IN CRR 1497 OF 2023 - CAL HC- No mala fide intention proven: Calcutta High Court refuses to quash investigational proceedings in criminal case pertaining to CIRP, says not compelled to get into the merits of allegations simply because petitioner alleges malus animus against the author of the FIR
Justice Bibek Chaudhuri [19-06-2023]

Read more: Ramesh Sharan Rai v. State of West Bengal

Simran Singh

New Delhi, June 30, 2023:  The Calcutta High Court recently dismissed a challenge to the investigational process of the investigating agency in an FIR registered in connection with a Corporate Insolvency Resolution Process (CIRP), stating that it was not desirable to quash a proceeding when criminal investigation was set in motion specially when the investigating authority has the scientific technicalities to examine the admitted and purported signature of a person.

The Single Judge Bench of Justice Bibek Chaudhuri was of the view that it was not desirable for the Court to take the duty of physically comparing the alleged fake signatures of the de facto complainant.

The Bench was of the view that the allegations were neither absurd nor inherently improbable. There were suitable grounds for proceeding with the investigation as there were reasons for doubts because “Mr. Joshi cannot upload the minutes of the EGM held on 20-02-2023 as this resignation letter, as well as Form DIR 12, is uploaded…Moreover, there was no express legal bar for the issuance and continuation of the proceedings, which would compel this court to quash the proceedings.”

The Court stated that it had no reason to believe that the present criminal proceeding was manifestly attended with mala fide or that the proceeding was maliciously instituted with an ulterior motive for wreaking vengeance on the accused and to spite him due to private and personal grudge. “This accused in this present case could not prove any mala fide intention. Still, even if they did, this Court would not have been compelled to go into the merits and demerits of the allegations simply because the petitioner alleges malus animus against the author of the FIR or the complainant, and use it as a reason to quash the FIR.”

The Bench consequently held that the matter at hand was not a rare case that justified the Court's interference at the investigation stage. The allegation in the FIR made out a prima facie case against the accused, and for this reason, the FIR registered for the offence under Section 120B, 406, 465, 467, 468, 471 and 420 of the Indian Penal Code, 1860 (IPC) pending before the Chief Metropolitan Magistrate, Calcutta should not be quashed. In view thereof,  he Court did not find any reason to interfere with the investigational process of the investigating agency in the instant case.

In the matter at hand, Palogix Infrastructure Private Limited (Palogix) was admitted into Corporate Insolvency Resolution Process (CIRP) under the provisions of Insolvency and Bankruptcy Code, 2016 (IBC) pursuant to an order of the National Company Law Tribunal. Sanjay Kumar Mishra was chosen as the successful resolution applicant and an order was passed by the NCLT at Kolkata approving the resolution plan submitted by him.

Mr. Mishra was also appointed as the managing director of GCL Logistics Terminal LLP, a limited liability partnership which resulted from a Memorandum of Understanding (MOU) executed between Palogix and Sanjay Kumar Mishra and Godavari Commodities Limited. Sanjay Kumar Mishra, along with Ramesh Saran Rai, Vishal Rai and Shweta Rai, who were minority shareholders of Palogix, created a resolution dated 01.02.2022 and appointed one Mr. Atul Paliwal as the director of Palogix.

It was contended by the opposing party that Mr. Mishra tried to part with the possession of Durgapur Freight Terminal belonging to Palogix in favour of one Durgapur Freight Terminal Private Limited (DFTL) and an agreement was entered by Palogix for transfer of license to carry on freight terminal business upon DPTL. It was contended that the accused persons have been diverting revenue receivable by Palogix to various third party entities in order to cause wrongful loss.

On 27.01.2023, GCL LLP gave a notice for convening an extraordinary general meeting (EGM) of the company on 20.02.2023. It was contended that the opposite party tried to upload relevant documents for the appointment of directors when the system showed an "error" message. This was when opposite party 2, one Mr. Deepak Joshi, who was the nominee director of GCL Logistics, came to learn that the accused person had fraudulently uploaded a resignation letter dated 18.02.2023 and uploaded Form DIR 12 to the Registrar of Companies, Kolkata and a purported board resolution dated 18.02.2023 in order to oust him from the company. As a result, the opposite party 2 had lodged a written complaint before Hare Police Station which led to the registration of a FIR under the aforementioned provisions of of IPC. Therefore, this instant revision petition had been filed for setting aside the above-mentioned FIR, which was lodged on the basis of a written complaint by Mr. Deepak Joshi.

The issue for consideration before the Bench was that whether the criminal proceeding instituted against the petitioners was liable to be quashed under Section 482 of the Criminal Procedure Code, 1973 (Cr.P.C.)

The Bench sated that with the extensive scope and ramification, inherent powers under Section 482 of CrPC included the power to stop any criminal case pending before any Court subordinate to the High Court. “Depending on the specifics of a case, these powers may be used to secure the ends of justice, prevent abuse of any court's process, and issue any orders as may be necessary to give effect to any order under the Code. The court can always take note of any injustice and stop a criminal proceeding by using its authority under Section 482 of the Criminal Procedure Code. No other clause of the Code restricts or limits their capabilities. Such natural powers should only be used sparingly and with caution.”

The Bench relied on the decision of a Supreme Court in the case of State of Haryana v. Bhajan Lal, wherein a detailed provision of Section 482 CrPC and the power of the High Court to quash criminal proceedings or FIR was summarised pertaining to the legal position by laying the following guidelines to be followed by the High Courts in the exercise of their inherent powers to quash a criminal complaint. Applying the guidelines to the facts of the matter at hand, the Court opined that the criminal proceeding should not be nipped in bud and quashed.

The Bench stated that the allegation made in the FIR made out a prima facie case of forgery under Section 468 of the IPC, as Mr. Deepak Joshi alleged that not only was his signature was forged in the resignation letter, but also his password had been changed. He had been impersonated by the accused as well as his e-mail id had been illegally and unauthorisedly accessed by the said accused. Therefore, it was of the view that taken at face value, the allegations made in the FIR did qualify as an offence under Section 468 and Section 471 of the IPC.

The Court stated that the crimes under Section 468 and Section 471 of IPC , as alleged by Mr. Deeepak Joshi, were cognizable offences and vide an order dated 06-04-2023, the prayer of the I.O for issuance of the warrant of arrest against the accused Mr. Sanjay Mishra was allowed by the Chief Metropolitan Magistrate, Calcutta. “When criminal investigation was set in motion, it is not desirable to quash a proceeding on the allegation that in DIR 12, the defacto complainant had put his signature and it was not forged. When the investigating authority has the scientific technicalities to examine admitted and purported signature of a person, it is not desirable for the court to take the duty of physically compare the signatures of the defacto complainant.”