Defamation / Reputation
Johnson v. Steele
On Appeal Expands Expression
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In June 2015, an article was published on Moneylife news website, alleging that the National Stock Exchange of India (NSE) facilitated illicit trading through high frequency trading techniques. The information was anonymously forwarded to the managing editor of the news website. Subsequently, the National Stock Exchange brought a defamation lawsuit in the High Court of Bombay against the website and its managing and executive editors, arguing that the article was per se defamatory and could not be considered a fair comment, nor did it have any qualified privilege.
In determining whether the statements contained in the article were defamatory, the Court primarily relied on the standard of “whether any reasonable person, however prejudiced or however strong of opinion, could say that the work in question was a fair comment.” By taking into account the failed attempts made by the website’s managing editor to solicit and verify response from the NSE officials, the Court held that a reasonable person used in dealing in financial markets could perceive the allegations as true. Accordingly, the Court dismissed the NSE’s motion for injunction, finding the article a fair comment protected under Article 19 of India’s Constitution.
On June 19, 2015, Moneylife news website published an article, alleging that the NSE actively permitted illicit trading advantages to a selected institutions using high-end technology. The article partly revealed that “certain institutions registered for [high frequency trades] were allowed to profit illegally by the NSE’s insiders.” Such allegations were provided by an anonymous letter addressed to the Securities & Exchange Board of India, a copy of which was sent to the managing editor of the news website. Prior to the publication, the website’s managing editor contacted the NSE on three separate occasions but she did not receive any response from officials as to the veracity of the accusations.
The article later drew public attention and led the Securities & Exchange Board of India and other investigative agencies to look into the matter. A second article followed almost a month later on the same subject, substantiating on the investigative turn that the events had taken. Subsequently, the NSE brought a civil defamation action in the High Court of Bombay against the news website and its managing and executive editors. It sought an injunction against the defendants, arguing that the statements contained in the article were per se defamatory.
Judge G.S. Patel delivered the judgment of the High Court of Bombay.
After addressing the technical concepts contained in the article, the Court assessed the discrepancies highlighted in the anonymous letter. It noted that the letter referred to an illegal advantage of time gap given to a few traders by affording them the advantage of early information of market fluxes. The NSE rebutted this allegation by emphasizing that there was no manual involvement and that early trading was entirely based on computer-generated and automatic allocation. The Court dismissed the contention, stating that the anonymous letter provided detailed information on how trading information could be done manually.
In order to determine whether the statements contained in the Article were defamatory, the Court applied the test used in Mitha Rustomji Murzban v. Nusserwanji Nowroji Engineer, AIR 1941 Bom 278: “whether any reasonable person, however prejudiced or however strong of opinion, could say that the work in question was a fair comment.” [para. 13] The Court first took particular note of the repeated efforts made by website’s managing editor to obtain a response from the NSE. It emphasized that the NSE as public institution had a duty to respond and failure to do so could amount to admission of truth. It concluded that “a reasonable person used to dealing in financial markets” could perceive the facts contained in the article as true, particularly after the publisher made several attempts to obtain response about the facts. [para. 23] The Court also found no lapse in adherence to journalistic standards in the acts of the defendants.
Based on the U.S. case of New York v. Sullivan, 376 U.S. 254 (1964), the defendants further argued that the NSE as a public institution, could not recover damages for defamation because it failed to prove with convincing clarity that the article was made with knowledge of its falsity or with reckless disregard of whether or not it was false. The Court declined to proceed with the analysis, finding it sufficient to dismiss the NSE’s motion for injunction primarily based on the defendants’ “reasonable verification of the facts” contained in the anonymous letter.
Based on the foregoing analysis, the High Court of Bombay dismissed the NSE’s motion for injunction and concluded that the published article by the defendants amounted to a fair comment protected under Article 19(1)(a) of India’s Constitution.
Decision Direction indicates whether the decision expands or contracts expression based on an analysis of the case.
Global Perspective demonstrates how the court’s decision was influenced by standards from one or many regions.
Case significance refers to how influential the case is and how its significance changes over time.
The decision resists the tendencies of strong arming and criminalizing the acts of journalists. It has opened doors to investigations and introduced concerns of transparency and need for accountability in trading sectors. With particular reference to press, the judgment is a welcome one.
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