Deccan Chronicle Holding concealed several facts like its status as newspaper publisher, links with IPL team, criminal cases against its chairman and action taken by lenders under SARFAESI Act, which resulted in BIFR rejecting its appeal
Deccan Chronicle Holdings Ltd (DCHL), the controversial Hyderabad-based group, which runs newspapers and once owned a cricket team in the Indian Premier League (IPL), has had its application rejected under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). More importantly, in a hard-hitting rejection order the group was told that while it approached SICA as an industrial undertaking, each of its units was registered as a newspaper and hence outside the purview of the Act.
The Appellate Authority at the Board for Industrial and Financial Reconstruction (BIFR), said, “The Central Bureau of Investigation (CBI) has registered a case against DHCL chairman T Venkatram Reddy for criminal conspiracy, cheating and forgery after finding several irregularities in the balance sheet of the company in a forensic audit.”
The registrar of BIFR while withdrawing Deccan Chronicle's registration had stated that the Ministry of Corporate Affairs (MCA) was inquiring into the alleged violations of Company Law by DCHL and this was concealed by the company while submitting its reference.
"On perusal of records, it is also observed that the company had ignored the mandatory provisions of law by not excluding from the relevant Balance Sheet such amounts, which pertains to those properties against which Indiabulls Housing Finance Ltd (IHFL) and other secured creditors have taken possession of the properties under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Thus the Balance Sheet on the basis of which the purported reference was made (to BIFR) was false and improper," the order said.
BIFR noted that DCHL in support of its claim of being an industrial undertaking has failed to submit a copy of relevant certificate issued by the Secretariat of Industrial Assistance. "Although the company is primarily in the business of newspaper, it had filed the reference showing its business to be that of printing which was completely misleading and factually incorrect. It is public knowledge that till recently DCHL operated the Hyderabad team of IPL and also runs more than 50 Odyssey stores across Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra and Delhi NCE dealing with consumer lifestyle products like books, music, stationery, gift and toys," the order said.
Deccan Chronicle had stated that action under Section 13(4) of SARFAESI Act had been taken only to the tune of 9.78% of its securities. However, the BIFR said, "a large number of secured creditors including India Bulls, Canara Bank, Kotak Mahindra, JM Financial, IDFC and State Bank of India (SBI) have confirmed that have initiated SARFAESI action individually against the company much more that what had been stated by DCHL."
"Notwithstanding the above it is also observed that DCHL made its reference (to BIFR) after action under Section 5(1) of the SARFAESI Act has been taken by JM Financial Asset Reconstruction Co Pvt Ltd and Pegasus Assets Reconstruction Pvt Ltd. This reference was, therefore filed in violation of Section 15(1) of the SICA, which states that, 'no reference shall be made to the BIFR after the commencement of the SARFAESI Act, where financial assets have been acquired by any securitization company or reconstruction company under sub-section (1) of the Section 5 of the Act'," the BIFR said in its order.
Here is the detailed order issued by BIFR against Deccan Chronicle...