Sequoia Capital has filed a response to Algo Legal and its founder Sandeep Kapoor’s Rs 1 crore defamation suit. The lawsuit, according to Sequoia Capital, is an attempt to block the development of the inquiry into the law firm’s alleged irregularities.
The venture capital fund argues that the defamation suit should not be granted an injunction by the Bengaluru court because the plaintiffs’ “only motive is to stop the investigation and halt the progress so that the Plaintiffs may have time to wipe out any further evidence that may be recovered that would be detrimental to them.”
Sandeep Kapoor and Algo Legal recently filed a defamation suit against Sequoia and others, alleging that the news articles were maliciously motivated, laced with canards, and involved deliberate misrepresentation of facts. Kapoor stated in the plaint that as a result, he has been ridiculed and jeered in social circles, and that people’s good opinion of him has been effected and that the firm’s three partners and several lawyers were fired as a result of bogus news stories being published.
According to the plaintiffs, Algo Legal’s market position has been negatively harmed as a result of the fiasco.
Sequoia has responded by denying all of Kapoor’s and his firm’s allegations, claiming that the suit was brought with the intent of harassing them and that these proceedings are a publicity stunt intended to drag Sequoia into this case for mala fide motives and to settle personal scores.
Kapoor served as General Counsel for Sequoia until 2019, and his firm was hired to complete their job because of their long-standing relationship. Following that, Algo Legal’s contract was terminated in January of this year due to unforeseen circumstances.
Kapoor served as General Counsel for Sequoia until 2019, and his firm was hired to complete their job because of their long-standing relationship. Following that, Algo Legal’s contract was terminated in January of this year due to unforeseen circumstances. Sequoia explains some of the events that led to the breakup in its answer.
According to the response, Algo Legal and Kapoor received huge, excessive payments from Sequoia portfolio company Zilingo, prompting an investigation. From April 2020 to March 2022, Zilingo and its subsidiaries paid Algo Legal and related entities a total of more than USD 6 million (50 crore), with Algo Legal receiving more than USD 5.2 million (45 crore), leading to the conclusion that several of these payments were not in accordance with the engagement terms/contracts between Algo Legal and Zilingo.
Sequoia has revealed that a company closely linked to Sandeep Kapoor received more than USD 2.2 million (Rs 18 crore) in fees for a software system that was never delivered, and that the services offered did not support the high payments to Algo Legal and allied entities totaling Rs 68 crore.
Because Kapoor worked for Sequoia Capital for nine years and was thus likely thought to be closely associated with or endorsed by Sequoia, the law firm’s termination communication was sent individually with a secure watermark, the allegedly defamatory text was not published by Sequoia, and that no specific allegations against the Law Firm were made. As a result, it could not be sued for defamation, according to Sequoia’s defence
Sequoia has also objected to Algo Legal and Kapoor naming “John Doe” as a defendant, implying that unknown and unnamed individuals may be involved in publishing articles on the subject. According to Sequoia, this would prohibit portfolio firms from making legally permissible statements to persons to whom they owe a duty of care and/or regulatory bodies.
Sequoia claims that none of Algo’s partners or employees have disclosed reasons for their resignations, despite Algo’s allegation that some of its lawyers left the firm as a result of the news articles’ publication.
It was argued that Kapoor and the firm had not demonstrated any proof of reputational or goodwill damage in the eyes of others.
Sequoia claims that the plaintiffs have failed to build out a case for a temporary injunction on these and other grounds.
Sequoia, HT Media Limited (owner of Hindustan Times), and E Eighteen.com Limited (Money Control) had submitted objections to the litigation, according to City Civil and Sessions Judge MH Annayyaanavar. Twitter’s lawyers want more time to respond. Sequoia has made charges about unaccounted payments received by Algo Legal from organisations like Zilingo, according to counsel for Algo Legal, despite the fact that Zilingo’s founder has publicly stated that all payments made were for services delivered. It was contended that because the allegations themselves are vague, the Court should not delay considering these cases.
Algo Legal and Sandeep Kapoor are represented by Keystone Partners and Senior Advocate Uday Holla.
HT Media and E Eighteen.com Limited are represented by Khaitan & Co’s Senior Partner Ajay Bhargava and Partner Nikhilesh Rao.
Aditya Vikram Bhat, Senior Partner at AZB & Partners, is Sequoia’s representative.
Twitter is represented by Manu Kulkarni, a partner at Poovayya & Co., Shravanth Arya Tandra, and Senior Advocate Sajan Poovayya.