Section 340 CrPC Does Not Mandate Prior Hearing: Delhi High Court Orders Criminal Complaint in Fortis Arbitration Case

The Delhi High Court has reaffirmed that no prior hearing is mandated under Section 340 of the Code of Criminal Procedure, 1973 (now Section 379 of the Bharatiya Nagarik Suraksha Sanhita, 2023). Pursuant to which it ordered the filing of a criminal complaint in a Fortis Healthcare arbitration dispute involving an allegedly forged term sheet.

The Court found that Walmark and its officials had advanced their petition under Section 9 of the Arbitration and Conciliation Act, 1996 based on a term sheet purportedly executed on 6-12-2017, which did not bear the authentic signature of Fortis’s then-CEO and, in fact, was not executed by Fortis at all.

While referring to the Supreme Court’s observation in Pritish v. State of Maharashtra, (2002) 1 SCC 253, a bench of Justice Amit Bansal noted, “…it is clear that Section 340 of CrPC does not mandate a preliminary inquiry and an opportunity of hearing to the accused before a complaint is made by a Court".

“In view of the discussion above, I am of the prima facie view that a fit case has been made out on behalf of Fortis for invoking the jurisdiction of this Court under Section 340 of CrPC (Section 379 of the Bharatiya Nagarik Suraksha Sanhita, 2023) in respect of the conduct of the non-applicants no.3 and 4”, the bench further noted.

Advocates H.S. Chandhoke and Saleem Hasan appeared for the respondent.

In the present matter, a dispute originated from a non-binding term sheet dated 26-09-2017 that had lapsed and a draft term sheet prepared in December 2017 that was never signed by Fortis.

Fortis repeatedly denied the authenticity or execution of any binding term sheet signed by its authorised representative, and the allegedly “signed” version surfaced only later in complaints filed by Walmark with SEBI, NSE and BSE, notwithstanding Walmark’s own admissions that the CEO was not present when the draft was prepared.

Walmark had relied on the disputed documents to seek interim reliefs under Section 9, including security of about ₹490 crore, even though contemporaneous affidavits filed by Fortis indicated that the term sheet had never been signed. After Walmark withdrew its Section 9 petition in February 2020 and Fortis moved the Section 340 application before the High Court, notices were issued to four Walmark officials. Two of the officials responded, affirming that the term sheet never came into force, and proceedings against them were dropped. The remaining two failed to file replies or appear despite service.

Justice Bansal noted that prosecution under Section 340 CrPC requires deliberate falsehood on a matter of substance and must not be invoked lightly, but concluded that the record showed the signed term sheet did not exist at the relevant time, and that the non-applicants were aware of this while approaching the Court.

Emphasising that the officials “...could not have been unmindful of the consequences of making statements and/ or falsely swearing affidavit before this Court, which prima facie appear to be false to their knowledge”, the Court directed the Registrar General to lodge the complaint within four weeks, and to transmit all documents relating to the Section 9 petition to the concerned magistrate for action in accordance with law.

Cause Title: Walmark Holdings Limited v. Fortis Healthcare Limited [Neutral Citation: 2026:DHC:515]