Akshar Share Services Private Limited v. State

M.H. KADRI, J.

(1) BY filing this group of Misc. Criminal Applications under sec. 482 of the Code of Criminal Procedure, 1973 (code for short), the petitioners. who are original accused Nos. 1 and 2, have prayed to quash the complaints filed by respondent No. 2, before the learned Metropolitan Magistrate, at Ahmedabad, which are registered as Criminal Case Nos. 806 of 1996, 33 of 1996, 34 of 1996, 39 of 1996 and 951 of 1996 for the offences punishable under Secs. 73 and 113 of the Companies Act, and for the offences punishable under Secs. 197, 403, 421, 464, 466, 468. 471 and 114 of the Indian Penal Code. The learned Metropolitan magistrate, after due verification has issued process against the petitioners and other accused persons.

(2) AS common questions of law and facts are involved in this group of Misc. Criminal Applications, they are disposed of by this common judgment. The following table shows the number of Misc. Criminal Applications under which the complaints are filed :-

Sr. No.

Matter filed.

Complaint No.

Offences

1.

Misc.

Cri. Appln. No. 4203/97

805/96

WC : Sees. 197, 403, 421, 464, 468, 466, 471- & 114

2.

Misc.

Cri. Appln. No. 4204/97

34/96

Companies Act : Sees. 73 & 123

3.

Misc.

Cri. Appln. No. 4205/97

39/96

IPC : Sees. 197, 403, 421, 464, 468, 466, 471 & 114

4.

Misc.

Cri. Appln. 4206/97

951/96

IPC : Sees. 197, 403, 464, 468, 466, 471 & 114

5.

Misc.

Cri. Appln. No. 4207/97

806/96

IPC : Sees. 197, 403, 421, 464, 468. 466, 471 & 114

6.

Misc.

Cri. Appln. No. 4208/97

33/96 .

Companies Act : Sees. 73 & 123

(3) AS per the allegations made in the complaint, accused No. 7, i. e. , M. Touch finance Limited, on 9/12/1995, had come out with a public issue of 44,67,600 shares. The complainant, on reading the prospectus, felt that the Company was having good business prospects and therefore, he applied for 20,000 equity shares, each of Rs; 10/ -. and had paid Rs. 2 lakhs. It is the case of the complainant that his application for 20,000 equity shares has been accepted. It is alleged that accused Nos. 8 to 19 are the Directors of accused No. 7-Company and accused No. 1 is Registrars of accused No. 7-Company and accused Nos. 2 to 6 are Directors of accused No. 1-Akshar Share Services Private Limited, who is the Registrar of accused No. 7-Company. It is further alleged that, even though the complainant was allotted 20,000 equity shares, the accused persons, in connivance with the each other, had not sent the delivery of the equity shares, which were allotted to the complainant, nor the complainant was given refund of the amount, which he had paid for the said shares. It is further alleged that the accused persons had issued false certificate and that the shares which were allotted to the complainant have been handed by the company and the Registrars to third parties. It is further alleged that accused nos. 1 and 7 have created false certificate to the effect that shares allotted to the complainants were sent by Registered Post, A. D. , but, in fact, no shares were received by the complainant. It is further alleged that the accused persons have not acted as per the procedure, which was prescribed in the prospectus, which was issued by the Company on 9/12/1995. It is further alleged that the accused persons had forged and created false documents, wherein, entries were made to show that the shares were delivered to the complainant. On the basis of the above allegations. complaints filed by the complainant came to be lodged for the offences stated above. The learned Metropolitan Magistrate, on receipt of the complaints, took cognizance and issued processes, which have been challenged by petitioner No. 1, who is registrar, and petitioner No. 2, who is Director of petitioner No. 1-Company, by filing these Misc. Criminal Applications under Sec. 482 of the Code.

(4) WHEN the above Misc. Criminal Applications were placed for admission hearing before this Court (Coram : N. J. Pandya, J.) on 13/08/1997, following order was passed :

"rule returnable on 27/08/1997. By way of ad-interim relief, prayer in terms of para 11 (B) is granted. Notice as to interim relief also returnable on 27/08/1997;"

In the applications filed under Sec. 482 of the Code, it is averred that the process issued by the learned Metropolitan Magistrate is required to be quashed, inasmuch as the complaint does not disclose any offence. It is further averred that identical complaints filed by eight other investors against accused No. 7-Company were already quashed by this Court in applications filed under Sec. 482 of the Code and the company was directed to furnish duplicate share certificates and. pursuant to that direction, the Company has already furnished duplicate share certificates, for which the complaints were filed. It is averred that. under the circumstances the alleged grievance of the complaint does not survive. Therefore, the complaints deserve to be quashed. It is further averred that identical complaints filed by five investors have already been quashed by this Court by order dated 25/06/1996 and, as identical complaints are quashed by this Court, the present complaints are also required to be quashed. In each application, the petitioners have declared on oath that they have not filed any other petition either in this Court or in any other court in respect of the subject-matter of this petition.

(5) RESPONDENT No. 2, who is original complainant, has filed affidavit-in-reply, inter alia, contending that the criminal cases, which are filed by him were sought to be challenged by accused No. 7, M. Touch Finance Limited and Rajiv R. Kotia (accused No. 10), by filing Misc. Criminal Application No. 1597 of 1996, wherein. this Court (Coram : K. J. Vaidya, J.) on 9/12/1996, has dismissed Misc. Criminal Application No. 1597 of 1996, observing that the complaint, prima facie disclosed prima facie offences alleged against accused Nos. 7 and 10. It is further contended that petitioner No. 2, Amul Maheshbhai Gandhi, had filed Special criminal Application No. 665 of 1996 with one of the prayers that all the complaints filed against him should be quashed. This Court (Coram : N. N. Mathur, J.) has dismissed Special Criminal Application No. 665 of 1996 by its order dated 11/06/1996. It is further contended that in Special Criminal Application No. 665 of 1996 filed by petitioner No. 2, numbers of other applications being Misc. Criminal applications Nos. 1671 of 1996, 2451 of 1996 1587 of 1996. 1595 of 1996, and 1599 of 1996 have been given. It is further contended that all these applications were filed for quashing different complaints being Criminal Case No. 33 of 1996, enquiry Case No. 34 of 1996, Criminal Case Nos. 39 of 1996, 805 of 1996 and 951 of 1996 respectively. This Court, while rejecting the applications, has also observed that the complaint primu facie discloses the offence. It is further contended that the petitioner filed Misc. Criminal Application No. 3692 of 1996 for joining him as party in Misc. Criminal Application 1598 of 1996 and since this Court was not inclined to allow the said application, the said application was withdrawn. It is further contended that petitioner No. 2 had filed Misc. Criminal Application No. 1595 of 1996. However, the said application was also withdrawn by the petitioner.

(6) IN the light of the above details, respondent No. 2 has contended that the petitioners had approached this Court several times. and they are aware of the fact that the applications for quashing complaints had been filed earlier, which were rejected by this Court, as the complaints, prima facie, disclose offence alleged therein. . It is, therefore, contended that petitioners had approached this Court several times and they are aware of the fact that the applications filed for quashing the complaints were rejected by this Court as the complaints prima facie disclosed the offences alleged therein. It is, therefore, contended that the petitioner No. 2 has suppressed fact with regard to filing and rejection of earlier petitions and has made only selective averments with a view to obtain suitable orders in his favour. It is. therefore, contended that the petitioners have not come with clean hands before this Court and, therefore, discretion is not required to be exercised in their favour, as the petitioner No. 2 has suppressed material facts.

(7) MR. P. M. Thakker, senior Counsel, appearing for the original complainant in all the applications, raised preliminary objection that the present applications deserve to be rejected, as the petitioners have suppressed material facts that they had earlier approached this Court by filing Special Criminal Application No. 1655 of 1996 for quashing complaints, which came to be rejected by this Court on 11/06/1996. It is further submitted that in Special Criminal Application No. 665 of 1996, the complainants, who have filed all the complaints, which are under challenge, were shown as respondents and, therefore, the petitioners having tailed in that Special criminal Application and by suppressing that material fact. have approached this court again for the same relief and. therefore, discretionary power should not be exercised in their favour and the applications should be dismissed on the preliminary ground of suppression of material facts and also on the ground that the petitioners have not come with clean hands.

(8) ALONG with the affidavit-in-reply, respondent No. 2 has annexed copy of special Criminal Application No. 665 of 1996, which was filed by petitioner No. 2 herein. In the cause title, the present complainants were shown as respondent Nos. 7 to 10. Further, it is stated in the cause title Chat the application was filed for the purpose of quashing criminal proceedings and/or protection against illegal arrest effected by various police stations in illegal fashion and at odd hours of night. In paragraph 25 of the Special Criminal Application, in prayer Clause (C), it was prayed as under :

" (C) Be pleased to quash the criminal proceeding/s filed by the respondent Nos. 2 to 10 in connection with the non-receipt of the shares of M. Touch Finance Ltd. "

Special Criminal Application No. 665 of 1995 came up for hearing before this court (Coram : N. N. Mathur, J.) on 11/06/1996 and the Court has passed the following order. "this petition is wholly misconceived and is rejected. "

(9) THE learned Senior Counsel appearing for the complainant, in support of his submission that the applications deserve to be rejected on preliminary objection that the petitioners have not come with clean hands and they have suppressed materials facts from this Court to obtain suitable orders and discretionary relief should not be granted to them, has relied upon the judgment of the Supreme Court in the case S. P. Chengalvaraya Naidu v. Jagananth, reported in AIR 1994 SC 853 [LQ/SC/1993/933] . wherein, the Supreme Court observed as under :

"the Courts of law are meant for imparting justice between the parties. One who comes to the Court, must come with clean hands. It can be said without hesitation that a person whose case is based on falsehood has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. A litigant, who approaches the Court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the Courts as well as on the opposite party. "

(10) THE learned senior Counsel appearing for the complainant has also placed reliance on the decision of this Court in the case of Vijay J. Gadhavi v. State of gujarat. reported in 1988 (2) GLR 902 [LQ/GujHC/1988/61] , wherein, the learned single Judge has refused to exercise discretionary power for issuance of a writ on the ground that the petitioner therein had not approached the Court with clean hands and he should not have suppressed the material facts. If is further held by this Court in Vijay J. Gadhavi (supra), that, if an interim order is obtained by suppressing materials facts, the petitioner would be liable to be punished for contempt of Court, and, at any rate such a petition is liable to be rejected when there is no remorse. In paragraph 7, this Court has observed as under :

"7. The answers given by the learned Counsel for the petitioner leads to only one and one inference that the petitioner as well as the learned Counsel for the petitioner knew that the appointment of the petitioner was on purely ad hoc and temporary basis. hut deliberately these facts are not mentioned in the petition. Now it is sought to be explained away by saying that there is no positive assertion that his appointment was on permanent basis. But it is a matter of elementary understanding that had there been any such positive averment it would have been a case of suggestio falsi or positive falsehood. positive falsehood and/or falsehood by suppression, both stand on same footing. In-the instant case, the falsehood is by suppression of facts. A person who comes before the High Court with unclean hands and snatches the order of interim relief on the basis of deliberate suppression of material facts is not entitled to he heard at all. In fact, the petitioner is liable to be dealt with for contempt of Court for misusing and/or abusing the process of Court. However, having regard to the crumbling standards of professional ethics and all pervading laxity for maintenance of standards of discipline (which is probably justified in the name of pragmatism an euphemism for populist stance). But if I do not reject the petition on the ground of material suppression of facts I would be failing in my duty. "

(11) THE learned Senior Counsel for the complainant has also placed reliance on the decision of the Madras High Court in the case of Deptylal v. Collector of nilgiris, reported in AIR 1959 Madras 460, wherein, it is ruled that a person invoking the special jurisdiction of the High Court under Art. 226 is bound to make a full and true discloure and all relevant facts. The Madras High Court with approval quoted the observations in Rex v. Kensington Income-tax Commrs. : Princess Edmond de Poligance, Es Party, 1917 (1) KB 486, as under :

"where an ex parte application has been made to this Court for a rule nisi or other process, if the Court comes to the conclusion that the affidavit in support of the applicant was not candid and did not fairly state the facts, but stated them in such a way to mislead the Court as to the true facts, the Court ought, for its own protection and to prevent an abuse of its process to refuse to proceed any further with the examination of the merits. This is a power inherent in the Court, but one which should only he used in cases which bring conviction to the mind of the Court that it has been deceived. Before coming to this conclusion, a careful examination will be made of the facts as they are and as they have been stated in the applicants affidavit, and everything will be heard that can be urged to influence the view of the Court when it reads the affidavit and knows the true facts. But if the result of this examination and hearing is to leave no doubt that the Court has been deceived, then it will refuse to hear anything further from the applicant in a proceeding which has only been set in motion by means of a misleading affidavit. "

(12) THE Supreme Court, in the case of G. Narayanaswanyreddy v. Government of Karnataka, reported in AIR 1992 SC 1726, has ruled that the relief under Art. 136 is discretionary and a petitioner who approaches the Supreme Court for such relief must come with frank and full disclosure of facts. If he fails to do so and suppresses material facts, his application is liable to be dismissed. Similar view is taken by the learned single Judge of" this Court in the case of D. K. Jadeju v. State, reported in 1994 (2) GLR 1560, wherein, the Court has refused to exercise extraordinary jurisdiction under Arts. 226 and 227 of the Constitution of India. In that case, the petitioner was guilty of deliberate suppression of important and material facts. In that context, the Court declined to interfere with the orders under challenge in the petition under Art. 227 of the Constitution of India on the ground of suppression of material facts alone.

(13) THE learned Counsel for the petitioners, Mr. P. K. Jani, submitted that the complainants, with the help of the police authorities, have tried to harass the petitioners and petitioner No. 2 was forcibly taken to Madhupura and Kankaria police Stations and the police had arrested petitioner No. 2 in illegal fashion at odd hours of night and, therefore, he was constrained to file Special Criminal Application no. 665 of 1996 in this Court for various reliefs. As the petitioner had prayed for various reliefs, the Court had rejected his petition on the ground that it was misconceived. It is submitted that the petition was not dismissed on merits qua the relief of quashing the complaint. It is further submitted by the learned Counsel for the petitioners that, as per the decision of the Supreme Court in the case of superintendent and Remembrancer of Legal Affairs v. Mohan Singh, reported in AIR 1975 SC 1002 [LQ/SC/1974/310] , rejection of prior application tor quashing on the ground of absence of prima facie case is no bar to subsequent applications for the same relief. The supreme Court in case of Superintendent and Remembrancer of Legal Affairs v. Mohan Singh (supra), in the facts of that case, held that when the proceedings were long drawn and there was no prima facie case made out against the accused, the proceedings may be quashed by the High Court to prevent abuse of process of the court and to secure ends of justice. It is ruled that the fact that similar application for quashing the proceedings on a former occasion was rejected by the High Court on the ground that questions involved were purely question of fact which were for the Court of fact to decide, is no bar to quashing of the proceedings at the later stage. Such quashing will not amount to revision or review of the High Courts earlier order. The Supreme Court has further observed that the order under Sec. 561-A (old Code) should be passed in view of the circumstances existing at the time when the order is passed.

(14) THE decision of the Supreme Court in case of Superintendent and remembrancer of Legal Affairs v. Mohan Singh (supra) lays down the principle that subsequent application for quashing can be filed, if the circumstances of the case so require. In the facts before the Supreme Court, as the proceedings were long drawn and the first information did not disclose the offence, the Supreme Court has entertained the subsequent application for quashing the proceedings. In the case before the Supreme Court, there was no material suppression of fact and, therefore. in my view, the decision relied upon by the learned Counsel for the petitioner will not apply to the facts and circumstances of the case.

(15) THE petitioners have filed these applications by invoking "inherent power" vested in the High Court under Sec. 482 of the Code. Inherent power has not been conferred upon the Court; it is a power inherent in the Court by virtue of its duty to do justice between the parties before it. Thus, this power is necessary in the interest of justice. Inherent power has its roots in necessity and its birth is co-existent with necessity. The "inherent power" of a Court is that which is necessary for the proper and complete administration of justice and such power is resident in all Courts of superior jurisdiction and essential to their existence. In my view. exercise of inherent power is purely discretionary. A person, who approaches the Court to get a discretionary relief, must come with clean hands and by disclosing all material facts before the Court. The party, who invokes the extraordinary inherent jurisdiction of high Court under Sec. 482 of the Code, is supposed to be truthful, frank and open. He must disclose all the material facts without any reservation even if they are against him. He cannot pick and choose the facts he likes to disclose and to suppress or not to disclose other facts. If material facts are suppressed or distorted, the very functioning of the Courts and exercise of inherent jurisdiction would become impossible.

(16) AS observed earlier, petitioner No. 2 has deliberately suppressed filing of special Criminal Application No. 665 of 1996 in this Court for identical reliefs of quashing criminal complaints filed by respondent Nos. 2 to 10 of that petition in connection with non-receipt of share certificates of M. Touch Finance Limited. The present applications are filed to quash criminal complaints which are lodged by respondent Nos. 7 to 10 of that petition. It is true that the principles of res judicata are not applicable to the criminal proceedings. But, when the Court is exercising its inherent powers, which is purely of discretionary in nature, the petitioner cannot suppress the fact that earlier he had approached this Court by filing Special Criminal application No. 665 of 1997 for identical relief, i. e. , quashing of criminal complaints filed against him and other accused by the present respondents. By suppressing material facts from this Court, the petitioners have obtained discretionary relief in the nature of interim relief staying proceedings pending before the learned metropolitan Magistrate. If the interim relief, which was in the nature of discretionary relief, was obtained by the petitioners by suppressing material facts and keeping the Court in dark, the said interim relief deserves to be vacated forthwith. When the petitioner had approached this Court by invoking its inherent powers which are discretionary in nature, he cannot suppress any material facts and give distorted version in these applications. The petitioners have deliberately stated about the applications filed by M. Touch Finance Limited, wherein, the complaints came to be quashed by this Court. The petitioner was bound to disclose the facts of filing of previous applications for identical relief in this Court. In all the present applications, the petitioners have made the statement on oath that no other petition has been filed in this Court or in any other Court in respect of the subject-matter of this petition. This statement is made in spite of the fact that the petitioners had filed previous applications in respect of the complaints filed by the respondents which came to be rejected by this Court. The petitioners, in Special Criminal application No. 665 of 1996, stated, on oath. that the company, i. e. , M. Touch Finance had moved this Court by way of various Misc. Criminal Applications, being Nos. 1587. 1599, 1598 and 1597 of 1996 and Honble Mr. Justice S. D. Dave by order dated 23/04/1996 has been pleased to stay the further proceed ing on the condition that the company deposits the duplicate shares with this Court. In the same application, in prayer Clause (b) of paragraph 25, the petitioner No. 2 prayed that the present petition, i. e. . Special Criminal Application No. 165 of 1996 be placed for hearing along with Misc. Criminal Application Nos. 1587. 1599, 1598 and 1597 of 1996, the hearing of which was fixed on 25/06/1996. It is worthwhile to note that Misc. Criminal Application Nos. 1587 of 1996, 1597 of 1996 and 1599 of 1996 came to be rejected by this Court (Coram : K. J. Vaidya. J.) by its order dated 9/12/1996. Even though petitioner No. 2 was aware that those applications were ultimately rejected, he has suppressed the same in the present applications. The petitioner should not be allowed to play hide and seek and to abuse the process of the Court. It is not open to him to pick and choose his own facts to determine in advance what is relevant and material or to omit to mention all material facts and proceedings and orders and then claim that he has acted bona fide even though he has made untrue statements, omitted to inform the Court of all the proceedings and the orders passed at different stages in the proceedings up-to-date and claim indulgence.

(17) THE above facts have been, with deliberate intention, suppressed by the petitioners in the present applications with a view to get orders of interim relief in their favour. Therefore, in my view, when the petitioner has not come with candid facts and clean hands, he cannot hold a writ of the Court with soiled hands. | suppression or concealment of material facts is not an advocacy. It is a jugglery, which has no place in discretionary and inherent jurisdiction. If the petitioner does not disclose all the material facts fairly and truly but states them in a distorted manner with a view to mislead or deceive the Court, the Court has inherent power in order to protect itself and to prevent an abuse of its process to discharge the rule nisi and refuse to proceed further with the examination on the merits. If the Court does not reject the petition on this ground, the Court would be failing in its duty. In this view of the matter, I uphold the preliminary objection raised by the senior Counsel appearing for respondent No. 2 (original complainant) that the applications should be rejected on the ground that the petitioners have suppressed material facts while obtaining interim relief. These applications are required to be rejected on the preliminary ground that the petitioners have approached this Court by invoking its inherent jurisdiction under Sec. 482 of the Code by suppression of material facts.

(18) IN view of my aforesaid discussion, I do not think it necessary to examine the merits or demerits of the complaints in question, because the petitioners deserve no relief from this Court in these applications.

(19) IN the result, these applications are rejected. Rule is discharged in each application. The interim relief stands vacated. ORAL ORDER

(20) AFTER the judgment was pronounced, Mr. P. K. Jani, learned Advocate appearing for the petitioners, has requested to extend the interim relief, which was granted earlier by this Court, so as to enable the petitioners to challenge this judgment in the higher forum. In the facts and circumstances of the case, the interim relief, which was granted earlier, is extended for a period of four weeks to enable the petitioners of approach the higher forum.