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

By KRISHN KAUSHIK | 11 September 2015

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.”

“Because they are a much-vaunted public body,” he said of the NSE in particular, in a critique that is applicable for similar institutions, “[to assume that] they are, only for that reason, immune from all error and wrongdoing is, I think, a grotesque over-simplification.”

Justice Patel then came to the defense of media—which has of late proven to be indefensible on account of its behavior in some cases. He asserted that while it is “fashionable” today “to deride every section of the media as mere papparazzi [sic], chasing the salacious and steamy,” it has also played a pivotal role in unearthing some of the major cases of corruption in the country. As he made a strong case for fair and responsible journalism, Justice Patel inadvertently served a forceful reminder to Indian journalists and media organisations about their role in a democratic society. He said:

“None of the scams and the leaks of the past two decades would have been possible without journalists, editors, newspapers and television news anchors. We have grown accustomed to mocking them. We deride their manner, describing them as loud, brash, obnoxious, abrasive and opinionated. We forget. We forget that but for them the many uncomfortable questions that must be asked of those in authority and those with the sheer muscle power of money would forever go unasked and unanswered. We forget that it is these persons we are so wont to mock who are, truly, the watchdogs of our body politic, the voice of our collective conscience, the sentinels on our ramparts. They may annoy. They may irritate. They certainly distress and cause discomfort. That is not only their job. It is their burden. Watchdogs respond to whistles and whistles need whistleblowers; and between them if they can ask what others have not dared, if they can, if I may be permitted this, boldly go where none have gone before; if they can, as they say, rattle a few cages, then that is all to the good.”

Five years ago, taped conversations between the corporate lobbyist Nira Radia and several journalists were brought into the public domain. The content of these exchanges led to a severe and justified trust deficit in the credibility of many media organisations and personalities. In one of the last interviews he gave before his death, Vinod Mehta, the former editor of Outlook magazine, told Scroll—a news website—that the public’s confidence in the media has dwindled. He went on to add that the “Radia tapes are a benchmark in seriously damaging the reputation and credibility of journalists, both electronic and print.” Justice Patel echoed Mehta’s sentiments, directing his disappointment at Indian public institutions instead, “Today, all our institutions face the crisis of dwindling public confidence. Neither the NSE nor the judiciary are exceptions to this.”

Justice Patel appears to believe that this predicament presents a “very real dilemma” as these public institutions can thrive only in the continuance of that public trust. He wrote, “The challenge is, I think, in finding legitimate methods of restoring that public trust, that balance. Hence the cries for transparency and accountability everywhere; and I see no reason why the NSE should be any exception to this.” “Quelling dissent and doubt by strong-arming,” Justice Patel observed, “seems to me a decidedly odd way of rebuilding the stature of our public institutions.”

Arguing about the logic behind what can be called defamation, and advocating a higher degree of responsibility for these public institutions, Justice Patel suggested “that the legal standard is set higher to demonstrated actual malice and a wanton and reckless embracing of falsehood though countered at the first available opportunity.” This is significant as it suggests that it is crucial to prove malice on the part of the author of a story or a book for it to be accepted as a an instance of defamation. In the past, the American Supreme Court has held that simply proving that a journalist got a fact wrong does not automatically prove libel. Justice Patel brought in the same argument and wrote, “If there is indeed a factual error, can it be said to have been made in good faith, and in a reasonable belief that it was true? The ‘actual malice’ standard seems to me to suggest that one or both of these must be shown: intentional falsehood, or a reckless failure to attempt the verification that a reasonable person would.” In this particular case, he said, Dalal had proven that she had tried to reach out to various stakeholders at the NSE who refused to engage. This, he noted, meant that, “The burden of proof in claiming the qualified privilege that attaches to fair comment can safely be said to have been discharged.”

The most remarkable aspect of this judgement however, was the annoyance that Justice Patel demonstrated with the NSE for filing this case by asking the stock exchange to pay damages. Referring to the NSE, in an evaluation that could once again, be easily extended to other organisations that sue to intimidate, he said, “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.”

Concluding the judgement, Justice Patel acknowledged that the course of action he had decided to take by penalising the NSE was unusual and may even be frowned upon. He asserted that, “in my view exceptional circumstances in which an action that is entirely and deliberately mala fide in its intent ought to receive an award of costs.” Calling the suit “a gross abuse of the process,” Justice Patel seemed to hope that the ruling would send out a strong message to companies employing similar tactics that “Courts do not view these matters lightly.”

It would be premature to try and predict whether other courts across the country will follow suit and apply Justice Patel’s standards in assessing the validity of future cases of defamation. The judgement should, however, arm Indian journalists with the confidence to be fearless and fair, especially when they report on topics that have the potential to make the powerful and wealthy of this country squirm.

                                                                                                 

Krishn Kaushik is a staff writer at The Caravan.

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