The founders of Moneylife magazine have told the Bombay High Court that its coverage of a whistle-blower account on high frequency trading (HFT) in the National Stock Exchange (NSE) was in the public interest and after following fair journalistic practices.
In an affidavit last week, in reply to a civil suit seeking damages of Rs 100 crore, senior financial journalists Sucheta Dalal and Debashis Basu (who began the publication) have pleaded the court not grant the interim relief sought by NSE and, instead, dismiss the petition. Among other reliefs, the bourse had sought the allegedly defamatory articles be removed from the website, moneylife.in.
"The suit is lodged to prevent facts about (their) operations from becoming public…(their) sole object is to intimidate us, stifle free speech and our ability to report freely on their activities, which are matters of public interest and concern," Dalal and Basu said in the affidavit.
They called the suit a classic example of "a corporate giant using large corporate funds at its disposal to steamroll and subjugate a tiny independent publication".
The duo have given proof of e-mails and text messages sent to seek responses of NSE's managing director and chief executive officer, Chitra Ramkrishna, and the vice-chairman, Ravi Narain. Dalal had sent a mail addressed to U K Sinha, chairman of the Securities and Exchange Board of India, with copies marked to Ramkrishna and Narain on June 11. She followed this with a text message on June 15. The article was published on June 19. Moneylife published a second article, seeking a detailed probe into HFT, on July 8.
"The subject matter of the impugned articles is a matter of public importance, since it highlights concerns raised regarding transparency and manipulations in one of the biggest stock exchanges of the country," the journalists' petition said. It argues how it is imperative that the public be informed about the concerns over alleged manipulation and irregularities that were brought to the notice of Sebi by an anonymous whistle-blower in January 2015. Moneylife took it up after five months and wanted to know what action the bourse and the regulator had taken.
"The impugned articles cannot be termed as defamatory but were a bonafide journalistic exercise," the petition added.
A spokesperson of NSE did not respond to an e-mail questionnaire sent on Friday. The bourse is likely to file its response in court next week. It is likely to argue that Dalal and Basu had not provided any proof of alleged misdoing or corruption inside the bourse.
The journalists' response is over a hundred pages and has references to past cases, controversies involving NSE and its staff with other media houses and even a two-decade-old correspondence between Dalal, her then bosses, and the NSE.
In July 1996, Dalal, then working with The Times of India, had written to her executive editor, Gautam Adhikari, recommending that stock quotes of all 1,500 NSE stocks be included in place of the sparsely traded and smaller stocks of rival BSE. At that time, the paper was only carrying the top 100 stocks of NSE, despite its market dominance. This was followed by a letter from the late R H Patil, then managing director of NSE, showing the cordial relations in that era.
However, the petition alleged, an "iron curtain" had since fallen over the affairs of the exchange and it had been fighting this lack of transparency, including reluctance to come under the ambit of the Right to Information (RTI) Act.
"We, as journalists, have a duty to report and highlight concerns raised regarding manipulation in the stock markets, particularly when the country has faced several stock market scams in the past, where the plaintiff's systems have also come in for scrutiny. The impugned articles, when read as a whole, by an unprejudiced reader, cannot be called false and defamatory," the journalists said in the affidavit.
According to them, NSE "culled out specific statements from the impugned articles and twisted them out of context" to make out a case for defamation, "where there exists none". The petition has also annexed media reports from Business Standard and Mint to show how regulatory bodies and a parliamentary panel are paying attention to the issues in HFT.
