Supreme Court orders perjury complaint: balance sheet ‘interpolation’ in SLP triggers Section 340 CrPC action
Case name: M/s New Era Fabrics Ltd. v. Bhanumati Keshrichand Jhaveri & Ors. (In re: IA under Section 340 CrPC at the instance of Nikhilesh Keshrichand Jhaveri)
Date of Order: 03 March 2020
Citation: Interlocutory Application No. 61907 of 2018 in MA No. 1301 of 2018 in SLP (C) No. 3309 of 2018
Bench: Mohan M. Shantanagoudar, J.; R. Subhash Reddy, J.
Held: A prima facie case of fabrication of evidence was made out against the petitioner company and its director in relation to a balance sheet filed before the Supreme Court in the SLP; the Court directed initiation of proceedings under Section 340 CrPC and ordered that a complaint under Sections 193 and 199 IPC be filed before the competent Magistrate at Delhi.
Summary: The landlords sued for eviction in the Small Causes Court, Mumbai, asserting that the tenant, a public limited company, was outside the Maharashtra Rent Control Act due to paid-up capital exceeding ₹1 crore. The tenant pleaded a March 2007 buyback reduced capital below the threshold and relied on its 2007-08 audited financials. The trial and appellate courts (and later the High Court) found discrepancies—particularly that the EPS table still reflected the same weighted average number of shares as the previous year despite the claimed buyback—and held that paid-up capital at termination remained above ₹1 crore; the SLP against those findings was dismissed. Thereafter, the landlords applied under Section 340 CrPC alleging that, in the SLP, the tenant had produced a tampered balance sheet in which the EPS row was altered by hand: the phrase “Weighted average number of Equity Shares” was struck out and replaced with “number of Equity Shares as on 1/4/07,” thereby attempting to reconcile the EPS with the buyback narrative. Comparing the original trial-court exhibits with the documents filed in the SLP, the Supreme Court found that the handwritten modification appeared for the first time before it and represented a significant alteration. The Court concluded that there was reasonable likelihood that offences concerning false evidence had been committed and that it was expedient in the interests of justice to proceed.
Decision: Application allowed. The Secretary General is directed to depute an officer (Deputy Registrar or above) to lodge a complaint under Sections 193 and 199 IPC against M/s New Era Fabrics Ltd. and its director R.K. Agarwal before a competent Magistrate at Delhi and to ensure prosecution in accordance with law.