Allegations of Perjury in Financial Documents

The court’s legal analysis in a recent case delves into allegations of perjury related to financial documents. The focus is on discrepancies found in balance sheets and auditor reports, highlighting potential falsification in the presentation of crucial financial information. Stay tuned to understand the implications of this legal battle involving intricate financial details and accusations of misconduct.

Facts

The Respondents claimed to be lessors of the suit premises at Mogul Lane, Mahim, Mumbai.
The Petitioner reduced its share capital from Rs. 1,03,64,000 to Rs. 93,74,000 by resolution dated 01.03.2007.
The Registrar of Companies was informed of the reduction in share capital.
Witnesses testified to the reduction and surrender of shares by shareholders.
The Trial Court’s jurisdiction was challenged by the Petitioner based on the reduced share capital.
Discrepancies in audit reports regarding share capital were highlighted.
The Trial Court’s jurisdiction was upheld, and the suit for possession and injunction against the Petitioner is pending.
The Respondents terminated the tenancy, citing the initial higher share capital of the Petitioner.
Revised income tax return showing reduced share capital was filed post-termination notice.
The statutory auditor confirmed the actual paid-up share capital of the Petitioner as Rs. 1,03,64,000.
The trial of the suit on merits is ongoing before the Trial Court.
The Trial Court rejected the Petitioner’s contentions due to material discrepancies in the evidence of their witnesses.
No record of the 5 letters dated 09.03.2007 and 25.03.2007 was found, which the Petitioner claimed to have filed before the Registrar of Companies.
Electronic return was filed only on 05.09.2009, despite the mandatory requirement for electronic returns from 16.09.2006.
The Petitioner failed to comply with the procedure for buy-back of shares as prescribed under Sections 77A, 77B, and 159 of the Companies Act, 1956.
The High Court dismissed the revisional application filed by the Petitioner.
The Court of Small Causes affirmed the Trial Court’s findings.

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Arguments

The Petitioner attempted to manipulate the balance sheet by making a handwritten interpolation during the hearing of the SLP.
The manipulation involved crossing out ‘Weighted Average’ to show a different number of equity shares.
The original balance sheet dated 19.09.2008 did not contain any handwritten interpolation.
The Petitioner’s move to change the number of shares in the balance sheet was seen as an attempt to mislead the court.
The interpolated document was first presented before the court, indicating potential forgery to mislead the court.
The auditor’s report and balance sheet marked as Exhibit 13 contained handwritten corrections.
Column 12 of the balance sheet stated the number of Equity Shares as on 1/4/07 as 10,36,400 shares.
The contention was that the corrections were present since the beginning of the trial, indicating no merit in the Applicant’s accusation of perjury.
The Applicant was expected to raise any grievances regarding forgery during the trial, but no cross-examination was conducted on this aspect then.
The perjury application was made only after the SLP dismissal.
The Petitioner’s advocate did not use Column 12 of the balance sheet during the SLP argument before this Court.
Handwritten interpolations were found in Column 12 of both Exhibit 13 and Exhibit 82 balance sheets.
The certified copy of Exhibit 82, dated 19.9.2008, also contained the same handwritten interpolation in Column 12.
The advocate for the Petitioner at the trial Court had obtained a certified copy of Exhibit 13 which showed the same interpolations.

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Analysis

Trial Court found discrepancies in the balance sheet of the Petitioner Company regarding the number of equity shares bought back and the weighted average number of shares.
The Petitioner made handwritten modifications in the balance sheet submitted to the Court, changing ‘Weighted Average’ to ‘number of Equity Shares as on 1/4/07’.
Earnings Per Share (EPS) was calculated based on the original share capital of the Petitioner Company, indicating that the buy-back process had not been completed by 1.04.2007.
The Trial Court record and the documents filed before the Court show differences in the presentation of EPS in the balance sheet, with handwritten alterations present only in the Court documents.
The Petitioner is accused of committing perjury based on the discrepancies observed in the original and Court-submitted documents, indicating potential falsification.
The ‘Weighted Average’ number of shares in a company is adjusted for changes in shareholding over a financial reporting period, illustrating the importance of accurate representation in financial statements.
A prima facie case is established that the Petitioner fabricated evidence in the SLP proceedings before the Court by making significant alterations to a balance sheet.
A prima facie case is also established against Mr. R.K. Agarwal for swearing to the veracity of facts and documents in the SLP, despite relying on an original auditor’s report without any handwritten interpolations.
The Court refrains from commenting on the intention behind the interpolations made in the documents.
In a similar case previously, the Registrar General of the Court was authorized to file a complaint for perjury against the respondent.
The Secretary General of the Court is directed to designate an officer of the rank of Deputy Registrar or higher to file a complaint under Sections 193 and 199 of the Indian Penal Code against the Petitioner Company and Mr. R.K. Agarwal before a competent Magistrate in Delhi.