Indiabulls' plea: Canadian court dismisses suit by Veritas, former analyst

Accordingly, Veritas counsel appears before Delhi High Court, which issues fresh summons and adjourns case till April

A court in Canada has dismissed an anti-suit injunction proceeding moved by Veritas Investment Research Corporation and its former analyst, Neeraj Monga, against two Indiabulls group entities. The order by the Superior Court of Justice, Ontario, issued last Friday, also criticised the Canadian research firm’s decision not to respond to proceedings in Indian courts. This is the first major success for the Indian business group in Canada, bolstering several proceedings it had initiated against the Canadian research firm and its analysts in Indian courts.

Following the order, Veritas appeared through its lawyer on Monday in a suit for Rs 200 crore of damages being heard by the high court here. The HC issued fresh summons to Monga before adjourning the matter to April, the Veritas lawyer told Business Standard. He declined to comment on proceedings in Canada. Monga, who now runs his own investment entity, did not respond to an e-mail seeking comment. Indiabulls executives declined to comment.

In June, the Delhi HC had summoned Veritas and Monga in a suit filed by Indiabulls, which sought Rs 200 crore in damages for allegedly filing “defamatory materials” in a separate court case in Canada. Veritas and Monga had moved the Ontario court for an injunction on this June order of the Delhi HC. The motion also sought protection for Nitin Mangal, Monga’s co-author in the 2012 report on Indiabulls, against certain contempt of court proceedings.

In an order dated October 2, Ontario judge Sean F Dunphy said, “Having considered the matter carefully and in as much detail as the restricted time would allow, I have concluded that the motion must be dismissed…”

In September last year, Veritas had instituted a settlement of claim suit, claiming damages of $11 million (Rs 70 crore) for the alleged defamatory announcements and press releases put out by Indiabulls, which led to the closure of its India Research services.

Indiabulls won an ex parte interim order against further proceedings in this case in the Delhi HC. Though Veritas and Monga did not appear, Mangal's lawyer had. In November, he surrendered before the Gurgaon police and was sent to judicial custody. In a separate order last month, the Delhi HC lifted its earlier injunction on The Wall Street Journal on publication of a story on Mangal's tryst with Indiabulls. The order was with the consent of the parties.

Judge Dunphy said Veritas and Monga have to face the consequences of their choice not to appear before Indian courts. “The plaintiffs thus far have determined that it is not in their best interests to attorn to the jurisdiction of the Indian courts…Choices have consequences. It does not automatically flow that this court’s role is to relieve the plaintiffs of the consequences of their choice. They did not venture to give the Indian courts much of a chance to prove them wrong by challenging the anti-suit injunction, despite having an opportunity to do so.”

Further, “I am being asked to assume that any attempt to persuade Singh J (Judge Manmohan Singh of the Delhi HC), for example of the privilege attaching to statements made by defendants filed in the Ontario proceeding, would have fallen in deaf ears. I cannot make any such assumption when they never attempted to persuade him.”

The judge added that he cannot tar India for not allowing every facility allowed in Ontario. “The plaintiffs decry the fact that India does not have the concept of conditional appearance on motions to challenge service ex juris. This is, of course, a relatively recent novelty in our own rules of civil procedure. I can hardly tar India with the brush of failing to accord natural justice for not following every reform to Ontario’s rules of civil procedure.”

The court was also not impressed at Veritas’ 11th hour moves. “The plaintiffs admit to having become aware of the Indian defamation action by (Indiabulls) Housing Finance by June 22. This motion was heard on September 29.” It added that more than 90 days elapsed before the plaintiffs took action and then did so in panic, “asking this court to render a very fast decision and leaving the responding parties with no time to file responses...This smacks of tactical manoeuvres, not genuine necessity,” judge Dunphy said.

CROSS-BORDER DISPUTE

• Aug 2012: Neeraj Monga and Nitin Mangal co-author a research report for Veritas on Indiabulls
   
• Aug 2012: Indiabulls files police complaints in Gurgaon and Mumbai against Veritas and its analysts
   
• Sep 2014: Veritas and Monga move Ontario court for $11 million damages
   
• Sep 25, 2014: Delhi high court ex parte interim order against proceedings in Ontario
   
• May 2015: Indiabulls files suit against Veritas and Monga, seeking Rs 200 crore in damages for submissions made in Ontario
   
• Jun 2015: Delhi HC summons Veritas, Monga
   
• Sep 2015: Veritas, Monga move Ontario Superior Court of Justice, seeking relief against Delhi HC proceedings
  

 

Oct 2: Ontario court dismisses petition
 

Oct 5: Veritas appears in Delhi HC court; fresh summons for Monga, matter adjourned to April