Malicious Falsehood Can't Become Freedom Of Speech, Care To Be Exercised To Avoid Denigration Of Competitor's Goodwill While Advertising: Delhi HC

Observing that malicious falsehood cannot become freedom of speech, the Delhi High Court has observed that care is to be exercised in order to avoid disparagement of another's products or denigration of the goodwill and reputation built by a competitor while engaging in advertising one's own products.

"While some latitude is to be given for hyperbole and commendatory expression for oneself with an attempt to show down the competitor, there can be no license to anyone to denigrate the competitor. The courts have protected parties who have been at the receiving end of such negative advertisements," Justice Asha Menon observed.

The Court was dealing with a plea filed by FIITJEE Limited, a company engaged in imparting education to students for securing admission to various educational institutions, seeking an ex-parte injunction against the defendants, Vidya Mandir Classes, requiring them to immediately take down an allegedly defamatory and scandalous YouTube video.

It was the case of the plaintiff that the video which was uploaded on YouTube by defendant No.2, contained falsities as the said defendant was seen in the video introducing the topic as akin to the battle between Sri Ram and Ravan thereby suggesting that the plaintiff was in the position of Ravan by not heeding to the warnings of defendant No.1 on previous occasions. According to the plaintiff, the company was painted in a negative light by the use of such metaphors.

It was also the plaintiff's case that the public was told that FIITJEE had misled the parents, held the parents and children hostages, was focused only on making money, indulged in kidnapping and extortion, while at the same time ill-treating its teachers by not paying salaries and so on.

The plaintiff also argued that there was a comment on its refund policy and that there was a Central Bureau of Investigation (CBI) case against the plaintiff.

It was further submitted by the plaintiff that it was fair practice in the industry for institutions to issue advertisements where a comparative performance is published. However, since the comparison in the advertisement issued by the plaintiff was not complimentary to the defendants, the offending video was uploaded by the defendant no.2.

On the other hand, the defendant no. 1 argued that no relief could be granted at an interim stage and that the plaintiff could be compensated with award of damages, if the comments in the video were found to be unjustified. However it added that if the video was taken down, the defendant would get no opportunity to prove justification.

On behalf of defendant no. 2 it was submitted that since the plaintiff had claimed damages, it was disentitled for interim injunction. It was further submitted that every word in the video could not be looked into at this interim stage so as to determine whether they constituted defamation or not.

"As traditionally, transfer of knowledge has been considered as the highest of all human action and does not involve accumulation of wealth, one is hesitant to use the word "business" rivals to describe the plaintiff and the defendants but since both are incorporated entities, there appears to be no other apt word to describe them. Considering that the pool for both of them is the same i.e. the young students in the Higher Secondary Schools, who are desirous of joining premier engineering colleges and institutions, they seek to exert themselves to attract more and more from the common pool. In normal course, such competition would work for the improvement in the quality of the services and must be welcomed," the Court said.

However, the Court added that there are occasions when competition takes an ugly turn. Referring to the preamble to the Competition Act, 2002, the Court said that while practices having adverse effect on competition need to be prevented but at the same time, competition must be promoted and sustained to protect the interest of consumers and to ensure freedom of trade carried by all participants in the markets.

Noting the plaintiff's submission that the defence of justification is not of the same caliber as the defence of truth, the Court said:

"Truth is an absolute defence and no injunction can follow when truth is pleaded. But it is undeniable that justification can be established only at trial and a defendant ought to have an opportunity to establish it through evidence. When the plea of justification is taken, the courts are slow in issuing injunctions against publication. The general view taken is that if the defendants fail to substantiate their defence of justification, then the plaintiff would become entitled to damages."

Further referring to the Bonnard Rule which is followed by the courts in determining whether interlocutory injunctions should be granted against publication in cases of defamation, the Court observed:

"In Bonnard it was decided that an interim injunction should not be awarded unless a defence of justification by the defendant was certain to fail at trial level. Free speech has been held to be of paramount importance. The right to free speech must remain unimpeded, except when it leads to the commission of a wrongful act. Or the words published or spoken are ex facie untrue."

Coming on the question as to whether the video in question contained any disparagement or defamatory matter, the Court was of the view that the defendant No.2 had used very offensive words alleging that the plaintiff would kidnap and take the students hostage and put them under such pressure and indulge in extortion.

"Whether there is one disgruntled teacher or several, as are the varying stances of the plaintiff and the defendants, there may be some material for the defendants to have claimed that the teachers were dissatisfied. It would be an inquiry during trial whether, on whatever material the defendants had relied on, such an inference can be drawn and statements made. Similarly, criticizing the refund policy on the basis of the decisions of the Consumer Disputes Redressal Forum prima facie does not appear to be defamatory and that too of a scale which would require immediate directions to pull down the video," the Court said.

It continued,

"But, to accuse someone of kidnapping, extortion etc. is different. Use of such strong words is inappropriate to say the least. It directly impacts the parent who would be discouraged with such negative description of the plaintiff. These words ex facie are untrue. These words cannot be allowed to remain. This Court, however, does not agree with the submission of the learned senior counsel for the plaintiff that removal of the offensive words will not be sufficient to meet the ends of justice at this interim stage."

Accordingly, the Court observed that the defendants have established that the balance of convenience was in their favour as no harm would be caused to the plaintiff if the video remained, that cannot be compensated through award of damages.

Therefore the Court was of the view that the defendants will have to take down the said sentences in the video and ensure that no version with such content is in circulation, depicting the plaintiff as a set of criminals.

"Accordingly, an affidavit shall be filed by the defendants to this effect that they have edited out the aforementioned offending words and sentences that have been used in the video. The same be filed within four weeks," the Court ordered.

Case Title: FIITJEE LIMITED v. VIDYA MANDIR CLASSES LTD. & ORS.

Citation: 2022 LiveLaw (Del) 121

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