Andhra HC (Pre-Telangana)
P.R. Periakaruppan vs Chola Chits And Finance (P) Ltd. on 6 July, 2005
Equivalent citations: AIR2005AP471, 2005(5)ALT345, AIR 2005 ANDHRA PRADESH 471, (2005) 1 ANDHWR 647 (2005) 5 ANDH LT 345, (2005) 5 ANDH LT 345
JUDGMENT P.S. Narayana, J.
1. P.R. Periakaruppan, the unsuccessful defendant in O.S. No. 128/88 on the file of Addl. Subordinate Judge, Chittoor, had preferred the present appeal as against the Judgment and Decree, dated 27-9-1995. The suit was filed by the respondent herein-plaintiff, M/s. Chola Chits & Finance (P) Ltd., for recovery of damages of Rs. 50,000/-. The learned Addl. Subordinate Judge on the strength of the respective pleadings of the parties, having settled the issues, recorded the evidence of P.Ws. 1 and 2 and D.W. 1, marked Exs. A-1 to A-16 and Exs. B-1 to B-3 and ultimately decreed the suit with costs for Rs. 50,000/- with interest at 6% per annum from 27-12-1995 till the date of realisation, granting three months time for payment, and if the appellant-defendant fails to pay the amount within three months, he has to pay interest of 6% per annum on Rs. 50,000/-from 27-12-1995 till the date of realization. Hence, the present appeal.
2. Sri Suresh Reddy, the learned Counsel representing the appellant-defendant would maintain that this is a suit filed claiming damages on the ground of libel having been committed by the appellant-defendant. The learned Counsel would submit that appellant-defendant is the father of one Periathambi, a minor at the relevant point of time, who was the subscriber of the chit under Group-AA1 in respondent-plaintiff company. The Counsel also would submit that some problem arose after payment of certain instalments and Ex. A-5 is the xerox copy of the letter sent to the concerned Registrar of Chits by appellant-defendant. The learned Counsel would submit that absolutely there is no malice and this letter was sent by appellant-defendant in his interest as customer and also in the interest of the public and hence, this could not amount to defamation. The learned Counsel had taken this Court through the evidence available on record and the findings recorded by the Trial Court. The learned Counsel also placed reliance on certain passages from the Law of Torts (Ratanlal & Dhirajlal) and also placed reliance on certain decisions to substantiate his contentions.
3. Per contra, Sri P. Suresh, the learned Counsel representing the respondent-plaintiff would maintain that if the conduct of appellant-defendant is taken into consideration, it cannot be said that Ex. A-5 is a bona fide action. The learned Counsel also had taken this Court through the contents of Ex. A-5 and would submit that the allegations made therein are false to the knowledge of appellant-defendant and they are blemish and all the more defamatory too. The learned Counsel also had taken this Court through the findings recorded by the Trial Court and would maintain that these findings are well-considered findings by the Trial Court and the said findings need not be disturbed, in any way.
4. Heard the Counsel.
5. The respective pleadings of the parties are as hereunder:-
The parties will be referred to as the plaintiff and defendant here-in-after for the purpose of convenience. The plaintiff pleaded in the plaint, as hereunder:-
"The plaintiff submits that they are running a Private Limited Company under the name and style of "Chola Chits and Finance (P) Limited" for the last about 15 years. The plaintiff further submits that the said company has been duly registered under Indian Companies Act with Registrar of Companies, Madras, having its Registered Office at Madurai.
The plaintiff further, submits that they have Branch Office at Chittoor and also at Bangalore and they have constituted their own by-laws as required under Section 3, Rule 3 of the A.P. Chit Funds Act, 1971.
The plaintiff submits that they have been running the Chit Office for the last about 15 years without any blemish whatsoever and they have gained reputation for running the chit transactions in an absolutely honest, straight-forward and efficient manner to the satisfaction of all members of public, safe-guarding the interests of public and they have reputation of their own in the public.
The plaintiff further submits that the defendant's minor son P.R. Periathamby was enrolled as subscriber to the above chit Group AA1, Pass Book No. 36, for the chit amount of Rs. 50,000/-. It was further pleaded that the defendant has been a member of the plaintiff's chit company from about the year 1978 at Bangalore and he has contributed in the plaintiff's company in various groups. The plaintiff submits that the defendant's minor son is a subscriber to the above chit in Group AA1, Pass Book No. 36 for Rs. 50,000/-. The plaintiff submits that he received a certified true copy of By-Laws No. 58/84-95 registered under the Registrar of Chits, Chittoor, A.P. and he has also signed in the Chit Agreement relating to this group. The defendant also received the chit agreement from the plaintiff's company.
The plaintiff submits that the defendant made due publication making false allegations against the plaintiff's company without reasonable and probable cause. The plaintiff submits that on 23-3-88 to the shock and surprise of the plaintiff, the District Chit Registrar of Chittoor inspected the plaintiff's office and took the file relating to this group AA1 58/84-85 containing pages 1 to 107 informing them that a complaint has been lodged against them by the defendant for alleged malpractices by the plaintiff's company. It was further pleaded that the plaintiff subsequently obtained a copy of the said report from the District Registrar on 23-8-88 and gone through the contents of the same, and came to know that the defendant had lodged the above complaint against the plaintiff's company.
The plaintiff submits that subsequently after thorough investigation and enquiry, the District Registrar returned the file to the plaintiff's company on 23-8-88 which has been duly acknowledged by the plaintiff. The plaintiff further came to know that after seeing the report of the District Registrar, as stated above, the defendant sent copies of the same to the Secretary, Finance Department, Govt. of Andhra Pradesh, Hyderabad, to the Registrar of Chits (Chit Funds Scheme), Registration Department, Govt. of Andhra Pradesh, Hyderabad and to the Registrar of Companies, Madras. It was further pleaded that as already stated above, the District Registrar of Chits, Chittoor, to the best knowledge of the plaintiff after thorough investigation and enquiry, returned the file and did not take any action.
The plaintiff submits that the various allegations made by the defendant in his complaint dated 2-5-87 addressed to the District Registrar of Chits, Govt. of A.P., Chittoor, relating to the activities of the plaintiff's company are totally false. In this connection, the plaintiff submits that to the letter dated 22-6-87 addressed by the defendant to the plaintiffs company, the plaintiff gave a reply dated 27-6-87 stating that since the defendant had not paid the chit instalments since May, 1987, the defendant is not entitled to take part in the auction last time, the defendant is not entitled for the monthly dividend because of default and that therefore the defendant had to remit 27th to 29th instalments of Rs. 3,750/- with interest due immediately. Subsequently, the defendant wrote a letter dated 16-7-87 offering tender of Rs. 43,400/- after deducting Rs. 6,600/- towards chit auction and that he is prepared to abide by the rules stipulated towards the auction and in the agreement the defendant also affixed his signature. It was pleaded that subsequently after having sent this letter on 16-7-87, the defendant attended the chit in person on 26-7-87 and having been successful bidder, he is entitled to a sum of Rs. 41,950/- and in fact the defendant had received the said sum from the plaintiff's company and passed a receipt dated 24-8-87. The plaintiffs thus submit that in respect of the said Group AA1 for which the defendant is a subscriber, representing his minor son, he has been duly paid the amount due to him by the plaintiff's company without any demur am on their part and the defendant also acknowledged the receipt of the same.
The plaintiff submits that having regard to these state of affairs, they are very sorry to find in the defendant's complaint to the Registrar that he made representation to the said authority to the following effect:-
"I am justified in feeling that the above chit company is adopting malpractices in the auctions conducted by them more conveniently so in the absence of any subscriber of this particular group being personally present at the time of the auction."
Not being satisfied with these false allegations made against the plaintiff's company, the defendant intentionally asked the authorities to investigate into the whole affairs and particularly with regard to the auction conducted on 26-4-87. Further, in the said report the defendant had also made a statement to the effect that:
"I will be much obliged if the investigation could be taken up immediately before much damage is done so that the money deposited by the public in the Chit Company is safe-guarded."
These allegations in the nature of innuendo are absolutely false and baseless and they have been deliberately and intentionally made by the defendant.
The plaintiff submits that the said report sent by the defendant has been received by the Registrar of Chits, Chittoor, and the other officers referred to above. The plaintiff submits that those two statements made by the defendant referred to in quotations above, are defamatory, patently false on the face of them. The said statements are clearly understandable by right thinking of reasonable minded persons as referring to plaintiff's activities in the Chit transaction and the defendant had made a public defamatory statements by communicating to the officers referred to above and the said publication is false without just cause or excuse and false to the knowledge of the defendant and made intentionally, which are proved by subsequent events in this case and such defamatory statements made by the defendant and duly published, the plaintiffs have suffered irreparable injury to their reputation which has been doing their business for the last about 15 years without any whisper of any complaint or allegation or blemish and having reputation of their own. The plaintiffs deny that there was any malpractice by them at any time in running of the chits.
The plaintiff submits that these statements made by the defendant have the effect of the conduct on the part of the plaintiffs to degrade them and also prejudiced in their business, and more than any else, these statements are false and exfacia defamatory tend to lower the reputation of the plaintiff's company having right thinking in the society.
The plaintiff submits that on account of these dafamatory statements made by the defendant, they have suffered irreparable mental agony, injury and loss of reputation in the eyes of public for no fault of theirs and that the very allegations made by the defendant and published are totally false as proved not only by the investigation and enquiry done by the Registrar of Chits, Chittoor but also by the defendant's own conduct by having participated in the said chit and having received the amount from the plaintiff's company.
The plaintiff further submits that the defendant being a subscriber in the plaintiff's company for the last about 10 years, he know their work, honesty, efficiency and working of the said company and with all these, the defendant made a patently defamatory statement by making false allegations and by making publish by sending the authorities, but in their turn they discharged their duties by taking the files relating to the Chit from the office of the plaintiff and later on returning the same and there being no action taken against them till today, which clearly shows that the allegations made by the defendant are totally false to his knowledge.
The plaintiff therefore submits that since the defendant had defamed the plaintiff's company by making such statements referred to above and causing loss, irreparable mental injury and damage to the reputation of the plaintiff's company, the defendant is liable to compensate damage for the plaintiff's company for the defamation caused to them on account of his defamatory statement at Rs. 50,000/- (Rupees fifty thousand only) as he is liable to pay the said amount to the plaintiff's company.
The plaintiff submits that they issued a regd. Notice dt. 30-8-88 bringing forth all these facts to the defendant and claiming damages as compensation in a sum of Rs. 50,000/-. The defendant acknowledged receipt of the notice on 1-9-88 and gave a reply notice dated 3-9-88 with all false allegations. The allegations made by the defendant in the reply notice dated 3-9-88 are not true and correct and as such they are denied. It is surprising to note that in the reply notice, the defendant had said whether the plaintiff's company has got its own by-laws having received a copy of by-laws from the plaintiff's company. A Photostat copy of the receipt issued by the defendant having received the by-laws is herewith filed. The defendant has further stated in the reply notice that he is not aware of the chit company though he has been a subscriber. Consequently, these allegations in the reply notice would clearly show that the allegations made by him are totally false.
The plaintiff submits that the allegations made in para 6 of the reply notice that the allegations made by the defendant in the letter dated 2nd May, 1987 are believed to be true and correct is not true and correct and are denied by the plaintiff. These allegations are false, without any basis and made recklessly by the defendant without any reasonable cause or basis and false to his knowledge. Consequently, the allegations made in para 6 of the reply notice are totally false that they believed to be true and correct.
The plaintiff submits that from the very allegations in the reply notice it is abundantly clear that the allegations made in the letter to the District Registrar by the defendant is without reasonable believe, reasonable cause and false to the knowledge of the defendant.
The plaintiff further submits that the allegations made in para 7 of the reply notice that the statements which are said to have been made by the defendant are based on information furnished to him and are not defamatory in nature and are made in good faith are all not true and correct and as such they are denied by the plaintiff. On the other hand, as what has been stated above, on account of these allegations made and published by sending the same to the Registrar of Chits, the plaintiff's company suffered irreparable injury to the reputation and they have been doing such business without any whisper from any quarters."
The defendant filed written statement denying the allegations. It was pleaded in the written statement, as hereunder:-
"The allegation that the plaintiff has been running Chit Office for the last 15 years without any blemish and with the reputation in running chit transaction are untrue. It is equally false that the plaintiff company was honest, straightforward and efficient in working to the satisfaction of its members. The allegation that the defendant was subscribing to the plaintiff's chit since 1987 is correct. It is true that defendant's minor son was a subscriber in a Chit AA1 group.
The allegation in para 6 of the plaint that the defendant has been a member of the plaintiff's chit company from 1978 at Bangalore and that he has contributed in the plaintiff's company in various groups and it excludes the territorial jurisdiction of this Court. The allegation that the defendant received certified true copy of by-laws No. 58-84-85 registered under the Registrar of Chittoor, Andhra Pradesh, are false. It is also false that the defendant received chit agreement from the plaintiff company.
The allegation that the District Chit Registrar of Chittoor visited plaintiff's office took out the file relating to AA1 58-84-85 and that the plaintiff was informed that a complaint has been lodged against him by the defendant for the alleged malpractice is denied. Defendant never made any publication without any reasonable and probable cause. On the contrary, the defendant is good faith wrote a letter on 2nd May, 1987 to the District Registrar, Chittoor, bringing to his notice certain irregularities and infirmities, committed by the plaintiff. The defendant is not aware of the plaintiff obtaining the copy of complaint from the District Chit Registrar on 23-8-88. It is denied that the defendant sent copies of complaint to some other officers. It is false that the District Registrar after thorough investigation returned the file. Till today, the defendant was not served with the intimation from the District Registrar of Chits, Chittoor, about the result of the complaint. It is observed by the District Registrar that the file was returned to the plaintiff and hence, it cannot be presumed that no action was taken by the concerned official.
It is denied that the defendant sent any false notice to the District Registrar. Defendant as a subscriber to chit AA1 was regular in the contribution without any default till 26th instalment dated 24-4-87 for the auction to be held on 26-4-87 this defendant sent a phonogram to the plaintiff on 24-4-87 expressing his intention to take part in the bid of Rs. 42,000/-. The defendant did not receive any reply. Hence, he was under the impression that some other subscriber must have offered the bid less than Rs. 42,000/- as quoted by the defendant. But to his surprise he received intimation from the plaintiff that the chit was knocked at for Rs. 43,900/-and that the same was accepted by the plaintiff. The normal practice is to declare the successful bidder. But the plaintiff having received phonogram from the defendant well in advance ought not to have declared his bid for Rs. 43,900/-and accepted the same and knocked down. This material fact has been designedly suppressed by the plaintiff. Though the defendant personally met the plaintiff and brought the above said fact. Plaintiff admitted receipt of phonogram on 24-4-87 but even before the commencement auction on 26-4-87. The plaintiff gave evasive reply.
The defendant naturally became apprehensive of the conduct of the plaintiff and addressed one letter to the Registrar of Chits, Chittoor on 2-5-87 requesting to order an enquiry into the conduct of chit, dt. 26-8-87. Thereafter the defendant continued to pay the chit amount. On 16-7-87 this defendant paid Rs. 3750/- out of which Rs. 3,555-00 was the amount due towards chit and Rs. 295/- which was for forfeiture of dividend and plaintiff is not entitled to forfeit the dividend due to this defendant. Later on defendant participated in bid in auction for Rs. 41,950/- and the defendant was necessitated to reduce Rs. 12,000/- towards security for future instalments of 31 to 40 at the rate of Rs. 1250/- per month. In the above circumstances, the statements in the complaint in good faith and under justifiable circumstances. The defendant calls upon the plaintiff to cause production in the Court, the bidder list AA1, bye-laws 58-84-85 and the account copy and all message including the phonogram message dt. 24-4-87 and the minutes book from 20th auction to 31st auction including the tenders and auction book. The defendant participated in Chit since 1978 as such there is no question of the defendant to defame the plaintiff when the plaintiff was fairly conducting the chit.
The allegation that the defendant is liable to pay Rs. 50,000/- is unwarranted. Reply notice of the defendant is false. Plaintiff by suppressing material facts and filed the suit only to blackmail the defendant. Plaintiff himself showed the defendant as resident of Bangalore and he also stated that the alleged transaction took place at Bangalore. This Court has therefore no jurisdiction. The defendant was put to great loss by the plaintiff when he rejected the offer of Rs. 42,000/- in respect of the chit held on 26-4-87, the plaintiff to forestall any legal action for compensation instituted this speculative litigation. Defendant had no mala fide intention to degrade the reputation of the plaintiff. Conduct of the plaintiff caused reasonable and justifiable apprehension in the mind of defendant that in future plaintiff would not conduct the chits fairly. Hence, defendant in good faith approached the Assistant Registrar, Chittoor, for redressal."
6. On the strength of the respective pleadings, the following issues were settled by the Trial Court:--
(1) Has this Court territorial jurisdiction to try this suit?
(2) Were the allegations in the letter of the defendant to the Dist. Chit Registrar, Chittoor, made in good faith and do they not constitute defamation?
(3) In any event is the plaintiff entitled to any damages from the defendant and if so, to what amount?
(4) To what relief?
7. P.Ws. 1 and 2 were examined and Exs. A-1 to A-16 were marked on behalf of the plaintiff. Likewise, D.W. 1 was examined and Exs. B-1 to B-3 were marked on behalf of the defendant. On the aspect of jurisdiction, the Trial Court recorded that the learned Addl. Subordinate Judge, Chittoor, has jurisdiction to try the suit. While answering issue No. 2, the Trial Court recorded a finding that the allegations in the letter in question would constitute defamation and accordingly, issue No. 3 was also answered and the suit was decreed, as referred to supra. The aspect of territorial jurisdiction was not seriously canvassed before this Court.
8. The following points arise for consideration in this appeal:-
(1) Whether the allegations made in the letter in question constitute defamation?
(2) Whether the plaintiff is entitled for damages, as claimed by the plaintiff?
(3) If so, to what relief the parties are entitled to?
9. Points 1 and 2:- The respective pleadings of the parties and Issues settled and the findings recorded by the Trial Court already had been referred to supra.
10. P.W. 1-Chokkalingam, the Managing Director of the plaintiff Chit Company; P.W. 2-Anil Kumar, who had been working as Chit Registrar in Zone IV at the relevant point of time, were examined on behalf of the plaintiff. Ex. A-1-Form No. III, dt. 21-3-85; Ex. A-2-Bye-laws of Chola Chits; Ex. A-2(a)-Signature of defendant in Ex. A-2; Ex. A-3-Receipt of bye-laws of company; Ex. A-4-Carbon Copy of the bye-laws of the company; Ex. A-5-Xerox copy of the letter from defendant to District Registrar of Chits, Chittoor; Ex. A-6-Office Copy of notice; Ex. A-7-Postal Acknowledgment; Ex. A-8-Reply Notice; Ex. A-9-Letter of Defendant; Ex. A-10-Letter by plaintiff to defendant; Ex. A-11 -Receipt; Ex. A-12-Auction minutes; Ex. A-13-File relating to Chola Chits; Ex. A-14 and A-15-Office notes; and Ex. A-16-Receipt had been marked. The defendant was examined as D.W. 1. Ex. B-1-Telephone Bill; Ex. B-1(a)-Entry dated 24-4-87; Ex. B-2-Letter of the defendant; and Ex. B-3-Pass Book No. 36 of Chola Chits had been marked.
11. At this juncture, it is relevant to have a look at the contents of Ex. A-5, which reads as hereunder:-
"I have been enrolled as a subscriber to the above chits at their Bangalore Office. I have remitted 26 instalments promptly on or before due dates. 27th auction for the above chit group was to be held on 26-4-1987 at Chittoor. Since I could not personally attend the auction, I had sent telegram to the above Chit Company's Office at Chittoor, giving my tender at Rs. 42,000/- on 24-4-87 through phonogram. Surprisingly, I received their intimation card subsequently when it was forced to be given to some other party at Rs. 43,900/-. The practice normally adopted by their Chit Company is that they will bid on our behalf along with others to the maximum limit of our bid. I understood that the other bid of Rs. 43,900/- has come through letter in which case, I should have been awarded the chit at Rs. 43,850/- being the most competitive bidder in their auction.
When I brought the above facts to the notice of the Chit Company though they admitted the receipt of the telegram well in time, they were giving evasive replies.
I am justified in faceting that the above chit company is adopting malpractices in the auction conducted by them more conveniently. In the absence of all subscribers their particular group being personally present at the time of the auction.
In the interest of the public and as a customary Chit Funds scheme being operated in your District, I request to kindly investigate into the whole offices of the Chit company and in particular with regard to the auction held on 26-4-87 leading justice to me by instructing the Chit company to award the chit to me for Rs. 43,850/-. I will be must obliged if the investigation could be taken up immediately because much damage is done so that the money deposited by the public in the chit company is safe-guarded. A line in reply from your end will be very much appreciated and impose confidence on the public like us about the functioning, controlling of Chit Companies in your District.
Yours faithfully, (P.R. Peria Karapan) Copy to:
(1) Secretary to the Government, Finance Department, Govt. of A.P., Hyderabad.
(2) Registrar of Chits, Chit Funds, Secunderabad, Reg. Dept. Govt. of A.P., Hyd.
(3) Registrar of Companies, Sashi Bhavan, Madras.
From Ex. A-5, it is clear that the defendant had sent Ex. A-5 and also marked the same to 1, 2 and 3, referred to above, while addressing the same to the Deputy Registrar concerned at Chittoor. These allegations made in Ex. A-5 are complained by the plaintiff to be defamatory and it is stated that in pursuance thereof, they have made enquiry, and reputation of the company was brought down and prejudice was caused and hence, on the basis of the said cause of action, the present suit had been instituted. P.W. 1, no doubt, deposed in detail about all the aspects. This witness deposed that the company is running and conducting chits for about 19 years and headquarters is at Madhurai in Tamil Nadu and the same was registered under the Indian Companies Act and they have branches at Chittoor and Bangalore. This witness also deposed about the bye-laws and the reputation of the company. This witness also deposed that he knows the defendant and his minor son is Peria Thambi, one of the subscribers for a Chit group with Pass Book No. 36 for chit amount of Rs. 50,000/-. The defendant was a member since 1978 in Bangalore branch and he had subscribed a number of groups in the Company in his name and also in the name of his wife and as a regular subscriber, the defendant knows well about the plaintiff Chit Fund Company. This witness also deposed that the defendant made a complaint before the District Registrar, Chittoor, alleging malpractices of the Company on 2-5-87 and also to conduct an enquiry for auction held on 26-4-87. P.W. 1 further deposed that based on the complaint, the Registrar inspected their office on 23-3-88 and seized the entire records pertaining to the Chit Group WA1. Then, he came to know that the defendant gave a complaint. On the application of the company, a certified copy was furnished and the allegations made against the company are all false and absolutely there were no reasons to make such allegations. The Registrar held enquiry with regard to the Chit WA1 and after full enquiry, returned the entire file seized by him pertaining to the chit stating that the complaint was false. P.W. 1 also deposed about other details relating to the participation in the auction for the chit and the default committed by the defendant. This witness also further deposed that after receipt of the reply notice, the defendant had paid all the dues of subscription and participated in auction in the month of July, 1988. This witness also read out the portions of defamatory allegations and deposed that by virtue of these defamatory allegations, the Public Departments came to know about the same and the reputation of the company had been brought down and thus they suffered with mental agony and also public reputation because of the false complaint made in this regard. This witness also deposed about the documentary evidence, already referred to supra. This witness was cross-examined at length. This witness deposed that the members are at liberty to inform the highest bid amount to the plaintiff company even by 'post' prior to the bid. The names of the bidders will be mentioned in the Register. It is called Auction Minutes Book. It is with the office and he did not bring it. The son of the defendant is a minor and he is a member of the Chit Fund business and he belongs to Group bearing No. AA1. The letters relating to the same are in the office and he can file them. This witness also was cross-examined relating to the seizure and the return of books. This witness deposed that he does not know whether the Registrar of Chits passed any orders when defendant complained against the plaintiff company. The defendant wrote a letter Ex. A-9 to the plaintiff company requesting to arrange the amount in pursuance of the auction. Ex. A-10 is the office copy of reply notice. This witness was further cross-examined that the company has got an auditor. This witness deposed about the getting of profits and since 1980 the profit of the company has been increasing on every year. The defendant is a business man and he has got dealing with them for several years and there was no misunderstanding between the plaintiff company and the defendant prior to the filing of suit. This witness also deposed that it is not true to say that the defendant sent a phonogram to him from Bangalore that bidding for 26th chit on 24-4-87 and it is not true to say that they deliberately ignored the defendant's bid and allotted the bid to somebody. This witness also deposed that it is not true to suggest that one Lakshmanan filed a suit for damages against the plaintiff's company in O.S. No. 2622/80 on the file of City Civil Court, Madras, and the same was decreed. Certain questions were put in re-examination and answers were elicited. P.W. 2-Anil Kumar, the Chit Registrar, who was summoned to produce the records, deposed that on 2-5-87 the defendant gave a complaint against the plaintiff and he complained that the plaintiff was not conducting the chits according to the Rules and the Registrar received the complaint from the defendant and then the Inspecting Officer of the Chit directed the Registrar to enquire into the matter and submit his report and his predecessor enquire the matter and no report was prepared. Later, two reminders were given to his predecessor to submit his report. The Inspecting Officer of the chits closed the enquiry on 28-3-88 stating that no action is necessary as it is a long pending case, on 28-3-88 their office returned the file to the plaintiff under acknowledgment. This witness deposed about Ex. A-13-File relating to the plaintiff; Ex. A-14-Office Note; and Ex. A-15-Office Note. This witness deposed about Ex. A-16 also. As against this evidence, D.W. 1 was examined, who deposed that he is qualified M.Tech., (Textile Technology) and he is an Income Tax assessee and his turn over of the business would be Rs. 50,00,000/- per year. This witness further deposed that the proprietor of the plaintiff company, by name Chokka Lingam, belongs to his community and he was a subscriber of the chits run by the plaintiff company from 1978 onwards. He was also a subscriber for chit No. AA1 for an amount of Rs. 50,000/-, payable in 40 instalments, at the rate of Rs. 1,250/- per month, on the name of his minor son Peria Tambi. He paid instalments regularly up to 26 instalments. 26th instalment auction was held on 26-4-87 and he sent the bid on phonogram for Rs. 42,000/- on 24-4-87 and he enquired in the branch office of the plaintiff's company at Bangalore relating to bidding and he came to know that the bid was knocked down in favour of some other person for Rs. 43,000/-. D.W. 1 also deposed that the plaintiff Branch Office people used to collect the subscription amount every month from him by cash or by cheque. He contacted Mr. Chokka Lingam on phone relating to his bid. He replied that D.W. 1 was not proper person to question the bid and he also asked him to do whatever he wants. This witness also deposed that he admitted having received his phone call and subsequent thereto, he wrote a letter to the District Registrar, Chits, Chittoor with a good and bona fide intention to get the bid money but not to defame the plaintiff company. This witness also deposed that he did not receive any reply from the Registrar of Chits, till that day and he is expecting reply from the Registrar or Chits and as such he did not pay remaining 3 subsequent instalments. Subsequently, he paid 3 instalments and participated in the auction held on 26-7-87 and the bid amount was Rs. 41,950/- and he asked the plaintiff company to take future subscription and pay remaining balance amount. The plaintiff company deducted Rs. 12,000/- for future subscriptions and paid an amount of Rs. 29,150/- to him. The plaintiff company had not furnished the bye-laws of the company to him. This witness further deposed that the plaintiff company received his signatures on 2 sets of papers, which were not filled up and which were in blanks. He signed on the papers having confidence on the plaintiff company being an old subscriber and belongs to the same community. He also signed the signatures in previous subscriptions and likewise signed on these subscriptions. Ex. B-1 is the Telephone Bill dated 24-4-87 pertaining to phone No. 355221 and Ex. B-1(a) is the relevant entry pertaining to his phonogram, dated 24-4-87. This witness deposed that he applied for the certified copy of the phonogram from Telephone Department but it was stated that the record had been destroyed. Ex. B-2 is the letter by Telephone Department dated 28-1-1990. Ex. B-3 is the Chit Pass Book issued by the plaintiff company. This witness also deposed that he had written the letter with bona fide intention to have remedy for getting the bid amount. This witness was cross-examined at length about the details of the Chit Fund Company. This witness deposed that he is not aware of the plaintiff's company has high reputation for running the Chit Fund business. This witness deposed that except in one chit, he had not made any complaint or allegation before the Registrar of Chits. He is not aware of the Rules of the Chit. He executed Chit Agreement before becoming a subscriber in respect of the chit group. This witness was cross-examined in detail about Ex. A-5. This witness deposed that he expressed his feeling in Ex. A-5 that the plaintiff company is adopting malpractices in the auctions conducted by them. The witness added that the said allegation was made in good faith. Except in his chit, he did not made any allegation with regard to malpractices against the plaintiff company. This witness also deposed that he had stated that immediate investigation is necessary before much damage is done to the public money. This witness added that the said words used with his own apprehension. This witness also deposed that he stated that he marked copies but the witness added that no copies were sent to the said persons, as mentioned in Ex. A-5. This witness also deposed that he is not aware about the inspection and also the seizure and the other aspects. This witness denied the suggestion that he made false allegations in Ex. A-5. This witness was also cross-examined in relation to Exs. A-9, A-10, A-4, A-5, A-2, A-8 and other documents, at length. Several suggestions put to this witness were specifically denied. On appreciation of this evidence, findings had been recorded by the Trial Court that the allegations made in Ex. A-5 are defamatory which brought down the reputation of the plaintiff company, and hence, the plaintiff company is entitled for damages. Winfield on Torts gives the definition as "Defamation is the publication of a statement which tends to lower a person in the estimation of right-thinking members of society generally; or which tends to make them shun or avoid that person." Underhill defines as hereunder:-
(1) Defamation is the publication of a false and defamatory statement concerning another without just cause or excuse, whereby he suffers injury to his reputation (not to his self-esteem).
(2) A defamatory statement is one which imputes conduct or qualities tending to disparage or degrade any person or to expose him to contempt, ridicule or public hatred, or to prejudice him in the way of his office, profession or trade.
In The Law of Torts' (Ratanlal & Dhirajlal, 23rd edition) on the aspect of 'Fair and bona fide comment' it was stated that "A fair and bona fide comment on a matter of public interest is no libel. Thus, legitimate criticism is no tort; should loss ensue to the plaintiff, it would be damnum sine injuria. Matters of public interest are not to be understood in a narrow sense. They include matters in which the public is legitimately interested as also matters in which the public is legitimately concerned." It was also stated at page No. 271 that:--
"The law presumes or implies malice in all cases of defamatory words; this presumption may be rebutted by showing that the words were uttered on a privileged occasion. If a communication is privileged, the privilege will cover all incidental publications which are made in normal course of business such as dictation to a typist. Malice in law, which is presumed in every false and defamatory statement stands rebutted by a privileged occasion. In such a case, in order to make a libel actionable, the burden of proving actual or express malice is always on the plaintiff. Malcie in that sense means making use of a privileged occasion for an indirect and improper motive. Such malice can be proved in a variety of ways, inter alia (i) by showing that the writer did not honestly believe in the truth of the allegations, or that he believed them to be false; (ii) or that the writer is moved by hatred or dislike, or a desire to injure the subject of libel and is merely using the privileged occasion to defame; and (iii) by showing that out of anger, prejudice or wrong motive, the writer casts aspersions, reckless whether they are true or false. Lack of honest belief is destructive of privilege and reckless publication of defamatory matter without considering or caring whether it be true or not comes in the same category; but if the defendant honestly believed in the truth of his allegations, the protection of privilege is not lost simply because he leaped to his conclusions on inadequate material or because he believed in the truth of the allegations on account of gross and unreasoning prejudice, although these factors along with other material may be used for holding that the dominant motive in publishing the statement was personal spite or some other improper motive taking away the protection of privilege in spite of the defendant's belief in the truth of the allegations."
It was also stated at page No. 274 that:-
"Where the defendant has a duty or interest which entitles him to speak and the person or authority to whom he so speaks is also under a corresponding duty or interest in that connection, the occasion is a privileged one, and though the complaint made may be per se defamatory, it would be protected even if it be made falsely or erroneously so long as it is not made out of malice or from improper motive."
At page No. 277 on the aspect of "Protection of common interest" it was stated that:-
"Every communication made bona fide, upon any subject-matter in which the party communicating has an interest, is privileged if made to a person having a corresponding interest, or to a person honestly believing to have a duty to protect that interest. But the privilege will be lost if the statement is made to an unnecessarily large number of persons and thus spread broadcast."
In Sim v. Stretch 1936(2) All England Law Reports 1237 it was stated that "the criterion by which words are to be considered capable of being defamatory has generally been regarded as settled by authority of long standing. The definition generally laid down is that the words expose the plaintiff to hatred, ridicule and contempt. This definition is hereby though by Lord Atkin to be probably too narrow. In the present case he proposes the test would the words tend to lower the plaintiff in the estimation of right-thinking members of society generally? This, of course, is not a test of universal application, because one has to consider the person or class of persons whose reaction to the publication is the test of the wrongful character of the words used. This qualification, however, would only seem to require that there should be substituted for "right-thinking members of society generally," the person or class of persons whose reaction to the publication forms the test of the defamatory character of the words." Several other English Cases also had been relied upon in this regard, which are follows:-
D& L Caterers, Ltd., and Jackson v. D'Anjou (1945 (1) The All England Law Reports, 563); National Union of General and Municipal Workers v. Gillian and Ors. (1945 (2) The All England Law Reports, 593); Speidel v. Plato Films, Ltd. (1960 (2) The All England Law Reports, 521); Plato Films, Ltd. and Ors. v. Speidel (1961 (1) The All England Law Reports, 876); Lewis v. Daily Telegraph, Ltd. (1963 (2) The All England Law Reports, 151); and Bognor Regis UDC v. Campion (1972 (2) The All England Law Reports, 61).
12. The Chit Fund business is, no doubt, a commercial one and there will be several subscribers and in that view of the matter, to the limited extent the public interest would also be involved though it may be a private business dealing with commercial transaction. When a group of public would be interested in the functioning or working of a particular system, it can be said that to some extent the public interest is involved and in that view, the public interest would be attracted. It is, no doubt, true that D.W. 1 was not clear in his evidence whether he had communicated Ex. A-5 to all persons, who were shown or whether the same was addressed to only one of them. Be that as it may, the fact remains that in the light of the facts, referred to supra, as a subscriber, the defendant bona fide believed about certain irregularities and with a view to set right the same, Ex. A-5 was thought of by him, no doubt, personal problem was also involved and in the said context, he had communicated the same bona fide believing that the concerned authority will look into the functioning of the chit business and would set right things. It is not in controversy that the concerned authority is the lawful authority, that is the reason why the chain action of inspection was initiated in pursuance of Ex. A-5. Hence, under the relevant Chit Fund Law, it can be taken that the appellant-defendant had made this representation bona fide not only in his own interest but also in the interest of the other subscribers as well. In the light of the answers which had been given in cross-examination by P.W. 1 definitely it cannot be said that any serious prejudice had been caused to the company because of this action. Though certain reports had been seized, there was no follow-up action and nothing further had been done and as per the evidence of PW. 2 everything was dropped. It is also highly doubtful whether the internal correspondence was made published to all, amounting to publication, which had brought down the reputation of the plaintiff company in the eye of the public. The words "malpractices" and the "enquiry to be conducted" are the words used by the defendant in the representation under the bona fide belief that the disorderly things would be rectified and the same could be put in order. The evidence of D.W. 1 on this aspect also is very crucial. Though he made an attempt by contacting P.W. 1, he did not care much and in view of that fact that the parties belonged to the same caste and known to each other and also in the light of the events, defendants might have thought that it would be appropriate to report the same to the concerned lawful authority who can set right things.
13. On the overall appreciation of all the circumstances, this Court is of the considered opinion that at any stretch of imagination, this cannot be said to be a mala fide action and a deliberate action, done by the defendant with a view to defame the plaintiff, but, on the contrary, only thing is, anxiety to tell his problem and also to see that the things are rectified in the interest of the other subscribers similarly placed. Nothing more and nothing beyond. This is a clear from the evidence of D.W. 1. Apart from this aspect of the matter, D.W. 1 specifically deposed that the same was made in good faith. This was taken serious note of and suit had been instituted as against the defendant and the learned Judge was carried away by the particular words used in Ex. A-5 and also arrived at a conclusion that the words are defamatory and hence, the plaintiff is entitled for damages. This Court is of the considered opinion that inasmuch as the report was made under the bona fide belief, without any mala fide intention, to an authority who is lawfully entitled to look into the grievance, this cannot be said to be a defamatory action, which can result in the granting of damages. Hence, the findings recorded by the Trial Court definitely cannot be sustained and the same are hereby set aside.
14. Point No. 3:- In the light of the findings recorded above in detail, this Court is of the considered opinion that the findings recorded by the Trial Court cannot be sustained and accordingly, they are hereby set aside and it is needless to say that consequently the appellant-defendant is bound to succeed and accordingly, the appeal is hereby allowed. Inasmuch as the parties have been litigating in relation to the claim of damages for a defamatory action, this Court directs the parties to bear their own costs.