High Court Of Andhra Pradesh

Rallis India Ltd. & Others V. K.T. Vijay Kumar & Others

CRIMINAL PETITION No. 3917 of 2007. 05-12-2009


This criminal petition is filed by the accused Nos.1 and 2 under Section 482 Cr.P.C for quashing proceedings in C.F.No.2425 of 2007 on the file of I Additional Chief Metropolitan Magistrate, Vijayawada relating to offence under Section 499 I.P.C punishable under Section 500 I.P.C.

The first petitioner/A.1 is M/s.Rallis India Limited represented by its Managing Director. The second petitioner/A.2 is Company Secretary of A.1-company. Originally, the respondents 1 and 2/complainants filed private complaint in the lower Court against A.1 to A.9. A.3 is Managing Director and A.4 to A.9 are directors of A.1-company. The lower Court took cognizance of the case under Section 499/500 I.P.C against A.1 and A.2 only and did not take cognizance of the case against A.3 to A.9. After taking cognizance of the case, the lower Court registered the complaint as C.C.No.535 of 2007.

Respondents 1 and 2 are Managing Director and Chairman respectively of M/s.Chemcel Biotech limited, Vijayawada. The alleged imputation is contained in letter dated 14.12.2006 addressed by A.2 on behalf of A.1 to M/s.Ashika Capital Limited, Mumbai. This letter is the result of query made by M/s.Ashika Capital Limited, which is doing merchant banking and which is appointed as lead manager for public issue to be given by M/s.Chemcel Biotech Limited. As per SEBI Guidelines, the lead manager has to make enquiries and satisfy itself about allegations, if any, against promoters of the company going for public issue before approving draft prospectus of the company going to public issue. During the said activity, M/s.Ashika Capital Limited requested A.1-company to furnish information regarding promoters of M/s.Chemcel Biotech Limited going for public issue. While giving certain information, A.2, who is Company Secretary of A.1, addressed this letter dated 14.12.2006, which contained the following imputations.

“Mr.K.T.Vijay Kumar along with his brother Mr.Balakrishna Rao had affected suitable change in the shareholding pattern as the part of well-planned conspiracy perfectly planned and executed by them and other directors of the Chemcel biotech Ltd to cheat & depute the common men via the IPO mode and finally to embezzle Crores of rupees.

We are in the process of approaching CBL’s banks, financial institutions and the state government departments which have also been mislead by these habitual cheats and had been made a part of the conspiracy in the proposed initial public offer…….

This shall help these banks, financial institution & state govt. departments to revaluate their support for these habitual cheats at the cost of public money.”

Copy of this letter was also marked to (a) Secretary, Indian Banks Association, Mumbai, (b) Managing Director, Credit Information Bureau (India) Ltd., Mumbai, (c) Chairman, Securities and Exchange Board of India, (d) Finance Minister, Government of India, New Delhi, (e) State Minister of Finance (Banking), Govt. of India, New Delhi, (f) Secretary, Ministry of Finance, Government of India, New Delhi, (g) Secretary-Banking, Government of India, New Delhi, (h) Joint Secretary Banking, Government of India, New Delhi and (i) Joint Secretary (CM), Department of Economic Affairs, New Delhi. Alleging that the above quoted imputations, which were made in the letter dated 14.12.2006 are defamatory, the respondents 1 and 2 filed the private complaint in the lower Court.

It is contended by the Senior Counsel appearing for the petitioners that A.1 is a body corporate and therefore is an artificial person, which has no sole to be damned and no body to be condemned and that there cannot be any vicarious liability for A.1-company for acts committed by individuals relating to the company and that therefore the lower Court would not have taken the case on file in so far as A.1 is concerned. It is further contended that A.2 is only a Company Secretary and that therefore the lower court should not have taken cognizance of the case against A.2 also. It is further contended that exceptions 1 and 9 to Section 499 I.P.C are attracted to facts of this case because the imputations are true and were made in good faith for public good.

Insofar as the application of exceptions 1 and 9 to Section 499 I.P.C to this case is concerned, it is a question of fact. It may not be taken into consideration in this petition filed under Section 482 Cr.P.C. In first exception to Section 499 I.P.C itself it was stated that whether or not it is for the public good is a question of fact. Factual aspect cannot be gone into in this criminal petition. Further, whether the imputations are true and whether the imputations were made in good faith are also questions of fact, which cannot be gone into in this criminal petition. They are all matters which have to be tried and decided by the trial Court, after recording entire evidence to be let in by both the parties.

The petitioners placed reliance on Sunilakhya Chowdhury v. H.M.Jadwet and another (1968 Cri.L.J.736) of Calcutta High Court and State Bank of Hyderabad, Gunfoundry Branch rep. by Manager, Bhathak SIB v. T.Meenakshi and another (2004(1) ALT (Crl.)188 (D.B) (A.P)) of this Court, in support of their contention.

The Calcutta High Court observed that requirement under Section 499 I.P.C is that the imputations must have been made with intention to harm or with knowledge or having reason to believe that it will harm reputation of the persons concerned and that intention to cause harm is most essential sine qua non of the offence under Section 499 I.P.C. It was a case relating to the person who merely printed the impugned article containing the alleged defamatory imputations. That decision cannot be applied to facts of this case, where it is A.2, who is Company Secretary of A.1, made the above objectionable imputations in writing and signed by her in her capacity as Company Secretary of A.1.

Division Bench of this Court in the latter decision was considering the question of commission of offence by a company punishable under Sections 416, 420, 471 and 474 I.P.C. No doubt, a company cannot commit any offence against body. At the same time, a company may not commit cheating or fabrication of documents which are offences against property, though such offences are committed by the persons working in it. Whereas in the case on hand, the offence alleged is one under Section 499 I.P.C., which is an offence against reputation.

The argument that there cannot be vicarious liability relating offences punishable under the Indian Penal Code beyond application of Sections 34, 109, 149 & 120(B) I.P.C is not correct because persons representing a company may commit offences punishable under provisions of the I.P.C in the name of company itself.

In Municipal Corporation of Delhi v. J.B.Bottling Company Pvt. Ltd (1975 Cri.L.J.1148), full Bench of the Delhi High Court held that where only a corporal punishment is prescribed, an artificial body like a company cannot be prosecuted, since it cannot be punished. Of course, this legal decision is subsequently state to have been altered to the effect that even for the offence wherein corporal punishment is prescribed, artificial body like a company can be prosecuted but it can only be punished with fine. Therefore, I am of the opinion that simply because A.1 is corporate body, it cannot be said that it cannot commit offence of defamation defined under Section 499 I.P.C.

In the present case, A.1 is being represented by its managing director. In fact, A.3 is managing director of A.1-company. But the lower court did not take cognizance of the case as against A.3 in his individual capacity, but it took cognisance of the case against A.1-company represented by its managing director, who is A.3. Therefore, I find that A.1 cannot escape liability by simply pleading that it is a corporate personality.

A.2, in fact, did not claim in the letter dated 14.12.2006 that she was addressing that letter under the instructions of any persons or directors or managing director. Without giving case numbers relating to promoters of M/s.Chemcel Biotech Limited, A.2 made objectionable imputations in unrestrained manner to the effect that respondents 1 and 2 are cheats and habitual cheats. There was absolutely no necessity to publish the said letter to others to whom copies thereof were sent.

On total consideration of material on record, I am fully satisfied that contents of letter dated 14.12.2006 of A.2 as Company Secretary of A.1 prima facie contained defamatory statements. It is for the petitioners to prove before trial Court the defence based on exceptions 1 and 2 to Section 499 I.P.C.

In the result, the Criminal Petition is dismissed.

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