Defamation / Reputation
Johnson v. Steele
Closed Expands Expression
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The Delhi High Court directed the plaintiffs to pay INR 1,50,000 (approx USD 1,835) to each of the two defendants, and INR 47,00,000 (approx USD 57,503) to public causes after noting that the defamation suit was filed to suppress dissent and criticism and therefore, was a “gross abuse of the process of this Court”. In the instant case, National Stock Exchange (NSE), one of the premier stock exchanges in India, filed a case against the defendants – Ms. Sucheta Dalal, Managing Editor of Moneylife, an online news website and Mr. Debashish Basu, Executive Editor of Moneylife for publishing articles accusing NSE of facilitating impropriety in “high-frequency trades” or algorithmic trades, permitting illicit trading advantages to certain people and being unwilling to part with any information or to provide any clarification. The judge held that the defendants made every effort that a reasonable person would in checking the veracity of the claims including carrying out an independent investigation and wiring letters to the higher authorities of NSE.
The plaintiff, National Stock Exchange (NSE), one of the premier stock exchanges in India, filed a case against the defendants – Ms. Sucheta Dalal, Managing Editor of Moneylife, an online news website and Mr. Debashish Basu, Executive Editor of Moneylife for publishing articles dated June 19, 2015 and July 8, 2015 [p. 1].
The article made reference to an anonymous letter sent to Mr. B.K. Gupta, the Deputy General Manager of the Market Regulation Department of Securities and Exchange Board of India (SEBI). The letter accused NSE of facilitating impropriety in “high-frequency trades” (“HFT”) or algorithmic trades (“algo trades”), permitting, illicit trading advantages to certain people and being unwilling to part with any information or to provide any clarification [p. 1-2].
Some of the statements considered defamatory by the plaintiff include: “certain institutions…..were allowed to profit illegally by the NSE’s insiders, “NSE operates like a fortress and outsiders had no details”, and “there is the issue of corruption. Clearly, people at the NSE and SEBI who permitted the manipulation of algo trades and attempted to bury the scandal cannot be in charge of this investigation” [p. 3].
The plaintiff contended that these statements had a detrimental effect on the NSE since it conveyed to the readers that the NSE was involved in “serious wrongdoings” and was “complicit in permitting these illegal HFTs or algo trades”, which according to them were entirely false [p. 10] and fell outside the scope of fair comment and qualified privilege [p. 11].
This case was presided over by Justice G.S. Patel of High Court of Bombay. The central issue for consideration was whether the articles published by Moneylife, an online news website were defamatory in nature. While deciding this question, the judge referred to different tests evolved in New York Times v. Sullivan, Reynolds v. Times Newspapers, Rajagopal v. State of Tamil Nadu and Mitha Rustomji Murzban v. Nusserwanji Nowroji Engineer.
The defendants contended that the plaintiff being a “public persona or figure or institution” could not recover damages in a defamation action unless it proved with convincing clarity that the statements were made with knowledge of their falsity or with reckless disregard of whether or not it was false [p. 22]. This standard requires the plaintiff to show that there was intentional falsehood or a reckless failure to attempt the verification that a reasonable person would do [p. 26]. The judge noted that several attempts were made by the defendants to verify the information presented in the anonymous letter: on June 11, 2015, the first defendant Ms. Sucheta Dalal, emailed the Chairman of SEBI, Mr. Ravi Narayan and Ms. Chitra Ramakrishan, people who held key positions in the NSE’s dealings, processes and affairs, seeking their response, however they didn’t respond to Ms. Dalal’s queries [p. 16]. On June 15, 2015, reminder mail was sent to these people, and on the next day, SMS was also sent, however they were all ignored by NSE [p. 16].
Herein, the judge observed that although NSE was not bound to respond to “any and every person” who writes to them, in this case, the defendant was a “much-decorated and highly regarded journalist in financial sectors with nearly three decades of experience in the field”, responsible for exposing the 1992 Harshad Mehta scam and had the experience of working closely with former chairman of SEBI, and therefore could not be said to be “remotely irresponsible, scare-mongering, populist or given to hyperbole” [p. 17]. The judge observed that the defendant had fulfilled all her duties by publishing the article which referred to the anonymous letter only after making her own investigations and soliciting the views of people involved in the management of NSE, and since the letter was so detailed, it called for a response from NSE, irrespective of the source [p. 17].
The plaintiff had further contended that the contents of the article were false and therefore, defamatory. At this point, the judge remarked that the accuracy of the contents didn’t matter at this stage as NSE had not provided their response when they had an opportunity to provide it, and it was like saying “your articles are per se defamatory because they are contrary to the information we now provide in our plaint but which we did not provide before you wrote your articles, though you did seek our response.” The judge noted that had NSE responded, and the defendants, had published the article without further investigating the response, the NSE might then have had a case to make [p. 17].
The judge held that NSE was incorrect in accusing Ms. Dalal of a lapse in ethical and journalistic standards, as the defendant like a “responsible journalist” and not some “sensationalist muck-racker”, didn’t merely accept the anonymous communication but took all the possible steps before going to the press to verify the information, thereby abiding by ethical standards [p. 19]. The court noted that NSE, being a “public institution” and “custodian of public funds (in some sense)”, needed to handle their operations with “complete transparency, accountability and openness in its actions”. According to the court, although the NSE did not have a duty to respond to every “wild or reckless allegation”, but not responding to a “person, having made some enquiries, and herself having something of an established track record” indicated “egregious hubris and arrogance or, alternatively, an admission that there was an element of truth in what was being said” [p. 20].
After acknowledging that NSE was a “public body”, the court discussed the applicability of the UK case Reynolds v. Times Newspaper. While the court did apply some elements of the actual malice standard as devised in NYT v. Sullivan, it noted that the defendants’ reliance on Reynolds v. Times Newspapers Ltd & Ors was better suited to the case as it was closer to Indian legal jurisprudence. The court noted that although the Reynolds test i.e. the journalist in question had a duty to publish an allegation even if it ultimately turned out to be wrong considering the seriousness of the allegation, nature and status of the information, urgency of the matter etc., it could not be adopted as an “absolute standard” since it had been abolished in England after enactment of the Defamation Act, 2013, it nevertheless, contained valuable guidance to judicial assessment in the present case [p. 22].
The court then discussed the standards laid down in the Mitha Rustomji Murzban case i.e. what would a reasonable person do, and in this case, “what would a reasonable person used to dealing in financial markets make of the fact that Ms. Dalal had sent this query and this letter to the NSE and sought its responses not once but three times and received no response?”. The court noted that the defendants behaved in a manner similar to how a reasonable person would behave in cases of refusal to answer a legitimate query, raised in the public interest and therefore, this didn’t make the alleged article defamatory [p. 23].
The court also made some important observations regarding use of defamation law “to gag, to silence, to suppress, to subjugate”: “I do not believe that a defamation action should be allowed to be used to negate or stifle genuine criticism, even pointed criticism or 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. It is to me a matter of very great dismay that the NSE should have attempted this action at all. Except where it is shown that the article complained of is facially defamatory, that is to say, it is prima facie intended to defame or libel, an injunction will not readily be granted. Every criticism is not defamation. Every person criticized is not defamed” [p. 24]. The court also noted that defamation law which is a restriction on freedom of expression, was already a “volatile” right and being “sensitive to assault” should be construed narrowly [p. 25].
While noting the importance of the freedom of expression which was won after “years of sacrifice and toil and struggle”, the judge noted the trend of deriding “every section of the media as mere papparazzi, chasing the salacious and steamy”. The judge remarked that, “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. Neither of our principal stock exchanges are strangers to scandal” [p. 25]. The court further noted that “quelling dissent and doubt by strong-arming seems to me a decidedly odd way of going about restoring public faith. It is not a move that, from a public institution, readily commends itself” [p. 26].
To conclude, the judge held that the legal standard set to demonstrate “actual malice and a wanton and reckless embracing of falsehood” was higher for public bodies and figures. In the instant case, plaintiffs were unable to show intentional falsehood, or a reckless failure to attempt the verification that a reasonable person would. The judge therefore, directed the plaintiff to pay INR 1,50,000 (approx USD 1,835) to each of the defendants, and INR 47,00,000 (approx USD 57,503) to public causes for the treatment of indigent people at the Tata Memorial Hospital and the Masina Hospital after declining the plea for an injunction and dismissing the Notice of Motion by the plaintiff and noting that the entire process was a “gross abuse of the process of this Court” [p. 27].
Decision Direction indicates whether the decision expands or contracts expression based on an analysis of the case.
The judge expanded the freedom of expression first, by noting the misuse of defamation law to quell dissent, criticism and legitimate questions in public interest, second by raising the standard of proof required in defamation cases against public figures and third, by the important important role being played by journalists in exposing the scams and scandals prevalent in the country for the betterment of society.
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.
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