1) truth is best defence in defamation cases
2) you have only disclosed the facts of case not maligned reputation
3) wait for court to decide .dont send the complaint
Seeking legal opinion: risks of submitting ethics complaint during ongoing dispute
Dear Legal Community, I’m involved in a commercial dispute with a Pvt Ltd company and am considering submitting a formal ethics complaint to an industry association of which the tenant is a member .Below is a draft letter – I’d appreciate insights on: Defamation Risk: Could this complaint expose me to liability, even if facts are verifiable? Litigation Impact: Might this affect my ongoing case (currently in appeal)in the High Court for the past 11 years? WE HAVE WON IN BOTH THE LOWER COURTS. Issue: Tenant retained properties post-lease expiry (2010) under a contract requiring 15% annual rent increases if tenant does not vacate. Tenant gave letter agreeing to retain premises by giving 15% annual rent increasese. After 1-2 years, they stopped paying escalated rent but continued occupation. Financials: Estimated arrears ~Rs 12 Crore; current monthly liability ~Rs 20 lakh . Key Concern: Tenant hasn’t disclosed this liability in balance sheet, misleading stakeholders and could later say that they do not have the funds to pay. Copy of letter I am writing to formally lodge a complaint against X, a member of your organization (Y) , for unethical business practices, breach of contractual obligations, and failure to disclose material financial liabilities. 1. Summary of the Issue Lease Agreement (Expired 2010): The agreements included a 15% annual rent increase if the tenant retained the premises post-expiry. X confirmed in writing (registered letter on letterhead) their intent to continue under these terms. Breach of Contract: They paid the increased rent for only 1-2 years and then stopped, despite continuing occupation till date. The outstanding unpaid rent, as per the agreed terms, now exceeds USD 1.25 million (accumulated till date and not inclusive of any interest) . The current monthly liability (with 15% escalation) exceeds USD 20,000/month+18% GST . Financial Misrepresentation: X has not disclosed this liability in its balance sheet, misleading stakeholders. 2. Violations of Y’s Code of Conduct This conduct appears to violate Y’s principles of: Fair Business Dealings – Deliberately breaching a contract while benefiting from it. Transparency – Concealing a material financial liability. 3. Requested Action Investigate X's compliance with ethical guidelines. Require corrective action, including: Settlement of outstanding dues as per the lease terms. Proper disclosure of liabilities in financial statements. Take disciplinary measures if violations are confirmed. 4. Supporting Evidence (Available Upon Request) Copy of the lease agreement Registered letter Accepting Terms Financial records showing non-disclosure of liability Specific Questions Defamation: If the complaint is sent only to the association(not publicly),does it make me liable for defamation. Litigation Impact: Could this complaint go against me in the the ongoing court case where I have the advantage or should I just wait for the Court to decide.
Asked 7 months ago in Criminal Law
Religion: Hindu
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13 Answers
No doubt it is not advisable to take any action of sending notice to the association when the matter is pending before high court in an appeal pending disposal of the appeal.
This act may sometimes jeopardise the outcome of the appeal especially when you have already won in the lower courts.
However there is no element of defamation by sending notice to the association also in this regard especially when the tenant has not reflected this liability of arrears of rent in his balance sheet.
You can send a formal written notice to the association, clearly stating that the tenant is in arrears and detailing the amount owed.
The association, as the governing body, has a responsibility to ensure that all owners, including the tenant, are adhering to their obligations, including the payment of rent.
The association has a responsibility to ensure the proper functioning of the business premises and the well-being of the business owners within the premises.
This act will be considered as an act done in good faith hence it may not attract the defamation ingredients
Thank you for presenting the facts in such a structured and thoughtful manner. Based on the details shared, here is a professional legal opinion addressing your specific concerns:
1. Defamation Risk (Complaint to Industry Association)
Legal Position:
In India, defamation (civil or criminal) requires the following elements:
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A false statement,
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Publication of that statement to a third party,
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Harm to the reputation of the person/entity.
Application to Your Case:
If your complaint:
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Is factually accurate and based on documentary evidence,
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Is made privately to a relevant authority (i.e., the industry association),
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Is made in good faith to protect your legal and financial interests,
Then it falls within the "qualified privilege" defence, especially since the communication is made to a body with a legitimate interest in the matter.
Conclusion:
As long as your statements are truthful, supported by documentation, and the communication is not published publicly or with malice, your exposure to defamation liability is minimal. However, ensure the tone remains objective, not accusatory or inflammatory.
2. Litigation Impact (Ongoing Appeal in High Court)
Given that:
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You have already prevailed in both lower courts, and
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The case is currently pending in appeal,
filing a complaint with an industry association may not technically amount to sub judice contempt, but it could lead the opposing party to argue that:
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You are trying to influence parallel forums while the matter is pending,
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You are undermining judicial process or prejudicing the appeal by pursuing remedies outside the courtroom.
Risk Assessment:
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The association has no adjudicatory power; it can only enforce ethical standards, not legal dues.
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However, a savvy opposing party may attempt to use your complaint to allege harassment or parallel pressure tactics, especially if the association initiates an inquiry.
Recommendation:
Since your case is already strong and pending before the High Court:
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Wait for the final verdict, unless the balance sheet misrepresentation presents an imminent fraud on stakeholders or regulators (e.g., under MCA, SEBI, or Companies Act implications).
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If urgent, phrase your complaint cautiously, stating that the court case is pending and that your intent is to notifythe association of potential ethical breaches, without prejudice to ongoing litigation.
Suggested Wording Revision for Key Risk Reduction:
Instead of alleging fraud directly, use phrasing like:
“We believe that the continued non-disclosure of this contingent liability, while the matter is sub judice, may not align with the spirit of transparency and accountability expected of members under your Code of Conduct.”
This softens the tone and signals that you're not making a final accusation, but raising ethical concerns for review.
Conclusion & Strategic Advice:
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Defamation: Low risk if complaint is factual, confidential, and not malicious.
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Litigation: Advisable to wait until the High Court appeal concludes, unless you must urgently act to protect stakeholder interests.
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If you proceed now, include a clear disclaimer that the matter is pending before the High Court and this complaint is not intended to prejudice judicial outcomes but merely raise professional conduct concerns.
Please let me know if you’d like me to refine your draft letter for legal clarity and reduced risk exposure. Feel free to reach out to me at Legal Corridor
Thanks & Regards
Adv. Aman Verma
LegalCorridor
What are your recommendations for informing their Chartered Accountant and The Registrar of Companies about the non-disclosure of this contingent liability , as we don't want the tenant to say later that they can't pay as they don't have the funds.
Asked 7 months ago
Dint complicate the issue
Continue with your existing case
To protect your rights and prevent the tenant from later pleading financial incapacity, you may formally notify their Chartered Accountant (Statutory Auditor) in writing, highlighting the ongoing litigation, lease terms mandating 15% annual rent escalation, and the approximate ₹12 crore arrears. Request them to ensure disclosure of this contingent liability in accordance with applicable accounting standards (AS 29 / Ind AS 37). Similarly, you may file a written representation with the concerned Registrar of Companies (RoC), pointing out that the company is continuing in possession post-lease without disclosing material liabilities in their financials, thereby potentially misleading stakeholders in violation of Sections 129 and 134 of the Companies Act, 2013. Both communications should be factual, non-defamatory, and clearly state that they are being made without prejudice to your ongoing litigation before the High Court.
His chartered accountant is not an authority to pay the arrears of rental amount to you even you may notify the same.
If the lease amount is paid by the company then it becomes the liability of the company and if the tenant is suppressing the information of arrears of rental amount to be paid, then he will face the consequences accordingly.
Besides there is a case going on in the high court i the form of second appeal, your anxiety should not draw adverse inference to the current litigation/case, you may better consult your advocate in detail before taking any step in haste.
No if only send to them it’s not defamation unless personal allegations on some one member without evidence
no it can’t go against you unless you have some contrary stands
you can inform them with caution
Dear Client, kindly note the following
- The Risk of Defamation
Unless your complaint is supported by facts and evidence, even if your complaint is accurate, defamation can be claimed in case the tenant alleges that the complaint impinges on their reputation according to the relevant sections. However, truth is an absolute defence for defamation. If all your assertions are verifiable facts, supported by documents, and done in good faith without ill will, the chances of winning defamation suit against you are minimal. Since complaint is submitted only to the industry association (not publicly), the chances of defamation liability are minimized further because the communication is restricted and not published to the general public. However, in order to minimize the risk, ensure the complaint sticks strictly to verifiable facts, avoid speculative or inflammatory language, and keep your tone professional. - Impact on Ongoing Litigation
Filing an ethics complaint should not legally prejudice your ongoing civil litigation in the High Court, especially since you have won in both lower courts and the complaint concerns related ethical and contractual breaches. Nevertheless, the tenant could attempt to counter that the complaint is intended to intimidate or pressure, an argument that would be raised tactically in the lawsuit. You are wise to advise your lawyer of the complaint so that she/he can plan ahead and dispel any such claims in the appeal. If you wish to stay clear of any impression of interference, you could wait for the court to dispose of the appeal, but it is not necessary. - Notification to Chartered Accountant and Registrar of Companies (ROC)
Failure to disclose a material liability (Rs 12 Crore arrears) in balance sheets may constitute financial misrepresentation and violation of statutory obligations under the Companies Act, 2013. You can write a formal representation to the Chartered Accountant of the tenant pointing out non-disclosure and seek rectification. At the same time, you can seek action from ROC for non-adherence to accounting and disclosure standards. This action can generate regulatory pressure upon the tenant to disclose the liability appropriately and avoid future claims of inability to pay owing to undisclosed liabilities.
Sir/Madam,
It is not disclosed in your query that what is your actual aim to writing to the association. It must have some airm and asking for some remedy which is not sought in the court case/appeal. Then it will not harm you anymore. Further, it is also suggested that your submit complaint to ROC/Registrar of Firms regarding the illegal proactices done by the Y- the tenant. It will benefit you ultimately.
A) If the complaint is sent privately to the association and is fact-based, supported by documents, and made in good faith, it is unlikely to amount to defamation under Indian law. However, ensure the tone is factual, not accusatory.
B) Regarding litigation, filing such a complaint could be seen by the opposing party as an attempt to exert external pressure, potentially complicating your position in the High Court appeal. Since you've already won in both lower courts, it may be prudent to wait for the court's final decision to avoid claims of prejudice or interference. Consult your litigation counsel before proceeding.
- Defamatory acts can include “words either spoken or intended to be read", signs or visible representations, which are published or put up in the public domain. The offence is punishable with up to two years imprisonment, a fine or both.
- Hence, disclosure the truth not come under the defamation
- You can continue the case .
