G.I. Retail Private Limited vs Goomo Orbit Corporate & Leisure

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 15.09.2020

CORAM

THE HONOURABLE MR. JUSTICE N. KIRUBAKARAN

AND

THE HONOURABLE MR. JUSTICE P. VELMURUGAN

O.S.A. Nos. 213 to 215 of 2019 In C.S. No. 194 of 2019

O.S.A. No. 213 of 2019 G.I. Retail Private Limited, Having its registered office at:

C-9, Thiru.Vi.Ka. Industrial Estate, Guindy, Chennai – 32, Tamil Nadu, Rep. by its Director, Mr. Ramu Annamalai ..Appellant

Vs.

1. Goomo Orbit Corporate & Leisure Travels (I) Private Limited, Office Number : 1003, Hallmark Business Plaza, SD Marg, Opposite Guru Nanak Hospital, Bandra East, Mumbai – 400 051.

Rep. by its Director.

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2. Hermes I Tickets Private Limited, Rep. by its Director, Mr.Manoj Kumar Sahu, Having its registered office at:

Unit No. 301, 302, 3rd Floor, Campus 3B, RMZ Millenia Business Park, 143, MGR Main Road, Perungudi, Chennai – 600096.

3. Wirecard AG, Einstelnring 35, Rep by its Chief Financial Officer, Alexander Von Knoop, Einstelnring 35,85609 Aschheim, Germany.

4. Emerging Markets Investments Fund – Fund 1A, Rep. by its Director, Rohit Kumar, Having registered office at:

5th Floor, Barkly Wharf, Le Canden Waterfron, Port Louis, Republic of Mauritius.

5. Mr. James Henry O’ Sullivan, C/o. Senjo Group #56, One Raffle Place, 048616 -Singapore.

6. Mr. Jan Marsalek,

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Einstelnring 35, 85609 Aschhelm, Deutschland, Germany. ..Respondents

Prayer : Appeal against the order dated 26.08.2019 made in A. NO. 3847/2019

in C.S. No. 194/2019.

O.S.A. No. 214 of 2019

G.I. Retail Private Limited, Having its registered office at:

C-9, Thiru.Vi.Ka. Industrial Estate, Guindy, Chennai – 32, Tamil Nadu, Rep. by its Director, Mr. Ramu Annamalai ..Appellant

Vs.

1. Mr. Jan Marsalek, Einstelnring 35, 85609 Aschhelm, Deutschland, Germany.

2. Hermes I Tickets Private Limited, Rep. by its Director, Mr.Manoj Kumar Sahu, Having its registered office at:

Unit No. 301, 302, 3rd Floor, Campus 3B,

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RMZ Millenia Business Park, 143, MGR Main Road, Perungudi, Chennai – 600096.

3. Wirecard AG, Einstelnring 35, Rep by its Chief Financial Officer, Alexander Von Knoop, Einstelnring 35,85609 Aschheim, Germany.

4. Emerging Markets Investments Fund – Fund 1A, Rep. by its Director, Rohit Kumar, Having registered office at:

th 5 Floor, Barkly Wharf, Le Canden Waterfron, Port Louis, Republic of Mauritius.

5. Mr. James Henry O’ Sullivan, C/o. Senjo Group #56, One Raffle Place, 048616 -Singapore.

6. Goomo Orbit Corporate & Leisure Travels (I) Private Limited, Office Number : 1003, Hallmark Business Plaza, SD Marg, Opposite Guru Nanak Hospital, Bandra East, Mumbai – 400 051.

Rep. by its Director. ..Respondents

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Prayer : Appeal against the order dated 26.08.2019 made in A. No. 4725/2019 in

C.S. No. 194/2019.

O.S.A. No. 215 of 2019

G.I. Retail Private Limited, Having its registered office at:

C-9, Thiru.Vi.Ka. Industrial Estate, Guindy, Chennai – 32, Tamil Nadu, Rep. by its Director, Mr. RAmu Annamalai ..Appellant

Vs.

1. Wirecard AG, Einstelnring 35, Rep by its Chief Financial Officer, Alexander Von Knoop, Einstelnring 35,85609 Aschheim, Germany.

2. Hermes I Tickets Private Limited, Rep. by its Director, Mr.Manoj Kumar Sahu, Having its registered office at:

rd Unit No. 301, 302, 3 Floor, Campus 3B, RMZ Millenia Business Park, 143, MGR Main Road, Perungudi, Chennai – 600096.

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3. Emerging Markets Investments Fund – Fund 1A, Rep. by its Director, Rohit Kumar, Having registered office at:

5th Floor, Barkly Wharf, Le Canden Waterfron, Port Louis, Republic of Mauritius.

4. Mr. James Henry O’ Sullivan, C/o. Senjo Group #56, One Raffle Place, 048616 -Singapore.

5. Mr. Jan Marsalek, Einstelnring 35, 85609 Aschhelm, Deutschland, Germany.

6. Goomo Orbit Corporate & Leisure Travels (I) Private Limited, Office Number : 1003, Hallmark Business Plaza, SD Marg, Opposite Guru Nanak Hospital, Bandra East, Mumbai – 400 051.

Rep. by its Director. ..Respondents

Prayer: Appeal against the order dated 26.08.2019 made in A. No.

4724/2019 in C.S. No. 194/2019.

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For Appellant :: Mr.Srinath Sridevan, for Mr.R.Udhaya Kumar in all OSA's

For Respondents :: Mr.Sankara Narayanan, Senior Counsel for Mr.S.V.Pravin Rathinam, for R1 in OSA.No.213/2019 & R6 in OSA.Nos.214 & 215/2019

Mr.P.H.Arvind Pandian, Senior Counsel for Mr.Anand Bhushan, for R3 in OSA.Nos.213 & 214/2019 & R1 in OSA.No.215/2019

Mr.J.Sivanandharaj, for Mr.EKK.Kumaresan, for R2 in all OSA's

Mr.C.Mani Shankar, Senior Counsel for Mr.Avinash Krishnan Ravi, for R6 in OSA.No.213/2019 for R1 in OSA.No.214/2019 for R5 in OSA.No.215/2019

COMMONJUDGMENT

(Judgment of the Court was delivered by N. KIRUBAKARAN,J.)

These appeals have been filed against the allowing of applications filed

nd th th by the respondents/2 , 5 and 6 defendants to revoke the leave granted in

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favour of the appellant to file a suit in C.S. No. (Commercial Division)

194/2019 praying for a decree of permanent injunction restraining the

respondents/defendants from making any representation that the appellant had

made any profit from the sale of share of Hermes other than the consideration as

rd per the share purchase agreement entered into between the appellant and the 3

nd defendant on 07.09.2015 and for a mandatory injunction directing the 2

defendant to withdraw the statements made to the public with respect to the

purchase of the shares of Hermes and for damages against the

respondents/defendants to pay a sum of INR 40 crores or for any higher amount

due to the defamatory and malicious act on their part.

2. For the sake of convenience, the parties are referred in the same

rank as stated in the suit.

3. The facts of the case are as follows:

The plaintiff filed a suit for injunction and damages against the

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st defendants. The 1 defendant is an Indian Company namely Hermes I Tickets

Private Limited initially owned by its promoters namely, Ramasamy and

Palaniappan along with minority shareholders of the Company. By virtue of

share purchase agreements dated 07.09.2015 and 16.09.2015, the plaintiff sold

st rd the shares of the 1 defendant to the 3 defendant in the year 2015. After

st rd rd purchase of the shares of the 1 defendant Company by the 3 defendant, the 3

st nd defendant is said to have sold shares of the 1 defendant company to the 2

defendant during the year 2015 for a huge value.

4. The plaintiff came to know about the said fact only when the then

st minority shareholders in the 1 defendant’s company issued a legal notice dated

04.04.2017 to the plaintiff during 2017. The minority shareholders claimed that

rd st the plaintiff and the 3 defendant conspired and sold the 1 defendant’s

nd company to the 2 defendant for a higher price and the same was suppressed by

the plaintiff. The basis for such a claim was due to a representation made by the

nd 2 defendant made on 27.10.2015 through a net press release. The reply notice

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was given on 17.05.2017 by the plaintiff through their counsel which invoked a

rejoinder legal notice dated 06.10.2017 from the minority shareholders.

5. Thereafter, the minority shareholders filed a suit for tortious claim

before the English Court on 26.01.2018 against the plaintiff. An ex parte

worldwide freezing order dated 14.03.2018 was issued against Ramasamy and

st Palaniappan, who are the promoters of 1 defendant company in the tortious

claim made by the minority shareholders. Karur Vysya Bank Limited, the

Bankers of the plaintiff company restricted its financial facilities to the plaintiff

company and also sought creditworthiness of the plaintiff.

6. In view of the aforesaid position, the plaintiff filed C.S. No.

192/2018 before this Court seeking anti-suit injunction against the minority

shareholders from proceeding with the tortious suit filed before English Court.

The said suit was rejected in O.S.A. Nos. 275 to 277 of 2018 by judgment dated

24.01.2019 directing the plaintiff/appellant to approach the English Court for

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appropriate relief and the same was confirmed by the Honourable Supreme

Court on 15.02.2019. The present suit is for a mandatory injunction directing

nd the 2 defendant to withdraw the misleading, malicious and defamatory

statements made to the public in respect of the purchase of shares of Hermes

and for damages against the respondents/defendants to pay a sum of INR 40

crores or levy any sufficient higher amount for defamatory and malicious act on

nd their part as the 2 defendant made a publication on 27.10.2015 in its website

st that it got the 1 defendant company along with other company from the

plaintiff/appellant herein and financial investors with capital increase in one of

the plaintiff’s subsidiary companies for a sum of Euro 230 million along with

earnout of 110 Euro.

7. According to the plaintiff, on account of the acts of such malicious

and defamatory misrepresentation dated 27.10.2015, the minority shareholders

st of the 1 defendant company filed tortious claim. Due to the acts of

nd misrepresentation and statements made by the 2 defendant, the plaintiff and

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promoters faced severe financial loss, apart from loss of reputation in the

business. The plaintiff’s Banker also restricted its financial facility to the

nd plaintiff company resulting in loss to the plaintiff company. Since the 2

defendant made misrepresentation through internet, which effect was felt in

Chennai, the present suit has been filed.

8. The plaintiff would state that the suit claim arises out of the sale of

st rd shares of the 1 defendant company to the 3 defendant and the subsequent sale

st rd nd of shares of the 1 defendant by the 3 defendant to the 2 defendant. Though

rd the 3 defendant is a company registered in Mauritius, it deals in sale of shares

nd th in several Indian Companies including the 2 defendant and the 6 defendant.

st The 1 defendant company was situated in Guindy, Chennai at the time of sale

rd of shares in 2015 to the 3 defendant. Two share purchase agreements dated

07.09.2015 and 16.09.2015 were executed at Chennai and the actual share

st transaction took place at Chennai apart from location of the 1 defendant

company at Chennai. The flow of fund for sale took place in Chennai. Several

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th e-mails and letters including letter dated 18.04.2018 were sent by the 5

defendant with respect to the role of plaintiff when the alleged transaction took

nd place in Chennai. The misrepresentation made by the 2 defendant, the plaintiff

st made hidden profit out of the aforesaid sale of shares of the 1 defendant in

rd 2015 to the 3 defendant was felt in Chennai as the plaintiff company is located

and doing business in Chennai. Karur Vysya Bank restricted its financial

facilities to the plaintiff company, thereafter, at Chennai. Making all the above

contentions, leave was prayed for and the same was granted to file the suit here.

9. Pursuant to grant of leave, suit was numbered.

th

10. After receiving the summons, the 6 defendant filed application

nd th No. 3847 of 2019, the 2 defendant filed application No. 4724/2019 and the 5

defendant filed application No. 4725/2019 seeking revocation of leave granted

st to the plaintiff on the ground that the sale of shares of the 1 defendant company

was a concluded transaction and the said transfer is not the subject matter of the

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suit. The above transaction did not give raise to cause of action for the suit

nd claim and holding of shares by the 2 defendant which is a third party to the

rd concluded contract between the 3 defendant and plaintiff is in question. That

apart, all the defendants are outside the jurisdiction of this Court. The suit for

damages for defamation is barred by limitation. Therefore, the suit cannot be

maintained before this Court and sought for revocation of leave.

11. The plaintiff/appellant resisted the said applications making the

contentions which have been stated in the application for grant of leave.

However, the learned Single Judge rejected the contention of the appellant and

allowed the applications and revoked the leave holding that,

(i) The suit is one for defamation simpliciter which has been filed

after a period of one year limitation, hence, cannot be maintained;

(ii) The defendants/respondents are outside Chennai and the suit is not

maintainable;

(iii) No part of cause of action arose within the jurisdiction of this

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Court;

(iv) The present suit has been filed only to re-agitate the issues, which

have been concluded in the anti-suit injunction filed by the plaintiff in C.S. NO.

192 of 2018. If at all any relief is to be obtained, it is only before the English

Court.

Against the allowing of these applications revoking the leave granted in

favour of the appellant, the present appeals have been filed by the plaintiffs.

12. According to Mr.Srinath Sridevan, learned counsel assisted by

Mr.R.Udayakumar, learned counsel for the appellant, the suit is maintainable

before this Court for the following reasons:

(i) The entire dispute has genesis from the share purchase agreements

dated 07.09.2015 and 16.09.2015 entered into at Chennai by the plaintiff with

rd the 3 defendant;

(ii) The shares of the first defendant were sold and registered at

st Chennai as the 1 defendant’s registered office was located at that time at

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Guindy, Chennai;

(iii) The flow of fund for the transaction took place at Chennai through

plaintiff Bank at Chennai;

st

(iv) Out of the above sale of shares in the 1 defendant company

covered by share purchase agreements dated 07.09.2015 and 16.09.2015

rd nd between the plaintiff and the 3 defendant only, the 2 defendant alleged by

virtue of malicious and defamatory misrepresentation dated 27.10.2015 through

website that the plaintiff/appellant made a huge hidden profit;

(v) The effect of such net publication in website was felt in Chennai,

as the plaintiff is carrying on business.

(vi) There is another article published in Alphaville during January,

2018 based on the misrepresentation and wrong statement made by the second

st defendant about the sale transaction of 1 defendant’s company’s shares.

nd

(vii) Effect of wrong and malicious representation of the 2 defendant

st through website about giving false information regarding sale of 1 defendant

shares and sale consideration, the alleged huge profit made by the

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plaintiff/appellant was though capable of being felt throughout the world and

was felt particularly, in Chennai where the plaintiff is located and doing

business.

nd th (viii) The 2 defendant is running its business in Chennai through 5

defendant.

(ix) E-mail correspondences are from Chennai.

nd (x) Since the misleading publication has been effected by the 2

defendant and also by Alphaville through website, the “doctrine of effect”

would apply;

nd

(xi) The statements made by the 2 defendant through internet is

nothing but “injurious falsehood”, which is a malicious statement, ultimately

damaging the image of the plaintiff and consequently, make it suffer huge loss

and damages and loss of reputation;

(xii) It is not a suit for defamation simpliciter and as stated above, it is

damages for injurious falsehood.

Since the present suit is in the nature of claim for injurious falsehood, which

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st rd originated on account of sale of shares of the 1 defendant by the plaintiff to 3

defendant, the issue would squarely fall under Section 2(c)(xii) of the

Commercial Courts Act.

(xiii) The limitation of one year as per Article 75 as found by the learned

Single Judge is not applicable. Article 113 of Limitation Act alone will be

applicable for the claim of the plaintiff/appellant as the Limitation Act does not

provide for injurious falsehood as it is an emerging tort for the time being.

Articles 74 & 75 of the Limitation Act only deal with “ libel” and “slander” and

would not cover injurious falsehood statements.Since the present suit is in the

nature of claim for injurious falsehood, which originated on account of sale of

rd shares to 3 defendant, the issue would squarely fall under Section 2(c)(xii) of

the Commercial Courts Act.

(xiv) Since the present suit is in the nature of claim for injurious

rd falsehood, which originated on account of sale of shares to 3 defendant, the

issue would squarely fall under Section 2(c)(xii) of the Commercial Courts Act.

(xv) The misleading and malicious statement which is nothing but

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injurious falsehood is available on internet and cause of action is a recurring one

and no time limit could be fixed. Therefore, the finding given by the learned

nd Single Judge that as the said publication was made by the 2 defendant on

27.10.2015 and the suit has been filed only on 11.03.2019, the suit is barred by

limitation as per Article 75 of Limitation Act, the suit filed beyond one year

cannot be sustained.

(xvi) Mr. Srinath Sridevan, learned counsel for the plaintiff/appellant

would also submit that the finding given by the learned Single Judge that the

present suit is only to re-agitate the issues, which had already been rejected by

this Court in the earlier anti-suit injunction in C.S. No. 192 of 2018 is erroneous

as the parties to the present suit, namely, the present defendants were not parties

to the earlier suit. According to him, the prayer sought in the earlier suit and in

the present suit are different and therefore, the finding of the learned Single

Judge cannot be sustained in this regard.

(xvii) The earlier anti-suit injunction had been filed by the promotors and

the plaintiff against the minority shareholders only to non-suit the proceedings

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before the English suit. This Court directed the plaintiff therein to approach the

English Court for relief and therefore, the same cannot be put against the

plaintiff.

(xviii)The learned Single Judge conducted a roving enquiry and gave a

finding on merits of the case unnecessarily holding that no details about the

nd misrepresentation made by the 2 defendant had been given in the plaint and

also held that bald allegations of misrepresentation have been made in

paragraph No.12 and paragraph No.11.38.

(xix) The learned Single Judge exceeded the limit by stating that the

article in Alphaville in January, 2018 is in the nature of criticism.

(xx) Further, regarding the relief, he has stated that preventive relief

cannot be granted as it is in the nature of a gag order against the defendants.

Such a finding cannot be given when this Court has got no jurisdiction to grant

such a relief.

By making the above contentions, the learned counsel for the plaintiff

would contend that even if part of cause of action arises at Chennai, leave could

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be granted. Many acts have been done at Chennai, which attract the jurisdiction

of this Court. Therefore, the order of the learned Single Judge revoking the

leave has to be set aside and the suit has to be restored. The following

judgments have been relied on by the learned counsel for the plaintiff/appellant:

(i).2005 SCC OnLine Bom 110 : (2005) 3 Bom CR 41 (Villa Mode General

Trading Co.V. Chordia Fashions Pvt. Ltd.)

(ii).AIR 1963 SC 1, Viswanathan v. Rukn Ul Mulk.

(iii).2007 (3) CTC 259, S.Abdul Subhan v. AR Mahaboob Jani.

(iv).977 F.Supp 404 (E.D. Va 1997), Telco Communications v. An Apple a

Day.

(v).148 F.2d 416 (2nd Cir. 1945), U.S. v. Aluminium Co. Of America

13. However, Mr.Arvindh Pandian, learned Senior Counsel appearing

nd for the 2 defendant made the following contentions:

(i) The present suit is not maintainable as the suit filed by the

appellant in C.S. NO. 192/2018 filed by the promoters of the plaintiff making

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the very same allegations was already rejected and the same was confirmed by

the Honourable Supreme Court;

(ii) The present suit is only to re-agitate the issues which had been

concluded against the appellant;

st

(iii) The plaint is based on the sale of shares of 1 defendant company

rd by the plaintiff to the 3 defendant and the said transaction was over. Therefore,

it is a concluded contract and that cannot be made use to file a suit;

nd

(iv) The publication given by the 2 defendant emanated from

Germany and not within the jurisdiction of this Court;

(v) None of the defendants are residing nor they are having office

within the jurisdiction of this Court;

nd

(vi) The 2 defendant was not a party to the share purchase agreement

rd between the appellant and the 3 defendant at any point of time as there is no

privity of contract at any point of time between them;

(vii) Prayer(a) in the suit is made in such a manner to non-suit the

earlier order of the Division Bench in O.S.A. No. 275 to 277 of 2018;

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(viii) The article dated 25.01.2018 published on the internet by one

Alphaville is only critical in nature and the same cannot be relied upon to save

limitation and no cause of action would arise out of the same;

The following judgments have been relied on by the learned counsel for

the 2nd defendant:

(i). (2002) 1 SCC 567, Union of India and Others v. Adani Exports Ltd and

Others.

(ii). (2004) 6 SCC 254, Kusum Ingots and Alloys Ltd. v. Union of India

and Others.

(iii). (2007) 11 SCC 335, Alchemist Limited and Others v. State Bank of

Sikkim and Others.

(iv). (2006) 6 SCC 207, Om Prakash Srivastava v. Union of India and

Others.

(v). 2016-5-L.W.865, Tecpro Systems Limited v. The Union of India.

(vi). 2014 (6) CTC 577, Duro Flex Pvt. Limited v. Duroflex Sittings System 150.

(vii). (1996) 3 SCC 443, South East Asia Shipping Co. Ltd. v. Nav Bharat

Enterprises Pvt. Ltd. and Others.

(viii). AIR 1954 Bom 491, Baroda Oil Cakes and Traders v. Parshottam

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Narayandas Bagulia and Others.

(ix). AIR 1958 MP 409, Shah Ganpat Pasu and Co. v. Gulzarilal Bhaiyalal

and Another.

(x). AIR 1965 All 590, Zila Parishad (District Board) v. Shanti Devi and

Others.

(xi). (2001) 2 SCC 294, Rajasthan High Court Advocates Association v.

Union of India and Others.

(xii). AIR 1966 All 522, Ram Chandra Laddha and Others v. Teja Bai and

Others.

(xiii). 2018-5-L.W.689, Captain Tractors Pvt. Ltd. v. Ashok Leyland Ltd.

(xiv). AIR 2019 SC 413, Ahmed Abdulla Ahmed Al Ghurair and Others v.

Star Health and Allied Insurance Company Limited and Others.

(xv). (2012) 9 SCC 552, Bharat Aluminium Company and Others v. Kaiser

Aluminium Technical Services Inc and Others.

(xvi). 2018 (5) CTC 291, Syed Mohamed Salahuddin and Others v. Ahmed

Adulla Ahmed Al Ghurair and Others.

(xvii). 2016-4-L.W.86, Mytrah Energy (India) Limited v. Gamesa

Renewable Private Limited and Others.

(xviii). 2014 (3) CTC 565, A.L.Mathialagan v. V.Balasundaram and

Others.

(xix). AIR 1984 Mad 212, S.Nagaraj v. S.Govindaswamy and Others.

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(xx). AIR 2019 Mad 260, FLSmidth Private Limited and Others v. S.Balaj

Das and Others.

(xxi). 2016 (4) CTC 353, Sub Continental Equities Limited v. R.V.D.

Ramaiah and Others.

(xxii). 2009 SCC OnLine Del 3780, Banyan Tree Holding (P) Ltd. v.

A.Murali Krishna Reddy.

(xxiii). ILR (2010) Supp.(1) Delhi 11, Sholay Media Entertainment and

Others v. Yogesh Patel and Others.

(xxiv). (2011) SCC 47, Crookes v. Newton.

(xxv). (2015) SGHC 38, Golden Season Pvt Ltd and Others v. Kairos

Singapore Holdings Pvt Ltd and Another.

(xxvi). 369 Fed.Appx. 368, Bruce Marks and Marks, LLC v. ALFA Group.

(xxvii).155 F.3d 254, IMO Industries, INC v. Kiekert AG Appellee.

(xxviii). 317 F.3d 467, Oliver “Buck” Revell v. Hart G.W. LIDOV.

(xxix). 315 F.3d 256, Stanley K.YOUNG v. NEW HAVEN ADVOCATE.

(xxx). 238 F.3d 248, Lloyd Z.REMICK v. Angel MANFREDY.

(xxxi). 633 F.3d 1235, Greg SHRADER v. AL BIDDINGER.

(xxxii). 2017 Indlaw MAD 7749, Ponmari Enterprises Pvt. Ltd v.

C.Sivasubramanian.

(xxxiii). 2016 Indlaw MAD 3728, D.R.Logistics v. Pridhvi Asset

Reconstructions and Securitization Company.

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14. Mr.R.Sankaranarayanan, learned Senior Counsel appearing for the

th st 6 defendant would submit that the 1 defendant company itself is not within

the jurisdiction of this Court. The email exchanged between the plaintiff

rd between the plaintiff and the 3 defendant is only in the nature of seeking

information which cannot give rise to any cause of action to file a suit. The suit

is nothing but abuse of process of law. It is only filed to non-suit the earlier

orders passed by this Court in English Suit. On the other hand, prayer (a) in the

suit, namely, permanent injunction restraining the defendants from alleging that

the plaintiff made profit/ earnout from sale of shares of Hermes other than what

had been stated in share purchase agreement dated 07.09.2015 is only to prevent

the minority shareholders from giving particulars before the English Court.

th

15. Mr.C.Manishankar, learned senior counsel appearing for the 5

defendant would submit that the suit is barred by limitation; the article relied on

by the appellant does not give any cause of action before this Court and the suit

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is nothing but a vexatious one. The following judgments have been relied upon:

(i).AIR (36) 1949 Calcutta 495 (Madanlal Jalan V. Madanlal)

(ii).(2002) 1 SCC 567 (Union of India V. Adani Exports)

(iii).1990 (Supp) SCC 727(Wander Ltd. V. Antox India P. Ltd)

(iv).2014-5-L.W.673 (M/s. Duro Flex Pvt. Limited V. M/s. Duroflex

Sittings System)

16. Mr. Sivanandaraj, learned counsel appearing for the first defendant

would elaborately argue and condense submissions made by other counsel.

17. Heard the parties in detail and perused the records very carefully.

18. Though the appeals arise out of allowing of applications filed by

nd th th 2 , 5 and 6 defendants to revoke the leave granted in favour of the plaintiff, it

is appropriate to go into the details of the case as the impugned judgment

touches upon the merits of the case.

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st rd

19. The plaintiff sold the shares in the 1 defendant company to the 3

nd nd defendant company, which in turn sold it to the 2 defendant company. The 2

defendant gave an internet publication on 27.10.2015 which is the basis for the

present proceedings. Hence, the said publication is essential for this case. The

relevant portion of the publication reads as follows:

“Wirecard will acquire 100% of the shares from GI Retail and

financial investors of companies operating payment services in

India, Philippines, Indonesia and Malaysia under the brands “ I

CASH CARD”, “ Smart Shop”, “ Star Global”, “ Commerce

Payment” as well as several segment brands. Furthermore, Wirecard

will also acquire 60% of the shares in GI Technology Private Ltd

(GIT), a licensed Prepaid Payment Instrument (PPI) issuer in India.

Wirecard will take over more than 900 staff in offices in Delhi,

Chennai, Hyderabad, Bangalore, Mumbai, Kolkata, Lucknow, Manila,

Batam and Kuala Lampur.

Dr. Markus Braun, CEO, of Wirecard AG says “ Great Indian (GI)

Retail Group has been on the forefront of India’s very dynamic and

early stage e-commerce and money remittance market for many years.

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Our investment into one of the region’s leading payment groups

secures us a strong position in one of the world’s most rapidly

growing electronic payment markets.

The total cash consideration paid to GI Retail and Financial

Investors including capital increase of GI Technology will amount

to EUR 230 million, completely paid for in cash and financed by

common capital and by committed Bank Loans. Further payment

of up to a total of EUR 110 million are linked to the overall financial

performance of acquired business in calendar years 2015 to 2017.

Elements of the agreement are subject to certain closing conditions.”

The aforesaid internet publication, according to the appellant, is

misleading and defamatory statement apart from being in the nature of

injurious falsehood. Even though, there is no privity of contract between the

nd nd 2 defendant and the plaintiff, the 2 defendant’s statement made it appear as

nd if the plaintiff sold the shares to the 2 defendant directly, which according to

the plaintiff, is deliberate one with malice. A perusal of the aforesaid

st nd publication would denote name of the 1 defendant company and the 2

rd defendant company alone. The 3 defendant company to which the appellant

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nd sold the shares had not been named at all. The 2 defendant stated it would

st acquire 100% of the shares in the 1 defendant company from the plaintiff and

nd its financial investors directly. Therefore, according to the plaintiff, the 2

rd defendant and the 3 defendant conspired and made the above statement to the

public at large to cause injury to the plaintiff for reasons best known to them.

20. Further, it is stated that the total cash consideration paid to GI

Retail Financial Investors including a capital increase of GI Technology to the

amount of EUR 230 million, completely paid for in cash and financed by

common capital and committed Bank loans. The said statement was

deliberately made, according to the plaintiff, as if the plaintiff made hidden

profit/earn out, out of the transaction keeping the minority shareholders in the

dark. Based on the net publication dated 27.10.2015 only, the minority

st shareholders of 1 defendant company initiated a tortious claim before the

English Court against the promoters of the plaintiff’s company. Though the

anti-suit injunction filed by the promoters in C.S. No. 192/2018 against the

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minority shareholders who preferred the tortious claim against the promoters of

the plaintiff’s company was rejected, the present suit has been filed against the

nd defendants, especially, the 2 defendant which made a misleading and

defamatory statement in the nature of injurious falsehood to cause financial and

reputation loss to the plaintiff.

21. Though the disputed statement dated 27.10.2015 had been made on

the internet which is available throughout the world, its effect is said to have

been felt particularly in Chennai where the plaintiff company is carrying on

business and its reputation got damaged. Consequently, Karur Vysya Bank

Limited restricted its financial facilities offered to the plaintiff. Hence, the suit

has been filed with the following prayers:

“a. For a permanent injunction restraining the defendants and/or their agents, representatives or servants from representing that the plaintiff or its shareholders/Directors had made any profit/earn out from the sale of share of Hermes, other than that pursuant to the Share Purchase Agreements (SPA) entered into between plaintiff and defendant No.3 dated 07th September, 2015;

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b. For a mandatory injunction directing the defendant No.2 to withdraw the statements made to the public, with respect to the purchase of the shares of Hermes, and to place the correct factual position with respect to the same.

c. For damages against the said defendant Nos. 1 to 6, jointly and severally, to pay a sum of INR 40 crores or for any higher amount due to the defamatory and malicious act on the part of their part.”

nd

22. From the 2 defendant’s publication, it is very clear that the sale of

st 1 defendant’s shares started with entering into share purchase agreements dated

07.09.2015 and 16.09.2015 and they were originally entered into by the plaintiff

st rd to sell the shares of the 1 defendant company in the year 2015 to the 3

st defendant. Though the defendants would argue that the 1 defendant company

shifted its office to Perungudi and at present, it is not having office at Chennai,

rd at present, the purchase of shares by the 3 defendant took place at Chennai. A

perusal of the said share purchase agreement documents would reveal that they

were entered into in Chennai as the stamp papers were purchased at Chennai

and executed at Chennai. The flow of fund with regard to the sale transaction

st took place at Chennai. That apart, the 1 defendant company is registered at

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Chennai and it was having office at Guindy, Chennai, during the relevant time

in 2015.

st

23. It is not denied by the respondents that the shares of the 1

rd defendant company were purchased by the 3 defendant company. It is very

nd clear from the documents that the 2 defendant company did not have any

privity of contract with the appellant as no transaction took place between the

nd plaintiff company and the 2 defendant. When such is the position, regarding

st nd the purchase of shares of 1 defendant company, the 2 defendant made a net

publication making it appear that it directly dealt with the plaintiff and its

promoters, which is contrary to their own pleadings in the petition to revoke

leave. That apart, money is said to have been paid in cash directly to the party

nd by the 2 defendant to the plaintiff, which should be prima facie a wrong

statement as there is no priority of contract. Moreover, there is a reference

about GI Technology transaction which has absolutely no connection with the

rd transaction between the appellant and the 3 defendant, as rightly contended by

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the plaintiff. Though the above observations of this Court are in the nature of

finding on merit, these are all prima facie observations which are necessary for

considering as to whether the cause of action for the suit arises at Chennai or

not, especially, when the defendants/respondents have taken out applications to

revoke the leave granted.

24. The respondents would argue that the share purchase agreements

are concluded contracts and therefore, the execution of the same at Chennai

cannot be made use for the purpose of cause of action. However, as stated

above, the three share purchase agreements and purchasing of shares were done

rd by the 3 defendant at Chennai only. Even though the contracts are concluded,

nd the material fact in the case is that the 2 defendant made the disputed net

statement regarding the very same sale of shares by the plaintiff. Therefore, in

nd isolation, the statement of the 2 defendant cannot be dealt with, especially,

when the internet statement is the basis of the plaintiff’s case. Hence, sale of

rd shares by the plaintiff to 3 defendant at Chennai would give cause of action for

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this case.

25. Though a number of judgments have been quoted by all the parties,

only the relevant judgments are referred to in this order.

26.1. The cause of action is a mixed question of facts and law and the

Honourable Supreme Court in Union of India and Others V. Adani Exports

Limited and others reported in (2002) 1 SCC 567 held that at least part of cause

of action has to arise within the jurisdiction of that Court to maintain the

proceedings. Paragraph No.17 of the judgment is extracted as follows:

“It is seen from the above that in order to confer jurisdiction

on a High Court to entertain a writ petition or a special civil

application as in this case, the High Court must be satisfied from the

entire facts pleaded in support of the cause of action that those facts

do constitute a cause so as to empower the court to decide a dispute

which has, at least in-part, arisen within its jurisdiction. It is clear

from the above judgment that each and every fact pleaded by the

respondents in their application does not ipso facto lead to the http://www.judis.nic.in 35\90 O.S.A.Nos.213 to 215 of 2019

conclusion that those facts give rise to a cause of action within the

courts territorial jurisdiction unless those facts pleaded are such

which have a nexus or relevance with the lis that is involved in the

case. Facts which have no bearing with the lis or the dispute involved

in the case, do not give rise to a cause of action so as to confer

territorial jurisdiction on the court concerned. If we apply this

principle then we see that none of the facts pleaded in Paragraph 16

of the petition, in our opinion, fall into the category of bundle of facts

which would constitute a cause of action giving rise to a dispute

which could confer territorial jurisdiction on the courts at

Ahmedabad.”

26.2. The cause of action is nothing but a bundle of facts, which provide

adequate right to the plaintiff for relief. The above principle has been stated in

Syed Mohd Salahuddin V. Ahmed Abdulla Ahmed AlGhurair and others

reported in 2018 5 CTC 591. Paragraph Nos. 8.1 and 8.2 are extracted as

follows:

“8.1. Before going in to the merits of the case, let us deal with the

word cause of action. The word cause of action has not been defined

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either under the Civil Procedure Code or under the Letters Patent. A

cause of action has to be seen in the context of territorial jurisdiction

available to the Court while entertaining a suit. It is the basis for the

maintainability of a suit. It is the foundation of a suit, around which,

the other provisions of the Civil Procedure Code revolve. While

dealing with the cause of action, the Courts are concerned with the

material facts required to be established in support of the right of the

party to get a judgment. Such a material fact may be a fact in issue or

a relevant fact. It has got no relationship with the case of a defendant.

Such a fact shall not be equated with the evidence, which is necessary

to prove a fact. A cause of action would include not only the right of

the plaintiff, but also, the facts disclosing the infringement of its right.

Therefore, the facts which are in support of its right and leading to

infringement would form cause of action. Thus, what is important is

that a fact will have to be material to the suit and the relief.

Therefore, all facts, which are not material, would not constitute

cause of action. There has to be an existence or infraction coupled

with the right.

8.2. It is nothing but bundle of facts, which, when added with the law

applicable provide the adequate right to the plaintiff ‘s relief. In a

suit relates to a breach of contract, the making of a contract and its

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breach would be the proper cause of action. Therefore, the place in

which it occurred would be very relevant. Thus, the fact which is

remotely connected to another which forms a cause of action cannot

be one, just for the purpose of giving jurisdiction to a Court.

Similarly, termination of a contract would certainly create a part of

cause of action and therefore, the place in which it takes place gives

jurisdiction to the Court. The legal position aforesaid has been

reiterated by the Division Bench of this Court in

D.LAKSHMINARAYANA CHETTIAR AND ANOTHER ((1954) AIR

Madras 594) in the following manner.

“41. There is no definition of “cause of action” in the Civil Procedure Code; but it is the fundamental pivot around which many of the provisions of the Civil Procedure Code revolve. It is the basis for the maintainability of the suit. It is the foundation for the adding up of parties, and it is an important ingredient in working out the principle of res judicata and that embodied in Order 2, Rule 2, Civil P.C. It has, therefore, necessarily become the subject of judicial scrutiny. Bretts J. defined it in – ‘Cooke v. Gill’, (1373) 8 CP 107 (Z1) a leading case on the subject, to mean “every fact which is material to be proved to entitle the plaintiff to succeed, every fact which the defendant would have a right to traverse.” In – ‘Bead V. Brown’, (1889) 22 QBD 128 (Z2), Lord Esher adopted the same definition, but expressed it in more felicitous language as follows:

“Every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment http://www.judis.nic.in 38\90 O.S.A.Nos.213 to 215 of 2019

of the court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.” Lord Watson in ‘Chandkour v. Partab Singh’, 16 Cal 08 (PC) (Z3) approved of the definition, but added a rider that “the cause of action has no relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff.” Subsequent decisions have followed the lead given by the earlier decisions.

48. In ‘Gangi v. Ramaswami’, 12 Mad LJ 103 (Z.7), Bhashyam Aiyangar J. struck a different note which is more in consonance with the later view regarding the meaning of the word “cause of action.” There a first suit was brought by the plaintiffs for the recovery of some land which was in the possession of the defendant on the ground that they succeeded to the father’s estate, and that the alienation made by the mother during her lifetime was bad. They obtained a decree therein, but subsequently they filed another suit to recover possession against another defendant in respect of another item which they claimed as part of the same inheritance. It was contended that the later suit was barred by Section 43, Civil P. C. In dealing with that contention, Bhashyam Aiyangar J. made the following pertinent remarks at p. 105 :

“The former suit was instituted against the de-fondant therein, by reason of his wrongfully withholding from the plaintiffs, on the death of their mother, possession of the land in Schedule B, and the present suit is brought on the defendants herein similarly withholding the land comprised in schedule A, the defendants in both the cases having respectively come into possession of the

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lands comprised in schedules B and A under separate alienations made by the mother in favour of each on a different occasion. It will thus be seen that though the ground of title is one and the same in both the suits and the cause of action in respect of both arose at the same time, viz., the date of the mother’s death, yet the persons who wrongfully withheld the land in schedule A are quite different and there was no manner of combination or privity between them in respect of the lands which they severally withheld.

“The words ‘cause of action’ have fill along been held to mean ‘every fact which it is material to be proved to entitle the plaintiff to succeed; every fact which the defendant would have a right to traverse’ and have no relation whatever to the defence, but refer entirely to the grounds set forth in the plaint as the cause of action: (1873) 6 CP 107 (Z1), -- ‘Shankar Baksh v. Daya Shankar’, 15 Ind App 66 (PC) (Z8), 16 Cal 98 (PC) (33). “Though the ground of title on both suits are founded in one and the same and the causes of action also arose at the same time, yet the properties comprised in the two suits are different and the persons who severally withheld the same are also different. A reference to Section 50, C. P. C. clearly shows that in every suit the plaint must show that the defendant is or claims to be interested in the subject matter and that he is liable to be called upon to answer the plaintiff’s demand. This clearly shows that the cause of action is not an abstraction, something independent of the defendant, but that the plaint should disclose a cause of action against the defendant.” We respectfully agree with the aforesaid observations of the learned Judge, and this passage clearly brings out the distinction between the ground of title and the cause of action. A

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cause of action is something more than a ground of title. It not only includes the facts necessary to support the plaintiff’s title, but also the facts which entitled him to relief against a particular defendant.

49. An interesting and instructive discussion, if we may say so, on the question raised is found in – ‘Bahadur Singh v. Sultan Husain Khan’, AIR 1922 Oudh 171 (Z9). Syed Wazir Hasan A. J. C. held that, “A revisioner has a separate cause of action in respect of each alienation made by the widow, and a suit to recover property comprised in one alienation is not barred by Order 2, Rule 2, C. P. C. by reason of a proper suit for the recovery of property comprised in another alienation.” The learned Judge traced the history of the meaning of the words “cause of action” and then made some weighty observations to the following effect at p. 175 ; “Though the cause of action has no relation to the defence which may be set up by the defendant, yet it would be an error to suppose that it has no relation to the defendant and his acts preceding the suit. A ‘cause of action’ is not a theoretical term entirely picked up from text books and placed on a plaint. In cases of torts, the right of the plaintiff and its infringement by the defendant will generally make up the ‘cause of action’. In –'Williams v. Morland’, (1824) 107 ER 620 (210), cited by Bowen L. J. in – ‘Bransden v. Humphrey’, (1885) 14 QBD 141 (Z11), Little-dale J. said ‘Generally speaking, there must be a temporal loss or damage accruing from the wrongful act of another, in order to entitle a party to maintain an action on the case.’ Order 7, Rule 5 (Act 5 of 1908) is based on the same principle. It is as follows : ‘The plaint shall show that the defendant is or claims to be interested in the subject matter and

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that he is liable to be called upon to answer the plaintiff’s demand. ‘Now in the present case the defendants’ connection with the land in suit is wholly different from his connection with the lands covered by the other saies both in point of time and the subject matter of the alienations. Their act of infringement of the plaintiffs’ right qua the property in suit is ‘ different from their act or acts of infringement of the plaintiffs’ right qua one or the . other of the properties previously in suit.” It would be seen from the aforesaid decisions that though under Act 3 of 1859 this court was inclined to take the view that the unity of title was synonymous with cause of action, the later decisions clearly laid down that cause of action was something more than unity of title, and that it would include not only the right of the plaintiff but also the facts disclosing the infringement of that right.”

26.3. Further, the Honourable Supreme Court in Bloom Dekor V.

Subhash Himatlal Desai reported in 1984 (6) SCC 322 held regarding cause of

action at paragraph No.28 as follows:

“28. By “cause of action” it is meant every fact, which, if traversed,

it would be necessary for the plaintiff to prove in order to support his

right to a judgment of the Court, (Cooke v. Gill2). In other words, a

bundle of facts which it is necessary for the plaintiff to prove in order

to succeed in the suit. This Court had occasion to refer to the case of

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Cooke2 in A.K. Gupta and Sons Ltd. V. Damodar Valley Corpn.3 At

page 98 it is stated thus:

“The expression ‘cause of action’ in the present context does not mean ‘every fact which it is material to be proved to entitle the plaintiff to succeed’ as was said in Cooke v. Gill2 in a different context, for if it were so, no material fact could ever be amended or added and, of course, no one would want to change or add an immaterial allegation by amendment. That expression for the present purpose only means, a new claim made on a new basis constituted by new facts. Such a view was taken in Robinson v. Unicos Property Corporation Ltd.4 and it seems to us to be the only possible view to take. Any other view would make the rule futile. The words ‘new case’ have understood to mean ‘new set of ideas’: Doman v. J. W. Ellis and Co. Ltd.5 This also seems to us to be a reasonable view to take. No amendment will be allowed to introduce a new set of ideas to the prejudice of any right acquired by any party by lapse of time.”

26.4. The Honourable Supreme Court in A.B.C. Laminart Pvt Ltd and

Another v. A.P.Agencies, Salem reported in (1989) 2 SCC 163 has held as

follows:

“12. A cause of action means every fact, which if traversed,

it would be necessary for the plaintiff to prove in order to support

his right to a judgment of the court. In other words, it is a bundle of

facts which taken with the law applicable to them gives the plaintiff

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a right to relief against the defendant. It must include some act

done by the defendant since in the absence of such an act no cause

of action can possibly accrue. It is not limited to the actual

infringement of the right sued on but includes all the material facts

on which it is founded. It does not comprise evidence necessary to

prove such facts, but every fact necessary for the plaintiff to prove

to enable him to obtain a decree. Everything which if not proved

would give the defendant a right to immediate judgment must be

part of the cause of action. But it has no relation whatever to the

defence which may be set up by the defendant nor does it depend

upon the character of the relief prayed for by the plaintiff.”

26.5. The Honorable Karnataka High Court in P.Lankesh and Another

v. H.Shivappa and Another reported in 1994 CriLJ 3510 has held as

follows:-

“10.In Chambers 20th Century Dictionary, the meaning of the

word "publish" is given as "to make public, to divulge, to announce,

to proclaim, to send forth to the public, to put forth and offer for sale

any article, new books, newspapers, to put into circulation". The word

"publish" is used in Section 499 IPC in its ordinary sense. It cannot http://www.judis.nic.in 44\90 O.S.A.Nos.213 to 215 of 2019

be said that the act of publication comes to an end as soon as one

issue of the newspaper is released at one place. If that newspaper is

despatched by the printer and publisher to other places for being sold

or circulated the defamatory article gets published at each such

place. Mere fact that the headquarters of a newspaper is based at a

particular place or that it is printed and published at one place does

not necessarily mean that there cannot be publication of defamatory

article contained in the paper at another place. If the defamatory

imputation is made available to public at several places then the

offence is commited at each such place. Though the first offence may

be committed at the place where it is printed and first published, it

gets repeated wherever the newspaper is circulated at other places. I

may refer to some of the decided cases on this aspect. The earliest

case is that of Queen Empress v. Girja Shankar Kashiram (ILR 15

Bom 286). In that case an issue of a newspaper printed and published

in Bombay was sent to certain person at Ahmedabad. The Bombay

High Court held that the editor and proprietor of the newspaper is

responsible for the circulation of newspaper in Ahmedabad of such

copies of the paper as have been so sent. It was held that there was a

publication of the defamatory article in Ahmedabad. In Emperor v.

Jhabbar Mal (AIR 1928 All 222) relying on the decision in

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Girjashankar's case it has been held that, to prove publication of libel

through newspaper it is sufficient to prove that the paper was

delivered within the postal area over which the court had jurisdiction

and it need not be proved that the article was read by some particular

person.

12.Chellappa Pilla v. Karanjia (1962 (2) Cri LJ 142) (Ker) it

has been held at p. 142 as hereunder :

"To maintain a prosecution for defamation in a particular court there

must be publication of that court. Where it is a publication of a

newspaper containing the libel it is sufficient to prove that the paper

was delivered within the territorial jurisdiction of the court and it

need not be proved that the libellous matter was seen or read by any

particular person as in the case of a letter. Newspaper is a commodity

printed for the purpose of being read and it can be presumed that it

was so read."

13. In Sunilakhaya Chowdhury v. H. M. Jadwet an issue of a

Bengal weekly published in Calcutta contained a defamatory article

regarding the complainant. The complainant filed the complaint in the

court at Port Blair stating that the court at Port Blair had jurisdiction

to entertain the complaint as the accused had made and published the

article and circulated for sale the paper at Port Blair. The Calcutta

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High Court has held that the gravamen of the question of jurisdiction

is the test of publication and that where a defamatory statement is

published in newspaper it is sufficient to prove that the paper was

delivered within the jurisdiction of that Court.

15. In Dr. Subramaniam Swamy v. Prabhakar S. Pai (1984 Cr

LJ 1329) (Bom) an alleged defamatory statement was made by the

accused in press conference called by him at Chandigarh. The said

defamatory statement was reported in Delhi edition of Indian Express.

That Delhi edition of Indian Express was circulated for sale at

Bombay. The complainant filed the complaint for the offence under

section 500 I.P.C. in the court at Bombay. The jurisdiction of the court

at Bombay to try the offence was challenged before the Bombay High

Court and the main ground urged was that as the statement was made

at Chandigarh and the publication took place at Delhi the court at

Bombay had no jurisdiction. The contention was negatived and it was

held that the Indian Express in which the impugned news item was

published was circulated and read in the city of Bombay where the

complainant was residing, that the consequence of the statement made

at Chandigarh had been completed at Bombay by circulation of the

said newspaper and therefore the offence of defamation was

completed in city of Bombay. It was held that the courts both at

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Bombay and Chandigarh had jurisdiction to entertain the complaint.

In Sardar Diwan Singh Magtoon v. Emperor (AIR 1935 Nagpur 90) :

36 Cri LJ 744) it has been held that every publication or circulation

of libel constitute a fresh and distinct act and therefore a separate

offence.

16. The above authorities would clearly indicate that where a

newspaper containing a defamatory article printed and published at

one place and is circulated or should at other places by or on behalf

of the accused responsible for the printing and publishing the

newspaper, then there would be publication of the defamatory article

in all such other places and the jurisdictional Magistrate can

entertain the complaint for defamation.”

st

27. Only with regard to the acquisition of those shares in the 1

nd defendant company, the 2 defendant had issued the alleged misleading and

nd malicious net publication as if the 2 defendant directly dealt with the plaintiff.

nd It is pertinent to note that the 2 defendant in paragraph No. 13 of the affidavit

to revoke the leave stated that they are not party to the share transaction

rd between the 3 defendant and the plaintiff. Therefore, the share purchase

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agreement dated 07.09.2015 and 16.09.2015 and subsequent transfer of shares

nd cannot be divested from the disputed statement made by the 2 defendant. The

facts are interconnected. Unless they are pleaded in the plaint, it would not give

a correct picture. Otherwise, it would amount to suppression of material facts.

28. Even though the respondents would state that net publication has

been made throughout the world and there is no pleading in the plaint that effect

has been felt in Chennai and therefore, the suit is not maintainable, it is a fact

that the share purchase agreements dated 07.09.2015 and 16.09.2015 were

rd executed at Chennai and shares were purchased by the 3 defendant only at

Chennai from the appellant and the appellant company is at Chennai. Hence, the

nd net statement issued by the 2 defendant would take effect only in Chennai as

the appellant company is having business only in Chennai and no other part of

the world, would feel the effect.

29. Further, in paragraph No.13, is has been pleaded as follows:

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“The plaintiff states that the misrepresentations and press

released regarding the purchase of shares of Hermes by defendant

No.2 have caused grave prejudice to the business and huge loss both

financial and otherwise to the plaintiff. The statements have already

affected credibility of the promoters of the plaintiff. Further, the

unjust, unfair and arbitrary acts of defendants have caused the

bankers to restrict financial facilities enjoyed by the plaintiff.”

The above pleadings certainly are material statements with regard to the

effect. In fact, the plaintiff pleaded about restriction of Bank facilities enjoyed

by the plaintiff/appellant. What is to be seen is only whether the material fact

has been pleaded or not. From the above statements, it is clear that proper

pleadings are available in the plaint with regard to “Doctrine of Effect” felt at

Chennai. One cannot expect pleading to his expectation. If more statements are

given, in detail, it would be like pleadings in the form of evidence in the plaint.

Therefore, this Court is of the opinion that the “Doctrine of Effect” has been

pleaded in the plaint. Moreover, the place where it can have effect is only at

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Chennai where the plaintiff is having office and carrying on business and where

grave prejudice to the plaintiff business and huge loss is sustained.

30. Karur Vysya Bank, the Bankers of the plaintiff restricted the

financial facilities. Consequently, cause of action arises at Chennai to maintain

the suit. In Dr. Subramaniam Swamy V. Prabhakar S. Pai and another

reported in MANU/MH/0019/1983, it has been held that, “ in cases of

defamation, the statement made in Chandigarh have effect in Bombay and the

Bombay Court has got jurisdiction to take cognisance of the offence.” In this

case, though net publication has been made from Germany on the internet

platform, it can be accessed anywhere in the world. But the effect has been felt

by the plaintiff/appellant in Chennai as aforesaid. Hence, the Chennai Court has

got jurisdiction.

31. Even otherwise, in the suit for compensation, for wrong done to a

person or movable property, the suit is maintainable either within the

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jurisdiction of the defendant where he resides or carries on business or at the

option of the plaintiff, where wrong is done to a person or to immovable

property. Section 19 of CPC reads as follows:

"19. Suits for compensation for wrongs to person or movable.

Where a suit is for compensation for wrong done to the person or to

movable property, if the wrong was done within the local limits of the

jurisdiction of one Court and the defendant resides, or carries on

business, or personally works for gain, within the local limits of the

jurisdiction of another Court, the suit may be instituted at the option

of the plaintiff in either of the said Courts.

Illustrations

(a) A, residing in Delhi, beats B in Calcutta. B may sue A either in

Calcutta or in Delhi.

(b) A, residing in Delhi, publishes in Calcutta statements defamatory

of B. B may sue A either in Calcutta or in Delhi."

In this case, though the Internet publication has been given from Germany, it

was read by the plaintiff at Chennai and the effect was felt at Chennai as

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plaintiff suffers loss of repetition, business etc., Therefore, even as per Section

19 of CPC, the suit is maintainable before this Court.

32. The Honorable Delhi High Court in M/s.Frank Finn

Management Consultants v. M/s.Subhash Motwani and Another reported in

2008 SCC OnLine Del 1049 has held that as the defendant made allegedly

libelous articles in the magazine “Opportunities Today” published from Mumbai

against the plaintiff which has got registered office at Delhi filed a suit for

compensation. The defendants contended that the defendants are having office

at Mumbai and published the article only at Mumbai and therefore, the Delhi

Courts cannot have jurisdiction. Rejecting the argument, the Hon'ble Delhi High

Court held that the impugned article besides publication in the Magazine was

also put by the defendants on its website and the magazine is circulated all over

India and that the plaintiff noticed the said article in the magazine at Delhi and

therefore, the Delhi Courts have got jurisdiction. It was further held that by

putting the Magazine on the internet, the Magazine cannot be said to be having

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circulation only at Mumbai and concluded to be having circulations all over

India and the wrong within the meaning of Section 19 CPC in an action for

defamation is done by the publication. The Court further held that under Section

19 of CPC which is in relation to suits for compensation for wrong done to the

person or to movable property and confers choice on plaintiff to sue either

within the local limits of the defendant or where the wrong was done. Since the

plaintiff therein read the Magazine at Delhi and the wrong was done at Delhi, it

was held that the Delhi Court has got jurisdiction. The above judgment would

categoricaly hold that where the effect is felt, the suit can be filed and where the

wrong is done as per Section 19 CPC, the suit can be filed. The relevant

paragraphs of the said judgment is usefully extracted hereunder:

“7.I have drawn attention of the counsel for the defendants to

Section 19 of the CPC which is in relation to suits for compensation

for wrong done to the person or to movable property and confers

choice on plaintiff to sue either within the local limits of the

jurisdiction of the court where the defendant resides or carries on

business or within the local limits of jurisdiction of the court where

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the wrong was done.

9.The plaintiff has invoked the jurisdiction of the courts at

Delhi on the plea that the plaintiff has its office at Delhi and the

impugned article besides publication in the magazine was also put by

the defendants on its website and the magazine is circulated all over

India; that the plaintiff noticed the said article in the magazine at

Delhi and, therefore, the cause of action had arisen at Delhi.

16.From the evidence aforesaid, it stands established that the

magazine was being or could be subscribed at Delhi. The magazine

itself states that it is available at all railway stalls and reputed outlets

and the version of the defendant No. 2 that the reference was to

railway stalls and reputed outlets within Mumbai only, without it

being so printed is unbelievable. Thus, it stands established that the

plaintiff has its registered office at Delhi and the magazine has

circulation at Delhi and is also put up on the website of the

defendants. Even otherwise growing number of readers prefer to read

newspapers and magazines via internet rather than in hard form. By

putting the magazine on the internet, the magazine cannot be said to

be for circulation within Mumbai only and is concluded to be having

circulation all over India. The next question which arises is that if the

magazine has circulation in Delhi, will any article in the magazine http://www.judis.nic.in 55\90 O.S.A.Nos.213 to 215 of 2019

defaming a resident of Delhi, give jurisdiction, in an action for

damages for defamation, at Delhi or the plaintiff will have to rush to

Mumbai to sue the defendants.”

33. Similarly, the Hon'ble Gauhati High Court in the case of State of

Meghalaya v. Jyotsna Das reported in AIR 1991 Gauhati 96 held that wrong

done includes and covers the effect of the act.

34. Further, the Hon'ble Delhi High Court in Indian Potash Ltd. v.

Media Contents and Communication Services (India) Pvt. Ltd., reported in

2009 IV AD (Delhi) 28 has dealt with cause of action in detail. In the said case

the plaintiff filed a suit claiming damages at Delhi against the defendants, which

is having registered office at Noida, UP to the tune of Rs.11 Crores on the

ground that the defendant telecasted a feature on its news channel making

defamatory and false allegations of plaintiff's indulging into manufacturing

synthetic milk. The contention of the defendant that no cause of action has

arisen in Delhi as the defendant is carrying on business at Noida and from the http://www.judis.nic.in 56\90 O.S.A.Nos.213 to 215 of 2019

way news was telecast was rejected by the Delhi Court and the said order was

challenged before the Delhi High Court. The Hon'ble Delhi High Court held

that if publication of defamatory material against the plaintiff is made at a place

different from where the plaintiff lives or defendant lives, the Court at that place

will have the jurisdiction to entertain the suit for compensation on the ground of

defamation where the defamatory material is printed in books, newspaper is

published through electronic media on TV and the defamatory material directly

hits the reputation demolishing the esteem and standing of the plaintiff. Since

the telecasting of a feature on TV by the channel which is for Indian audience

and has all India viewers, the plaintiff has a choice to file the suit at those places

where the plaintiff has been hit the most. In that case, the plaintiff was

supplying milk to many organizations and institutions and marketing companies

in Delhi. The business of the plaintiff was allegedly hit by broadcasting of such

publication in Delhi and therefore, the suit filed by the plaintiff therein at Delhi

is held to be maintainable. From the above, it is clear that the parties can invoke

the jurisdiction of the Court where the effect is felt. Paragraph 7 of the order

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reads as follows:

“7. The above Section makes it abundantly clear that any suit for

compensation for wrong done to a person can be filed either within

the territorial limits of the jurisdiction where the defendant resides or

carrying on business or it may be instituted at the option of the

plaintiff if the wrong done was within the local limits of the

jurisdiction of the Court. In the event of publication of defamatory

material, the wrong is done where the defamatory material is

communicated and the moment the same is received by the persons,

for whom it has been written. The publication of defamatory material

against a person gives rise to a cause of action only when it is made

known to the third party. The place of the third party and the place

where it is known to a third party gains importance. The plaintiff may

be living at any place. If publication of defamatory material against

him is made at a place different from where the plaintiff lives or

defendant lives, the Court at that place will have the jurisdiction to

entertain the suit for compensation on the ground of defamation

where the defamatory material is printed in books, newspaper is

published, through electronic media on TV and the defamatory

material directly hits the reputation demolishing the esteem and

standing of the plaintiff. It is the choice of the plaintiff to file the suit http://www.judis.nic.in 58\90 O.S.A.Nos.213 to 215 of 2019

either at the place where publication has been made or the place

where the defendant resides. Since in case of telecasting of a feature

on TV by the channel which is for Indian audience and has all India

viewers, the plaintiff has a choice to file the suit at those places where

the plaintiff has been hit the most. In the present case, the plaintiff

was supplying milk to many organizations and institutions and

marketing companies in Delhi. The business of the plaintiff was

allegedly hit by broadcasting of such publication in Delhi. Therefore,

the suit of the plaintiff lies in Delhi and this Court has jurisdiction to

entertain the suit. In T.N. Seshan, Chief Election Commissioner v. Dr.

M. Karunanidhi, President of Dravida Munnetra Kazhagam Party.

1995 (3) ALT 108 the Andhra Pradesh High Court had similar view

and observed as under:

“23. Publication of defamatory matter is communicated the

moment the same is received by some person other than the

person for whom it has been written. Publication of defamatory

matter includes communication to third party. Defamatory matter

printed in books and distribute for whatever purpose constitutes

publication. All the three defendants must have known that the

aforesaid books and, particularly, the contents of chapters 9 and

10 may be read at least by the book sellers immediately on their http://www.judis.nic.in 59\90 O.S.A.Nos.213 to 215 of 2019

receipt by them because of their curiosity. In the ordinary course

of business the sending of books containing defamatory matter by

post or otherwise from the place where it is published to book

distributor of another place is publication of that matter at latter

place, particularly/when it is read by them and/or others. Under

these circumstances, it can be safely presumed that the

importance of the aforesaid book containing chapters 9 and 10

would have aroused the curiosity of at least the book-seller to go

through it immediately on its receipt and, therefore, this type of

communication amounts to publication at Madras.

24. As noted above, the excerpts of chapters 9 and 10 of the

aforesaid book in local newspapers is distinct publication. Much

publicity was given for the sale of the book as is evident from the

affidavits of the defendants. Therefore, a presumption regarding

awareness of the contents of the concerned newspapers can be

raised against all the defendants because out of these defendants

only the concerned matter would have been passed on to the

newspapers concerned and thus all of them, prima facie, appear

to be responsible alike for the publication of the alleged

defamatory news item in the local newspapers.”

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The above judgments also support the view of this Court that cause of

nd action for the present suit arises at Chennai as the effect of the 2 defendant net

publication is felt and the suit is maintainable before this Court.

35. The plaintiff relied upon the e-mail correspondence between the

nd plaintiff and the 2 defendant seeking particulars regarding the sale of shares by

rd nd nd the 3 defendant to the 2 defendant as the 2 defendant deliberately gave false

information maliciously to cause damage only to show that there was huge

hidden profit. However, the said information was declined to be furnished by

the second defendant. The e-mail correspondence also emanated from Chennai

and that e-mail correspondences would also give cause of action for the

plaintiff/appellant to maintain the suit in Chennai.

36. The learned Single Judge found that no details of misrepresentation

nd said to have been made by the 2 defendant are given in the plaint, except bald

allegations of misrepresentation. However, the plaint has to be read as a whole

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in a meaningful manner in conjunction with the documents filed with the plaint.

In this case, the plaintiff has given the details in paragraph No.11.27 about

nd misrepresentation made by the 2 defendant through net publication dated

27.10.2015, which has been filed as Document No.21 in the plaint. In

paragraph No. 11.26, how the misrepresentations made by the second defendant

have been categorically explained. Even a reading of the press release dated

27.10.2015 filed as Document No.21, as explained supra, would give the details

of the misrepresentation. Moreover, the learned Single Judge went into the

merits of the case with regard to the misrepresentation which is unwarranted

while deciding an application to revoke the leave. Therefore, the finding given

by the learned Single Judge that no details of misrepresentation have been given

in the plaint is perverse and is set aside.

nd

37. Based on the press release dated 27.10.2015 issued by the 2

defendant, Document No. 21 and another Article in Alphaville published in

2018, the suit has been filed. The learned Judge found that if the press

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nd statement made by the 2 defendant dated 27.10.2015 is a defamatory

statement, then the suit should have been filed within one year from the date of

publication and the plaintiff cannot rely upon the article by Alphaville as it has

nd not been made by the 2 defendant and it is only critical in nature. The net

press release, though it is made in 2015, it continues to be in the net. Net

publication is not like conventional publications through media and books.

Internet is a world wide web available continuously and accessible easily to vast

people throughout the world. As long as the press publication remains in the net

and accessible at any time throughout the world, it gives rise to continuous

nd cause of action. It is not the case of the 2 defendant that the press release has

been removed from the internet. Therefore, the finding given by the learned

Single Judge that the suit for claiming damages should have been filed within

one year from the date of the publication has to be set aside, as the limitation

point has to be decided only at the time of final disposal, as to whether the

nature of statement made by the second defendant has to be classified as “libel”

and “slander” as per Articles 74 & 75 or “injurious falsehood” as per Article 113

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of the Limitation Act.

38. The contention of the defendants is that the article published in

“Alphaville” namely (Part of the House of Wire Card Series) “ RE-VISIT

WIRECARD’S BIG INDIAN DEAL” by Dan McCrum dated 25.01.2018 is

critical in nature about the share transaction and therefore, that net article cannot

be made use by the plaintiff for the purpose of limitation. However, a close

perusal of the said net article would reveal that it has been titled as “Part of the

House of WireCard Series” and was written on January 25, 2018 by Dan

McCrum. Below that, it has been stated “Read more articles in House of

WireCard Series”. The above lines would indicate that it is not a single article

regarding the subject share transaction and it is a part of “House of WireCard

Series” as mentioned therein. Further, the article invites the visitor to read more

articles about the “ House of WireCard Series” These words abundantly make it

clear that there were many more articles in the past and there would also be

articles in future as it is stated as “ series of articles”. Even in the said article

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dated 25.01.2018, the malicious, defamatory statement, in the nature of

nd injurious falsehood, as alleged by the plaintiff made by the 2 defendant in

2015, has been referred to in the body of the article, which is extracted as

follows:

“In the deal annexed in letter 2015, Wirecard acquired three businesses: Hermes I Tickets Private Limited, GI Philippines Company (Manila) and Star Global Currency Exchange Private Limited( Bangalore). It also took 60 per cent stake in GI Technology Private Limited (Chennai) through a €15m capital increase.

Wirecard said to be paid € 230m upfront including capital increase and would pay as much as €110m in further “earn outs” subject to profitability. The seller was said to be “ Great Indian (GI) Retail Group”

nd The reference of the 2 defendant statement dated 25.10.2015 in the

article dated 25.01.2018 would prove that it was not only in 2015, but also in

nd the subsequent years, namely, in 2018, the 2 defendant’s statement was

accessed and relied on by the author of the article in “ Alphaville” and published

it. Even in 2018, the said article is proved to be available on the internet and

nd thereafter also. Hence, the 2 defendant’s statement which had continued to be

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available on the net from 2015 onwards would give rise to continuous cause of

action. Though the learned counsel for the defendants would rely upon the

judgment in 2013 (139) DRJ 157 (Khawar Butt V. Asif Nazir Mir and

Others) to stress the point that limitation for claiming damages based on

libellous posting on internet is one year and only single publication rule is

applicable rather than multiple publications rule, the contention of the plaintiff

nd is that internet statement of the 2 defendant has been continuously accessed is

evident from the net article made in Alphaville in 2018 wherein the earlier net

nd statement of the 2 defendant has been referred to. The said argument of the

nd plaintiff cannot be ignored. The net statement of the 2 defendant is accessed

and made use of continuously and that would definitely give cause of action to

the plaintiff. In any event, it is a matter to be decided by this Court as to

whether the limitation is one year as per Articles 74 & 75 which are applicable

in the case of “ libel” and “ slander” or Article 113 of the Limitation Act for

injurious falsehood. It is a triable issue and therefore, only at the time of trial,

the applicability of the correct provision of Limitation Act can be decided.

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39. The finding of the learned Single Judge that the suit for damages

has to be filed within one year from the date of the publication is as per Articles

74 and 75 of the Limitation Act, which deal with “ libel “ and “ slander”

nd whereas the case of the plaintiff/appellant is that the statement of the 2

defendant is defamatory, malicious besides being in the nature of “injurious

falsehood”. The learned counsel for the plaintiff would argue that the law of

limitation does not provide any provision for “injurious falsehood” as it is an

emerging tort for the time being and it will only fall under Article 113 of the

Limitation Act which is usefully extracted as follows:

PART X – Suits for which there is no prescribed period

113. Any suit for which no Three years When the right to sue period of limitation is accrues.

provided elsewhere in this Schedule.

The “defamation” refers to a statement that is published in the net and is

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harmful to someone’s reputation whereas “injurious falsehood” refers to

statements that may actually cause reputation damage and in this case, the focus

is on the effect of the false malicious publication on the commercial interest of

the company rather than any personal set back, which is considered in cases of

defamation. Hence, Article 113 of Limitation Act is applicable to cases coming

under “Injurious Falsehood”.

40. The learned counsel for defendants would submit that the issue

would not come under Commercial Dispute as defined under Section 2(1)(c) of

Commercial Courts Act and relied upon the judgment of Honourable Delhi

High Court in Perpetuuiti Technosoft Service Private Limited V. Sanovi

Technologies (India) Pvt. Ltd and Others (MANU/DE/3048/2016), in which

it has been held that “ circulation of notice by other means, which according to

the plaintiff is tortuous interference in the conduct of business of plaintiff,

consequently filing suit for permanent injunction and damages of a sum of Rs. 1

crore would not come under Commercial Dispute and it cannot be viewed as a

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matter connected with or incidental to an ordinary transaction of a merchant or

trader. Section 2(1)(c) of Commercial Courts Act is extracted as follows:

“ (c) “commercial dispute” means a dispute arising out of––

(i)ordinary transactions of merchants, bankers, financiers and traders such

as those relating to mercantile documents, including enforcement and

interpretation of such documents;

(ii) export or import of merchandise or services;

(iii) issues relating to admiralty and maritime law;

(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and

helicopters, including sales, leasing and financing of the same;

(v) carriage of goods;

(vi) construction and infrastructure contracts, including tenders;

(vii) agreements relating to immovable property used exclusively in trade or

commerce;

(viii) franchising agreements;

(ix) distribution and licensing agreements;

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(x) management and consultancy agreements;

(xi) joint venture agreements;

(xii) shareholders agreements;”

The above Section makes it clear that the present suit issue would definitely

come under Section 2(1)(c)(i) and (xii) of Commercial Courts Act, i.e, “ordinary

transactions of merchants, bankers, financiers and traders such as those relating

to mercantile documents, including enforcement and interpretation of such

documents and “ shareholders agreements”.”

Even the object of “ Commercial Courts Act” would support the case of

the plaintiff, which is extracted as follows:

“An Act to provide for the constitution of Commercial Courts

(Commercial Appellate Courts), Commercial Division and

Commercial Appellate Division in the High Courts for adjudicating

commercial disputes of specified value and matters connected

herewith or incidental thereto.”

The plaintiff’s case is that net publication constitutes statement of injurious

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falsehood and interferes with their business, reputation, causing financial loss.

Therefore, it should be viewed as a matter connected with or incidental to an

ordinary transaction of a traders. Hence, this Court is not in agreement with the

judgment rendered by the learned Single Judge of Delhi High Court.

41. In Mahon V. Mach 1 Financial Services Pty Limited (No.2),

reported in (2013) NSWSC 10, Justice McCallum of Supreme Court of New

South Wales reiterated that four key elements are required to succeed in an

action for injurious falsehood:

(i) There must be a false statement of or consisting the plaintiff’s

goods or business;

(ii) The defendant must have published that statement to a third

person;

(iii) There must be malice on the part of the defendant and

(iv) The plaintiff must prove that there has been actual damage as a

direct result of the statement.

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Prima facie, the above elements are found in the publication dated

27.10.2015 and therefore, there is force in the argument of the learned counsel

for the appellant that it will not fall under Articles 74 or 75 of the Limitation Act

and it would come under Article 113 of the Limitation Act. In any event, it has

to be dealt with or gone into only at the time of trial. It is a triable issue as to

whether which provision of law of limitation could be invoked to the facts of

the case. Therefore, the conclusion reached by the learned Single Judge that

this suit for damages based on defamatory statement after one year is not

maintainable is set aside.

42. Regarding maintainability of the suit, with regard to damages for

injurious falsehood and for injunction, learned counsel for the plaintiff relied

upon the judgment of the Honourable Bombay High Court in 2005 SCC

OnLine Bom 110 : (2005) 3 Bom CR 41 (Villa Mode General Trading Co.V.

Chordia Fashions Pvt. Ltd.). In the said case, the plaintiff therein had sought

several injunction with regard to interpretation of confidentiality clause in the

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agreement entered between the plaintiff and the defendant therein as to whether

the defendant has to obtain necessary permission from the Government

Authorities in India as per clause 2.1.1 of the agreement or the plaintiff has to

obtain rights/authorisation for use of the brands from the brand owners of the

goods. Subsequently, the plaintiff therein terminated the franchisee agreement

on the ground of breach of the agreement. Violating the confidentiality clause,

the defendant therein wrote to the brand owners directly that the plaintiff

wrongly terminated the agreement and started negotiations with some of the

brand owners directly. Therefore, the suit was filed claiming various injunctions

including injunction restraining the defendant from committing tort of highly

injurious falsehood by alleging in any correspondence that it is not the

defendant, but it is the plaintiff who committed breach of the confidentiality

clause in the agreement. The injunction application was opposed by the

defendant. While refusing to grant injunction the Court held that the plaintiff

has to prove the existence of malice at the time of trial. The Bombay High Court

had categorically held in paragraph Nos. 12 and 13 as follows:

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“12. After the plaintiffs terminated the franchise agreement

dated 4th November 2003, they wrote letters to the various brand

owners owning the said brands that the agreement has been

terminated on account of the breach committed by the defendant. On

becoming aware of such letters, the defendant responded by writing

two letters dated 29th November 2004 (Exhibit-P1 and P2) to two of

the brand owners taking exception to the plaintiffs' claim. In the said

letters, the defendant interalia said that inspite of several requests

made by the defendant the plaintiffs were not able to complete their

part and therefore, the agreement never came into force and that the

defendant had not committed any breach of the franchise agreement.

The tenure of the letters indicates that the defendant laid the blame

for not opening of the stores for retailing of the products of the said

brands on the plaintiffs. The plaintiffs have alleged that the defendant

is further writing letters to the owners of the said brands for entering

into a direct contract with it by making false representations to them

that it were the plaintiffs who had committed the breach or in any

event it were the plaintiffs who were at fault for non-implementation

of the franchise agreement dated 4th November 2003. The plaintiffs

have alleged that this claim made by the defendant and likely to be

repeated to the other brand owners owning the said brands is not

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only false but is likely to injuriously affect the plaintiffs in their

business. Because of this false representation made and/or likely to

be made by the defendant to the various brand owners owning the

said brands the business relationship of the plaintiffs with those

brand owners is likely to be soured thereby causing injuriously

affecting their business. The plaintiffs therefore claim injunction

restraining the defendant from making false representations about the

breach/termination of the franchise agreement dated 4th November

2003 to the various brand owners owning the said brands or to

anybody else. A tort of injurious falsehood can be distinguished from

the tort of defamation or slander. While in both cases the tort feaser

makes a statement which is false or untrue in the case of defamation

or slander the false statement is likely to lower the person, against

whom false imputations are made, in the estimation of others. It

affects reputation of the person. In case of the tort of injurious

falsehood, the false statement made may not lower the injured person

in the estimation of others but it may affect him in his business. In

both torts, a misrepresentation is made by the tort of feaser but in the

former it is the character or reputation of the injured person that is

affected; in the latter the business of the injured person is affected.

Salmond and Heuston on "The Law of Torts" (Nineteenth Edition)

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succingly points out the difference in the two torts in para No. 147 at

page 446, which reads as follows:-

"This wrong of injurious falsehood is to be distinguished not only from the wrong of deceit, but also from that of defamation, to which it is analogous, but from which it is distinct. Both in defamation and in injurious falsehood the defendant is liable because he has made a false and hurtful statement respecting the plaintiff; but in one case the statement is an attack upon his reputation, and in the other it is not. The distinction is clearly made in the following quotation. "Thus the malicious publication in a newspaper to the effect that Y, the famous popular singer, had commenced his novitiate with a closed order of monks would not lower him in the esteem of right-thinking people -quite the reverse possibly - but would lose him engagements and therefore money, and therefore be actionable at this suit." It should be noted that no action lies for such a statement is made maliciously: here, as in some other branches of law of torts, carelessness alone, however gross, does not suffice to establish liability".

13. No action lies for an untrue statement which constitutes a tort of

injurious affection unless it has been made maliciously. Here, as in

some other branches of law of torts, carelessness alone would not be

sufficient to establish the liability. The remedy for a tort of injurious

affection would be both in damages as well as in injunction

preventing further dissemination of the statements. However, the

essential things which the plaintiff would be required to prove in a

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tort of injurious affection are (i) falsity, (ii) malice and (iii)damage.

The plaintiff first would be required to prove that the statement is

untrue. He would further be required to prove that the statement was

made not merely out of the carelessness but was made maliciously ;

there must exist a malice in law, if not in fact. The onus of proof of

existence of malice is on the plaintiff. The plaintiff would further be

required to allege and prove special damage to claim damages,

though a mere possibility of a special damage would be enough for

an injunctive relief.”

Though injunction was declined in the said suit, the maintainability of the

suit was upheld. Similarly, this Court in S. Abdul Subhan V. A.R. Mahaboob

Jaani (2007 3 CTC 259) held that the suit for compensation for having caused

defamation by the defendant residing at Arakkonam, Vellore District, Tamil

Nadu, who caused defamatory notices which were received by the plaintiff at

Chennai as well as by the Chief Minister’s Office at Chennai is maintainable

before this Court as cause of action arose at Chennai.

43. The learned Single Judge while considering prayer (a) i.e,

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permanent injunction restraining the defendants from alleging that plaintiff had

made any profit /earnout from the sale of shares of Hermes pursuant to the share

purchase agreement entered into on 07.09.2015, held that the said prayer is in

the nature of a gag order as against the defendants. The said observation

regarding prayer (a) has to be set aside. When misrepresentations are being

nd made by the 2 defendant and the statement suggest huge hidden profit to the

rd plaintiff out of the share transaction with the 3 defendant, which is false

according to the plaintiff and it is in the nature of causing injury and damage to

the reputation as well as financial loss to the plaintiff, definitely, the plaintiff has

got every right to claim such a relief. There is no prohibition in law to grant

such an order which is contemplated under the Specific Relief Act. When a

party approaches the Court for permanent injunction and proves his case by

evidence, both oral and documentary, consequently, the Court is to pass a decree

for injunction and the Court cannot deny the same holding that it is in the nature

of a gag order. Therefore, the said finding given by the learned Single Judge is

set aside.

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44. The learned Single Judge categorically held that the present

proceedings is only to overcome the earlier proceedings filed by the promoters

including the present plaintiff and to prevent the defendants from producing any

materials before the English Court. In paragraphs 38, 40 and 41 of the order,

the said finding has been given without adverting to the facts. The defendants

are not parties in the tortious claim filed by the minority shareholders. When

such is the position, it is not understandable as to how the defendants could give

such materials before the English Court. Therefore, the finding that the present

suit is to prevent the defendants from producing the information to the English

Court is perverse and set aside.

45. The learned Single Judge would also observe that it is only to re-

agitate and overcome the earlier order passed by this Court in C.S.No.192 of

2018, accepting the contentions of the learned counsel for the respondents.

Since the earlier anti-suit injunction was filed by the promoters subsequent to

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the initiation of English Court proceedings by the minority shareholders, this

Court rejected the said suit only based on comity and forum conveniens and in

fact, this Court only directed the parties to approach the English Court and

nothing has been conclusively found against the promoters. The relevant

paragraph from OSA 275 to 277 of 2018 are extracted as follows:

“28. Though we have passed above order, in view of the principle

of law stated, any observation made by the learned Single Judge or

by way of these appeals cannot have any bearing on the respective

stands of the parties before the English Court. This, we do so for

the reason that once it is held that it is the English Court which has

dealt with the contentious issues, the findings and observations

rendered by us will have to be confined only for the purpose of

deciding the applications filed and therefore not on merits. Hence,

the parties are given liberty to raise all the other contentions in the

pending claim petition before the English Court”

Therefore, the finding given that to re-agitate the issue decided in the earlier

proceedings filed by the promoters, the present suit is filed, is contrary to the

records and liable to be set aside.

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46. The earlier suit is to prohibit the minority shareholders from

proceeding with the tortious claim made before the English Court and the

defendants were not parties in the earlier suit. In the present suit, the minority

shareholders are not parties. Moreover, the prayers are different. Therefore, the

issue in the earlier suit is different and distinct from the present case. Here, in

the present suit, preventive injunction, mandatory injunction to withdraw the

false and defamatory press release and damages due to defamatory and

malicious act on the part of the defendants have been sought. Hence, the finding

given by the learned Single Judge that the present suit is to re-agitate the issue

already decided in the anti-suit injunction is perverse and is set aside.

nd

47. The case of the plaintiff right from the beginning is that the 2

defendant made malicious and defamatory press statement dated 27.10.2015 in

the internet platform causing serious injury to the reputation and financial loss

nd to the plaintiff company. If really, the 2 defendant wants to make it clear, they

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would have disclosed the financial details as to how the plaintiff and its

promotors made hidden profit out of the sale of shares of first defendant in 2015

in response to the appellants e-mails dated 04.06.2018, 27.06.2018, 30.07.2018

nd and 01.12.2018. The 2 defendant refused to divulge the information through

reply email dated 12.12.2018 relying upon the confidentiality clause in the

rd nd agreement between the 3 defendant and the 2 defendant. When the

nd confidentiality clause is there, it is not understandable as to how the 2

defendant could make such a statement on 27.10.2015 suggesting hidden profit

nd allegedly earned by the plaintiff. On the one hand, the 2 defendant

deliberately made a statement, which according to the plaintiff is false, injurious

and defamatory and on the other hand, the second defendant failed to disclose

the material details of the transaction, which would only go to show that there is

nd malice or mala fide intention on the part of the 2 defendant deliberately to

cause damage or injury to the plaintiff. Therefore, the plaintiff is justified in

filing the suit.

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48. The second defendant's press statement dated 27.10.2015 did not

mention about name of the third defendant. The statement stated that second

defendant would directly acquire shares of the first defendant from the plaintiff

directly. At th risk of repetition the relevant portion of second defendant's

statement viz., Wirecard dated 27.10.2015 is extracted for proper appreciation:

“Wirecard will acquire 100% of the shares from GI Retail and

financial investors of companies operating payment services in

India”

However quite surprisingly, in para 9 of the affidavit filed in support to revoke

leave, the second defendant stated that it entered into an agreement with the

st third defendant for purchase of 1 defendant's share on 27.10.2015.

“9.The Applicant/Respondent No.2/Defendant No.2 further

submits that the agreement between the Applicant/Respondent

No.2/Defendant No.2 and Respondent No.3/Respondent

No.3/Defendant No.3, for sale of shares of the Respondent

No.2/Defendant No.1, was executed outside India, on 27 October,

2015.”

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Further, the second defendant made it clear in Paragraph 13 of the affidavit that

it is not a party to the transaction between the plaintiff and the third defendant.

Relevant portion of paragraph 13 is extracted as follows:

“13. ..........The Applicant/Respondent No.2/Defendant No.2

further submits that it is not a party to the transaction of sale of

shares of Hermes i.e. Respondent No.2/Respondent

No.1/Defendant No.1, by the Respondent No.1/Applicant/Plaintiff

to Respondent No.3/Respondent No.3/Defendant No.3.”

The above contradictory statements of second defendant would certainly prima

facie prove malice on the part of the second defendant in issuing misleading

statement suggesting hidden profit allegedly made by the plaintiff in the

transaction between the appellant and third defendant especially it reiterates that

it is not a party to the said transaction.

nd

49. It is not understandable as to how the 2 defendant could make a

statement on 27.10.2015 suggesting allegedly hidden profit made by the

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plaintiff, out of the sale of shares by the plaintiff to the third defendant, when

nd rd the 2 defendant only entered into an agreement with the 3 defendant to

st purchase shares of the 1 defendant.

nd

50. If the 2 defendant is third party to the transaction between the

rd plaintiff and the 3 defendant, in any event, it is not prejudiced out of that

transaction.

51. In this case, part of cause of action, as already stated, arose at

Chennai for the following reasons:

st

(i)The situs of sale of 1 defendant’s shares by the plaintiff/appellant to

rd the 3 defendant is at Chennai.

st

(ii)The 1 defendant company, the sale of whose shares forms the basis of

nd the 2 defendant’s net publication dated 27.10.2015 and the present suit,

was located at Chennai, in 2015, within the territorial jurisdiction of this

Court as per Clause 12 of the Letters Patent.

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(iii)The flow of funds regarding sale of shares of the first defendant took

place in Chennai.

nd

(iv)The 2 defendant alleged through net statement on 27.10.2015 as if it

st acquired the shares of the 1 defendant company located at Chennai from

the plaintiff directly at the first instance and plaintiff made huge profit

suggesting without role of third defendant, contrary to the facts.

nd

(v)The effect of the malicious press statement of the 2 defendant dated

27.10.2015 regarding the above sale of shares has been felt in Chennai as

the plaintiff/appellant company is located in Chennai.

(vi)The Bankers of the plaintiff/appellant, located in Chennai, restricted

the financial assistance.

(vii)The plaintiff company is located at Chennai.

(viii)The email correspondence dated 04.06.2018, 27.06.2018 and

01.12.2018 emanated in Chennai.

In view of the above reasons, the cause of action arises in Chennai and

the suit is maintainable. Hence, the contentions made by the learned counsel for

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the defendants are rejected.

52. While considering the revocation of leave, the statements made in

the application and the pleading in the plaint alone have to be taken into

consideration and not the defence taken by the defendants whereas in this case,

the learned Judge considered the matter on merits and made unnecessary

observations which are liable to be set aside. The Honourable Supreme Court in

Abdullah Bin Ali and others V. Galappa and others reported in 1985 (2) SCC

54 held that the jurisdiction does not depend upon the defence taken by the

defendants in the written statement.

53. This Court already held that regarding limitation that it is a matter

to be considered at the time of final disposal as to whether the suit is barred by

limitation or not as the appellant pleads Article 113 of the Limitation Act will be

nd applicable as the press statement of the 2 defendant dated 27.10.2015 is in the

nature of injurious falsehood and not Articles 74 and 75 of the Limitation Act as

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contended by the defendants/respondents. At the time of deciding the leave, the

same cannot be decided.

54. Regarding the nature of the press statement dated 27.10.2015 as to

whether it is a malicious and a false statement, in the nature of injurious

falsehood or otherwise has to be decided only at the time of final disposal.

nd rd Whether the 2 and 3 defendants conspired to make such a false and malicious

statement, which is denied by the defendants has to be decided only at the time

of final disposal. This Court holds that cause of action arises at Chennai to

maintain the suit. Therefore, the suit is maintainable.

55. The learned Single Judge exceeded his limits by striking off the

plaint from the file of this Court as no such prayer was sought by the

defendants. Hence, the applications filed by the defendants are dismissed. The

order of the learned Single Judge striking off the plaint is set aside and the

application in A.No. 1956 of 2019 filed by the plaintiff for grant of leave is

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allowed. The suit is restored to file along with injunction granted in OA. No.

266 of 2019 which was in force till the revocation of leave. It is made clear that

the findings/observations given/made in this order are confined only to decide

as to whether leave could be granted or not and they are not on merits of the

suit.

In fine, the Appeals are allowed. No costs.

(N.K.K.,J) (P.V.,J) 15.09.2020 nv

Index : Yes / No

Internet : Yes / No

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N.KIRUBAKARAN, J AND P.VELMURUGAN, J

O.S.A.Nos. 213 to 215 of 2019

Dated : 15.09.2020

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