Zoho files Rs 10 crore defamation suit against Flexype; Here's what happened

Zoho Corporation has filed a ₹10 crore defamation suit in the Madras High Court against Flexype Technologies Pvt Ltd and its co-founder Azeem Hussain, legal site Law Chakra reported on Wednesday.

Zoho has sought damages and injunctive relief over allegedly defamatory social media posts related to its accounting software Zoho Books.

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The case came up for hearing on Wednesday before Justice Senthilkumar Ramamoorthy, who reportedly raised questions on whether the court could assume jurisdiction simply because the content was available online. The court observed that accessibility of online content does not automatically mean every court has jurisdiction to hear a case.

Zoho, however, argued that the posts had wide reach and that the impact of the alleged defamatory statements was felt in Chennai, where the company has significant business operations. 

According to the report, the court noted that the plaint did not clearly set out specific jurisdictional facts, particularly on how the alleged harm affected Zoho's business in Chennai. 

Zoho's counsel admitted that the pleadings could have been drafted more comprehensively. Taking this into account, the court allowed Zoho to file an additional affidavit to establish that a part of the cause of action arose within Chennai, which would justify jurisdiction. 

The matter has been posted for further hearing on April 17.

The dispute began after Azeem Hussain, in a LinkedIn post, raised concerns about Zoho Books. He alleged that certain failed transactions were wrongly recorded as successful payments, leading to financial discrepancies and operational difficulties for his company.

Zoho has denied the allegations.

In a detailed statement, the company said the issue raised by FlexyPe had nothing to do with Zoho Books. "It was caused by incorrect payment status updates from a third-party tool that FlexyPe was using called Cashfree, which marked incomplete or dropped transactions as successful, leading to reconciliation discrepancies."

Zoho said it had actually helped FlexyPe identify the issue, and "CashFree has acknowledged that the issue was on their side. The Cashfree team has publicly confirmed the issue."

"Unfortunately, while the investigation was still underway, FlexyPe prematurely took to social media and made a big attack on Zoho Books that was entirely false. Even after it became clear that the issue was not with Zoho, they have not retracted their falsehood," Zoho said. "As a result, we are compelled to pursue stringent legal action on FlexyPe for posting these malicious false claims."