AI Structured Summary
Not yet generated for this judgment
Judgment
Bharati H. Dangre,J
The present Criminal Writ Petition emanates from an order dated 15.12.2018 passed by the Additional Chief Metropolitan Magistrate, 38th Court,
Ballard Pier, Mumbai in a Complaint Case No.11356/SS/2016 instituted by the respondent No.2 for the offence of defamation and alleging that the act
of the respondent (present petitioner) has damaged his reputation. By the said impugned order, process is issued against the accused Nos.2 to 12 for
the offences punishable under Section 500 read with 34 of the Indian Penal Code.
Before adverting to the order impugned before us, it would be necessary to refer to the bare minimum facts in a chronological manner to have a
better understanding of the issue before us. Tata Sons Ltd., is an unlisted public company registered under the provisions of the Companies Act, 1886.
The said company is having substantial shareholdings in various listed and unlisted private companies which form a part of the Tata Group of
Companies. The said Tata Sons Ltd., is a shareholder of Tata Steel Ltd., Tata Chemicals Ltd. and Tata Motors Ltd., as it holds ordinary shares
representing a marginal percentage of the paid up ordinary share capital of the three companies. Thus, Tata Sons Ltd., is a promoter/share holder in
the three operating companies i.e. Tata Chemicals, Tata Motors and Tata Steels.
The petitioner No.1ÂRatan Tata was an Additional Director and Interim Chairman of the Tata Sons as on 10.11.2016 where as the petitioner Nos.2
to 10 were the Directors of the said promoter Company. The petitioner No.11 was the Chief Operating Officer and Company Secretary of Tata Sons
Ltd. The respondent No.2 (the ComplainantÂNusli Neville Wadia) is the Chairman of Bombay Dyeing and Manufacturing Company Ltd., as well as
several other companies and claims to be a person of impeccable reputation in society. The respondent No.2 was an independent Director of the three
holding companies of the Tata Group and came to be appointed as a Director of Tata Steel on 29.08.1979, nonÂexecutive Director of Tata Motors on
22.12.1998 and a nonÂexecutive Director of Tata Chemicals on 26.06.1981 and in this capacity he claims to have long association with the said three
companies.
The roots of the present dispute between the aforesaid parties could be traced back to 24.10.2016 when the Chairman of the Tata Sons Ltd., by
name Mr.Cyrus Mistry came to be removed by the Board of Directors of Tata Sons Ltd. In the wake of his removal, the independent Directors of
Tata Chemicals Ltd., met at Bombay House on 10.11.2016 to review the recent events and the subsequent media reports which could impact the
Management of the business of the company, both on domestic and international front and the meeting was convened to enable the independent
Directors to review the situation which had developed on account of removal of the Chairman of the Tata Sons Ltd. It is this meeting which is core of
the dispute between the parties. Both the parties have their own version as to what transpired in the said meeting. However, at present it would be
only necessary to refer to the undisputed outcome of the fact that the independent Directors unanimously affirmed their confidence in the Board, it's
Chairman and the Management in the conduct of the business. The independent Directors after due discussion which, according to the respondent
No.2 was unanimous whereas according to the petitioners it was an attempt on part of the respondent No.2 to galvanize the independent Directors
and met with an allegation that he has not conducted himself independently and acted as an interested party. As an outcome of the said meeting dated
10.11.2016, a statement was issued by the independent Directors of Tata Chemicals to the stock exchanges affirming their confidence in the Board,
Chairman and the Management of the Tata Chemicals and it also re assured all the stake holders, Management of the company and its subsidiary
where ever located of their full confidence and support. The said statement was issued by one Mr.Rajiv Chandan, General Counsel and Company
Secretary on behalf of the independent Directors of Tata Chemicals Ltd. It is this conduct of the respondent No.2 which was perceived as
unfavourable and prompted the Tata Sons Ltd., which is a shareholder of Tata Chemicals Ltd., to requisition the Board of Directors of Tata
Chemicals for convening an Extraordinary General Meeting of its shareholders in the manner prescribed under the law to pass two resolutions.
Accordingly, on 10.11.2016 itself the Chief Operating Officer and the Company Secretary of Tata Sons Ltd., i.e. petitioner No.11 issued notice to the
Board of Directors of Tata Chemicals Ltd., in its capacity as shareholder of Tata Chemicals Ltd. The Circular Resolution came to be passed by the
Board of Directors of Tata Sons Ltd., which included the petitioner Nos.1 to 10 to submit requisition for convening Extraordinary General Meeting of
the shareholders of the Tata Chemicals and communication came to be addressed informing that pursuant to Section 100(2)(a) and other applicable
provisions of the Companies Act, 2013 and the Rules framed thereunder, a requisition has been forwarded to the holding company for convening an
Extraordinary General Meeting of the shareholders of Tata Chemicals Ltd., to pass two resolutions. Item No.1 related to removal of Mr.Cyrus P.
Mistry as Director where as Item No.2 pertain to “Removal of Mr.Nusli Wadia as Directorâ€. The similar communications were addressed by
Tata Sons Ltd., to the other two holding companies and the Special Notices issued to the Company included the resolution seeking removal of
Mr.Nusli Wadia as Director of the Relevant Tata Companies. The resolution which was contemplated to be passed as an ordinary resolution in
pursuant to the provisions of section 169 and other provisions of the Companies Act and the Rules was accompanied with a brief background about
the conduct of Mr.Nusli Wadia and it is the reflection of this conduct contained in the special notice issued under Section 169(2) read with Section 115
of the Companies Act which is the bone of contention between the parties. According to the petitioners, the narration contained in the Special Notice
issued under Section 169(2) read with 115 of the Companies Act by Tata Sons Ltd., was a statutory requirement before taking action of removal of a
Director and fall completely within the four corners of the Companies Act and the Rules framed thereunder, whereas according to the respondent
No.2, the said Special Notice containing the allegations is per se defamatory and no due diligence was shown by the petitioner by ascertaining whether
the allegations are true or false before issuance of the said Notice containing the imputation. The contention of the respondent No.2 is that this Special
Notice contained the defamatory statement and the statement being per se defamatory, the respondent No.2 followed up with the petitioners by asking
them to seek legal advise and withdraw the said Special Notice as the same is alleged to be defamatory. But instead of doing the needful, it is the
grievance of the respondent No.2 that the notices containing the defamatory material came to be further circulated to the shareholders of the
operating companies, again without verification of the statements contained therein and this amounted to an irresponsible behavior. It is in the
backdrop of this fact we have heard the submissions advanced on behalf of the petitioners as well as the respondents and we would be making
reference to the rival contentions of the respective parties by making reference to the voluminous documents placed before us.
To continue the assertion of facts, it may be noted that the end result of the proceedings is that the Extraordinary General Meeting of all the three
holding companies came to be held and the respondent No.2 was removed as Director by requisite majority and in case of Tata Steel Ltd., on
21.12.2016 in case of Tata Motors on 22.12.2016 and in case of Tata Chemicals on 23.12.2016.
It is to be noted that Suit No.50 of 2017 came to be filed by few public shareholders in relation to the removal of the respondent No.2 along with the
Notice of Motion No.345 of 2017. The said suit came to be instituted on 13.12.2016 and certain affidavits came to be filed in this suit which have been
sought to be relied upon by the parties. It is also to be noted that the respondent No.2 instituted Civil Suit which came to be numbered as Civil Suit
No.225 of 2017 before the High Court of Judicature at Bombay (Nusli Wadia V/s. Tata Sons Pvt. Ltd. and Others) for defamation and he has prayed
for declaration that the defendants are jointly and severely liable to compensate him by paying sum of Rs.3 Crores by way of damages, for having
published or caused to be published the Special Notices containing per se defamatory and libelous allegations against him. The said suit came to be
filed on 15.12.2016.
The respondent No.2 Mr.Nusli Wadia filed a complaint in the Court of Additional Chief Metropolitan Magistrate, Mumbai on 23.12.2016 which is a
genesis of the present Writ Petition. In the complaint, respondent No.2 has set out in detail his curriculum vitae which is depictive that he is a famous
personality who enjoys very good and immaculate reputation amongst caste, creed and calling. The respondent No.2 highlighted in the complaint his
lifetime achievements. It is alleged in the complaint that the complaint is filed since the accused persons individually and collectively have committed
an offence of defamation against the complainant by printing, publishing and circulating per se false, frivolous, baseless, incorrect, libelous and
defamatory material concerning the complainant which have been so printed and published with the sole intention of lowering, tainting, tarnishing the
reputation and selfÂesteem of the complainant in the eyes of right thinking person. The complainant further proceed to state that the accused persons
have been instrumental in preparing the contents of the Special Notice which is defamatory and they collectively ensured that these defamatory
contents are published and circulated and thus all the accused persons are jointly and directly responsible for committing the offence under Section 500
read with Section 109 of the Indian Penal Code. It is also specifically alleged that the Special Notices which contained the material against the
complainant is based on false, baseless and unsubstantiated imputation which have been published with a view to damage and tarnish his reputation
and goodwill. It is further alleged that the defamatory and offensive contents of the Special Notice has caused serious prejudice to his reputation and
has affected his status as Director in various other Companies. The justification is also offered as regards the allegation about his conduct as an
independent Director and it is stated in the complaint that if the other independent Directors have expressed their support towards Mr.Cyrus Mistry as
Chairman of the Company, Board and Management of the operating companies, it is not on account of the action on the part of the complainant but
the collective and unanimous decision of the independent Director which is reflected in the Minutes of meeting of Tata Chemicals and Tata Motors. It
is also stated in the complaint that as an independent Director, the complainant is entitled to express his support in the Chairman, the Board and the
Management of the operating companies and he is entitled to do so after exercising his independent business judgment as his fiduciary duty is only to
the companies in which he is a Director. In the said complaint, a request is made to the Magistrate to take cognizance of the offence committed under
Section 500 of the I.P.C. read with Section 109 and also read with Section 34 of the I.P.C. and a request was made to issue process against the
accused persons.
On this complaint, the Magistrate recorded the verification of the complainant on 14.12.2018 and passed the impugned order on 15.12.2018 in which
the Magistrate recorded a finding that the complainant has made out a case against the accused persons except the accused No.1 which is a
company, hence, he issued process against accused Nos.2 to 12 (Petitioner Nos.1 to 11) for the offences punishable under Section 500 read with
Section 34 of the Indian Penal Code. The learned Magistrate has recorded that on perusal of the complaint and its verification, in view of Section 200
of Cr.P.C. and on perusal of the documents as per list of documents Exhibit ""A to Z"" and ""Aa to GG"", it appears that the averments made in the
complaint are supported by documents i.e. record of minutes of the independent Directors of Tata Chemicals Ltd., dated 10.11.2016, outcome of the
meeting of the independent Directors dated 10.11.2016, Special Notice issued by the accused to Tata Chemicals Ltd, copy of eÂmails, copy of articles
published in newspapers etc., and the allegations levelled against the complainant in the Special Notice are serious in nature and there was no
satisfactory explanation offered as to on what basis the statements were contained in the Special Notice and the learned Magistrate concluded that
the statements are defamatory. That is how the learned Magistrate justify the issuance of process against the present petitioners.
In support of the petition, we have heard the learned senior counsel Shri.Abhishekh M. Sanghvi. After inviting our attention to the sequence of
events, Shri.Sanghvi would submit that by no imagination the provisions of Section 500 of Indian Penal Code can be invoked and applied against the
present petitioners. He would submit that the existence of the primaÂfacie case is a preÂrequisite of issuance of process and before exercising power
the Magistrate has to satisfy himself, upon due application of mind that there exists sufficient ground for proceeding against the present accused and
committing an offence. Shri.Sanghvi would submit that the complaint alleges defamation in respect of the Special Notices issued by the Tata Sons Ltd
to the three operating companies promoted by it on 10.11.2016 under the provisions of the Companies Act seeking removal of the independent
Director of the Relevant Tata Companies. Shri.Sanghvi has invited our attention to the statutory power contained in Section 169 of the Companies Act
which authorizes the company to remove a director including an independent director by following the procedure set out in the said section. He would
submit that Board of Tata Sons took a decision to replace Mr.Cyrus Mistry as its Chairman on 24.10.2016 and the proceedings came to be initiated to
remove him from the operating companies and notices came to be issued for removal of Mr.Cyrus Mistry as Director of all the companies in which he
was the Director. In this process on 10.11.2016, the meeting of the Tata Chemicals was being held and in the evening, one of the nonÂexecutive
Director of the Tata Chemicals Mr.Bhaskar Bhat submitted his resignation as Director of the Tata Chemicals and the various events which transpired
in the meeting, came to be documented through the affidavits which included the affidavit of Mr.Rajiv Chandan Company Secretary, Mr.MukundÂ‐
Manging Director and Mr.Bhaskar BhatÂNonÂexecutive Director who resigned. This affidavits came to be tendered in suit filed by one Mr.Janak
Mathura Das seeking stay of the EGM's of the Tata Companies on account of the resolution proposed for removal of the respondent No.2.
Mr.Sanghvi invited our attention to the affidavit reflecting the conduct of the respondent No.2 in the meeting held on 10.11.2016. Shri.Sanghvi, would
submit that in the light of the events that took place on 10.11.2016, Board of Tata Sons in its fiduciary duty as shareholders and promoters of the
relevant Tata Companies decided to issue the Special Notices to seek removal of the respondent No.2 along with Mr.Cyrus Mistry. As a part of the
Special Notices, according to Shri.Sanghvi, some background material came to be alluded and it was only with an intention to assist the board of the
Relevant Tata companies in the deliberation of the request of the requisitioning of the meeting for removal of the respondent No.2. He would submit
that the communication of the Tata Sons was a confidential communication in accordance with the provisions of the Companies Act and the only
purpose of the said notice was to request the Relevant Tata Companies to requisition meeting of its shareholders and propose resolution at the behest
of the promoter company for removal of Mr.Nusli Wadia as an independent director. This was sought to be done strictly in conformity with the
mechanism prescribed in Section 169 of the Companies Act. He would submit that perusal of the contents of the said notice can by no sense be
construed as per se defamatory and rather provisions of the Companies Act contemplate that the notice of the business to be transacted in a meeting
should be accompanied with a statement setting out the material fact concerning each item of special business to be transacted in the meeting
including the facts or any other information that may enable the members to understand the meaning, scope and implication of the items and to take
decision thereon. He would thus submit that the notice contained the relevant background so that the Board of Directors of the relevant companies
would have a brief idea of the purpose of holding a meeting. Shri.Sanghvi has also submitted that when the procedure contemplated under Section 169
was sought to be followed, the respondent No.2 actively and consciously consented to the circulation of the Special Notice of the Tata Sons including
the background material to the shareholders of the Tata Companies as an annexure to the explanatory statement and that the relevant Tata companies
were duty bound to issue notice in terms of the Section 102 of the Companies Act. Shri.Sanghvi would submit that the sole intention of the Special
Notices containing the brief factual material was necessary since the meeting was to be held for removing a director in whom the Tata Sons as
shareholder had lost confidence and any such comment made for achieving the objective, in any case cannot constitute the defamation. The learned
senior counsel further submits that if it leads to a criminal offence of a defamation, it would have a disastrous effect as those who are expected to
take an independent and objective decision in an institution would be stalled in exercise of their duty if such a course is permitted. He would further
submit that the power of removal of a person including an independent director is vested in the Board of Directors of the company cannot be stultified
through threats of criminal prosecution. Shri.Sanghvi has placed reliance on the judgment of the Hon'ble Apex Court in case of Subramanian Swamy
V/s. Union of India, Minstry of Law & Ors. (2016-7-SCC-221 )to support to his submission that there has to be imputation and it must have been
made in the manner as provided in the Section 499 of the Indian Penal Code with the intention to cause harm to the reputation of a person about
whom it is made. He would submit that the said judgment in unequivocal terms has held that the complainant has to show that the accused has
intended or had reason to believe that such imputation will harm the reputation of the complainant. He would also place reliance in the judgment of this
Court in the matter of Ramchandra Venkataramanan V/s. Shapoorji Pallonji & Company Ltd & Anr. (2019-SSCÂOnline-Bom-524) where certain
yardsticks have been set out to find out whether the statement is defamatory or not and it has been held that the statement has to be read in its
entirety and while determining the question whether the statement is defamatory or not, it will have to be ascertained whether the averments in the
complaint and the statement made are capable as a matter of law being defamatory. Shri.Sanghvi would submit that if the statutory powers, has been
exercised by a company and the process contemplated under statute is followed to achieve the end result which is within the four corners of the
statute, then whether the defamation can be attracted. He would submit that when the petitioners as a Board of Directors of the Tata Sons had lost
confidence in one of its independent director and it proceeded to follow the statutory procedure for his removal and circulated the Special Notice
giving a brief backdrop of the material, the provisions of Section 499 cannot be attracted in any case. He has also relied upon the judgment of the
Hon'ble Apex Court in case of S. Khushboo V/s. Kanniammal & Anr. 2010-5-SSC-600.
Shri.Sanghvi also placed reliance on the judgment of Punjab and Haryana High Court in case of Shri.Mohinder Singh Dhillon V/s. Shri Ganga Dhar
Sharma 1975-2-SLR-603 which relates to the entry taken in annual confidential remarks of an employee and as to whether adverse entry would
attract the offence of defamation.
Apart from the said submission, Shri.Sanghvi has also submitted that the Magistrate has fallen into a great error in not considering an important
aspect of matter, namely, the aspect of jurisdiction. He would invite our attention to Section 202 of Cr.P.C. and submit that the Magistrate has failed
to appreciate that as per mandate of Section 202, he was duty bound to inquire into the case before passing the impugned order and admittedly no
inquiry/investigation under Section 202 was conducted. He would further submit that the petitioner Nos.5 to 9 reside beyond the jurisdiction of the
learned Magistrate and therefore, the Magistrate could not have issued process to the said respondents who were located beyond his jurisdiction. He
would place reliance upon judgment of the Apex Court in the case of Abhijit Pawar V/s. Hemant Madhukar Nimbalkar & Anr. 2017-3-SCC-528
where the requirement of the amended Section 202 is reiterated.
The submission of Shri.Sanghvi is to the effect that the said approach of the Magistrate in not following the provisions of Section 202 itself discloses
the nonÂapplication of mind on the part of the Magistrate. He would also place heavy reliance on the judgment of the Apex Court in case of Udai
Shaker Awasthi V/s. State of Uttar Pradesh & Anr. 2013-2-SSC-435 and a judgment in case of Vijay Dhanuka & Ors. V/s. Najma Mamtaj & Ors.
(2014-14-SCC-638) wherein it is held that the requirement to conduct an inquiry and direct investigation before issuing process against the accused
beyond the territorial jurisdiction of the Magistrate concerned is held to be mandatory, the object, being to protect innocent persons residing at far off
places from being harassed. Apart from the said two points, Shri.Sanghvi would also submit that the complainant was not entitled to approach the
Magistrate since he has failed to seek efficacious remedy provided under Section 111(3) of the Companies Act. He submits that the subÂSection (3)
of Section 111 would impose a fetter on the company to circulate any statement, if on the application either of the company or any other person who
claims to be aggrieved, the Central Government has declared that the right conferred by the section are being abused to secure needless publicity for
defamatory matter. Shri.Sanghvi submits that there is no explanation offered by the respondent No.2 as to why he did not invoke the remedy under
Section 111(3). He would also invite our attention to the illustrative guidelines by the Hon'ble Apex Court in case of State of Haryana and Ors V/s.
Bhajan Lal & Ors. 1992-Suppl(1)-SCC-335 and specifically place reliance on clause (6) of paragraph No.102 where there is an expressed legal bar
engrafted in any of the provisions of the Code or the concerned Act to the institution and continuation of the proceedings where there is a specific
provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
Shri.Sanghvi would thus submit that since the contents of the Special Notice are not per se defamatory as what is sought by the respondent No.2 and
since they have been circulated in exercise of the statutory power and are in form of a duty cast upon the company, the issuance of the process by the
Magistrate is nothing but abuse of process of law and this Court in exercise of its inherent power should intervene by quashing and setting aside the
impugned order.
We have also heard learned Senior Counsel Shri.Amit Desai for the petitioners. The learned Senior Counsel would adopt the arguments advanced
by Shri.Sanghvi. Apart from the said arguments, he placed reliance on the judgment of the Apex Court in case of Birla Corporation Limited V/s.
Adventz Investments and Holdings Limited and Others (Criminal Appeal No.875 of 2019 arising out of SLP (Crl.) No.9053 of 201 6decided by the
Apex Court on 09.05.2019 and he would submit that the said judgment exhaustively deal with the issue of exercise of jurisdiction of this Court under
Section 482 of Cr.P.C. as against an order passed by the Magistrate on a complaint filed under Section 200/202 of Cr.P.C.
In support of the impugned order justifying issuance of the process against the present petitioners, we have heard learned counsel Shri.Abad
Ponda. According to Shri.Ponda the statements contained in the Special Notices to which he has exhaustively referred to, are per se defamatory in
nature and he would further submit that having regard to the respondent No.2's eminent stature and reputation it was incumbent upon the petitioners
before levelling any allegation to ascertain the truthfulness of the same and there ought to have been some care shown on their part to find out
whether the allegations are true or false. He would submit that when an independent Director is alleged to be acting in consonance with another, it is a
direct affront on his independence and this is no short of questioning his integrity as any independent Director. He would place reliance on the
judgment of the Hon'ble Apex Court in case of Shiv Narayan Laxmi Naryan V/s. State of Maharashtra 1980-2-SCC-46 5to submit that a conclusion
derived by the petitioners that on account of the act of the respondent No.2 as the company is in jeopardy and this has desired effect of harming and
tarnishing his reputation. Shri.Ponda is therefore extremely critical about the phraseology used in the Special Notices including the word
“Galvanizing independent Directors†and according to him this projects a picture in the eyes of the right thinking persons that the conduct of
respondent No.2 is deplorable. Further, the allegation in the Special Notices that the action of the respondent No.2 makes his continuation on the
Board untenable and that the principal shareholder have lost confidence in his independence, suitability and bona fides are also nothing but statements
attempting to lower his reputation. He would emphasize on the fact that the respondent No.2 was acting as an independent Director and would submit
that at no point of time, prior to 10.11.2016, the respondent No.2's independence and integrity has been questioned and doubted. He would further
submit that the allegation that he was acting in concert with Mr.Cyrus Mistry is not only per se defamatory but palpably false. He would also invite our
attention that in the explanatory statement to the notice convening the Extraordinary General Meeting, it is recorded that “The Board has been
informed by the independent Directors individually that they have not been approached by Mr.Nusli Wadia that may be considered as influencing their
independence in the Companyâ€. He would also rely upon the Minutes of meeting of the independent Directors of the Tata Motors Ltd., held on
14.11.2016 whereas unanimous decision of the independent Director was recorded in the following effect.
“The independent Director confirm that all decisions taken by the Board with regard to statutory, operation and business of the company have been
unanimous and executed by the Chairman and Management accordinglyâ€.
“The Independent Directors further affirm that the Company continues to be governed, supervised and managed under the guidance and direction
of the Board. The Management of the Company and its subsidiaries have the full confidence and support of the independent Directorsâ€.
Further, he also makes a reference to the meeting of the Board of Directors of Tata Sons Ltd., held on 11.11.2016 where the Board has resolved to
the following effect:Â
“All decisions taken by the Board with regard to strategy, operations and business of the company have been unanimous and executed
accordingly.â€
Further, he also invite attention to the Resolution passed in the meeting of the independent Directors of the Tata Chemicals on 10.11.2016 which reads
thus :Â
“On the basis of the above criteria, the independent Directors concluded that in their view the Board, Management and Chairman had been acting
in a manner consistent with law and prudence in the best interest of the company and that nothing adverseÂ(covert or avert)Âhad come to their
notice which necessitated a revision of their assessment which had been made by them on March 22, 2016.
Considering the above the Independent Directors unanimously affirmed their confidence in the Board, its Chairman and the management in the
conduct of the Company's business.
Independent Directors also reaffirmed that all the decisions taken with regard to the operations and business of the Company had been taken by the
Board unanimously and executed by the Chairman and management as per the directions of the Board.â€
Based on the aforesaid statements and the Resolution, Mr.Ponda has vehemently submitted that the material available on record disclose
otherwise and in fact there is no basis for making the defamatory allegation by the petitioners against a responsible independent Director who was
enjoying longstanding association with them and he submits that is how the allegation “become per se defamatoryâ€.
He would place reliance on the judgment of the Apex Court in case of John Thomas V/s. Dr. K. Jagadeesen 2001-6-SCC-3 0where it is categorically
held that the only effect of an imputation being per se defamatory is that it would relieve the complainant of the burden to establish that the publication
of such imputations has lowered him in the estimation of the rightÂthinking members of the public. However, even if the imputation is not per se
defamatory, that by itself would not go to the advantage of the publisher, for, the complaining person can establish on evidence that the publication has
in fact amounted to defamation even in spite of the apparent deficiency, so the appellant cannot contend, at this stage,that he is entitled to be
discharged on the ground that the imputations in the extracted publications were not per se defamatory.
Shri.Ponda has also further emphasized on the fact that the Special Notices were circulated inter alia, to the Board of Directors of the operating
companies comprising almost entirely or totally different sets of Directors, when the law do not require any reason to be ascribed. He would submit
that except the common Director, namely, Mr.Ishaaat Hussain, who is also a Director of the Tata Steel and Tata Sons Ltd., Dr.Ralf Speth, Director in
Tata Motors and Tata Sons Ltd., and Mr.Cyrus Mistry, the entire Board of Directors in the operating companies was different from that of Tata Sons
Ltd. He also alleges that Special Notices were deliberately lent to the print media for this purpose. He has placed reliance on the articles published in
Business Standards, Economic Times etc. He would also allege that during the deliberation by the Board of Directors of Tata Motors at its meeting
held on 14.11.2016 regarding the requisition of Tata Sons Ltd., to convene an Extraordinary General Meeting, stories were immediately reported by
the media agencies and this reflect the nexus between the Tata Sons Ltd., personnels and the media and that this formed a part of large conspiracy to
disrepute the respondent No.2. Shri.Ponda also deal with the submissions of Shri.Sanghvi to the effect that respondent No.2 never objected to the
circulation of the defamatory material and he submits that the said allegation misleading. Shri.Ponda submit that respondent No.2 has addressed a
letter dated 21.11.2016 to the Board of Directors and the Company Secretary of Tata Steel and had asserted that the allegations in the Special Notice
are absolutely false and baseless and he had clarified that the draft notice and the explanatory statement circulated by the Company Secretary
reproduces the highly defamatory statement made by the Tata Sons Ltd., in the Special Notices and this letter was received by the Tata Sons Ltd.,
before the Board meeting dated 21.11.2016 where such letter was discussed at length. Shri.Ponda would submit that the petitioners had responded to
the respondent No.2's letter and denied the allegation and had reÂiterated that the Special Notice was confidential communication. He would also
invite our attention to the fact that pursuant to the decision of the Board in its meeting held on 21.11.2016 a Board meeting of Tata Steel Ltd., was
held on 25.11.2016 to consider and approve the notice convening an Extraordinary General Meeting and prior to it, legal opinion was also sought and
circulated to the members of the Board which was duly considered and discussed in the meeting. He would submit that the petitioners had circulated
the Notices and the defamatory contents thereof in spite of serious efforts on part of respondent No.2 to stall its publication and circulation, and not
only this though there was no legal obligation to ascribe reasons for respondent No.2's removal, that formed part and parcel of the Special Notice and
the requisition. Shri.Ponda would thus submit that the respondent No.2 had continuously objected to per se defamatory publication of the Special
Notices but no heed was paid to his request. He would also deny the contention of the petitioners that the Special Notices were issued under the
provisions of Section 102 of the Companies Act. Shri.Ponda has further submitted that Special Notices are reflective of the mens rea and malice on
the part of the petitioners and therefore Section 499 of the Indian Penal Code is clearly attracted.
He would place strong reliance on the judgment of the Hon'ble Apex Court in case of Subramanian Swamy V/s. Union of India 2016-7-SCC-221 and
also the judgment of the Apex Court in case of Jeffery J. Diermeier and Another V/s. State of West Bengal and Anr. 2010-6-SCC-243, where it has
been categorically held that the constitute “Defamation†under Section 499 IPC, there must be an imputation and such imputation must have been
made with the intention of harming or knowing or having reason to believe that it will harm the reputation of a person about whom it is made and
according to Shri.Ponda it has been held that it would be sufficient to show that the accused intended or knew or had reason to believe that the
imputation made by him would harm the reputation of the complainant, irrespective of whether the complainant actually suffered directly or indirectly
from the imputation as alleged.
Shri.Ponda has also extensively dealt with the submission of the petitioners in relation to the bar under Section 202 of Criminal Procedure Code. In
conclusion he would submit that in any case at present this Court is only confronted with a limited issue as to whether the Magistrate who had issued
the process was justified in doing so. He would submit that this would not involve passing of a detailed order but only a prima facia satisfaction on part
of the Magistrate that a case has been made out and when the Magistrate was satisfied that there is sufficient material against the accused persons,
he has issued the process. He would further submit that there is absolutely no reason for this Court to resort to its extraordinary jurisdiction to interfere
in such a matter since there are several triable issues and under the inherent power of this Court, a just prosecution cannot be stultified.
The Writ Petition has been filed before us under Article 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure
and relief is sought to the effect of quashing and setting aside the order passed by the Additional Chief Metropolitan Magistrate, Mumbai on
15.12.2018.
The present petition was initially listed before the learned Single Judge, however, in light of the judgment in case of Abdul Pal Abdul Rahim V/s. State
of Maharashtra 2012-All MR (Criminal) 131, the learned single Judge was pleased to issue direction for listing of the matter before the Division Bench
in light of the power sought to be invoked and, that is how, the matter came to be listed before us.
It is trite position of law that the power conferred on this Court under Section 482 of the Cr.P.C. is the inherent power and the said power is to be
exercised with great circumspection and in rarest of rare case where the complaint does not disclose any offence. It is settled position of law that if
the complaint itself discloses an offences, then it is not permissible for this Court to embark upon an inquiry as to genuineness of the allegation made in
the complaint or whether those allegations are likely to be established on evidence or not. It is not permissible for the Court to verify the authenticity or
truthfulness of the allegations made in a complaint and if an offence prima facie falls under the provisions of the Penal Code, the launching of
prosecution cannot be thwarted by the High Court under Section 482 of the Cr.P.C.
The principles enveloping the discharge of this power by the High Court have been well settled as early as in the year 1992 in the case of State of
Haryana V/s. Bhajanlal and Ors., 1992-Suppl-1-SCC-335 where the Hon'ble Apex Court has enumerated several categories of cases by way of
illustration wherein the extraordinary power under Article 226 or the inherent power under Section 482 of Cr.P.C. can be exercised by the High Court
either to prevent the abuse of the process of the Court or otherwise to secure the ends of justice. Though the guidelines laid down by the Apex Court
have been declared to be not clearly defined and sufficiently channelized and inflexible guidelines or rigid formulae, the parameters by this time are
more or less well settled. Where the allegations made in the complaint even if they are taken at their face value and accepted in their entirety do not
prima facie constitute any offence or no case is made out against the accused then the Courts exercising the power under Section 482 are justified in
exercise of its power.
We have examined the case before us by keeping in mind this well settled principles in exercise of the inherent powers of this Court under Section 482
of Cr.P.C.
Since we have already averred to the necessary facts, we would straightway refer to the contents of the Special Notice which have been alleged
to be defamatory. It is to be noted that the statements/imputations which are alleged to be defamatory are contained in a Special Notice/requisition by
the promoter company, namely, the Tata Sons Ltd., for convening the Extraordinary General Meeting of the Shareholders of the Tata Chemicals, Tata
Motors and Tata Steels and to issue Special Notices to propose resolution for removal of the respondent No.2 as Director of the Relevant Tata
companies. The Special Notice and requisition under the provisions of the Companies Act came to be issued by the Tata Sons Ltd., and was
addressed to the Board of Directors of the three holding companies, for convening an Extraordinary General Meeting of the shareholders of the
respective companies. The separate notices came to be issued to the Board of Directors of all the three holding companies on 10.11.2016. The Special
Notice proceed to state that Tata Sons is a shareholder of the three companies and hold equity shares in the respective companies. After making
reference to the provisions of Section 100(2)(a) and other applicable provisions of the Companies Act, 2013, the Notice proceed to state that Tata
Sons Ltd., submit the requisition to the Holding Companies for convening an Extraordinary General Meeting of their shareholders in the prescribed
manner to pass two resolutions on following subjects:Â
Item No.1 Removal of Mr.Cyrus Mistry as Director.
Item No.2 Removal of Mr.Nusli Wadia as Director.
Since we are not concerned with item No.I of the Special Notice, we would refer to item No.II which pertains to the removal of respondent No.2.
The Special Notice issued to the holding companies on 10.11.2016 read thus :Â
“Item No.2
REMOVAL OF MR.NUSLI N. WADIA AS DIRECTOR
To pass the following resolution as an Ordinary Resolution :
RESOLVED THAT pursuant to the provisions of Section 169 and other applicable provisions of the Companies Act, 2013 and the Rules framed
thereunder, Mr.Nusli N. Wadia (Director Identification Number 00015731) be and is hereby removed from the office of Director of the Company
with effect from the date of this meeting.â€
Although there is no requirement, legally or otherwise, for the benefit of the shareholders, the following may be noted :Â
(i) Post the development of October 24, 2016, Mr.Nusli Wadia acting in concret with Mr.Cyrus Mistry has been acting against the interests of Tata
Chemicals and its principal shareholder by galvanising independent directors and mobillising opinion, forcing disruptions, and issuing a statement that in
our view is contrary to the interests of the company. By such an act, it has put the company in jeopardy with respect to its further expansion plans,
capital raising by virtue of equity or debt, queries from rating agencies and impact on the overall morale of the workers, employees and management
who have joined Tata Chemicals, a Tata Company. Moreover, he has been a director since several decades and considering all these factors, his
continuance on the Board is untenable. The principal shareholders have lost confidence in the independence, suitability or bonafides of Mr.Wadia and
seek his removal.
(ii) Consequently, the Board of Directors of Tata Sons limited by its resolution dated November 10, 2016 has resolved to propose the removal of
Mr.Nusli Wadia as Director of Tata Chemicals.
Please also treat the above as special notice under Section 169(2), read with Section 115 and other applicable provisions of the Companies Act,
2013 and the Rules framed thereunder for the aforesaid purpose.
Yours faithfully,
TATA SONS LIMITED
(F.N. Subedar)
Chief Operating Officer & Company Secretary Copy to :Company Secretary, Tata Chemicals Limited.â€
The contents of the Special Notices issued to all the holding companies contain a similar averment. Based on this Special Notice issued under
Section 169(2) read with Section 102 of the Companies Act, the respective holding companies forwarded the copy of the Special Notice and
requisition dated 10.11.2016 to the respondent No.2 and drawn his attention to Section 169(4) of the Companies Act and intimated him that in case he
intends to make any representation to the members of the company in resolution for his removal as a Director, the same should be forwarded for
circulation to the members. Similar communications were addressed by all the three companies to the respondent No.2. On 21.11.2016, the respondent
No.2 addressed a letter to the Board of Directors of the three holding companies as well as their respective Company Secretaries and he responded
that the statement contained in the Special Notice issued by Tata Sons Ltd., was without any evidence or proof and that the allegations were
absolutely baseless, false, defamatory and libelous and with an intention to harm his reputation. He also makes a mention that he had an opportunity to
read the draft notice and the explanatory statement circulated by the Company Secretary of the Companies and the draft reproduces the highly
defamatory statement made by the Tata Sons Ltd., in the Special Notice. A request is therefore made by the respondent No.2 to the Board of the
respective holding companies, to the effect that if the Board convened a shareholder meeting under Section 169 he must be extended an opportunity to
make a written and oral representation to the shareholders. The said communication also contained a following categorical statement :Â
“In any event, if the Board convenes a shareholders' meeting under Section 169, I must be extended the opportunity to make a written and oral
representation to the shareholders. I would like to confirm that I will make a representation in writing to the shareholders of the Company as provided
under Section 169 of the Companies Act and would expect the company to circulate the same to all shareholders. I would also make a representation
at the shareholders' meeting. I request that the company to notify the shareholders accordinglyâ€.
Pursuant to the requisition, the holding companies issued notice of holding of an Extraordinary General Meeting, on the requisition of the Tata Sons
Ltd., on different dates. The said notice briefly referred to the business to be transacted in the said Extraordinary General Meeting including removal
of Mr.Nusli Wadia as Director and was accompanied with notes. It is also mentioned in the said notice that the Board of Directors in its meeting held
on 23.11.2016 had approved the convening of the Extraordinary General Meeting and issue of the notice of the said meeting. The related explanatory
statement pursuant to section 102 of the Companies Act, 2013 in respect of the business as set out in the notices was also accompanied. The
explanatory statement accompanying the said notice was signed by the Company Secretary, by order of the Board of Director. It contained the
explanatory statement pursuant to Section 102 setting out the material facts relating to the special business mentioned at item No.1 and 2 as an
accompaniment to the notice dated 23.11.2016 and as far as item No.2 is concerned it contained the following statement :Â
“Item No.2
Tata Sons Limited (the Requisitionist) is the Promoter of the Company and holds 77,89,70,378 Ordinary shares aggregating 26.51% of the Company's
voting capital: Tata Sons Limited has pursuant to the Requisition and Special Notice dated November 10, 2016 and in recognition of the legal rights
vested in them as a shareholder, decided to convene an EGM, to consider and if through fit, pass an Ordinary Resolution for removal of Mr.Cyrus P.
Mistry and Mr.Nusli Wadia as Directors of the Company.
Mr.Nusli Wadia is an independent Director of the Company. He was appointed as a NonÂExecutive Director of the Company by the Board on
December 22, 1998 and by the shareholders at the AGM held on August 12, 1999. Being a director liable to entire by rotation, Mr.Wadi's reÂ‐
appointment was approved at various, AGM's held on July 26, 2002, July 11, 2005, August 25, 2009, August 12, 2011 and August 21, 2013 in terms of
the provisions of the Companies Act, as applicable from time to time. As required under the listing agreement, Mr.Wadia has been an independent
Director of the Company since March 2001. As required under Section 149 of the Companies Act, 2013, Mr.Wadia was appointed as an independent
Director of the Company with effect from July 31, 2014. Mr.Wadia is the Chairman of the NRC and a Member of the Eco's.
The Board has been informed by the independent Directors individually that they have not been approached by Mr.Wadia that could be considered as
influencing their independence in the Company.
Mr.Wadia, vide his letter dated 23, 2016 addressed to the Board of Directors and the Company Secretary has stated as under:Â
Letter No.1 Mr.Wadia has inter alia, termed the reasons provided by the Requisitionist, in the Special Notice for his removal as baseless, false,
defamatory and libelous and have been made with the intention of harming his reputation. Further, Mr.Wadia has questioned the ability of the
Requisitionist to requisition a general meeting and vote to removal him as a Director (he being an independent Director) from the Board of the
Company.
Letter No.2: Mr.Wadia has requested the Board of Directors to forthwith institute an Independent investigation upon the allegations as set out in the
Special Notice issued by Tata Sons Limited dated November 10, 2016 or state otherwise on the allegations.
The said letters were tabled at the Board of Directors meeting held on November 23, 2016 and are also open for inspection.
Under Section 169(4) of the Companies Act, 2013, the Director being sought to be removed has a right to make a representation to the Members in
the manner stated therein. We have been informed that Mr.Wadia intends to provide a separate representation to be sent to the Members of the
Company.
The Board of Directors of the Company would like to clarify that a copy of the Special Notice issued by the Requisitionist is being sent along with this
Notice with a view to provide the relevant background concerning item No.2 of Special business to be transacted at the EGM, A copy of this Special
Notice and Requisition is annexed hereto (Annexure). Consequently, the company, the Board of Directors of the Company and its Officers do not
take any responsibility for the same.â€
Similar notices came to be issued by the other two holding companies which were accompanied with the statement pursuant to Section 102 of the
Companies Act, 2013.
The letter dated 21.11.2016 addressed by the respondent No.2 to the Directors of the Tata Sons Ltd., and the Chief Operating Officer of Tata
Sons Ltd., and the subsequent letter dated 22.11.2016 addressed to all the Directors of the Tata Sons Ltd., was responded to by the Chief Legal and
Group General counsel of Tata Sons Ltd. In the said response, it was highlighted that as a shareholder of the Tata Steel, Tata Motors and Tata
Chemicals, Tata Sons Ltd., had certain rights, duties, obligations, legal and otherwise towards Tata Sons Ltd., as well as various stake holders and
Tata Sons Ltd., has exercised these rights as shareholder of the holding company and issued a Special Notice to the Board of Directors on 10.11.2016
pursuant to Section 100, Section 115 and Section 169 of the Companies Act calling upon the Board of Directors to convene an Extraordinary General
Meeting of shareholders of the Companies to pass the two resolutions. It was also clarified that it was a fairly well settled position that there was no
requirement, legally or otherwise as a shareholder to provide any reason while seeking the removal of a Director in terms of Section 169 of the Act.
The Special Notice was therefore sought to be justified and the respondent No.2 was called upon to consider withdrawal of the notices issued by him.
It is a specific case of the petitioners that the respondent No.2 by e mail has categorically approved the final draft notice and the explanatory
statement of the Extraordinary General Meeting of Tata Motors as well as Tata Chemicals and these eÂmails have been suppressed in the complaint
during verification. The issue as to whether the subsequent circulation of the explanatory statement was with the consent of the respondent No.2
would be referred to by us at a little later. At this stage, it is suffice to note that there was exchange of correspondence between the petitioners and
respondent No.2 in form of rejoinders/sur rejoinders but it is important to note that the respondent No.2 preferred a representation by availing the
opportunity under Section 169(4) of the Companies Act.
We have carefully perused the said representation where the respondent No.2 has averred to the following effect.
“To,
M/s.Tata Motors Limited
Bombay House, 24 Homi Mody Street,
Mumbai 400 001, India.
Kind Attention: Board of Directors and Company Secretary Mr.Hoshang K. Sethna.
Subject : Representation under Section 169 of the
Companies Act, 2013.
Dear Sir/Madam,
I refer to the special notice (“Special Notice') moved by Tata Sons Limited (“Tata Sonsâ€), seeking my removal as an Independent Director
levelling allegations against me, which are unsubstantiated, baseless, false, motivated, defamatory and libellous and have been made with the intention
of harming my reputation.
Further to my letter dated 23rd November 2016, and my statutory rights under Section 169(4) of the Companies Act, I am exercising my right to make
a written representation to the shareholders. The representation is attached herewith (“Representationâ€).
The Company is obliged to send the representations to the shareholders so that they are able to take an informed decision. You have reasonable time
to circulate this representation to the shareholders in physical as well as electronic form.
Kindly note that documents referred to in the attached Representation letter are also available for inspection/perusal at my office. The shareholders
requiring any further information/clarification may write to me on my email address nusliwadia@independentdirectortml.com and same would be
provided promptly.
Kindly note that this letter is without prejudice to my rights.â€
The said communication is accompanied with a detailed representation addressed to the shareholders where the respondent No.2 has attempted to
relent the imputation against him as contained in the resolution proposing to remove him as an independent Director. In conclusion, he had urged the
shareholders to decide his fate as an independent Director and also cautioned that the fate of the very institution of independent Director needs to be
protected by the shareholders. He also clarified that the representation preferred by him keeping in mind the spirit of Section 169 of the Companies
Act and with no other intention. At the bottom of the said representation, a note similar to the one appended to the letter which we have reproduced
above is also added, permitting the shareholder to seek any other clarification on an eÂmail address of the respondent No.2. Such representations
have been addressed to the shareholders of all the three respective companies. In the said representation, the respondent No.2 has deciphered the
allegations levelled against him and in great detail has highlighted his role on the Board of Directors and has also levelled certain allegations about the
inappropriate behavior of the interim Chairman of Tata Sons LtdÂShri.Ratan Tata.
It can thus be seen that in the entire representation, Shri.Nusli Wadia had offered an explanation and requested the shareholder to take a conscious
decision by taking into consideration the information put forth by him in the representation and as to how his removal was an attempt to undermine the
entire institution of Independent Director itself. It is also to be noted that on 22.12.2016 the respondent No.2 directly addressed a letter to all the
shareholders of respective holding companies and the said letter is placed by the petitioner on record as annexure “Tâ€. In the said letter, Shri.Nusli
Wadia has made reference to his earlier detailed letter setting out his response to the resolution proposed by the Tata Sons Ltd., for his removal as
Director and once again he reiterated his stand by highlighting his achievement in the field of corporate governance. He also invited attention of the
shareholders as to what actually transpired in the meeting of the Board of Directors of the Company held on 10.11.2016 and asserted that the actions
of the Tata Sons of trying to involve the Management in the process of removal of Director is against the interest of the Company, its stake holders
and shareholders and has slammed the action as inappropriate and illegal. In conclusion he intimated the shareholders that he had chosen not to attend
the meeting as he was unhappy with the manner in which the meetings have been held inappropriately and therefore he had chosen to forward the
letter to the Company Secretary to be read out to the shareholders. It is the allegation of the petitioners that this letter has been suppressed by the
respondent No.2 in the complaint and also during his verification. It is in this background we are required to examine the allegation as to whether the
contents of the resolution passed by the petitioners directing the holding companies to requisition the Extraordinary General Meeting are defamatory.
We have already reproduced the statement which is referred to as defamatory as contained in the Special Notice dated 10.11.2016. We must
make it clear that we are not here to judge the truthfulness of the said statement and to ascertain as to whether the statements were made after due
verification or whether they are baseless, not being backed without any supporting material. The alleged statement is contained as an accompaniment
giving the brief background of the subject to be discussed, namely, removal of Mr.Nusli Wadia as a Director by taking recourse to the provisions of
Section 169 and other applicable provisions of the Companies Act, 2013. The argument of the learned Senior Counsel for the petitioners is to the
effect that the said statement is a part of statutory action which the petitioners proposed under the provisions of the Companies Act and it is contained
in the Special Notices which were issued by the Tata Sons Ltd., under Section 169(2) read with Section 115 of the Companies Act, in its capacity as a
shareholder of the Relevant Tata Companies inter alia seeking removal of the respondent No.2 as the Director of the Relevant Tata companies. It is
also sought to be justified that the issuance of Special Notices by Tata Sons Ltd., was necessitated by conduct of respondent No.2, a matter in which
the Tata Sons Ltd., had material interest (being promoter and controlling shareholder of Relevant Tata Companies) and aimed at protecting its interest.
It is thus sought to be submitted that the Special Notices were issued in exercise of the statutory power conferred upon the Tata Sons Ltd., under the
Companies Act and a subject wherein a Tata Sons Ltd., had a legitimate, legal interest and duty to do so.
At this stage, it would be apposite to refer to Section 169 of the Companies Act 2013 which deals with “Removal of Directorsâ€. The relevant
Section 169 of Companies Act reads as under :Â
1) A company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of
the period of his office after giving him a reasonable opportunity of being heard:
[Provided that an independent director reÂappointed for second term under subÂsection (10) of Section 149 shall be removed by the company only by
passing a special resolution and after giving him a reasonable opportunity of being heard:]
[Provided further that] nothing contained in this sub section shall apply where the company has availed itself of the option given to it under section
163 to appoint not less than twoÂthirds of the total number of directors according to the principle of proportional representation.
(2) A special notice shall be required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so
removed, at the meeting at which he is removed.
(3) On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director
concerned, and the director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting.
(4) Where notice has been given of a resolution to remove a director under this section and the director concerned makes with respect thereto
representation in writing to the company and requests its notification to members of the company, the company shall, if the time permits it to do so,â€
(a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and
(b) send a copy of the representation to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the
representation by the company),
and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company’s default, the director may without prejudice
to his right to be heard orally require that the representation shall be read out at the meeting:
Provided that copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of
the company or of any other person who claims to be aggrieved, the Tribunal is satisfied that the rights conferred by this sub section are being
abused to secure needless publicity for defamatory matter; and the Tribunal may order the company’s costs on the application to be paid in whole
or in part by the director notwithstanding that he is not a party to it.
The Companies Act also contain a provision in form of Section 115 which provides for resolution requiring a Special Notices which stipulate that
where, by any provision contained in the Companies Act or in the Articles of a Company, Special Notice is required of any resolution, notice of the
intention to move such resolution shall be given to the Company by such number of members holding not less than one percent of total voting power or
holding shares on which such aggregate sum not exceeding Rs.5 lakh rupees, as may be prescribed, has been paidÂup and the company shall give its
members notice of the resolution in such manner as may be prescribed.
At this juncture, reference would also be necessary to Section 101 and Section 102 of the Companies Act. Section 101 prescribes for the manner in
which a meeting of a company can be called, where as Section 102 prescribed that a statement setting out the material facts concerning each item of
special business to be transacted at a General Meeting, shall be annexed to the notice calling such meeting and Section 102 enlist the material facts to
the following effect :Â
(a) the nature of concern or interest, financial or otherwise, if any, in respect of each items of Â
(i) every director and the manager, if any;
(ii) every other key managerial personnel; and
(iii) relatives of the persons mentioned in sub clauses (i) and (ii);
(b) any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take
decision thereon.
A conjoint reading of all the said provisions would thus disclose that whereas any Special Notice is required of any resolution, then it would be
imperative to give to the Company, a notice of the intention to move such requisition. Section 102 of the Companies Act prescribe that if a special
business is to be transacted in any meeting, it should be accompanied with a statement setting out the material facts in form of information and such
facts that may enable the members to understand the meaning, scope and implication of the items of the business and to take decision thereon.
In the frame work of this statutory provision, we would deal with the power conferred on the Company for removal of its Director. Section 169 of the
Companies Act, 2013 empower the Company to remove a Director by an ordinary resolution before expiry of the period of notice after giving
reasonable opportunity of being heard. SubÂSection (2) of Section 169 contemplates a Special Notice of any resolution to remove a Director and
SubÂSection 3 contemplates the company to send forthwith a copy thereof of the resolution to the Director concerned, and the Director who is
entitled to be heard on the resolution at the meeting. SubÂsection 4 contemplates a further opportunity to the Director who is sought to be removed
and it is open to the Director concerned to make a representation to the Company in writing and he can request its notification to the members of the
company and then the Company is duty bound, if the time permits to issue notice of the resolution to the members of the Company stating the fact that
the representation has been made and send a copy of the representation to every member of the Company to whom notice of meeting is send. But for
if any reason the representation could not be sent due to insufficient time or of the company's default, the Director may without prejudice to this right
to be heard orally require that the representation shall be read out at the meeting. The only exception carved out to the said procedure, is proviso
appended to subÂSection (4) which set out that the copy of representation need not be sent out and the representation need not be read out in the
meeting if, on the application either of the Company or of any person who claims to be aggrieved had approached the Tribunal and the Tribunal is
satisfied that the rights of such person are being affected then it may not be permit publicity of the said representation.
It is in light of this statutory scheme we are called upon to examine whether the publication of the imputation against the respondent No.2 in the
Special Notice is defamatory.
Section 499 of the Indian Penal Code defines defamation in the following manner :Â
“Whoever, by words either spoken or intended to be read, or by signs or by visible representations, 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, except in
the cases hereinafter excepted, to defame that person.â€
The Section is succeeded by 10 exceptions which would take out the words either spoken or intended to be read, or by signs or by visible
representations, making or publishing any imputation concerning any person out of the preview of defamation. Mr.Ponda has invited our attention to
the case set out by the petitioner in their petition by setting out a case that the petitioners have claimed to be covered by Exception Nos.8 and 9 and he
would invite our attention to paragraph Nos.94 and 95 of the petition where the petitioner contends that the bona fides of the petitioners are evident
from the fact that the Special Notices were issued in accordance with law in favour of the said companies and they are based on true and correct
facts. A further statement is made that the Special Notices issued by the Tata Sons Ltd., in good faith and by taking appropriate care and protection
and to protect its interest and therefore the Special Notices are protected and safeguarded under 9th exception to Section 499 of Indian Penal Code.
However, the learned Senior Counsel during the course of the argument has categorically stated that the petitioners do not wish to take recourse to
the 8 and 9 exceptions appended to the said section but the petitioners have a more stronger case though it may not strictly fall within the two
exceptions and that being the exercise of the statutory powers which is available under the relevant statute.
The offence of defamation under the Indian Penal Code inter alia consisting of three initial ingredients namely :Â
(a) Making or publishing any imputation concerning a person.
(b) Such imputation must have been made either by words either spoken or intended to be read or by sign or by visible representation.
(c) The said imputation must have been read with the intention of harming or with the knowledge or having reason to believe that it will harm the
reputation of the person concerned.
We have perused the imputations contained in the Special Notice. It undisputedly makes a reference to certain acts of the respondent No.2 in
reference to the erstwhile Chairman Mr.Cyrus Mistry. The Special Notices contain certain statement in respect of the respondent No.2 and his
conduct, but this imputation will have to be read in reference to the purpose for which it find place in the Special Notice. The Special Notice issued by
the Tata Sons Ltd., as a promoter is in form of requisition to the holding companies to call for an Extraordinary General Meeting for removal of their
independent Director in whom “Principal shareholder†(Tata Sons) have lost confidence. The Special Notice is thus issued for the purpose of
seeking removal of an independent Director of the Company since the principal shareholders are of the opinion that the respondent No.2 is acting in a
manner that is designed to harm the “Tata Group†and his conduct reflect that he is not conducting himself independently and instead has been
inter alia galvanizing independent Directors and acting prejudicial and as such, the Principal shareholder are apprehensive that in future his action may
put the company and its future in great jeopardy and impact the overall morals of the works, employees and management who have joined Tata
Company. The imputation contained forms part of the resolution passed by the Board of Directors of Tata Sons Ltd i.e. the present petitioners and it is
contained in a requisition/Special Notice proposing resolutions for removal of the respondent No.2 as Director of the Relevant Tata Companies
seeking vote in favour of such resolution. It is not to be construed as an independent statement but will have to be referred to in the background in
which it is made, namely, an act or conduct of the independent Director who is sought to be removed by the Company who is empowered to remove
its Director after following the procedure prescribed under Section 169 of the Companies Act, 2013. The entire argument of the respondent No.2 as
canvassed by Mr.Ponda is that the statement of imputation has been made without any verification and reflects of an irresponsible behavior on the
part of the petitioners. Section 169 of the Companies Act vest a power in the Company to remove a Director before expiry of the period of his office
the grounds of removal though not mentioned in Section 169, Section 166 of the Companies Act set out the duties of the Director and expects the
Director of the Company to act in good faith in order to promote the objects of the Company for the benefit of the members as a whole, and in the
best interests of the company, it's employees, shareholders, community and for the protection of environment. It also contemplate that the Director of
a Company shall exercise his duties with due diligence and care and shall exercise independent judgment and he shall not involve in a situation in
which he may have a direct or indirect interest that conflicts or possibly may conflict, with the interest of the Company. If these are the duties of a
Director of a Company and if a Company which has appointed a person as a Director is of the opinion that he has failed to live upto its exceptions and
has acted in a manner where he has failed to exercise his independent judgment and ceased to act in an independent manner and has issued a
statement which is contrary to the interest of the company and if this conduct of a Director is adjudged by the promoter as design to cause harm to the
Tata Group, which is put forth as a ground for his removal, we are of the view that the action of the petitioners in exercise of its power conferred
under Section 169 of the Companies Act. It is not necessary for us to assess or judge the truthfulness of the imputation/allegation since ultimately the
allegations levelled against the respondent No.2 has caused his removal by the Board of Directors of the respective companies. The imputation
contained in the Special Notice cannot be viewed independent of the purpose for which it is included in the Special Notice and if the petitioners have
adopted a legal course permissible to be adopted under the frame work of the statute governing it, we do not think the allegations can be termed as
“per se defamatoryâ€. The Special Notices though categorically have mentioned that there was no legal requirement, legal or otherwise and is
discretion of the Relevant Tata companies that the Special Notices were circulated to the shareholders of the Relevant Tata companies, they cannot
be held liable since the statutory scheme itself contemplates that the notice should be accompanied by a brief statement of information and facts that
would enable the members to understand the meaning, scope and implication of the items and business to be transacted in the meeting and to take
decision thereof. If removal of the respondent No.2 was one of the agenda of the notice and it is accompanied by a brief statement why such action
of removal is initiated, we are not ready to accept the submission of Shri.Ponda and examine the bona fides or otherwise of the said action since, we
are of the clear opinion that the imputations are contained in a Special Notice which is statutory in nature and it had ultimately resulted into removal of
the respondent No.2 as independent Director from the three Tata Companies by requisite majority.
Moreover, we also do not agree with the submission of Mr.Ponda who has asseverated before us the mala fides and malice in the imputation. If the
petitioners in exercise of the statutory obligation have included the statement, which is challenged to be defamatory, we do not perceive any mens rea
to the petitioner which is a condition precedent to constitute a particular offence. The petitioners can, by no imagination said to have an intention to
cause harm to the reputation of the respondent No.2 but its action was only directed towards removal of the respondent No.2 as an independent
Director of the three holding companies and it succeeded in the said exercise. The Special Notices were prepared and submitted in the name of Tata
Sons and the petitioners being the Directors/Officers of Tata Sons Ltd., cannot be held to be vicariously liable and no malice can be attributed to the
petitioners, since the power under Section 169 has been exercised by the Tata Sons Ltd., a corporate entity. We therefore do not find any justification
in the Metropolitan Magistrate issuing process to the present petitioners and holding that the imputation contained in the Special Notice is per se
defamatory.
The facts placed before us do disclose that the requisition by the Tata Sons Ltd., to its three holding companies for convening Extraordinary
General Meeting for removal of the respondent No.2 was acted upon by the holding Companies and the holding companies have issued the notices of
Extraordinary General Meeting to its shareholders and scheduled the holding of the meeting which was accompanied with the copy of Special Notice
and also the explanatory statement. We do not intend to precipitate the issue as to whether the circulation was by the respondent No.2's consent as
the subsequent conduct of the respondent No.2 reflect that he had submitted a detailed representation under Section 169(4) availing the opportunity to
rebute the imputations and while addressing the representation to the respective companies, he has reminded the companies, that they are obliged to
circulate the representation to shareholders so that they are able to take an informed decision. He also made it clear that company has reasonable time
to circulate the representation to the shareholders in visible as well as electronic form. He also clarified that the documents referred to in the
representation are also available for inspection/perusal and supplied his eÂmail address from where this information can be sought. In the detailed
representation, the respondent No.2 himself has referred to the allegation and rebutted them one by one and offered his explanation. Not only this, he
independently addressed a letter to the shareholders on 21.12.2016 and requested the shareholders to take conscious decision in the interest of the
entire institution of independent Directors. In the backdrop of this fact, we express that the respondent No.2 has also chosen to avail statutory right
available to him under subÂSection (4) of Section 169 and has responded to the resolution of removal and availed the opportunity of appealing to the
shareholder to take a conscious decision after going through the response submitted by him through his representation to the allegation/imputations
levelled in the Special Notice. Therefore, it is not that the imputations have been first time contained in the Special Notice but in the representation, the
respondent No.2 repeated then and offered an explanation as to how they are not true and rather levelled allegation against the petitioner No.1 as to
how he has manipulated the action of his removal and therefore when the respondent No.2 has also availed the statutory remedy and offered his
explanation in form of a representation and addressed an independent letter to the shareholder, we fail to understand how the offence of defamation is
made out and if it is not made out whether the Magistrate is justified in issuing process to the petitioners by the impugned order.
As far as the conduct of the respondent No.2 in the meeting dated 10.11.2016 which forms the basis of Tata sons Ltd., losing their confidence in
him as an independent Director, it is reflected in the affidavit of Mr.Rajiv Chandan, Company Secretary and General Counsel of Tata Chemicals as
well as affidavit of Shri.R.Mukundan, Managing Director of Tata Chemicals and one Mr.Bhaskar Bhat, Director of Tata Chemicals. The said
affidavits are subsequently filed in a Suit No.50 of 2017 filed by few public shareholders in relation to the removal of the respondent No.2. In any
contingency, it is informed that the said suit came to be withdrawn unconditionally on 06.02.2019. We do not intend to go into the veracity or
truthfulness of the alleged conduct of the respondent No.2 in the meeting dated 10.11.2016 since we have already observed that the Tata Sons Ltd.,
was exercising its statutory power of removal of its Director in whom they had lost confidence and it is to be noted that respondent No.2 has never
challenged his removal before any Court of Law meaning hereby he has accepted his removal as an independent Director from the holding companies
of Tata Group and do not question the power of Tata Sons Ltd., to remove him.
The learned Magistrate who has passed the impugned order had before him the complaint instituted on 23.12.2016 when the respondent No.2 was
already removed as an independent Director from the Company. The Magistrate recorded the verification statement of the respondent No.2 on
14.12.2018.
We have carefully perused the said statement. The statement revolves around the Special Notice dated 10.11.2016 and the alleged defamatory
imputation contained in the said Notices. The respondent No.2 proceeded to state before the Magistrate the allegations in the Notices were published
which were per se defamatory and damaged his reputation. He has also proceeded to state that he has requested the accused person to withdraw the
defamatory allegations. It is pertinent to note that even in 2018, he does not make any statement as to the culmination of the said proceedings into his
removal as Director of the Company. The Magistrate therefore proceeds only on the basis of the Special Notice dated 10.11.2016 and even fail to
take into account the subsequent replies, counter replies or even the representation preferred by the respondent No.2 and he himself reminding the
Companies of its imperative duty to circulate the same and an independent letter addressed by him to the shareholders. The learned Magistrate while
exercising his power under Section 200 of Cr.P.C. refers to “Perusal of the documents as per list of documentsâ€. He makes a reference to the
record of minutes of independent Directors of Tata Chemicals dated 10.11.2016 outcome of the meeting, the Special Notice dated 10.11.2016, copy of
articles (news papers etc.) and also the notices issued by the respondent No.2 to the accused persons rebutting the allegations contained in the Special
Notice. The Magistrate applied his mind and deem it expedient not to issue to M/s.Tata Sons Ltd., (accused No.1) before him, being a juristic person
and cannot be held liable for defamation, mens rea and essential ingredients. However, he refers to the statement made in the notices in the news
items as defamatory and concludes that accused persons have failed to offer any satisfactory explanation on what basis the statements have been
made and therefore, he concludes thus: “From the above document it appears that the meant item and allegations in the news papers and
statements of Special Notice mentioned in the aforesaid documents i.e Exhibit “A†to “Z†and “Aa†to GG might come within the
meaning of the defamation as per Section 499 of the Indian Penal Code. It appears that the complainant made out his case against accused nos.2 to
22 but there is no such case made out against petitioner No.1 for the offence under Section 500 read with Section 34 of the Indian Penal Codeâ€. The
impugned order is a clear reflection of non application of mind on the part of the learned Additional Chief Metropolitan Magistrate apart from the fact
that he only relied on the statement of the complainant whom he examined under Section 200 and failed to examine any other witness. The Magistrate
has committed a haste in issuing the process without conducting an inquiry into the allegation of the complainant considering other relevant material to
satisfy himself whether there was sufficient ground for initiating the proceedings against the accused as contemplated under Section 202 of Cr.P.C.
We are satisfied that there is no prima facie case of defamation in the present case as there was no intent on the part of the petitioners to cause
harm to the reputation of the respondent as contemplated by Section 499 of the IPC nor can we discern any actual harm caused to his reputation,
since the element of mens rea being absent and since the publication was only limited to the Board of Directors of the holding Company and the
respective shareholders of these Companies, it could not be said that it was circulated widely over a section of general public. Publication of the news
about a resolution being passed by a well acclaimed business house happened to be a business news for the media and both the petitioner no.1 and
respondent no.2 being wellÂknown business personalities, they drew the attention of the media and the allegations/imputations and the story of
removal of the respondent no.2, no wonder, happened to be a hot topic for media. However, it is not conclusively established as to it is the petitioners
who have leaked the information to the media and particularly when we have noted that the respondent no.2 himself had addressed the communication
to the shareholders independent of his representation in terms of subÂsection (4) of Section 169 and which he requested for being circulated to the
shareholders. The allegations of the respondent no.2 in respect of disparaging remarks/comments being widely circulated is also not correct since it
was only circulated to the shareholders and they had a right to know the background of the resolution on which they were supposed to vote. In light of
the decision of the Apex Court in case of S. Khushboo (supra), since there was no intention to malign the image of respondent no.2 by making his
conduct known to the public and particularly when the petitioners were exercising their statutory power, we record that there is no prima facie case of
defamation in the present case which the Magistrate has failed to consider.
The Magistrate before issuing the process, has failed to take into consideration the conspectus of the matter and though it is the duty cast upon him
to be satisfied before issuance of a process, he had concluded without any material being placed before him that the statement is defamatory. The
learned senior counsel Shri Singhvi is justified in relying upon the observations of the Bombay High Court in case of Ramchandra Venkatraman Vs.
Shapoorji Pallonji & Anr, 2019 SCC Online Bom 524, where it has set out the test to be applied to determine whether a statement is defamatory and it
is held that the statement must be understood as defamatory by right thinking or reasonable minded persons and certain yardsticks were laid down to
enable the Court to have an objective assessment of a subjective crime i.e. defamation. He would also invite our attention to the relevant observations
of the Hon'ble Apex Court in case of Subramanian Swamy Vs. Union of India (supra) where the Apex Court has cast a responsibility on the
Magistrate in the following words :
Another aspect required to be addressed pertains to issue of summons. Section 199 of Cr.P.C envisages filing of a complaint in Court. In case of
criminal defamation, neither can FIR be filed nor can any direction be issued under Section 156(3) of Cr.P.C. The offence has its own gravity and
hence, responsibility of the Magistrate is more. In a way, it is immense at the time of issue of process. Issue of process as has been held in Rajindra
Nath Mahato Vs. T. Ganguly, (1972) 1 SCC 450 is a matter of judicial determination and before issuing a process, the Magistrate has to examine the
complainant. In Punjab National Bank Vs. Surendra Prasad Sinha, 1993 Supp (1) SCC 499 : 1993 SCC (C,r ii)t has been held that judicial process
should not be an instrument of oppression or needless harassment. The Court, though in a different context, has observed that there lies responsibility
and duty on the Magistracy to find whether the accused concerned should be legally responsible for the offence charged for. Only on satisfying that
the law casts liability or creates offence against the juristic person or the persons impleaded, then only process would be issued. At that stage, the
court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before
issuing process lest it would be an instrument in the hands of the private complaint as vendetta to harass the person needlessly. Vindication of majesty
of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal
vengeance. In Pepsi Foods Ltd, Vs. Special Judicial Magistrate (1998) 5 SCC 74,9 a twoÂJudge Bench has held that summoning of an accused in a
criminal case is Investigating Agency serious matter and criminal law cannot be set into motion as a matter of courseâ€
Further reliance placed by the learned counsel for the petitioner in the latest judgment of the Apex Court in case of Birla Corporation Vs. Adventz
Investments and holdings, 2019 SCC Online 682, where the Apex Court has elaborated and clarified the scope of enquiry in the following words :
As held in Chandra Deo Singh v. Prokash Chandra Bose alias Chabi Bose and Another AIR 1963 SC 143 0and in a series of judgments of the
Supreme Court, the object of an enquiry under Section 202 Cr.P.C. is for the Magistrate to scrutinize the material produced by the complainant to
satisfy himself that the complaint is not frivolous and that there is evidence/material which forms sufficient ground for the Magistrate to proceed to
issue process under Section 204 Cr.P.C. It is the duty of the Magistrate to elicit every fact that would establish the bona fides of the complaint and the
complainant.
The object of investigation under Section 202 Cr.P.C. is “for the purpose of deciding whether or not there is sufficient ground for proceedingâ€.
The enquiry under Section 202 Cr.P.C. is to ascertain the fact whether the complaint has any valid foundation calling for issuance of process to the
person complained against or whether it is a baseless one on which no action need be taken. The law imposes a serious responsibility on the
Magistrate to decide if there is sufficient ground for proceeding against the accused.
Mr.Singhvi has also vehemently argued that the nonÂapplication of mind on the part of the Magistrate is reflected in the wake of the fact that the
place of residence of the petitioners 5 to 11 is beyond the jurisdiction of the learned Magistrate but still the learned Magistrate had issued the process.
To demonstrate that this is reflective of non application of mind, he would place heavy reliance on the judgment of the Apex Court in case of Vijay
Dhanuka Vs. Najima Mamtaj & ors, (2014) 14 SCC 638, where it has been held that the requirement to conduct an enquiry or direct investigation
before issuing process where accused residing beyond territorial jurisdiction of Magistrate is mandatory and the purpose is to protect innocent persons
residing at far off places from being harassed. The Apex Court had construed the word “shall†applied in the said section and after taking into
consideration the intention of legislature in bringing out an amendment by the Central Act No.25 of 2005 held that the object of amendment is to
prevent innocent persons from harassment. Therefore, the expression “shall†would contemplate an enquiry or investigation, as the case may be,
being mandatory before issuance of summons against the accused persons living beyond the territorial jurisdiction of the Magistrate. Further, it is no
doubt true that the enquiry contemplated under Section 202 contemplate an expression of the complainant and the witnesses and then the Magistrate
has to satisfy himself that there are sufficient grounds for proceedings against the accused and the entire purpose of the enquiry is to determine
whether a prima facie case is made out. In the judgment in Birla Corporation (supra), the Hon'ble Apex Court after making reference to the earlier
precedents observed thus :Â
Reiterating the mandatory requirement of application of mind in the process of taking cognizance, in Bhushan Kumar and Another v. State (NCT
of Delhi) and Another (2012) 5 SCC 424, it was held as under:Â
“11. In Chief Enforcement Officer v. Videocon International Ltd. (2008) 2 SCC 492 (SCC p. 499, para 19) the expression “cognizance†was
explained by this Court as “it merely means ‘become aware of’ and when used with reference to a court or a Judge, it connotes ‘to take
notice of judicially’. It indicates the point when a court or a Magistrate takes judicial notice of an offence with a view to initiating proceedings in
respect of such offence said to have been committed by someone.†It is entirely a different thing from initiation of proceedings; rather it is the
condition precedent to the initiation of proceedings by the Magistrate or the Judge. Cognizance is taken of cases and not of persons. Under Section
190 of the Code, it is the application of judicial mind to the averments in the complaint that constitutes cognizance. At this stage, the Magistrate has to
be satisfied whether there is sufficient ground for proceeding and not whether there is sufficient ground for conviction. Whether the evidence is
adequate for supporting the conviction can be determined only at the trial and not at the stage of enquiry. If there is sufficient ground for proceeding
then the Magistrate is empowered for issuance of process under Section 204 of the Code.â€
Under the amended subÂsection (1) to Section 202 Cr.P.C., it is obligatory upon the Magistrate that before summoning the accused residing
beyond its jurisdiction, he shall enquire into the case himself or direct the investigation to be made by a police officer or by such other person as he
thinks fit for finding out whether or not there is sufficient ground for proceeding against the accused.
By Cr.P.C. (Amendment) Act, 2005, in Section 202 Cr.P.C. of the Principal Act with effect from 23.06.2006, in subÂsection (1), the words
“…and shall, in a case where accused is residing at a place beyond the area in which he exercises jurisdiction…†were inserted by Section 19 of
the Criminal Procedure Code (Amendment) Act, 2005. In the opinion of the legislature, such amendment was necessary as false complaints are filed
against persons residing at far off places in order to harass them. The object of the amendment is to ensure that persons residing at far off places are
not harassed by filing false complaints making it obligatory for the Magistrate to enquire. Notes on Clause 19 reads as under:Â
“False complaints are filed against persons residing at far off places simply to harass them. In order to see that the innocent persons are not
harassed by unscrupulous persons, this clause seeks to amend sub section (1) of Section 202 to make it obligatory upon the Magistrate that before
summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or
by such other person as he thinks fit, for finding out whether or not there was sufficient ground for proceeding against the accused.â€
The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable
thereto. The application of mind has to be indicated by disclosure of mind on the satisfaction. Considering the duties on the part of the Magistrate for
issuance of summons to accused in a complaint case and that there must be sufficient indication as to the application of mind and observing that the
Magistrate is not to act as a post office in taking cognizance of the complaint.
The Apex Court, therefore, held that since summoning of an accused is a serious matter affecting ones dignity and reputation in the Society, there
has to be application of mind before proceeding against the accused persons and though it may not contemplate a detail order but the Magistrate has
to be prima facie satisfied that there are sufficient grounds for proceeding against the accused.
Shri Ponda has made a submission that the Code of Criminal Procedure do not specify any mode or manner of enquiry under Section 202 though the
Apex Court in case of Birla Corporation Vs. Adventz (supra) has laid down the guidelines revolving around the exercise of the said power. He would
rely upon the same judgment relied upon by the learned senior counsel for the petitioners and invite our attention to the specific paragraphs. He would
canvass that the Magistrate had two options before considering the issuance of process and the Magistrate passed an order issuing of process instead
of postponing the same. We do not find the said submission to be tenable since we have already held that there is no compliance of the provisions of
Section 202 in letter and spirit and by this, we do not mean that it could have called for a detailed enquiry but we surely intend to convey that the
Magistrate has failed to apply his mind before issuing the process against the accused.
Though Mr.Singhvi has observed that one of the aspect of non application of mind is the fact that the place of residence of the petitioner Nos.5 to
11 is beyond the jurisdiction of the learned Magistrate, since, the process was issued, we would not deliberate on the said issue in detail as we are
clearly of the view that the Magistrate has failed to take into consideration the very basis of exercise of his power and did not satisfy himself about the
issuance of process. The Magistrate has in a mechanical manner referred to the list of documents and we really wonder whether these documents are
really perused by the Magistrate before issuance of the process and before recording his satisfaction that the petitioners are guilty of offence of
defamation. In any contingency, since, we have recorded that the petitioners cannot be held liable for defamation, and the Magistrate who has failed to
conduct an inquiry, the impugned order cannot be sustained and deserves to be dismissed.
We are of the specific view that the impugned order passed by the Magistrate looked at from this angle also suffers from nonÂapplication of mind
but we would not deliberate on the issue further since we have already formed an opinion that the Magistrate has failed to take into consideration the
very genesis of exercise of his power about being satisfied that the allegations in the complaint constitute an offence of defamation and there is no
indication in the impugned order demonstrating his satisfaction based on the material placed before him. For the aforesaid reasons, we conclude that
the order passed by the Magistrate is without application of mind and cannot be sustained and resultantly, we quash and set aside the impugned order.
The writ petition is allowed in terms of prayer clause (b). No order as to costs.