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Delhi High Court directs Google, Twitter to take down article facilitating short selling in stock market

Delhi High Court directs Google, Twitter to take down article facilitating short selling in stock market

Aditi Singh

In one of the first orders in the country on the practice of “short selling” in the stock market, the Delhi High Court has directed Google and Twitter to take down a defamatory article on the plaintiff, Ebixcash World Money Ltd.

A similar John Doe order was also passed by the Court with respect to the article.

The order was passed by a Single Judge Bench of Justice Jayant Nath in a suit by Ebixcash  against the members of the Viceroy Research Group.

As per the plaintiff, the defendants held “shorting positions” in various stocks of Ebixcash and its group companies, and have a “notorious reputation” for spreading false information to the public.

Short selling refers to an investment or trading strategy that speculates on the decline of a stock or other securities price. In short selling, a position is opened by borrowing shares of a stock or other asset that the investor believes will decrease in value by a set future date.

The Ebixcash group is a supplier of on-demand software and e-commerce services to the insurance, financial, healthcare and the governance industries. It has claimed that it has more than 9000 employees, and exercises the highest standard of financial and professional discipline with an exemplary track record in terms of compliance, ethics, development etc.

It was alleged that Viceroy Research Group made false and malicious statements in an article published on its website to defame them.

The article titled “Ebix-Goodwill Hunting: The alchemy of creating profits” made several allegations of illegal and unlawful transactions against the plaintiff. After listing the “many red flags” raised with respect to the business of the plaintiff, the Court concluded that at least two statements made by the defendants were blatantly false.

The two statements pertained to the alleged investigation being conducted by the Security Exchange Commission and Internal Revenue Service of the USA against Ebixcash. The Court also opined that the allegation of round tripping cash from India to Mauritius was prima facie false, disparaging and malafide.

The Court issued notice to the defendants in the suit. Interestingly, the Court stated that notice might be issued through email as well.

Meanwhile, an injunction order was passed restraining Google, Twitter and all such platforms from hosting the article.

Ebixcash was represented by Senior Advocate Sandeep Sethi with Advocates Rajshekhar Rao, Aditya Swarup, Anurag Rawal and Rajat Sehgal.

The matter will be heard next on September 4.

Read the order: