Case: M/S.Kapil Corepacks Pvt.Ltd Vs. Harbans Lal (D) Thr.Lrs

Late Harbans Lal (for short the `plaintiff of whom the respondents are the legal heirs) filed a suit against the appellants on 5.9.2006, for recovery of Rs. 66 lakhs. He alleged that second appellant and his brother late Sohan Lal Dua (father of third appellant) on behalf of the first appellant, had executed an Agreement/Receipt dated 7.9.2003 agreeing to sell him an industrial property for a consideration of Rs. 2,02,41,600/- and had received a sum of Rs. 33 lakhs made up of Rs. 9 lakhs by cheque and Rs. 24 lakhs in cash towards the said agreement. He further alleged that the appellants were unwilling to convey the property and failed to produce the documents necessary to satisfy him about their title to the property; and that therefore in terms of the agreement, he was suing for refund of double the amount advanced by him.3. The appellants filed a criminal complaint dated 23.2.2007 against Harbans Lal and certain others alleging that the purported signatures of second appellant and late Sohanlal Dua on the said agreement/receipt were forged and that they had not executed any such agreement/receipt. On 5.3.2007, they also filed their written statement in the suit filed by Harbans Lal denying the claim, and making a counter claim seeking a declaration that the agreement/receipt put forth by the plaintiff was forged and void. The appellants alleged that second appellant and his late brother had never signed the agreement/receipt and the signatures found thereon, (purporting to be the signatures of second appellant and his late brother) were clever forgeries; that they did not receive Rs.24 lakhs said to have been paid in cash; that the sum of Rs. 9 lakhs paid by cheque by Harbans Lal, was an advance to their company (first appellant) obtained by late Sohanlal Dua to tide over a short term financial crisis and the said amount was treated as share application money.4. In the said suit, the appellants filed an application under Section 151 of the Code for referring the agreement/receipt to a hand writing expert or a Government Forensic Laboratory for examination of the signatures therein and for keeping the said document in safe custody. On 31.7.2007 a learned Single Judge of the High Court made an order directing as follows : (a) parties to file their original documents within four weeks and matter to be listed before the Joint Registrar for admission/denial of documents on 27.9.2007; (b) matter to be listed before court for framing issues on 8.1.2008; (c) parties to be personally present on the next date of hearing for recording their statement under Order 10 Rule 2 of the Code; and (d) the original receipt/agreement of sale dated 7.9.2003 should be kept in safe custody in a sealed cover. In regard to the appellants application seeking reference to a hand writing expert, the learned single Judge directed asas the directions sought for sending the receipt/agreement to sell to a hand writing expert is concerned, I am of the considered view that the parties can lead their respective evidence including of hand writing expert in support of their pleas. Application stands disposed of.The appellants filed an appeal aggrieved by the refusal to refer the matter to a hand writing expert, contending that they had obtained a Preliminary Report dated 4.2.2007 from a Handwriting Expert with reference to a photocopy of the Agreement/Receipt; and that the Handwriting Expert could give expert evidence on the genuineness of the document, only if he got an opportunity to examine the original also. The said appeal was disposed of by a Division Bench of the High Court on 1.11.2007 with the followingour considered opinion, the apprehension of the learned counsel for the appellant is misplaced and unfounded as the appellant can file an application before the learned Single Judge seeking intervention of the court to permit a hand writing expert to examine the original receipt/agreement to sell dated 7.9.2003 take photographs etc. and give his opinion with regard to the genuineness of the said document.As and when any application is field by the appellant, the same shall be considered by the learned Single Judge in terms of the observations made herein giving due weightage to the submissions of the learned counsel appearing for thepursuance of it, the appellants filed an application on 7.1.2008 under Order 26 Rule 10A of the Code to permit their Handwriting Expert to inspect the original Agreement/Receipt dated 7.9.2003 and take photographs thereof so that he can give a further report as also evidence. They also made another application on 7.1.2008 to modify the order dated 31.7.2007 and defer the examination under Order 10 Rule 2 of the Code till the report of the Handwriting Expert was received. In the meanwhile, the plaintiff Harbans Lal having died on 12.11.2007, his legal representatives came on record on 29.4.2008.6. On 3.10.2008, a learned Single Judge directed the Principal Officer and Managing Director of the first appellant-company to appear in person on 12.11.2008 along with its annual returns filed with the Registrar of Companies, income tax returns and the balance sheets for the financial year 2003-2004 onwards. In pursuance of the said order, the second appellant appeared before the court with the relevant documents on 12.11.2008. The second appellant was examined under Order 10 Rule 2 of the Code and his statement recorded by the learned Single Judge, is extractedam the Managing Director of M/s. Kapil Corepacks Pvt.Ltd. Rs. 9 lacs received from the plaintiff is shown in the statement of account of the defendant No.1 - Company. However, the said amount is not reflected in the annual return of the defendant No.1-Company which was filed in the Registrar of Companies. It is correct for the period ending 31st March, 2004 receipt of share application money of Rs. 9 lacs is not shown and mentioned. As on 31st March, 2004, the paid up share capital of the defendant No. 1- Company was Rs. 51 lacs. This did not include Rs. 9 lacs. Defendant No.1-Company is a Pvt. Ltd. company. The plaintiff did not fill up any share application form/share allotment form before payment of money. I am not aware whether a request letter or a share application form is required to be filled up by a party before shares can be allotted. At no point of time, defendant No. 1 has recorded or mentioned entry of Rs. 24 lacs as received from the plaintiff in cash. We know the plaintiffs. We have known them for several years.Question : Please examine the stamp and the signatures and state whether they belong to the defendant No. 1 - Company and who has signed?(Witness was shown copy of Agreement/Receipt in a manner that only the rubber stamp and the signature on the document was visible and the rest portion of the document was covered by a blank paper. For the sake of convenience, the Agreement/receipt is marked `A)Answer : Stamp at point `A is that of defendant No.1 - Company and the same has been signed by me.Question : Are you ready and willing to pay back Rs. 9 lacs?Answer : We are ready and willing to pay Rs. 9 lacs. (emphasis supplied)On conclusion of the said examination, the learned Single Judge made the following order on 12.11.2008:"Statement of the Managing Director of the defendant No. 1 - Company has been recorded today in the court. The Managing Director has admitted his signature on the Agreement/receipt as well as stamp of the defendant No. 1 - Company on the said document. The said document was thereafter shown to the witness after removing blank paper. I may note here that the said document was denied at the time of admission/denial and in the written statement.Witness -Managing Director of defendant No. 1 Company has produced copy of annual returns. These will be indexed and filed in the Registry within two days. Copy of the same be supplied to the learned counsel for the plaintiff within one week.List this matter on 21st January, 2009 when all pending applications will be considered.Court on the next date will also examine whether or not to initiate proceedings against Mr. Harish Kumar Dua, Managing Director of defendant No. 1 Company under Section 340 Code of Criminal Procedure, 1973 and 195 of the Indian Penalsupplied)7. Feeling aggrieved, the appellants filed an intra-court appeal on 16.1.2009. A Division Bench of the High Court dismissed the said appeal, by the following order datedManaging Director of the appellant had denied his signatures earlier on the agreement/receipt but when his statement was recorded under order 10 CPC before the court, an admission came that the signature were his and stamp of defendant No. 1 company. The truth emerged though belatedly.We see nothing wrong with this process by which the learned judge has recorded statement under Order 10 of CPC which is a tool for the court to obtain elucidation of the matter and to obtain answer to any material question. The authority of the court to examine a party under Order 10 Rule 2 CPC can hardly be doubted and undoubtedly the crucial document is the agreement/receipt in respect of the matter infind that the appeal is wholly misconceived and without anysupplied)8. The said order is challenged in this appeal by special leave.

Reasoning: 13. The object of Order 10 Rule 2 is not to elicit admissions. Nor does it provide for or contemplate admissions. The admissions are usually contemplated (i) in the pleadings (express or constructive under Order 8 Rule 5 of the Code); (ii) during examination of a party by the court under Order 10 Rule 1 of the Code; (iii) in answers to interrogatories under Order 11 Rule 8 of the Code; (iv) in response to notice to admit facts under Order 12 Rule 4 of the Code; (v) in any evidence or in an affidavit, on oath; and (vi) when any party voluntarily comes forward during the pendency of a suit or proceedings to make an admission.14. The power of court to call upon a party to admit any document and record whether the party admits or refuses or neglects to admit such document is traceable to Order 12 Rule 3A rather than Order 10 Rule 2 of the Code. Nothing however comes in the way of the court combining the power under Order 12 Rule 3A with its power under Order 10 Rule 2 of the Code and calling upon a party to admit any document when a Party is being examined under Order 10 Rule 2. But the court can only call upon a party to admit any document and cannot cross-examine a party with reference to a document.Both the learned Single Judge and the Division Bench committed an obvious error in equating admission of a signature which is claimed to be a clever forgery, as an admission of execution of the agreement/receipt and the contents thereof. The observations of the learned Single Judge in his order that "The Managing Director has admitted his signature on the agreement/receipt as well as stamp of the defendant no.1 company on the said document" and the further observation that on the basis of the said answer, the second appellant could be proceeded under Section 195 of Indian Penal Code read with Section 340 of Code of Criminal Procedure, are without any basis. Equally unwarranted is the observation of the Division Bench : "The Managing Director of the appellant had denied his signature earlier on the agreement/receipt, but when his statement was recorded under Order 10 CPC before the court, an admission came out that the signature were his.... The truth emerged though belatedly". Admission must obviously be a conscious and deliberate act. Admission can be explained. An admission of a signature is not an admission of execution of a document. The power to identify the matters in controversy by examination of parties at the pre-trial stage under Order 10 Rule 2, is completely different from the power exercised by the court under Section 165 of the Evidence Act to put any question it pleases in any form, to a witness or a party in order to discover or to obtain proper proof of relevant facts, or the power under Order 18 Rule 14 of the Code to recall and examine any witness. The courts anxiety to do justice by speeding up the process of the suit should not itself lead toSatish Kumar, the Delhi High Court purported to rely upon the decision of this Court in B.K. Gupta v. Damodar H. Bajaj [2001 (9) SCC 742 ], to hold that prosecution under section 340 CrPC is permissible in regard to answer given under Order 10 Rule 2 of the Code. What this Court observed in B.K. Gupta was that a complaint can be filed against a person who has given false affidavit or evidence in a proceeding before the court. But a party giving an answer in an examination under Order 10 Rule 2 is neither giving evidence nor giving a affidavit. Section 340 of the Code will not be attracted with reference to any statement under Order 10 Rule 2 of the Code assuming that the Delhi High Court had laid down the law rightly in Satish Kumar, the said observation will not help the respondent in this case. In Satish Kumar, it was held that a false statement given in the examination under Order 10 Rule 2 of the Code can give rise to criminal prosecution under Section 340 of Cr.P.C. But in this case the High Court has proceeded on the basis that the second appellant spoke the `truth in response to the question in the examination under Order 10 Rule 2 of the Code. There is no finding that second appellant made a `false statement in his examination under Order 10 Rule 2 CPC. Therefore, the said decision will be inapplicable, even if it had been rightly decided.Consequently, the decision of the court to consider initiation of proceedings under section 340 Cr.P.C. read with section 195 IPC in regard to an answer to a question put under Order 10 Rule 2 of the Code is ill- conceived and wholly without jurisdiction.