Mr. Sridhar Somashekar & Anr. vs M/s. Vinyas Constructions Pvt. Ltd. & Ors.

Per : Justice Sharad Kumar Sharma, Member (Judicial):

The instant Appeal is against the Impugned Order dated 23.08.2024. The Appellants herein happen to be the Applicants to the proceedings in CP / 34 / BB / 2019, which was preferred under Section 241, 242 read with Section 244 of the Companies Act, 2013.

When the aforesaid proceedings came up for consideration before the Ld. NCLT, the nature of the relief, which was sought for therein, among other things, pertained to the declaration of the Board’s Resolution dated 28.09.2018 and DIR 12 filed on 02.10.2018, as to be illegal and void and also for the declaration of the Board’s Resolution of 29.09.2016 and DIR 12 as filed on 14.10.2018 as to be illegal.

However, when the aforesaid proceedings came up for consideration before the Tribunal, the Ld. Tribunal observed that the parties were already under litigation in a criminal proceedings, and deriving its logic from the Judgment of Capt M. Paul Anthony V. Bharat Gold Mines Ltd., as reported in 1999 Vol III SCC Page 679 held that, since there happens to be a criminal proceeding already pending consideration before the competent Criminal Court qua the same set of allegations / the charges, the proceedings under Section 241 & 242 read with Section 244, is to be kept in abeyance till the Criminal Court decides the controversy at hand.

After having heard the Ld. Counsel for the Parties, this Appellate Tribunal is of the view that, the ratio as propounded in the matters of Capt M. Paul Anthony, was arising from a service jurisprudence, where, there were disciplinary proceeding and criminal proceedings too against the same set of allegations, which were being carried against the delinquent employee.

The issue came up for consideration in the matter of Capt M. Paul Anthony was that, as to whether, both the proceedings criminal and disciplinary proceedings can simultaneously go on, for the reason, as it was argued, that finding if any, is recorded in the criminal proceedings, it may have an adverse bearing on the disciplinary proceeding, which was being held on the service side and hence, it was observed that, the disciplinary proceedings was required to be kept in abeyance till the criminal proceedings was brought to an end or vice versa.

The ratio as propounded therein is in regard to the implications of the Civil and the Criminal proceedings, as to whether at all they could simultaneously be carried. This ratio may not be a precedent, which could be borrowed to be applied in the instant case, because, service jurisprudence is based upon a consideration of altogether different issues and aspects which are required to be considered. The principles laid down in the matters of Capt M. Paul Anthony, may not be applicable in the instant case because, in Capt M. Paul Anthony’s case, it was a comparative analysis, which was being made qua the disciplinary proceedings vis-a-vis its implications on the criminal proceedings.

There is another aspect which is required to be considered is that, under the Indian jurisprudence, criminal law or a criminal proceedings are basically aimed at, to be reformative in nature, which ultimately leads to a consequential action of imposition of a penalty or a punishment as contemplated under the provisions of the Indian Penal Code in relation to the respective offences which would have been the subject matter of the criminal proceedings.

We are of the considered view, that the conclusion drawn in the criminal proceedings cannot be borrowed for the purposes of deciding a civil proceedings. Civil Proceeding has to be independently decided, even if both proceedings deal with same set of charges / allegations and will require production of evidence which would be more or less common and therefore, a corresponding criminal proceedings for the same set of allegations may not be a reason to stall or keep on hold the civil proceedings at hold, until and unless the criminal proceedings are decided.

There is yet another logic, if that be the situation and civil proceedings are kept pending because of a corresponding criminal proceeding, then it will be very easy for the rival party to stall the civil proceedings by registering a FIR or a criminal complaint and then taking a plea that as a consequence of the registration of the FIR or a criminal complaint, since there happens to be a pending criminal investigation or a criminal trial, the civil proceedings may be kept on hold.

It cannot be the prescription of law to hold the civil proceedings, to be suspended sine-die, merely on the pretext that, there happens to be a pendency of a criminal case, because, if that is permitted to be perpetuated, it will be leading to an absolute abuse of process of law and that too particularly, when it is a settled principle that, any finding that is recorded in a criminal proceedings at the stage of determining of an act, the criminal liability of an act for offences covered under the IPC or any other law requiring criminal trial, is only intended to award punishment for the purpose of creating an example in the Society which will then act as a deterrent for the rest to refrain from engaging themselves, in commission of such acts. But, this is not the objective of civil proceedings which aim to adjudicate inter-se rights of the parties to the proceedings. Therefore, findings of a criminal case would not have any relevance on civil proceedings which have to be independently decided.

The reason behind the same is that, the scrutinization of evidence in both the proceedings have a different gravamen. In the criminal proceedings, the textual evidence which is led, is in relation to the establishment of a commission of an act complained of and therefore, it requires a different parameter for assessment as to whether an accused person is liable to be punished. The same is not the case in a civil proceedings.

Hence, merely because of the fact that, a criminal case is pending consideration, it will be absolutely irrational to keep the civil proceedings on hold for an indefinite period, by observing thereof, that the civil proceedings are premature and it could only revive back when the criminal proceedings are brought to an end.

This would be contrary to the basic percept of Justice Dispensation System, for the reason being that, a prolonged pendency of the criminal proceedings, genuine or otherwise should not be utilised as an instrument or a tool to stall the civil proceedings, which ought to be decided in accordance with the procedure laid down for the conduct of the civil proceedings as per the applicable law.

Thus, the conclusion which has been drawn by the Tribunal while passing the Impugned Order observing thereof that, the Company Petition itself is disposed of because of the fact that, there happens to be a criminal case pending and reserving the liberty to the Petitioner / Appellant herein, to re-approach the Ld. Tribunal after conclusion of the criminal proceedings would be absolutely an abuse of process and it would be also an instrument to delay the redressal of a grievance, which may have only a civil consequences for which the proceedings have been initiated.

Thus, the reasoning adopted by the Ld. Tribunal in the instant case in the light of the ratio of Capt M. Paul Anthony’s Judgment (supra), may not be applicable because, there are different pedestals which govern the aspects pertaining to the civil jurisdiction and the service jurisprudence and to reiterate, the principles of Capt M. Paul Anthony will not apply for this instant case.

Apart from it, M. Paul Anthony’s Judgment has been subsequently considered in various other Judgments of the Hon’ble Apex Court where clarification has been made by the Hon’ble Apex Court itself, while considering the implications emanating from the Judgment of Capt M. Paul Anthony, which is to the effect that, both the proceedings can simultaneously go on, since they do not have any bearing on each other and that the set of evidence which is required to be considered in a criminal proceedings, cannot be borrowed to be applied in a civil case. Therefore, the analogy drawn by the Ld. Tribunal while passing the Order holding the proceedings of the Company Petition to be pre-mature, by applying a wrongful principles based upon the ratio of Capt M. Paul Anthony’s Judgment (supra), is contrary to law.

Accordingly, the Impugned Order is considered to be not tenable and is hereby quashed. The matter is remitted back to the Ld. Tribunal to decide the Company Petition No. 34 / BB / 2019 in the matters of Sridhar Somashekar & Anr. V. M/s. Vinyas Constructions Pvt. Ltd. & 3 Ors., exclusively on its own merits, without being influenced with any finding or evidence which has been recorded in the criminal proceedings as it cannot be borrowed to be applied when the Company Petition proceedings are revived back to be decided on its own merits.

Hence, the Company Appeal (AT) (CH) No. 09 / 2025 is allowed. The Impugned Order is quashed. All pending Interlocutory Applications, if any, would stands closed.