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NSE v. Moneywise.com defamation case: examining the new legal standards


In an attempt to moderate the skewed power and resource balance between individual journalists/bloggers and powerful corporations (characteristic of SLAPP litigation), in relation to defamation lawsuits, the Bombay High Court through its decision in the NSE v. Moneywise Media Pvt. Ltd. case has titled the balance slightly in favour of journalists/bloggers. Though this decision has already been stayed, the standards it sets are significant to examine with respect to civil defamation.

Our blog too has faced SLAPP suits: Shamnad’s Natco defamation suit here and the Times defamation notice sent to me here.

Though courts have begun to observe and comment on the malpractice of ‘SLAPP (Strategic lawsuits against public participation)’ suits, few have ventured to explicitly alter the existing laws and principles to address this problem. Like the Delhi High Court case which adopted the ‘single publication rule’ for online defamation, new standards are beginning to be set, as also evident in this judgment:

Through this decision the court has set new standards applicable to reportage in relation to public figures/bodies. As stated “I do not think it is reasonable to propose a legal standard of utter faultlessness in reportage or public comment in relation to such bodies or persons. 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.” The court denied granting an injunction and ordered NSE to pay Rs. 1.5 lakhs to each defendant and Rs. 47 lakhs to two hospitals, as exemplary costs.

The facts of this case briefly: an anonymous letter was sent to the defendant and the General manager of SEBI exposing illegality in high frequency trades or algorithmic trades facilitated by the NSE. Several months after this letter was received by Ms. Dalal (one of the defendants), two articles appeared on moneywise.com in relation to the matters exposed in the anonymous letter. NSE brought a defamation suit against the editors of moneywise.com in relation to these articles.

The NSE countered the allegations by stating that it was impossible for any impropriety, as the technology used by the NSE was automatically generated and could not be tweaked manually.

However, the judge started assessing the case by examining the effort made by the editors of moneywise.com into finding the truth behind the allegations contained in the letter. As noted, Ms. Dalal sent emails, messages and reminders to the Chairman of SEBI and two persons at NSE seeking answers to the anonymous letter. However, she received no reply. Having made this effort, the judge states that she was not duty bound to do more. These facts influenced the decision to a great extent.

The judge then examined whether the defendant had some duty, either public or private, to claim qualified privilege. The court characterized the NSE as a public institution and a custodian of public trust which requires transparency, accountability and openness in its actions and operations. In this regard, it was stated that as a reputed journalist, Ms. Dalal had a social and moral duty to investors and every trader to expose this letter. Also, the court noted that she had fulfilled her ethical duty by trying to ascertain her position before publishing the information.

It was in light of these facts that the court brought in a new standard for testing ‘fair comment’ when it comes to public persons/institutions. As explained, previously, in Konkan v. Bennett Coleman (2011 Bombay HC), while explaining the test of ‘fair comment’ the court laid down that : a) the comment itself must not be a mixed statement of facts and b) the comment should be based on an inference from the facts and c) a fair minded reader must be able to discern whether the inference logically follows or not. When these conditions are satisfied, for the defense to stand, the facts themselves need to be true, even if the comment maybe untrue.

The court in the present case seems to have modified this test. It was held that even if there is a factual error in reporting, when it comes to public person/institutions, only if the reporting was done with intentional falsehood, or a reckless failure to attempt to verify the truth, would the publication be considered defamatory. Therefore, in this case, since Ms. Dalal had tried to solicit responses from the NSE showed that she attempted to verify the facts. Therefore, even if the facts were not completely correct, the defense of fair comment applied.

Further, after citing the New York Times v. Sullivan case and adopting the criteria laid down in the Reynolds v Times Newspapers Ltd. & Ors, the standard of burden of proof that is laid down in this case is that the plaintiff must now establish that the material published was with actual malice. This is a deviation from the strict liability standard followed for defamation cases in India, where intent was not material. For an detailed discussion see Gautam Bhatia’s post here. See also Prashant Reddy’s post here.

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Aparajita Lath

Aparajita graduated from the WB National University of Juridical Sciences, Kolkata. She was formerly an editor of the NUJS Law Review. She is a lawyer based in Bangalore. All views expressed by her on the blog are her personal views.

2 comments.

  1. AvatarGautam Bhatia

    Hi Aparajita,

    Thank you for a great essay analysing the judgment.

    In your penultimate paragraph, you say that the Bombay HC has modified the fair comment defence by applying Reynolds. With respect, I’m not sure if this is entirely correct. Reynolds was not a case about fair comment, because the impugned article was largely factual. See, for instance, Lord Nicholls summing up of the factual matrix:

    “The action was tried by French J. and a jury between 14 October and 19 November 1996. The issues at the trial were: the meaning of the article, qualified privilege at common law, justification, malice and damages. During the trial the defendants abandoned pleaded defences that the words were fair comment on a matter of public interest and that they were a fair and accurate report of proceedings in public of the Irish legislature.”

    http://www.publications.parliament.uk/pa/ld199899/ldjudgmt/jd991028/rey11.htm

    Fair comment, following Diplock L.J.’s direction in Beaverbrook, can’t apply to false statements of fact. I would therefore submit that Justice Patel’s invocation of Reynolds is not aimed at modifying the defence of fair comment, but – following Reynolds itself – creating a new defence of reasonable publication in public interest that applies to *false* statements, which would otherwise slip through the net, since they can’t be immunised either under the truth/justification defence, or the fair comment defence.

    Reply
    1. AvatarAparajita Lath Post author

      Hi Gautam:

      Thank you for your insightful comment. I may have taken a narrower view for the following reasons:
      I actually based my conclusion on a reading of para 26 of the judgement itself, especially the last line “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 case, I do not think that the Plaintiffs have met that standard, or demonstrated either intentional falsehood or a failure to attempt a verification. The burden of proof in claiming the qualified privilege that attaches to fair comment can safely be said to have been discharged.” Since fair comment is the only defense used in this case, together with the last line of para 26, to me, the ratio is aimed at modifying the defence of fair comment alone.

      As you say this standard could apply as an independent defence (though the result would also be a modification of the defence of fair comment).

      Reply

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