An attempt to institute a criminal case against leading NRI industrialist Lord Swraj Paul has failed with the Calcutta High Court quashing criminal proceeding after coming down heavily on the complainant company controlled by his brother-in-law MD Jindal.
Machino Finance, the company controlled by Jindal, had filed an FIR, alleging that shares held by it and Machino Plastic in Caparo Maruti Limited (CML) in which the Pauls have majority shares, were cancelled illegally.
The FIR was registered against the NRI industrialist, his son and others for allegedly entering into criminal conspiracy to forge the documents relating to CML's shares.
"Allegations made in FIR do not reveal prima facie materials of any kind of offence allegedly made in the FIR sufficient to allow investigational proceeding," Justice PN Sinha said.
The court said the allegations made in the FIR or complaint were "absurd" and "inherently improbable" and "on the basis of such allegation no prudent person would ever reach a conclusion that there is sufficient ground for proceeding against the accused."
"It is clear that the complainant (Machino Finance) came to court not with clean hands and suppressed material facts...," the court said.
Caparo, Maruti and Jindal had entered into a joint venture agreement (JVA) to set up Caparo Maruti Ltd in which Caparo Group had 60 per cent shares, Maruti Udyog Ltd 20 per cent and Jindal 20 per cent.
The NRI industrialists had alleged that Machino Finance got nearly 10 per cent shares of CML from Jindal's quota of 20 per cent in violation of JVA which did not permit allotment of shares of CML to any outsider except the three groups.
Later, it was found Jindal controlled Machino Finance was the outsider as it had in its affidavit before the Company Law Board said that it was not the part of Jindal and Associates and had acquired shares of CML on its own.
"Prima facie it appears that Jindal, while he was acting as Chairperson in Board meeting, acted illegally by alloting shares to outsiders or to members who were not parties to the JVA and such illegal action of Jindal was corrected by Board of Directors by deleting the names of two unauthorised companies (Machino Finance and Machino Plastics)," the court said.
The High Court rejected the allegation of Machino Finance that the resolution adopted by the Board of Directors of CML to cancel shares and deletion of name of the company from the register was forged.
"There is nothing to show that the resolution adopted in the Board meeting was forged or that the agenda of the Board meeting was also manufactured. The deletion of name of complainant from register of members cannot be termed as forgery."
The bench also pulled up the Jindal-controlled company for lodging the FIR against the NRI and others and held that "such a procedure was adopted only to create pressure on the members of the Board of Directors of CML."
Caparo group's counsel Pradip Ghosh contended that Lord Paul had nothing to do with the company and neither did he hold any official position nor had any shares of the company in his name.