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PETITIONER: LEGAL REMEMBRANCER OF GOVT. OF WEST BENGAL

       Vs.

RESPONDENT: HARIDAS MUNDRA

DATE OF JUDGMENT09/12/1975

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. GOSWAMI, P.K. UNTWALIA, N.L.

CITATION:  1976 AIR 2225            1976 SCR  (2) 933  1976 SCC  (1) 555  CITATOR INFO :  R          1979 SC 437  (8)

ACT:      Code of  Criminal Procedure,  1898-Sec. 195(1)(C)-Scope of.

HEADNOTE:      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 defrauded the company. At the trial,  a single  Judge of the High Court discharged 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.      Allowing the appeals to this Court, ^      HELD: The  High Court  was entitled to proceed with the trial of  the respondent 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 punishable  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  High Court  had  clearly  and  indubitably jurisdiction  to   proceed  with   the  trial   against  the respondent in respect of offences under ss. 418 and 477A. On its plain  language the  inhibition in  s. 195(1)(c) applies only where  a person  is being tried for an offence under s. 463 or  punishable under ss. 471, 475 or 476. Offences under 418 and  s. 477A are plainly not covered by s. 195(1)(c) Cr. P.C. [936-D-G]      (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

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the Company  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. In  Patel Laljibhai  Somabhai v.  The  State  of Gujarat this  Court restricted the scope and ambit of s. 195 (1)(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. [936H, 937A-D]      Raghunath v.  State of  U.P., AIR  1973 S.C.  1100  and Mohan Lal  v. The  State of  Rajasthan, AIR  1974 S.C.  299, referred to.      In the  instant case  since the offence charged against the respondent was one alleged to have been committed by him before he  became a  party to  the proceeding 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 document  in question  should  be 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.  [937G, 938A]

JUDGMENT:      CRIMINAL APPELLATE  JURISDICTION: Criminal  Appeal  No. 115 of 1971.      From the judgment and order dated 16th June 1970 of the Calcutta High  Court in  Criminal Revision  Case No.  650 of 1967 and 934      Criminal Appeals Nos. 256 and 257 of 1971      Appeals by  special leave  from the judgments 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  Criminal Sessions  1967 respectively.      D. Mookherjee  and M.  N. Shroff for the appellants (in all the appeals).      V. S.  Desai, A. G. Menseses, J. B. Dadchanji & Co. for respondents in Crl. 256-57/71.      The Judgment of the Court was delivered by      BHAGWATI, J.  These three appeals arise out of the same facts and  it would,  therefore, be convenient to dispose of them by  a common  judgment. The respondent in all the three appeals is  one Haridas Mundra. He was at all material times the managing  director of  S. B.  Industrial Development Co. (Pvt.) Ltd.,  who were  the managing  agents  of  a  company called Richardson & Cruddas Ltd. He and his brother Tulsidas Mundra were  also directors of Richardson & Cruddas Ltd. The Life Insurance  Corporation of  India, which was the largest shareholder, filed  a petition in 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 Companies  Act, 1956.  The respondent  and other directors  were   impleaded  as   party-respondents  to  the petition. The  High Court,  on the  application of  the Life Insurance Corporation,  made an  interim order  sometime  in December 1957  appointing Sir  Dhirendra  Mitra  as  Special Officer to  manage the  affairs of Richardson & Cruddas Ltd. There was  an audit  report made  by  M/s  Gutgutia  &  Co., Chartered  Accountants,   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  Company Judge, appointed M/s

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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 purporting 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  account 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 debiting to the machinery account. On making inquiries, Ferguson  & Co. discovered that there was no firm of Indian  Machine Tools Co. in existence at 7, Mission Row, Calcutta and  no machinery was in fact purchased or received by Richardson  & Cruddas  Ltd. as  shown in  the  two  bills supposed to  have been  made out by Indian Machine Tools Co. The conclusion reached by Ferguson & Co. as a result of this probe was that Richard- 935 son & Cruddas Ltd. has been defrauded of an aggregate sum of Rs. 10,60,900  representing the amounts of the two bills and that amount  had been  siphoned  off  to  S.  B.  Industrial Development Co.  (Pvt.) Ltd. by using these two bills, which were forged,  as genuine  and they  made a  report  to  this effect to  the Special  officer.  The  Special  Officer,  on receipt of  the report,  made an  application to the Company Judge for a direction that he might be authorised to lodge a complaint with  the police  for further  investigation  into these facts  set out  in the  report. The Company Judge gave the necessary  direction 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 against the respondent and Tulsidas Mundra in the Court of the Chief Presidency Magistrate.  The respondent  and Tulsidas  Mundra were committed  by the  Chief President  Magistrate to stand their trial before the High Court on charges under ss. 120B, 409, 471 read with s. 468 and s. 477A against the respondent and ss.  120B and  409 of  the  Indian  Penal  Code  against Tulsidas Mundra.  When the  trial commenced  before the High Court, the  Public Prosecutor  made two applications on 17th April, 1967,  one  for  amending  the  charges  against  the respondent by  dropping ss.  120B and  409 adding s. 418 and the other  for withdrawing  the prosecution against Tulsidas Mundra. Both  these applications  were allowed  by the  High Court, with the result that the trial proceeded only against the respondent  on charges  under ss.  418, 471 read with s. 468 and  s. 477A.  Mr. Justice Bagchi, before whom the trial proceeded, felt  that he had no jurisdiction to proceed 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 arguments advanced before him on  both sides,  delivered an elaborate judgment holding that by  reason of  s. 195(1)  (c) of  the Code  of Criminal 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 27th April 1967.      The State  being aggrieved  by this  judgment and order

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passed by  Mr. Justice  Bagchi in  the exercise  of original criminal  jurisdiction,  preferred  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 trial. Since this preliminary objection raised  a  question  of  some  importance  it  was referred to  a full Bench and by a judgment dated 16th June, 1970, the  Full Bench  upheld the  preliminary objection and held that  the High Court had no jurisdiction in revision of some importance,  it was  referred to  a Full Bench and by a judge of  the High  Court in  the exercise  of its  original criminal jurisdiction  and accordingly rejected the revision application. 936      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 judgment and order of Mr. Justice Bagchi. This application  was rejected  by the  learned Judge  by an 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 preferred two  petitions in  this Court for special leave to appeal, one  against the  judgment and  order of Mr. Justice Bagchi discharging  the respondent and the other against the judgment and  order of  the 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 discharging  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 this application, leave was granted by the High Court under Art.  134(1) (c)  of the  Constitution and that is how Criminal Appeal No. 115 of 1971 is before us.      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 consider 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 punishable 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. Obviously, on its plain language,  the inhabitation  in s.  195(1) (c) applies only where  a person is being tried for an offence described in 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  and 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 respondent 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

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against the  respondent in respect of the offences under ss. 418 and  477A. The  question of  lack of jurisdiction 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 specified  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 Indian Machine Tools Co. as 937 genuine on  24th and  29th June,  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 June, 1955 long before the proceeding in Matter No. 357 of 1957 commenced 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 amongst various High Courts in regard to the true  interpretation of  s. 195(1) (c). Some High Courts held  that  to  attract  the  prohibition  contained  in  s. 195(1)(c), the  offence  should  be  alleged  to  have  been committed by the party to the proceeding in his character as such party,  which means, after having become 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 becoming  such party, provided that the  document in  question was  produced  or  given  in evidence in  such proceeding.  This  divergence  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  in s.  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  Rajasthan(3).  It  must inevitably follow,  on this  view, that  since  the  offence charged against  the respondent was one alleged to have been committed by  him before he became a party to the proceeding in Matter  No. 357 of 1957, s. 195(1)(c) had no application. It may also be noted that neither of the two forged bills of Indian Machine  Tools Co.  was produced or given in evidence in the  proceeding in  Matter No.  357 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 with  the other record of the Company and nobody produced them or tendered them in evidence before the Company  Judge in  the proceeding  in Matter  No. 357 of

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1957. The  requirement of s. 195(1) (c) that the document in question should be 938 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 Sessions Court, to which  the original  criminal  jurisdiction  in  Sessions cases has  now been  transferred, for  disposal 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 date. In  the view taken by us in Criminal Appeal No. 256 of 1971, Criminal  Appeals Nos.  115 and  257 of  1971  do  not survive for consideration and we accordingly dismiss them. P.B.R.                           Cr. A. 256 of 1971 allowed.                          Cr.As. 115 & 257 of 1971 dismissed. 939