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Bengaluru Court Issues Notice To Sequoia, Others In Defamation Suit By Algo Legal, But No Interim Gag Order

Bengaluru Court Issues Notice To Sequoia, Others In Defamation Suit By Algo Legal, But No Interim Gag Order

A Bengaluru City Civil and Sessions court today has issued notices to Sequoia Capital, Twitter and a number of media outlets

However, the court refused to pass an order on the interim appeal for an injunction or a gag order on publication of articles related to Algo Legal

Last week, Sequoia Capital India had told its portfolio companies that it is no longer working Algo Legal due to some concerning incident

Hearing the INR 1 Cr defamation suit by Algo Legal and its founder Sandeep Kapoor, a Bengaluru City Civil and Sessions court today has issued notices to defendants Sequoia Capital, Twitter and a number of media outlets including Hindustan Times and Times of India. However, the court refused to pass an order on the interim appeal for an injunction or a gag order on publication of articles related to Algo Legal.

While Sequoia Capital India cut ties with its long-time legal partner last week, reports speculated that Algo Legal had coerced some Sequoia portfolio companies into paying higher fees with threats of investigations from government officials. These reports attracted the defamation suit and the interim appeal for an injunction order.

The Bengaluru court’s notice after two days of hearing was issued specifically on the interim application filed by Algo seeking injunction against publication of articles on the issue, but judge MH Annayyaanavar refused to grant the interim stay on publication of articles. The court held that the defendants have to be given the opportunity to file their objections before any order is pronounced in the injunction matter.

According to a statement shared by Algo Legal, the court has sought objections from Sequoia Capital, Twitter, and other defendants. It also said the court has issued notices to journalists Digbijay
Mishra, Samidha Sharma and Ashok Kumar/John Doe in the matter.

Senior counsel Udaya Holla, representing Kapoor and Algo, argued that the alleged defamatory content was based on statements made in reference to a purportedly ongoing investigation, “in which for six months Sequoia Capital was unable to come to any definitive finding of wrongdoing on part of Mr. Kapoor or Algo Legal”.

The law firm added that the “concerning details” with regards to Algo Legal as stated by Sequoia to its portfolio companies completely lacked any particulars and were baseless.

Algo Legal was founded in 2019 by Sandeep Kapoor, the former general counsel of Sequoia Capital India. Among other tasks and projects, the firm is said to have advised Sequoia and other venture capital funds in India and abroad in several funding transactions since 2019.

Last week, Sequoia Capital told its portfolio companies that it has stopped working with law firm Algo Legal. “Sequoia India & SEA came to be informed of concerning incidents involving Algo Legal, a service provider associated with a former senior Sequoia India employee, and related entities. A recently concluded investigation in a portfolio company has also brought concerning details to light regarding such entities,” Sequoia’s letter said.

Following this, reports emerged that the concerning incidents pointed to by Sequoia involved coercing some portfolio companies into taking up Algo Legal’s services. These reports were denied by the law firm, and attracted a defamation suit against publications Hindustan Times, and Times Of India parent Bennett Coleman And Company Limited (BCCL), as well as Twitter India, Sequoia Capital India and John Doe (a general injunction that could apply to any citizen in India).

The Sequoia-Algo Legal Connection

Sources within Sequoia’s portfolio claimed that for all intents and purposes, Algo Legal was considered a direct representative of Sequoia India. Multiple sources also told us that Algo Legal representatives were part of Zilingo’s layoffs in early 2020. Sequoia Capital India did not respond to Inc42’s queries on the probe into Algo Legal.

The law firm was also the advisor for a number of Sequoia-led funding rounds including Trell’s $45 Mn Series A round in 2020, and CRED’s unicorn round in 2021. It also advised Malabar Investors in the unicorn round for Games24x7, and several other startups in the past three years as per its website. 

The past few weeks have brought waves of challenges for Sequoia — the allegations against BharatPe, Trell and Zilingo have not only damaged some of the reputation of the firm, but these issues have delayed the close of Sequoia’s upcoming $2.8 Bn fund for India and Southeast Asia.