LEGAL REMEMBRANCER OF GOVT. OF WEST BENGAL versus HARIDAS MUNDRA

LEGAL REMEMBRANCER OF GOVT. OF WEST BENGAL

933

ll · H;ARIDAS MUNDRA

December 9, 1975

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[P. N. BHAGWATI, P. K. GOSWAMI AND N. L. UNTWALIA, JJ.]

Code of Criminal Procedure, 1898-S'ec. 195(1) (c)-Scope of.

The respondent, a director of a company was charged with offences under ss. 418 and 471 read with ss. 468 and 477A, I.P.C. on the ground that he defraud•ed the company. At the trial, a single Judge of the High Court dis charged the respondent on the view that he had no jurisdiction to proceed with the trial by reason of s. 195(1) (c) of the Cr. P.C., 1898. The full Bench of the High Court affirmed the view of' the single Judge.

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Allowing the appeals to this Court,

HELD : The High Court was entitled to proceed with the trial of the res pondent in respect of offences under s. 471 without any complaint in writing from the company Judge whom the proceeding was pending.

[938A]

(1) Section 195(1 )(c) of the Code of Criminal Procedure provides that no court shall take cognizance of an offence described in s. 463 or p1mishable D under ss. 471, 475 and 476, Indian Penal Code where such offence is alleged to have been committed by a party to any proceeding in any' court in respect of any document produced or given in evidence in such proceeding, except on the complaint in writing of such court or of some other court to which such court is subordinate. The Hi!l'h Court had clearly and indubitably jurisdiction to proceed with the trial against the respondent in respect of offences under ss. 418 and 477 A. On its plain langua~ the inhibition in s. 195 (1) (c) applies only where a person is being tried for an offence under s. 463 or punish.able under ss. 471, 475 or 476. Offences under 418 and s. 477A are plainly not covered by s. 195(1)(c) Cr. P.C.

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(2) In regard to offences under s. 471, I.P.C. it could not be said that the respondent could invoke the applicability of s. 195(1)(c). The offence under s. 471 was committed by the respondent long before the proceeding in the Com pany matter commenced and he became a party to that proceeding, and it was not committed by him in his capacity as such party, i.e. after having become a party to the proceeding. this Court restricted the scope and ambit of s. 195 (l)(c) to cases where the offence was alleged to have been committed by a party to a proceeding after he became such party and not before.

In Pc•tel Laljibhai Somabhai v. The State of Gujarat F

[936H, 937 A-DJ

Raghunath v. State oj U.P., AIR 1973 S.C. 1100 and Mohan Lal v. The

State of Rajasthan, AIR 1974 S.C. 299, referl'.ed to.

In the instant case since the offence charged against the respondent was one alleged to have been commi.tted by him before he became a party to the pro- ceeding in the company matter, s. 195(1)(c) had no application. Secondly, the forged bills had not been produced in evidence before the Company Judge in the ,proceeding before him. The requirement of s. 195(1) (c) that the docu- ment in question should be produced or given in evidence in the proceeding was, therefom, clearly not satisfied and on this ground also s. 195(1)(c) was not attracted in the present case.

[937G, 938A]

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 115

of 1971.

From the judgment and order dated .16th June 1970 of the Cal cutta High Court in Criminal Revision Case No. 650 of 1967 and

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SUPREME COURT REPORTS

(1976] 2 S.C.R.

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Criminal Appeals Nos. 256 and 257 of 1971

Appeals by special leave from the judgme.,1ts and order dated the 27-4-67 and 28-1-71 of the Calcutta High Court in Cases Nos. 2-4/67 and 2/67 Second Crim'nal Sessions 1967 respectively.

D. Mookherjee and M. N. Shroff for the appellants (in all the

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appeals).

V. S. De,sai, A. G. Menseses, J. B. Dadchanji & Co. for respon

dents in Crl. 256-57 /71.

The Judgment of the Conrt was delivered by

BHAGW A TI, J. These three appeals arise out of the same facts and it would, therefore, be convenient to dispose of them by a com mon judgment. The respondent in all the three appeals is one Hari das Mundra. He was at all material times the managing director of S. B. Industrial Development Co. (Pvt.) Ltd., who were the manag ing agents of a company called Richardson & Cruddas Ltd. He and his brother Tulsidas Mundra were also directors of Richardson & Cruddas Ltd. The Life lnsnrance Corporation of India, which was the largest shareholder, filed a petition i'.1 the High Court of Calcutta being Matter No. 357 of 1957 seeking relief against mismanagement of Richardson & Cruddas Ltd. under ss. 397 and 398 of the Compa nies Act, 1956. The respondent and other directors were impleaded as party-respondents to the petition. The High Conrt, on the appli cation of the Life. lnsnra•ace Corporation, made an interim order sometime in December 1957 appointing Sir Dhirendra Mitra as Spe cial Officer to manage the affairs of Richardson & Cruddas Ltd. There was an audit report ~made by M/s Gutgutia & Co., Chartered Accoun tants, in regard to the accounts of Richardson & Cruddas Ltd., but the Special Officer was not satisfied with this report and he, therefore, after obtaining directions from the Compaay Judge, appointed M/s Ferguson & Co., a reputed firm of Chartered Accountants, to examine the accounts of the Company and submit their report. Ferguson & Co. found, as a result of their investigation, that there were two bills in the records of the Company, one for Rs. 4,12,000 dated 20th June, 1955 and the other for Rs. 6,48,900 dated 27th June, 1955 pnrport ing to be issued by a firm called Indian Machine Tools Co. having its address at 7, Mission Row, Calcutta, showing purchase of certain machinery by Richardson & Cruddas Ltd. from Indian Machine Tools Co. and on the strength of these two bills, entries were made in the books of accoU'.1! of Richardson & Cruddas Ltd. on 24th June, 1955 in respect of the first bill and on 29th June, 1955 in respect of the second bill, crediting the amounts of the bills to S. B. Industrial Development Co. (Pvt.) Ltd. and d~biting to the machinery account. On making inquiries, Ferguson & Co. discovered that there was no firm of fodian Machine Tools Co. in existence at 7, Mission Row. received by Calcutta and no machinery was in fact pnrchased or Richardson & Cruddas Ltd. as ~hown in the two bills to supposed have been made out by Indian Machine Tools Co. The o::onclusion reached by Ferguson & Co. as a result of this probe was that Richard-

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LEGAL REMEMBRANCER v. H. MUNDRA (Bhagwati, J.)

935

sum of son & Cruddas Ltd. has been defrauded of an aggregate Rs. 10,60,900 representing the amounts of the two bills and that amount had· been siphoned off to S. B. Industrial Development <;o. (Pvt.) Ltd. by using these two bills, which were forged, as genume and they made a report to this effect to the Special. O~cer. The Spe cial Officer, on receipt of the report, made an application to the Com pany Judge for n direction that he might be authorised to lodge a complaint with the police for further investigation i·,1to these f~cts _set out in the report. The Company Judge gave the nec~ssary d1rect10n and the Special Officer thereupon moved the police for making further investigation in the matter. The Special Police Establishment. started the investigation and ultimately submitted a chargesheet agamst the respondem and Tulsidas Mundra in the Court of the Chief Presidency Ma£!istrate. The respondent and Tulsidas Mundra were committe<.l by ~be Chief Presidence Magistrate to stand their trial before the H,igh Court on charges under ss. 120B, 409, 471 read with s. 468 and s. l 20B and 409 of the Indian 4 Tl A against the respondent and ss. Pei::al Code against Tulsidas Mm1dra. When the trial commenced bei'.Jre the High Court, the Public Prosecutor made two applications on 17th April, 1967, one for amending the charges against the res pondent by dropping ss. l 20B and 409 adding s. 418 and the other for withdrawing the prosecution against Tulsidas Mundra. Both thtst' applicatio"1s were allowed by the High Court, with result that the trial proceeded only against the respondent on charges under ss. 418, 471 read withs. 468 ands. 477A. Mr. Justice Bagchi, be fort· whom the trial proceeded, felt that he had no jurisdiction to pro ceed with the trial in view of s. 195 (1) (c) of the Code of Criminal Procedure, 1898 and he, therefore, requested the Public Prosecutor as well as the counsel for the respondent to argue the point as to the applicability of that section. The learned Judge, after hearing the argume·,1ts advanced before him on both sides, delivered an elaborate judgment holding that by reason of s. 195 (1) ( c) of the Code of Cri minal Procedure, 1898, which applied in the present case, he had no jurisdiction to proceed further with the trial of the respondent and he accordingly discharged the ·respondent by an order dated 27to April, 1967.

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The State being aggrieved by this judgment and order passed by

Mr. Justice Bagchi in the exercise of origi.,ial criminal jurisdiction, pre ferred a revision application against the same on the appellate side of the High Court. The respondent raised a preliminary objection against the maintainability of the revision application on the ground that it was not competent to the High Court to exercise revisional jurisdiction against an order made by a judge of the High Court in a Sessions tr:al. Since this preliminary objection raised a question of some importance it was referred to a full Bench and by a judg ment dated 16th June, 1970, the Full Bench upheld the preliminary ohjection and held that the High Court had no jurisdiction in revision · of some inrnortance. it was referred to a Full Bench and by a judg of the High Court in the exercise of its original criminal jurisdiction and accordingly rejected the revision application.

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SUPREME COURT REPORTS

[1976] 2 s.c.R.

It appears that the State had in the meantime filed an application in the High Court for leave to appeal to this Court against the judg ment and order of Mr. Justice Bagchi. This application was rejected by the learned Judge by <1n order dated 28th January, 1971 on the ground that it was not a judgment or a final order or a sentence falling within Art. 134(1) (c) of the Constitution. The State thereupon pre ferred two petitions in this Court for special leave to appeal, one against the judgmen_t and order of Mr. Justice Bagchi discharging the respo'udent and the other against the judgment and ord~r of !he same learned Judge rejecting the application of the State for leave to appeal to this Court. This Court allowed both the petitions and granted special leave and hence we have Criminal Appeal No. 256 of 1971 directed against the judgment and order of Mr. Justice Bagchi discharg ing the respondent and Criminal Appeal No. 257 of 1971 against the judgment and order of that learned Judge refusing leave to appeal to the State. The State also preferred an application in the High Court for leave to •appeal to this Court against the judgment and order of the Full Bench rejecting the revision application of the State and on 1.his application, leave was granted by the High Court under Art. 134 ( 1) ( c) of the Constitution and that is how Crimiiaal Appeal No. 115 of 1971 is before us.

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We will first deal with Criminal Appeal No. 256 of 1971.

If that criminal appeal is allowed and it is held that s. 195 (1) ( c) has no applicability in the present case, it would become unnecessary to con sider the other two criminal appeals. Now, s. 195(1) (c) provides that no court shall take cognisance of an offence described in s. 463 or pu'aishable under ss. 471, 475 and 476 of the Indian Penal Code where such offence is alleged to have been committed by a party to any proceeding in any court in respect of any document produced or given in evidence in such proceeding, except on the complaint in writing of such court or of some other court to which such court is subordinate. Ob viously, on its plain language, the inhibitation ins. 195(1) (c) applies only where a person is being tried for an offence described i_n s. 463 or punishable under ss. 471, 475 or s. 476. Here, the respondent was being tried for three distinct offences under ss. 418, 471 and 477A. So far as the offences under ss. 418 a'ild 477A are concerned, they were plainly not covered by s. 195(1) (c) and even if s. 195(1) (c) were otherwise applicable, it is difficult to see how the trial of the res pondent for these two offences could be said to be vitiated on the ground that no complaint in writing was made by the Company Judge. The High Court had, therefore clearly and indubitably jurisdiction to proceed with the trial agai'nst the respondent in respect of the offences under ss. 418 and 477A. The question of 1'ack of jurisdic tion in the High Court to proceed with the trial could arise only in regard to the offence under s. 471 which is one of the offences speci fied in s. 195 ( 1) ( c). But in regard to this offence also, we do not see how, on the facts of the present case, the applicability of s. 195 (1) ( c) could be invoked on behalf of the respondent. The offence under s. 471 which was charged against the respondent was that he had used the two forged bills of as

Indi'an Machine Tools Co.

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LEGAL REMEMBRANCER v. H. MUNDRA (Bhagwati, J.)

937

genuine. on 24th and. 29th J4_11e, 1955 by making, on the strength of these two bills, false entries in the books of account of Richardson & Cruddas Ltd. crediting the aggregate sum of Rs. 10,60,900/- in the account of S. B. Industrial Development Co. (Pvt.) Ltd. and debiting it in the machinery account. This offence was alleged to have been committed by the respondent on 24th •and 29th Jme, 1955 long before the proceeding in Matter No. 357 of 1957 com menced and he became a party to that proceeding and it was not committed by him in his capacity as such party, that is, after having become a party to the proceeding. Now, at one time there was sharp cleavage of opinion amo11gst various High Courts in regard to the true interpretation of s. 195(1) (c). Some High Courts held that to attract the prohibition contained ins. 195(l)(c), the offence should be alleged to have been committed by th~ party to the pro- ceeding in his character as such party, which means, after having be come a party to the proceeding, while some others took the view that it was sufficient to attract the applicability of s. 195(1) (c) even if the alleged offence was committed by the party to the proceeding prior to his becomi•ag such party, provided that tlJe document in question was produced or given in evidence in such proceeding. This diver gence of opinion amongst different High Courts was set at rest by this Court by its decision in Patel Lal Gbhai Somabhai v. The State of Gujarat (1) where this Court accepted the former view in preference to the latter. This Court pointed out that the words of s. 195(1) (c) clearly meant that the offence should be alleged to have been committed by the party to the proceeding in his character as such party, that is, after having become a party to the proceeding. Sections 195 ( 1)- · (c), 476 and 476A read together indicated beyond doubt that the legislature could not have intended to extend the prohibition contained ins. 195(1) (c) to the offences mentioned therein when committed by a party to a proceeding prior to his becoming such party. The scope and ambit of s. 195 (1) ( c) was thus restricted by this Court to cases where the offence was alleged to have been committed by a party to a proceeding after he became such party and not before. This view as to the interpretation of s. 195 (1) ( c) was reaffirmed by this Court in Raghunath v. State of U.P.( 2 ) and Mohan Lal v. The State of Rajas than(3). It must inevitably follow, on this view, that since the offence charged against the respondent was one alleged to have byen co]ll mitted by him before he became a party to the proceeding in Matter It may also be No. 357 of 1957, s. 195(1) (c) had no application. noted that neither of the two forged bills of Indian Machine Tools Co. was produced or given: in evide.nce in the proceeding rn Matter No. ~57 of 1957. Both these forged bills formed part of the record of Richardson & Cruddas Ltd. and they were taken possession of by the Special Officer along ":'ith the other record of the Company and nobody produced them or tendered them in evidence before the Com pany Judge in the proceeding j1n Matter No. 357 of 1957. The re quirement of s. 195(1) (c) that the document in question should be

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(1) [1971] Supp. s, C.R. 834.

(2) A. I. R. 1973 S. C. 1100.

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(3) A. I. R. 1974 S. C. 299.

938

SUPREME COURT REPORTS

(1976) 2 S.C.R.

· produced or given in evidence in the proceeding was, therefore, clearly not satisfied and on this ground also, s. 195 (1) (c) was not attracted in the present case. We must, therefore, hold that the High Court was entitled to proceed with the trial of the respondent in respect of the offence under s. 471 without any complaint in writing from the Company Judge before whom the proceeding in Matter No. 357 of 1957 was pending.

We accordingly allow Criminal Appeal No._ 256 of 1971, set aside the judgment of Mr. Justice Bagchi discharging the respondent and remand the case to the City Sessicms Court, to which the original cri minal jurisdiction in Sessions cases has now been transferred, for dis posal according to law. Since the case is a very old one, we would direct the City Sessions Court to take it up for hearing at .an early • In the view taken by us in Criminal Appeal No. 256 of 1971, date. Criminal Appeals Nos. 115 a:ad 257 of 1971 do not survive for con sideration and we accordingly dismiss them.

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Cr.A. 256 of 1971 allowed.

Cr.As. 115 & 257 of 1971 dismissed.

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