Supreme Court: In an appeal filed by the appellant in a suit for damages for malicious prosecution, the four-judges bench of Mehr Chand Mahajan, S.R. Das, Vivian Bose* and Ghulam Hasan, JJ., referred to order passed by the High Court, on which the respondent relied on to show that the proceedings were terminated in his favour and opined that the order was passed on an appeal from the Ramlal and Co.’s petition alone and the appellant was not a party to the appeal. The Supreme Court opined that the appellant had no opportunity of contesting it, nor the order was passed after the contest. The appellant had filed an independent petition because Ramlal and Co. had compromised with the respondent. The Supreme Court opined that this was not the type of termination of proceedings which the respondent was required to show in a suit for malicious prosecution and that the Trial Court was right in dismissing the respondent’s claim and accordingly, set aside the decree passed by the High Court and allowed the present appeal.
Background
In an instant case, the appellant was a registered firm of brokers, which carried on the business in stocks and shares. On 05-04-1937, the managing partner of the appellant advised the respondent to buy certain number of shares in Indian Iron and Steel Company as the market for these shares were rising. The respondent accepted the appellant’s advice but immediately after the purchase, the market dropped drastically, and the respondent suffered a loss of over Rs. 1,00,000 on a resale. Thereafter, the accounts between the parties showed a debit balance of Rs. 51,712 against the respondent.
Subsequently, the respondent discovered that the appellant had secret information that the market for the purchase and sale of Indian Iron and Steel Company’s shares was going to close, which would result in the rapid fall in the shares’ prices. Therefore, the appellant decided to unload the loss on the respondent and fraudulently led him to believe that the market would rise. Thereafter, the appellant sued the respondent and obtained interim orders of attachment. Subsequently, Ramlal and Co., to whom the respondent was also indebted, filed an insolvency petition in the High Court to have the respondent adjudged as an insolvent. Further, the appellant intervened by filing an independent petition against the respondent and though, both the petitions were heard together, but they were dealt separately.
On the appellant’s petition, a separate order was passed, and the appellant was held entitled to get costs of their application. However, later, the appellant’s claim of certain sum of money against the respondent was dismissed and all the further appeals from such dismissal was also rejected. Further, with regard to Ramlal and Co.’s claim, the official assignee also made an order dismissing the claim. It was further stated that it was the appellant, who owned the respondent a considerable sum of money, on account of loss suffered by him in the Indian Iron and Steel Company.
The appeal filed by Ramlal and Co. was dismissed, because of the compromise and on the basis of termination of proceedings in his favour, the respondent then filed a suit for damage of malicious prosecution only against the defendant and not Ramlal and Co. The suit was dismissed by the Trial Court, but the High Court decreed a part of it. Hence, the present appeal was filed by the appellant.
Analysis, Law, and Decision
The Supreme Court opined that the insolvency proceedings were not instituted either by the appellant or its partners, it was instituted by the third party named Ramlal and Co., which had not been sued. The Supreme Court opined that ordinarily, that would not give the respondent, a cause of action against the appellant, but the appellant intervened in the insolvency and filed another petition, asking for the adjudication and explained that the respondent was trying to compromise with Ramlal and Co., and if they compromised, it would probably affect the other creditors prejudicially. Further, the Supreme Court opined that it was true that the two petitions by the Ramlal and Co. and the appellant were heard together but the respondent’s petition was not treated as the foundation of these proceedings.
The Supreme Court referred to the order passed by the High Court, on which the respondent relied on to show that the proceedings were terminated in his favour and opined that the order was passed on an appeal from the Ramlal and Co.’s petition alone and the appellant was not a party to the appeal. The Supreme Court opined that the appellant had no opportunity of contesting it, nor the order was passed after the contest. The appellant had filed an independent petition because Ramlal and Co. had compromised with the respondent. The Supreme Court opined that this was not the type of termination of proceedings which the respondent was required to show, in a suit for malicious prosecution. Even if it was assumed that the appellant was one of the parties, responsible for the institution and carrying out the proceedings, it was evident that the termination of the proceedings was by the consent and was brought about behind the appellant’s back by an agreement with a third party.
The Supreme Court opined that the Trial Court was right in dismissing the respondent’s claim, and accordingly, set aside the decree passed by the High Court and allowed the present appeal.
[Trojan and Co. v. Nagappa Chettiar, (1952) 2 SCC 446, decided on 12-11-1952]
Note: Malicious Prosecution
Malicious prosecution is a kind of tort, which denotes the wrongful initiation of criminal proceedings maliciously and without reasonable and probable cause. The plaintiff has to prove the following essentials in a suit for damages for malicious prosecution: a.) that he was prosecuted by the defendant; b.) the prosecution was instituted without any reasonable and probable cause; c.) the defendant acted maliciously and not with a mere intention of carrying the law into effect; d.) the proceedings complained of terminated in favour of the present plaintiff; e.) the plaintiff suffered damage as a result of the prosecution.
*Judgment by- Justice Vivian Bose
Advocates who appeared in this case :
For the Appellant: V. Rangachari, Senior Advocate (K. Mangachary, Advocate, with him);
For the Respondent: K. Krishnaswamy Iyengar, Senior Advocate (K. Parasuraman, Advocate, with him)
“non-consideration of submissions”, “arbitrary assessment”, “natural justice”,