Company can be prosecuted if it did not disown authorized agent’s defamatory statements: Supreme Court

The Supreme Court recently held that a company can be prosecuted for defamatory statements made by its authorized agent or Power of Attorney holder if it has not cautioned the agent against doing so or has not disowned such statements. [M/S Iveco Magirus Brandschutztechnik GmbH v. Nirmal Kishore Bhartiya & Anr].A Bench of Justices Bela M Trivedi and Dipankar Gupta added that there was no reason to nip a defamation case in the bud on the specious ground that an authorized agent is always supposed to act lawfully and not unlawfully..The Court was hearing a German company's appeal challenging the Delhi High Court's refusal to quash a trial court order summoning the company in a defamation case. The trial court had summoned the company in 2010 on a private complaint alleging that the company's agent had written defamatory letters against another bidder in a tender process. .In the appeal, the Supreme Court was also called upon to examine whether a magistrate can go beyond the allegations in a defamation complaint and consider exceptions to defamation under Section 499 of the Indian Penal Code (IPC) to decide on whether the complaint is frivolous. .In the verdict written by Justice Datta, the top court said that a magistrate, while deciding whether to issue process, can also prevent a frivolous complaint from triggering an unnecessary trial.“Since initiation of prosecution is a serious matter, we are minded to say that it would be the duty of the Magistrate to prevent false and frivolous complaints eating up precious judicial time,” it added.The Court said if the complaint warrants dismissal, the magistrate is statutorily mandated to record his brief reasons. However, it added that the same is not required when the court decides to issue process. “The requirement of recording reasons at the stage of issuing process is not the statutory mandate; therefore, the Magistrate is not required to record reasons for issuing process.".The Court explained that while issuing process is based on a prima facie satisfaction depending upon probability of complicity, the dismissal of complaint requires a higher degree of satisfaction.In the context of defamation complaints, the Court held there was no bar on a magistrate to consider whether any of the Exceptions to Section 499 (defamation) of Indian Penal Code are attracted, at the stage the court proceeds to issue process.“It is not the law that the Magistrate is in any manner precluded from considering if at all any of the Exceptions is attracted in a given case; the Magistrate is under no fetter from so considering, more so because being someone who is legally trained, it is expected that while issuing process he would have a clear idea of what constitutes defamation,” it added.The Court further observed that if the contents of the complaint and the supporting statements on oath as well as the reports of investigation or inquiry reveals a complete defence under exceptions to defamation, the magistrate would be justified to dismiss the complaint.“It would not amount to an act in excess of jurisdiction if such dismissal has the support of reasons,” the Court added..In the German company’s case, the Court said the trial court’s finding of a prima case having been made was not so outrageously illogical or in defiance of legal principles and acceptable standards.With regard to the appellant’s claim for benefit of Fourth Exception (Publication of reports of proceedings of courts) under Section 499 IPC, the Court said the company would be free to raise whatever defence is available to it in law during the trial. “This, in our opinion, is not the right stage to opine one way or the other and, therefore, we leave it open for being decided by the Trial Court in accordance with law,” it added, while dismissing the appeal.Advocate R Gopalakrishnan represented the appellant. Advocates Manoj D Taneja, Gauri Karuna Das Mohanty, Snehasish Mukherjee and Sunil Fernandes represented the respondent..[Read Judgment]