A Bombay High Court order in a suit filed by NSE against Moneylife upholds the freedom of the press when due process of verification is followed, as Moneylife did
The Bombay High Court on Wednesday, while dismissing a notice of motion directed the National Stock Exchange (NSE) to pay Rs3 lakh towards cost to Sucheta Dalal and Debashis Basu and Rs47 lakh as punitive and exemplary costs in equal parts for public causes to Tata Memorial Hospital and the Masina Hospital for free treatment of the poor, within two weeks.
While delivering the order, Justice Gautam S Patel also passed several strictures on NSE. He said, "The suit and the NSE’s conduct seem to me attempts at deflection and evasion. I also believe this entire action to be a gross abuse of the process of this Court. The NSE seems to have taken it more or less for granted that our Courts are too easily cowed by self-congratulatory assertions and overblown claims of rectitude to even consider refusing their claim. This is an approach that must be deprecated, and there is only one way to do that when dealing with an institution like the NSE. Our Courts are not to be treated as playgrounds for imagined and imaginary slights for those who command considerable resources."
The case related with NSE filing a suit against Moneywise Media Pvt Ltd (publishers of Moneylife), Ms Dalal, Managing Editor and Mr Basu, Editor & Publisher of Moneylife for writing two articles and calling for investigation on algo or high-frequency trading. Terming the articles as defamatory, NSE had filed the suit in the HC.
Ms Dalal had received copy of a letter addressed to DGM of SEBI from a whistleblower on 22 January 2015. After making several enquiries, on 11 June 2015, she sent an email to SEBI Chairman UK Sinha, NSE's Vice Chairman Ravi Narain and Chitra Ramakrishna, Managing Director and Chief Executive of the Exchange. There was no answer. Ms Dalal then on 15th June sent a reminder, which also met with silence from NSE. On 16 June 2015, Ms Dalal sent an SMS to Mr Narain and Ms Ramakrishna and there was still no response.
She on 19 June 2015 wrote an article for crowd-sourcing investigation on a whistleblower account detailing how NSE’s system has been exploited. (Read: Blowing the Whistle on Manipulation in NSE
) After receiving feedback and inputs from several people, Ms Dalal on 8 July 2015 wrote another article calling for a detailed probe in the high-frequency trades. (Read: High-frequency Trading Needs a Detailed Probe
). NSE had filed a case after the second article was published.
The HC noted that there were three distinct communications from Ms Dalal to the two persons at the NSE, best placed to answer the questions, she raised. The Court said, "Ms Dalal’s query to Mr Ravi Narain and Ms Chitra Ramakrishna was no idle accusation. She had then not gone to press with her article. She took the trouble firstly to make her own investigations, and then specifically to solicit the views of the two persons who manage and run the NSE. I do not believe she was duty-bound to do more. She had with her a damning letter, albeit anonymous, but one that contained a welter of detail that could not be denied and that, on my reading of it, certainly calls for a response, irrespective of the source. To decry this as the handiwork of a disgruntled individual or to belittle the anonymous author is, I think, in this day and age of the statutory recognition of what are called ‘whistleblowers’, to attempt to deny the undeniable. To say that there must be material from which a person may draw a conclusion is only half the story… it might certainly be enough to lead one to a conclusion that the addressees of this letter had nothing in fact to say in response at all. The only alternative to that view is again a point that Ms. Dalal makes in her articles, viz., that the persons in charge at the NSE felt it beneath them to deign to respond to what is indubitably a very serious case made manifestly in the public interest."
Justice Patel said, "There is not even a whisper of these communications in the plaint. Even today, despite the amendment, there is no explanation as to why these two persons chose not to respond to Ms. Dalal. What is stated in paragraph 18A of the plaint cannot be new. It was then known to the NSE. If it is indeed a complete answer, it ought to have been provided. It was not; and we are left to speculate as to why the NSE did not think it necessary to provide the response when it was sought."
In the rejoinder of its Plaint, the Exchange, under paragraph 18A stated, "It is impossible for any trading member to ensure a particular position in a queue in the port since such a position is automatically allocated by the network card and cannot be tweaked manually. There are maximum 30 trading members per port. The time lag between the first person and the last person (depending on the load) is maximum 50 micro seconds (1 micro second = 1 millionth of a second) which by no stretch of imagination can confer any advantage to any person.”
"To begin with, I believe this paragraph is yet another attempt at misdirection," Justice Patel said, adding, "The anonymous letter specifically mentions the advantages paragraph 18A tries to deny, possibly in the hope that the judicial mind can safely be presumed to be ignorant of all matters technical and too easily overawed by an outpouring of technical jargon."
"I note that paragraph 18A does not even begin to address the very many technical questions pointedly raised in the letter and to which Ms Dalal drew the NSE’s attention. Instead, that paragraph cherry-picks one isolated facet that possibly relates to an earlier point in the history of the NSE’s systems automation and presents that as a ‘complete’ answer. Indeed, it is not. And this is telling: for at least now, after the suit was filed, the NSE had the undeniable opportunity to deal with the technical aspects. It has chosen not to do so, and the reasons that suggest themselves are, in my estimation, and I expect in the estimation of any rational-minded person who went through this carefully, precisely those that Ms Dalal outlined in her articles. It is certainly not insignificant that the letter in question outlines a typical instance with figures of how these advantages can be obtained," Justice Patel added.
Here is the order from Bombay High Court…
"The brokers say NSE's unaccountability is even more serious than even the issue of its monopoly. The NSE has practically been unaccountable ever since it was established in 1992. SEBI, on the other hand, is accountable to the capital markets as well as the country's finance minister.
And while SEBI changes its chairman every three years, the NSE is the only public or quasi-public entity where the top management has remained the same for the past 25 years.
"Simply put, it's nepotism," says one trader. "The NSE is also not open to RTI." In this regard, the NSE stands with that other monopolist, the Board of Control for Cricket in India.
A big win for Moneylife, a small step for journalism
The Bombay High Court’s decision on Wednesday to dismiss the National Stock Exchange (NSE) case against Moneylife magazine and its founders Sucheta Dalal and Debashis Basu is a victory not only for the defendants.
It is a significant battle won in the long war several journalists and media organizations have been waging against Big Business, which is always getting bigger.
NSE is a new entrant to this club. The post-liberalisation period has created outsized corporations and business entities, especially those that have benefitted from leasing out of national resources. Many of them enjoy near-monopolies and super profits, such as NSE.
They also happen to be among the most opaque and scowl at uneasy questions. The wealth of these organisations has grown exponentially in the past two decades and has given them the ability to sink millions into their communications and litigation budgets.
The Bombay High Court on Wednesday dismissed the National Stock Exchange's (NSE) notice of motion against media firm Moneylife Magazine.
The court said that NSE's action in refusing to answer repeated queries from Moneylife amounted to arrogance.
"The motion is dismissed. Since we have not received the final copy from the court, we are not in a position to comment further. However, it goes without saying that whatever is the court order, NSE will respect that," said a statement issued by the stock exchange.
Justice Gautam Patel observed courts cannot be treated as a playground by institutions to file such cases to harass the defendants and the exchange not sharing comments is not acceptable.
The Bombay high court on Wednesday ruled against the National Stock Exchange (NSE) in a defamation case that the bourse had filed against financial news website Moneylife.
The court dismissed the case and asked the NSE to pay Rs.1.5 lakh each to journalists Debashis Basu and Sucheta Dalal. Besides this, the court imposed a penalty of Rs.47 lakh on NSE to be paid in the form of a donation to Masina Hospital and Tata Memorial Hospital in Mumbai.
“The motion is dismissed. Since we have not received the final copy from the court, we are not in a position to comment further. However, it goes without saying that, whatever is the court order, NSE will respect that,” said an NSE spokesperson.
City-based business news magazine and popular financial website Moneylife has won the first round of defamation litigation in Bombay High Court filed against it by the National Stock Exchange. Justice Gautam Patel dismissed an application filed by the NSE against Sucheta Dalal (pictured) and Debashis Basu - founders of Moneylife magazine.
The Bombay High Court has dismissed NSE’s defamation suit against Moneylife magazine and its publishers. The NSE had filed the suit after Moneylife had published reports alleging that insiders at the stock exchange gave unfair advantage to certain high-frequency (algorithmic) traders.
Element of truth possibility
Dismissing the Rs100-crore suit that the stock exchange had brought against the magazine, Justice Gautam Patel observed that the magazine had given the exchange an adequate opportunity to defend itself before the articles had been published. The exchange, however, had chosen not to answer the questions from the magazine. Given this, the judge said the NSE cannot use the process of the court to gag the press.
HC: Shreds NSE’s defamation suit against Moneylife to pieces; Appreciates media’s ‘watchdog’ role.
HC observes that there is no direct question of 'freedom of press' / 'free speech', holds that "defamation action should not be allowed to be used to negate / stifle genuine criticism, even pointed criticism / criticism that is harshly worded; nor should it be allowed to choke a fair warning to the public if its interest stands threatened in some way....Every criticism is not defamation, every person criticized is not defamed .... Defamation law is not to be used to gag, to silence, to suppress, to subjugate".
The Bombay High Court's Ruling on NSE's Defamation Case against Moneylife
In a significant judgment delivered yesterday, the Bombay High Court rejected the National Stock Exchange’s application for injunction, in a defamation action, against the journalist Sucheta Dalal (and others), for articles published on the financial news website, moneylife.in. Justice Gautam Patel also imposed heavy damages upon the NSE, in what seems to be an acknowledgment of the need to put a halt to proliferating SLAPP lawsuits (although imposing damages in an injunction application without disposing off the main suit seems a little incongruous).
‘Court order on NSE’s lawsuit upholds media’s freedom to report without being needlessly harassed’: Sucheta Dalal
The Bombay High Court order on the National Stock Exchange’s (NSE) defamation suit is in many ways not just a win for Moneylife but journalists as well. The court order upholds the media’s right to report (responsibly) and states that “defamation law is not to be used to gag, to silence, to suppress, to subjugate”.
In Good Faith: Bombay High Court's judgement against NSE’s defamation suit
Last October, a story that was published on the website of the Committee to Protect Journalists—a non-profit organisation based in New York—underscored the manner in which large corporations were using libel laws in India to intimidate journalists. The story noted that “India was failing to uphold a basic proponent of its constitution” as journalists are unable to conduct an investigation without the looming threats of exorbitant lawsuits or the risk of their work being criminalised. The Bombay High Court recently made note of this tendency through its judgement on a defamation lawsuit that had been filed by the National Stock Exchange (NSE) against senior financial journalists Sucheta Dalal and Debashis Basu, founder-editors of the financial news magazine, Moneylife, earlier this year. On 9 September, while dismissing the case, Justice Gautam Patel ordered the NSE to pay both Dalal and Basu Rs. 1.5 lakh each. He also imposed a penalty of Rs 47 lakh on the stock exchange, , to be donated to the Tata Memorial Hospital and Masina Hospital in “punitive and exemplary costs.”