Administration of Justice – Abuse of process of law – Held: Respondent No.1-complainant has attempted to turn a purely contractual dispute between the parties into a criminal case – Not only that, there is an inordinate delay in lodging the complaint – Further, the complaint even taken at its face value, does not disclose that any of the ingredients of the offence complained of have been made out – Thus, the present complaint is nothing else but an abuse of process of law – Complaint filed before the trial court u/ss.403, 406, 420, 120B, IPC is dismissed – Impugned judgment and order passed by the High Court and trial court are quashed and set aside – Penal Code, 1860 – ss.120-B, 403, 406, 420 r/w s.34 – Security Exchange Board of India Act, 1992 – s.15-HA – Arbitration and Conciliation Act, 1996 – s.34.
Allowing the appeals, the Court
HELD: A perusal of the entire complaint would reveal that the only allegation is that accused No.1 Company had sold the shares to itself when the market price of the shares had fallen. The averments are totally contrary to the terms agreed between the parties in the Inter-Corporate Deposit Agreement (ICDA) as well as in the Letter of Pledge (LoP). The ICDA as well as the LoP specifically authorizes the accused persons/appellants to sell the shares either to themselves or their group of companies. Accused No.1 Company had already invoked the arbitration clause on 14th August 2001. In the arbitration proceedings, a specific stand was taken by the complainant/respondent No.1 that accused No.1 Company should have invoked the pledge at the stage of the first default, i.e. in May 2000. However, the accused persons/appellants waited till August-September, 2001 to sell the pledged shares which had in the meanwhile depreciated in value. Another allegation made before the arbitration proceedings was that accused No.1 Company had manipulated the price of the shares. Thus, though the complainant/respondent No.1 was aware about the sale of shares as early in the year 2001, he did nothing till the year 2006 when, according to it, it had applied to BSE and NSE for details. Even after the year 2006, the complainant/respondent No.1 waited till the year 2011 to lodge the complaint. Though, it is sought to be urged by the complainant/respondent No.1 before this Court that it came to know about the fraudulent act of the accused persons/appellants in the year 2009, which gave a cause of action to it to file the complaint, there is no averment to that effect in the complaint. Insofar as the other contention that the shares were sold at a lesser price than the market price is concerned, there is no averment in the complaint in that regard. In any case, the transactions have been made through the BSE and NSE. As such, the contention in that regard is without substance. In any case, a specific finding has been given by the Arbitrator in that regard. The said arbitral award is under challenge in the proceedings under Section 34 of the Arbitration Act. The complainant/respondent No.1 has attempted to turn a purely contractual dispute between the parties into a criminal case. Not only that, there is an inordinate delay in lodging the complaint. Though the complainant/respondent No.1 was aware about the sale of the shares in the year 2001, it did not do anything except filing an application before the Arbitrator. According to the complainant/respondent No.1, it received the information from the BSE and NSE in the year 2006, which fortified its suspicion about the fraud being played. Even thereafter, for a period of 5 years, it was silent and filed the complaint only in the year 2011. The complaint, taken at its face value, does not disclose that any of the ingredients of the offence complained of have been made out. The present complaint is nothing else but an abuse of process of law. The impugned judgment passed by the High Court and the order passed by the trial court are quashed and set aside. The complaint filed before the trial court under Section 403, 406,
420 and 120B of the IPC is dismissed. [Paras 16, 17, 20-24][853E, G-H; 854-A-B; 855-D-H; 856-A-B, C-E]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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