A. Nos. 41 and 42 of 2020 were not naturally executed but they must have traced/transplanted/copy-pasted . When the admitted and disputed signatures were not sent through the Adjudicating Authority, and Corporate Debtor sent copies of documents it had, such report could naturally be expected. Copy of the Report has not been placed before us. Even without going into the merit whether or not, the signatures are matching, the Appellant has not shown that the Financial Creditor or Mr. Praful Prakash Bafna the authorized Signatory had anything to gain by authorized signatory not signing. The contents of the I.As were false is also not the case. The Appellant/Corporate Debtor has not prima facie shown any intention or mensrea on the part of the Financial Creditor in this regard - No prima facie material is shown by Corporate Debtor that by Praful Bafna himself not signing, the Adjudicating Authority would entertain an erroneous opinion touching any point material to the result of the proceeding. (This is not to be taken as any finding whether or not he signed. We are only seeking material for opinion as required under Section 340 of Cr.P.C.) In the facts of the matter it does not appear to us that it is expedient in the Interest of Justice that an inquiry should be made under Section 340 of Cr. P.C. No such case was made out before the Adjudicating Authority and the Appellant has not convinced us that Interest of Justice required an inquiry to be held and so the order of Adjudicating Authority should be interfered with. The Appellant is right in claiming that the Adjudicating Authority could not have directed the Appellant to approach appropriate forum for redressal and that on this count it had jurisdiction under Section 340 of Cr. P.C. However Appellant fails to convince us that facts and circumstance of the matter required Adjudication Authority to form opinion that it is expedient in the interest of justice that an inquiry should be made into alleged offence. It appears to us that the observations made by the Adjudicating Authority regarding jurisdiction may have to be modified. The Order of the Adjudicating Authority, as not pressed, is maintained - Appeal disposed off.
Issues Involved:
1. Whether the Adjudicating Authority erred in suo motu restoring CP/204/2019. 2. Whether the Adjudicating Authority should have initiated criminal proceedings under Section 340 of Cr.P.C. read with Section 195(1)(b)(i) of Cr.P.C. and Section 193 of IPC for alleged forgery and perjury. 3. Whether the Adjudicating Authority's direction to approach an appropriate forum for redressal was valid. Detailed Analysis: 1. Suo Motu Restoration of CP/204/2019: The Financial Creditor filed CP/204/2019 under Section 7 of the Insolvency and Bankruptcy Code (IBC) seeking Corporate Insolvency Resolution Process (CIRP) due to a default in payment of a financial debt. Another petition by an Operational Creditor, M/s. Eshwar Enterprises, was admitted, leading to the disposal of CP/204/2019. Subsequently, M/s. Eshwar Enterprises settled out of court, and their petition was withdrawn. The Financial Creditor then filed I.A. Nos. 41 and 42 of 2020 for restoration of CP/204/2019. The Adjudicating Authority accepted the memo filed by the Financial Creditor, dismissed I.A. Nos. 41 and 42 of 2020 as not pressed, and suo motu restored CP/204/2019. The Tribunal found this action appropriate to cut short delays caused by the disputes raised by the Corporate Debtor, maintaining that the Financial Creditor had a right to get its application decided on merits. 2. Initiation of Criminal Proceedings: The Corporate Debtor alleged that the signatures on I.A. Nos. 41 and 42 of 2020 were forged and sought criminal proceedings against Mr. Praful Prakash Bafna under Section 340 read with Section 195(1)(b)(i) of Cr.P.C. and Section 193 of IPC. The Adjudicating Authority observed that it could not order prosecution and that such matters fall within the jurisdiction of a Criminal Court. However, the Tribunal clarified that under Section 424 of the Companies Act, 2013, and Section 340 of Cr.P.C., the Adjudicating Authority does have the jurisdiction to order prosecution in appropriate cases. The Tribunal found that the Corporate Debtor failed to show any intention or mens rea on the part of the Financial Creditor and that the allegations of forgery did not justify initiating criminal proceedings. Therefore, the Tribunal did not find it expedient in the interest of justice to hold a preliminary inquiry under Section 340 of Cr.P.C. 3. Direction to Approach Appropriate Forum: The Adjudicating Authority directed the Corporate Debtor to approach an appropriate forum for redressal regarding the allegations of forgery and perjury. The Tribunal found that this direction was incorrect as the Adjudicating Authority itself has the jurisdiction under Section 340 of Cr.P.C. to deal with such matters. However, the Tribunal maintained that no prima facie case was made out by the Corporate Debtor to warrant a preliminary inquiry or criminal proceedings. Conclusion: The Tribunal upheld the Adjudicating Authority's decision to dismiss I.A. Nos. 41 and 42 of 2020 as not pressed and to restore CP/204/2019. It set aside the direction to approach an appropriate forum for redressal and disposed of I.A. Nos. 51 and 52 of 2020, concluding that it was not expedient in the interest of justice to hold a preliminary inquiry. The Tribunal maintained the disposal of I.A. No. 62 of 2020 and the restoration of CP/204/2019. The appeal was disposed of accordingly, with no costs.
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