ORDER
K.C. Ganjwal, Member
1. The Respondent No. 3 & Respondent No. 2 and 4 in main Company Petition No. 21 of 2003 have filed applications C.A Nos. 203 and 205 of 2004 for stay of proceedings of the main petition. Respondent No. 3 has filed written submissions in support of the application filed by Respondent Nos. 2 & 4 for stay of the company petition No. 21 of 2003 mentioned above. The respondents have also filed CA No. 235 and 237 of 2004 for placing additional documents on record.
2. The Respondent submitted that when the matter was listed for hearing on 02.08.2004 and the Learned Counsel for Petitioner had already concluded his arguments on last hearing i.e. 20.07.2004, the Petitioners registered a case in MECR 11/04 at Mata Ramabai Ambedkar Marg, Police Station, Mumbai and the hearing of CC No. 210/M/04 in the Court of the Additional Chief Metropolitan Magistrate, Mumbai which is pending and as such the present company petition be stayed. The Petitioners were directed to file their reply to the application filed by Respondents. The arguments on application of stay of proceedings of the main petition were completed on 02.09.2004.
3. It was argued by Learned Counsel for respondent/applicants that the issue in the company petition as well as in the criminal complaint filed by the Petitioner are identical. It was submitted that this Board is required to give finding on whether the Petitioner owns 55,005 shares or whether he owns 405 shares as alleged by the petitioners. If this Board is to give finding that Petitioner owns 55005 shares, such finding will necessarily have to be based on conclusions that Respondent Nos. 2 & 3 have tempered with the shareholding of the Respondent No. 1 company. Such a finding will incriminate Respondent Nos. 2 & 3 in the complaint registered at the instance of the Petitioners. The applicants are seeking stay of the preceding filed before this Board on the following legal principles:-
The party cannot adopt parallel Proceedings /forum shopping to agitated its grievance.
4. It was submitted that the court have held that party should not be encouraged to agitate in different court simultaneously. In the present case the petition filed in July 2003 and in page No. 26, 29, 30 & 31 of amended petition, specific allegations have been made that shareholding have been reduced. The Petitioner have filed a private complaint before the magistrate in 2004 and obtained an order Under Section 156 (3) of Criminal Procedure Code for investigation, with a view to harass to Respondent. Respondent relied upon the judgement in the matter of M.S. Sheriff v. the State of Madras and Ors. 1954 SCR 1144 wherein
It has been held that:
” that the simultaneous prosecution of civil and criminal proceedings regarding the same matter is likely to embarrass the accused and so ordinarily, and in the absence of special circumstances, the criminal proceedings should be given precedence and the civil proceedings should be stayed pending the termination of the criminal”
It was also submitted by learned counsel for respondent/applicants that in the matter of Kusheshwar Dubey v. Bharat Coking Coal Ltd. and Ors. 1988 Supp. 2 SCR 821,. The Hon’ble Supreme Court held as under:
“in the instant case, the criminal action and the disciplinary proceedings are grounded upon the same set of facts. We are of the view that the disciplinary proceedings should have been stayed and the High Court was not right in interfering with the trail court’s order of injunction which had been affirmed in appeal.”
The following two judgments were also relied upon in the matter of Amresh Tiwari v. Lata Prasad Dubey and Anr. 2000(4) SCC 440, wherein it has been held as under:-
“13. We are unable to accept the submission that the principles laid down in Ram Sumer’s case would not apply if the civil Court has already adjudicated on the dispute regarding the property and given a finding. In our view Ram Sumer case is laying down that multiplicity of litigation should be avoided as it is not in the interest on the parties and public time would be wasted over meaningless litigation. On this principle it has been held that when possession is being examined by the civil court are in a position to approach the civil court for adequate protection of the property during the pendency of the dispute, the parallel proceeding i.e. Section 145 proceedings should not continue”
In the matter of Sardar Iqbal Singh and Anr. v. Sardar Gurbaksh Singh and Ors. 2000(100) COMPCAS -0504 -CLB the Hon’ble Bench after considering the question as to whether the proceedings before the Company Law Board should continue if the similar proceedings are pending before the Civil Court has held as under-
“We have considered the pleadings and arguments of counsel Other than raising objections on the maintainability of the petition under Section 398 and also in view of the pending civil proceedings, counsel for the Respondents did not argue on the various allegations made in the petition. As far as the maintainability of the petition under Section 398 of the Act is concerned, since the allegations pertain to the control of the shares and the management, the same is covered under Section 398(1) (b) of the Act and as such the petition is maintainable. In regard to the proceedings before the civil court, we have gone through a copy of the plaint enclosed with the reply of the Respondents. All the allegations in the present petition except the one relating to additional issue of 1900 shares are found to have been included in the plaint. The various reliefs that the Petitioners have sought in the present petition also find a place in the relief portion of the civil suit. The Company Law Board has been taking a consistent stand that to avoid conflicting decisions on common issues, if any proceedings are found to have been initiated prior in time to the filing of the petition before the Company Law Board on issues covered in the petition, the Company Law Board would either stay the proceedings before it or dismiss the petition unless otherwise the earlier proceedings are withdrawn. Since we find that the matters covered in the petition are already before the civil court and since the proceedings are pending and the Petitioners have not chosen to withdraw the earlier proceedings, without going into the merits of this case, we stay our proceedings. Petition is stayed.
The Petitioners are at liberty to revive the petition through an application after the completion of the proceedings in the civil court, if they are so advised.”
The second legal principle quoted was whether the findings of the civil court would tie binding upon criminal court the respondent/ applicant submitted that in the matter of Karam Chand Ganga Prasad and Anr. Etc. v. Union of India and Ors. 1970 (3) SCC 694 it has been held that
“I is well established principle of law that the decisions of the civil court are binding on the criminal court”
In the matter of Ram Sumer Puri Mahant v. State of U.P. and Ors. 1985 (1) SCC 427, it has been held that:
“When a civil litigation is pending for the property wherein the question of possession is involved and has been adjudicated, we see hardly any justification for initiating a parallel criminal proceeding Under Section 145 of the Code. There is no scope of doubt or dispute the position that the decree of the civil court is binding on the criminal court in a matter like the one before us. Counsel for Respondents 2-5 was not a position to challenge the proposition that parallel proceedings should not be permitted to continue and in the event of a decree of civil court, the criminal court should not be allowed to invoke its jurisdiction particularly when possession is being examined by the civil court and parties are in a position to approach the civil court for interim orders such as injunction or appointment of receiver, for adequate protection of the property during pendency of the dispute. Multiplicity of litigation is not in the interest of the parties nor should public time be allowed to be wasted over meaningless litigation. We are therefore, satisfied that parallel proceedings should not continue and the order of the Learned Magistrate should be quashed. We accordingly allow the appeal and quash the order of the learner Magistrate by which the proceedings under Section 145 of the Code has been initiated and the property in dispute has been attached.:
In the matter of Apeejay Private Ltd. v. Raghavachari Narasingham and Ors. 1989 (2) CLJ 220 it has been held that:
1.1 The decision, therefore, in a civil suit will have a binding effect interse between the parties even before the criminal court but not canversly. Mr. Sarkar submitted that at best the observations of the Supreme Court in Karamchand’s case can be termed to be an obiter which does not have the same evidentiary value as that of a judgment. Assuming that the observations of the Supreme Court to be so, but it is now well settled that the obiter dicta of the Supreme Court has also a binding effect on to the High Court. At this juncture, however, short recapitulation of facts is needed. The criminal complaint filed in August 1988 under Section 409 read with Section 34 of the Indian Penal Code consist of two counts : the first count deals with the shares of EID Parry Ltd., the second count deals with the shares of Mahinder & Mahinder Ltd., numbering 1,76,000 equity shares valued at Rs. 69,94,013/- for which the civil suit has also been filed. As noted above, specific delivery of the shares has been prayed for, alternative the money claim has also been made representing the value of the shares. There is’ therefore, total identify of the subject matter and by reason of the position of law as above, it appears that in the event of a decree is passed against the Petitioners herein, conviction under Section 409 of the Indian Penal Code is almost a certainty. Incidentally it is to be noted that in criminal jurisprudence every person is deemed to be innocent unless contrary is proved. The onus lies, therefore heavily on the prosecution to prove the complicity of the accused persons, in the absence of which the prosecution will fail. But in the event of a judgment in favour of the plaintiff herein, such a procedural law will be given complete a goby which in my view, law courts ought not be encourage.
1.2
“1.5” The third aspect of the matter rests with expedience. In that event of both the civil and the criminal proceedings arise from the same set of facts, the criminal proceedings should be given all priorities as criminal jurisprudence dictate that the criminal trial ought to be with utmost expedition and the guilty party should be put to books as quickly as possible and within the immediate memory of the public in general. Looking at from the other way round a person may also innocent and he should be let off immediately and without any delay. In short, criminal justice should be swift and sure. It is undesirable to let thins slide till memories have grown to dim to trust. The decision of the Supreme Court in the case of M.S. Sarif v. State of Madras (Supra) lends supports to the view as above.
“1.7 Considering the above and since there is total identity of the subject matter, in the earlier criminal proceedings and the subsequent civil suit, in my view, question of further proceeding in the Civil Suit does not and cannot arise till after the disposal of criminal matter.
5. The learned counsel for respondent further submitted that findings of the Company Law Board under Section 10E of the Companies Act are judicial proceedings. Findings of the Company Law Board therefore, on the same set of facts is binding upon criminal court. It was submitted that in view of such Legal Position it will be against the fundamental right of respondent No. 2 to 4 to allow Civil proceedings to continue. It was further mentioned that this Board is called upon to findings on the basis of affidavits and photo copies of documents. The Board does not examine the veracity of genuineness of the documents relied upon by the parties. The decision therefore of the Company Law Board is based on preponderance of evidence whereas the criminal court onus to prove the case fairly relied upon by the prosecution. The prosecution has to prove the case beyond reasonable doubt. The findings of the Civil Court are binding upon criminal court. It was submitted by the learned counsel that it would be against the principal of natural justice and fundamental right of the respondents to allow the company petition to continue when in the event of an order being passed, conviction is almost a certain thing.
6. The Learned Counsel for respondent/applicant submitted that during the course of arguments, the petitioner cited the following two judgments:-
1. Shanti Prasad v. Kalinga Tubes Ltd. AIR 1962 Orissa 202
2. Syed Mahmood Ali v. R. Sundaramoorthy and Ors. AIR 1958 Madras 587.
It was submitted that proposition laid down in the above two judgments on the interpretation and meaning of “oppression is not disputed, however, the facts of these cases are completely distinguishable from the facts of the present case. As in the present case, the only dispute is regarding shareholding of the petitioner which has been recorded in the order of this Board dated 31.3.2003. The petitioners have alleged in various paragraphs in the petition that his shareholding has been fraudulently reduced. Identical allegations seem to have been made in the criminal complaint. The facts of the case cited by the petitioner are therefore distinguishable. It was further submitted by respondents that the petitioner also cited case of Santram Paper Mills v. C.C.E., Ahmedabad 1997 (96) ELRT 19. It was submitted that this case is no relevance as the Central Excise Act itself provide or penalty as well as prosecution and the dispute in the appeal was whether the product manufactured by the appellant was backing paper or mill board. The dispute raised by the criminal court is not known. The court only indicated that the prosecution in criminal court will be determined in its own manner. This case therefore, has no bearing on the arguments advanced by the petitioner.”
7. The Learned Counsel for respondent, therefore, stated that in view of the total similarity in the issues sought to be adjudicated upon by both criminal court and Company Law Board, the proceedings before the Company Law Board are liable to be stayed failing which the fundamental rights of the respondents are likely to be infringed and respondents may have to face conviction and prayed that the proceedings be stayed.
8. The counsel for respondent No. 3 filed a similar application to the one filed by respondent Nos. 2 and 4. The respondent No. 3 has also filed written submissions although he did not argue the case. It is submitted by the Learned Counsel for respondent No. 3 that it is well settled law that civil proceedings are to be stayed during the continuance and pendency of criminal proceedings. Respondent No. 3 relied on the following judgments in support of his contentions:
“I. M.S. Sheriff v. State of Madras reported in AIR 1954 SC 397:
15. As between the civil and the criminal proceedings we are of the opinion that the criminal matters should be given precedence. There is some difference of opinion in the High Courts of India on this point. No hard and fast rule can be laid down but we do not consider that the possibility of conflicting decision in the civil and criminal courts is a relevant consideration. The law envisages such an eventuality when it expressly refrains from making the decision of the Court binding on the other, or even relevant except for certain limited purposes, such as sentence or damages. The only relevant consideration here is the likelihood of embarrassment.”
II. Assumpcao Ribeiro and Ors. v. Elaviano Boaventura Salvadora and Ors. reported in AIR 1979 Goa, Daman and Diu 37:
1. The petitioners are defendants in a suit brought by the respondents for recovery of certain’ amount on the ground that the petitioners formed an unlawful assembly and entered into their house and damaged their doors, windows and furniture between 7.00 a.m. to 12 a.m. on 20.5.1975. This suit has been filed on 28m January, 1976. The petitioners and three others are now facing their trial instituted by the Ribandar Police on the basis of a complaint filed by the 6th respondent in relation to the incident that took place on 20,5.1975. The petitioners moved the civil court to stay the civil suit brought by the defendants until disposal of the Criminal Case on the ground that they would be embarrassed in their defence in the Criminal case if they are to file their written statements in the Civil Suit. The learned Civil judge Senior Division having rejected their prayer they have filed this present revision application.
2. In support of their case the petitioners cited the case of M.S. Sheriff V. State of Madras (AIR 1954 SCR 1144) wherein it is held that “the simultaneous prosecution of civil and criminal proceedings regarding the same matter is likely to embarrass the accused and so ordinarily, and in the absence of special circumstances, the criminal proceedings should be given precedence and the civil proceedings should be stayed pending the termination of the criminal”.
The learned counsel also relied on the following judgement:
Arvind Kalidas Wadookar v. Ramdas Devidas Joshi reported in 1996(2) Mh.L.J. 9O7.
2………The learned counsel submitted that these two matters since rest on the same set of facts, and in the civil proceedings since the applicant is to file a written statement revealing his defence and give evidence, the same would cause prejudice to the applicant who is the accused in the said criminal prosecution. The learned counsel stressed the point that in a criminal proceeding the accused is not bound to disclose his defence whereas in the civil suit is to proceed against him. The learned counsel made reliance on the decision which has held that simultaneous prosecution of criminal proceedings and civil suit will embarrass the accused, and since it is necessary with due regard to the nature of criminal proceedings that a speedy trial in the criminal proceedings is necessary. In the decision in Assumpcao Ribeiro v. Elaviano Boa Ventura Salvador Silveira, AIR 1979 Goa, Daman and Diu 37 the Judicial Commissioner also tok the same view relying on the decision of Supreme Court reported in AIR 1954 SC 397. Applying the principles laid down by the Supreme Court in the aforesaid decision, it is clear that the civil suit from which this revision arises has to be stayed till the civil suit from which this revision arises has to be stayed till the criminal prosecution under Section 500 of Indian Penal Code launched by the non-applicant is disposed of.
3. In view of the above, the revision is allowed. The impugned order of the learned joint Civil Judge, Sr. Dn. Akola is set aside and the civil suit from which this revision arises, is stayed till the disposal of the aforesaid criminal prosecution. No costs.
V.M. Paul Anthony v. Bharat Gold Mines Limited reported in (1999) 3 Supreme Court cases 679:
22. The conclusions which are deducible from various decision of this Court referred to above are:
i) Departmental proceedings and proceedings in a criminal case can proceed simultaneously as there are no bar in their being conducted simultaneously, though separately
ii) If the departmental proceedings and the criminal case are based on identical and similar set of facts and the charge in the criminal case against the delinquent employee is of a grave nature which involves complicated questions of law and fact, it would be desirable to stay the departmental proceedings till the conclusion of the criminal case.
iii) Whether the nature of a charge in a criminal case is grave and whether complicated questions of fact and law are involved in that case, will depend upon the nature of offence the nature of the case launched against the employee on the basis of evidence and material collected against him during investigation or as reflected in the charge-sheet.
iv) The factors mentioned at (ii) and (iii) above cannot be considered in isolation to stay the departmental proceedings but due regard has to be given to the fact that the departmental proceedings cannot be unduly delayed.
v) If the criminal case does not proceed or its disposal is being unduly delayed, the departmental proceedings, even if they were stayed on account of the pendency of the criminal case, can be resumed and proceeded with so as to conclude them at an early date, so that if the employee is found guilty, the administration may get rid of him at the earliest.
35. Since the facts and the evidence in both the proceedings, namely the departmental proceedings and the criminal case were the same without there being any iota of difference, the distinction, which is usually drawn as between the departmental proceedings and the criminal case on the basis of approach and burden of proof, would not be applicable to the instant case.
36. For the reasons stated above, the appeal is allowed, the impugned judgement passed by the Division Bench of the High Court is set aside and that of the learned Single Judge, in so far as it purports to allow the writ petition, is upheld. The learned Single Judge has also given liberty to the respondents to initiate fresh disciplinary proceedings. In the peculiar circumstances of the case, specially having regard to the fact that the appellant is undergoing this agony since 1985 despite having been acquitted by the criminal court in 1987, we would not direct any fresh departmental enquiry to be instituted against him on the same set of facts. The appellant shall be reinstated forthwith on the post of Security Officer and shall also be paid the entire arrears of salary, together with all allowances from the date of suspension till his reinstatement, within three months. The appellant would also be entitled to his cost which is quantified at Rs. 15,000/-
It is submitted that the above case considered whether a departmental enquiry(which is similar to a civil proceedings) and criminal proceedings could proceed simultaneously. The Hon’ble Supreme Court of India has laid down various guidelines as to when a departmental enquiry (civil proceeding) and criminal proceedings could proceed simultaneously. It is submitted that the Hon’ble Supreme Court of India lays down that if the departmental proceedings (civil proceeding) and the criminal case are based on identical and similar set of facts and the charge in the criminal case is of a grave nature which ‘involves complicated questions of law and fact, it would be desirable to stay the departmental proceedings (civil proceeding) till the conclusion of the criminal case. It is further submitted that this judgement applies to the facts of the present case as in the present case also the civil proceeding and the criminal case are based on identical and similar set of facts and the charge in the criminal case is of a grave nature which involves complicated questions of law and fact, it is desirable to stay the civil proceeding till the conclusion of the criminal case.”
9. The learned counsel for respondent No. 3 further submitted that it is pertinent to know that the petitioner has chosen not to file any reply to the present company application, inspite of being given an opportunity to file a reply. Hence all the contentions raised by respondent Nos. 2 and 4 are deemed to be accepted by the petitioner by non- traverse. The applicant has specifically averred that the substantial issue in the company petition namely, the reduction of share capital of the petitioner from Rs. 55, 005 shares to 405 shares is the one directly and substantially in issue in the criminal compliant filed by the petitioner pending the hearing of the arguments in this petition. It was further alleged that petitioner has not given a copy of criminal complaint to the respondent till the date of hearing of this application. It was also submitted that the contention raised by the petitioner if the proposition that civil proceedings cannot continue his upheld that anybody can file proceedings whereby the CLB will be forced to not adjudicate the matter is in correct. The petitioner has himself chosen to file a criminal compliant which is based on the very same facts on which the company petition is based. The rules of natural justice cannot be given a go by this Board as has been laid down by the Supreme Court of India, time and again in several decisions. It is also submitted that the contention raised by the petitioner that this Board has exclusive jurisdiction in respect of company matters and therefore in any criminal proceedings should not cause this Hon’ble Board to resent from its responsibility of adjudicating the petition filed under Section 397/398 of the companies act, is also incorrect. The respondent state that the company petition and criminal compliant being based on identical and similar facts and the nature of the charge in the criminal case as filed by the petitioner, being grave and because it raises complicated questions of fact and law, the company petition ought to be stayed.” The respondent No. 3 has also relied on the judgement of the Supreme Court in the case of Canara Bank v. Nuclear Power Corpn. Reported in (1995) 84 Comp. Cases 70 at page 95 to press his point that the contention of the petitioner is incorrect that Company Law Board is not a civil court:-
“Now, under Section 111 of the Companies Act as amended with effect from 31 May, 1991, the Company Law Board performs the functions that were performed by courts of civil judicature under Section 155. It is empowered to make orders directing rectification of the company register, as to damages, costs and incidental and consequential orders. It may decide any question relating to the title of any person who is a party before it to have his name entered upon the company’s register, and any question which Is necessary or expedient to decide. It may make interim orders. Failure to comply with any order visits the company with a fine In regard to all these matters it has exclusive jurisdiction (except under the provisions of the Special Court Act, which is the issue before us). In exercising the junction under Section 111 the Company Law Board must and does, act judicially. Its orders are appealable. The Company Law Board, further, is a permanent body constituted under a statute. It is difficult to see how it can be said to be anything other than a court, particularly for the purposes of Section 9A of the Special Court Act.”
10. Respondent No. 3 therefore prays that the Company Application as filed by Respondent No. 2 and 4 be allowed in terms of prayers (a) and(b).
11. The learned counsel for petitioner in the main petition and respondent in this application submitted that the stay application has been filed only with the sole purpose of delaying justice being rendered to the petitioner and the company in particular. When the petitioners made brief submissions and completed arguments on 1.7.2004 and the respondents are not ready to continue the arguments, the matter was adjourned to 20.7.2004. However, a request was made on behalf of respondents once again and the mater was adjourned to 2.8.2004 on the ground that respondents were busy. However, the respondents/applicants filed the stay application on 31.7.2004/6.8.2004 on behalf of respondent No. 2 and 4. It was submitted by respondent that if they compelled to take any submissions before this Board, it will amount to compelling them to be witness against themselves as the same would affect there interest in the matter pending before the Criminal Court at Mumbai and the reference was made to a judgement of Apeejay Pvt. Ltd v. Raghavachari Narasingham and Ors. (1989) (2) CLJ 200 . The conduct of the respondent therefore clear that they are only attempting to prevent the matter being disposed off on merit and are not acting bonafidely. The judgement of Apeejay Pvt. Ltd v. Raghavachari Narasingham relied upon was only misconceived. The pleadings in the present proceedings had already been completed and detailed .affidavits have been filed by both the parties. No further affidavits are required to be filed and both the sides have disclosed their case fully. The matter was only to be argued. Hence the argument that they would be required to disclose their defence no longer arises and the said judgement does not apply to the facts of the present case . The judgment in Apeejay Case of the High Court of Calcutta is apparently said to be on the basis of judgment of Supreme Court, titled as Karamchand Ganga Prasad Versus Union of India and Ors (AIRc 1971 SC 1244). This judgment has been quoted out of contest deliberately to mislead this Hon’ble Board. The Hon’ble Supreme Court n the matter of Karamchand Gangaprasad Vs Union of India specifically held that a Civil proceeding is not to be stayed on the ground that there is criminal proceeding pending . The learned counsel for petitioner referred to the relevant portion of the said judgement as under:-
“…..A Division Bench of the Delhi High Court after elaborately hearing the arguments advanced in the case on the various issues arising for decision in the case rejected the Writ Petition on the sole ground that in view of the pendency of the criminal proceedings before some Courts in the State of West Bengal, it is inappropriate for the High Court to pronounce on the questions arising for decision in the writ petitions. In our opinion the High Court seriously erred in coming to this conclusion…………..”
The above judgement of Hon’ble Supreme Court does not help the respondent but on the contrary shows that the present proceedings ought to continue. It was further submitted by the Learned Counsel for petitioner that the Supreme Court in the matter of Santram Paper Mills v. Collector of Central Excise, Ahmedabad (1997 (96) E.L.T. 19(S.C.) held as under:-
“…The Learned Counsel for the appellant brought to our notice that the appellant is also being prosecuted in a Criminal Court. It is obvious that the said case shall be determined on its own merits and according to law, uninhibited by the findings of the Tribunal….”
12. Accordingly, the argument that the respondents would be prejudiced by the continuance of the present proceedings is wholly without any basis.
13. The Learned Counsel for petitioner further submitted that the petitioner is only bringing to the notice of the Board the acts of oppression and mismanagement committed by the respondent against the interest of the company and this Board is to decide only the question whether there is any oppression/and/or mismanagement and ensure that the interest of the company is well protected. This Board is not deciding any rights or liabilities of any individual. This position has been made clear in the various judgements and relied on the judgement of Hon’ble High Court in Syed Mahomed Ali v. R. Sundaramoorthy and Ors. (AIR 1958 Madras 587) have held that the interest of the company are paramount when a petition Under Section 397/398 is filed. The relevant portion of the said judgement is as under:
” ….Proceedings under Sections 397 and 398 of the Companies Act are not like suits between private parties which could be compromise in any manner they choose. The interests of the Company are paramount……..”
“…..Both under Sections 397 and 398 the interests of the Company are of paramount importance and the proceedings should not be conceived as a mere dispute between individuals. Any compromise suggested should be acceptable to the Court…..”
14. The Learned Counsel for petitioner further submitted that two separate reliefs are possible arising out of the same facts or part of the facts which does not preclude different authorities from granting the reliefs as prayed and falling within the exclusive jurisdiction of this Board. The facts as contended before this Board dealing with the criminal matter even if similar to some extent would have no bearing on the present proceedings as this Board can grant relief keeping the Companies Act in mind while the court dealing with the Criminal proceedings will deal with the matter in the light of law applicable thereto. The respondents are not entitled to copies of criminal complaint in as much as it is only the appropriate court dealing with the complaint can pass appropriate orders. In the present case, only a complaint has been filed against some of the respondents namely Sham Vasant Kotak and Raj Vasant Kotak in their individual capacity and not in the capacity as a director. Accordingly, merely for the reason that Sham Vasant Kotak and Raj Vasant Kotak are also parties in the present proceedings as respondents, it cannot be said that this petition is against the same party or that there are any parallel proceedings. The complaint filed before the Addl Chief Metropolitan Magistrate, Mumbai is merely allegation against the accused referred therein under Section 126(3) of the code of Criminal procedure. The learned ‘Addl Chief Metropolitan Magistrate has yet not taken cognizance of the offences alleged to have been committed by the accused named therein but merely referred the complaint to the Police for investigation and to file a challan charge sheet if mere is evidence. The order of learned magistrate of 26.5.2004 on the first page of the complaint reads as under:
“Perused the complaint documents. Matter require investigation. Send the case to S.P. MRA Marg Police Station for investigation as per Section 156(3) Cr. P.C. He should file charge sheet in case of evidence “.
15. From the above order of the learned magistrate it is clear that there is no criminal proceeding pending so as to tantamount to a parallel proceeding as contended by the respondents. The applications for stay are liable to be dismissed on this ground alone. The learned counsel relied on the judgement of High Court of Orissa in the case of Shanti Prasad Jain v. Kalmga Tubes Ltd. and Ors (AIR 1962 ORISSA 202) held as mentioned herein under:
“…When the facts are fully set out an admitted, a party’s opinion about the legal effect of those facts is of no consequence in construing it…..”
“…having regard to the exclusive jurisdiction of the High Court under Sections 397 to 407 read with Section 10 of the Companies Act, 1956, the decision in the said suit could not operate as res-judicata; the question of granting reliefs against oppression to the minority shareholders and mismanagement of the company’s affairs under Sections 397, 398, 402 and 403 is the exclusive jurisdiction of the High Court alone, and no such reliefs, as prayed for herein, could be given in the said Title Suit; therefore, no order made in the said Title suit could operate as res-judicata, nor there could arise any question of alleged estoppel either in law or in facts of the case…..”
16. The learned counsel for petitioner further submitted that the petition contains various issues and is not limited only to the issue of tampering of records or illegality effecting changes in the share capital of the company. There are grave and serious acts of oppression and mismanagement committed by the respondents and in particular financial irregularities and siphoning of profit of the respondent company. The filing of the present application is an after thought and is only a tactic to delay the proceedings before this Board. In support of their case the petitioners referred to the following judgments:-
a. (1954) SCR 1144
MS Sheriff v. The State of Madras and Ors.
The issue was whether simultaneous prosecution of civil and criminal proceedings regarding the same matter should be allowed to continue. It was specifically held that the relevant consideration for giving precedence to the criminal mailer is the likelihood of embarrassment. Possibility of conflicting decisions is an irrelevant consideration. The law expressly refrains from making the decision of one court binding on the other or even relevant except for certain limited purposes (pages 1149 para 1)
The judgment specifically negates the arguments as advanced in the present case that the judgement passed by the civil court wilt operate as a conclusive proof in the criminal court. The far from supporting (he case of (he respondents, the above judgement, in fact, in anyways supports the case of the respondents, (he above judgement, in fact, in many ways supports the case of the petitioner.
b. (1988)Supp 2SCR 821
Kusheshwar Dubey v. Bharat Coking Coal Ltd. (Decided by the Apex Court)
The issue was whether disciplinary proceedings and criminal proceedings arising from the same set of facts can he allowed to run simultaneously.
It was specifically pointed out that there were authorities of the Apex Court (e.g. Jang Bahadur Singh case) in support of the position that there is nothing wrong in parallel proceedings being taken – one by way of the disciplinary proceedings and the other in the criminal court. It was also pointed out that in the Delhi Cloth and General Mills case (which was used to support the stay of disciplinary proceedings) it has been held that although employers stay enquiries pending the decision of the criminal trial courts and that is fair, it cannot be said that principles of natural justice require that an employer must wait for the decision atleast of the criminal court before taking action against an employee. (Paras 3 and 5, pages 2119 and 2120).
As set out in earlier judgments the paramount consideration is whether the continuation of the civil proceedings would prejudice the respondents in the criminal trial. It is the contention of the petitioner that it would not. Under the circumstances and in fact applying the ratio of the aforesaid judgement, this Hon’ble Board must continue with the hearing of (he present matter. ”
17. The learned counsel for petitioner also referred to :
(1985)1 SCC 427
Ram Sumer Puri Mahant V The State of UP and Ors. (2000)4 SCC 440
Amresh Tiwari v. Lata Prasad Dubey and Anr (Decided by the Apex Court)
18. The learned counsel submitted that the aforesaid judgment are grossly inapplicable and irrelevant in the present case. Firstly, the criminal matter under consideration is not akin to Section 145 criminal procedures code proceedings. While criminal proceedings grant certain reliefs (possession of the concerned properties to the parties, the criminal court in the present case would not be granting any relief to the petitioner. The aforesaid judgments dealt with the issue of dropping/dashing of criminal proceedings and not with the issue of stay of civil proceedings which is the issue in the present case. The respondents are seeking to rely on the aforesaid judgments in support of their stand as regards multiplicity of proceedings. The question of multiplicity of proceedings and hence stay/quashing would arise only if the civil suit is capable of giving same relief as sought in the criminal proceedings and vice-versa. This is not so in the present case, The learned counsel for petitioner accordingly submitted that in the circumstances of this case, application for stay filed on behalf of respondent be dismissed and the company petition be disposed of on merits.
19. I have gone through the written submissions of both the parties and also the arguments advanced by learned counsels of both sides. The learned counsel for respondents/applicants relied on the judgement of High Court of Calcutta in the case of Apeejay Private Ltd. v. Raghavachari Narasingham (1989(2) CLJ and submitted that it is a well established principle of law that decisions of Civil Court are binding on the criminal courts. The converse is not true. The Supreme Court also observed that it would be particularly appropriate to adopt such a course where a charge against a workman is of grave character, because in such a case it would be unfair to compel workman to disclose the defence which he may take before the criminal court. It was also submitted that the petitioners being accused in the criminal have the constitutional rights to maintain silence and not to be compelled to be a witness against themselves. The right granted under Article 20(3) of the Constitution of India cannot be taken away by adoption of a method as in the present case. It was also submitted that by reason of the finding of the Civil Court, the prosecution would not have to prove or adduce any further evidence which is a complete negation as regards criminal jurisprudence. Accordingly, it was emphasized that the proceedings in mis case should be stayed.
20. The learned counsel for respondents/applicants stated that this judgement of the High Court of Calcutta in the case of Apeejay Pvt. Ltd. v. Raghavachari Narasingham is apparently on the basis of judgement of Supreme Court, titled as Karamchand Gangaprasad and Anr. v. Union of India and Ors. (AIR 1971 SC 1244 (V 58 C 251) and this judgement has been quoted out of context. The Hon’ble Supreme Court in this judgement has specifically held that a Civil proceeding is not be stayed on the ground that there is criminal proceeding pending and quoted Para 4 of the judgement which reads as under:-
“A Division Bench of the Delhi High Court after elaborately hearing the arguments advanced in the case on the various issues arising for decision in the case rejected the writ petitions on the sole ground that in view of the pendency of the criminal proceedings before some Courts in the State of West Bengal, it is inappropriate for the High Court to pronounce on the questions arising for decision in the writ petitions. In our opinion the High Court seriously erred in coming to this conclusion. If the appellants are able to establish their case that the bank on export of maize from the State of Haryana had been validly lifted all the proceedings taken against those who exported the maize automatically fall to he ground. Their maintainability depends on the assumption that the exports were made without the authority of law. It is a well established principle of law that the decisions of the civil courts are binding on the criminal courts. The converse is not true. The High Court after entertaining the writ petitions and hearing arguments on the merits of the case should not have dismissed the petitions merely because certain consequential proceedings had been taken on the basis that the exports in question were illegal. For the decision of the controversy between the parties to the writ petitions neither the presence of the State of West Bengal nor the authorities who took penal action was necessary. The validity of the steps taken by them, as mentioned earlier, would depend upon the validity or otherwise of the export in question.
The Supreme Court ultimately directed the High Court to dispose of the matter on merits not withstanding the criminal proceedings. The petitioners in the main petition have filed further written submissions on 27.9.04 when this order was being dictated The petitioners have submitted that without prejudice, in the event, this Board grants stay of proceedings, the interim prayers of the petitioners be granted, which was also mentioned during the course of arguments by the learned counsel for the petitioner..
Both the parties quoted number of judgments which have been discussed in the above mentioned paras, as such, I do not intend to repeat them. In the instant case the parties have already submitted. their reply and rejoinder in the main petition and pleadings are complete. In fact Learned Counsel for petitioner had already concluded his arguments and in the meantime the petitioner filed a criminal complaint before the learned Metropolitan Magistrate of Mumbai against two respondents. The learned Magistrate has ordered for investigation by the Police and file charge sheet if there is evidence.
21. As already said, the pleadings in this case are complete and no further disclosure is required to be made by the respondents against whom the criminal case is filed. Therefore, the arguments advanced by the respondents/applicants are not tenable. Nothing prejudice is likely to affect them. Moreover, the Company Law Board has consistently taking in view that if both the parties on similar grounds have filed another civil case, the CLB would not encourage parallel proceedings. There is nothing to prevent this Board to proceed with this case when the criminal complaint has been filed which is only at stage of investigation by the police. Relying on the judgment of the Supreme Court in the case of Karamchand Gangaprasad and Ors. v. Union of India, I am of the view that the proceedings before the Company Law Board can continue even when criminal case is pending which might have been filed by either parties against each other. The matters before the Company Law Board are to be decided in summary proceedings on the basis of evidence by way of affidavits filed by the parties. The overall assessment of the case leads to the conclusion that CLB can proceed with the case when Criminal proceedings are pending. Having said so, however, I do not propose to proceed in this case for the reasons that the whole issue is evolving around the question of 55005 shares holding of the petitioner which have been fraudulently and by tampering certain documents alleged to have been reduced to 405 shares. The question of tampering the document fraudulently or otherwise has to be decided by the criminal court. This being the sole basis of the petition, I have no choice but to adjourn this case sine-die with following directions keeping in view the balance of convenience of the parties before this Board:
a. The respondents/applicants are directed not to dispose of any movable or immovable property or create any third party interest in the assets and properties of the company till the final disposal of this petition.
b. The respondents/applicants will supply duly certified list of transactions with statement of receipts and payments transaction-wise every month to the petitioner on or before 10th of each month.
c. In case of any payment/withdrawal of over Rs. 50,000 two days prior notice should be given to the petitioner by respondent giving full details. (No single transaction shall be broken to smaller amounts with a view to avoid giving notice to the petitioner).
d. The Board meetings would be held in accordance with the provisions of the Companies Act, 1956 and notices would be sent to the petitioner and all Directors by Regd. Post, AD with a copy to Company Law Board. Status quo be maintained regarding directorship of the respondent company.
e. All transactions of the respondent company will be through bank accounts and any cash receipts will be deposited with the bank account of the company.
f. The shareholding of both the parties as on date shall not be disturbed.
g. Articles of Association of the company shall not be amended during the pendency of this case.
22. With the above directions, the applications are disposed of and the petition is adjourned sine-die with liberty to apply to both the parties.