Mumbai: The Bombay high court on Friday said the National Stock Exchange Ltd (NSE) cannot use defamation suits to gag the media as it heard a ₹ 100 crore defamation case filed by the bourse against financial news website Moneylife.

You “cannot use defamation to gag the press", justice Gautam Patel said while hearing the matter.

Appearing on behalf of the NSE, lawyer Virag Tulzapurkar argued that an article published by Moneylife on the NSE was defamatory and should not be republished. The article was written by Sucheta Dalal, a consulting editor for Moneylife.

“How is it defamation when Ms Dalal sent you questions before publishing the article and you (NSE) chose not to respond to the query?" the judge asked.

Patel posted the matter for hearing on 24 August.

Moneylife has agreed not to republish the story until the matter is decided by the court. NSE did not immediately respond to an email query sent seeking comment on the case.

On 8 July, Dalal wrote an article on the website alleging that some NSE staffers were leaking sensitive data related to high frequency trading or co-location to a select set of market participants so that they could trade faster than their competitors.

Her article was based on an alleged complaint made to the Securities and Exchange Board of India (Sebi) in January by an official of a Singapore-based hedge fund.

“I wish to draw your attention to a sophisticated market manipulation done at NSE for several years at NSE co-location. The most shocking aspect is that when the matter came to the knowledge of NSE management team, they have chosen to hush up the matter under the carpet rather than coming out in open against the same," said the letter addressed to B.K. Gupta, deputy general manager, Sebi.

“The market manipulation that I am referring to has been occurring by enabling certain vested brokers to get market price information ahead of the rest of the market and thus enabling them to front-run the rest of the market," it adds.

Co-location refers to bourses allowing members to set up automated trading systems on their premises to reduce the time required for orders to flow between the exchange and the broker’s trading system.

Early this week, responding to an email query, an NSE spokesperson said that the exchange had filed a defamation suit against an organization and its representatives who published unsubstantiated and misleading reports against the exchange.

A separate statement from the exchange said that a defamation suit with a claim of ₹ 100 crore had been filed in the Bombay high court.

“As you know, since inception, NSE has been maintaining a high degree of surveillance and integrity in its day-to-day operations, strictly adheres to the rules, regulations and guidelines issued by the regulators from time to time," said the spokesperson in the emailed response.

NSE in a statement on Friday declined to comment further at this juncture.

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