UNION BENEFIT GUARANTEE CO LTD Vs. THAKORLAL PTHAKOR

JUDGEMENT

(1.) This is a libel action. Plaintiffs are a private limited company doing provident insurance business, and have filed this suit to recover from the defendants the sum of Rs. 50,000 for damages for injury to its credit and reputation and in the way of its business by reason of certain statements which according to them, were falsely and maliciously written and published or caused to be written and published by the defendants, and which the plaintiffs say are defamatory of them. Defendants are all residents of Ahmedabad, and in or about June 1931, they formed themselves into a committee, called the Provident Society Vigilance Committee, in order to make a report to another committee, called the Working Committee of the Indian National Congress, on the working of provident societies and of what are called "Free Insurance Companies" in the Bombay Presidency. The committee has also been described as the Free Insurance Vigilance Committee. All the defendants except defendant 5 appeared at the hearing. Defendant 5 is dead, and his name has been struck off. The words complained of by the plaintiff company appear in the report made and published by the defendants, secondly, in a resolution passed by the defendants committee, which I will refer to as "the boycott resolution," recommending that certain "Free Insurance Companies", including the plaintiff company, should be boycotted by the public, and thirdly, in the heading of a publication in the "Gujarati", a Gujarati weekly of Bombay, giving the purport of that resolution.

(2.) The publication of the report and of "the boycott resolution," at first in Ahmedabad, and subsequently in Bombay, is not denied, but defendants deny that the words were written and published or caused to be written and published by them falsely and maliciously as alleged of and concerning the plaintiff company. They also deny that they gave the heading to the publication in the "Gujarati" which the plaintiff company has complained of. Defendants further contend that even if the words complained of were written and published of and concerning the plaintiff company, they are true in substance and in fact, in so far as they consist of allegations of fact, and are fair and bona fide comment on a matter of public interest in so far as they contain expressions of opinion. Defendants deny liability for the damages claimed. In order to appreciate the points in dispute between the parties it is necessary to set out a few facts relating to the plaintiff company and the defendants, and also to refer to the correspondence which led up to the suit. The plaintiff company is a private limited company within the meaning of Section 2 (13), Companies Act of 1913, and was registered on 16ch October 1930. It was also registered on 6 November 1930, as a Provident Insurance Society under the Provident Insurance Societies Act of 1912. A Provident Insurance Society is denned in Section 2 (8) of the Act. Under Section 3 the maximum amount payable on a life assurance policy by a Provident Insurance Society is Rs. 500, and the maximum amount of premiums it can receive on any one life policy is Rs. 250. The Act recognises societies or companies working on what is called the dividing principle."

(3.) Under Section 24 of the Act the Local Government is empowered to make rules to carry out the purposes of the Act Such rules have been framed by the Bombay Government and are called the Bombay Provident Insurance Societies Rules. Rule 2 (d) defines a -dividing society business" as a provident insurance business under which the amount payable on the policy money becoming due is not fixed, but depends either partly or wholly on the results of the division of any portion of the premium income or funds amongst the policies which have become due for payment in proportion to the premiums received under each class in any specified period. These societies have been referred to in the evidence as dividing societies or dividing companies or companies or societies working on the dividing principle. Ordinary life assurance business is defined in Rule 2 (f) as business transacted on similar lines to those adopted by ordinary life assurance companies. The plaintiff company does both ordinary life assurance business, though on a small scale, and also the dividing society business. The issued capital of the company is Rs. 20,000 in 1,000 shares of Rs. 20 each. The paid up capital amounts to about Rs 14,000. In all, 925 shares have been subscribed by a few share-holders, out of which Asbai, the wife of Lakhamsi Jetha, one of the directors, holds 851. She became qualified as a director on purchasing 451 shares at first, but it was said that she subsequently resigned. Among the original directors were Lakhamsi Jetha, Haridas Vallabhdas, Jamnadar Mavji, one Lalji Shamji or L.S. Patel, and Shivji Velji. Of these, Haridas Vallabhdas and Jamnadar Mavji resigned on 21 July 1931, and one Gangji Ghela Shanghavi joined the directorate in or about September, 1933. Lalji Shamji is Asbai's brother and Shivji Velji is the son-in-law of Lakhamsi Jetha and Asbai. The managing agents of the company are Bhavanji Brothers of which firm the partners are said to be Shivji Velji and the two minor sons of Lakhamsi Jetha, namely, Virchand and Bhavanji, through their mother and natural guardian Asbai. Under their agreement with the plaintiff company the managing agents were to get Rs. 200 per month by way of remuneration, of which Rs. 50 were payable to Shivji Velji, and Rs. 150 to Asbai on behalf of the minor sons.