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.

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