In Good Faith: Bombay High Court's judgement against NSE’s defamation suit

11 September 2015
On 9 September 2015, the Bombay High Court ruled against the National Stock Exchange (NSE) in a defamation suit that had been filed against senior financial journalists Sucheta Dalal and Debashis Basu, founder-editors of the financial news magazine, Moneylife, earlier this year.
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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.” In his judgement, Justice Patel wrote, “I do not believe a defamation action should be allowed to be used to negate or stifle genuine 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,” before adding, “It is to me a matter of great dismay that the NSE should have attempted this action at all.”

On 27 August, Nandita Jha, the web editor of The Hoot—a media news and criticism website—wrote an article titled Defamation Cases Multiply. In her story, Jha made note of the pace at which defamation cases were being filed against the media in India, stating that, “There have been ten so far in the first 8 months of this year, as opposed to six in 2014.” Listing the varied lawsuits from this year, Jha mentioned that the latest one to be filed also involved the maximum damages. She was referring to a Rs 250 crore suit that was filed by Essar on 22 August against The Caravan, its editors, the parent company—Delhi Patra Prakashan—and me for our cover story in August, Doing the Needful.

In the article, Jha also highlighted the multi-crore suit—amounting to Rs 100 crore, to be precise—that had been filed by the NSE against Dalal and Basu. The NSE had filed the case against a story that Moneylife had published on 19 June. The story, primarily based on the account of a whistle-blower who worked with a Singapore-based hedge fund, alleged that the technical manipulation of data at the NSE distorted the level playing field and gave certain players at the stock exchange advantage over others. Dalal’s reportage went beyond the whistle-blower’s letter. She made multiple attempts to reach out to the NSE for a comment on the story. However, no one from the stock exchange responded, and a little less than a month after the story was published, the bourse sued the publication. According to a press release circulated by the stock exchange, it sought “the withdrawal of unsubstantiated and misleading reports against it” and “made a claim of Rs 100 crore.”

As he rejected the NSE’s claims, Justice Patel said that the stock exchange had been “arrogant” in not responding to Dalal’s queries. In his 30-page judgement, he also elaborated on the dangers of such lawsuits being employed as tools to silence and stifle an independent media. He emphasised that, “Defamation law is not to be used to gag, to silence, to suppress, to subjugate.” Justice Patel also placed on record his agreement with Dalal and Basu’s argument that “of all the freedoms guaranteed by Article 19 of the Constitution, the freedom of speech and expression is arguably the most volatile, the most sensitive to assault, and the most precious.”

Justice Patel continued by observing  that the many restrictions imposed on the media, because of certain information deemed sensitive and potentially detrimental to the security or reputation of individuals or organisations, harm our society: “More and more, in the name of security or reputation, we are increasingly too eager to surrender this, and its sister, freedoms. When we do so we forget: we forget that these freedoms are vital to our survival and our existence as a nation, as a people. We forget that these freedoms have not come easily. They have not come cheap. They were hard won after years of sacrifice and toil and struggle. They have not been given. They have been forged. We surrender them at our peril.”

Krishn Kaushik  was formerly a staff writer at The Caravan.