Decided on March 03,2020

New Era Fabrics Ltd Appellant
Bhanumati Keshrichand Jhaveri Respondents

Cited Judgements :-



MOHAN M.SHANTANAGOUDAR,J. - (1.)This application has been filed under Section 340 read with Section 195(1)(b) of the Criminal Procedure Code, 1973 ('CrPC') seeking institution of criminal proceedings against the Petitioner in SLP (Civil) No. 3309/2018 for giving false evidence before this Court.
(2.)The facts giving rise to this application are as follows: The Respondents/plaintiffs claim to be the lessors of suit premises being C.S. No. 560 and 561, final Plot No. 268, T.P.S. III of Mahim Division, Ward No. 6/North 5546 (1-1A) situated at Mogul Lane, Tulsi Pipe Road, known as Senapati Bapat Marg, Mahim, Mumbai- 400 016. The Petitioner/defendant Company was a monthly tenant of the suit premises. The Respondents terminated the tenancy by notice to quit dated 11.02.2009 and subsequently filed Suit No. 48/62/2009 before the Court of Small Causes, Mumbai ('Trial Court') for possession and injunction against the Petitioner. The Respondents averred in their suit that the Petitioner is a public limited company having a paid-up share capital of more than Rs. 1 crore; hence it would not be protected under the Maharashtra Rent Control Act, 1999. [Section 3(1)(b) of the Maharashtra Rent Control Act, 1999 provides that the Act shall not apply to any premises let or sub-let to private limited and public limited companies having a paid up-share capital of more than one crore rupees.]
The Petitioner claimed in its written statement that as of 31.02.2007, it had a paid up share capital of Rs. 1,03,64,000; however, by resolution dated 01.03.2007, it had reduced its share capital to Rs. 93,74,000. Hence it raised a preliminary objection to the jurisdiction of the Trial Court to try the suit.

2.1 Consequently, the matter was directed to be heard on the preliminary issue of whether the Trial Court had jurisdiction to entertain, try and decide the suit. The Respondent relied on the income tax return filed by the Petitioner Company for the assessment year 2008-2009 (i.e. pertaining to the financial year 2007-2008), which showed that the paid-up share capital of the company as on the date of termination of the tenancy was Rs. 1,03,64,000. A revised return showing the share capital to be Rs.93,74,000/- was filed only on 4.04.2009, which was subsequent to the notice for termination of the tenancy.

2.2 Per contra, the Petitioner argued before the Trial Court that the share capital had been reduced by way of 'buy-back' of shares on 1.03.2007, and hence the paid-up share capital for the financial year 2007-2008, ending on 31.03.2008, was Rs. 93,74,000. Mr. R.K. Agarwal, who is the Director of the Petitioner Company, was examined as D.W. 1 in this regard. He deposed that the Registrar of Companies had been informed of the aforesaid reduction in share capital; that the assistant of the Company's internal auditing firm had inadvertently entered the share capital of the Company as Rs. 1,03,64,000/- while preparing the income tax return for the assessment year 2008-2009; and upon discovery of the error, the revised return dated 4.04.2009 (supra) was filed. That the audit report and the balance sheet for the year 2007-2008 showed that the share capital had been reduced, and the same had been submitted to the Central Excise and Sales Tax Departments. The audit report and the balance sheet dated 19.9.2008, as prepared for the financial year 2007- 2008, and as produced in the evidence of D.W. 1, were marked as Exhibits 81 and 82 respectively.

Additionally, D.W. 3 Mr. Gautam Nemani, who was stated to be a shareholder of the Company, deposed that he had surrendered 18,000 shares at the rate of Rs. 10 per share, though he admitted that the book value of a single share was Rs. 73.46. D.W. 5, the internal auditor of the Company deposed that the Company had bought back 99,000 shares of face value of Rs. 10 each, and therefore the Petitioner's share capital for the year 2007-2008 was Rs. 93,74,000/-.

D.W. 6, the statutory auditor of the Company, similarly deposed that he had prepared the balance sheet dated 19.09.2008, for the financial year 2007-2008 (as mentioned supra) showing the reduced share capital as Rs. 93,74,000/-. He also certified that the figure stated in Column 12 of the balance sheet, showing the basic and diluted earning per share (hereinafter 'EPS') as Rs. 15.91 per share, was correct.

2.3 However, the Trial Court rejected the Petitioner's contentions, finding that there were material discrepancies in the evidence of their witnesses, which made their case regarding 'buy-back' of shares improbable. That there was no record of the letters dated 09.03.2007 and 25.03.2007 which the Petitioner contended it had filed before the Registrar of Companies as returns relating to the buy-back, and electronic return was filed only on 05.09.2009, though filing of electronic returns has been made mandatory from 16.09.2006 onwards. Hence the Petitioner had not complied with the procedure for buy-back of shares as prescribed under Sections 77A, 77B and 159 of the Companies Act, 1956.

Importantly, it was pointed out that there was a significant discrepancy in the audit report and the balance sheet dated 19.09.2008, inasmuch as the weighted average number of shares for the financial year 2007-2008 in Column 12 of the balance sheet was stated to be the same as that for the year 2006-2007, i.e., 10,36,400, even though the share capital of the Petitioner Company had been reduced. [The Trial Court had erroneously stated that the 'EPS' was 10,36,400, perhaps because the heading of Column 12 states 'EPS', however the same does not have any bearing on the merits of the case.] Therefore it was evident that the revised income tax return filed by the Petitioner was a subsequent act, post notice of termination of tenancy served by the Respondent, and that the actual paid-up share capital of the Petitioner Company as on the date of termination of the tenancy was Rs. 1,03,64,000/-. Hence the Trial Court would have jurisdiction to try the Respondent's suit.

2.4 The Trial Court's findings were affirmed by the Court of Small Causes (Appellate Bench). The High Court dismissed the revisional application filed by the Petitioner. Subsequently, on 09.04.2018, a three-Judge Bench comprising one of us dismissed SLP (Civil) No. 3309/2018 filed by the Petitioner before this Court, out of which the present application arises. Therefore it is not disputed that the finding on the preliminary issue of jurisdiction has attained finality, and the trial of the suit on merits is presently pending before the Trial Court.

2.5 However it is the case of Respondent No. 4 in the aforesaid SLP (Civil) No. 3309/2018 (hereinafter 'Applicant') that the Petitioner in the aforesaid SLP deliberately made false interpolations in the auditor's report and the balance sheet dated 19.9.2008, while submitting these documents before this Court. The Applicant's contention is that these documents have been revised/interpolated for the first time in the course of the SLP proceedings, for the purpose of misleading this Court. Hence the present application has been moved on 24.04.2018, soon after the dismissal of the SLP, seeking institution of criminal proceedings against the Petitioner for the offence of perjury.

(3.)Learned Senior Counsel Mr. Amit Sibal, arguing on behalf of the Applicant, submitted that the Petitioner/defendant, in its reply to the application for interim injunction filed by the Applicant before the Trial Court, had annexed the audited balance sheet dated 19.09.2008 for the financial year 2007-2008 (supra). In the version filed before the Trial Court, the paid-up share capital of the Petitioner/defendant was shown as Rs. 1,03,64,000/- as on 31.03.2007, and Rs. 93,74,000/- as on 31.03.2008.
Therefore as per the Petitioner's stand, the buy-back process was completed in April 2007. If that was the case, the number of Weighted Average shares and the EPS for the financial year 2007- 2008 ought to have been computed accordingly. However, Mr. Sibal pointed out that the number of Weighted Average shares in the balance sheet was stated to be 10,36,400 for both financial years 2006-2007 and 2007-2008, even though it should have changed to 9,37,400 for the year 2007-2008. Further, the EPS was also calculated on the basis of the original share capital of Rs. 1,03,64,000, and not the reduced share capital as claimed by the Petitioner.

Mr. Sibal argued that it was on account of this failure to manipulate the balance sheet that the Trial Court declined to rely on the document, and held that the Petitioner had failed to establish that its share capital had been reduced. Hence, in order to overcome this omission at the stage of hearing of the SLP, the Petitioner for the first time made a handwritten interpolation in Column 12 of the balance sheet, by which the words 'Weighted Average' were crossed out, and the document was manipulated (by interpolation) to show that the number of equity shares 'as on 1/4/07' was 10,36,400.

Mr. Sibal also pointed out that there were four instances in the Trial Court record wherein D.W. 1 Mr. R.K. Aggarwal had referred to the original balance sheet dated 19.09.2008, which did not contain any handwritten interpolation. Therefore the first time that the Petitioner sought to place reliance on the contents of the manipulated balance sheet was before this Court, which clearly showed that the document was forged specifically to mislead this Court. Had the interpolated document been authentic, the Petitioner would have naturally placed reliance on the same before the Courts below.

3.1 Per contra, learned senior counsel for the Petitioner/Non-Applicant, Mr. Basava Prabhu Patil submitted that the auditor's report and balance sheet dated 19.09.2008 were exhibited multiple times as part of the evidence of different parties. In the Petitioner's reply to the application of the Respondent/Applicant for interim injunction, the auditor's report together with the balance sheet had been marked as Exhibit 13. Mr. Patil highlighted that the advocate appearing for the Petitioner before the trial Court had obtained a certified copy of the aforesaid Exhibit 13. In the certified copy of Exhibit 13, Column 12 of the balance sheet states that the 'number of Equity Shares as on 1/4/07' is 10,36,400 shares. It can be seen that the words 'Weighted average' have been crossed out, and 'as on 1/4/07' has been added, by hand.

Mr. Patil also placed on record a certified copy of Exhibit 82, which is the balance sheet dated 19.9.2008, as marked in the evidence of D.W. 1. Column 12 of the certified copy of Exhibit 82 contains the same handwritten interpolation. Therefore it was strenuously contended that the handwritten corrections in the balance sheet were present since the beginning of the trial. The Applicant ought to have raised any grievance regarding forgery in the document at the stage of trial itself. However, no cross- examination of the Petitioner's witnesses was conducted on this aspect before the Trial Court, and the perjury application was moved only after the SLP had been dismissed.

It was further contended that the Petitioner's advocate had not relied upon Column 12 of the balance sheet while arguing the SLP before this Court, and as such the contents of Column 12 had no bearing on the dismissal of the SLP. Hence it was submitted that there was no merit in the Applicant's contention that the Petitioner had committed perjury.


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.