IMPORTANT POINT
The proposed accused do not have a right to be heard at the stage of inquiry under section 340(1) of the CrPC.

JUDGMENT :

Moushumi Bhattacharya, J.

1. The petitioner has taken out an application under section 340 of The Code of Criminal Procedure, 1973 for a preliminary enquiry into the alleged fraudulent and illegal acts of the respondents in connection with AP 124 of 2023. AP 124 of 2023 was filed under section 11(6) of The Arbitration and Conciliation Act, 1996 for appointment of arbitrator.

2. The only point which falls for adjudication is whether the respondents have a right to be heard in the proceedings.

3. Learned counsel appearing for the respondents urges, with considerable vehemence and industry that the proceedings under section 340 of the CrPC allows an opportunity of hearing to the proposed accused and places emphasis on the words used in the said provision. According to counsel, the word “inquiry” in section 340(1) contemplates intervention by the Court and hence envisages that the proposed accused be heard before an inquiry is ordered into the offence referred to in section 195(1)(b) of the CrPC.

4. Learned counsel appearing for the petitioner, on the other hand, relies on several decisions of the Supreme Court including that of Pritish vs. State of Maharashtra; (2002) 1 SCC 253 to contend that there is no scope of granting any opportunity of hearing to the proposed accused at the pre-referral stage.

5. Before the Court considers the import of the decisions pronounced by the Supreme Court in respect of section 340 of the CrPC, the relevant part of the section should be extracted below:

“340.(1) When upon an application made to it in this 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, 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, -

(a) record a finding to that effect;

(b) make a complaint thereof in writing;

(c) send it to a Magistrate of the first class having jurisdiction;

(d) take sufficient security for the appearance for the accused before such Magistrate, or if the alleged offence is non-bailable and the Court thinks it necessary so to do, send the accused in custody to the Magistrate; and

(e) bind over any person to appear and give evidence before such Magistrate.”

6. The Supreme Court comprehensively explained the implications of the provision in Pritish vs. State of Maharashtra (supra). The Supreme Court was unequivocally of the opinion that there is no statutory requirement to afford an opportunity of hearing to persons against who the Court might make a complaint and send it to the Magistrate for initiating prosecution proceedings. The primary reason for the opinion was that section 340 of the CrPC does not contemplate deciding the guilt or innocence of the party against who proceedings are to be taken before the Magistrate. At that stage the Court simply considers whether it is expedient in the interest of justice that an inquiry should be made into any offence affecting administration of justice. The Supreme Court relied on M.S. Sheriff vs. State of Madras; AIR 1954 SC 397 where the Constitution Bench of the Supreme Court cautioned that no expression on the guilt or innocence of the persons should be made by the Court while passing an order under section 340 of the CrPC.

7. The other reasons expressed by the Supreme Court in Pritish are of equal relevance and are summarised below.

8. Section 340(1) essentially envisages formation of an opinion by the Court that it is expedient that an inquiry should be made in the interest of justice into an offence which appears to have been committed under section 195(1)(b) of the CrPC. The Court is empowered to hold a preliminary inquiry in order to form such opinion. It is therefore not manda