Workplace email accuses director of fraud, Madras High Court orders Rs 50 lakh relief

“The allegations are not merely an expression of dissatisfaction or criticism. They impute the plaintiff’s involvement in misappropriation of institutional funds, which is an allegation of serious professional and moral misconduct,” the September 21 order noted.

“An imputation of this nature is plainly capable of lowering the plaintiff in the estimation of right-thinking members of society and, particularly, in the estimation of persons associated with his professional and academic work. The allegation is particularly serious because it concerns the plaintiff’s professional integrity and honesty,” the court said.

Justice K Govindarajan Thilakavadi found that the allegations of financial misconduct were made by the manager and communicated to the higher-ups.

Noting that the defendant neither appeared before the court nor filed a written statement or gave evidence from the witness box, the court said there was no evidence to contradict the executive director’s allegations. It added that the documentary evidence, together with his oral testimony, established both the publication of the allegations and their nature.

Internal audit, dispute

The dispute arose at the Inclusion Economics India Centre in the Institute for Financial Management and Research (IFMR), a Chennai-based private policy research organisation that works with national and state government departments and international researchers.

The projects finance manager was appointed on June 12, 2018, at a monthly salary of Rs 1,41,667. The case concerned allegations made by him against the executive director after a dispute over financial irregularities at the institution. The manager said that after a whistleblower alerted senior management, a routine internal audit was conducted on March 24, 2022.

The executive director’s case was that the audit uncovered misappropriation of funds and that the manager resigned on March 25, 2022. He further told the court that the manager repaid Rs 6,07,988 in two instalments after being confronted with the alleged irregularities.

The manager apologised, and during a call with the institution’s chief financial officer and registrar, admitted that he had acted out of greed, the executive director claimed.

The grievance in the defamation proceedings centred on an email dated May 26, 2022, which the executive director said the manager had sent to the forensic auditor. The email contained allegations about his conduct and character and it was forwarded to the institution’s registrar and came to his knowledge on October 11, 2022, he said.

The plaintiff executive director said the accusations were an attempt to damage his professional reputation. He relied on the email, subsequent communications, legal notices and an employee disciplinary action report to support his case.

Allegations sent to management

The high court examined the May 26, 2022 email along with the other documents produced by the plaintiff. These included his legal notice dated December 16, 2022, the manager’s reply dated December 20, 2022, and an employee disciplinary action report dated February 7, 2023.

The court found that the documents established that allegations concerning the executive director’s involvement in financial misconduct was made by the manager and communicated to persons connected with the institution’s management and audit process.

It held that the allegations went beyond ordinary dissatisfaction or criticism because they imputed involvement in misappropriation of institutional funds. The high court said such an allegation concerned serious professional and moral misconduct and was capable of lowering the plaintiff in the estimation of people associated with his professional and academic work.

The court also noted that the allegations concerned the plaintiff’s professional integrity and honesty. The manager did not enter appearance, file a written statement or enter the witness box. As a result, there was no evidence before the court against the plaintiff’s claims.

Rs 50 lakh relief, not Rs 1 crore

The plaintiff had sought Rs 1,00,10,000 as damages for loss of reputation. The court, however, said the amount of compensation had to be determined on the basis of the evidence available and not merely the amount claimed.

The court found that the executive director’s evidence established injury to his professional reputation, dignity and standing. At the same time, it found no documentary evidence establishing any specific monetary loss of income, loss of employment or loss of professional engagement directly attributable to the allegations.

It considered the gravity of the allegations, the professional context in which it was made, the people to whom it was communicated, the plaintiff’s professional standing, the distress caused to him and the overall circumstances, and directed the former manager to pay Rs 50 lakh to the plaintiff as compensation for injury to his reputation.