Case BriefsTribunals/Commissions/Regulatory Bodies

Securities Exchange Board of India (SEBI): SK Mohanty, Whole Time Member, while acting immediately on the matter, was of the opinion that the Noticees were liable to be held jointly and severally responsible for active collusion, for the unlawful gain through illicit means. And further directed to disgorge the amount so gained, while restricting them from the securities market for an appropriate period.

In the instant matter it was alleged and was further established through investigation that the Noticees were the administrators of a telegram channel where they potrayed themselves to be experienced analysts and researchers, further inducing and manipulating investors. The features of the telegram of sending bulk messages were successfully misused for ‘illicit activities like manipulating the stock prices by repeatedly sending unfounded stock recommendations’. The same was advertised through facebook (Meta) and WhatsApp, resulting in members in thousand digits.

The description on the Telegram Channel was:

“We are team of 4 Research Analysts with combined experience of 40 years. All calls are for study purpose only. Taking any trade consultant your financial advisor. We are in the process of getting SEBI Research Analyst Registration.”

The Tribunal was very blatant in its approach towards the Noticees, when it said,

“The tips circulated through the Channel create an inducing impact which are then followed by the subscribers and ironically, such stock tips may also prove to be true, if large number of recipients of such tips believe it and collectively act on it. Slowly and gradually, after seeing the price of the said thinly traded scrip actually rising, more and more subscribers start believing in the tips and start acting on it, which further strengthens the belief of such tips being genuine, as large number of individuals end up acting on such tips and by their collective buying actions, convert the deceitful, specious and baseless tips to realty”… “Such collective belief by the large base of subscribers of the channel in the stock recommendations given by the Noticees would lead to a bull run in the said scrips and propel the scrip price/volume upwards, ultimately giving a golden opportunity to the Noticees to make unlawful profits by selling their shares in the same scrip”.

The Tribunal even cited the relevant observations by the Supreme Court in N. Narayanan v. SEBI, (2013) 12 SCC 152 and Kishore Ajmera v SEBI, (2016) 6 SCC 368 on the pertinent matter.

The concerns of the Tribunal came out in such words:

“…Such dubious acts of the Noticees are quite alarming hence, it becomes imperative to act immediately and restrain them from perpetuating such fraudulent activities in the securities market through any other scheme and in any other manner thereby further threatening the integrity of the securities market.”

“…Nevertheless, SEBI being entrusted with the mandate of protecting the interest of the investors cannot be a mute spectator irrespective of the technology used by the delinquents and such delinquents need to be kept out of the walls of the securities market”.

“…b) The alleged scheme of enticing and inducing others to deal in certain securities thereby creating adverse and artificial impact on the price and volume of those scrips, has been ingenuously crafted and implemented in a manner that it was an impossible task for the common investors to identify any dubious hidden intent behind such messages and tips that were being circulated amongst them through the Telegram Channel”.

Resultantly, the Tribunal restricted all the Noticees from the securities market, impounded banks accounts of the Noticees jointly and severally and directed to open an escrow amount to deposit the amount.[Stock Recommendations using Social Media Channel (Telegram), In re,2022 SCC OnLine SEBI 5, decided on 12-1-2022]

Agatha Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Delhi High Court: Jasmeet Singh, J., held that plaintiff made out a strong prima facie case and the balance of convenience also lies in its favour. Defendants agreed that they will take down the infringing contents with regard to the cinematograph film in a channel in accordance with law, as and when a request is received from the Plaintiff, in not later than 36 hours.

Petitioner filed the present suit against Telegram.

In the instant matter, plaintiff apprehended and believed that the defendants will unauthorizedly copy, disseminate, stream and made available for download on the internet, the cinematograph titled ‘MAADATHY’.

Further, the plaintiff submitted that the plaintiff had spent valuable consideration in obtaining the cinematographic rights of ‘MAADATHY’, and in case, the same is unauthorisedly made available for download on the internet, it will suffer irreparable loss and injury which cannot be compensated in terms of money.

Senior Counsel, Rajshekhar Rao appeared for defendant 1 and stated that defendant 1 will take down infringing contents with regard to cinematograph ‘MAADATHY’ in a channel in accordance with law, as and when a request is received from the plaintiff, not later than 36 hours informing the defendant No.1 in writing by the plaintiff with particulars about the same. The information by the plaintiff must specifically indicate that cinematograph ‘MAADATHY’ is being contained/shown on that particular channel/s.

Matter is to be listed on 21-09-2021. [Neestream Creations (P) Ltd. v. Telegram FZ LLC, 2021 SCC OnLine Del 3598, decided on 23-06-2021]

Advocates before the Court:

For plaintiff: Mr. Prince Jose, Mr. Justin George, Mr. Santosh Kumar Sahu, Advs.

For Defendants: Mr. Rajshekhar Rao, Sr. Adv. with Ms. Anushka Sharda, Mr. Madhav Khosla, Ms. Mansi Sood, Ms. Smriti Nair, Advs. for Def.-1

Case BriefsHigh Courts

Delhi High Court: Mukta Gupta, J., directed “Telegram” to take down the channels that are infringing plaintiff’s rights and granted ad-interim injunction to Jagran Prakashan Limited.

Plaintiffs’ claim in the present suit is that its digital e-paper is available on Readers of the newspaper have the option to either subscribe the physical/print newspaper or they can log on to the plaintiff’s website for the purpose of reading the said daily newspaper.

Plaintiff’s counsel, Jeevesh Mehta submitted that taking into consideration the present circumstances of spread of COVID-19 pandemic, plaintiff is not charging any subscription fee from its readers in India. Though fee of 1 dollar is being charged in other countries.

Further, plaintiff claims to be the exclusive owner of the trademark Dainik Jagran.

Grievance as placed by the plaintiff is that, defendant 1 (Telegram) a cloud based instant messaging and voice over IP service, allows its users to create channels while not disclosing the identity of these users and these users have created channels on which plaintiffs e-paper are being uploaded in PDF format on daily basis.

With the creation of these channels, users can now download the previous editions of e-paper too which otherwise would not have been available, if not subscribed.

Plaintiff alleged that defendant 1 was indulging into reproducing, adopting, distributing, transmitting and disseminating the e-newspapers of the plaintiff and thereby not only causing the plaintiff serious financial loss but also violating the plaintiff’s trademark rights as well as copyrights in the e-newspaper. 

Defendant 1 is required to conduct due diligence and in terms of Rule 3 sub-rule 4 of the Information Technology (Intermediaries Guidelines) Rules, 2011 on being informed about the misuse, the defendant No.1 is required to pull down the said channels within 36 hours.

Bench on perusal of the above stated that, balance of convenience lies in favour of the plaintiff.

Consequently, an ad-interim injunction is granted in favour of plaintiff and against defendant’s 1 and 2. Further, defendant 1 is also directed to disclose the basic subscriber information/identity of the users/owners of the channels. 

Thus, defendant 1 is directed to take down/block the telegram channels or any other similar channels infringing rights of plaintiff with 48 hours of receipt of this order. [Jagran Prakashan Limited v. Telegram FZ LLC,  2020 SCC OnLine Del 615 , decided on 29-05-2020]