The duty of transparency and accountability for public institutions, the importance of fair comment in public interest matters, and the need for factual demonstration to dislodge a claim for an injunction.

1. This is an application for injunction in a defamation action brought by the National Stock Exchange (“NSE”), one of the two premier Stock Exchanges of this country. The NSE complains that an article published on 19th June 2015 by Defendants Nos. 2 and 3, Ms. Sucheta Dalal and Mr. Debashish Basu, on their online news and analysis journal or website moneylife.in, is per se defamatory. Ms. Dalal is the Managing Editor of Moneylife; Mr. Basu is its Executive Editor. Their article accuses the NSE of actively permitting, in circumstances that I will describe in somewhat greater detail shortly, illicit trading advantages being afforded to a select few using high-end technology. Much of what is alleged is very technical indeed, but the NSE’s case as presented by Dr. Tulzapurkar is that the assertions made by Ms. Dalal and Mr. Basu, even allowing for the fact that they were based on an anonymous letter dated 14th January 2015 addressed to the Securities & Exchange Board of India (“SEBI”) with a copy to Ms. Dalal, are in themselves reckless and defamatory of the NSE. The article clearly alleges illegality and criminality in the actions of the NSE. It goes further and accuses the NSE of being “like a fortress” and unwilling to part with any information or to provide any clarification.

2. On 14th January 2015 an anonymous letter in hard copy was sent to Mr. B.K. Gupta, the Deputy General Manager of the Market Regulation Department of SEBI, Plaint, Exhibit “A1”, p. 44. This document was copied to Ms. Dalal. It is a most technical eight page letter and it appears to detail at very considerable length what it describes as the illegality or impropriety in “high-frequency trades” (“HFT”) or algorithmic trades (“algo trades”) facilitated by NSE’s allowing co-location of its servers. I do not claim to be able to understand every single one of the financial and technical details that are set out in this anonymous letter, but I think that is of little moment at this interim stage. On 19th June 2015, several months after the anonymous letter, appeared the article on moneylife.in of which the NSE now complains.

3. This article contained the following statements that the NSE says constitute defamation. These are reproduced from paragraphs 11, 16 and 18 of the plaint.

“11(i) Finance Ministry nudges regulators in Mumbai to probe NSE’s HFT scam.

(ii) ...certain institutions registered for HFT...were allowed to profit illegally by the NSE’s (National Stock Exchange) insiders...” immediately preceded by the statement that “...multiple agencies have woken up to the possible dangers of large-scale market manipulation by large institutional traders who run high-frequence trading (HFT) programmes in India.” [Emphasis supplied]

(iii) “...NSE’s insiders allowed some chosen traders to benefit through faster connectivity, day after day...”, followed by the statement that, “These high-frequency trades contributed to the high froth of trading volumes on the Exchange.” [Emphasis supplied]

(iv) “Government sources also tell us that “NSE’s management of HFT servers in the initial years until 2013 (which are the subject of the whistleblower’s letter) may need a detailed review by SEBI or an investigation agency.”” [Emphasis supplied]

(v) “... NSE operates like a fortress and outsiders had no details...” [Emphasis supplied]

(vi) “Then, 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.” [Emphasis supplied]

16(i) “For several months, I shared the letter with key market-players and investigators to find out more; but the NSE operates like a fortress and outsiders had no details.”

(ii) “Nobody we spoke to was surprised to know that the system was manipulated and each one speculated about the likely beneficiaries; but no proof was forthcoming.”

(iii) “The reason for this is best explained on the jacket of Michael Lewis’s book Flash