Delhi District Court
Sunair Hotels Ltd vs State Of Nct Of Delhi Through on 1 October, 2014
IN THE COURT OF SH. R.K. GAUBA: DISTRICT & SESSIONS
JUDGE (SOUTH DISTRICT) SAKET: NEW DELHI
Criminal Revision No. 213/2013
ID No.: 02406R0179532013
Sunair Hotels Ltd.
Having its Office at 302,
Akashdeep Bldg.
26, K. G. Marg, New Delhi
(Through AR) ... Petitioner
Versus
1. State of NCT of Delhi through
APP
2. VLS Shareholders Association
D63, Naraina Vihar, New Delhi 110028.
3. Dr. S. K. Garg (Chairman)
VLS Shareholders Association
D63, Naraina Vihar, New Delhi 110028.
4. R P Goel (Vice Chairman)
VLS Shareholders Association
D63, Naraina Vihar, New Delhi 110028.
5. VLS Finance Limited,
2nd Floor, 13, Sant Nagar,
East of Kailash, New Delhi 65
(Through its Managing Director). ... Respondents
Instituted on: 16.07.2013
Judgment reserved on: 24.09.2014
Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 1 of 18
Judgment pronounced on: 01.10.2014
J U D G M E N T
1. This criminal revision petition seeks to question the correctness, legality and propriety of orders dated 08.05.2013 passed by Ms. Chetna Singh, Metropolitan Magistrate02 (South) on the file of criminal case no. 1345/1 of 2005 whereby the complaint presented by the petitioner on 12.09.2005 seeking prosecution of the respondents No. 2 to 5 herein for offences under Sections 499 and 500 read with Section 120B IPC was dismissed.
2. Since the said respondents (prospective accused as per the complaint) were never summoned, they were not required to be noticed for purposes of the revision petition at hand. The respondent no. 1 State has appeared through Public Prosecutor for assistance.
3. I have heard Sh. Tarun Chandiok, advocate for the petitioner and Sh. Manoj Chaudhary, Chief Public Prosecutor. I have gone through the trial court record.
4. The background facts as could be gleaned from the averments on record and submissions of the counsel may be noted in brief at the outset.
5. It has been stated that, in 1995, the petitioner company and Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 2 of 18 respondent no. 5 herein entered into some collaboration arrangement wherein finances was to be provided by the latter for setting up by the petitioner company of a hotel in the name and style of "Metropolitan Nikko". A dispute arose between the said parties with each side alleging breach by the other of the terms and conditions of the said contractual arrangement. The dispute eventually landed before the Company Law Board (CLB) in 1997 involving allegations of mismanagement and oppression. Some negotiations are stated to have taken place with the intervention of CLB in 1998. The respondent no. 5 is stated to have got an FIR registered against the petitioner company, its promoters and certain others on allegations of misappropriation of funds, unauthorised rotation of money etc. in the year 2000. It is the case of the petitioner that the matter was decided by the CLB in 2001 in its favour. The said order was appealed against by respondent no. 5 before the Hon'ble High Court of Delhi. It is stated that the High Court later, in 2005, set aside the order of CLB thereby remanding the matter. In the meantime, three more FIRs are stated to have been got registered by respondent no. 5 against the petitioner company, its promoters, financial advisors and certain others, they being FIR no. 99/2002 of PS Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 3 of 18 Connaught Place, FIR No. 48/2002 of PS Defence Colony, and FIR No. 315/205 PS Naraina. It is admitted case of the petitioner that charge sheets came to be filed in due course in all the said FIRs in which the petitioner company and others stand summoned. The criminal cases arising out of the said FIRs are stated to be pending trial before the court of Metropolitan Magistrate.
6. It appears from the material on record and submissions made during the hearing that respondent no.2 is a registered society and established by "small share holders" of the respondent no. 5. company, primarily with the objective "to protect their interest", presumably, in the course of the dispute having arisen as noted above involving the petitioner on one hand and respondent no. 5 on the other. It appears that respondent no. 3 and 4 have been functioning as Chairman and Vice Chairman respectively of the said society.
7. It further appears from the record that on 26.03.2005, a public notice was published with caption "ATTENTION ! " in daily news paper in the name and style of "Financial Express" with nation wide circulation addressed to "all share holders of VLS Finance Ltd., its customers, investees, various Departments of Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 4 of 18 Govt. of India and all other concerned parties" (Ex. CW 1/B). The said public notice purported to have been initiated and published in the news paper at the instance of respondents no. 3 & 4 acting for and on behalf of respondent no.2. Even in the opening paragraph of this public notice, it declares that respondent no.2 had been floated as a society for protecting the interests of small shareholders of respondent no. 5 company since it was being jeopardised due to hostile propaganda being carried out in the National Print Media under various pseudo names. The respondent no.2 society claiming to be holding 56% of share capital had got the said notice published as "note of true information" so as to "dispel fear in the mind of investors and to clear the air of suspicion", this without prejudice to any pending litigation proceedings in any court of law. Certain facts and figure/statics were mentioned in the said public notice.
8. There are certain foot notes appended in the later portion of the above mentioned public notice including a statement to which exception was taken in the criminal complaint before Metropolitan Magistrate in the following words:
"VLS invested Rs. 7 Crores in March 1995 in the equity of Sunair Hotels Ltd. (owning a Fivestar Deluxe Hotel at New Delhi). It was about 86% Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 5 of 18 of the then subscribed capital of hotel (Rs. 8,00,84,000/). Besides, a bridge loan of Rs. 10 Crores was given. Further equity of Rs. 2.59 Crores was taken as per Delhi High Court order dated 10.09.2001. Now VLS hold equity of Rs. 2.59 Crores was taken as per Delhi High Court order dated 10.09.2011. Now VLS hold equity of Rs. 9.59 Crores i.e. about 25% of the paidup capital of Rs. 39.75 Crores of hotel as on 31.03.04. The validity of share capital of Rs. 21 Corores allotted by the promoters of hotel to themselves is subject to pending proceedings before the High Court. The present estimated value of the hotel, as a going concerned, should be about Rs. 400 Crores."
9. It further appears that the respondent no. 3 purporting to be acting as Chairman of respondent no.2 society gave a public statement in a press conference held on 16.10.2005 which was telecast by "Total TV Films", a nation wide electronic media. A Compact Disk Ex. PW 1/G has been filed on the record. The transcript (Ex. PW 1/H) of the video footage contained in CD reads as under: "USME HAM LOGON KA 100 CRORE KA SHARE HAI. HAM KAHTE HAI KE AAP LOG VSS FINANCE LTD. AUR SUNAIR HOTELS LTD. BAITHKAR APNA DISPUTE SETTLE KARE AUR JO 100 CRORE RUPYA HAM LOGAN KA HOTA HAI, US KO HAME DE JISSE HAMARI JO SHARE VALUE JO HONI Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 6 of 18 CHAHIYE VO HO JAI NAHI TO HAM LOGO KO BHARI NUKSAN HO RAHA HAI."
10. It is alleged by the petitioner that the aforementioned public notice, particularly the statement in the paragraph extracted above, and the public statement in the Press Conference extracted above were the material containing imputation which had been published by the said respondents concerning the petitioner company intending to harm its reputation and, therefore, in the nature of offence punishable under Section 500 IPC.
11.The complaint to above effect (based on Ex. CW 1/B) was submitted on 12.09.2005. On 13.09.2005, the Metropolitan Magistrate to whom the matter was allocated recorded an order to the following effect: "Fresh complaint received on assignment. It be checked and registered.
Present: Sh. R. Menon Adv. for the complainant. Put up for CE on 23.2.2006.
Sd/ MM: N.D."
12. The trial court record shows that the petitioner examined its first/solitary witness Mr. B. L. Bhardwaj (authorised person) as CW1 in the preliminary inquiry under Sections 200/202 Cr.P.C. Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 7 of 18 on 01.01.2006. The matter kept hanging fire thereafter for more than two years with no effective proceedings. On 19.04.2008, CW1 was further examined so as to bring on record material in the nature of the CD vide Ex. PW 1/G and its transcript vide Ex. PW 1/H.
13.It appears from the record that the petitioner company was not interested or inclined in producing any further evidence, in as much as after the further statement of PW1 had been recorded on 19.04.2008, the matter was adjourned for arguments primarily for purposes of consideration of the case at the stage of Sections 203/204 Cr.P.C. The complainant thereafter seems to have lost interest as adjournments were taken one after the other on several dates with no meaningful assistance rendered till 08.05.2013.
14.The Metropolitan Magistrate heard arguments on the question of "summoning" and, thereafter, passed the impugned order declining to proceed further drawing curtain on the proceedings holding that the petitioner had failed to make out a good case for such purposes.
15.The revision petition at hand questioning the correctness, legality and propriety of the above mentioned order was preferred on Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 8 of 18 15.07.2013. When the matter was taken up for consideration, on 08.11.2013, the petitioner took adjournment referring to certain directions of Hon'ble High Court in some connected matter wherein the proceedings between the parties had been temporarily kept on hold in view of efforts of amicable settlement through mediation. After taking several adjournments on this ground, the counsel submitted on 04.08.2014 that the interim stay against the proceedings between the parties had been vacated by the Hon'ble High Court on 01.07.2014. The matter has been heard at length thereafter.
16.In the criminal complaint, exception has been taken to the footnote of Ex. PW 1/B quoted above alleging that it was defamatory and derogatory invasion over the credibility and reputation of the petitioner in the market. It has been stated that respondent no.5 company had not been given any "bridge loan"
to the petitioner since the arrangement was in the nature of interest bearing security deposit which had been forfeited on account of breaches committed by respondent no.5. It is alleged that the statement in the public notice that the petitioner company had secured Rs. 10 Crores was factually incorrect and that the representation intended to jeopardise the interest of the Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 9 of 18 petitioner company. The petitioner also expressed grievances about the statement respecting equity shares worth Rs. 2.59 Crores having been taken by respondent no. 5 from the petitioner company referring in this context to the order dated 10.09.2001 of Hon'ble High Court with the averment that the court had never given any such order or direction "forcing" the respondent no. 5 to take such additional equity. As regards the claim in the public notice that respondent no. 5 is the owner of 25% shares, the petitioner claimed it to be pertaining to a matter which was sub judice.
17. As is clear from the chronology of the facts noted above, the impugned assertion alleged to be defamatory is shown to have been made by respondent no. 3 in press conference on 16.10.2005, which was an event that occurred after filing of the criminal complaint and during the pendency of the pre summoning inquiry. The evidence with regard to such subsequent facts appears to have been taken on board on the subsequent request of the petitioner.
18.The learned Magistrate, upon consideration of the evidence adduced in the presummoning inquiry, found no ground to proceed further. She has declined to issue process mainly on the Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 10 of 18 basis of conclusion that intention to defame has not been brought out. In this context, she has observed that in order to make out a case for prosecution on the charge of defamation, the impugned imputation should be such as lowers the complainant's character in the estimation of others, rather than in his own estimation. She found that impugned assertion do not seem to portray the petitioner company in a negative sense. She also referred to the 9th exception to Section 499 IPC to observe that imputation made in good faith by a person for protection of his own interest or interest of others would not fall within the mischief of the penal clause.
19. At the hearing on the revision petition, the petitioner came up with an application seeking leave to examine an additional witness namely Rajinder Prasad son of late Sh. Radhey Shaym Aggarwal invoking in this context the provisions contained in Sections 397/399/401(1)/391 of Cr.P.C. While pressing the said application, the counsel for the petitioner submitted that this application had been made without prejudice to the other contentions raised in the revision petition, according to which the impugned order was vitiated on account of improper approach.
Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 11 of 18
20.The counsel for the petitioner has argued that cognizance having been taken on the complaint and he having embarked upon inquiry under Sections 200/202 Cr.P.C., it was beyond jurisdiction of the Metropolitan Magistrate to dismiss the complaint under Section 203 Cr.P.C. on the ground that the offence of defamation was not made out. The counsel submitted that cognizance is taken by the Magistrate on perusal of the criminal complaint and since the Magistrate was satisfied at the outset that the averments in the complaint did disclose the requisite facts constituting the offence of defamation, contrary view taken at the stage of consideration for summoning would amount to review of the order which is a power not vested in the criminal court. In pressing home this line of argument, the counsel submitted that it has to be kept in mind that cognizance is taken of the offence and not of the accused. In his submission, the Magistrate could have chosen to proceed against the particular accused or declined to proceed against another accused shown in the array but could not have guillotined the case in entirety by concluding that offence was not shown to have been committed.
21. The argument does appear to be attractive but is devoid of Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 12 of 18 merit, particularly in the facts and circumstances of the case at hand. The first order whereby the complaint was put on the pre summoning inquiry has been noted verbatim earlier. Clearly, it is a mechanical order with no application of mind. The Magistrate did not even note that he had gone through the complaint before requiring the complainant to adduce pre summoning evidence. So much for application of mind or formal taking of cognizance in the case at hand.
22. But then, it may be assumed that the Magistrate had actually applied his mind before calling upon the complainant to adduce evidence under Sections 200/202 Cr.P.C. and thereby impliedly taking cognizance. It is not correct to say that once cognizance has been taken, it is beyond the purview of the Magistrate to hold, at any subsequent stage, that offence had not been committed at all. The preliminary order of taking cognizance is only a tentative view taken for purposes of proceeding further. When the matter reaches the stage of presummoning inquiry for purposes of Sections 203 or 204 Cr.P.C., the Magistrate is expected to take another call, now focused more on the evidence led during the proceedings under Section 200 and 202 Cr.P.C., rather than on the averments in the complaint. The case would Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 13 of 18 have travelled by such time from the stage of mere allegations to formal evidence furnished. It is the evidence led during such presummoning inquiry which would be decisive.
23.It is not difficult to conceive of cases where false allegations are made in the complaint giving the impression that an offence has been committed but such allegations later found to be not true when the matter is examined after presummoning inquiry. Thus, it is not correct to say that an order under Section 203 Cr.P.C. holding that offence was not made out would be in the nature of review or consequently impermissible in law.
24.I agree with the submissions of the counsel for the petitioner that it is not permissible that the Magistrate at the presummoning stage to assume that the prospective accused would be entitled to certain general defences as may be available in terms of Section 76 to 106 IPC. But then, that cannot become the thumb rule in the context of scrutiny of the material on record for forming an opinion whether the requisite ingredients of the penal clause had been established, for which purpose the exceptions have to be borne in mind.
25. One is, however, prepared to exclude from consideration the reasoning given by the learned Magistrate in the impugned order Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 14 of 18 with reference to the exceptions to Section 499 IPC. One may proceed to examine the available material de hors the possibility of such exceptions being invoked by the prospective accused in the event of they being summoned.
26.The counsel for the petitioner submitted that the impugned order suffers from deficiency in that the learned Magistrate has not even noted the background facts at length while proceeding to dismiss the complaint. In my view, the learned Magistrate has focused more on the grey areas or the deficiencies in the material on record and has given her reasons at sufficient length and, therefore, it cannot be said that the order suffers from non application of mind only because detailed narration of background facts is amiss.
27.I agree with the observations of the learned Magistrate that the impugned material does not portray the petitioner company in any manner which could be called defamatory and that the complaint did not deserve any further action under Section 204 Cr.P.C., particularly because the requisite evidence about criminal intention or knowledge or belief about likelihood of harm being caused to the reputation of the petitioner in the estimation of others are missing.
Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 15 of 18
28.The avowed objective of the public notice Ex. CW 1/B is declared not only in the beginning but also in the end of the publication, it being to protect the legitimate interests of the small share holders who apparently would have suffered on account of the feud between the petitioner company on one hand and the respondent no. 5 on the other. There is nothing in the impugned publication to indicate that it was projected by its publisher that respondent no. 5 was "forced" to take an additional equity by order of Hon'ble High Court. The matter relating to extent of holding of respondent no. 5 may have been subjudice. But, that does not detract others from putting forward facts in the manner they understood to be the actual state of affairs. The interest bearing deposit taken by the petitioner company from respondent no. 5 may not be a "bridge loan" as it was described in the impugned publication. But, it is not explained as to how this misdescription, if indeed it was a mis description, was intended to, or would, harm the reputation of the petitioner company. It was a financial liability undertaken and would remain a liability in the nature of loan. The petitioner has questioned the accuracy of the assertion that it had received Rs. 10 Crores from the respondent no.5. But then, noticeably, it Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 16 of 18 would not bring out what would be the correct statement of facts in such regard.
29.The fact remains that the solitary witness CW1 spoke for and on behalf of the complainant. As observed by the learned Magistrate in the impugned order, the petitioner was required to show that its reputation had been jeopardised in the estimation of others. The evidence in this regard was never led, even though the complaint remained pending at the stage of presummoning inquiry for eight long years.
30.The application now moved to fill in deficiencies in above regard by seeking examine Sh. Rajinder Prasad son of Radhey Shyam Aggarwal as additional evidence is clearly an after thought. The name of this witness was never mentioned either in the complaint or in the list of witnesses submitted initially. There is nothing on record to substantiate that the proposed evidence of Rajinder Prasad would bring any facts relating to events that would have occurred in the runup to the filing of the complaint. Filling up of lacuna in this manner cannot be permitted.
31. In the above facts and circumstances, the petition and application are found devoid of merits and consequently dismissed.
Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 17 of 18
32.The trial court record along with a copy of this judgment be sent back.
33.The file of the criminal revision petition be consigned to Record Room.
Announced in open Court today (R.K. GAUBA) on this 1st day of October, 2014. District & Sessions Judge (South) Saket/New Delhi.
Crl. Rev. No. 213/13 Sunair Hotels Ltd. Vs. State & anr. Page No. 18 of 18