Abstract
The National Company Law Tribunal and its appellate forum, the National Company Law Appellate Tribunal have increasingly seen a significant rise in the number of proceedings filed before it. This significant rise can perhaps be associated with the increasing use of the Insolvency and Bankruptcy Code, 2016 by litigants, leaving these Tribunals overburdened with cases pertaining to specific subject-matter jurisdiction, viz. inter alia Oppression and Mismanagement, Restoration of Companies and Insolvency and Bankruptcy. Given the concentrated focus on these specific subject-matter cases, many seem to be uncertain about the powers available to these Tribunals, including that of passing orders and issuing directions should these Tribunals find that a litigant has perjured itself before it. The authors have sought to address this issue in this research paper.
Issues
- Are the National Company Law Tribunal and the National Company Law Appellate Tribunal “courts” within the ambit of Section 195 r/w Section 340 of the Code of Criminal Procedure, 1973?
- Do “judicial proceedings” [as mentioned in Section 424(4) of the Companies Act 2013] fall within the ambit of “any proceeding in any court” per Section 195(1)(b)(i) of the Code of Criminal Procedure, 1973?
- Are there legal consequences to perjuring oneself before the National Company Law Tribunal or the National Company Law Appellate Tribunal?
The authors have reviewed the provisions of the Penal Code, 1860, the Code of Criminal Procedure, 1973, the Companies Act, 2013 and judgments of the Bombay High Court and the Supreme Court of India in order to address these questions. The relevant provisions of these codified laws and relevant portions of the said judgments have been referred to and even quoted hereinbelow.
Relevant Provisions of Law
Before addressing the issues at hand, it is pertinent to examine the existing legislation surrounding these issues.
1. The Companies Act, 2013
Section 424 – Procedure before [the National Company Law] Tribunal and [the National Company Law Appellate] Tribunal
Sub-section (4) states as follows:
“All proceedings before the [National Company Law] Tribunal or the [National Company Law] 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 [1860], and the [National Company Law] Tribunal and the [National Company Law] Appellate Tribunal shall be deemed to be civil courtfor the purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure […] 1973 […]”
2. The Penal Code, 1860
The following provisions form part of Chapter XI of the Penal Code, 1860 (“ IPC”), titled “Of False Evidence and Offences Against Public Justice”:
Section 191 – Giving False Evidence
“Whoever, being legally bound by an oath or by an express provision of law to state the truth, or being bound by law to make a declaration upon any subject, makes any statement which is false, and which he either knows or believes to be false or does not believe to be true, is said to give false evidence.”
Section 192 – Fabricating False Evidence
“Whoever causes any circumstance to exist or makes any false entry in any book or record, or electronic record or makes any document or electronic record containing a false statement, intending that such circumstance, false entry or false statement may appear in evidence in a judicial proceeding, or in a proceeding taken by law before a public servant as such, or before an arbitrator, and that such circumstance, false entry or false statement, so appearing in evidence, may cause any person who in such proceeding is to form an opinion upon the evidence, to entertain an erroneous opinion touching any point material to the result of such proceeding, is said “to fabricate false evidence”.”
Section 193 – Punishment for False Evidence
“Whoever intentionally gives false evidence in any stage of a judicial proceeding, or fabricates false evidence for the purpose of being used in any stage of a judicial proceeding, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine; and whoever intentionally gives or fabricates false evidence in any other case, shall be punished with imprisonment of either description for a term which may extend to three years, and shall also be liable to fine.”
Section 199 – False Statement made in Declaration which is by Law receivable as Evidence
“Whoever, in any declaration made or subscribed by him, which declaration any Court of Justice, or any public servant or other person, is bound or authorised by law to receive as evidence of any fact, makes any statement which is false, and which he either knows or believes to be false or does not believe to be true, touching any point material to the object for which the declaration is made or used, shall be punished in the same manner as if he gave false evidence.”
Section 209 – Dishonestly making False Claim in Court
“Whoever fraudulently or dishonestly, or with intent to injure or annoy any person, makes in a Court of Justice any claim which he knows to be false, shall be punished with imprisonment of either description for a term which may extend to two years, and shall also be liable to fine.”
3. The Code of Criminal Procedure, 1973
Section 2(i) – Definition of ‘Judicial Proceeding’
“‘judicial proceeding’ includes any proceeding in the course of which evidence is or may be legally taken on oath”
Section 195 – Prosecution for Contempt of Lawful Authority of Public Servants, for Offences Against Public Justice and for Offences Relating to Documents Given in Evidence
Sub-section (1)(b)(i) states as follows:
“No Court shall take cognizance of any offence punishable under any of the following sections of [the IPC], namely, Sections 193 to 196 (both inclusive), 199, 200, 205 to 211 (both inclusive) and 228, when such offence is alleged to have been committed in, or in relation to, any proceeding in any Court…”
Sub-section (3) states as follows:
“In clause (b) of sub-section (1), the term ‘Court’ means a Civil, Revenue or Criminal Court, and includes a tribunal constituted by or under a Central, Provincial or State Act if declared by that Act to be a Court for the purposes of this section.”
Section 340 – Procedure in Cases Mentioned in Section 195
Sub-section (1) states as follows:
“When, upon an application made to it in this behalf or otherwise, any Court is of opinion that it is expedient in the interests of justice that an inquiry should be made into any offence referred to 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, such Court may, after such preliminary inquiry, if any, as it thinks necessary,—
(a) record a finding to that effect;
(b) make a complaint thereof in writing;
(c) send it to a Magistrate of the First Class having jurisdiction;
(d) take sufficient security for the appearance of the accused before such Magistrate, or if the alleged offence is non-bailable and the Court thinks it necessary so to do, send the accused in custody to such Magistrate; and
(e) bind over any person to appear and give evidence before such Magistrate.”
Sub-section (4) states as follows:
“In this section, ‘Court’ has the same meaning as in Section 195.”
Analysis
1. The National Company Law Tribunal (“NCLT”) and the National Company Law Appellate Tribunal (“NCLAT”) are quasi-judicial adjudicating authorities set up under the provisions of Chapter XXVII the Companies Act, 2013 and deriving their jurisdiction under that legislation as well as the Insolvency and Bankruptcy Code, 2016 (“IBC”). Their quasi-judicial nature stems from the fact that the members appointed to adjudicate disputes that are within the NCLT’s and the NCLAT’s jurisdiction are of two kinds: (i) Judicial Members i.e. appointees who have had sufficient experience as practicing advocates or as Judges; and (ii) Technical Members i.e. appointees who have had sufficient experience in inter alia finance and accountancy inter alia as chartered accountants, company secretaries and cost accountants. This distinction between Judicial and Technical Members has been more specifically captured in Section 409 of the Companies Act, 2013.
2. Broadly, the NCLT and the NCLAT hear disputes arising out of the Companies Act, 2013 that pertain to inter alia oppression and mismanagement, restoration of companies and proceedings under the IBC. Even though the National Company Law Tribunal Rules, 2016 (“the NCLT Rules”) empowers the NCLT to receive evidence and conduct examination and cross-examination of witnesses in its proceedings[1], these proceedings are invariably conducted in a summary fashion inasmuch as no witnesses are directly examined or cross-examined before the Members of the NCLT or the NCLAT. The authors have not been able to identify any case where the NCLT has issued a commission for the collection of evidence in exercise of the provisions contained in Chapter XVIII of the NCLT Rules. The outcome of proceedings before these Tribunals are based on the documents produced, factual matrix surrounding the same and provisions of law that are applicable. Further, the pleadings in these proceedings are required to be supported by an affidavit which is duly sworn or affirmed on oath[2].
3. The jurisdiction of the NCLT (and consequently the NCLAT) must be understood in the context of the differences between the Companies Act, 1956 and the Companies Act, 2013. The path towards tribunalisation of matters arising out of the companies’ legislation has been a long and arduous one. The Companies Act, 1956 was amended in the year 1991 to introduce a “Company Law Board” with the power to hear certain matters arising out of it, most notably matters relating to oppression and mismanagement (which were earlier dealt with by the High Courts[3]). In the year 2002, the Companies Act, 1956 was further amended to introduce a version of National Company Law Tribunals. Challenges made to the constitutionality of these provisions persisted well into the tenure of the Companies Act, 2013; and only after the Supreme Court of India laid down guidelines relating to the constitution of specialised tribunals,[4] were the NCLT and the NCLAT as we know them today constituted. Section 430 of the Companies Act, 2013 specifically bars the jurisdiction of civil courts from entertaining any suit or proceeding which the NCLT or NCLAT is empowered to adjudicate upon. What this also means is that the NCLT and the NCLAT would be expected to deal with a dispute before it keeping in mind the same principles of natural justice and equity as would be binding upon a civil court. The ability of the NCLT to receive evidence and facilitate examination of witnesses is thus, in light of this, an integral part of its jurisdiction.
4. Given this specific jurisdiction legislatively assigned to the NCLT and the NCLAT and the fact that they are quasi-judicial authorities, many have been uncertain about the consequences of perjury in the NCLT or the NCLAT. In fact, given this specific jurisdiction assigned to the NCLT and the NCLAT, many wonder whether the NCLT and the NCLAT have the requisite jurisdiction to pass orders or issue directions in relation to perjury that may have been committed in proceedings before the NCLT or the NCLAT, as the case may be.
5. The provisions of Sections 195(1)(b)(i) and 340 of the Code of Criminal Procedure, 1973 (“CrPC”) state that “courts” are entitled to hold a preliminary inquiry for offences committed, such as perjury, that are committed before it. However, do the NCLT and NCLAT fall within the ambit of these “courts”?
6. Section 195(3) CrPC appears to give direction towards an answer to this specific question. It states that the term “court” appearing in Section 195(1)(b) CrPC means a Civil, Revenue or Criminal Court, and includes a tribunal constituted by or under a Central, Provincial or State Act if declared by that Act to be a Court. Therefore, it would only stand to reason that the NCLT and the NCLAT, being tribunals constituted under an Act of Parliament, would fall within the ambit a “court” appearing in Section 195(1)(b) CrPC. More importantly, Section 424(4) of the Companies Act, 2013 inter alia states that the NCLT and the NCLAT shall be deemed to be a civil court for the purposes of inter alia Section 195 CrPC. Furthermore, Section 424(4) of the Companies Act, 2013 also states that all proceedings before the NCLT and the NCLAT are “judicial proceedings” for the purposes of inter alia Section 193 of the Penal Code, 1860, the charging provision for committing inter alia perjury in a “judicial proceeding”.
7. These provisions seem to give a clear answer to the first two issues inasmuch as the NCLT and NCLAT are “courts” within the ambit of Section 195 CrPC and therefore, in the event a litigant perjures himself before the NCLT or the NCLAT, there can be legal redressal for the same. Interestingly, Section 195(1)(b)(i) states that such a “court” i.e. the NCLT or the NCLAT cannot take cognizance of crimes such as perjury, which begs the question – Is there really a forum for redressal in the event a litigant perjures himself before the NCLT or the NCLAT? It is here where Sections 340(1) and 340(4) CrPC fill in the gap and provide an answer.
8. The provisions of Section 340(1) r/w Section 340(4) CrPC state that a “court” i.e. the NCLT or the NCLAT may, upon application and after conducting a preliminary inquiry, make a complaint in writing to the Magistrate of the First Class concerned to take appropriate steps as such Magistrate would in the ordinary course of a criminal trial. A bare perusal of these provisions and a harmonious reading of the same would only suggest that the NCLT and the NCLAT do in fact have the requisite jurisdiction to entertain a matter of perjury that has been committed before it. However, these provisions also seem to make it clear the NCLT and NCLAT do not have the requisite jurisdiction to deliver judgment on these matters. They do, however, have the requisite jurisdiction to take up such a matter before the Magistrate of the First Class concerned, who has the requisite jurisdiction to hear the matter and deliver judgment.
9. In order to better appreciate the jurisprudence relating to the aforementioned provisions, a study of relevant judgments of our courts is necessary. For example, in Lalji Haridas State of Maharashtra [5] (“Laji Haridas”), a Constitution Bench of the Supreme Court of India held that “judicial proceedings” per Section 193 of the Penal Code, 1860 would include “any proceeding in any court” per Section 195(1)(b) CrPC. The relevant portions of this judgment have been culled out and reproduced herein below:
“6… Section 195(1)(b) [CrPC] with which we are concerned, provides that no court shall take cognizance of any offence punishable under the sections therein mentioned, when such offence is alleged to have been committed in, or in relation to, any proceeding in any court, except on the complaint in writing of such court or of some other court to which such court is subordinate; amongst the sections mentioned are Sections 193 and 228 IPC. The effect of this provision is that if an offence is alleged to have been committed either under Section 193 or Section 228 IPC, and it appears that the said offence was committed in relation to any proceeding in any Court, it is only if the said court, or the court to which it is subordinate, makes a complaint in that behalf that cognizance will be taken of the said complaint. A person cannot make a complaint in respect of the alleged commission of any of the offences specified in Section 195(1)(b) [ CrPC]; that is its plain effect.
* * *
-
It is somewhat remarkable that though Section 193 IPC, refers to a judicial proceeding, Section 195 CrPC refers to a proceeding in any court; it does not say a judicial proceeding in any court. Mr Desai contends that reading Section 193 IPC and Section 195(1)(b) CrPC 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 proceeding. 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 complaints as regards the said offences and that safeguard is provided by Section 195 (1)(b) CrPC. In other words, an offence which is treated as more serious by the first paragraph of Section 193 IPC 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 Section 195(1)(b) CrPC. On this argument, it is not necessary to consider whether the Income Tax Officer is a court or not, for, in substance, the contention is that as soon as Section 37(4) of the Act was enacted, the proceedings before an Income Tax Officer become judicial proceedings for the purpose of Section 193 IPC, and since they are classed under the first paragraph of the said section, they attract the protection of Section 195(1)(b) CrPC. 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.”
(emphasis supplied)
10. More recently, in Amit Vashistha Suresh [6] (“Amit Vashistha”), a Division Bench of the Supreme Court of India while relying on Lalji Haridas[7], held that when proceedings before the authority under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 were specifically in the nature of a “judicial proceeding”[8], then such proceedings can be equated to mean a “court” per Section 195(1)(b) CrPC. The relevant portions of this judgment have been culled out and reproduced herein below:
“6. Section 2(i) CrPC defined judicial proceeding to include any proceedings in the course of which evidence is or may be legally taken on oath. This power is indisputably statutorily vested in the authority holding proceedings under Section 7-A of the [Employees’ Provident Funds and Miscellaneous Provisions] Act [1952]. The legislature, in its wisdom, considering the seriousness of the adjudicatory process under the said provision, vested it with the nature of a judicial proceeding within the meaning of Sections 193 and 228 [of the Penal Code, 1860]. If the proceedings under Section 7-A are deemed to be a judicial proceeding by fiction, it must be carried to its logical conclusion. Therefore, such a judicial proceeding can well be equated for that purpose with a court under Section 195(1)(b)(i) [ CrPC]‚ The High Court failed to consider the effect of the judicial nature of the proceeding, simply by reference to Section 195(1)(b)(i) CrPC to hold that proceedings did not partake the nature of a court, and therefore, the complaint was not maintainable. A similar issue was considered in [Lalji Haridas][9]…”
(emphasis supplied)
Given this decision of the Supreme Court, one could easily draw a parallel between Section 7-A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and Section 424(4) of the Companies Act, 2013 and perhaps conclude that if the authority holding “judicial proceedings” under Section 7-A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is a “court” for the purposes of Section 195(1)(b)(i) CrPC, then given the specific provisions of Section 424(4), the NCLT and the NCLAT also ought to be considered to a be “court” considering they too hold “judicial proceedings”.
11. Furthermore, in Baskar Mendon Sadashiv Narayan Shetty[10] (“Baskar Mendon”), a Single Judge Bench of the Bombay High Court, while relying on Lalji Haridas[11] and Amit Vashistha[12], held that proceedings before a Labour Court would mean proceedings before a “court” within the meaning of Section 195(1)(b)(i) CrPC. The relevant portions of this judgment have been culled out and reproduced hereinbelow:
“6… In other words, the ratio of the Supreme Court’s judgment [in Lalji Haridas[13]] was that every judicial proceeding under Section 193 IPC must be treated as proceeding in a court for the purpose of Section 195(1)(b) [ CrPC], for that, as the Court held, would really carry out the intention of the legislature in enacting a provision such as Section 37(4) of the Income Tax Act.”
* * *
-
In [Amit Vashistha][14], the Supreme Court held proceedings under Section 7-A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which inter alia provides that such proceedings shall be judicial proceedings for the purpose of Section 228 IPC, as proceedings before a court within the meaning of Section 195(1)(b)(i). The Court held that if the proceedings under Section 7-A are deemed to be judicial proceedings by fiction, such fiction must be carried to its logical conclusion, and the proceedings should be equated with proceedings before a court under Section 195(1)(b)(i) [CrPC] for the purpose of offence covered under Section 228 IPC, following the law stated in Lalji Haridas[15].”
12. In summation, a harmonious reading of the aforementioned provisions of law and the judgments delivered in Lalji Haridas[16], Amit Vashistha[17] and Baskar Mendon[18] suggest the following:
- that proceedings before the NCLT and the NCLAT are “judicial proceedings” for the purposes of Section 193 IPC i.e. the charging provision for the offence of perjury;
- that the NCLT and the NCLAT fall within the ambit of a “court” vis-à-vis Sections 195(1)(b) and 340 CrPC;
- that the NCLT or the NCLAT (as the case may be) being a “court” for the purposes of inter alia Section 340(1) CrPC may, upon application and after conducting a preliminary inquiry make a complaint to the Magistrate of the First Class having jurisdiction for the commission of the offence of perjury in the NCLT or the NCLAT (as the case may be). Subsequently, such Magistrate of the First Class shall proceed to act upon such a complaint as it would in a regular criminal trial.
13. It may also be noted that this debate is relevant also in relation to the commission of an offence under Section 192 IPC. This provision is not limited to the filing of a false document before a “judicial authority” but includes making any entry in any book or register, or making any electronic record, with the intention that it be used as evidence in some judicial proceeding.
14. While these legislations, read with the aforementioned judicial pronouncements, provide a clear procedural framework with regard to perjury in the NCLT and the NCLAT, the NCLT Rules and the National Company Law Appellate Tribunal Rules, 2016 do not make it clear which officer of these Tribunals are specifically assigned to issue the “complaint” to the Magistrate of the First Class. However, considering how proceedings in India are carried out, it may well be the case that the Tribunals may direct the party alleging perjury to carry out service of such “complaint” and in the event the NCLT or NCLAT initiates suo motu proceedings pertaining to perjury, the Tribunal may direct a member of its registry to do the needful.
15. However, an ad hoc procedure may end up stifling the NCLT’s and NCLAT’s desire to proceed against persons who present false evidence or information. The judicial discipline of any institution, and the respect and authority it carries amongst the public at large, depends upon its ability to prevent abuse of its process. This would also include the power to punish for misconduct by a litigant during the proceedings. To this end, the President of the NCLT ought to exercise his administrative powers to nominate enough officers from each Bench to be empowered to initiate criminal action against perjurers. The interests of justice would be best served if the President also prepares a Standard Operating Procedure for the manner in which the NCLT would determine whether a litigant has committed an offence under the relevant provisions of IPC. Without this, each Bench may end up resorting to its own procedure which would certainly undermine the efficacy of these provisions as well as the faith in the judiciary.
*Advocate-on-Record, Supreme Court of India, BBA LLB, Symbiosis Law School (a constituent of Symbiosis International University)
** Advocate, Bombay High Court, BA LLB, Symbiosis Law School (a constituent of Symbiosis International University)
[Authors’ Note: The views expressed herein are personal and independent. No third party has funded inter alia the issuance of this paper or the research conducted by the authors. The authors have based their views in this research paper on prevalent legislation, judicial opinions/interpretations pertaining to the same and their experience as practicing advocates in India.]
[1] See Rules 39 & 40, as well as Chapter XVIII of the National Company Law Tribunal Rules, 2016.
[2]Although it may be noted that the oath can be affirmed by either a Notary Public registered under the Notaries Act 1952, or by an Advocate, as per Rule 127 of the National Company Law Tribunal Rules, 2016
[3]While Section 10(2) of the Companies Act, 1956 allowed the Central Government to designate District Courts to hear matters arising out of the Companies Act, 1956, no steps were taken in furtherance of this mandate
[4] Madras Bar Association v. Union of India, (2015) 8 SCC 583
[5] (1964) 6 SCR 700 : AIR 1964 SC 1154 : (1964) 52 ITR 423 : (1964) 2 Cri LJ 249
[7]Supra Note 5
[8]Akin to Section 424(4) of the Companies Act, 2013
[9]Supra Note 5
[11]Supra Note 5
[12]Supra Note 6
[13]Supra Note 5
[14]Supra Note 6
[15]Supra Note 5
[16]Ibid
[17]Supra Note 6
[18]Supra Note 10
Bhaskar Mendon has already been overruled in review ????????♂️