Madras High Court
K.Venkateshvaralu vs Subhiksha Trading Services Ltd on 6 August, 2020
Author: M.Nirmal Kumar
Bench: M.Nirmal Kumar
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON :20.07.2020
PRONOUNCED ON : 06.08.2020
CORAM:
THE HONOURABLE MR.JUSTICE M.NIRMAL KUMAR
CRL.O.P.No.3357 of 2014
K.Venkateshvaralu
Assistant General Manager
Bank of Baroda
Corporate Financial Service Branch
No.21, Gopalakrishna Street,
T.Nagar, Chennai. ... petitioner
Vs.
1.Subhiksha Trading Services Ltd.,
Rep.by its Managing Director,
R.Subramanian.
2.R.Subramanian ... Respondents
Prayer : Criminal Original Petition filed under Section 482 of Cr.P.C., to
call for the records in C.C.No.2558 of 2013 pending on the file of XIV
Metropolitan Magistrate, Egmore, Chennai and quash the same.
For Petitioner : M/s.A.Sasidharan
For Respondent : Mr.R.Subramanian
Party in Person
ORDER
This petition is filed to call for the records in C.C.No.2558 of 2013 pending on the file of the XIV Metropolitan Magistrate, Egmore, http://www.judis.nic.in 2 Chennai and quash the same.
2. The gist of the case is that the first respondent is a pioneer in organized retailer in India, commenced business in the year 1997. The first respondent had pioneered an India-centric model of retailing, in which, the stores operated by the 1st respondent catered to the middle class persons for day to day items at much lower prices than those offered by other retailers. The second respondent was the promoter of the 1st respondent and is a well qualified professional having graduated from IIT Madras and IIM Ahmedabad. The second respondent is well recognized for his achievements and has won various awards and he was also the Chairman of the Indian Retail Forum for the year 2008-09 and a Governing Board Member of the Retailers Association of India. As such, the first respondent was having high reputation and standing, well known for business in society. The first respondent, who had established chain of stores, sells products in FMCG, Pharma, Groceries, Fruits, Vegetables, telecom products etc. The retail shops of the first respondent are opened in the brand name of "SUBHIKSHA". The first respondent for their business had availed loan facility with various banks and financial institutions. Since the first respondent company is going through a Debt restructuring, the scheme in this regard is under consideration of the Hon'ble High Court of Madras pursuant to the orders of the Hon'ble Apex http://www.judis.nic.in 3 Court.
3. The petitioner is Assistant General Manager of Bank of Baroda, Corporate Financial Service Branch, T.Nagar, Chennai, one of the largest banks in the Country, had granted some loans to the 1st respondent company. The loans become NPA and the said Bank of Baroda filed an application in O.A.No.71 of 2010 for recovery of Rs.88,16,33,236.28/- before the Debt Recovery Tribunal-II, Chennai and the matter contested by the respondent. Certain affidavits were filed by the petitioner seeking interim reliefs which is pending disposal before the Debt Recovery Tribunal-II, Chennai. In the said affidavits, in paragraph Nos.16 and 18, the petitioner has stated as under:
"...It is further reported that the second respondent has floated many private limited companies and diverted funds from the first respondent company. The OA filed by the 15th defendant has set out at length the various details of the perpetuated fraud by the second defendant herein. All the hypothecated assets and the charges created on the movable and fixed current assets are only on papers and the Applicant Bank does not have anything to look at for realisation..."
"...Further, the second respondent is likely to face criminal prosecution as various contentions are made on fraudulent activities of the second respondent and the first respondent would also become liable for huge statutory dues. http://www.judis.nic.in 4 It is probable that the second respondent may also leave the country to evade the due process of law".
4. The learned counsel for the petitioner submitted that the petitioner Bank sanctioned term loan to the extent of Rs.50 crores and cash credit to the extent of Rs.25 crores to the first respondent. Since Subhiksha Trading Services Limited did not repay the loan amount, the petitioner filed O.A.No.71 of 2010 for recovery of due amount, in which, D1 and D3 are the Company, D2 is the second respondent herein and D4 to D15 are the other banks, who had given financial assistance and extended loan facility to the first respondent. In paragraph No.16 of the affidavit, it is made clear that several other banks have filed similar petitions before DRT for recovery of their loan amounts. The fifteenth defendant, namely, KOTAK MAHINDRA BANK LIMITED, Chennai had set out at length in its application, various details of the perpetuated fraud committed by the second defendant. Further, such statement was necessary to protect the interest of the Bank, where public money is involved, since it is a public sector bank. Further, unless pleadings are made, evidence cannot be led in the suit, reading of the paragraph Nos.16 and 18 of the affidavit on the whole would clearly show that there is nothing defamatory. Taking certain words in isolation and attributing motive would not constitute an offence of defamation. The entire affidavit filed by the petitioner has to be read in full and not in piecemeal. The http://www.judis.nic.in 5 respondents in their complaint have not stated, any harm was caused to their reputation. He further submitted that the respondents not only filed a case against the petitioner, also, defamation cases against ICICI Bank, Kotak Mahendra Bank. On similar accusation, this Court, by order dated 31.07.2018, in Crl.O.P.Nos.25422, 25458, 26906, 26910 & 31446 of 2012, quashed the proceedings. The petitioner submits that in reply to the affidavit filed before the DRT, the first defendant had not made any such objections and averments of defamation. Hence, he prayed for quashing of the complaint. The petitioner relied on the order passed by this Court in the batch cases, in quashing the complaint of the respondent initiated against officials of ICICI Bank, Kotak Mahindra Bank, Honkong and Shanghai Bank in Crl.O.P.No.25422 of 2012.
5. Mr.R.Subramanian, party in person, submitted his written submissions with citation and advanced arguments that the first respondent availed term loan and cash credit for the purpose of their business. The statements made in paragraph Nos.16 and 18 of the affidavit are false, such statements are per se defamatory made only with a view to defame the respondents and belittle them in the eyes of various other banks. The defamatory statements by the petitioner are deliberately made to sabotage the restructuring efforts of the respondents. The respondents had sent a legal notice dated 26.04.2010 http://www.judis.nic.in 6 which was replied belatedly on 24.05.2010. With a explanation that the imputation was made on behalf of the Bank based on records, a untenable reply. Therefore, not satisfied with the same, the respondents had filed a complaint against the petitioner.
6. The respondents in counter affidavit stated quashing of complaint filed by the respondent against certain banks by this Court are per inquirum, not good in law, as the finding is contrary to the provisions of the statute. Further, the respondents had challenged the findings of this Court, by way of S.L.P. Further he submitted that the petitioner placing reliance on exception 8 to Section 499 IPC is not applicable for the averments made and it is to be decided only during trial and not in a quash petition.
7. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act) is now known as Recovery of Debts and Bankruptcy Act, 1993. As per RDDBFI Act, the power given to the DRT to adjudicate on the amount claimed as due by the Banks or Financial Institution, once such claim is determined, to issue recovery certificate for the same. By no stretch of imagination, DRT can decide or adjudicate any issue of fraud and as such, any averment of fraudulent conduct made in pleadings before DRT is not a matter covered, as one http://www.judis.nic.in 7 over which DRT exercise lawful authority.
8. Further, he submitted that it is a settled law that when a Court proceeds to decide an issue without either noting the correct provisions of law or without noting the law settled and binding on it, the said decision is rendered per incurium and is not good law and sets no precedent.
9. In respect of the same, he relied on the Hon'ble Apex Court Judgment in the case of K.S.Panduranga vs. State of Karnataka reported in 2013(3)SCC 721 and the State of Uttar Pradesh vs. Synthetics and Chemicals Limited and various other citations. The learned counsel for the respondents further submitted in the case of Subramanian Swamy vs. Union of India reported in 2016 (7) SCC 221, the vires of Section 499 IPC was challenged and in that case, the Apex Court elaborately discussed all aspects in the case of defamation and held that the provisions of Section 499 IPC are constitutional. Further, person, who is claiming the exception, has to prove it.
10. Further, he submitted that what is public good is a question of fact depending on the facts and circumstances of the case. In respect of this contention, he relied on the case of M.A.Rumugam vs. Kittu http://www.judis.nic.in 8 reported in 2009 1 SCC 101. Further, he submitted that where the utterances are per se defamatory, there is no need for the complainant to prove that he was defamed. In respect of this contention, he relied on the case of John Thomas vs. Dr.K.Jagadeesan reported in 2001 6 SCC 30. Further, he submitted that the averments are unambiguously defamatory. The averments specifically allege "fraud" and "siphoning" both of which are acts of criminal nature and are per se defamatory, requiring no proof of defamation. Further submitted that the DRT is only for recovery of due amount, and there is no manner, in which, DRT could consider or decide any issue of criminal misconduct and as such, the averments were made for the sole purpose of defaming the respondents. Therefore, he prayed for dismissal of the petition.
11. The respondent submitted that S.L.P. is filed, the respondent is unable to furnish the particular of proceedings or any material to show whether the S.L.P. is filed and it is pending or not?.
12.This Court, on the rival submissions and on perusal of the materials, finds the availment of financial assistance by the respondent from the petitioners bank and its default, the loan account becoming NPA, are not in dispute. The petitioner's Bank is a Public Sector Bank, in which, Public money is involved. To safeguard the Bank interest, and to http://www.judis.nic.in 9 recover the loan, which has become NPA, the petitioner filed application before Debt Recovery Tribunal-II, in O.A.No.71 of 2010, in which, the petitioner has filed affidavits in support of his claim and for immediate interim relief I.A.Nos.191, 192, 193, & 195 of 2010 were filed.
13. It is seen, in paragraph Nos.16 & 18, passing reference are made:
“The O.A. Filed by the KOTAK Mahindra Bank Limited herein as set out at length the various details of the perpetuated fraud by the second defendant herein. All the hypothecated assets and the charges created on the movable and fixed current assets are only on papers and applicant bank does not have anything to look for realization”.
14. It is seen, in the affidavits filed in I.A.Nos.191, 192, 193, & 195 of 2010 in paragraph No.16, it is found as follows:
“The O.A. Filed by the KOTAK Mahindra Bank Limited herein has set out at length the various details of the perpetuated fraud by the second respondent herein.”
15. In paragraph No.18, found as follows:
http://www.judis.nic.in 10 “Further the second respondent is likely to face criminal prosecution as various contention are made on fraudulent activities of the second respondent and the first respondent would also become liable for huge statutory dues.”
16. The paragraph and the sentence read as a whole, makes it clear and apparent that they are not defamatory.
17. The respondent admitted that the imputation has caused no harm directly or indirectly in the estimation of others. According to the respondent, imputation are per se defamatory. Hence, the burden to establish such imputation has lowered him in the estimation of the others, which does not arise in this case. On perusal of the notice, it is seen that there is no mention of any imputation being per se defamatory. In the complaint, no witnesses other than the second respondent is shown. Thus, the wording of per se defamatory in the complaint is an after thought, improvement made, while filing the complaint. On the facts of the case and perusal of materials, it is found that no imputation can be said to harm the respondents reputation and Section 499 IPC explanation No.4 squarely applicable in this case.
18. The petitioner filed an application for recovery of http://www.judis.nic.in 11 Rs.88,16,33,236.28/-, before the Debt Recovery Tribunal and the relevant facts, to decide the issue of debt and its recovery, are to be made therein. If these averments are not made in the pleadings before the Debt Recovery Tribunal, the petitioner would not be permitted to plead on that subject orally and lead evidence. As a result, they may not be in a position to succeed in getting the recovery certificate. Therefore, it cannot be stated that these averments are totally unnecessary.
19. This Court finds the petitioner have made averments in the pleadings before the Debt Recovery Tribunal which are very relevant to the issues and according to the petitioner, it was stated with care and attention. The respondent had not objected for the same before the Debt Recovery Tribunal.
20. Admittedly, the petitioner had succeeded in the claim before DRT-II, Chennai and now, the respondent had filed an appeal against the order of the Tribunal.
21. As discussed earlier, the averments made in the pleadings have got relevance to the issues involved in the proceedings before the Debt Recovery Tribunal. Hence, it cannot be said that the imputations are per se defamatory.
http://www.judis.nic.in 12
22. In view of the foregoing discussion, I hold this is not a case where the statements are per se defamatory so as to allow the respondent to go ahead with the prosecution. Hence, continuation of the proceedings further would amount to abuse of process of law.
23. In view of the above, the Criminal Original petition is allowed and the case in C.C.No.2558 of 2013 on the file of the XIV, Metropolitan Magistrate, Egmore, Chennai is hereby quashed.
06.08.2020 ssb Index:Yes/No Internet:Yes/No Speaking Order/Non-speaking Order http://www.judis.nic.in 13 M.NIRMAL KUMAR, J.
ssb CRL.O.P.No.3357 of 2014 06.08.2020 http://www.judis.nic.in