H.L. Anand, J.
1. This judgment would dispose of R. S, A, 144/73 Cross-objections and Cr. M. (M) 175/73.
2. P. D. Jain and A. P. Jain, Appellants in R. S. A. 144/73 were carrying on business in partnership in the name and style of Bishamber Dass and Sons prior to March, 1958. In March, 1958, a joint stock company by the name of Bishamber Dass and Sons (P) Ltd,, was constituted by them with P. D. Jain as its Managing Director and the other appellant as its Chairman, and the said business was continued. It further appears that the assets of the firm were transferred to the company on its constitution. In May, 1965, the Board of Directors of the company decided to transfer the assets of the company to the said partnership firm. In 1969, the Board decided to wind up the company voluntarily. The decisions were ratified by the company in its general meeting in November, 1969. The winding up proceedings were commenced on January 5, 1970 and were completed on March 18, 1970. The winding up proceedings have since been confirmed by this Court by its order of January 29, 1971 by virtue of which the company was dissolved.
3. Sometime in July, 1968, the respondent H. W. Sehgal acting as Karta of M/s. Sehgal Industries Works, filed a suit, out of which the Second Appeal has arisen, against the company as well as the aforesaid individuals for recovery of Rs, 1800/-, Rupees 1500/- on account of value of goods supplied and Rs. 300/- on account of damages, on the allegation that P. D, Jain aforesaid had placed an order on me respondent for providing and hoisting of N. Trusses, Frame Rafters and Purlings at the company's factory at Mathura Road, near Faridabad on behalf of the company. The claim for damages was based on the plea that the defendants failed to supply the material with which the remaining contracted goods had to be fabricated and the respondent was thus deprived of the profit which the respondent would have made if the default had not been committed. The company, defendant No. 1 in the suit, denied the allegations that any order was placed by it with the respondent. The appellants, who were defendants Nos. 2 and 3, also denied the allegation that any order had been placed by them with the respondent By its judgment and decree of January 14, 1972, the trial Court returned the finding that the respondent was entitled to a decree for Rs. 1500/- with proportionate costs against the company on account of the goods supplied and the claim of the respondent to this: extent was decreed. The suit as against the appellants was dismissed with costs on the ground that on the respondent's plea in the plaint there was no privity of contract between the respondent and the appellants in their personal capacity. The claim of the respondent against the defendants for damages to the extent of Rs. 300/- was also dismissed. The respondent did not file any appeal against the rejection of. the claim of Rs. 1500/-against the appellants but challenged the judgment and decree of the trial Court in appeal with regard to the rejection of the claim of Rs. 300/- on account of damages. The respondent succeeded in the appeal and by its judgment and decree of April 19, 1973, the First Appellate Court granted to the respondent a decree for Rs. 300/- against the appellants in their personal capacity under Section 70 of the Contract Act on the finding that even though the contract had been entered into between the respondent and the company, the appellants had benefited by the work done by the respondent since the appellants were the owners of the factory and were liable to pay the damages to the extent of Rs. 300/- to the respondent. The Court justified the claim in these words:
The above evidence shows that there is no doubt that defendant No, 2 placed order on the plaintiff for structural work at 16/4 Mile Mathura Road, Faridabad. The defendants led evidence to show that the defendant No. 1 is not the owner of that factory and defendants 2 and 3 are owners of these premises. During the course of arguments the learned Counsel for the defendants has also admitted that defendants 2 and 3 are the owners of the factory at 16/4, Mathura Road, Faridabad. Since the plaintiff worked for that factory and defendants 2 and 3 are the owners thereof, Section 70 of the Indian Contract Act would be attracted. Section 70 of the Contract Act reads as follows:Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.
Since defendants 2 and 3 were benefited, the mere fact that the order was placed by defendant No, 2 alone in the name of Messrs Bishamber Dass and Sons, defendants 2 and 3 would both be liable.
The further claim of the respondent to compensatory costs under Section 35-A of the Code of Civil Procedure and to interest on the amount of damages was turned down.
4. It appears that in the course of the trial an application was made by the respondent under Sees. 476 and 479-A of the Code of Criminal Procedure for initiation of proceedings for the prosecution of the appellants on the ground that they had made fake claims in the defense to the suit and had been guilty of perjury, The trial Court did not devote any attention to this application. In the course of the hearing of the First Appeal the respondent filed an application alleging that the appellants had received large amounts from the liquidator and filed certified copies of the return filed by the liquidator showing that the company had discharged all its liabilities and the payment of over Rs. 1 lakh to the various contributories including the appellants. The return also gives an impression that all the out-standings had been realised by the liquidator. Pursuant to this disclosure die First Appellate Court examined both the appellants. In the course of their statements while P. D. Jain did not advert to the receipt of any money the other appellant stated that the liability of die company exceeded the assets and, thereforee, nothing was paid to him or the other appellant,
5. While disposing of the appeal the First Appellate Court after discussing the statements of the appellants recorded in the course of the trial of the suit and before it and the contents of the return of the liquidator held that, 'defendants 2 and 3 (appellants in the second appeal) knowingly gave false evidence before a Court' and directed that 'notice under Section 479-A of the Code of Criminal Procedure be served on defendants/respondents 2 and 3 to show cause why they should not be prosecuted for giving false evidence.'
6. By R. S. A. 144/73, the appellants challenge the judgment and decree of the First Appellate Court as also its order' by which it has directed that a notice under Section 479-A of the Code of Criminal Procedure be given to the appellants. By the tCrotss-objeclBons, the respondent reiterates his claim to' interest on the amount awarded by the First Appellate Court as well to special costs under Section 35-A of the Code of Civil Procedure, By Criminal Misc. (Main) 175/73, the respondent seeks the prosecution of the appellants for having committed various offences in the Courts below. An allegation has also beep made in the application to the effect that in the grounds of appeal before this Court, the appellants had made false representations.
7. I have heard learned Counsel for the appellants and Shri Sehgal, who has been appearing in person, at length. The controversy with regard to the civil liability of the appellants or of the company vis-a-vis the respondent except the claim for interest on the amount of damages and special costs does not survive because in the course of the hearing of the appeal, learned Counsel for the appellants offered to pay to the respondent the amount decreed in favor of the respondent by the trial Court against the economy as well as the amount decreed by the First Appellate Court against the appellants and which forms subject-matter of the appeal. The respondent has since been paid Rs. 300/-by the appellants as well as the principal amount of the decree made by the trial Court some dispute between the parries remains with regard to the payment of interest on the amount decreed by the trial Court with which the present proceedings are not concerned,
8. The questions that really survive for consideration are:
(1) Whether the First Appellate Court was justified in directing that a notice under Section 479-A of the Code of Criminal Procedure should be issued to the appellants.
(2) Whether the respondent was entitled to interest on the amount of damages awarded to him.
(3) Whether the respondent should have been allowed special costs under Section 35-A of the Code of Civil Procedure.
9. On the first question, It was contended on behalf of the appellants that the direction contained in the judgment of the First Appellate Court with regard to notice under Section 479-A of the Code of Criminal Procedure was based on the statements of the appellants recorded by the First Appellate Court, and that the said statements could not be considered to be false either on their Own terms or with reference to any material on the record. It was argued that in considering whether the said statements were false the First Appellate Court was not entitled to consider certified copies of the records, placed before the First Appellate Court by the respondents, for the purpose of initiating criminal action. It was further argued that in any event, even if the said statements are examined in the context of the aforesaid documents it could not be said that any false statements were made by the appellants, It was further argued that in arriving at the conclusion regarding initiation of criminal action, the First Appellate Court has neither given any reasons nor is there any indication the alleged perjury had been attributed to the appellants with reference to their statements at the trial or before the First Appellate Court. It was further contended that in any event neither set of statements would have justified the direction.
10. On the other hand, Shri Sehgal argued that the direction of the First Appellate Court with regard to prosecution had nothing whatever to do with the statements recorded by the First Appellate Court, but that it was based on the false statements made by the appellants in the course of their evidence before the trial Court and contended that in denying the existence of a contract with the respondent the claim of the respondent the genuineness of the various documents relied upon on behalf of the respondent the appellants had raised reckless and false pleas in the trial Court and supported the same by false statements and were, thereforee, guilty of perjury. Shri Sehgal made a strong plea for a very serious view of the matter being taken of the blatant lies alleged to have been told by the appellants in the course of their evidence to the extent of denying the very existence of the factory in relation to which the work had beep undertaken by the respondent.
11. It is well settled that criminal action for perjury should not be initiated unless the Court was satisfied that the evidence given in a Court was false to the knowledge of the witness or the party on the basis of the material available on the record and that there was reasonable probability of the charge being sustained in a criminal Court. Mere rejection of any evidence in a Civil action would not justify such a course because the decision in a civil Court has to be on the basis of preponderance of doubt while the standard of proof for a criminal charge is different, . It is no doubt true that perjury and forgery are rampant in judicial proceedings and it is necessary to curb these evils so that the course of judicial Doweedings is not sullied. It is equally necessary that a complaint should not be made of commission of an offence by a Court which would not stand judicial scrutiny. It is, thereforee, important that in dealing with applications for initiation of criminal action Court should deal with the allegations that an offence of perjury or forgery has been . committed and be prima facie satisfied that the evidence was false to the knowledge of the witness or the party and that there was reasonable probability of conviction on the material on the record.
12. In the present case, the First Appellate Court had before it the evidence of the appellants in the trial Court and their statements recorded by the First Appellate Court. While returning the finding that the 'appellants knowingly gave false evidence before a Court', the First Appellate Court did not indicate as to which of the statements of the appellants, it was referring to. The Judgment also gives no indication as to the particular or particulars in which the statements of the appellants were considered false nor does it specify the material on the basis of which these statements could be said to be false to the knowledge of the appellants.
13. Taking the statements of the appellants before the First Appellate Court, prima facie it could not be said that any false statement has been made or any statement could be false to the knowledge of the appellants. It was contended by Shri Sehgal that the statements were false in that the appellants stated that they had not received any money from the liquidator after the company had been wound up and that this statement was clearly belied with reference to certain copies of the records from the Registrar of Companies produced by Shri Sehgal before the First Appellate Court. So far as appellant P. D. Jain is concerned, he made no mention in his statement whether he had or he had not received any money from the liquidator. So far as the other appellant is concerned, be did say that neither he nor his brother, the other appellant, received any money from the liquidator. There is, however, nothing on the record of this case which may show that any of the appellants had received any money from the liquidator. The falsity of the statement has to be decided on the touchstone of the. material on the record and not by any material that may be placed in the course of arguments befit the First Appellate Court, The First Appellate Court could not have, thereforee, decided the falsity or otherwise of the statement of the appellants recorded by him on the basis of the aforesaid documents. Even the documents do not clarity make that any comment had actually been made to the appellants or the payments shown to them towards the returns of their capital invested in the company as shareholders was anything but a bonk entry. It could not, thereforee, be said the on the material available on the recommended appellant any statement which could be said to be false to their knowledge or that there was reasonable probability that such a charge would succeed in a criminal Court.
14. So far as the evidence in the trial Court is concerned, the trial Court itself took no action on the respondent's application for initiating criminal action for perjury against the appellants. Although the First Appellate Court has not given reasons why it came to the conclusion that the appellants gave false evidence nor it has indicated the particulars in which the evidence was false and the material on the basis of which it could be said that the appellants intentionally gave false evidence, an apparent reference must be to the pleas raised by the appellants on the question whether any contract was entered into between the respondent and the company or the appellants; as to whether the factory in question belonged to the company or the appellants personally and as to the liability of the company and the appellants to the respondent. The respondent had made a claim not only against the company but the appellants as well apparently because although the respondent was dealing with the appellants after the company had come into existence, there was some confusion as to whether the contract was between the respondent and the company or between the respondent and the appellants. This is so because while the respondent addressed the erstwhile firm, the replies were received from the company. It is also not clear on the record as to whether the factory in relation to which the supply was made by the respondent belonged to the company or to the appellants who were its managing director and chairman respectively. The claim of the respondent before the trial Court, thereforee, succeeded against the company and the claim as against the appellants was rejected, apparently because there was no privity of contract between the respondent and the appellants. Even the First Appellate Court, which was only concerned with the limited claim of the respondent for Rs. 300/- on account of damages, noticed the contention that the company was not the owner of the factory and that it was owned by the appellants. It consequently returned a finding that since the respondent 'worked for that factory and defendants 2 and 3 are the owners thereof' the appellant would be liable by virtue of the provisions of Section 70 of the Contract Act. It was further held that the appellants had benefited by the work said to have been done by the respondent and that the order was placed by appellant No. 1 in the name of the firm the appellants would be liable. It appears from this that prima facie there was some confusion as to whether the factory belonged to the company or the appellants in their individual capacities and a fair controversy as to whether there was any privity of contract between the respondent and the appellants, The statements of the appellants, thereforee, that they had not entered into any contract with the respondent and that the factory did not belong to the company, which have apparently been found to be false had, thereforee, to be seen in the context of the aforesaid confusion and controversy. There may be justification for the conclusion that the appellants were personally liable, but the company was not but such a finding would not ipso facto constitute sufficient material to establish that in raising the aforesaid pleas of denial of liability and as to the ownership of the factory, the appellants had intentionally made false statement or that such statement was false to the knowledge of the appellants., In any event the contention that on this material it could not be said that there would be a reasonable probability of criminal action would succeed cannot ' be lightly brushed aside.
15. Section 479-A of the Code of Criminal Procedure, 1898 provides that 'when any ....Court is of opinion that any person...has intentionally given false evidence....the Court shall...record a finding to that effect stating its reasons thereforee and may, if it so thinks fit, after giving the witness an opportunity of being heard, make a complaint....'
The expression of the requisite 'opinion', that recording of a 'finding' and of the 'reasons' for it are, thereforee, conditions precedent to the initiation of any action. These conditions have not been satisfied.
16. It is true that the First Appellate Court has instead of making a complaint directed that an opportunity be given to the appellants to show cause why the complaint be not made and in response of such a notice the appellants would be entitled to urge all the contentions raised before me and thus have an opportunity to perhaps persuade the Court to forbear from taking the proposed course. But even a notice under Section 479-A of the Code must, to be valid, be! founded on the opinion, the finding and the reasons referred to above. Moreover, to allow the proceedings to go on merely because of the opportunity that the appellants have to persuade the First Appellate Court to drop the proceedings would be eminently unjust to the appellants because the appellants would then be deprived of an opportunity to appeal against the order. This is so because while an order under Section 479-A of the Code of Criminal Procedure could be assailed in an appeal against the main judgment, an appeal against it or the complaint is barred by Sub-section (3) of that Section.
17. The order under Section 479-A of the Code must, thereforee, be set aside.
18. So far as the claim of the respondent for interest is concerned, it is difficult to justify it, A decree for Rs, 300/- was awarded to the respondent by the First Appellate Court on account of damages and the First Appellate Court has held, and rightly in my view, that the respondent would not be entitled to interest on the amount of damages obviously because the claim for damages could not be considered to be a claim for a sum certain, within the meaning of the Interest Act so as to entitle the respondent to interest.
19. As for the special costs, the First Appellate Court has declined the relief on the ground that under Section 35-A of the Code of Civil Procedure, such a relief could have been granted by the trial Court and that the 1st Appellate Court would have no jurisdiction to grant such a relief. This conclusion of the First Appellate Court is fully justified and I see no reason to interfere with it.
20. In the result, the appeal succeeds In part so far as it assails the direction with regard to criminal action which is set aside. The appeal in so far as it relates to the claim of Rs. 300/- must fail and is to that extent dismissed, The cross-objections of the respondent are also dismissed. Criminal Misc. (Main) 175/73 also fails as it was not pressed.
21. Ordinarily, I would have left the parties to bear their respective costs but it appears to me that in raising the plea of denial and persisting in it in the course of their statements, the appellants were not acting reasonably even though the conclusion of the First Appellate Court with regard to the propriety of criminal action may not be justified, The pleas of the appellants were ultimately found to be baseless with the result that the course of litigation was unnecessarily prolonged thereby causing considerable harassment and anguish to the respondent who has been doggedly pursuing his claim personally in all the Courts and has not only a justified grievance that he should have been harassed for a minor claim by the appellants and their company who are apparently carrying on business in a large way and a feeling of righteous indignation on his part is fully justified. I would, thereforee, direct that the appellants would pay the costs of the proceedings in this Court to the respondent.