Madras High Court
M/S. Chemplast Sanmar Limited vs A. Vikram Suthakar on 4 March, 2021
C.S.No.287 of 2018
THE HIGH COURT OF JUDICATURE AT MADRAS
Date : 04.03.2021
CORAM:
THE HONOURABLE MR.JUSTICE R. PONGIAPPAN
C.S.No.287 of 2018
M/s. Chemplast Sanmar Limited .. Plaintiff
vs.
A. Vikram Suthakar .. Defendant
Civil Suit filed under Order IV Rule 1 of Original Side Rules read
with Order VII Rule 1 CPC praying for the following judgment and decree
against the defendant.
a) for a Permanent Injunction restraining the
Defendant, his men, servants, agents and/or any
person/persons claiming any right through and/or under
him from in any from in any manner writing and/or
publishing any letters either in print and /or in electronic
form to any Authority and/or persons(s) which are per se
false and/or defamatory as against the Plaintiff and/or its
Directors and/or employees;
b) to pay as damages of a sum of Rs.5,00,00,000
1/19
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C.S.No.287 of 2018
(Rupees Five Crores only) as compensation to the
Plaintiff for loss suffered by the Plaintiff due to
irreparable damage caused to the Plaintiff's name,
reputation and goodwill on account of the Defendant's
wilful act of making and publishing per se false and
defamatory allegations against the Plaintiff.
(c) to pay the Plaintiff the costs of this Suit
For Plaintiff : Mr. Sharanya Vaidhyanathan for
Mr.S. Raghunathan
For defendant : No appearance
Defendant set exparte
JUDGMENT
The suit is filed for directing the Defendant for a Permanent
Injunction restraining the Defendant, his men claiming any right in any
manner writing and/or publishing any letters either in print and /or in
electronic form to any Authority and/or persons(s) which are per se false
and/or defamatory as against the Plaintiff and/or its Directors and/or
employees; direct the defendant to pay damages of a sum of Rs.5,00,00,000
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C.S.No.287 of 2018
(Rupees Five Crores only) as compensation to the Plaintiff for loss suffered
by the Plaintiff due to irreparable damage caused to his name, reputation
and goodwill on account of the Defendant's willful act of making and
publishing per se false and defamatory allegations against the Plaintiff with
costs.
2.The brief facts of the case of the plaintiff are as follows:
2(a) The Plaintiff is a Public Limited Company and carries on
business inter alia as one of the leading manufacturers of PVC resins,
caustic soda, Chloro chemicals and refrigerant gases and during the course
of which over a period of time it has garnered immense goodwill and
reputation, both nationally as well as world wide owing to the high quality
of said products manufactured by it, and by maintaining the highest
standards of business ethics in all its business dealings vis-a-vis its
employees, customers, suppliers and shareholders. The manufacturing
facilities are located in India at Mettur in Tamil Nadu and Karaikal in
Puducherry and provides gainful employment to around 2500 persons. It
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C.S.No.287 of 2018
had an annual turnover of around Rs.3,125 Crores, for the year ending 31 st
March 2018.
2(b) Due to constant improvements, innovations and rationalisation
inter-alia by adopting and implement new technologies, the Plaintiff has
earned a good and valuable reputation not only among its customers but
also from all its stakeholders including raw material suppliers in India and
abroad. The Plaintiff has also built up an excellent track record in financial
market. It is therefore vital that its name and/or reputation is not tarnished
or sullied in any manner, as this could have serious repercussions by
prejudicially affecting the Plaintiff's name and reputation in industrial and
business circles and amongst the public.
2(c) The Defendant continuously publish wholly false and per se
defamatory allegations against the Plaintiff and continuous to cause the
Plaintiff's name and reputation inter alia by lowering its image not only in
the eyes of the Plaintiff and its Associate companies senior management
personnel, but also the general public and Government officials. The
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C.S.No.287 of 2018
Defendant has been making these per se highly false, defamatory and
disparaging publications against the plaintiff deliberately with the
knowledge and intent to cause incalculable damage to the Plaintiff's name
and reputation and it is with this unlawful intent and despite being fully
aware of these repercussions, the Defendant is persisting in publishing these
wholly false and defamatory allegations against the plaintiff.
2(d) The Defendant firm was carrying on business in Erode in the
purchase and sale of Chemicals and allied products and it was originally a
dealer of the Plaintiff's predecessor-in-interest for the marketing and sale of
caustic soda Lye and Caustic Soda Flakes and other allied produces. The
Defendant's firm the dealer of the Plaintiff was engaged in trading in few of
the products manufactured by the Plaintiff by buying the same from the
Plaintiff and selling it in the market. The plaintiff was a listed company. It
had around 29000 public shareholders. During March 2009, the Plaintiff
came out with a right issue offering 31,98,79,627 Equity shares of Rs.1/-
each, for cash, at a price of Rs.5/- per share to its shareholders. This Rights
issue was made in compliance with the provisions of the Companies Act,
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C.S.No.287 of 2018
1956, SEBI Regulations and other applicable laws. The Plaintiff's Holding
Company, M/s. Sanmar Holdings Limited, Chenai, had along with its
promoters at all times, held 75%of the Plaintiff's total paid up equity shares
capital and the remaining 5% was held by the public, which was being
traded in the Stock Exchanges. Mr.V.N.Ayyadurai, the Parter of the
Defendant firm had in his personal capacity participated in the said Right
issues and subscribed for and was allotted 60,00,000 Equity Shares at the
rate of Rs.1/- per equity share at a premium of Rs.4/- per equity share ans
for which he paid a sum of Rs.3.00 Crores as consideration.
2(e) After a lapse of 3 years, the Plaintiff's Holding Company
M/s.Sanmar Holdings Ltd., as well as the Plaintiff resolved to delist the
Plaintiff's shares from the Stock Exchanges in accordance with the
provisions contained in the Securities and Exchange Board of India (SEBI)
(Delisting of Equity Shares) Regulations 2009. These regulations provided
for a mechanism by which the promoters of the Plaintiff could buy the
shares held by the public. This offer was made in an around April 2012 to
the then existing shareholders of the Plaintiff. The rationale for the terms on
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C.S.No.287 of 2018
which the Delisting offer, as mentioned in the Offer letter dated 28.3.2012
issued by the Holding Company to the share holders to the plaintiff. This
offer for delisting of shares of the Plaintiff was made in the interest of the
public shareholders by providing them with an opportunity to exit at a fair
price. It was to be implemented as per the norms contained in the Delisting
Regulations laid down by SEBI. In terms of the said Regulations the
shareholders of the Plaintiff were provided with an opportunity to bid for
the sale of their respective shareholdings in the Plaintiff to Sanmar Holdings
Limited, the Plaintiff's Holding company,during the period 12.4.2012 upto
18.4.2012. The said V.N.Ayyadurai had of its own volition participated in
the Delisting Offer by agreeing to sell the shares held by him in the Plaintiff
to M/s. Sanmar Holdings Ltd., at the rate of Rs.7.20 per Equity share having
nominal value of Rs.1/- per share. The Shares that were held and
surrendered by V.N.Ayyadurai were in his personal name and as such
nothing to do with M/s.V.N.Ayyadurai, The Said Firm in Erode.
2(f) During the period when the Plaintiff was supplying the Said
Products to the Said Firm, a part of the supplies were being desptached from
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the Plaintiff's Kariakkal Plant, in Puducherry, it was treated as an inter-state
sale. The Said Firm was therefore required to furnish the Plaintiff with
Form-C. Such transaction were based on the Dealer's instructions either re-
directed and or delivered directly to the Dealer's customers, without the
Dealer taking physical delivery of the said products are classified as E-1
transaction under Sales Tax Act. In these instances, upon the Dealer
furnishing to the Plaintiff Form C along with other supporting documents,
the Plaintiff would furnish E-1 to the Dealers. Since the said Firm had
admittedly failed to furnish these documents fro some of the transactions, in
the manner as mandated in the Sales Tax Act, in spite of the Plaintiff
repeatedly calling upon the Said Firm to furnish the same vide
emails/letters, to enable the Plaintiff to issue the E-1 forms, the said Firm
had failed and neglected to do so. Due to the Said Firm's negligence in
furnishing the said documents the plaintiff was unable to furnish Form E-1
to the Said Firm. This obviously resulted in the Sales Tax Authorities
levying a penalty of Rs.51.38 Lakhs on the Said Firm. These facts would
clearly establish that there was no lapse on the Plaintiff's part.
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2(g) It was only upon receiving the aforementioned notice/assessment
orders from the Sales Tax Authorities, with regard to the levy of penalty,
that the Defendant had sine 03.06.2017 began writing to the Sales Tax
Authorities leveling false and per se defamatory allegations against the
Plaintiff inter alia holding the Plaintiff Responsible for the levy of the
penalty and accused the Plaintiff as having indulged in insider trading
activities of its shares.
2(h) Mr.V.N.Ayyadurai as the Plaintiff's Shareholder would not fall
under the definition of Specified Persons as per the Code of Conduct in
force. He was also not a person associated with the Plaintiff. He also did
not have any access to unpublished price sensitive information nor did he
trade in shares of the Plaintiff at any time other than by subscribing to the
Rights shares as per the Letter of Offer issued to the Shareholders and while
surrendering the Said Shares by participating in the Scheme for delisting.
Despite this, and not being involved in this transaction, the Defendant had
with an ulterior motive, chosen to level these serious per se highly
defamatory allegations against the Plaintiff as though it had violated the
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insider trading regulations and published these statements to third
parties/government officials, etc., causing irreparable damage to the
Plaintiff's name and reputation. The defendant was at no point in time a
shareholder of the Plaintiff, nor was he ever expressly authorised by the said
V.N.Ayyadurai in to act on his behalf, even though he was his son, with
regard to the transaction that had admittedly taken plea over 5years ago.
2(i) The Defendant had thereafter with the obvious malafide intent to
cause disrepute to the Plaintiff's name and reputation, had on 12.09.2017
made highly defamatory allegations against the Plaintiff to the Indo-Japan
Chamber of Commerce, an NGO, in which Mr.N. Kumar was an officer.
The only obvious reason for the Defendant to have chosen to address this
defamatory notice to the said NGO was due to Mr.N.Kumar belonging to
the Plaintiff's promoters family.
2(j) On 12.09.2017 the Defendant wrote to Mr.Visweswaran a
Director in M/s.Sanmar Engineering Technologies Ltd., which is the
Plaintiff's Associate Company alleging that the Plaintiff was involved in
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insider trading and in so doing had carried on unlawful activities which
needless to state is not only false but also per se defamatory. Copies of the
said letter containing these per se false and defamatory allegations against
the Plaintiff were marked to Ms.Madhurika Sankar, Mrs.Bhavani Kumar,
Mrs. Madhura Kumar Visweswaran and Mrs. Mayra Kumar Sarathy all of
whom belong to families of the Plaintiff's Promoters and all of whom are in
no way involved with the day to day management and operation of the
Plaintiff nor with regard to the transaction referred to the defendant, since
the plaintiff was and continues to be a professionally managed company.
2(k) On 17.10.2017 when the Plaintiff's counsel issued a notice to the
Defendant as instructed by the Plaintiff; on 13.11.2017 when the
Defendant's counsel replied to the Plaintiff Counsel's notice by reiterating
the said false and defamatory allegations against the Plaintiff; on
18.12.2017 when the Plaintiff's counsel issued a rejoinder to the Defendant's
counsel stating that on account of such unlawful publication of per se false
and defamatory allegations; on several dates based on the defamatory
publications made by the Defendant in Chennai where the Plaintiff has been
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put to irreparable loss and grave prejudice, which loss though incalculable
in monetary terms, as been quantified at Rs.5,00,00,000/-(Rupees five
crores only); where the Plaintiff continues to suffer irreparable damage and
prejudice on the account of publication of false and defamatory allegations
against the Plaintiff, the Plaintiff pray for Permanent Injunction restraining
the Defendant from writing or publishing any defamatory as against the
Plaintiff and or its Directors and employees and to impose damage of a sum
of Rs.5 Crores as compensation to the Plaintiff for the loss suffered by the
plaintiff due to irreparable damage caused to the Plaintiff's name, reputation
and goodwill on account of the Defendant's willful acts of making and
publishing per se false and defamatory allegations against the plaintiff with
costs.
3. Though several opportunities were given to the Defendant to file
written statement, neither the Defendant nor his counsel filed the written
statement. Hence, the matter is posted under the caption Undefended
Board. Even after also the Defendant side has not filed the written
statement and hence the defendant was set exparte on 10.09.2020 and the
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suit was referred to the Learned Master for recording Evidence.
4. On the side of the Plaintiff, the Authorised Signatory Mr.M. Raman
was examined as P.W.1 and marked Ex.P.1 to P.25. The exhibits marked on
the side of the Plaintiff are as follows:-
Plaintiff's side Exhibits:
S.No. Exhibits Date Description
1. P-1 03.03.2018 Original Board resolution issued
by the Plaitniff
2. P-2 01.04.2006 Photocopy of Partnership Deed of
M/s.V.N.Ayyadurai, Partnership
firm
3. P-3 01.04.2009 Photo copy of the Del Credere
Agency Agreement between the
Plaintiff and M/s.V.N.Ayyadurai
Parnership firm
4. P-4 01.04.2010 Original Del Credere Agency
Agreement between the Plaintiff
and M/s.V.N.Ayyadurai Parnership
firm
5. P-5 13.03.2009 Photo copy of extracts from the
letter of offer issued by the Plaitniff
to its shareholders for rights issue
of shares.
6. P-6 09.04.2009 Photo copy of renunciation of
shares in favour of
Mr.V.N.Ayyadurain in his
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S.No. Exhibits Date Description
individual name
7. P-7 27.04.2009 Photo copy of the allottement of
shares in favour of
Mr.V.N.Ayyadurai in his name
along with share certificate.
8. P-8 27.03.2012 Photo copy of Public
announcement for delisting of
shares issued by Sanmar Holdings
Ltd.,
9. P-9 28.03.2012 Photo copy of offer letter
delsiting/bid forms issued to public
shareholders.
10. P-10 20.04.2012 Photo copy of Post Officer Public
Announcement.
11 P-11 20.04.2012 Photocopy of the Report of
Integrated Enterprises Ltd.,
Registrar to the Office issued to
Manager to the Officer
12 P-12 25.04.2012 Photo copy of the Payment
instructions by Inga Capital Pvt.
Ltd.,
13 P-13 28.04.2012 Photo copy of the payment made in
favour of Mr.V.N.Ayyadurai –
Statemet of Bank Account of
Chemplast Shareholders' Benefit
Trust showing the debit.
14 P-14 31.03.2016 Copy of e-mail addressed by ICICI
Bank to the plaintiff reg.defeault in
payment by Mr.V.N.Annadurai
15 P-15 08.06.2017 Photo copy of letter dated
08.06.2017 from the Plaintiff to
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S.No. Exhibits Date Description
M/s.V.N.Ayyadurai, Partnership
firm along with the statement
calling for detail for E1 forms
16 P-16 29.07.2017 Photo copy of the letter from the
Plaintiff to M/s.V.N.Ayyadurai,
Partnership firm calling for
documents to furnish E1 forms.
17 P-17 03.06.2017 Photo copy of letter from
M/s.V.N.Ayyadurai, Partnership
firm to the Asst. Commr.of Sales
Tax, Erode.
18 P-18 --- Photo copy of the code of conduct
for prevention of insider trading in
the shares in compliance with SEBI
(Prohibition of Insider Trading )
Regulations, 1992.
19 P-19 10.07.2017 Photo copy of the letter from
M/s.V.N.Ayyadurai's legal counsel
to Asst. Commr.of Sales Tax
Erode.
20 P-20 12.09.2017 Photo copy of letter from
Defendant to the family members
of the Promoters of Plaintiff,
Chamber of Commerce, NGO, etc.,
21 P-21 17.10.2017 Photo copy of Notice dated from
the Plaintiff counsel to the
Defendant.
22 P-22 13.11.2017 Photo copy of the Reply notice
from defendant's counsel to the
plaintiff's counsel.
23 P-23 18.12.2017 Photo copy of the Rejoinder from
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C.S.No.287 of 2018
S.No. Exhibits Date Description
the Plaintiff's counsel to the
Defendant's counsel.
24 P-24 03.01.2018 Photo copy of the Reply dated
03.01.2018 to rejoinder from
defendant's counsel to the
plaintifff's counsel
25 P-25 --- Extract from books of accounts of
the Plaintiff – Accounts of
M/s.V.N.Ayyadurai, Erode.
Plaintiff's side witness: P.W.1. - Mr.M. Raman
5. Heard the learned counsel for the plaintiff and perused the records.
6. On going through the evidence given by the P.W.1 would disclose
that the Defendant continuously publishing wholly false and per se
defamatory allegations against the Plaintiff, and causing damages to the
Plaintiff's name and reputation and lowering its image in the eyes of
statutory authorities, public bodies, its service employees etc., From the
Plaint, evidence given by P.W.1 and documents exhibited on the side of
the Plaintiff are proved the case of the Plaintiff that the Defendant made
defamatory allegations continuously against the Plaintiff. Therefore, the
Plaintiff is entitled for the permanent injunction and damages.
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C.S.No.287 of 2018
7. With regard to damages the Plaintiff prayed for Rs.5,00,00,000/-
(Rupees Five Crores) in view of this Court it is on the higher side.
Considering the defamatory statements made by the Defendant continuously
against the Plaintiff and caused damages to the Plaintiff's name, reputation
and goodwill, this Court is of the view that Rs.50,00,000/- (Rupees Fifty
Lakhs only) compensation would be a reasonable amount.
8. Accordingly, the suit is partly allowed and the decree is passed as
follows:
(a) Granted Permanent Injunction restraining the
Defendant, his men, servants, agents and/or any
person/persons claiming any right through and/or under
him from in any from in any manner writing and/or
publishing any letters either in print and /or in electronic
form to any Authority and/or persons(s) which are per se
false and/or defamatory as against the Plaintiff and/or its
Directors and/or employees;
b) Defendant to pay as damages of a sum of
Rs.50,00,000/- (Rupees Fifty Lakhs only) as
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compensation to the Plaintiff for loss suffered by the
Plaintiff due to irreparable damage caused to the
Plaintiff's name, reputation and goodwill on account of
the Defendant's wilful act of making and publishing per
se false and defamatory allegations against the Plaintiff.
c) Defendant to pay the Plaintiff the costs of the Suit.
10. In the result, the Suit is Partly allowed with costs.
04.03.2021
Index : yes/no
Internet: yes
Speaking/Non-speaking order
ggs
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C.S.No.287 of 2018
R. PONGIAPPAN,J.
ggs
Judgment in:
C.S.No.287 of 2018
04.03.2021
https://www.mhc.tn.gov.in/judis/
