Harvest Securities Pvt. Ltd. & ... vs Bp Singapore Pvt. Ltd & Anr.
2014 Latest Caselaw 5654 Del

             *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                          Date of decision: 11th November, 2014.

+      CS(OS) No.103/2013, Counter Claim No. 29/2013 & IAs
       No.14636/2013 (u/O XXXIX R-1&2 CPC) & 16579/2013 (u/O XI
       R-1 CPC)
       HARVEST SECURITIES PVT. LTD. & ANR.           .... Plaintiffs
               Through: Mr. Avi Singh and Mr. Subhiksh, Adv.

                                          Versus
    BP SINGAPORE PVT. LTD & ANR.             ..... Defendants
             Through: Mr. Sandeep Sethi, Sr. Adv. with Mr.
                      Ananya Kumar & Ms. Pragya Chauhan,
                      Advs.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.

The two plaintiffs have instituted this suit pleading:-

(i) that the plaintiff no.2 Shri Rohit Vedhara was posted in the

India-based office of the defendant no.1 i.e. with the defendant

no.2 BP India Services Private Limited and the plaintiff no.2

himself is the Managing Director of the plaintiff no.1 which,

relying on the experience and goodwill of the plaintiff no.2, is

carrying on business of providing consulting services for oil

and gas industry;

(ii) that the defendant no.1 is a company incorporated under the

laws of Singapore and is engaged in the business of global oil

integrated supply and trading for the Asian region including

India; the defendant no.2 is a company incorporated in India

and hosts those employees of the defendant no.1 who are

involved in the global oil trading work of the defendant no.1

and who are deputed in India to manage and carry out the India

related work of the defendant no.1;

(iii) that the plaintiff no.2 was working for the defendant no.1 and

providing his services in managing the defendants no.1‟s India-

based oil trading and marketing business; however for tax

saving purposes, the plaintiff no.2 was deputed to the defendant

no.2 from whose offices he performed his work, almost

exclusively on behalf of the defendant no.1;

(iv) that the plaintiff no.2 for 12 years prior to 2001 was working

for British Petroleum in Europe though his employment was

with a group company „BP International Services Company,

USA‟; with effect from the year 2003, the employment of the

plaintiff was shown with the defendant no.2 while still working

for the defendant no.1 in Singapore, but technically on a BP

International employee contract, the plaintiff no.2 was

managing the India-based team of the defendant no.1 from the

last quarter of the year 2006, as a „UK expatriate‟ (sic) ; in

2007, the plaintiff no.2 was relocated / transferred to India by

the defendant no.2, without any change in his contract or scope

of work; however the defendant no.1 continued to pay part of

the plaintiff no.2‟s compensation directly in a bank account in

Singapore and / or in United Kingdom at his discretion and

remaining part of compensation was paid by the defendant

no.2; the plaintiff no.2 however was working exclusively for

the defendant no.1 and exclusively on the directions of the

defendant no.1;

(v) on 5th May, 2009 the defendant no.1 (and not the plaintiff‟s

formal employer, defendant no.2) issued a notice for

compliance inquiry into alleged violations of travel policy and

offensive or insulting behavior by the plaintiff no.2; however

no allegations of insider trading or conflict of interest were

made in the said notice to the plaintiff no.2;

(vi) the plaintiff no.2 submitted a reply;

(vii) one Mr. Raymond Hoefer, an employee of the defendant no.1

who co-ordinated the disciplinary proceedings pursuant to the

above said notice dated 5th May, 2009 issued a Report dated

15th May, 2009; a notice was again issued to the plaintiff no.2

by the defendant no.2 on 12th August, 2009 reiterating the same

charges as in the notice dated 5th May, 2009 and additionally

accusing the plaintiff no.2 of insider trading and conflict of

interest;

(viii) though hearings were held in Singapore on 21 st August, 2009

and 15th September, 2009 but in violation of the principles of

natural justice and due process and in a pre-determined fashion

and which led to suspension and subsequently the termination

(vide letter dated 18th September, 2009) of the plaintiff no.2;

(ix) the plaintiff no.2 protested against the said termination;

(x) that from the year 2010 till the institution of the suit on 16 th

January, 2013, the defendant no.2, without any basis had sought

to recover "dues" from the plaintiff no.2; and,

(xi) "it has come to the knowledge of the plaintiff no.2 in talks with

others in the industry, and on one occasion when he was

interviewing for another position; that the defendants

themselves, and through their agents, have been publishing

slanderous and / or libellous statements in regard to the

plaintiff no.2; these slanderous and / or libellous statements

have resulted in the plaintiff no.2‟s reputation and goodwill

being tarnished and caused economic loss to both the

plaintiffs".

The plaintiffs have accordingly instituted this suit for the reliefs of:-

A. declaration that the allegations "concluded" qua the plaintiff no.2 in the letter of termination dated 18th September, 2009 and 9th January, 2010 which was issued by the defendant no.2 to plaintiff no.1 are wrong, illegal, without any basis and incorrect;

B. declaration that the two defendants are jointly and severally liable for breach of employment contract and tortuous liability in the inquiry and termination and defamation;

C. for permanent injunction and mandatory injunction restraining the defendants from causing any defamation and damage to the reputation and goodwill of the plaintiffs including by publishing derogatory, libellous and defamatory remarks or content about the plaintiffs in print, electronic or

other media and from passing slanderous statements against the plaintiffs thereby causing injury and irreparable loss to the plaintiffs; and, D. for recovery of Rs.20 lacs jointly and severally from the defendants on account of plaintiff‟s damages, losses, expenses, consequential damages, loss of goodwill etc. arising out of the defendants no.1 & 2‟s breach of contract, negligence, tortuous conduct including negligence and recklessness, that resulted in loss / damages.

2. Summons of the suit were issued. The two defendants have filed their

separate written statements and the defendant no.2 has also filed a counter

claim for permanent injunction, restraining the plaintiffs from disclosing any

confidential information, documents, communications, data belonging to the

defendant no.2 to any third party and for mandatory injunction directing the

plaintiff no.2 to return all such confidential information, e-mails, data, hard-

drive, documents etc. Replications to the written statement, written

statement to the counter claim and replication to the written statement to the

counter claim have also been filed but for the present purposes need is not

felt to advert thereto.

3. Vide order dated 13th September, 2013 in the suit, the alleged

confidential documents referred to in Annexure-A to the counter claim of the

defendant no.2 were ordered to be placed in a sealed cover. Vide order dated

8th October, 2013 the application of the plaintiffs for interim relief

restraining the defendants from publishing, printing any material against the

plaintiffs was disposed of on statement of the counsel for the defendants that

the defendants had not defamed the plaintiffs and have no intentions to do so

in future as well. The plaintiffs along with the suit filed an application

seeking permission to deposit in this Court in a sealed cover a hard-drive

which the plaintiff no.2 was allowed to keep by his immediate supervisor at

the defendant no.1 and stated to be part of the computer system on which the

plaintiff no.2 used to work and operate while working at the office of the

defendant no.1. Vide order dated 8th October, 2013 it was directed that the

said hard-drive placed in this court in a sealed cover shall be de-sealed and

two copies thereof shall be made with one copy to be provided to the

plaintiffs and the other to the defendants. Though the plaintiffs had also filed

an application for appointment of a Local Commissioner to inspect the

e-mails, communications, employee database and other information stored

on hard-drive of computer systems maintained by the defendant no.2 at its

office at New Delhi but withdrew the said application on 8 th October, 2013.

The defendant no.2 has filed IA No.14636/2013 for interim injunction

restraining the plaintiffs from disclosing the confidential information. The

plaintiffs have filed IA No.16579/2013 under Order 11 Rule 1 of the CPC

for leave to deliver interrogatories to the defendants with direction to the

defendants to reply the same.

4. The aforesaid application of the plaintiffs for interrogatories was

listed before this Court for hearing on 10th March, 2014 when the following

order was passed:-

"1. During the hearing of this application, it has transpired that the claim of the plaintiffs inter alia is for compensation for slander. A perusal of the plaint shows that the plaintiffs in para No.35 of the plaint have pleaded that the defendants have published slanderous and / or libellous statements in regard to the plaintiff No.2 and which have resulted in the plaintiff‟s No.2 reputation and goodwill being tarnished and caused economic loss to both the plaintiffs. None of the other paragraphs of the plaint also plead as to what was the slanderous / libellous statement.

2. Upon the same being put to the counsel for the plaintiffs, he has drawn attention to the documents at pages No.127 to 130 which are the communications of non-parties to the suit to the plaintiffs to the effect that the defendants and their officials had made slanderous statements about the plaintiffs. The counsel for the plaintiffs on the basis thereof states that the plaintiffs were in the plaint not required to disclose what was the slanderous / libellous statement for which compensation is claimed.

3. It is also stated that one of the interrogatories sought to be served by the plaintiffs on the defendants is as to what slanderous / libellous statements, the defendants / their officials made qua the plaintiffs to the persons who had sent the communications aforesaid to the plaintiffs.

4. I am unable to agree. As far as my understanding goes, without the plaintiffs in the plaint pleading the slanderous / libellous statement for which compensation is claimed, the defendants have no opportunity to respond thereto. The defendants are required to file the written statement to the pleas in the plaint and not qua the documents even if served on the defendants along with the plaint. I am also of the prima facie view that such pleas would be a material fact within the meaning of Order 6 Rule 2 of the CPC and which are necessarily required to be as per Rule 4 of Order 6 of the CPC. The same would also be a fact constituting a cause of action within the meaning of Order 7 Rule 1 of the CPC.

5. As far back as in Nannu Mal Vs. Ram Prasad AIR 1926 Allahabad 622 it was held that a plaint in a case of defamation ought to allege not only the publication, or set out not only the words, but that they were published or spoken to, at any rate, some named individuals at a particular time and place specified in the plaint and in the absence thereof is vague and liable to be struck out. Similarly, in Brijlal Prasad Ramcharan Sharma Vs. Mahant Laldas Guru Gautamdas Bairagee AIR 1940 Nagpur 125 it was held that without pleading the names of persons to whom or in whose hearing slanderous statements were made and setting out the words which were spoken, no case for compensation for defamation can be said to have been made out. Else, for general principles in this regard, reference can be made to Ram Sarup Gupta Vs. Bishun Narain Inter College (1987) 2 SCC 555 and Kalyan Singh Chouhan Vs. C.P. Joshi (2011) 11 SCC 786.

6. As far as the argument of the counsel for the plaintiffs, of the plaintiffs serving interrogatories in this respect on the defendants is concerned, it has been put to the counsel for the plaintiffs whether in the event of the defendants taking a stand that they had not made any slanderous / libellous statement qua the plaintiffs, the plaintiffs would be willing to withdraw the said claim.

7. The counsel for the plaintiffs states that he will not and would produce the witnesses to whom such slanderous / libellous statements were made by the defendants / their officials.

8. I am prima facie of the view that aforesaid amounts to the plaintiffs, after institution of the suit, conducting a roving and fishing inquiry and which is not the scope of interrogatories, the purport whereof is to limit the trial.

9. This Court in Tarun Kumar Vs. Ajay Kumar 61 (1996) DLT 174 held that interrogatories cannot be allowed to be delivered in case they are in the nature of making fishing inquiries from the adversary; interrogatories must be confined to facts which are relevant to the matters in question in the suit.

10.It has also been asked from the counsel for the plaintiffs as to how, in the absence of any material plea qua the claim of compensation for defamation, an issue within the meaning of Order 14 Rule 1 of the CPC on the said aspect can be said to arise.

11.It is deemed appropriate to given an opportunity to the counsel for the plaintiffs to address on the said aspect.

12.List on 12th March, 2014, as sought."

5. The counsels have been heard further.

6. Though I have, as is customary, observed hereinabove that the

counsels have been heard but the counsel for the plaintiffs had little to say to

controvert the aforesaid prima facie opinion expressed in the order dated 10th

March, 2014 except for stating, (i) that during trial, the witnesses of the

plaintiffs would depose as to what slanderous / libellous statements were

made by the defendants against the plaintiff no.2; (ii) that the plaintiffs have

claimed compensation of Rs.20 lacs not only for such slanderous / libellous

statements but also for breach of contract by the defendants by terminating

the employment of the plaintiff no.2; (iii) that the plaintiffs have also sought

the relief of declaration that the reasons for which the defendants have

terminated the services of the plaintiffs are wrong, illegal, without any basis

and incorrect; and, (iv) that the plaintiffs have also sued for permanent

injunction, and thus the suit cannot be dismissed at this stage without trial.

7. Per contra, the senior counsel for the defendants placed reliance on R.

Rajagopal Vs. J. Jayalalitha AIR 2006 Madras 312 (DB) where, while

dealing with an application for interim injunction in a suit for recovery of

damages for defamation and for injunction it was held that in a libel action

defamatory words must be set out in the plaint where the words are per se or

prima facie defamatory, and where the defamatory sense is not apparent on

the face of the words, the defamatory meaning i.e. the innuendo, must also

be set out in clear and specific terms and that in the absence of these

necessary averments, the plaint would be liable to be rejected on the ground

that it does not disclose any cause of action.

8. I have already hereinabove in paragraph 1(xi) reproduced the only

paragraph in the plaint i.e. paragraph no.35 in which the plea of the

defendants having published slanderous and /or libelous statements in regard

to the plaintiff no.2 has been taken.

9. The plaintiffs, in the plaint, apart from stating that the defendants have

made slanderous and libelous statements qua the plaintiff no.2, have not

stated anything more. The question posed to the plaintiffs was whether

without the plaintiffs pleading what are the slanderous and / or libellous

statements on which the suit is based, the suit can be entertained and

whether such slanderous and libellous statements can be permitted to be

disclosed by the witnesses to be examined by the plaintiffs. No reply to the

said question has been given by the counsel.

10. I may in this regard elaborate on the documents at pages 127 to 130

of the Volume-I of the documents file to which reference was made by the

counsel for the plaintiffs during the hearing on 10 th March, 2014 and as

recorded in the order of that date.

10A. The document at page 127 is an e-mail dated 21st February, 2012 of

one Mr. Peter Henry to the plaintiffs to the effect that he in the capacity of a

recruitment consultant had introduced the plaintiff no.2 to a leading global

commodity trading group on 23rd September, 2009 and though the

prospective employer had shown interest in employing the plaintiff no.2 but

after making inquiries from the defendants, in specific relation to the manner

in which the plaintiff no.2 left the defendants, and the negative comments

from the people of the defendants, changed its mind and withdrew interest in

recruiting the plaintiff no.2.

10B. The document at page 128 is an e-mail dated 6th February, 2012 of

one Shri Srikanth Venkatraman earlier working with British Petroleum and

to the effect that all the employees of British Petroleum were aware of the

situation with regard to the departure of the plaintiff no.2 and what he was

accused of.

10C. The document at page 129 is an e-mail dated 19th October, 2011 of

one Shri Trishul Seth, also an ex-employee of British Petroleum, to the

effect that others then still working in British Petroleum had informed him

of the departure of the plaintiff no.2 from British Petroleum as a result of

plaintiff no.2 engaging in non-compliant behavior.

10D. The document at page 130 is an e-mail dated 9th September, 2009 of

the plaintiff no.2 to one Mr. Moutrie Andrew G asking him to give reference

of someone in Reuters India who can deny the rumour prevalent in that

organization of the plaintiff no.2 having been suspended.

11. As would be obvious from the above, the said documents also, even

if allowed to take the place of pleadings, do not advance the case of the

plaintiffs any further save for showing that the other employees of the

defendants were in the know of the reason for termination of employment of

plaintiff No.2 and that the defendants, when approached by the prospective

employers of the plaintiff No. 2 also were disclosing the said reasons; the

said documents also do not contain the allegedly slanderous and libelous

statements attributed to the defendants and on which the case of the

plaintiffs is premised.

12. I am therefore of the view that the principles as enunciated in the

judgments (supra) and with which I respectfully concur, apply and the plaint

so far as premised on the cause of action, of the defendants having defamed

the Plaintiff No.2, does not disclose any cause of action and is liable to be

rejected. Evidence, to be led, cannot be a substitute for pleadings. Rejection

of plaint, on the ground of not disclosing cause of action, cannot be saved by

contending that it will be disclosed in evidence.

13. I add, that Plaintiff No.1 is merely stated to be a company of which

Plaintiff No.2 is the managing director; even if it were to be held that

plaintiff No.1 is a closely held company of plaintiff No.2, the plaintiff No.1

being a juristic person and having a identity distinct from plaintiff No.2,

cannot possibly have any cause of action from the defamation even if

pleaded of the plaintiff No.2 and no reason whatsoever for the plaintiff No.1

joining in the suit, claiming reliefs with respect to termination of

employment and defamation of the plaintiff No.2 has been given / pleaded.

14. I further add that though the other documents filed by the plaintiffs are

voluminous but they concern the activities of the defendants and the record

of the disciplinary proceedings held prior to the termination of the plaintiff

no.2.

15. I have also wondered whether the action of the defendants of

disclosing to the other employees and prospective employers of the plaintiff

No.2 the reasons for termination of employment of the plaintiff No.2 can be

said to be per se defamatory of the plaintiff No.2. The consequential

question is whether the defendants were required to or owed a duty to the

other employees and prospective employers of the plaintiff No.2 to make

such disclosure and if so to what effect, i.e. whether then such disclosure

was a privileged communication and which constitutes a defence to a claim

based on defamation.

16. Let us first see the reasons for termination of employment of the

plaintiff No.2. The letter dated 18th September, 2009 of the defendant no.2,

of termination of employment of the plaintiff no.2, is titled "Private &

Confidential" and informs the plaintiff no.2 that the disciplinary proceedings

panel had found all four charges against the plaintiff no.2 satisfied, namely,

that the plaintiff no.2:-

"1. breached duly notified rules or instructions in that you have either abused or willfully disregarded the BP Travel Expenses Policy and code of Conduct with regard to personal travel expenses;

2. profited, or attempted to profit, from dealing in shares in CALS Refineries Limited (CALS) on the basis of „inside information‟ (information that was not publically known and would affect the price of those securities if made public);

3. otherwise failed to avoid a conflict of interest in the negotiations with CALS by using for your own profit confidential and sensitive information obtained directly through acting in commercial negotiations for BP; and

4. acted unlawfully with regard to use of the inside information described above."

and accordingly dismisses the plaintiff no.2 from employment.

17. It is not the plea of the plaintiffs that the defendants had leaked the

letter dated 18th September, 2009 (supra) of termination of employment of

the plaintiff no.2 and which is marked "Private & Confidential" and which is

addressed only to the plaintiff no.2, to any other person and thereby defamed

or maligned the plaintiff no.2. The only case as aforesaid is, that other

employees of the defendants are aware of the reasons for which the

employment of the plaintiff no.2 was terminated and that the defendants

when contacted by a prospective employer of the plaintiff no.2 to check the

credentials of the plaintiff no.2, have given a negative report of the plaintiff

no.2. What we have to determine is whether the same can constitute the

defamation, for the suit to be put to trial.

18. I am of the view that the mere fact that other employees of the

defendants are aware of the reason for termination of employment of the

plaintiff no.2 cannot per se constitute defamation, without the plaintiffs

specifically averring that the defendants, without being required to make the

other employees aware, have, with an intent to malign and defame,

published the details of the reasons for which the plaintiff no.2 has been

removed from employment. No such pleas also exist in the plaint. In the

normal course of human behavior and conduct, when one of several

employees of an organization suddenly leaves, the others are bound to get

curious and merely because they, out of such curiosity, learn or assume the

reasons for their colleague leaving, cannot make the employer liable for

compensation for defamation. Rather, in my opinion, the employer is bound

to inform them of such reasons, to avoid speculation and resultant unrest in

the organization affecting its business and to inculcate faith in the employer.

19. As far as the other aspect, of the defendants when contacted by the

prospective employers of the plaintiff no.2 to check the antecedents /

credentials of the plaintiff no.2 giving a negative report of the plaintiff no.2,

I am of the view that such inquiries, made by prospective employers from

the earlier employer, of the person whom they are considering to employ,

and honest response thereto are essential / necessary for trade and business

to flourish, specially for professionally managed organizations, the very

functioning whereof is dependent on each of their officials on his / her own,

without being under the watch of any owner / proprietor of the organization,

conducting the affairs of the organization diligently and honestly. If it were

to be held that the ex-employer is barred, when approached by prospective

employers, from expressing its opinion of the merits / de-merits / character /

acumen of an ex-employee and / or that a prospective employer is not

entitled to so enquire from the ex-employer, the same would be against the

public policy and against the larger interest of such professionally managed

organizations. I see no harm in such enquiries being made and which remain

largely confidential in nature.

20. It cannot be lost sight of that the plaintiff no.2 had not challenged the

order of his termination and which had attained finality. It is also not as if

the termination of employment of plaintiff No.2 was per se illegal. Though

such contract of employment being a contract of private employment was by

its very nature terminable at any time but since the defendants / defendant

No.2 were / was terminating the employment of plaintiff No.2 on ground of

misconduct, procedure prescribed in law therefor, of conducting an internal

departmental enquiry, was followed and only upon such enquiry finding the

plaintiff No.2 guilty, was the letter of stigmatic termination of employment

issued. The plaintiff No.2 was satisfied therewith and did not challenge the

same, neither on the ground that the enquiry held was not in accordance with

principles of natural justice or procedure prescribed therefor nor on any

other ground. The grounds on which the defendants / defendant no.2 had

terminated the employment of the plaintiff no.2 thus remained unchallenged.

21. The defendants / defendant no.2, in my opinion as an ex-employer of

the plaintiff no.2 were entitled to, when contacted by the prospective

employers of the plaintiff no.2 to check the antecedents of the plaintiff no.2,

in a bona fide and honest manner express their opinion of the plaintiff no.2.

Such opinions held and formed by persons who have occasion to form such

opinions and which facilitate the forging / non-forging of new alliances /

partnerships are an integral part of our society and human relations and to

say that a person is not entitled, when owes a duty to express his opinion

about another, would be a grave infringement on the fundamental right of

the freedom of speech and expression. Such a view cannot be accepted. This

Court in V.K. Bagga Vs. O.P. Arora MANU/DE/9845/2006 held that if a

particular person has committed a misconduct, even a public notice

published thereof may not be defamatory as public good requires that such

imputation be made and published. Of course if the ex-employer indulges in

rumour mongering or acts mala fide and instead of bona fide and honestly

expressing opinion when approached by a prospective employer to check the

antecedents of an ex-employee, starts publically maligning the ex-employee

to one and all, the same would no doubt furnish a cause of action to the ex-

employee. I may notice that Section 499 of the Indian Penal Code, 1860,

while constituting defamation as an offence, also carves out exception with

respect to (i) imputation of truth which public good requires to be made or

published; (ii) expression in good faith of opinion respecting the conduct of

any person touching any public question and respecting his character; (iii)

censure passed in good faith by person having lawful authority over another;

(iv) preferring in good faith, accusation against any person by one having

lawful authority over that person; (v) imputation made in good faith by

person for protection of his or other‟s interest; and, (vi) caution intended for

good of person to whom conveyed or for public good. I find, the High Court

of Gauhati in Dr. Govind Ballav Goswami Vs. Meena Sharma

MANU/GH/0112/1997 to have held that employer‟s words of warning if

administered to an employee do not come within purview of defamation, in

whatever manner those words have been said until it is done in bad faith.

22. In Salmond and Heuston on the Law of Torts (20th edition), it is

explained while dealing with the section on qualified privilege under the

chapter on Defamation that on an occasion of qualified privilege a person is

entitled to make defamatory statements about another provided he is not

actuated by malice. The authors have further opined that the right of freedom

of speech prevails over the right of reputation but only to a limited extent.

Statements made in the performance of a duty or in the protection of an

interest, fairly made are described as occasions of qualified privilege. In my

opinion an ex employer owes a duty, to make a statement of his opinion of

the character, honesty and acumen of an ex employee to a prospective

employer. Similarly, an employer owes a duty to his other employees and it

is in the interest of other employees to inform them the reasons for the

termination of employment of another employee so that the other employees

are not unnerved from such termination, presuming it to be arbitrary and

whimsical.

23. Winfield & Jolowicz on Tort (17th Edition) in the section dealing with

defences to defamation and under the head "Qualified Privilege at Common

Law" have authored that the common law confers qualified privilege upon

statements by A to B about C which A is under a legal and moral or social

duty to communicate to B and which B has a corresponding interest in

receiving. A classic example given of duty and interest, is of the situation

where a former employer gives a reference on a former employee. Similarly

while explaining "what is an interest" it is mentioned that it is the

employer‟s interest to inform the workers about the reason for the dismissal

of a fellow worker.

24. Reference in this regard may also be made to Hunt Vs. Great

Northern Railway Company [1891] 2 Q.B. 189. The plaintiff therein was in

the service of the defendant and was dismissed on the ground of gross

neglect of duty. The defendant published the name of the plaintiff in a

printed monthly circular addressed to the other employees stating that he had

been dismissed and the nature of the offence for which he was dismissed. It

was held that the employer if of the opinion that an employee has done

things which if done by other employees also, would seriously damage the

business, has an interest in stating it to the other employees. It was further

held that the other employees to whom the statement was made also had an

interest in knowing that certain things were being treated by the employer as

misconduct and that if any of them should be guilty of such misconduct, the

consequence would be dismissal from service. It was yet further held that

where the defendant in an action for libel has an interest in the subject matter

of the communication and the person to whom the communication is made

has a corresponding interest, the occasion is privileged.

25. The House of Lords of United Kingdom in Spring Vs. Guardian

Assurance [1994] 3 All ER 129 (MANU/UKHL/0009/1994) was concerned

with the question whether one who supplies a defamatory reference about a

person in response to a request from a concern with which that person is

seeking employment, is liable in negligence to the subject of reference if it

has been complied with without reasonable care. It was inter alia held that

an employer possesses special knowledge derived from his experience from

the employee‟s character, skill and diligence in the performance of his duties

while working for his employer, and while providing a reference to a third

party in respect of the employee, does so not only for the assistance of the

third party but also for the assistance of the employee who necessarily has to

rely on the employer to exercise due skill and care in the preparation of the

reference. It was held that such an employer owes a duty to avoid making

untrue statements negligently or expressing unfounded opinions even if

honestly believed to be true or if honestly held; however there can be no

action for negligence if the statement is true.

26. In the facts of the present case the termination by the defendants /

defendant no.2 of the employment of the plaintiff no.2 on the ground on

misconduct had attained finality as aforesaid and had been accepted by the

plaintiff no.2. I do not see as to how the defendants can be said to have

defamed the plaintiff no.2 in communicating the said facts to the prospective

employers of the plaintiff no.2.

27. I find the view taken by the American Courts also to be the same. The

Court of Appeals for the 5th Circuit in Lawrence Frakes Vs. Crete Carrier

Corporation MANU/FEFT/0568/2009 held that a qualified privilege

extends to any communication by an employer about an employee made to a

person having a corresponding interest or duty in the subject matter of

communication and such qualified privilege acts as a complete defence to a

claim for defamation unless the employer‟s statement is made with actual

malice or the privilege is abused. It was yet further held that a statement is

made with actual malice when the statement is made with knowledge of its

falsity or with reckless disregard as to its truth. To the same effect are the

observations in Jonathon C. Mc. Intosh, DDS Vs. David Partridge, M.D.

Individually and In His Official Capacity MANU/FEFT/0606/2008, also of

the Court of Appeals for the 5th Circuit, where the disclosure by the

employer of the misconduct of the employee was to an association of which

the employee was a member. The Court of Appeals for the 7 th Circuit also in

Richard C. Delloma Vs. Consolidation Coal Company, and Bobby Brown,

Individually and as President of Consolidation Coal Company

MANU/FEVT/0441/1993 held that an employer may invoke a conditional

privilege to respond to direct queries by prospective employers. Similarly

the Court of Appeals for the 8th Circuit, in Jeffrey Scott Sherman Vs.

Rinchem Company, Inc., MANU/FEET/0175/2012 held that statements

made in the course of investigating or punishing employee misconduct are

privileged, based on the employer‟s interest in protecting against harmful

employees and being comunication made on a proper occasion and for

proper purpose as the employer has an important interest in protecting itself

and the public against dishonest or otherwise harmful employees. It was

further held that in context of employment recommendations, the law

recognizes a qualified privilege between former and prospective employers

as long as the statements are made in good faith and for legitimate purpose.

28. I reiterate that in the plaint in the present case there is no plea of the

defendants having disclosed to others anything other than what the plaintiff

no.2 in the departmental enquiry had been found guilty of.

29. Thus, on a reading of the plaint in the light of the aforesaid law I am

of the opinion that no case for recovery of any compensation for slander or

libel has been pleaded for the suit to be put to trial, at the cost of delaying

other deserving cases requiring trial.

30. The matter can be looked from another perspective. The limitation

provided in the Schedule to the Limitation Act, 1963, in Article 75, for

institution of a suit for compensation for libel is one year, commencing from

the date when the libel is published and in Article 76, for a suit for

compensation for slander, is one year commencing from the date when the

words are spoken or, if the words are not actionable in themselves, when the

special damage complained of results. The present suit as aforesaid was

instituted on 16th January, 2013. The letter dated 18th September, 2009 of

termination of employment of the plaintiff no.2, even if were to be said to be

libelous, is of much more than one year prior thereto and no action for

compensation on the basis thereof can be maintained. Similarly, the

reference in the documents (supra) at pages 127 to 130 is also to slanderous

statements made in the year 2009 and 2011 which again are more than one

year prior to the institution of the suit. The plaintiffs, in the cause of action

paragraph of the plaint state the cause of action to have accrued first on 18 th

September, 2009 and lastly in January / March, 2010 when the appeal stated

to have been preferred by the plaintiffs pursuant to the policy / code of

conduct was rejected. The claim for compensation for slanderous / libelous

termination appears to have been made without regard to the aspect of

limitation and is clearly barred by time.

31. As far as the other reliefs claimed by the plaintiffs are concerned, the

same also are premised on the termination of service and which is of a date

prior to three years from the institution of the suit. The plaintiffs have in the

plaint also claimed the suit to be for breach of contract of employment and

for declaration of the reasons for termination of employment to be bad. The

suit again has been filed without regard to the law of limitation. The counsel

during the hearing also could not point out which Article of the Schedule to

the Limitation Act would apply. The limitation provided in Article 55 for a

suit for compensation for breach of any contract is three years commencing

from the date when the contract is broken. According to the plaintiffs the

contract was broken on 18th September, 2009. The suit filed on 16th January,

2013 is beyond the said period of three years. The limitation provided in

Article 58 for a suit for declaration also is of three years commencing from

the date when the right to sue first accrues. The same again occurs on 18 th

September, 2009 when the employment of the petitioner no.2 was

terminated for the said reasons. Though the plaintiffs in paragraph 44 of the

plaint as aforesaid have stated that the cause of action arose in January /

March, 2010 when the appeal pursuant to the policy / code of conduct was

rejected but elsewhere in the plaint there is no reference to any appeal

against the termination of employment having been preferred by the

plaintiffs or the rejection thereof. The plaintiffs in the documents filed with

the plaint also have not filed copy of any such appeal or the order if any of

rejection thereof. The date even of the order of rejection of the appeal has

not been stated. The plaint otherwise proceeds on the premise of cause of

action having accrued on 18th December, 2009 and which would not have

been the case if the letter dated 18th September, 2009 of termination of

employment had not attained finality till the decision on the appeal. The

plaintiffs, by making a vague allegation in the plaint filed on 16 th January,

2013 of the cause of action having accrued in January / March, 2010 cannot

be permitted to have the suit put to trial. Thus the remaining claims in the

plaint are also palpably barred by time.

32. As far as the claim of the plaintiffs for restraining the defendants from

defaming the plaintiffs is concerned, the defendants having already given a

statement as aforesaid that they have not defamed the plaintiff no.2 and have

no intention in future also to defame him and with which statement they

have already been ordered to be bound. The defendants are hereby ordered

to be continued to be bound by the said statement notwithstanding the

disposal of this suit. There is thus no need to put the suit to trial for the

relief also.

33. As far as the counter claim of the defendant no.2 is concerned, the

senior counsel for the defendants has not raised any argument thereon. Even

otherwise it appears to have been filed as a counter blast to the suit. Had the

defendant no.2 had any bona fide apprehension against the plaintiff, the

defendants, immediately after the termination of the employment of the

plaintiff no.2 on 18th September, 2009 would have taken such an action. No

such action was taken till the written statement in the suit was being filed. I

therefore do not see any reason to keep the said counter claim also pending;

the same is dismissed.

34. Resultantly, both, the suit as well as Counterclaim are dismissed, save

that the defendants will remain bound as aforesaid.

No order as to costs.

Decree sheet be prepared.

RAJIV SAHAI ENDLAW, J.

NOVEMBER 11, 2014./„pp‟