NSE withdraws its Rs100 crore defamation suit against Moneylife, pays Rs50 lakh as cost and penalty

Moneylife Digital Team 12 September 2017

The National Stock Exchange on Tuesday withdrew its Rs100 crore defamation case against Moneywise Media Pvt Ltd, publisher of the fortnightly magazine Moneylife, Debashis Basu and Sucheta Dalal, founders of Moneylife (together Moneylife). The defamation case related to the publication of a whistleblower’s letter in Moneylife’s web portal that laid bare how certain NSE officials were giving undue advantage to specific brokers in their co-location facility set up for high-frequency trading (HFT).

NSE moved the Bombay High Court on 21 July 2015 to stop the publication and circulation of the article and also asked Moneylife to offer an unconditional apology. This application was heard by Justice Gautam Patel, who passed severe strictures against NSE and imposed a cost and penalty of Rs50 lakhs. Moneywise Media was represented by Advocate Bapoo Malcolm while Debashis Basu and Sucheta Dalal argued their own positions. NSE had filed an appeal against this order before a division Bench of Bombay HC.

On Tuesday, NSE told the division Bench of Justice Naresh Patil and Justice ZA Haq that it would honour the judgement of Justice Patel and withdraw appeal in the defamation case. Although the NSE came with demand drafts to pay up, they wanted Justice Patel's order nullified. Senior advocate Iqbal Chagla, counsel for NSE, started by saying that it was never the intention of the Exchange to gag the media. However, he argued hard and vehemently to have Justice Patel's order nullified.

Mr Janak Dwarkadas, who argued for Moneylife pro bono, argued vehemently against such a move. The judges were convinced that Justice Patel’s order should stay.

After the cheques were handed over, Mr Chagla remarked that this was probably the most hotly contested withdrawal of a suit.

At the appeal stage, NSE was represented by senior counsel Chagla while Debashis Basu and Sucheta Dalal were represented by Mr Dwarkadas, Sharan Jagtiani and Nirman Sharma, backed by solicitors, Veritas Legal, led by Rahul Dwarkadas and team member Areez Guzder.

Earlier on 9 September 2015, Justice Patel had asked NSE to pay Rs1.50 lakh each to Ms Dalal and Mr Basu “towards cost and Rs47 lakh as punitive and exemplary costs in equal parts for public causes to two trusts, Tata Memorial Hospital and the Masina Hospital, for free treatment of the poor.”

The misuse of Colo or algo trading came to light when on 19 June 2015, Moneylife published a whistleblower's letter on manipulation and collusion with select players in algo trading and use of Colo servers at NSE. Moneylife had duly contacted NSE for its response before writing the article. On that occasion too, the NSE had refused to respond despite three attempts by Moneylife to elicit its views. After Moneylife published the articles on HFT, NSE filed a Rs100 crore defamation suit against Moneylife, with prayers to remove the articles and stop Moneylife from writing further on the issue.

Moneylife deeply acknowledge the help and support received from Dr Subramanian Swamy, Senior Adv Shyam Divan, Adv Ishkaran Bhandari, Mr Ravi Raghunath, Adv Harsh Desai and our many friends and colleagues in this fight for truth and justice.

You may also want to read...

“The suit and the NSE’s conduct seem to me attempts at deflection and evasion”

NSE: Opportunity for a Clean Sweep and Full Transparency

Algo Scam: SEBI’s Show-cause Notice to NSE 14 an Escape Route?

TAC Report Proves Systemic Lapses at the NSE

SEBI Tries To Fix the HFT Issue without Closing the NSE Probe

Comments

User

Harish Kohli

6 years ago

My apologies for the mixup in the text of my write up. I had entered this piece as a response to Sucheta's mention about Justice Patel's judgement on NSE. Having appreciated the Goa judgement by Justice Patel, I wrote this bit to inform all. When I clicked the SUBMIT ICON, nothing happened. Having failed a couple of times, I sent it as a fresh response - a cut & paste job. Apologies for the bad job.

Harish Kohli

6 years ago

Though not connected with this case, I felt worthwhile to inform that Justice Gautam Patel is in the news today; see Page One Anchor in IndianExpress 12/10/17. His judgement w.r.t the the Central Govt. notification to move the western zone of NGT in Pune, which handles all cases from Goa, NGT Delhi principal bench. This shift based, on a proposal from Goa CM Mohan Parrikar is a pleasure to read. The CM has put forth that there is lack of air connectivity between Goa & Pune, loss of time of the trip costs Rs. 50,000 and availability of lawyers in Delhi. It is also stated in the report that there is an old proposal for a circuit bench in Goa. Justice Patel's judgement has pulled up the State Govt. for looking at the convenience of the lawyers and respondents instead of that of the litigants. He has quoted James Baldwin "If one really wishes to know how justice is administered in the country, one does not question the policemen, the lawyers, the judges or the protective members of the middle class. One goes to the unprotected - those, precisely, who need the law's protection most - and listens to their testimony". He also quotes JF Kennedy "sincerity needs evidence". Read on the whole, it is truly a wonderful judgment. Very well reported by Smita Nair.

Purva Joshi

6 years ago

Proud to be a reader of honest journalism like moneylife. Also, I can proudly recommend this magazine to other people over other media magazines and news websites.
CONGRATULATIONS.

NITIN PATIL

6 years ago

Certainly not just another feather in your cap but crowning glory ( so to say ) in investigative journalism. We can definitely imagine how traumatic ( apart from expense wise ) it must have been to take head on giants like NSE . But as Adv. Bapoo put it so very curtly - 'the bigger they are , the harder they fall ' ! 3 cheers for the victory !

Sheshadri Adiga

6 years ago

Superb...

Samita K Aiyer

6 years ago

Hearty Congrats Sucheta Di ,
Takes guts and grits to fight back !

Ragunathan Pattabiraman

6 years ago

Great win! It is still unfair that Goliaths barely get a scratch when they lose while Davids had to put their life on the line. Shouldn't the penalty be propositional to the defamation demanded originally? Though a complete novice about legalities, I think may be the penalty should be a decent multiple of, say 2 times, of what they demanded filing such a false case. This may deter shiver-inducing demands like 100 crores since when they fail the penalty would be big enough and everyone may pay more attention. Wish there is such a law.

Bapoo Malcolm

Replied to Ragunathan Pattabiraman comment 6 years ago

The normal "fine", called costs regime, is in the nature of a few thousand rupees at the motion stage. Six years ago, we had got Rs. 25,000/- which was a WOW amount then. So, the Rs. 50 lakhs is good for a start. It has deterrent value for others too. If frivolous litigation is given the boot, the courts will have so much time on their hands that judges will take the afternoon off to play golf.

Govinda Warrier

Replied to Bapoo Malcolm comment 6 years ago

This is a landmark victory for Moneylife. Long back, in my article in Moneylife on judicial reforms, I had argued that the cases before all courts where one party is government or corporates chances of delays and appeals on flimsy grounds are more. From admission/listing of cases in the lowest court to appointment of Judges in Apex court need to be reviewed and reforms are overdue.

NITIN PATIL

Replied to Ragunathan Pattabiraman comment 6 years ago

I agree . Wish there was such a law providing for proportionate penalty which could be a big deter ant for such Goliaths !

Pradeep Kumar M Sreedharan

Replied to Ragunathan Pattabiraman comment 6 years ago

Absolutely, law must discriminate between people and corporates

Neeraj Singh

6 years ago

Satyameve Jayate..

Bapoo Malcolm

6 years ago

Glorious in defeat but magnanimous in victory. Let us not go overboard with the tons of oodle. This was just a small battle. There needs to be a war ahead and malicious prosecution must be stopped. Litigants need to be advised properly. There's way to go. Let's read the order. And let us hope that Debashish Basu has preserved those 52 rogatories.

Sucheta Dalal

Replied to Bapoo Malcolm comment 6 years ago

Thanks Bapoo. But you may have noticed that the 52 rogatories that we had composed are not out of date. A LOT of water has flowed down the NSE bridge since Justice Gautam Patel's order. For starters, the SEBI TEchnical Advisory Committee stood up to pressure and confirmed the findings of the letter. NSE's own inquiry ordered through a Big-4 consulting firm re-confirmed it. Then internal whistle blowers began to sing and sent us anonymous letters. We ourselves were fighting relentless using RTI - either directly or through friends like Mr Shailesh Gandhi (former CIC). The can of worms opened and Chitra Ramakrishna had to quit, soon after her favoured appointee Subramanian Anand. Ravin Narain has also gone. The withdrawal happened because there is NEW Managing Director and most of the board has changed. Just to update you!!

Harish Kohli

Replied to Sucheta Dalal comment 6 years ago

Sucheta ji, you hit the nail on the head stating the reasons for the withdrawal. I had wanted to say "the jamindaars have gone and the new blood has prevailed". Nai umang (vichar) nai disha

Pradeep Kumar M Sreedharan

Replied to Bapoo Malcolm comment 6 years ago

Yes, using the state and Judicial machinery for vandalism /hooliganism must be stopped. It is very much in the interests of the Judiciary that it is not used to threaten and perpetrate crimes.

Goutam Roy

6 years ago

Truly remarkable Moneylife

Mushtaq Khan

6 years ago

Never forget the cause of this Great Victory!
Moneylife victory remind us once again, "Honesty is the Best Policy"
Keep writing the truth only.
Wish you the best for your Victory!