Khaitan & Co’s Calcutta partners and some of the firm’s current and one former associate have been summoned by the Calcutta high court to respond to perjury and criminal contempt allegations made against them by advocate Deepak Khosla on behalf of his client.

The West Bengal bar council has also sent a notice to the Khaitan lawyers to reply to professional misconduct allegations filed against them by Khosla.

Khosla claims that in 1987 Khaitan & Co’s Delhi office in the Delhi high court had stated a certain set of facts with respect to his client, and that Khaitan & Co Kolkata, 20 years later in the Kolkata high court, had stated a contrary set of allegedly untrue facts that caused his client to lose the case.

Hungerford Investment Trust had lost to Turner Morrison, which was advised by Khaitan Kolkata, at the suit stage (in 2006), the review stage (in 2007) and the appeal stage (in 2008).

Khosla, who took on Hungerford as a client much later, has alleged that the Khaitan partners and associates acting for Turner Morrison against his client had misled the court during the hearings of that case.

He has made all Khaitan partners party to his complaint as, according to him the liability of one partner binds all other partners of his firm as per the “principle of agency”.

Therefore Khosla has made all other individual partners of the firm a party to his complaint - Pradip Khaitan, Ram Niranjan Jhunjhunwala, Purushottam Lal Agarwal, Nand Gopal Khaitan, Padam Kumar Khaitan, Om Prakash Jhunjhunwala, Arvind Kumar Jhunjhunwala, Aniket Agarwal and Haigreve Khaitan, as well as those lawyers who are acting for Turner - partner Ratnesh Rai and senior associate Anunoy Basu.

The other defendants are senior advocate Utpal Bose and former Khaitan associate Krishnendu Datta, who had left the firm to become an independent counsel since then.

We have reached for comment to Khaitan’s Ratnesh Rai and Anunoy Basu, who are involved in the matter. Their detailed comments are a little further below.

Calcutta HC justice Aniruddha Bose had initiated a preliminary inquiry in his 18 April order in which he asked the Khaitan partners to respond to Khosla’s allegations, in order for the court to judge if there were any initial merits in Khosla’s claims and whether a further inquiry could be ordered for the complaint to be registered.

Justice Bose wrote in his order:

In my opinion, before considering whether a direction should be issued for registering a complaint, hearing of each of the persons against whom the applicant wants this Court to proceed is necessary, and in this case such hearing would form part of the preliminary inquiry on the part of this Court. I must make it clear that such hearing would be to test the allegations of the applicant against the persons accused by him would be at the surface level only.

Bose added:

I propose to hear the persons against whom the applicant wants to initiate proceeding before I form my opinion as to whether it is expedient in the interests of justice that an inquiry should be made into an offence.

The high court matter is now posted for 10 May, before which on 3 May Khaitan partners and associates have to appear before the state bar council.

Case history

Khosla’s client Hungerford Investment had lost a case for oppression and mismanagement against Turner Morrison in the Calcutta high court in 2006. Khaitan & Co had submitted on behalf of Turner, to the court, that Hungerford did not meet the eligibility criteria under the Companies Act 1988, for filing an oppression and mismanagement claim.

However, it is Khosla’s claim now that such submission by Khaitan was misleading and dishonest on the firm’s part as Khaitan already knew earlier that Hungerford did indeed meet the statutory eligibility criteria.

Khosla’s allegation: Hungerford held 2,295 Turner’s shares in 1956, of which 2,283 were in its own name but 12 in the name of four nominees of Hungerford. This, Khosla claimed, had been admitted on record by Turner in a writ in the Delhi high court in 1987 through Khaitan & Co Delhi, filed by Krishnendu Datta, who was an associate at the firm at the time.

In 1984 the Income Tax department auctioned Hungerford’s shares in Turner but didn’t auction Hungerford’s nominee shares in the company. The percentage of shares held by Hungerford in the name of its nominees, make it statutorily eligible to file a claim for oppression and mismanagement against Turner, claims Khosla.

But Khaitan had submitted before the Calcutta high court in more recent hearings, that because the IT department had already auctioned “all” of the shares Hungerford owned in Turner, Hungerford was ineligible to claim oppression and mismanagement.

The high court then dismissed Hungerford’s claim based on this averment.

Khaitan-Khosla history

Khosla and Khaitan do not agree on what this order means for Khaitan. A Khaitan Kolkata lawyer involved in the matter told us that not only had the court steered clear of commenting on the merits of Khosla’s case so far, but the court may have erred in even starting a preliminary inquiry against the firm.

Hungerford had lost against for Turner at the suit stage, then at the review stage and then at the appeal stage. Seeing this, the Khaitan lawyer said that the court should not have entertained Khosla’s application which is filed in a dismissed case.

Khosla has called it “laughable” for Khaitan to assume that the court’s jurisdiction to try offenders for perjury committed during a case, ends with the dismissal of that case.

Khaitan:

Please note that the Hon’ble High Court has not issued any show cause against the Khaitan & Co Kolkata Partners by way of the aforesaid order. Paragraph 9 of the order clearly states that copy of the petition should be served on the persons specified in paragraphs 81 and 82 of the application so that their stand can be considered on the next date of hearing before forming an opinion as to whether it is expedient in the interests of justice that an enquiry should be made into an offence which may come within clause (b) of sub Section (1) of Section 195 of Cr.PC. The prayer made in the application has not yet been considered at this juncture and the same will be done only after hearing the individuals as mentioned in paragraphs 81 and 82.

We would also like to place on record that the aforesaid order ought not to be have been passed by the Hon’ble Court since there is no “lis” pending before the Hon’ble Court and the order has been passed in an application filed in a “dismissed” and “disposed of” company petition. As such the aforesaid order is bad in law and is not maintainable

Khosla responded:

Firstly, it is very much a “notice” as the Court has taken “note” of their conduct, and the underlying purpose of the direction of the Court is to enable the Court to know their position, before deciding to commit the various accused to criminal trial for perjury or not. In other words, the court is already satisfied that falsehoods were stated to it, but now wishes to sift through the array of accused to identify who, in its opinion, merits being committed to a trial. If they plan to appear on 10-05-2017, hoping that by just “waving their arms in the air”, they will get off the hook, they are very much mistaken, as the court will “hear” them on a rebuttal of facts stated only if they file their rebuttal on affidavit. Which is precisely the meaning and effect of a ‘notice’.

Secondly, the very fact that the Court has issued notice not just to the Directors of the company (I.e. the litigating party) but also to the counsels who have appeared in the matter itself is renders it into an order of huge import, reflecting great application of mind by the court. Third, the fact that the Hon’ble Court, guided also by the principles of agency and the Original Side Rules for AORs, has demanded a response from all the partners of the AOR entity also is, itself, a matter of great significance. Lastly, to suggest that no notice can be issued in a disposed off matter betrays a laughable lack of knowledge of the law when it comes to fraud, because no court or Tribunal - ever - become functus officio when it comes to fraud played upon it, and a prayer is made before it to seek recall if any order passed pursuant to a fraud, and to commit such fraudsters to trial for perjury.

Khaitan in turn responded:

We hereby deny and dispute all allegations and contentions raised by Mr. Deepak Khosla in this regard. Owing to the fact that the matter is sub-judice we reserve our right to make appropriate submissions when the matter is taken up for hearing before the Hon’ble Court.

This is not the first time Khosla has gone to the high court to challenge Khaitan’s bona fides. In 2015, Khosla tried to get Khaitan & Co to drop “& Co” from its name and for the high court to dismiss all the pending litigations in which Khaitan & Co was acting for the last 20 years. We yesterday asked Khosla for an update on the case, and he said that he had not yet mentioned it for hearing before the high court, but would do so soon.

Khaitan, in turn, wrote to the chief justice of the Calcutta high court that Khosla was practising illegally before the court’s original side.

Cal HC Order Khosla vs Khaitan perjury allegation

Khosla vs Khaitan - application for perjury