Court arms journalists to be fearless and fair

By Vivek Vashi and Krishnendu Sayta, Bharucha & Partners
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The National Stock Exchange of India (NSE) brought a defamation action in Bombay High Court against Moneywise Media, Sucheta Dalal and Debashish Basu regarding two articles published on 19 June and 8 July 2015 on their online news portal www.moneylife.in. Dalal and Basu are the editors of Moneylife and their articles accused the NSE of granting illicit trading advantages to a select few users of high-end technology.

Vivek Vashi
Vivek Vashi

The NSE alleged that the article was per se defamatory, as the genesis of the allegation was an anonymous eight-page letter which itself recklessly defamed the NSE. Basu argued that a public body cannot recover damages in a defamation action unless it proves that the statement was made with knowledge of its falsity. Dalal submitted that the freedom of speech is arguably the most volatile freedom and its restrictions such as defamation law should be construed narrowly. She argued that after receipt of the anonymous letter she conducted her own investigations and also solicited the NSE’s views on three occasions but on each occasion the NSE was unresponsive. Accordingly, the pair submitted that there was no lapse in ethical or journalistic standards by either of them.

The court relied on the Supreme Court’s judgment in R Rajagopal v State of Tamil Nadu (1994), and held that a demonstration that one acted after a reasonable verification of the facts was sufficient to dislodge a claim for injunction and a charge of malice. The court noted that the authors’ independent investigations fulfilled the test laid down by Bombay High Court in Shree Maheshwar Hydel Power Corporation Ltd v Chitroopa Palit & Anr (2003), which required defendants to take precautions in ascertaining the truth, before publication.

The high court equated the NSE’s attempt to justify its claim for defamation on the basis of information that it provided subsequent to the publication of the articles to “putting the cart firmly before the horse”. Accordingly, the court concluded that, as a custodian of public trust, the NSE’s failure to respond to Dalal’s repeated attempts at contacting it, was “an example of the most egregious hubris and arrogance”, or, indeed, an admission of the truth. The court also remarked that the NSE attempted to portray itself as an organization that was “incapable of any mistake or any wrongdoing”, which was “a claim to the kind of infallibility best left to divinities not mortal institutions”.

Krishnendu Sayta
Krishnendu Sayta

The court agreed with Basu’s observation that despite the articles the NSE had not suffered any damage and therefore concluded that the NSE’s claim was liable to be dismissed. The court held that such lawsuits should not be permitted to muzzle free speech, as it was of on account of “persons like Ms Dalal and her fellow travellers” that a number of scams have come to light. By imposing costs of ₹5 million (US$75,600) on the NSE, the court has sent out a strong message that courts are not to be treated as “playgrounds for imagined and imaginary slights” by those who command considerable resources, and that these matters will not treated lightly.

The NSE has preferred an appeal against the above decision of a single judge. The division bench has decided to hear the appeal finally at the admissions stage. Meanwhile, the division bench refused to intervene with the single judge’s order but only stayed the order of costs.

The ruling of the single judge is significant because it proactively defends the press against large institutions that attempt to smother the freedom of speech and expression. Against this backdrop it will be interesting to see how the Supreme Court decides the ongoing challenge to criminal defamation and how other courts decide various other multimillion-rupee defamation actions.

Consumer forum to decide on slum dwellers’ consumer status

In Hubtown v State of Maharashtra, Bombay High Court recently addressed the issue of whether a slum dweller’s grievance against a developer is maintainable in a consumer forum. This issue arose during a challenge of an order of the district forum, which held that the developer was liable to compensate the slum dwellers for delay in the completion of a slum project.

While dismissing the challenge, the court held that the consumer forum could efficaciously deal with a number of issues, including determining whether the complainants are “consumers” under the Consumer Protection Act, 1986, and whether the bar on civil courts’ jurisdiction under section 42 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971, would also apply to the consumer forum.

The decision of the consumer forum will have a serious impact on the ongoing slum rehabilitation projects in Mumbai. The forum will have to keep in mind the jurisdictional bar in the slum act as otherwise it may open floodgates to complaints by slum dwellers.

Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners, where Krishnendu Sayta is an associate.

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