Skip to content


Union Benefit Guarantee Co. Ltd. Vs. Thakorlal P. Thakor and ors. - Court Judgment

LegalCrystal Citation
SubjectInsurance;Civil
CourtMumbai
Decided On
Reported inAIR1936Bom114
AppellantUnion Benefit Guarantee Co. Ltd.
RespondentThakorlal P. Thakor and ors.
Excerpt:
- - the words complained of by the plaintiff company appear in the report made and published by the defendants, secondly, in a resolution passed by the defendants' committee, which i will refer to as 'the boycott resolution,'recommending that certain 'free insurance companies',including the plaintiff company, should be boycotted by the public, and thirdly, in the heading of a publication in the 'gujarati',a gujarati weekly of bombay, giving the purport of that resolution. they also deny that they gave the heading to the publication in the 'gujarati' which the plaintiff company has complained of. defendants further contend that even if the words complained of were written and published of and concerning the plaintiff company, they are true in substance and in fact, in so far as they.....b.j. wadia, j.1. this is a libel action. plaintiffs are a private limited company doing provident insurance business, and have filed this suit to recover from the defendants the sum of rs. 50,000 for damages for injury to its credit and reputation and in the way of its business by reason of certain statements which according to them, were falsely and maliciously written and published or caused to be written and published by the defendants, and which the plaintiffs say are defamatory of them. defendants are all residents of ahmedabad, and in or about june 1931, they formed themselves into a committee, called the provident society vigilance committee, in order to make a report to another committee, called the working committee of the indian national congress, on the working of provident.....
Judgment:

B.J. Wadia, J.

1. This is a libel action. Plaintiffs are a private limited company doing provident insurance business, and have filed this suit to recover from the defendants the sum of Rs. 50,000 for damages for injury to its credit and reputation and in the way of its business by reason of certain statements which according to them, were falsely and maliciously written and published or caused to be written and published by the defendants, and which the plaintiffs say are defamatory of them. Defendants are all residents of Ahmedabad, and in or about June 1931, they formed themselves into a committee, called the Provident Society Vigilance Committee, in order to make a report to another committee, called the Working Committee of the Indian National Congress, on the working of provident societies and of what are called 'Free Insurance Companies' in the Bombay Presidency. The committee has also been described as the Free Insurance Vigilance Committee. All the defendants except defendant 5 appeared at the hearing. Defendant 5 is dead, and his name has been struck off. The words complained of by the plaintiff company appear in the report made and published by the defendants, secondly, in a resolution passed by the defendants' committee, which I will refer to as 'the boycott resolution,' recommending that certain 'Free Insurance Companies', including the plaintiff company, should be boycotted by the public, and thirdly, in the heading of a publication in the 'Gujarati', a Gujarati weekly of Bombay, giving the purport of that resolution.

2. The publication of the report and of 'the boycott resolution,' at first in Ahmedabad, and subsequently in Bombay, is not denied, but defendants deny that the words were written and published or caused to be written and published by them falsely and maliciously as alleged of and concerning the plaintiff company. They also deny that they gave the heading to the publication in the 'Gujarati' which the plaintiff company has complained of. Defendants further contend that even if the words complained of were written and published of and concerning the plaintiff company, they are true in substance and in fact, in so far as they consist of allegations of fact, and are fair and bona fide comment on a matter of public interest in so far as they contain expressions of opinion. Defendants deny liability for the damages claimed. In order to appreciate the points in dispute between the parties it is necessary to set out a few facts relating to the plaintiff company and the defendants, and also to refer to the correspondence which led up to the suit. The plaintiff company is a private limited company within the meaning of Section 2 (13), Companies Act of 1913, and was registered on 16ch October 1930. It was also registered on 6th November 1930, as a Provident Insurance Society under the Provident Insurance Societies Act of 1912. A Provident Insurance Society is denned in Section 2 (8) of the Act. Under Section 3 the maximum amount payable on a life assurance policy by a Provident Insurance Society is Rs. 500, and the maximum amount of premiums it can receive on any one life policy is Rs. 250. The Act recognises societies or companies working on what is called the 'dividing principle.'

3. Under Section 24 of the Act the Local Government is empowered to make rules to carry out the purposes of the Act Such rules have been framed by the Bombay Government and are called the Bombay Provident Insurance Societies Rules. Rule 2 (d) defines a 'dividing society business' as a provident insurance business under which the amount payable on the policy money becoming due is not fixed, but depends either partly or wholly on the results of the division of any portion of the premium income or funds amongst the policies which have become due for payment in proportion to the premiums received under each class in any specified period. These societies have been referred to in the evidence as dividing societies or dividing companies or companies or societies working on the dividing principle. Ordinary life assurance business is defined in Rule 2 (f) as business transacted on similar lines to those adopted by ordinary life assurance companies. The plaintiff company does both ordinary life assurance business, though on a small scale, and also the dividing society business. The issued capital of the company is Rs. 20,000 in 1,000 shares of Rs. 20 each. The paid up capital amounts to about Rs 14,000. In all, 925 shares have been subscribed by a few share-holders, out of which Asbai, the wife of Lakhamsi Jetha, one of the directors, holds 851. She became qualified as a director on purchasing 451 shares at first, but it was said that she subsequently resigned. Among the original directors were Lakhamsi Jetha, Haridas Vallabhdas, Jamnadar Mavji, one Lalji Shamji or L.S. Patel, and Shivji Velji. Of these, Haridas Vallabhdas and Jamnadar Mavji resigned on 21st July 1931, and one Gangji Ghela Shanghavi joined the directorate in or about September, 1933. Lalji Shamji is Asbai's brother and Shivji Velji is the son-in-law of Lakhamsi Jetha and Asbai. The managing agents of the company are Bhavanji Brothers of which firm the partners are said to be Shivji Velji and the two minor sons of Lakhamsi Jetha, namely, Virchand and Bhavanji, through their mother and natural guardian Asbai. Under their agreement with the plaintiff company the managing agents were to get Rs. 200 per month by way of remuneration, of which Rs. 50 were payable to Shivji Velji, and Rs. 150 to Asbai on behalf of the minor sons.

4. It appears that the plaintiff company is really a one-man company, run principally by Lakhamsi Jetha with the help of his wife's moneys and assisted by his son-in-law Shivji Velji. Lakhamsi Jetha was not called as a witness. Shivji Velji was called, and he said that Lakhamsi had thirty years experience of insurance business, and that he had ten years' experience as an insurance canvasser, but no further details were mentioned. The prospectus of the company is contained in a booklet called 'the guide'; it contains rules and regulations, some of which are not very happily worded. The objects of the company are very wide, and have been comprehensively stated in the memorandum of association; some of those objects are reproduced in the prospectus, one of them being to establish a dividing society business. There are five tables at the end of the prospectus. Of these, tables A, B and C relate to ordinary life assurance business, and tables D and E relate to the dividing society business. The age at admission under table D, with which table the Court is principally concerned in this suit, is between 18 and 45. There is a uniform rate of premium for persons of both sexes and of every age between 18 and 45. An applicant is not called upon to undergo a formal medical examination before being insured; he has only to make certain declarations referred to in the rules. The payment of benefits and reliefs to the claimants is to be made after deducting out of the monthly premiums thirty per cent, for the expenses of the company, a minimum of fifteen per cent, to form a reserve fund, and not more than ten per cent, for the company's general fund. The registered office of the company was at first at Tamarind Lane, Fort, and was subsequently removed to Kazi Sayad Street. It was registered about the end of 1930, and commenced doing its business some time in January 1931.

5. The defendants' committee consisted of eleven members, of whom one, as I have already stated before, is dead, and two subsequently resigned. Defendant 11 was the secretary of the committee, and he was the only defendant who was called as a witness. He said that he heard in Ahmedabad in or about May, 1931, about societies or companies working on the dividing principle, and that about forty of them were in existence in Gujarat including Kathiawad and Cutch. Their customers were drawn mostly from peasants and from the poor and illiterate classes of people. He said he read lectures and articles on the subject. In or about May 1931, he saw Mr. Vallabhbhai Patel, who was the then President of the working Committee of the Indian National Congress, and had conversation with him. As a result of the conversation the defendants formed themselves into a committee on or about 10th June 1931, to report on the working of such companies existing in the Bombay Presidency. Defendants sent for the prospectuses of such companies and obtained some. They also consulted some leading actuaries, and issued a sort of questionnaire to which they received replies from about twenty companies. On the materials then before them a report was drafted in English on or about 4th July 1931, and settled at a committee meeting.

6. Defendant 11 said that at the time when the report was drafted defendants were not aware of the existence of the plaintiff company. The plaintff company, however, was evidently aware of the existence of the defendants' committee, and the managing agents of the plaintiff company wrote a letter on 30th June 1931 to defendant 11, as the secretary of the committee. They sent along with it two copies of the prospectus, and drew the attention of defendant 11 to the tables appearing at the end. The letter reached Ahmedabad the next day, but defendant 11 said that he was busy preparing the report, and that his assistant opened the letter, but did not place it before him till a out July 8. In the meantime the report was circulated among actuaries and public men interested in insurance business all over India for their opinions, and was published in Ahmedabad about 21st July. On 23rd July it was placed before the defendants' committee in order that they might consider what further steps should be taken by them, and the committee resolved that the names of thirty-six companies should be recommended for being boycotted by the public generally. The resolution was formally passed by the defendants on 29th July. It stated that the defendants agreed with the message of Mr. Vallabhbhai Patel to the public that the companies working on the dividing principle deserved 'to perish', recommended that those thirty-six companies, including the plaintiff company, should be boycotted, and requested the office bearers and others connected with them to sever their connection. In the meantime, a Gujarati 'rendering' or translation of the report was published on 26th July, and appeared in the Praja-Bandhu', a newspaper published in Ahmedabad. On 1st August certain additions were made to the English report containing the opinion of Mr. M.K. Gandhi as expressed in a journal called 'Young India' dated 31st July 1931, under the heading 'Mushroom Companies', and the opinion of Mr. Vallabhbhai Patel under the heading Peasants Beware.!' The 'boycott resolution' was published in the 'Praja-Bandhu' at Ahmedabad on 9th August. It was published in the 'Hindustan and Praja Mitra' newspaper in Bombay on 11th August and the report was published in the 'Bombay Samachar' on 12th August 1931.

7. Correspondence ensued between the plaintiff company through its managing agents and defendant 11 as the secretary of the defendants' committee. On 22nd July 1931 the plaintiff company wrote to defendant 11 asking him to read their life insurance scheme, and to let the company know if the defendants wanted any further explanation or information. On 26th July defendant 11 replied, stating that he had noted with satisfaction some of the distinguishing features of the plaintiff company, but he added that the company worked on an unsound principle known as the dividing principle, and advised the plaintiffs to consult an experienced actuary on the point. The piaintiff company thereafter wrote several letters in August asking why the defendants considered that principle unsound. At first the defendants sent no reply, but on 14th August defendant 11 replied to the letters, and referred the plaintiff company to the report and the opinion printed at the end of it, and advised the company to scrap the dividing principle altogether. In the meantime the' boycott resolution' was published in Bombay on 11th August, as I have said before, and on the same day the plaintiff company wrote by registered post to the defendants saying that the resolution was defamatory of them as their name was included in the list of companies recommended for being boycotted, and that the resolution made it difficult, if not impossible, for them to secure customers. They asked the defendants for an apology, and in default threatened action. A reminder was sent on 15th August and defendant 11 replied enclosing a copy of the Gujarati report and referring the company again to the opinions of the actuaries embodied in the report and the opinions printed at the end of the report. The defendants refused to apologize. On 31st August defendant 2 wrote to the plaintiffs that the defendants' committee had acted bona fide in the interest of the insuring public. Thereafter the suit was filed on 29th September 1931.

8. The plaintiffs' cause of action is based on the report published by the defendants' committee, on the boycott resolution,' and the heading of a publication in the issue of the 'Gujarati' of 16th August 1931, and it is alleged in Para. 13 of the plaint that by reason of these libels which the plaintiff company complains of, it has been injured in its credit and reputation and in the way of its business, and has suffered great loss and damage. The plaintiff company claims Rs. 50,000 in lump as general damages, which means such damage as the law presumes to be a necessary consequence of the defamation, and is distinguished from special damage, or to put it more accurately, actual damage, which is not presumed, but has to be alleged and proved. It has been held that in the case of a company or a trading corporation the words complained of are not actionable without proof of special damage, if they refer only to the personal character or reputation of its officers; but words calculated to reflect upon a corporation in the way of its property or trade or business, and which are calculated to injure it therein, may be actionable without proof of special damage It was pointed out by Lord Esher, M.R., in South Hetton Coal Co. v. North Eastern News Association (1894) Q.B 133 that it was impossible to lay down an exhaustive rule as to what would be a libel of a firm or a company, but it has been generally held that a corporation has a trading character which may be destroyed by libel. For instance it was held in that case that it was defamatory to say of a colliery company that the cottages let by its proprietors to their colliers and workmen were in an insanitary condition, for such an imputation was likely to injure its reputation in the way of its business. If it is alleged that a trading company is insolvent or will be insolvent in the future, or consists of alien enemies in its constitution or management in a time of war, it is entitled to sue. It can also sue if it is alleged to be in the practice of holding out false hopes to the public or entering into contracts which are absolutely insecure: Williams v. Beaumont (1833) 10 Bing 260. In Metropolitan Saloon Omnibus Co. v. Hawkins (1859) 4 H N 87 Pollock, C.B., suggested that the right of action of a corporation to sue for libel was limited to a publication which affected its property but it has now been held that there is no such limitation. The question for consideration is whether the words com plained of are in disparagement of its corporate property, or its business or its reputation. In the words of Lord Blackburn in Capital and Counties Bank v. Henty (1882) 7 A.C 741 an action will lie if the statement is published without lawful justification or excuse and is calculated to convey to those to whom it was published an imputation on the plaintiffs injurious to them in their trade or holding them up to hatred, contempt or ridicule.

9. In order therefore to succeed in this action the plaintiff company must establish (a) that the words complained of are defamatory in the way of its business, (b) that they were published by the defendants, and (c) that they refer to the plaintiff company. As I have said before, the publication has not been denied the allegation however that is the words were falsely and maliciously published, and this is denied by the defendants. The words 'falsely and maliciously' appear invariably in pleadings in defamation suits. All defamatory words are presumed to be false, and it is for the defendants to prove that they are true. But malice in the sense of a corrupt or wrong motive is not an essential ingredient of the cause of action; it is not the gist of the action. The liability for defamation arises not from a malicious intention to defame but from the publication of the defamatory words. It is not therefore for the plaintiff to prove malice, except when the defendant pleads and proves privilege or fair and bona fide comment on a matter of public interest. Malice may also be material in the assessment of damages. The words complained of may be defamatory in their ordinary sense, and must prima facie be understood by the Court in the same sense as the rest of mankind would ordinarily understand them. They may also be defamatory in a secondary sense in which ease the plaintiffs have to allege and prove what is called an innuendo, that is, the plaintiffs must show that the words, not defamatory in their ordinary meaning or without a special application, are used with a specified libellous meaning. The burden is on the plaintiff' to show that the meaning they have assigned to the words is the true meaning, if it is traversed by the defendants. The plaintiff company must also prove that the words complained of might reasonably be understood by the persons to whom they were published to refer to the company, and that in fact they were understood to refer to it. If the words have in fact injured the company in the way of its business, it is no defence to say that they were not meant to be defamatory, for the question really is 'not what the writer of an alleged libel means, but what is the meaning of the words he has used': Capital and Counties Bank v. Henty (1882) 7 A.C 741. It is also no defence for the defendants to say that they did not intend to refer to the plaintiff company; as Lord Loreburn, L.C., suggested during the argument in E. Hulton and Co. v. Jones (1910) A.C 20 the queation is not so much who was meant as who was hit. In England it is for the Judge on reading the innuendo and after hearing the evidence upon it to say whether the words are reasonably capable of being understood in the particular meaning ascribed to them. To do that he has to take into account not merely the words complained of, but the manner and occasion of the publication, the persons to whom they were published, and all other facts which are properly in evidence as affecting the meaning of the words in the circumstances of the particular case. It is then for the jury to say whether the words in fact bore that meaning. In India the plaintiffs have to satisfy the Court on both these points. The evidence must be such as to satisfy the Court that the words will convey that particular defamatory meaning to reasonable men, and it is not enough to say that the words were understood by some persons in that definite sense or were understood to refer to the plaintiffs. Nor can the plaintiffs prove the innuendo by simply asking their witnesses what they understood by the words complained of, unless they have laid a basis or established a foundation by letting in evidence of facts and circumstances to show that words which bear their ordinary English meaning have a libellous tendency: Daines v. Hartley (1848) 3 Ex 200 This case was cited with approval in Simmons v. Mitchell (1880) 6 A.C 156. The rule has been thus put by Pollock in his Law of Torts, Edn. 13, p. 260:

Words are not deemed capable of a particular meaning merely because it might by possibility be attached to Thom: there must be something in either the context or the circumstances that would suggest the alleged meaning to a reasonable mind.

10. I will now deal with the alleged libels in the order mentioned in the plaint. The report is headed:

Report on the Free Insurance Companies and Provident Societies working in the Bombay Presidency.

11. The names of the members of the defendants' committee appear at the top, and the report is signed by defendant 1, as the president of the committee. The term 'Free Insurance Company' is a misnomer. It seems to imply that the company effects policies on lives without charging any premium to the policyholders, and defendant 11 stated that several companies working on the dividing principle had in their prospectuses described themselves as such. They are really not 'free' in the literal sense of the word, and defendant 11 said that he therefore used to put the Gujarati word for 'Free' always in inverted commas. The report is in general terms about companies working on the dividing principle, forty of which were said to have been working in Gujarat alone during the year before the publication of the report, the total number for the whole of India exceeding one hundred. It refers to two such companies in particular as illustrations of the general remarks. It ends by requesting the Working Committee of the Indian National Congress to declare unequivocally that such companies are not life insurance companies, but are unscientific, unsound and unworkable, and should not be supported by the public until they have remodelled their insurance schemes. The reasons for this request are then set out one after the other. The plaintiff company has not been referred to therein eo nomine. The plaintiffs however say that the report was meant and understood to refer to the company, as it is included in the list of the companies which were recommended in the boycott resolution' following the report. Even apart from the resolution, the companies working on the dividing principle are a determinate class which can be ascertained, and therefore the plaintiffs are entitled to sue the defendants by proving that the words complained of refer to the plaintiff company and are defamatory of it in the way of its business. The plaintiff company relies particularly on the passages referred to in para. 4 of the plaint as containing the innuendoes which they have set out in paras. 5 to 8 of the plaint. The first passage is set out in para, 4 (a) in which the defendants state that about twenty-five years back from the date of the report about 1,200 companies working on the dividing principle were in existence in India, that out of these, 1,100 were obliged to close their doors within 10 years, and the adventurers who floated such companies succeeded in filling their pockets at the cost of the ignorant poor. Then come the real words that are complained of:

It is exactly after a generation that a new set of adventurers has again sprung up and started these societies working on the 'Dividing Principle' under the misleading name of 'Free Insurance Companies'.

12. The plaintiffs say that these words were understood to mean that the plaintiff company was started and was carried on by adventurers who filled their pockets at the cost of the ignorant poor. What is the evidence on which the plaintiff company asks the Court to hold that those words in that passage bore the meaning they allege and in reference to the company? It appears from the Indian Life Insurance Year Book for 1.921-1922, published by the authority of the Government of India, that sixteen years before that year there were about 1,200 societies in existence in India of the provident insurance type, that only twenty-nine out of these societies remained of which seventeen were either working on the dividing plan without any minimum guarantee or on 'the death call system' and were consequently not susceptible of actuarial valuation. It is however in evidence that the defendants wanted to act on the report, and followed it up by 'the boycott resolution', and though the report and the resolution were published at Ahmedabad on different dates, they were published in Bombay in Gujrati on two consecutive days, the resolution appearing in the 'Hindustan & Praja Mitra' on 11th August and the report in the 'Bombay Samachar' of 12th August 1931. The publication in Bombay has not been denied by the defendants. It was suggested that both the report and the resolution were published by them at the instance of the Working Committee of the Indian National Congress which is said to have been a powerful and influential body in 1931. The witnesses called by the plaintiff stated that they had heard of the Committee, that the Congress was behind the Committee, and that they were themselves 'congressmen' who were ready to follow its resolutions.

13. The resolution in question recommends the boycott of certain companies, including the plaintiff company, which follow and work upon the dividing principle, and the report attacks the principle and the companies that follow it. It was argued that the resolution should be considered separately from the report, and that the plaintiffs could not read the resolution into the report in order to construe the report. It is true that they do not constitute one libel. They are separate, but they were published almost simultaneously in Bombay, and read one after the other in Bombay, and it might well be argued by the plaintiff company that it was likely that men of ordinary sense on reading them would be prejudiced against the plaintiff company and would have nothing to do with it in the way of its business. The resolution was published in Bombay before the report, and in my opinion the publication of the resolution is one of the surrounding circumstances which go to show how the words in the report were capable of being understood by men of ordinary sense or ordinary reasonable men, meaning men who have the knowledge, intelligence, experience and even the prejudices of the average man in the class of people to whom the words were meant to be published. Defendant 11 in his evidence said that the passage referred to free insurance companies, and that the plaintiff company was not a free insurance company. But this is mere quibbling, because he admitted that the report refers to free insurance companies working on the dividing principle, and he has called the plaintiff company one of such companies.

14. The question therefore is whether the inference suggested by the innuendo is an inference which reasonable persons will draw. The passage refers to the adventurers of the past who had started similar companies and filled their pockets at the cost of the ignorant poor, and it goes on to say that in the present such companies were again started by 'a new set of adventurers.' The word adventurers' is used in the English report; the word used in the Gujrati report is 'talembaj,' which primarily means an athlete, but it also means a vagabond. The Gujarati report however is, according to the defendants' own admission, a rendering or translation of the English report, and the word which they have themselves selected in the report which was first published in English is 'adventurers.' Now an adventurer is described in the dictionaries as one who is on the look out for chances of personal advancement, and this may be by methods which are not always straight. The defendants say of the past adventurers that they had succeeded in filling their pockets at the expense of the poor, and the suggestion is that the new set of adventurers are also men of that type. Moreover, it has been stated in 'the boycott resolution' that all possible help should be rendered to the poor to get back their moneys paid by them into companies working on the dividing principle, and the plaintiff company is one of them. It was argued on behalf of the defendants that the words refer only to those who floated or started the companies, i. e., the promoters of the companies, and that the words do not affect the company in the way of its business, because an alleged libel on promoters is not necessarily a libel on the company in the way of its business. Ordinarily, persons who start a company, especially small companies, are in fact also the persons who carry on its management, and to call the promoters of a company like the plaintiff company 'a set of adventurers' would prejudicially affect the company in the way of its business from its very inception. As I have said before, the test is what the words used will mean to an average reasonable man, and I think it will be conceded that such a person will not be able to distinguish strictly between the promoters of a company and its managers. Defendants' counsel argued that it had been proved in fact that the promoters of the plaintiff company were adventurers.

15. In the first place there is no plea of justification, nor is there any sufficient evidence to show who the promoters were and how they were in fact adventurers, except that the first subscribers to the memorandum of the, company were not man who had large experience in business In my opinion, therefore, the words are fairly capable of sustaining the innuendo, and according to the evidence of the plaintiffs' witnesses they were so understood by them. I was particularly impressed by the evidence of Jethahhai Nagda, one of the founders of the Bombay Insurance Brokers Association. It must be said that a certain amount of paraphrasing by the witnesses of the passages referred to in the plaint as containing the innuendoes was inevitable. But the witness Jethabhai Nagda clearly stated that the report did not consist merely of advice to the insuring public, but contained allegations that reflected upon the founders and managers of the company. Dr. Vora, another respectable witness, went even further. He said he had been asked to be a director of the plaintiff company, that he read the report only and not the resolution and on reading the report he thought that he would have nothing to do with the plaintiff company, and he refused to become one of its directors. It is no defence to say that the defendants were not aware of the existence of the plaintiff company at the date of the drafting of the report. If in fact they were in existence, and the words in the passage refer to them, they would a have grievance under the law. In any event, the defendants became aware of the existence of the plaintiff company within a week after the report was drafted and certainly long before its publication

16. It was argued on behalf of the defendants that the words complained of in this passage are really not defamatory of the plaintiff company, but are only a fair and bona fide comment on a matter of public interest. If the words are such comment, they are not actionable. Plaintiffs' counsel argued that the defendants cannot put forward the alternative plea of fair and bona fide comment after first pleading that the words were not published of and concerning the plaintiff company, for the defence of fair and bona fide comment in effect admits that the words were published of and concerning the plaintiff company. In my opinion, however, it is open to the defendants to raise this alternative plea, for all kinds of inconsistent pleas can generally be taken up by a defendant. They cannot plead the defence of fair and bona fide comment only, and then seek to show that the words were not published of and concerning the plaintiff company. It was pointed out in Nadirshaw H Sukhia v. Pirojshaw R. Ratnagar : (1913)15BOMLR130 that it is of the essence of the plea of fair and bona fide comment (p. 169)

that it should be. in the first place, comment on facts truly stated on a matter of public interest. In other words, given facts which are true as regards a matter of public interest, it is open to any member of the public at large to comment on them fairly, but if any allegation of fact imputing any act or acts of misconduct is made in the course of the comment, the libel is out of the sphere of fair comment, and can be justified only on the ground that the allegation is true.

17. The defence is only applicable to expressions of opinion as distinct from assertions of fact. The onus is on the defendants to show that the matter commented upon is a matter of public interest, that the statements of fact relating thereto are true, and that the comments based on the facts are fair and bona fide. It is then for the plaintiffs to show that the words exceed the limits of fair comment, and are not the real expression of the defendants' opinion, or that the words are inspired by malice. In England it is for the Court to decide whether the matter commented upon is one of public interest and whether there is evidence that any part of the words complained of exceed the limits of fair comment. If the Court is of opinion that there is evidence that any part of the words complained of go beyond the limits, it is for the jury to find whether that is so or not. Now it is usual for the defendant in a libel action to set up what is called the 'rolled-up' plea as the defendants have done in this case, namely, to state in defence that in so far as the words consist of allegations of fact they are true in substance and in fact, and in so far as they consist of expressions of opinion, they are in the nature of a fair and bona fide comment on a matter of public interest. It has been held that this composite plea is really a plea of fair comment only: see Sutherland v. Stopes (1925) A.C 47. In the first place, can it be said that the subject-matter of the words complained of is a matter of public interest? There is no exact definition of what a matter of public interest is. Matters of public interest are very numerous and are usually grouped under certain heads.

18. A matter of public interest can generally be said to be a matter or subject which invites public attention or is open to public discussion or criticism. It has been held that the prospectus of a company is a matter of public interest, and I see no reason why the management of its business according to the prospectus which invites the public to deal with the company should be considered as a matter merely for the prospeetive share-holders of the company, and not a matter of public interest. It is a scheme or project placed before the public and in my opinion the conduct of a private business, if it is of a sufficiently large extent or concerns a sufficiently large number of persons, is a matter of public interest. There is no definite standard of fair criticism, as was pointed out in Merivale v. Carson (1887) 20Q.B.D 275 but every latitude is given to opinion and 'even to prejudice. It is however necessary that the comment should be on facts which are true, and not on fiction. For if the facts do not exist, the foundation of the plea is gone. Plaintiffs' counsel argued that there were many misstatements of fact in the report; for instance, it is said in the report that no company working on the dividing principle in the past has ever survived twelve years, whereas in fact it appears from the Indian Insurance Year Book for 1932 that there were some such companies which had survived more than twelve years. This does appear to be a misstatement of fact, and a comment based upon it in reference to the plaintiff company cannot be said to be fair, but I do not think that a long and general report can be said to be entirely vitiated by reason of a single misstatement.

19. The important requirement is that the comment must be fair, that is to say, it must be relevant to the subject-matter commented upon and honest in the expression of the writer's real opinion, though mere honesty of purpose would be of no avail if the words exceeded the proper limits. The fact that a comment is honest does not necessarily make it fair. But an exaggerated or strong or prejudiced comment is not necessarily unfair, though the fairness of the comment often depends upon the language used. Small errors as to details which are immaterial should however be overlooked. The comment must also be bona fide, and not made from any malicious motive. Malice destroys the defence, though it is for the plaintiffs to prove it. In my opinion, it is neither a fair nor a bona fide comment to say of a company that it is started by a set of adventurers. The words exceed the limits, and are defamatory of the plaintiff company in the way of its business. It is really not fair to say that those responsible for floating a company who presumably will be the persons who in the eyes of reasonable men will carry on the business are men who are out for their own personal aggrandisement at the expense of the public, and especially the poorer classes of the public. The next passage in the report complained of by the plaintiffs runs as follows:

As no such company working on the Dividing Plan has ever survived twelve years the question of the fulfilment of the guarantee has never arisen and is never likely to arise in future.

20. Plaintiff's say that these words were understood to mean that the plaintiff company would not last for twelve years, and that it professed to guarantee the performance of certain obligations, well knowing that it would not exist long enough to be called upon to fulfil such guarantee The first question is whether the words complained of are fairly capable of sustaining the innuendo. Defendant 11 in his evidence stated that he read the names of some of the companies working on the dividing principle in the Indian Assurance Year Book for 1918. This Year Book is published for every year under the authority of the Government of India in the month of July of the succeeding year. It is a yearly publication which has been relied on in this case by either side. Defendant 11 has further stated that he did not find the same names in the Year Book of 1929, and that was the reason of the statement in the report which is the subject-matter of dispute. This may show the defendants' bonafides, as it cannot be said that a statement of this nature is based merely on imagination, but it will still be no defence if the words can be fairly capable of conveying the alleged meaning. The words do not appear to be sufficient to reasonably convey the imputation that the plaintiff company professes to fulfil a guarantee, well knowing' that in fact it would not. Further it was argued that a statement as to what might happen in the future was not necrssarily an imputation on the plaintiff company in its operations at present.

21. At the same time I am of opinion that to say of a trading concern, however small, that it takes upon itself certain obligations on receiving people's moneys for effecting policies, and will not be in existence long enough to be able to perform those obligations, does cast an imputation in the way of its business which on the face of it is defamatory. It is not enough for the defendants to say that the words are merely an inference as to the future based on what had happened in the past, though that inference is supported by the opinion of a well-known actuary, Mr. Vaidyanathan, who gave reasons based on his calculations why a company working on the dividing principle will not ultimately be able to fulfil its obligations. A statement of this nature does overstep the limits of fair and bona fide comment, as it imputes to a going concern a future insolvency by reason of which its business in the present will be prejudicially affected. The plaintiffs have called certain evidence which shows that the words were in fact understood in this meaning by some of the witnesses, but one of them, Ratansi Damji Khona, said in his cross-examination that he did not even understand what a guarantee meant though he first attempted to give his explanation in his examination-in-chief. The defendants could have called evidence on their behalf to show that persons had read the words complained of in this as well as in the other passages, but did not understand them to bear the meaning alleged in the innuendo nor to refer to the plaintiff company. They have chosen not to do so.

22. The next two passages in the report set out in paras. 4 (c) and 4 (d) of the plaint can be considered together. The words complained of are to the effect that companies working on dividing principle are unactuarial, and therefore unscientific, unsound and unworkable, and would come to grief unless they resorted to unfair tactics and unfair methods such as disqualifying claims received, encouraging lapses of policies and in other ways raising difficulties in the way of persons keeping up their policies. The plaintiffs say that these words were understood to mean that if the plaintiff company continued to flourish, it can only do so because it resorts to the unfair tactics and methods which I have mentioned before. In my opinion the words complained of are incapable of bearing that meaning, nor are they defamatory in their natural and ordinary meaning. That such companies are unactuarial and therefore unscientific, unsound and unworkable is a matter of opinion which may be right or wrong. The Provident Insurance Societies Act does recognise divided insurance business, that is insurance business on the dividing principle, but the opinion that it is unactuarial and unscientific is supported by expert actuaries, including the Government Actuary, and one of them, Mr. Vaidyanathan, was called to explain why these companies could be called unactuarial and unscientific. He has given his reasons at full length. He was called as a witness in order to show that the defendants had made bona fide inquiries before launching their attack upon such companies, and that their criticism was based on a knowledge of the subject supplied to them by a well-known actuary among others.

23. In my opinion the words cannot and do not mean that the plaintiff company will continue to flourish because it actually resorts or has in fact resorted to unfair tactics and methods. By a mere innuendo you cannot give a new sense to words which they do not naturally bear. There can be no question of the plaintiff company continuing to flourish, because it had just started and hardly begun its business. The words reasonably mean that if such companies after they had been started tried to flourish, they could only do so if they adopted unfair tactics and methods. They do not mean that such companies including the plaintiff company will adopt such tactics and methods in the future in order to flourish or that they have done so in the past. The plaintiffs' witnesses themselves said that they understood that such companies would not flourish unless they were dishonestly worked, but they need not necessarily be so worked. The plaintiffs might at any time determine rather to close their doors than to continue by such, methods, assuming that such methods were necessary. Shivji Velji who is a director of the plaintiff company stated that he understood the words to mean that if they worked honestly they would have to close their doors, which does not mean that they would necessarily work dishonestly in order to keep the doors open. These words are therefore not defamatory of the plaintiff company, and the opinion that such companies are unactuarial and therefore unscientific is a fair and bona fide comment upon a matter of public interest.

24. The next passage in the report which the plaintiff company complains of is set out in para. 4 (e) of the plaint. There it is stated that a large number of managing agents of such companies were adventurers who knew how to make money by voting themselves fat salaries and commission and were making fantastic promises of large returns in a short time, and were practically robbing the poor classes of the public of their hard-earned moneys. It is further stated that most of them are insurance canvassers who had suddenly raised themselves to the status of managing directors and that it was discovered that some of them had 'a shady past.' Plaintiffs say that defendants meant by all these words and were understood to mean that the plaintiff company was run by a sort of managing agents and directors who were not fit to be such, and who had a shady past. There is in this passage no doubt a strong imputation on a large number of the managing agents and directors who are called adventurers who had robbed the poor, and the question arises whether it may be applied to the plaintiff company.

25. You cannot by an innuendo stretch the natural meaning of the words, but it is open by the innuendo for the plaintiffs to point out and to prove to whom it applies. Counsel for the plaintiffs relied on Le Fanu v. Malcomsou (1848) 11H.L.C 637in which the words were that 'some of the Irish factories' had practised cruelties on their workmen, and it was proved that the plaintiffs' factory was thereby meant. Though the plaintiffs were not described by name in that case, it was known who they were, and satisfactory evidence was led to show that they were meant and hit. Are the words complained of, therefore, predicable with reasonable certainty of the plaintiff company? Do the words reasonably mean that the managing agents of the plaintiff company were adventurers or had a shady past? The words are capable of a defamatory meaning. Moreover, the report has to be read as a whole, and reading this passage in connection with the passage set out in para. 4 (a) of the plaint and 'the boycott resolution,' the words can be reasonably said to apply to the plaintiff company. A reference to the large number of managing agents of such companies also as 'adventurers' makes it clear that the authors of the report are making no distinction between those who started the companies and those who managed or would manage the business. It is true that one of the witnesses, Ratansi Damji Khona, said that he did not even know who the managing agents of the plaintiff company were, and he could not therefore, say whether they were the adventurers who were meant, or whether they were the persons who had a shady past, but the other witnesses seem to have understood who was meant. As the words are capable of a defamatory meaning and were understood to apply to the plaintiff company, the question of fair and bona fide comment does not arise, because such a comment would take the words outside the region of libel. In my opinion, therefore, the plaintiffs have succeeded in proving this innuendo too. The last statement which the plaintiffs complain of as defamatory per se is that the companies working on the dividing principle are a curse to Indian insurance enterprise.' These words are, in my opinion, a very strong expression of opinion, but they do not exceed the limits of fair and bona fide commention a matter of public interest. The expression itself is borrowed from the introductory statement in the Government Life Assurance Year Book for 1918, though that fact in itself can afford no defence if the words are defamatory.

26. I will now deal with what has been called 'the boycott resolution.' It is set out in extenso in para. 10 of the plaint. The defendants have answered para. 10 by denying that the resolution was written or published or caused to be published falsely or maliciously as alleged by the plaintiffs. That is really not a defence. Their defence seems to be, as gathered from the general answer to para. 13 of the plaint, that the words are a fair and bona fide comment on a matter of public interest. It is stated in that resolution that it was unanimously resolved that the defendants' committee agreed with the opinion of Mr. Vallabhai Patel in connexion with free insurance companies that they should 'perish,' that is Co say, they should be abolished, or, as the resolution recorded in the minute book of the defendants shows, taken into liquidation, as early as possible. The committee next earnestly appeals to the directors, legal advisers and auditors, and all office-bearers of such companies to sever their connexion with them, and enjoins that all assistance should be given to the poor to recover their moneys which they have already paid in. The committee earnestly recommends the public generally to boycott thirty-six free insurance companies which are doing business on the dividing principle. A list of such companies is given, and the plaintiff company is the tenth in the list.

27. The first question is whether a recommendation to the public to boycott a trading concern, that is to have no business intercourse with it, is defamatory per se of the trading concern in the way of its business. It has been held that it is actionable to put a man's name on a 'black list' with the object of inducing people not to have business dealings with him or with the object of bringing him into public odium or contempt: see Trollope and Sons v. London Building Trades Federation (1895) 11T.L.R 228 In that case an injunction was granted restraining any further publication of the 'black list' complained of on the ground that its publication was a purely malicious act unnecessary for the protection of the defendants or the men whom they represented, and was actuated by ill-will and intended to injure the plaintiffs. The decision of Keke-wich, J., was confirmed, though not without hesitation, by the Court of appeal; the judgment of the appeal Court is reported in the same volume at p. 280. In Ware and De Freville, Ltd. v. Motor Trade Association, (1921) 3 K.B 40 the defendants who were a trade union published a list called a 'a stop list' in order to enforce compliance with their decisions. The plaintin's who were dealers in motor cars but were not members of the defendants' association advertised on behalf of a customer a motor car which was being manufactured by a member of the defendants' association at a price exceeding the limit fixed by the association. The plaintiffs' name was thereupon put in the 'stop list.' It was held that in the absence of any evidence that the words would be understood in a meaning other than in their ordinary meaning, the plaintiffs were not entitled to succeed. Is putting the name of a trading corporation or company in a list of companies recommended for being boycotted an instrument of coercion? In the last case Scrutton, L.J., was of opinion that the very word 'boycotting' was a 'question-begging epithet.'

28. The word by itself might at times contain an element of what may be called forcible persuasion, but that would depend on the circumstances of the case. In this case the committee recommended to the public to boycott the different companies including the plaintiff company; they have not made any threats of coercion to third persons if they deal with the plaintiffs. There is no evidence that the defendants had conspired to injure the plaintiffs in pursuit of any malicious purpose. There is no evidence that any one of them was actuated by spite or ill-will or with a desire to injure the plaintiff company. Nor was there, as I have already stated, any threat or intimidation or coercion held out to anyone to follow the resolution. In fact the plaintiffs' witness Jethabai Nagda admitted that it was left to the option of any member of the public to boycott the company. It is true that the recommendation was not made by the defendants in furtherance of any trade interests of themselves, but I cannot see why they should be held liable merely because they had no trade interests to protect, if they bona fide considered that what they were doing was in the interest of the insuring public, and they were not actuated by any malice or ill-will towards the plaintiffs.

29. In my opinion a mere recommendation to boycott is not defamatory per se. It is actionable, if the plaintiffs can show that they have sustained special or actual damage, and it has been held that general loss of business is sufficient 'special damage' in such cases. The plaintiffs were asked to furnish the particulars of any special damage which they may have suffered, but they have not given any beyond what they have stated in para 13 of the plaint in which it is generally alleged that the business of the company has fallen off and it has become difficult, if not impossible, to enrol new members. I will deal later with the question whether in fact they have suffered special damage.

30. The resolution, however, is not made up merely of a recommendation to boycott. It also contains an expression of opinion in the guise of an agreement with the opinion of Mr. Vallabhbhai Patel that such companies ought to perish, and it goes on to state that the office-bearers of such companies should resign from their posts, and assistance should be given to the poor to get back the moneys which they have paid into such companies. These words clearly imply an imputation that the business should either be closed or taken into liquidation. There is further the imputation that the poor people had been robbed of their moneys. In my opinion all these words are defamatory of the plaintiff company in the way of its business, and are not a fair and bona fide comment on a matter of public interest. The plaintiff company lastly complains of a publication in the issue of the 'Gujarati' of Bombay dated 16th August 1931, which reproduces the purport of the boycott resolution and the list of companies recommended for being boycotted by the public, under the heading 'Fraudulent Insurance Companies depriving the poor subjects of (their) wealth'. In their written statements the defendants denied that they had falsely or maliciously published or caused to be published what appeared in the 'Gujarati', on 16th August 1931, and stated that they were not responsible for what was published in the said newspaper.

31. It was, however, admitted by defendant 11, in his evidencc that the publication in the 'Gujarati' was at the instance of the defendants' committee, but he denied that the defendants gave this heading to the proprietor and editor of the 'Gujarati' or that the defendants were responsible for the same. It would certainly be defamatory to allege of a company or corporation that it was fraudulent, for this would affect it prejudicially in the way of its business. It cannot be said that the words are a fair and bona fide comment on a matter of public interest. A defamatory imputation may be conveyed not merely by a direct statement, but also indirectly by means of headings, head-lines, figures of speech, and in various other ways. The defendants, however, deny that they gave the heading to the editor of the 'Gujarati'. The publication is one of a series of articles in the Gujarati' which commenced on 19th July 1931. The proprietor and editor of the Gujarati', Natvarlal Ichharam Desai, was examined, and he said that he reproduced the article from what appeared previously in the 'Praja-Bandhu' of Ahmedabad. He said that the heading complained of by the plaintiff company was sent to him by defendant 11 as secretary of the defendants' committee in a covering letter. That letter, however, has not been produced, and defendent 11 denied having seat the heading as alleged. It is really a question of word against word, and in the absence of the letter, I cannot take the word of the proprietor and editor as sufficient proof of his statement. It was, however, argued that the editor was the agent of the defendants for the purposes of the publication, and that the defendants were, therefore, liable for the heading, even though it might not have been sent or suggested by them. An agent can only be liable if he has received instructions to publish the heading, or if in doing what he did he was acting within the general scope of his employment. It cannot be said that the giving of an obnoxious heading by the editor is within the scope of his employment as the defendants' agent.

32. It was next argued that this heading appeared in all the articles in the series, and that the defendants are liable on the ground that by not objecting to it they had impliedly ratified it. It has, however, been held that in order that there may be a valid ratification there must be not only a knowledge of the fact to be ratified, but also an intention to ratify, and that the principal must do something more than merely stand by and let his agent act in the way he chooses. Non-iu-tervention by itself is not ratification. There is no evidence of any ratification before me, and the mere fact that the defendants may have known of the heading and did not object is not sufficient evidence for the purpose. Moerover, the editor stated that he was in the habit of changing headings himself and making alterations in the matter to be published. Further, this heading does not occur in the articles published by defendant 11 in the 'Praja-Bandhu' of Ahmedabad, and on the opinion of Mr. M.K. Gandhi, published at the end of the report in English, all these companies are not necessarily fraudulent, but they have worked on the dividing principle and the majority of them are unsound business propositions. I therefore do not hold the defendants liable for the heading complained of. I have now dealt with all the libellous statements complained of by the plaintiff company and the defences raised by the defendants.

33. The only question that remains is one of damages. The plaintiff company alleges in Para. 13 of the plaint that it has been greatly injured in its credit and reputation and in the way of its business, that it has been brought into public scandal, hatred and contempt, that its business has fallen off and it has become difficult, if not impossible, for it to enrol new members and that some of the directors have resigned. The onus of proving damages is on the plaintiffs. It appears that two of the original directors resigned in July 1931, as I have said before, but there is no evidence that they resigned because of the statements complained of by the company, and neither of them has been called on behalf of the company. The plaintiff company started business in or about January 1931, but on their own showing very little business was done, even from January to June 1931, that is before the publication of the report and the resolution. The company appointed agents who signed agreements on the printed forms of the company, and several of such agreements have been put in. These were entered into between January and October 1931, and some of the agents agreed to secure as many as 5,000 cases in a year. The majority of them could not secure any. Ratansi Punsi agreed on 21st February 1931 to secure 4,000 cases in a year. He secured only four, and he could not give a satisfactory explanation why he had not secured more than four, though his agreement was made in February, and the propaganda which the defendants are alleged to have carried on against companies working on the dividing principle commenced only in May-June 1931.

34. He wrote to the' plaintiff company on 9th July 1931, explaining why he could not secure more cases, and it is significant that though he could only secure four out of 4,000 policies between February and June he still wrote that but for the defendants' 'very dirty propaganda' he would have by the date when he wrote his letter secured at least 3,000 out of the 4,000 cases under his agreement. Four other agents also wrote letters to the plaintiff company, almost on similar lines. These have been put in, though their writers have not been called to give evidence. Apart even from the genuineness of these letters, which has been doubted, there is no satisfactory reason why even a decent number of cases was not secured before June 1931. The only explanation that was offered was that the agents were busy appointing sub-agents, or were busy otherwise.

35. It is admitted that the company had not paid a single claim of any policy-holder, though it was alleged that they had paid directors' fees and the managing agents' remuneration. It also appears from the evidence that moneys were advanced to the company by Asbai, the wife of Lakhamsi Jehta, in cash, and the necessary entries have been made in the books of the company. The company opened a banking account in December 1930, with a sum of Rs. 1,000 out of which a sum of Rs. 500 was returned the next day, and a sum of Rs. 250 was paid soon after to the managing agents. Asbai has not been called by the plaintiffs. The plaintiffs' account books have been audited and balance sheets prepared according to the requirements of the Act, but these do not furnish an adequate and satisfactory account of what the real financial condition of the company was during the few months after its inception. Shivji Velji stated that the company would have earned two to three lakhs rupees a year. Then he said that they would have earned rupees two to three lakhs in the course of three years, that is at the rate of a lakh of rupees a year. He has prepared an estimate of the damages which the plaintiff company alleges it has sustained on the basis that it would have secured 2,500 policies in 1931, 5,000 in 1932, and 7,5000 in 1933. The total premiums would have thus come to about Rs. 2,40,000, of which thirty per cent., i. e., Rs. 72,000, would have been earned by the company, and that sum is taken as the measure of the company's loss. The only basis for this estimate seems to be that most of the small insurance companies have been doing good business, and the plaintiff company being a small insurance company, would have done good business likewise. This, in my opinion, is not a correct syllogism, and in any event it is not a sound basis for an estimate, considering that the company had been in existence for about six months before the publication of the statements complained of, and had done very little business during that period. With regard to the special damage consisting of general loss of custom, it was in the first place obligatory on the plaintiff company to clearly and specifically allege the special damage. They have however lumped it up with the claim for general damages by alleging a fall in their business. There is no sufficient evidence to show what the fall was before the date of the filing of the suit. The evidence as to the subsequent fall in the business is also not satisfactory. There must have been some fall in the business, but as to how much it was the only verdict can be 'not proven.'

36. The plaintiff company must therefore fall back upon their claim for general damages. It was not always easy to assess the general damage according to any legal standard of measurement. Damages are in the discretion of juries in England and of Judges in india. Imputations in the way of the business of a trading corporation or company are generally considered to be a serious matter, but all the facts and circumstances connected with the corporation or company have to be scrutinized. About the defendants' bona fides I have no doubt. As was pointed out by Lord Esher, M.R., in Nevil v. Fine Arts and General Insurance Co. (1895) 2 Q.B 156 a man may use excessive language and yet have no malice in his mind'; and to use the words of Lord Punedin in (1917) A.C 309 in considering the evidence of express malice, 'no nice scales should be used.' The plaintiffs' witnesses admitted that defendants were respectable persons and had no animosity towards the plaintiff company. A suggestion was made that one or two of the defendants did not want small insurance companies to flourish, as they or their near relations were interested in bigger life insurance companies. That is an allegation which has not been proved. There are no serious aggravating circumstances against the defendants in this case. I do not think that there was such excessive publication, as was alleged in argument. It was also argued that the plaintiff company called upon the defendants to apologize before filing the suit, and they refused to do so. But that refusal seems to have been due to a bona fide belief that they were serving the interests of the insuring public by their strong attack on companies working on the dividing principle. Moreover, at common law the fact that the defendant has apologized to the plaintiff is no defence. It is however clear that the defendants have no grudge against the plaintiff company nor anyone connected with the plaintiff company, nor can it be said that any one of them had any axe of his own to grind. Under the circumstances it will be a fair and reasonable amount of compensation if I order the defendants to pay to the plaintiff company the sum of Rs. 1,000. I further order them to pay the plaintiffs' costs of the suit, including costs reserved, if any.

37. There will be a decree for the plaintiffs for Rs. 1,000, costs of the suit, including costs reserved if any, and interest on judgment at six per cent, per annum till payment.

38. The defendants appealed.

39. (The appeal was heard by Beaumont, C.J. and Blackwell, J. On 27th September 1935. Their Lordships confirmed the decree appealed from and concurred in the reasoning of the trial Judge.)


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //