Case: Ratan N. Tata and Others Vs. State of Maharashtra and Others

2. 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 SteelsThe petitioner No. 1-Ratan 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 Complainant-Nusli 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, non-executive Director of Tata Motors on 22.12.1998 and a non-executive Director of Tata Chemicals on 26.06.1981 and in this capacity he claims to have long association with the said three companies3. 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, its 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 reassured 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 Director. 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 us4. 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 23.12.20165. 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 15.12.20166. 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 self-esteem 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 persons7. 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 e-mails, 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.

Court's reasoning:
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.C16. 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 companies19. 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, 201323. 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, 2013It 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 defamatory. 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 majorityMoreover, 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 defamatory24. 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. 2s 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 e-mail 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 sub-Section (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 order25. 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 himThe 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.C27. 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 well-known 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 sub-section (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 consider28. 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 defamatoryWe 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 accused31. 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 dismissed32. We are of the specific view that the impugned order passed by the Magistrate looked at from this angle also suffers from non-application 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.