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The dangers of allowing corporations to invoke the criminal defamation law

By SUHRITH PARTHASARATHY | 1 November 2016

On 5 September, a petition filed by the Greenpeace activist Priya Pillai, questioning India’s criminal defamation law, came up for hearing in the Supreme Court. A bench presided by Justice JS Khehar agreed to hear her case, but limited the frame of the inquiry to one critical question: should corporations be allowed—as they currently are—to invoke the criminal defamation provision under the Indian Penal Code? In her petition, Pillai argued that they should not.

Pillai’s petition was originally part of a batch of cases, now known by its lead petition, Subramanian Swamy v Union of India. In these cases, a broader challenge was made to those provisions of the Indian Penal Code that collectively criminalise defamation. In May, the Supreme Court ruled against the petitioners, who included activists and politicians. It found that the defamation law was a reasonable restriction on freedom of expression. As a result of the judgment, it remains possible for the state to jail anyone found guilty of saying or writing anything that is likely to damage another’s reputation. According to the court, there was no reason why civil damages alone ought to be considered sufficient compensation for injuries suffered from defamatory speech.

Although, at the time it was delivered, Justice Dipak Misra’s opinion was criticised, not least for its garrulous prose and rickety reasoning, it was believed the verdict would settle the matter once and for all. But Pillai’s petition, which also challenged the validity of the criminal defamation law, was left undecided after Justice Misra recused himself from hearing it. It had to then be untagged from the group for separate disposal, leading to the 5 September hearing at which the court framed the particular question concerning corporate defamation.

Indian law, much like that of many other countries, treats corporations as separate legal personalities. As a result, a company can own property, enter into agreements and, most significantly, sue and be sued in its own name. It also allows a company to invoke the criminal law’s machinery when it believes its reputation has been tarnished.

But when examining a company’s right to initiate legal proceedings against defamation, differences between individuals and corporations become particularly relevant. As the Scottish judge James Reid observed in a 1964 case, “a corporation cannot be injured in its feelings, it can only be injured in its pocket.” This distinction makes the answer to the question now before the Supreme Court far from straightforward, and the importance of maintaining restrictions on the legal reach of corporations especially crucial.

Pillai’s case originated out of her criticism of the union government’s allocation of coal reserves in the forests of Mahan, Madhya Pradesh, to Mahan Coal Limited, a corporation jointly promoted by ventures of the Essar Group and the Aditya Birla Group. In March 2014, Mahan Coal filed a complaint alleging defamation by Pillai. The company’s management was specifically piqued by the following words on the Greenpeace blog: “In the matter of 20 days our new environment minister has cleared 70 projects worth Rs 1.5 lakh crores which means he can’t possibly have considered each proposal properly,” Pillai had written. “Has he been appointed to line the pockets of a tiny number of wealthy corporate companies like Essar, who are out there to wipe off forests like Mahan, or to safeguard the environment, rights of people and wildlife of the country?” Mahan Coal also claimed that Pillai had, in various meetings, compared the company to a blood-sucking bedbug. According to the company, these statements constituted a criminal offence.

The criminal defamation law comprises Sections 499 and 500 of the Indian Penal Code. According to the law, any imputation made by a speaker or writer who had reason to believe their statement would harm another person’s reputation is punishable by up to two years’ imprisonment. An “explanation” annexed to Section 499 clarifies that “it may amount to defamation to make an imputation concerning a company or an association or collection of persons as such.” Like many other colonial-era relics, these sections, which trace back to the original draft of the Indian Penal Code prepared by the British politician Thomas Babington Macaulay in the mid-nineteenth century, have been left intact by the Indian parliament. This is despite the fact that Macaulay’s intention in criminalising defamation, as can be gleaned from the detailed notes he prepared on each section of the code, was a matter of colonial policy. The inherent idea in punishing defamatory speech with imprisonment was to help quell any form of dissent that could threaten Britain’s interests.

Pillai’s petition seeks to question the retention of Sections 499 and 500 in today’s legal system. She argues that the provisions are not only dated, but are also excessively broad and vaguely worded, ultimately violating her fundamental, constitutionally protected right to freedom of speech and expression. What’s more, she argues, even if the criminalisation of defamation serves some public interest, the chilling effect that these laws impose on free speech is unacceptable. This is a result not just of Section 499’s strikingly wide ambit, but also its intricate details. For instance, to defend herself under the law, an accused must usually argue and prove that an allegedly defamatory statement is true. She must also show that the statement was made in the “public interest”—an arbitrary and disproportionate burden. In cases where the speech in question is found to be inaccurate, criminal trials weigh heavily against the defendant. While in a civil trial a person accused of defaming a company can argue that she had no knowledge that the information being disseminated was wrong, no such defence is possible in a criminal trial. These provisions, coupled with the sheer unpredictability of any criminal process, invariably lead to self-censorship.

Yet, the Supreme Court already considered and rejected all these arguments in Subramanian Swamy. The criminal defamation law, it found, did not unreasonably impinge on a citizen’s right to freedom of expression. Strangely, though, the court’s reasoning did not refer to the constitutionally provided exceptions to free speech in Article 19(2). Instead, its purported rationale hinged on an appeal to Article 21, which grants persons a right to life and personal liberty. “Reputation being an inherent component of Article 21, we do not think it should be allowed to be sullied solely because another individual can have its freedom,” Justice Misra wrote.

There are many flaws in Justice Misra’s reasoning. First, he fails to show us how the constitution protects a person’s right to reputation—this is neither evident from the text of Article 21, nor from the debates that the framers had when drafting the clause. Second, even if one were to assume that a person possesses a right to reputation, the opinion provides no sensible logic for criminalising acts that impinge on it. Instead, the judgment is littered with foggy platitudes such as:

Right to free speech cannot mean that a citizen can defame the other. Protection of reputation is a fundamental right. It is also a human right. Cumulatively it serves the social interest. Thus, we are unable to accept that provisions relating to criminal defamation are not saved by doctrine of proportionality because it determines a limit which is not impermissible within the criterion of reasonable restriction.

Justice Khehar appears to have made clear that when his bench hears Pillai’s challenge, it is unlikely to upset the court’s verdict in Subramanian Swamy; indeed, it cannot do so, unless it refers the case to a larger bench of three judges or more. But the question of whether a corporation has the right to invoke the criminal defamation law, which Pillai’s petition argues against, remains alive. If anything, Justice Misra’s foundation for validating the criminal defamation law crumbles when corporations are allowed to lodge complaints under Section 499. This is because, unlike that of an individual, a corporation’s reputation does not flow from any existing right to dignity. A company’s reputation is merely a commercial asset, a property worth protecting. A corporation has no right to life or personal liberty to balance with another person’s right to free speech and expression. Therefore, if corporations are permitted to invoke Section 499, any justification for the law would have to be made on altogether different grounds.

Pillai’s petition highlights a further anomaly. The law requires that for a person to be found guilty of defamation, the prosecution has to prove mens rea—that the accused possessed a mental state in which she intended to commit the crime. Because corporations have no minds of their own, courts have held that they have to be treated differently from individuals, and that they cannot be prosecuted under Section 499. This is best borne out by a 2013 Delhi High Court judgment in a case where the company Raymond Ltd had been accused of defamation for asserting that an individual had infringed its trademark. In exonerating the company of the charges, the court ruled that since it “cannot possess any mens rea it cannot be guilty of the offence of defamation.” The upshot of this is that while corporations can invoke the criminal defamation law, they cannot be prosecuted under it—a blatantly iniquitous state of affairs.

The chilling effect that Section 499 has on free speech, and the distinction drawn between individuals and corporations in its application, provide cogent constitutional reasons for restricting a company’s right to invoke the criminal defamation law. But prohibiting companies from complaining under Section 499 also serves a larger public interest. This objective was best articulated by a dissenting judgment of Brenda Hale, now a judge of the UK Supreme Court, in a 2006 decision of the House of Lords, Jameel v Wall Street Journal. “The dividing line between governmental and non-governmental organisations is increasingly difficult to draw,” she wrote. “The power wielded by the major multi-national corporations is enormous and growing. The freedom to criticise them may be at least as important in a democratic society as the freedom to criticise the government.” This judgment has since been vindicated by overarching reforms to Britain’s defamation law, made in 2013. Today, in the United Kingdom, whose city of London was once described as the “libel capital of the world,” people can no longer be prosecuted under the criminal law for acts of defamation, and corporations that sue for civil damages have to prove that they suffered, or are likely to suffer, serious financial loss due to any act of alleged defamation.

These developments in the United Kingdom are in keeping with the requirements of a liberal society. When hearing Pillai’s case, the Supreme Court must be mindful of the fact that permitting a corporation to trigger the criminal law’s machinery every time it believes its reputation has been besmirched simply serves no public good. But even more importantly, the court must recognise the danger in granting excessive privileges to abstract entities such as companies and societies, given the enormous costs that such licences impose on our most cherished democratic ideals.

Suhrith Parthasarathy is a lawyer and writer who currently practises as an attorney at the Madras High Court. He graduated in law from the National University of Juridical Sciences, and in journalism from Columbia University.

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