The Delhi High Court has unequivocally affirmed that deliberately submitting forged documents and falsely sworn affidavits in judicial proceedings constitutes a serious abuse of process, warranting criminal prosecution under Section 340 of the Code of Criminal Procedure. This ruling reinforces the judiciary’s zero-tolerance stance against litigants who manipulate legal processes through deceit.
Background & Facts
The Dispute
The dispute arose from a failed commercial negotiation between Walmark Holdings Limited and Fortis Healthcare Limited. A draft Term Sheet dated 6th December 2017, which was never executed by Fortis, was later presented by Walmark as a binding agreement. The document bore a forged signature of Mr. Bhavdeep Singh, Fortis’s former CEO, and included Side Letters allegedly signed by an unauthorized representative.
Procedural History
The case unfolded through multiple stages:
- December 2017: Draft Term Sheet prepared but not signed by Fortis
- July 2018: Walmark filed an impleadment application in a civil suit attaching the forged Term Sheet
- October 2018: Walmark lodged a complaint with SEBI and stock exchanges using the same forged document
- May 2019: Walmark filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief based on the forged documents
- February 2020: The Section 9 petition was withdrawn with liberty to Fortis to file a complaint under Section 340 CrPC
- January 2026: Fortis filed the application under Section 340 CrPC against Walmark’s officials
Relief Sought
Fortis sought criminal prosecution of Walmark’s officials under Sections 193, 196, 199, 200, 209, and 464 IPC for fabricating documents, making false statements under oath, and attempting to deceive the Court into granting injunctive relief worth Rs. 490 crores.
The Legal Issue
The central question was whether the filing of a petition under Section 9 of the Arbitration and Conciliation Act, 1996 based on forged documents and a falsely sworn affidavit constitutes a ‘false statement in a judicial proceeding’ sufficient to invoke Section 340 CrPC for initiating criminal proceedings.
Arguments Presented
For the Appellant/Petitioner
Fortis argued that Walmark’s officials knowingly submitted a fabricated Term Sheet and Side Letters to the Court, despite internal admissions that the documents were unsigned and unapproved. Reliance was placed on James Kunjwal v. State of Uttarakhand to establish that deliberate falsehood on a matter of substance in judicial proceedings meets the threshold for criminal liability under Section 193 IPC. Fortis emphasized that the petition was supported by a falsely sworn affidavit of one of the non-applicants, and that the forged documents were used to secure interim relief.
For the Respondent/State
The non-applicants (Walmark’s officials) failed to file any reply to the application after being served. Only two non-applicants, based in Germany, filed replies denying involvement or knowledge of the forgery. The remaining two, identified as key actors in filing the petition, remained silent, which the Court treated as an admission of guilt by default.
The Court's Analysis
The Court examined the legal framework under Section 340 CrPC and the Supreme Court’s ruling in James Kunjwal, which outlined five essential conditions for initiating proceedings for perjury: (1) false statement on oath, (2) made in a judicial proceeding, (3) deliberate falsehood on a matter of substance, (4) reasonable foundation for the charge, and (5) necessity in the interest of justice.
"The Court should be satisfied that there is a reasonable foundation for the charge, with distinct evidence and not mere suspicion."
The Court found that all five conditions were met. The Term Sheet was explicitly admitted by Walmark’s own pleadings to be unsigned by the authorized signatory. The Side Letters lacked dates and were signed by unauthorized personnel. Crucially, Walmark’s petition under Section 9 contained a sworn affidavit by one of the non-applicants, making the submission a ‘statement on oath’ in a judicial proceeding.
The Court distinguished between innocent errors and deliberate fraud, noting that the non-applicants’ silence after service, combined with prior admissions and the existence of a parallel civil suit declaring the Term Sheet void, established a clear case of mala fide intent. The Court also relied on Pritish v. State of Maharashtra to clarify that Section 340 CrPC does not require a preliminary inquiry or hearing before the Court forms a prima facie opinion - only that the Court be satisfied that it is expedient in the interest of justice to proceed.
The Verdict
Fortis succeeded. The Court held that the conduct of non-applicants no.3 and 4 constituted deliberate falsehood in a judicial proceeding under Section 193 IPC, warranting criminal prosecution. The Registrar General was directed to file a complaint with the Judicial Magistrate within four weeks and transmit all relevant documents for further action.
What This Means For Similar Cases
False Affidavits in Arbitration Proceedings Are Criminal Offences
- Practitioners must now treat affidavits filed in Section 9 petitions as judicial statements subject to Section 193 IPC
- Any material misrepresentation, even if later withdrawn, can trigger criminal liability if made with intent to deceive
- Courts may proceed under Section 340 CrPC without waiting for final adjudication of the underlying dispute
Silence After Service Is Not Neutral - It Is Adverse
- Non-appearance or non-reply by a party served with a Section 340 application will be construed as acquiescence to allegations
- Legal representatives must advise clients to respond even if they believe allegations are baseless
- Failure to respond may result in automatic invocation of criminal process
Judicial Fraud Will Be Prosecuted Even After Case Withdrawal
- Withdrawal of a petition does not extinguish liability for prior fraudulent conduct
- Courts retain jurisdiction to initiate criminal proceedings under Section 340 CrPC even after the civil/arbitral matter is concluded
- This creates a strong deterrent against using litigation as a tool for commercial coercion through falsified evidence
