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Atherton and Co. Pvt. Ltd. and ors. Vs. Rainbow Surgical Dressing Manufacturing Co. and anr. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtGujarat High Court
Decided On
Judge
Reported in(1984)2GLR795
AppellantAtherton and Co. Pvt. Ltd. and ors.
RespondentRainbow Surgical Dressing Manufacturing Co. and anr.
Cases ReferredState of Maharashtra v. Syndicate Transport Co.
Excerpt:
.....of persons like a partnership firm can be defamed as such and when a firm is defamed as a firm, the offence of defamation would take place. if the reputation of an artificial and legal person like a company can be a subject-matter of the offence of defamation and when reputation of unincorporated association or collection of persons can be defamed and the offence can take place in respect of that, there is no reason why any different view should be taken in respect of a partnership firm which is also an association of persons and which has got a very real, economic and commercial existence. chokkappa 1973crilj52 therein the supreme court observed that 'men of gown' or 'men of science' would be indefinite and hence no criminal prosecution would lie, but if a well defined class..........products on the terms and conditions embodied in the agreement. according to the complaint as the accused company did not act as per the terms and conditions stated in the said agreement and did not work to the complainant's satisfaction, the said agreement was terminated. it is further alleged that by such termination the accused felt aggrieved and therefore accused no. 2, the manager under his signature sent a circular letter on the letter head of the accused company to all the distributors and stockists of the complainant's product who were connected with the distribution, stock and sale of the products manufactured by the complainant. the offending circular letter stated inter alia 'this agency agreement is not functioning due to illegal and fraudulent activities of m/s. rainbow.....
Judgment:

R.A. Mehta, J.

1. The petitioners have come for quashing the process issued against them for offence punishable under Section 500 (defamation) of the complainant. The complainant is a partnership firm and on behalf of the firm the Manager as representing the firm, has filed the complaint against the four petitioners. Petitioner No. 1 is a Private Limited Company, No. 2 is its Manager, No. 3 is its Managing Director and No. 4 is Director.

2. It is alleged in the complaint that an agreement was entered into between the complainant firm and accused No. 1 company whereby accused No. 1 was appointed sole selling agent of the complainant's products on the terms and conditions embodied in the agreement. According to the complaint as the accused company did not act as per the terms and conditions stated in the said agreement and did not work to the complainant's satisfaction, the said agreement was terminated. It is further alleged that by such termination the accused felt aggrieved and therefore accused No. 2, the Manager under his signature sent a circular letter on the letter head of the accused company to all the distributors and stockists of the complainant's product who were connected with the distribution, stock and sale of the products manufactured by the complainant. The offending circular letter stated inter alia 'this agency agreement is not functioning due to illegal and fraudulent activities of M/s. Rainbow Surgical Dressing Mfg. Co.' - the complainant. It is further alleged in the complaint that this allegation of illegal and fraudulent activities attributed to the complainant firm is absolutely false, frivolous and vexatious and the complainant's prestige and reputation is lowered in the eyes of its distributors, stockists, retailers and customers using its products. It is further alleged that this has resulted into economic loss to the complainant firm as well as lowering of its prestige and reputation. It is also alleged that the complainant's good-will is also affected thereby. The complainant had given a notice to accused Nos. 1 and 2 on ll/22nd January 1982 respectively and instead of expressing regrets accused No 2 has given reply to the said notice reiterating the said allegations and accused No. 1 and 2 are said to have defamed the complainant and accused Nos. 3 & 4 are said to have aided and abetted the commission of offence.

3. The learned Magistrate after examining the Manager of the complainant on oath has ordered issuance of the process for offence under Section 500 I. P. C. against all the four accused. Being aggrieved thereby all the four accused have filed this application for quashing the process.

4. The grounds for quashing the process as formulated by the Learned Counsel for the petitioners are as follows:

(i) That a partnership firm is not a legal entity and is not an aggrieved person under Section 199, Cri. P. C. and, therefore, the complaint was not validly instituted and the court could not have taken cognizance.

(ii) Even if the complaint is assumed to have been validly instituted the process could not have been issued without examining partners constituting the complainant firm under Section 200, Cri. P. C.

(iii) That the process against the petitioner No. 1 being company could not have been issued because the company is not a natural person but an artificial person having no mind and, therefore, it is incapable of having any malice or mens rea or any other requisite for constituting the offence; and

(iv) There is no statement on oath to include the petitioners Nos. 3 and 4 for issuing any process against them.

5. Whether a partnership firm is capable of being defamed. We will have to see the definition of 'defamation' and definition of 'person'. Section 499, I. P. Code provides that whoever makes or publishes any imputation concerning any person intending to harm, or knowing or having reason to believe that such imputation will harm, the reputation of such person, is said, to defame that person. Explanation 2 to Section 499 provides that 'it may amount to defamation to make an imputation concerning a company or an association or collection of person as such.' Section 11 of I. P. Code defines the word 'person' thus:

'Person'- The word 'person' includes any Company or Association, or body of persons, whether incorporated or not.

This definition applies to the Code of Criminal Procedure also in view of the provisions of Section 2(y) of Cri. P. C. which provides that 'words and expressions used herein and not defined but defined in the Indian Penal Code (45 of 1960) have the meanings respectively assigned to them in that Code.' The General Clauses Act, 1897 also defines the word 'person' for the purposes of Central Acts and that provision Section 3(42) reads that ''person' shall include any company or association or body of individuals, whether incorporated or not'. In the light of these definitions and particularly in the light of Explanation 2 to Section 499 it is amply clear that a defamed person can be a company, or an association of persons whether incorporated or not and collection of persons as such. Therefore, unincorporated association of persons like a partnership firm can be defamed as such and when a firm is defamed as a firm, the offence of defamation would take place. It cannot be said that a firm being not a legal person or a natural person cannot be defamed and there cannot be an offence of defamation committed in respect of a firm. If the reputation of an artificial and legal person like a company can be a subject-matter of the offence of defamation and when reputation of unincorporated association or collection of persons can be defamed and the offence can take place in respect of that, there is no reason why any different view should be taken in respect of a partnership firm which is also an association of persons and which has got a very real, economic and commercial existence. A private limited company consisting of 7 members or a public limited company consisting of 7,000 members can be a 'person' which can be defamed and when association of persons also can be defamed, there does not seem to be any valid reason to exclude the category of partnership firm from the word 'person' in Section 499, I.P.C.

6. Now, if a partnership firm is a person capable of being defamed as held earlier, and is defamed why such defamed person or firm cannot be said to be an aggrieved person within the meaning of Section 199 Cri. P.C.? The Learned Counsel for the petitioner has contended that under Section 199 'no court shall take cognizance of offences punishable under Chapter XXI, I. P. Code except upon a complaint made by some person aggrieved by the offence.' The Learned Counsel submits that if there is any person aggrieved by the defamation of the firm, they are the partners and not the firm and the firm being neither legal nor a natural person, has no capacity to initiate criminal proceedings (in contrast to the capacity to sue and being sued in civil proceedings) and it is further contended that a firm may have changing composition, partners may retire, die and/or new partners may join and minors admitted to the benefits of partnership may attain majority. Thus the constitution of the firm is not certain and, therefore, a firm cannot be said to have a right to institute a criminal proceeding and a firm cannot be an aggrieved person. So is the contention. It is further submitted that unless the alleged defamation is referable to particular individuals or particular group of individuals, none can prosecute for the defamation. It was submitted that if 'all lawyers' or 'all Judges' were defamed, no particular lawyer or Judge could prosecute unless there was something to point to the particular individual. In 'Law of Crimes' by Ratanlal & Dhirajlal (22nd Edition) at page 1327, this contention does find support in these words:

If a man wrote that all lawyers were thieves, no particular lawyer could sue him unless there is something to the particular individual. Where a writing inveighs against mankind in general, or against a particular order of men, as, for instance, men of the gown, it is no libel, but it must descend to particulars and individuals to make it is a libel, e g. the religious society called the S. Nunnery, or 'certain persons lately arrived from Portugal and living near Broad Street'. The imputation must be capable of being brought home to a particular individual or collection of individuals as such.

This has also been approved by the Supreme Court in the case of G. Narasimhan and Ors. v. T.V. Chokkappa : 1973CriLJ52 Therein the Supreme Court observed that 'men of gown' or 'men of science' would be indefinite and hence no criminal prosecution would lie, but if a well defined class (such as 'the clergy of the diocese of Durham' or 'the justices of the peace for the country of Middlesex') is defamed, then only criminal prosecution would lie. The Supreme Court held that there was no difference in principle between the Common Law and Explanation II to Section 499 and held that collection of persons capable of being defamed must mean a definite and a determinate body and not too numerous and unascertainable persons.

In the present case, the defamation is not of an indefinite class or of numerous persons. It is of a partnership firm, a well defined class within the ratio of the Supreme Court judgment.

7. In this connection, the Learned Counsel for the petitioners also referred to and relied upon the judgment in the case of P.K. Oswal Hosiery Mills, Millerganj, Ludhiana v. Tilak Chand L. Ghasita Ram Jain It was a civil suit wherein a partnership firm had claimed damages for defamation and the Punjab High Court observed as follows in para 9 of the judgment:

It is well known that a firm is merely a compendious artificial name adopted by its partners and is not itself a legal entity. Libel or slander of a partnership firm may indeed amount to defamation of its partners. But then it is the partners who may in such an eventuality sue and not the firm.

and the court held that the plaintiff-firm could not maintain a suit for libel or slander. The reason and the rationale which was applied is indicated in the preceding para 8 of the judgment. The Court approved the quotations from 'Winfield on Tort' and 'Salmond on the Law of Torts'. These quotations show that 'if a libel or slander affects the management or its trade or business, then the Corporation itself can sue'. (Winfield) and 'that in case of defamation, it must be shown that the defamatory matter is of such nature that its tendency is to cause actual damage to the Corporation in respect of its property or business. Thus, an action of libel will lie at the suit of a trading Corporation charged with insolvency or with dishonest or incompetent management' (Slamond). Thus when there is trade defamation of a trading Corporation, action for defamation would lie. Similarly, when a partnership firm is defamed with reference to its trade reputation or trading activity or when it is charged with insolvency or dishonest or incompetent management, an action would lie at the instance of such trading Corporation whether incorporated or not and even if it is a partnership firm.

8. It is further contended that there is no provision of Criminal law enabling a partnership firm to institute a criminal complaint unlike the provision under the Partnership Act, or in the C.P.C. enabling a partnership firm to take civil proceedings and, therefore, it is contended that a partnership firm cannot institute a criminal proceeding. If a partnership firm is capable of being defamed and is an aggrieved person, the requirements of the offence under Section 499 C.P.C. and the requirements of procedure under Section 199 Cri. P. C. are satisfied and, therefore, there is no bar to such partnership firm initiating the proceedings for the offence of defamation.

9. In each case it would be necessary to decide as to whether the concerned imputation is concerning the firm as a firm or is concerning the partners of the firm as individual persons. In a given case a partnership firm might be grossly defamed in its trade and business management so as to greatly and injuriously affect its reputation and the same imputation may further clarify and say that the partners of the firm are not responsible for such state of affairs and they might be even said to be good, honest and ideal citizens. There being no defamation of partners personally, they cannot be personally aggrieved and, therefore, if they were to initiate criminal proceedings it can be argued that their complaint would not be maintainable because they have not been defamed as individuals or even as partners of the firm. In such a case, if the contention of the petitioners were right, the person committing grossest defamation, gravest trade and property damage to the defamed firm cannot be dealt with and punished under the law. Even if the same or similar defamation of a company would make them criminally liable. Therefore, there is no reason why a partnership firm, which is defamed as a partnership firm cannot be said to be an aggrieved person and cannot have the requisite locus standi for initiating criminal proceedings. Therefore, the first contention for quashing the process against the petitioners fails.

10. The Learned Counsel for the petitioners has contended that even if a partnership firm can validly institute a criminal complaint, the court taking cognizance has to examine the complainant on oath before issuing the process against the accused under Section 200, Cr. P.C. and when the partnership firm is the complainant, its partners should have been examined and in absence of the examination of any of the partners the learned Magistrate could not have issued the process at all.

11. In the present case the complaint is filed in the name of the firm by its Manager and para 1 of the complaint states that the complainant is a registered partnership firm which can sue and be sued and prosecute and be prosecuted in its own name and that Shri S.J. Solanki is its Manager and represents the complainant in this complaint. It is he who has signed the complaint on behalf of the firm as the Manager of Rainbow Surgical Dressing Manufacturing Co. and he has been examined on oath by the learned Magistrate and the substance of the examination has been recorded by the learned Magistrate and thereafter the learned Magistrate has passed the order of issuing process against the accused. When a partnership firm is defamed as a firm in its trade reputation and trading activity, a Manager or other servant of the firm can represent the firm and can give evidence on behalf of the firm. The Learned Counsel for the petitioners has contended that in his statement on oath before the learned Magistrate this witness has not said that he is representing the firm or that he has been authorised by all or any of the partners to file the complaint or to give evidence on behalf of the firm. In the complaint he has stated that he as the Manager represents the firm, and in his statement on oath he has stated that we had appointed accused No. 1 as the sole selling agent and that agency was terminated. He has also stated that in the offending circular of the accused, there was a writing of our defamation and thereby our reputation was harmed. This clearly shows that he was not filing the complaint or giving the evidence personally as an individual but he was acting on behalf of the firm. Therefore, there is no substance in this contention also.

12. The Learned Counsel for the petitioners has then contended that the issuance of the process against the petitioner No. 1 company is illegal, because a limited company being an artificial person cannot have any malice or guilty mind or requisite mens rea to commit offence of defamation and has relied on the judgment of the Calcutta High Court in the case of Sunilakhya Chowdhury v. H.M. Jadwet and Anr. : AIR1968Cal266 In that case a Bengali weekly published allegedly defamatory imputation against the complainant. This weekly was got printed by the publisher at a press owned by a limited company Metropolitan Printing and Publishing House (P) Ltd. and the petitioner-accused was one of the directors of that Printing Company and he was not the maker or author or the publisher of the impugned writing and he had been prosecuted as he was Director of the Company which owned the press and which did the job of printing the said weekly. The Company was not an accused in that case. It was contended that a company cannot in any event be held to have committed an offence punishable under Section 500 I.P.C. because the most essential ingredient of the said offence is metis rea and the company is a justice entity and/ or an artificial person and the Director is not the company and accordingly there is no offence by the limited company whereof the accused was a Director and as such he cannot be prosecuted for the offence at all. The court held that the offence of defamation requires intention to harm and the court further observed that 'in this case the press belonged to the Company at Calcutta and it had merely done the job of printing in the ordinary course of day-to-day business.' It is also to be noticed that the Director of the Printing Company or Printing Company were neither the author nor publishers of the weekly and, therefore, it would be difficult to impute any knowledge or intention or especially the intention to cause harm to the Company. It is true that in the judgment it is observed that 'the Company cannot be held to have committed the offence under Section 500, I.P.C. However, that observation seems to have been made in the context of the facts of that case where the petitioner-accused could not be implicated in any way merely because he was at the material time Director of the Company owning the Press where the journal was printed. It was also observed that a mechanic or the compositor or the press does neither make or publish the matter that may be impugned as defamatory end, therefore, the prosecution against that accused was held not maintainable merely as a Director of the Company concerned. However, it is not possible to agree with the generalised observations that a Company cannot commit an offence of defamation.

13. In the case of State of Maharashtra v. Syndicate Transport Co. (P) Ltd. and Ors. : AIR1964Bom195 the question has been considered whether a company can commit offences involving mens rea such as offences punishable under Sections 403, 406 and 420 - criminal breach of trust, criminal misappropriation and cheating, and the Bombay High Court held that the offence of cheating under Section 420 is required to be punished with imprisonment and a company cannot be prosecuted and punished for the offence mandatorily involving a punishment of imprisonment and for such an offence the company cannot be prosecuted. However, where the offence is punishable with imprisonment and/or fine it is possible to prosecute and punish even an artificial entity like the company. On the question whether such corporate body can be prosecuted for offences involving mens rea on the basis of the mens rea of the authorised agents or servants acting for the company, there is extensive and deep consideration on the question and after referring to Indian and English decisions, in para 17, the court held as follows:

In my view, therefore, 'the scope within which criminal proceedings can be brought against institutions which has been become so prominent a feature of everyday affairs' ought to be widened so as to make corporate bodies indictable for offences flowing from the acts or omissions of their human agents. Ordinarily, a corporate body like a company acts through its managing director or board of directors or authorised agents or servants and the criminal act or omission of an agent including his state of mind, intention, knowledge or belief ought to be treated as the act or omission including the state of mind, intention, knowledge or belief of the company. I do not mean or intend to suggest that in every case where an agent of a limited company acting in its business commits a crime, the company is automatically to be held criminally responsible. As adumbrated, a company cannot be indictable for offences like bigamy, perjury, rape etc. which can only be committed by a human individual or for offences punishable with imprisonment or corporal punishment. Barring these exceptions, a corporate body ought to be indictable for criminal acts or omissions of its directors, or authorised agents or servants, whether they involve mens rea or not, provided they have acted or have purported to act under authority of the corporate body or in pursuance of the aims or objects of the corporate body. The question whether a corporate body should or should not be liable for criminal action resulting from the acts of some individual must depend on the nature of the offence disclosed by the allegations in the complaint or in the charge-sheet, the relative position of the officer or agent vis-a-vis the corporate body and the other relevant facts and circumstances which could show that the corporate body, as such, meant or intended to commit that act. Each case will have necessarily to depend on its own facts which will have to be considered by the Magistrate or Judge before deciding whether to proceed against a corporate body or not.

I respectfully agree with the above view that a corporate body can be prosecuted for the offences committed by it through its Directors, authorised agents and servants. In the present case, accused No. 2 purporting to act as the Manager of the accused No. 1-company has issued the offending circular defaming the complainant partnership firm and alleging illegal and fraudulent activities against the company. Therefore, there is no illegality committed by the petitioner No. 1, which is a limited company.

14. The Learned Counsel for the petitioner has further contended that as regards accused Nos. 3 and 4 there is nothing stated by the complainant in his statement on oath before the learned Magistrate except that they are the Directors of the Company. In the complaint it has been stated that accused No. 3 Managing Director and accused No. 4 the Director have aided and abetted commission of the offence. The complainant has also sent a notice both to the limited company as well as to the Manager and in the reply given by the Manager, the stand taken in the circular letter is reiterated and even though accused No. 1 has received the notice, accused Nos. 3 and 4 have not disowned the offending statement. Under the circumstances, if the complainant submits that there is sufficient material to raise a reasonable inference that the said servant has acted as per the instructions and order of his bosses the learned Magistrate could not be said to have acted perversely while ordering issuance of the process against these accused also. The allegations in the complaint did disclose an offence against all the petitioners and, therefore, there is no reason why the process should be quashed.

All the contentions raised by the petitioners fail and the application is rejected, rule discharged, interim relief vacated.

15. Before parting with this matter, it would be necessary to take note of the proceedings in the trial court. The High Court had granted interim relief in terms of para 15(b) of the application i.e. 'to stay further prosecution of case No. 700 of 1982 pending in the court of the Judicial Magistrate, 1st Class, 2nd Court, Narol', on 28th December 1982. A writ of this stay has been duly sent to the trial court and certified by it on 18th February 1983. Inspite of the proceedings having been stayed and the stay writ having been duly returned served, the record shows that an order is passed by the trial court on 23rd September 1983 below the complaint that the complaint was called out and in default of the appearance by the complainant or his advocate in the court, the complaint is dismissed due to the absence of the complainant and the accused are discharged. This is a serious thing regarding which the office is directed to take necessary and suitable judicial and administrative action.


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