PRAKASH AGGARWAL versus GANESH BENZOPLAST LIMITED AND ANOTHER

Citation: [2023] 3 S.C.R. 844 · Decided: 28-04-2023 · Supreme Court of India · Bench: BHUSHAN RAMKRISHNA GAVAI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 3 S.C.R.
PRAKASH AGGARWAL
v.
GANESH BENZOPLAST LIMITED AND ANOTHER
(Criminal Appeal No. 1308 of 2023)
APRIL 28, 2023
[B. R. GAVAI AND VIKRAM NATH, JJ.]
Administration of Justice – Abuse of process of law – Held:
Respondent No.1-complainant has attempted to turn a purely
contractual dispute between the parties into a criminal case – Not
only that, there is an inordinate delay in lodging the complaint –
Further, the complaint even taken at its face value, does not disclose
that any of the ingredients of the offence complained of have been
made out – Thus, the present complaint is nothing else but an abuse
of process of law – Complaint filed before the trial court u/ss.403,
406, 420, 120B, IPC is dismissed – Impugned judgment and order
passed by the High Court and trial court are quashed and set aside
– Penal Code, 1860 – ss.120-B, 403, 406, 420 r/w s.34 – Security
Exchange Board of India Act, 1992 – s.15-HA – Arbitration and
Conciliation Act, 1996 – s.34.
Allowing the appeals, the Court
HELD: A perusal of the entire complaint would reveal that
the only allegation is that accused No.1 Company had sold the
shares to itself when the market price of the shares had fallen.
The averments are totally contrary to the terms agreed between
the parties in the Inter-Corporate Deposit Agreement (ICDA)
as well as in the Letter of Pledge (LoP). The ICDA as well as the
LoP specifically authorizes the accused persons/appellants to sell
the shares either to themselves or their group of companies.
Accused No.1 Company had already invoked the arbitration
clause on 14th August 2001. In the arbitration proceedings, a
specific stand was taken by the complainant/respondent No.1 that
accused No.1 Company should have invoked the pledge at the
stage of the first default, i.e. in May 2000. However, the accused
persons/appellants waited till August-September, 2001 to sell the
pledged shares which had in the meanwhile depreciated in value.
[2023] 3 S.C.R. 844
844
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Another allegation made before the arbitration proceedings was
that accused No.1 Company had manipulated the price of the
shares. Thus, though the complainant/respondent No.1 was aware
about the sale of shares as early in the year 2001, he did nothing
till the year 2006 when, according to it, it had applied to BSE and
NSE for details. Even after the year 2006, the complainant/
respondent No.1 waited till the year 2011 to lodge the complaint.
Though, it is sought to be urged by the complainant/respondent
No.1 before this Court that it came to know about the fraudulent
act of the accused persons/appellants in the year 2009, which
gave a cause of action to it to file the complaint, there is no
averment to that effect in the complaint. Insofar as the other
contention that the shares were sold at a lesser price than the
market price is concerned, there is no averment in the complaint
in that regard. In any case, the transactions have been made
through the BSE and NSE. As such, the contention in that regard
is without substance. In any case, a specific finding has been given
by the Arbitrator in that regard. The said arbitral award is under
challenge in the proceedings under Section 34 of the Arbitration
Act. The complainant/respondent No.1 has attempted to turn a
purely contractual dispute between the parties into a criminal
case. Not only that, there is an inordinate delay in lodging the
complaint. Though the complainant/respondent No.1 was aware
about the sale of the shares in the year 2001, it did not do anything
except filing an application before the Arbitrator. According to
the complainant/respondent No.1, it received the information from
the BSE and NSE in the year 2006, which fortified its suspicion
about the fraud being played. Even thereafter, for a period of 5
years, it was silent and filed the complaint only in the year 2011.
The complaint, taken at its face value, does not disclose that any
of the ingredients of the offence complained of have been made
out. The present complaint is nothing else but an abuse of process
of law. The impugned judgment passed by the High Court and
the order passed by the trial court are quashed and set aside.
The complaint filed before the trial court under Section 403, 406,
420 and 120B of the IPC is dismissed. [Paras 16, 17, 20-24][853-
E, G-H; 854-A-B; 855-D-H; 856-A-B, C-E]
PRAKASH AGGARWAL v. GANESH BENZOPLAST LIMITED
AND ANOTHER
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SUPREME COURT REPORTS
[2023] 3 

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