Delhi HC summons Veritas, Monga

Fresh suit by Indiabulls seeks Rs 200 cr in damages; summons to be served through external affairs ministry

The Delhi High Court has summoned Canadian research firm Veritas Investment Corporation and its then research head and executive vice-president Neeraj Monga in connection with an alleged defamatory report published in 2012 on the Indiabulls group and certain submissions made in subsequent legal proceedings in Canada.

The duo is required to appear on October 5. The order came in a suit for damages filed by Indiabulls recently claiming compensation of Rs 200 crore. In the order posted on the court website, judge Jayant Nath said, "Plaint be registered as suit. Summons in the suit and notice on the application be issued to the defendants through Ministry of External Affairs, returnable for 05.10.15. The plaintiff are also permitted to serve the defendants by email and file an affidavit of service."

This fresh suit has come in response to certain alleged "defamatory materials" filed by Veritas and its associates in certain legal proceedings in Canada. In September last year, Veritas had instituted a Settlement of claim 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.

An email sent to Monga and the representative of Veritas on Monday did not elicit any response. Indiabulls executives declined comment citing sub-judice nature of the issue.

In the suit, Indiabulls had said that the "Bilking India" report was factually incorrect and defamatory and had severely tarnished the image of the group. According to the petition, several prospective investors were discouraged by the negative publicity and as a consequence Indiabulls has suffered immense financial losses.

Indiabulls has also relied on certain alleged defamatory material filed by Veritas and its former employees in legal proceedings in Canada, "Where they have made sweeping, but baseless and unfounded allegations."

On August 8, 2012, Veritas published a report titled 'Bilking India' authored by Monga and his Indian associate Nitin Mangal. The report based on publicly available sources of information made several observations, which Indiabulls says are factually incorrect. Indiabulls issued several clarifications but claimed in legal proceedings that it has continued to face adverse publicity. The Indian firm has also produced emails allegedly sent to one of its well-wishers by the Veritas team to establish that the report was made available to select subscribers before its wider publication, thereby allegedly enabling them to take part in short selling. Veritas has contested these claims in turn alleging its promising business had to close down because of Indiabulls actions.

While Veritas and Monga have not yet appeared before the Indian courts, Mangal was interrogated by the local police and remanded to judicial custody for several weeks last year before he got bail. Three years later, the report has led to several suits and counter suits across the courts in two countries, which are running concurrently.