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Kapil Corepacks Private Limited And Others v. Harbans Lal (Since Deceased) Through Lrs. .
Factual and Procedural Background
Harbans Lal (“the plaintiff”), now deceased and represented by the respondents, filed a suit on 5-9-2006 seeking recovery of ₹66 lakhs from the appellants. He alleged that the second appellant and his late brother, acting for the first appellant-company, executed an agreement/receipt dated 7-9-2003 to sell an industrial property for ₹2,02,41,600 and acknowledged receipt of ₹33 lakhs (₹9 lakhs by cheque and ₹24 lakhs in cash). When the defendants allegedly refused to convey the property, the plaintiff claimed double refund of the advance.
The appellants responded by:
- Filing a criminal complaint on 23-2-2007 alleging the agreement/receipt bore forged signatures.
- Submitting a written statement on 5-3-2007 denying execution of the document and counter-claiming for a declaration of forgery.
- Moving an application to send the document for handwriting analysis; the Single Judge permitted parties to lead expert evidence but declined immediate reference.
- Appealing that refusal; the Division Bench (1-11-2007) allowed them to seek expert examination through a fresh application.
- Filing on 7-1-2008 an application under Order 26 Rule 10-A CPC for expert inspection and another to defer examination under Order 10 Rule 2 until the expert report.
On 12-11-2008 the Single Judge examined the second appellant (Managing Director) under Order 10 Rule 2. By covering most of the disputed document and exposing only the seal and signature, the court obtained an admission that the stamp and signature “appeared” to be his and the company’s. The Judge fixed a future date to consider criminal proceedings under Section 340 CrPC and Section 195 IPC for alleged false earlier denials. The appellants’ intra-court appeal was dismissed on 20-1-2009. They then approached the Supreme Court by special leave.
Legal Issues Presented
- The scope and ambit of Order 10 Rule 2 of the Code of Civil Procedure.
- Whether, during an Order 10 Rule 2 examination, a court may confront a defendant with only the signature portion of a disputed, un-exhibited document (the rest being concealed) and compel identification of the seal/stamp and signature.
- Whether answers given by a party in such an examination can trigger prosecution under Section 340 CrPC read with Section 195 IPC.
Arguments of the Parties
Appellants' Arguments
- Confronting only the signature portion of a disputed document, while concealing the remainder, is a cross-examination device available to counsel, not to the court acting under Order 10 Rule 2 CPC.
- The procedure adopted exceeded the limited purpose of Rule 2, which is merely to elucidate matters in controversy, not to secure admissions or test evidence.
Respondents' Arguments
- Order 10 Rule 2 grants wide authority to the court to ask any questions and adopt any procedure necessary to discover the truth; confronting the signature in isolation was therefore permissible.
- High-court precedents allegedly permit courts to obtain admissions regarding execution of documents during such examinations.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Manmohan Das v. Ramdei, AIR 1931 PC 175 | Order 10 Rule 2 is for obtaining information on material questions, not for superseding regular trial under Order 18. | Cited to affirm that Rule 2 cannot be used as a substitute for evidence or cross-examination. |
| Arunagiri Goundan v. Vasantharoya Koundan, AIR 1949 Mad 707 | Examination under Rule 2 is not on oath and is meant only to elucidate controversies before trial. | Used to reinforce the limited, pre-trial nature of Rule 2 examinations. |
| Bhanwarlal Kavad v. Shyamsunder, AIR 1984 Raj 113 | Court may call upon a party to admit or deny original documents during examination. | Shown as distinguishable; it allows asking for admissions but not selective cross-examination. |
| Amrita Devi v. Sripat Rai, AIR 1962 All 111 | Admission under Order 10 Rule 2 can be binding. | Cited by respondents; Supreme Court noted it deals with admissions but does not justify present procedure. |
| Rajiv Srivastava v. Sanjiv Tuli, AIR 2005 Del 319 | Similar to Amrita Devi—admissions during Rule 2 examination can conclude the matter. | Distinguished for same reasons as above. |
| Gautam Adani v. Container Corp. of India, (2008) 150 DLT 281 | Order 10 Rule 2 is to identify, not adjudicate, the real issues. | Cited to support appellants’ view that Rule 2 cannot be used for adjudication or evidence gathering. |
| Satish Kumar v. Union of India, (2009) 108 DRJ 317 | Held that false statements under Rule 2 could attract Section 340 CrPC. | Supreme Court expressly disagreed, terming the view “erroneous and unsound.” |
| B.K. Gupta v. Damodar H. Bajaj, (2001) 9 SCC 742 | Complaint possible where false affidavit/evidence is given. | Clarified that it concerns affidavits/evidence on oath, not unsworn answers under Rule 2. |
Court's Reasoning and Analysis
The Supreme Court undertook a three-part analysis corresponding to the framed issues:
- Scope of Order 10 Rule 2: The provision serves only to clarify obscurities in pleadings and identify matters in controversy. Statements are unsworn, not evidence, and Rule 2 cannot be converted into selective cross-examination or a device to obtain binding admissions.
- Impropriety of Confronting a Partial Document: Showing only the seal and signature of a disputed, un-exhibited document constitutes cross-examination beyond Rule 2’s remit. The procedure usurps trial functions reserved for evidence under Order 18 and expert testimony. An admission of a signature in such circumstances is not an admission of execution; where forgery is alleged, the possibility of “clever forgery” necessitates full trial scrutiny.
- Inapplicability of Section 340 CrPC: Prosecution under Section 340 CrPC read with Section 195 IPC is permissible only for false evidence or fabrication given on oath. Answers in a Rule 2 examination are not on oath; hence they cannot found such prosecution. The High Court’s proposal to initiate proceedings was therefore without jurisdiction.
Holding and Implications
APPEAL ALLOWED; impugned orders dated 12-11-2008 (Single Judge) and 20-1-2009 (Division Bench) are set aside.
Consequences:
- The disputed “admission” obtained through partial confrontation is to be completely disregarded.
- No proceedings may be initiated under Section 340 CrPC based on answers given in an Order 10 Rule 2 examination.
- The trial court must determine the suit strictly on admissible evidence, with full opportunity for expert examination of the questioned document.
- The judgment clarifies nationwide that courts cannot employ cross-examination tactics during Rule 2 examinations and reinforces the unsworn, limited purpose of such proceedings, thereby preventing misuse for coercive admissions or criminal prosecution.
R.V Raveendran, J.— Leave granted. This appeal relates to the scope of Rule 2 of Order 10 of the Code of Civil Procedure (“the Code”, for short) and the correctness of invoking of Section 340 of the Code of Criminal Procedure (“CrPC”, for short) in regard to answers given by a party in an examination under Order 10 Rule 2 of the Code.
2. 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 the second appellant and his brother, late Sohanlal Dua (father of the 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 the 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 counterclaim seeking a declaration that the agreement/receipt put forth by the plaintiff was forged and void. The appellants alleged that the second appellant and his late brother had never signed the agreement/receipt and the signatures found thereon (purporting to be the signatures of the 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 (the 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 handwriting 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 the 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.
5. In regard to the appellants' application seeking reference to a handwriting expert, the learned Single Judge directed as follows:
“… Insofar as the directions sought for sending the receipt/agreement to sell to a handwriting expert are concerned, I am of the considered view that the parties can lead their respective evidence including of handwriting expert in support of their pleas. Application stands disposed of.”
6. The appellants filed an appeal aggrieved by the refusal to refer the matter to a handwriting 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 following observations:
“In our 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 handwriting 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 filed 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 the appellant.”
7. In pursuance of it, the appellants filed an application on 7-1-2008 under Order 26 Rule 10-A 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.
8. 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 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 extracted below:
“I am the Managing Director of M/s Kapil Corepacks (P) Ltd. Rs. 9 lakhs received from the plaintiff is shown in the statement of account of Defendant 1 Company. However, the said amount is not reflected in the annual return of Defendant 1 Company which was filed with the Registrar of Companies. It is correct for the period ending 31-3-2004 receipt of share application money of Rs. 9 lakhs is not shown and mentioned. As on 31-3-2004, the paid-up share capital of Defendant 1 Company was Rs. 51 lakhs. This did not include Rs. 9 lakhs. Defendant 1 Company is a private limited 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 1 has recorded or mentioned entry of Rs. 24 lakhs 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 Defendant 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 of the 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 1 Company and the same has been signed by me.
Question: Are you ready and willing to pay back Rs. 9 lakhs?
Answer: We are ready and willing to pay Rs. 9 lakhs.”
(emphasis supplied)
9. On conclusion of the said examination, the learned Single Judge made the following order on 12-11-2008:
“Statement of the Managing Director of Defendant 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 Defendant 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 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 21-1-2009 when all pending applications will be considered. The Court on the next date will also examine whether or not to initiate proceedings against Mr Harish Kumar Dua, Managing Director of Defendant 1 Company under Section 340 of the Code of Criminal Procedure, 1973 and Section 195 of the Penal Code.”
(emphasis supplied)
10. 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 dated 20-1-2009:
“The Managing 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 signatures were his and stamp of Defendant 1 Company. The truth emerged though belatedly.
We see nothing wrong with this process by which the learned Judge has recorded the statement under Order 10 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 in controversy.
We find that the appeal is wholly misconceived and without any merit.”
(emphasis supplied)
The said order is challenged in this appeal by special leave.
11. On the contentions urged by the learned counsel, the following questions arise for our consideration:
(i) What is the scope and ambit of Order 10 Rule 2 of the Code?
(ii) Whether the court could, in an examination under Order 10 Rule 2 of the Code, confront a defendant with only the signature portion of a disputed unexhibited document filed by the plaintiff (by covering the remaining portions of the document) and require him to identify the seal/stamp and signature?
(iii) Whether on the basis of the answer given by a party, in response to a question under Order 10 Rule 2 of the Code, the court could prosecute him under Section 340 of the Code of Criminal Procedure read with Section 195 of the Penal Code?
Re: Question (i)
12. We may first advert to the relevant provisions. Rule 2 of Order 10 of the Code as also Rules 1 and 3 are relevant and they are extracted below:
“ORDER 10
Examination Of Parties By The Court
1. Ascertainment whether allegations in pleadings are admitted or denied.—At the first hearing of the suit the court shall ascertain from each party or his pleader whether he admits or denies such allegations of fact as are made in the plaint or written statement (if any) of the opposite party, and as are not expressly or by necessary implication admitted or denied by the party against whom they are made. The court shall record such admissions and denials.
2. Oral examination of party, or companion of party.—(1) At the first hearing of the suit, the court—
(a) shall, with a view to elucidating matters in controversy in the suit, examine orally such of the parties to the suit appearing in person or present in court, as it deems fit; and
(b) may orally examine any person, able to answer any material question relating to the suit, by whom any party appearing in person or present in court or his pleader is accompanied.
(2) At any subsequent hearing, the court may orally examine any party appearing in person or present in court, or any person, able to answer any material question relating to the suit, by whom such party or his pleader is accompanied.
(3) The court may, if it thinks fit, put in the course of an examination under this rule questions suggested by either party.
3. Substance of examination to be written.—The substance of the examination shall be reduced to writing by the Judge, and shall form part of the record.”
13. Rule 1 enables the court to ascertain from each of the parties (or his pleader), at the first hearing whether he admits or denies such of those allegations of fact made in the pleadings of the other party, which were not expressly or by necessary implication admitted or denied by him. In other words, if the defendant in his written statement fails to expressly or by necessary implication admit or deny any of the plaint allegations, the court can ascertain from the defendant, whether he admits or denies the said plaint allegations. Similarly, if the defendant has made some allegations against the plaintiff in his written statement, and no reply is filed thereto by the plaintiff, the court can ascertain whether the plaintiff admits or denies those allegations. Resort to Rule 1 of Order 10 is necessary only in cases where the court finds that the plaintiff or the defendant has failed to expressly or impliedly admit or deny any of the allegations made against him, by the other party. Examination under Order 10 Rule 1 of the Code will not be necessary where the pleadings of each party have been fully and clearly traversed by the other party.
14. On the other hand, the examination under Rule 2 of Order 10 of the Code, need not be restricted to allegations in the pleadings of the other party, but can relate to elucidating any matter in controversy in the suit. Further, under Rule 1 of Order 10, the court can examine only the parties and their advocates, that too at the “first hearing”. On the other hand, Rule 2 enables the court to examine not only any party, but also any person accompanying either party or his pleader, to obtain answer to any material question relating to the suit, either at the first hearing or subsequent hearings.
15. The object of oral examination under Rule 2 of Order 10 is to ascertain the matters in controversy in suit, and not to record evidence or to secure admissions. The statement made by a party in an examination under Rule 2 is not under oath, and is not intended to be a substitute for a regular examination under oath under Order 18 of the Code. It is intended to elucidate what is obscure and vague in the pleadings. In other words, while the purpose of an examination under Rule 1 is to clarify the stand of a party in regard to the allegations made against him in the pleadings of the other party, the purpose of the oral examination under Rule 2 is mainly to elucidate the allegations even in his own pleadings, or any documents filed with the pleadings. The power under Order 10 Rule 2 of the Code, cannot be converted into a process of selective cross-examination by the court, before the party has an opportunity to put forth his case at the trial.
16. The above position of law is well settled. We need refer only to two decisions in this behalf. In Manmohan Das v. Ramdei AIR 1931 PC 175 the Privy Council observed: (AIR pp. 176-77)
“… No doubt under Order 10 Rule 2, any party present in court may be examined orally by the court at any stage of the hearing, and the court may if it thinks fit put in the course of such examination questions suggested by either party. But this power is intended to be used by the Judge only when he finds it necessary to obtain from such party information on any material questions relating to the suit and ought not to be employed so as to supersede the ordinary procedure at trial as prescribed in Order 18.”
(emphasis supplied)
17*. A Division Bench of the Madras High Court in Arunagiri Goundan v. Vasantharoya Koundan AIR 1949 Mad 707 held as follows referring to Order 10 Rule 2 of the Code: (AIR p. 708, para 3)
“3. … At the outset it must be pointed out that this [Order 10 Rule 2] does not provide for an examination on oath. This provision was intended to be used to elucidate the matters in controversy in suit before the trial began. This is not a provision intended to be used to supersede the usual procedure to be followed at the trial.”
18. 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.
19. 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 3-A 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 3-A 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.
Re: Question (ii)
20. Learned counsel for the appellants contended that confronting the signature portion of a disputed document by covering up the remaining portions is a tool in the arsenal of the cross-examining counsel. He submitted that the court examining a party under Order 10 Rule 2 of the Code while purporting to elucidate the matters in controversy, cannot confront the signature portion of a disputed unexhibited document by adopting the procedure of covering up the other portions of the agreement.
21. The learned counsel for the respondents on the other hand submitted that the power of the court under Order 10 Rule 2 of the Code, to examine any party with reference to any document is wide and unrestricted and therefore, any procedure adopted to arrive at the truth, could not be said to be a deviation from the normal examination under Order 10 Rule 2 of the Code. He relied upon the decisions of several High Courts in support of his contention that the court could confront a party with a document and seek his admission in respect of its execution. The decisions relied upon are Bhanwarlal Kavad v. Shyamsunder AIR 1984 Raj 113, Amrita Devi v. Sripat Rai AIR 1962 All 111, Rajiv Srivastava v. Sanjiv Tuli AIR 2005 Del 319 and Gautam Adani v. Container Corpn. of India (2008) 150 DLT 281. On a careful consideration of these decisions, we find that they are not of any assistance in this case.
21.1 In Bhanwarlal Kavad AIR 1984 Raj 113, a learned Single Judge of the Rajasthan High Court held: (AIR p. 116, para 6)
“6. … In my opinion, the court should resort to the examination of the parties under Rule 2, particularly on the documents, which are said to be signed by the parties. … it is better that the original documents are put to the party and admission or denial is obtained after visual observations by the party himself of the original documents. After looking into the documents, the party would be in a position to admit or deny the same, which would not be possible, if the same is got done by his pleader.”
21.2 Learned Single Judge of the Allahabad High Court in Amrita Devi AIR 1962 All 111 and the Division Bench of the Delhi High Court in Rajiv Srivastava AIR 2005 Del 319 held that an admission made by a party under Order 10 Rule 2 of the Code is conclusive against him, and the court can proceed to pass judgment on the basis of such admission.
21.3 In Gautam Adani (2008) 150 DLT 281, a Division Bench of the Delhi High Court referred to the scope of Order 10 Rule 2 thus: (DLT pp. 289-90, para 20)
“20. … we are of the view that examination of the parties is a matter that is per se intended not so much for determining any right or obligation in the suit or resolving or adjudicating upon a controversy as it is for identifying the precise area of controversy so that the same can be effectively adjudicated upon. The distinction between any order which adjudicates upon a controversy or a part thereof and another which simply attempts to identify the real area in controversy cannot be lost sight of. Inasmuch as the impugned order directed the defendants to remain present for recording their statements under Order 10 Rule 2, it was an attempt to identify the real issues in controversy and to elucidate matters which, in the opinion of the learned Single Judge, required to be elucidated.”
21.4 None of these decisions assists the respondents. Bhanwarlal Kavad AIR 1984 Raj 113 recognises the power of the court to call upon a party to admit a document. Amrita Devi AIR 1962 All 111 and Rajiv Srivastava AIR 2005 Del 319 reiterate the position that if a party makes an admission of fact, it will be binding on him. Gautam Adani (2008) 150 DLT 281 supports the contention of the appellants that the scope of Order 10 Rule 2 of the Code is limited to identifying the matters in controversy and not to adjudicate upon the matters in controversy.
22. The object of the examination under Order 10 Rule 2 of the Code is to identify the matters in controversy and not to prove or disprove the matters in controversy, nor to seek admissions, nor to decide the rights or obligations of parties. If the court had merely asked the second appellant whether he had executed the agreement/receipt or not, by showing him the document (by marking the document for purposes of identification only and not as an exhibit), it might have been possible to justify it as examination under Order 10 Rule 2 read with Order 12 Rule 3-A of the Code. But any attempt by the court, either to prove or disprove a document or to cross-examine a party by adopting the stratagem of covering portions of a document used by the cross-examining counsel, are clearly outside the scope of an examination under Order 10 Rule 2 of the Code and the power to call upon a party to admit any document under Order 12 Rule 3-A of the Code. What the High Court has done in this case is to ‘cross-examine’ the second appellant and not examine him as contemplated under Order 10 Rule 2 of the Code. We therefore hold that the purported examination under Order 10 Rule 2 of the Code, by confronting a party only with a signature on a disputed and unexhibited document by adopting the process of covering the remaining portions thereof is impermissible, being beyond the scope of an examination under Order 10 Rule 2 of the Code.
23. In this case the appellant-defendants denied having signed/executed any agreement/receipt in favour of the respondents. In the examination under Order 10 Rule 2, the Court did not ask the second appellant whether he had signed the document or not, by showing the document. What was done was confrontation of a signature alone without disclosing the document. When so confronted, the second appellant admitted the signature shown as his signature. But that is not an admission of execution of agreement/receipt. The specific case of the appellants in the written statement was that the agreement/receipt dated 7-9-2003 was a clever forgery. If a signature is a clever forgery, there is a likelihood of the same passing the normal scrutiny of the person to whom it is attributed. Similar is the position in regard to stamping the name of the company.
24. If a false signature is very different from the real signature, and is easily identifiable, it will be a “forgery” but not a “clever forgery”. Therefore, if the document allegedly containing the forged signature is covered in such a manner as to show only a stamp/seal and signature, and if a question is put by the court under Order 10 Rule 2 to identify the seal/stamp and the signature and if the witness identifies the signature as his and the stamp/seal as that of his company, there are two possibilities: The first is that what is shown is the genuine signature of the party and the genuine stamp of his company, and that he has identified and admitted them. The second is that they are clever forgeries and the party could not obviously identify the forgery when it was shown to him by covering other portions of the document, when he is given only a normal glance without an opportunity to scrutinise it properly. Whether it is a forgery or not will have to be determined with reference to the expert evidence and after the evidence of both the plaintiff and the defendants tested by cross-examination.
25. 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 Defendant 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 the Penal Code read with Section 340 of the 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”.
26. 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 17 of the Code to recall and examine any witness. The court's anxiety to do justice by speeding up the process of the suit should not itself lead to injustice.
Re: Question (iii)
27. The Division Bench has affirmed the order of the learned Single Judge that he will next hear whether he should proceed to initiate proceedings under Section 340 CrPC read with Section 195 of the Penal Code (“IPC”, for short). Section 195 IPC provides that whoever gives or fabricates false evidence intending thereby to cause, or knowing it to be likely that he will thereby cause, any person to be convicted of an offence punishable with imprisonment for life, or imprisonment for a term of seven years or upwards, shall be punished as a person convicted of that offence would be liable to be punished. Section 195(1)(b) CrPC provides that no court shall take cognizance of any offence punishable under Section 195 IPC when such offence is alleged to have been committed in, or in relation to, any proceeding in any court, except on the complaint in writing of that court.
28. Section 340 CrPC provides that when upon an application made to it in that behalf or otherwise, any court is of opinion that it is expedient in the interests of justice that an inquiry should be made into any offence referred to in clause (b) of sub-section (1) of Section 195 CrPC which appears to have been committed in or in relation to a proceeding in that court or, as the case may be, in respect of a document produced or given in evidence in a proceeding in that court, such court may, after such preliminary inquiry, if any, as it thinks necessary, record a finding to that effect, make a complaint thereof in writing, send it to a Magistrate of the First Class having jurisdiction, etc. Thus the power under Section 340 CrPC read with Section 195 IPC can be exercised only where someone fabricates false evidence or gives false evidence. By no stretch of imagination, a party giving an answer to a question put under Order 10 Rule 2 of the Code when not under oath and when not being examined as a witness, can attract Section 195 IPC and consequently cannot attract Section 195(1)(b) and Section 340 CrPC.
29. The respondents relied upon the decision of a Division Bench of the Delhi High Court in Satish Kumar v. Union of India (2009) 108 DRJ 317 to contend that there can be a prosecution under Section 340 CrPC in regard to a statement under Order 10 Rule 2 of the Code. The conclusion in Satish Kumar (2009) 108 DRJ 317 that a party can be prosecuted under Section 340 CrPC for his answers in an examination under Order 10 Rule 2 is erroneous and unsound. As noticed above, the answers to an examination under Order 10 Rule 2 are not on oath and therefore the party is not deposing as a witness on oath when giving his answers under Order 10 Rule 2 of the Code.
30. In Satish Kumar (2009) 108 DRJ 317, 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 (2001) 9 SCC 742 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 an 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 (2009) 108 DRJ 317, the said observation will not help the respondent in this case.
31. In Satish Kumar (2009) 108 DRJ 317 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 CrPC. But in the instant 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 the 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.
32. Consequently, the decision of the Court to consider initiation of proceedings under Section 340 CrPC 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.
Conclusion
33. In view of the above, this appeal is allowed. The order dated 20-1-2009 of the Division Bench and the order dated 12-11-2008 of the learned Single Judge, directing the matter to be listed to consider whether the second appellant should be prosecuted under Section 340 CrPC, are set aside. As the process of confrontation of an unexhibited document by covering portions of it by a court is beyond the scope of examination under Order 10 Rule 2 of the Code, the answer to such question shall be excluded from consideration and completely disregarded. The court conducting the trial and hearing arguments shall decide the suit in accordance with law on the basis of evidence placed and ignore the said “answer” under Order 10 Rule 2 of the Code.
34. We make it clear that whatever we have stated or observed during the course of this judgment, are only in the context of examining the correctness of the procedure adopted under Order 10 Rule 2 of the Code, and not intended to be findings of fact.
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