Main Search Premium Members Advanced Search Disclaimer
Cites 3 docs
The Indian Penal Code
Section 499 in The Indian Penal Code
Section 105 in The Indian Evidence Act, 1872

User Queries
Try out the Virtual Legal Assistant to take your notes as you use the website, build your case briefs and professionally manage your legal research. Also try out our Query Alert Service and enjoy an ad-free experience. Premium Member services are free for one month and pay only if you like it.
Bombay High Court
Shri Ajay Shah vs Multi Commodity Exchange Of India ... on 2 December, 2009
Bench: D.G. Karnik


                     CRIMINAL APPLICATION  NO.4888  OF  2009

     Shri Ajay Shah                                   ...     Applicant

     Multi Commodity Exchange of India &Anr ...               Respondents


     Mr.   Shirish   Gupte,   Sr.   Advocate   with   Mr.Subodh   Desai   for   the 
     Mr.Amit Desai, Sr. Advocate with Mr.V.N. Shingnapurkar for respondent 
     Ms. M.H. Mhatre APP for the State.

                                    CORAM :   D.G. KARNIK, J.

DATED : 2nd December 2009 ORAL ORDER:-

1. Heard learned counsel appearing for the parties.

2. By this application u/s.482 of the Code of Criminal Procedure, the petitioner prays for quashing of the order dated 26th March 2009 passed by the Metropolitan Magistrate, 16th Court, Bombay issuing process (summons) in Criminal Case no.4471/SS of 2009 and also prays for ::: Downloaded on - 09/06/2013 15:22:06 ::: 2 quashing of the complaint.

3. Multi Commodities Exchange of India (hereinafter referred to as "the complainant") filed a complaint before the Metropolitan Magistrate alleging that had by writing and causing to be published an article "The X factor in regulation" in the Financial Express dated 4th February 2009, the applicant had committed an offence of defamation punishable u/s.500 of the Indian Penal Code (IPC) and therefore he be punished in accordance with law. After recording the verified statement, perusing the complaint and the article which is alleged to be defamatory, the learned Magistrate by his order dated 26th March 2009 issued process.

4. Mr.Gupte, learned Senior Advocate appearing for the applicant stated that the article, read as a whole, was not defamatory at all. He further submitted that assuming that any portion of the article was defamatory, the article was written by the applicant who was an eminent economist of national repute and a member of a committee of the RBI, had written the article in public interest and he was clearly covered by exceptions 3 and 10 to section 499 of the IPC. The Magistrate, therefore, ought not to have issued the process.

::: Downloaded on - 09/06/2013 15:22:06 ::: 3

5. As regards the first contention the learned Magistrate prima facie found that the allegations in the article fell within the definition of defamation u/s.499 of the IPC and therefore issued the process. In my view, the view taken by the Magistrate that the article prima facie was defamatory and fell within the definition of defamation as defined u/s.

499 of IPC is a possible view and requires no interference in exercise of jurisdiction u/s.482 of the Code of Criminal Procedure. Ordinarily, I would have refrained from giving reasons for the view as any observations made herein might prejudice the Magistrate at the stage of trial. However in deferance of the extensive arguments made by Mr.Gupte and suggesting that reasons be recorded I proceed to give short reasons with a clarification that all observations made in the order are only prima facie and the Magistrate would not in any way be influenced by them at the stage of trial.

6. The article in question first refers to the action taken by Forward Market Commission (FMC) preventing NCDEX, a commodities exchange, from cutting prices (fees charged for a transaction on the exchange) and then goes on to say that the only beneficiary of FMC's action was the incumbent MCX, (which is another commodities ::: Downloaded on - 09/06/2013 15:22:06 ::: 4 exchange carrying on business competing with NCDEX) which was aspiring to make initial public offering of shares (IPO). The article then states that the regulatory system of FMC was weak and then goes on to suggest that MCX was a beneficiary of the weak regulations. So far so good, but the article then says as follows:-

"When regulation is weak, this encourages the players who have strengths in fixing the regulatory system to their own advantage. The firms that have risen to prominence in such areas in India tend to be those who were unable to complete in global markets under fair competition. Even a few years of faulty regulation can do long-term damage to an industry, by killing off firms with high ethical standards and endowed with skills in running a business as opposed to skills in fixing the system."

After quoting this passage verbatim in the complaint, the complaint has alleged that the aforesaid statements are slanderous and defamatory and are full of innuendo. Read as a whole, the article gives an impression that MCX was fixing the regulatory system by taking ::: Downloaded on - 09/06/2013 15:22:06 ::: 5 advantage of faulty regulatory system. The article does give an impression that the action of FMC in preventing NCDEX from cutting the prices was taken for the benefit of the complainant and that it was fixing the FMC. If the complaint is read as a whole, the view taken by the Magistrate that prima facie that the article amounts to a defamation is a possible view on facts. The action of the Magistrate of issuing of a process, therefore, cannot be faulted on this ground.

7. As regards the second contention, relying upon a decision of the Supreme Court in Rajendra Kumar Sitaram Pande & ors. Vs. Uttam & Anr. , (1999) 3 SCC 134, Mr.Gupte submitted that even at the stage of issuance of process, the Magistrate was required to consider whether the case falls under any of the exception to section 499 of the IPC. In any event in exercising of its jurisdiction u/s.482 of the Code of Criminal Procedure (for short "the Code"), the High Court is required to consider the defence of the applicant that he was covered by exception 3 and 10 of the IPC. As the applicant was excepted by exceptions 3 and 10 of the IPC, the High Court must quash the order of issuance of process.

8. In Rajendra Kumar (supra), the accused challenged the order of ::: Downloaded on - 09/06/2013 15:22:06 ::: 6 the Magistrate for issuance of a process u/s.500 of the IPC by filing a revision before the Sessions Court. The Sessions Court allowed the revision and quashed the order of the Magistrate. The order of the Sessions Court was challenged before the High Court on the ground that order of issuance of the process was only interlocutory and the Sessions Judge could not have interfered with the order. On appeal, the Supreme Court set aside the order of the High Court holding that the order of the Magistrate was not interlocutory and the High Court erred in setting aside the order of the Sessions Judge on the ground that he had no jurisdiction to interfere in an interlocutory order.

Thereafter, instead of remanding the matter back for reconsideration on merits. The Hon'ble Supreme Court decided to consider by itself whether the allegations in the complaint read with a report of the Treasury Officer which was called for by the Magistrate u/s.202(1) of the Code before issuance of the process, made out the offence u/s.500 or not. Relying upon the report of the Treasury Officer which indicated that pursuance to a complaint made by the accused to the Treasury Officer against the complainant that he had come to the office in drunken state and abused the Additinal Treasury Officer, the complainant was found guilty, the Supreme Court held that the case was clearly covered by exception 8 to section 499 of the IPC. The Supreme ::: Downloaded on - 09/06/2013 15:22:06 ::: 7 Court did not lay down a law that in a petition u/s.482, the High Court is required to consider the probable defences which the accused may raise at the trial that the case falls under any of the exceptions to section 499 of the IPC.

8. Mr.Desai, learned advocate appearing for the complainant invited my attention to the three decisions of the Supreme Court viz. (i) Balraj Khanna & ors. Vs. Moti Ram, AIR 1971 SC 1389 (ii) Sewakram Sobhani Vs. R.K. Xaranjiya 1981 Cr.L.J. 894 and M.N. Damani Vs. S.K. Sinha, 2001 Cr.L.J. 2571 and submitted that at the stage of issuance of process the Magistrate is not required to examine the probable or possible defences of the accused. At the stage of issuance of process the accused has no right of audience, though he may remain present in the court and observe the proceeding. Consequently his defence need not be considered by the Magistrate at that stage.

9. The case of Sevakram (Supra) was decided by a three Judge Bench of the Supreme Court. The issue was whether the High Court was right in quashing the prosecution of the respondent Mr.R.K.

Karanjiya Chief Editor of the Weekly Blitz for an offence punishable u/s.

500 of the IPC for publication of a news item in the paper, which was ::: Downloaded on - 09/06/2013 15:22:06 ::: 8 per-se defamatory, on the ground that he was protected under 9 th Exception of section 499 of the IPC. Chinnappa Reddy (one of the Hon'ble Judges belonging to the majority view) in paragraph no.18 of the decision after posing several questions which would arise for consideration of defence at the trial held that the stage for deciding those questions would not arise at the stage of issuance of process. The questions of "good faith" and "public good" which form part of exception 9 could be decided only after the trial. Only after the plea of the accused was recorded and only at the trial it could be considered whether the article was published in good faith and public good. The decision lays down that whether the case falls under any exception to sec.499 IPC could only be decided after the plea was recorded and at the trial and not before.

10. Even earlier, in Balraj Khanna (supra) the Supreme Court had taken the same view. In paragraph no.30, the Supreme Court has observed:-

In our opinion, the question of the application of the Exceptions to Section 499, I.P.C does not arise at this stage. Rejection of the complaint by the Magistrate on the second ground mentioned ::: Downloaded on - 09/06/2013 15:22:06 ::: 9 above cannot be sustained. It was also unnecessary for the High Court to have considered this aspect and differed from the trial Magistrate. It is needless to state that the question of applicability of the Exceptions to Section 499, I.P.C as well as other defences that may be available to the appellants will have to be gone into during the trial of the complaint.

11. In M.N.Damani (supra) which is decided after the Rajendra Kumar's case the Supreme Court has in paragraph no.7 observed:-

"Assuming that the imputations made could be covered by exception 9 to Section 499, IPC, several questions still remain to be examined -
whether such imputations were made in good faith. In what circumstances, with what intention, etc. All these can be examined on the basis of evidence in the trial."

12. Section 105 of the Evidence Act says that when a person is accused of an offence, the burden of proving the existence of circumstances proving that the case falls within any of the general exceptions in the Indian Penal Code or within any special exception or ::: Downloaded on - 09/06/2013 15:22:06 ::: 10 proviso contained in any other part of the same Code, or any other law defining the offence is upon him and the Court shall presume the absence of such circumstances. Thus at the stage of the issuance of the process the Magistrate if satisfied that the allegations in the complaint, taken at their face value, do construe an offence and there is a prima facie material in support of them can issue process and is not required to consider whether the case falls in any of the exceptions. That stage would arise after the plea is recorded and at the trial. The burden of proving that the case falls under any of the exceptions is on the person claiming the exception.

13. Before parting, I would refer to the arguments of Mr.Gupte that the applicant is an economist of repute and therefore he must be presumed to have written the article in good faith and to educate the people. Firstly there is no presumption that eminent and/or learned people would write articles only for educating the public at large and in good faith. Experience has shown otherwise. Take the present case.

The applicant was a member of the board of directors of "NCDEX"

which is a rival exchange competing with the business of MCX, the complainant. In the complaint, the complainant has alleged that the article in question was written with malafide interest. The complaint ::: Downloaded on - 09/06/2013 15:22:06 ::: 11 states that in the past, on 17th May 2006, the applicant had written an article defamatory of the complainant. The complainant had then issued a notice on 14th June 2006 and called upon the applicant to cease and desist from indulging in a mallacious campaign against the complainant failing which it would be required to take appropriate legal proceedings. The applicant then kept quiet for more than two years and wrote the article in question on 4th February 2009. The article was written at a time when the complainant was contemplating a public issue of its shares. The timing of the article such as to harm the complainant at the time of public issue. The article in question bore a sub title "MCX vs NCDEX tussle shows why finance needs smart monitors". The sub-title as well as the allegations in the article show that there was a competition, if not a tussle between MCX and NCDEX and the applicant was campaigning for a rival exchange and condemning the complainant. The applicant imputed motives to "FMC" when he wrote in the article: "The recent episode of FMC preventing NCDEX from cutting periods is an example: the only beneficiary of FMC's action is the incumbent MCX (complainant), which aspire to do an IPO". The criticism of Mr.Desai that the article was motivated and was written to harm the complainant and put hinderance in its plan of public issue of shares needs to be investigated ::: Downloaded on - 09/06/2013 15:22:06 ::: 12 at the trial while considering the applicants defence that the case falls within exception 3 or 10 to sec.499 of the IPC as contended by the applicant.

14. For these reasons, there is no merit in the application which is hereby dismissed.

(D.G. KARNIK,J.) ::: Downloaded on - 09/06/2013 15:22:06 :::