Algo Legal, Its Founder Sandeep Kapoor Withdraw Defamation Suit Against Sequoia

Algo Legal and its founder Sandeep Kapoor have withdrawn the INR 1 Cr defamation suit they had filed in a Bengaluru court against Sequoia Capital and several media outlets earlier this year.

“We have decided to withdraw the defamation suit filed by us against the wholly unsubstantiated allegations made against Algo Legal and Sandeep Kapoor by various media houses. The fact that these allegations have not been proved, or resulted in any action – well over 6 months after they surfaced – clearly shows the falsity of these accusations and the malicious intent with which they were made,” Algo Legal said in a statement. 

“However, instead of being dragged through endless legal proceedings and defending against allegations which continue to remain baseless, unsubstantiated and hollow, we have decided to move forward and do what we do best – which is to service our clients to the best of our ability,” the law firm added.

As per Kapoor’s LinkedIn profile, he founded Algo Legal in 2019 after ending a nine-year stint at Sequoia Capital, where he worked as the general counsel. Later, Algo Legal was an advisor for Sequoia-led funding rounds. 

Kapoor filed the defamation lawsuit earlier this year after some reports said that Algo Legal made some companies in Sequoia’s portfolio pay higher fees to it by threatening them with investigations from officials from the Income Tax Department, the Enforcement Directorate (ED) and with cases related to violations of the Foreign Exchange Management Act (FEMA). The lawsuit also included Sequoia as a party.

Based on it, Bengaluru City Civil and Sessions court issued notices to the VC firm, Twitter, and a few other media outlets, including Hindustan Times and Times of India, in June. 

Following the public fallout, Sequoia in June said that it had ended its association with the law firm and claimed that it found ‘concerning incidents’ involving the firm and related parties. There were allegations against Kapoor that he took advantage of his earlier position as Director Legal of Sequoia to pressure the VC firm’s portfolio companies to make them hire Algo Legal for their legal work.

However, Algo Legal, in a press statement and its lawsuit, said that such baseless references by the VC firm hurt its business and reputation.

As per a Bar and Bench report, the proceedings of the defamation case were underway before City Civil and Sessions Judge MH Annayyaanavar, who had refused to grant any interim stay on the publication of articles relating to Algo Legal.

Sequoia India had also asked the court to dismiss the defamation lawsuit, saying it was an attempt to curb its free speech rights and harm its interests. In a 19-page court filing, the VC firm had called the lawsuit “frivolous and vexatious”.

As per an Inc42 report, Algo Legal was the advisor for Sequoia-led funding rounds including CRED’s unicorn round in 2021 and Trell’s $45 Mn Series A round in 2020. Besides, Algo Legal was also the third-party firm managing the legal aspects during Sequoia-backed Zilingo’s layoffs in mid-2020.

Sequoia was in the eye of the storm earlier this year after multiple reports emerged about corporate governance lapses at its portfolio startups. In a blogpost in April, Sequoia said that the issues were not because of a lack of due diligence.