Home / Companies / News /  Veritas files suit against Indiabulls claiming $11 million in damages


The two-year old legal fight between Canada-based Veritas Investment Research Corp. and the Indiabulls Group has revived, with the former filing a suit in Ontario claiming $11 million from the latter, and the arrest of Nitin Mangal, who co-authored a controversial report by Veritas in 2012 titled Bilking India on three Indiabulls Group companies.

On Thursday, The Economic Times reported that Mangal was arrested by the Gurgaon police on Tuesday and sent to police custody for six days.

In August, Veritas sued Indiabulls Real Estate Ltd and Indiabulls Housing Finance Ltd in Canada, claiming $10 million in general and special damages along with $1 million in punitive damages.

Punitive damages are typically awarded in addition to actual damages in cases wherein the court is convinced that the behaviour of the named entities was harmful and deserves further monetary punishment in addition to the damages.

The Delhi high court, however, has restrained Veritas from proceeding with the suit till the case is next heard in India in February 2015.

An Indiabulls spokesperson said the company has filed an anti-suit injunction before the Delhi high court.

“The Hon’ble high court has granted a stay against the Ontario proceedings and any other consequential proceedings," the spokesperson said.

“A court cannot direct another court to stall proceedings and so the litigants are ordered by way of an anti-suit injunctions. The order is binding on the litigants who cannot proceed with the matter as it could amount to contempt," says Sandeep Parekh, founder of Finsec Law Advisors, a corporate law firm.

Veritas, in its Canada suit, has alleged that the conduct of Indiabulls caused “irreparable damage to their business, professional reputation and goodwill". It has alleged charges related to injurious falsehood, defamation, malicious prosecution, abuse of process and conspiracy against Indiabulls.

Mint has a copy of the suit filed by Veritas in Canada.

Neeraj Monga, executive vice-president and head of global research at Veritas when the report was issued in August 2012 and who left Veritas early this year, refused to comment on the matter when contacted in Canada via email.

“As the legal action is currently before the courts in Ontario, neither I nor my clients wish to comment on this matter at this time," said John Archibald of Investigation Counsel PC, the law firm representing Veritas and Monga in Canada.

The case goes back to 1 August 2012 when Monga, along with Mangal, released a controversial report titled Bilking India on Indiabulls Real Estate, Indiabulls Power Ltd and Indiabulls Financial Services Ltd.

Among other things, the report said disclosures made by the companies were not reliable and that select insiders at Indiabulls Real Estate were gaining at the cost of institutional and retail investors.

Indiabulls responded with full-page advertisements and filed a first information report in 2012 against Veritas and the analysts. The police booked them under Sections 383, 384, 420, 500, 506, 511 and 120B of the Indian Penal Code.

Amit Dube, one of the lawyers representing Mangal, said the Gurgaon police included additional charges related to the forgery of secured documents while arresting him and that he would move a bail application.

Mangal has been questioned by the Mumbai police on several occasions, but he was not arrested as the Bombay high court has already granted him anticipatory bail. Mangal has been accused of charges related to forgery, extortion and conspiracy.

According to the suit filed in Canada, Veritas started offering paid equity research on publicly traded Indian companies on 1 January 2012 and there was considerable interest in the so-called “India Research Services".

“Veritas had also established plans to develop the India Research Services in light of the global reach and interest... However, as a direct result of the defendants’ actions, Veritas was forced to cancel these plans... Veritas formally decided to no longer pursue the India Research Services in early 2013. Following this decision, Monga ultimately left Veritas in 2014," says the suit.

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