Absconding directors of Sterling Biotech Group are in more financial trouble
The Enforcement Directorate (ED) warned that it could attach the entire amount of the one-time settlement (OTS) to be paid by the absconding directors of the scam-hit Sterling Biotech Group to the Committee of Banks. The ED informed the National Company Law Tribunal that it is also in the process of declaring the company's promoter Nitin Sandesara as an absconder under the stringent Fugitive Economic Offenders Act, 2018, (FOEA) and the agency has already attached Rs4,700 crore worth of the promoters' assets so far. Since the FEOA supersedes all other laws, the ED can also attach and seize the entire amount of the OTS which the banks, led by the Andhra Bank, expect to get from the Sterling Biotech Group. The agency's response came to the March 14 notice issued by the NCLT, Mumbai members V.P. Singh and R. Duraiswamy, after the Committee of Creditors sought withdrawal of the Corporate Insolvency Resolution Process (CIRP) after the Sterling Biotech Group's absconding promoters agreed to pay an OTS. 
In another revelation on Tuesday, the Committee of Creditors' lawyers said that the promoters have revised the settlement offer and instead of clearing the full OTS by March 31, they will now pay a token Rs179 crore and the rest, estimated around Rs3,100 crore, in June. The Gujarat-based pharmaceutical company owes Rs8,100 crore only to the banks and more to other financial creditors, amounting to a total of around Rs14,938 crore - bigger than the Nirav Modi scam. 
The OTS of around Rs3,100 crore would mean that the banks would have to forget a whopping nearly 65% of their total dues. The NCLT, questioning the sources of funds for the OTS offer, asked the Resolution Professional to verify the authenticity and posted the matter for further hearing on April 26. It has also directed the Ministry of Corporate Affairs (MCA) to give its opinion in the matter as most of the banks involved in the matter are public sector banks. During the last hearing, the NCLT had asked for the views of the MCA, the ED, the Securities and Exchange Board of India, the Reserve Bank of India, the Income Tax Department, and the Central Bureau of Investigation, but only the ED and SEBI have responded so far. 
The NCLT had slammed the Andhra Bank's proposal of an OTS especially since the firm's directors were missing and even specialized agencies like the ED and the CBI have failed to track them down so far. The Sterling Biotech matter came before the NCLT in June 2018 and during pendency of the matter, in the first week of March, the Committee of Creditors comprising banks, suddenly voted to withdraw the proceedings against it in return for a OTS from the Sandesara brothers. If accepted, the OTS plan -- under Section 12A of the Insolvency and Bankruptcy Code, 2016 -- could entail a loss of around two-thirds to the creditors-lenders, and probably help the fugitives emerge unscathed by the scam. According to the company's last Annual Report as on March 31, 2018, it had loans, borrowings, and external commercial borrowings of Rs7,564 crore, and financial creditors have made claims worth Rs14,938 crore. Of this Rs14,938 crore, the RP has admitted claims of Rs8,967 crore till November 21, 2018. The company admitted that its premises were sealed by the ED and it is under the scrutiny of multiple agencies including the CBI and the Serious Fraud Investigation Office (SFIO). In October 2018, the CBI had registered a case against Sterling Biotech and its top officials for obtaining fraudulent loans worth a total of Rs8,100 crore from Indian banks and their overseas branches between 2004-2012. The ED had named a web of 184 group companies in India and abroad, besides 181 accused, and charged the Sandesara brothers of hatching a criminal conspiracy to cheat the banks by manipulating the balance sheets of their companies and luring banks to sanction higher amounts in loans. Taking action on a CBI complaint, in January, the ED nabbed former Andhra Bank Director A.P. Garg in connection with the fraud, accusing him of money-laundering and other charges. On February 14, the Sandesara brothers moved a Delhi court seeking cancellation of the non-bailable arrest warrants against them. Their plea will come up for hearing on April 2. 
  • User 


    Ramesh Poapt

    1 year ago

    Solid political backing as usual.

    HC refuses to stay proceeding in defamation case against Tata
    The Bombay High Court refused to stay proceedings before a magistrate court in a 2016 criminal defamation case filed by Nusli Wadia against Ratan Tata and some other directors of Tata Sons. The Court refused to extend her March 18 order whereby she had restrained the magistrate court from hearing the case until March 27. The court was hearing a writ petition filed by Tata and the other directors seeking that the complaint, FIR and the charge sheet filed against them in the case be quashed.
    While the advocate sought an extension of such stay, the Court pointed out that the next hearing before the magistrate court was in July this year. She said the HC will hear the matter before July and, therefore, the stay was not necessary. In December 2018, a magistrate court in the city had issued notices to Ratan Tata and other directors of Tata Sons in the criminal defamation case filed by Wadia. Wadia had filed the case in 2016 after he was voted out of the boards of some Tata Group companies.
    Wadia had claimed that Tata and others had made defamatory statements against him after they removed Cyrus Mistry on October 24, 2016 as the group chairman of Tata Sons. Wadia was on the boards as an independent director of group companies like the Indian Hotels Company that runs the Taj group of hotels, TCS, Tata Motors and Tata Steel among others. He was voted out by shareholders at a specially convened general meeting between December 2016 and February 2017. He said he approached the magistrate court as he was not satisfied with the explanation the respondents (Tata and others) had given him following his letters to them.
    Wadia, therefore, initiated defamation proceedings against the respondents under section 500 of the Indian Penal Code. Tata and the other directors facing the proceedings, however, approached the HC earlier this month with the plea for quashing. While the case had been scheduled for a detailed hearing in the HC Wednesday, it was adjourned to April 18 following a conflict over the court's roster. Wadia's counsel argued that as per the current roster of Bombay HC, the case should be heard by a division bench and not a single judge.
    The HC has now directed the registry to sort out the issue of the roster and post the matter for further hearing before the appropriate bench. The Court also said the HC registry had brought to the court's notice that the Code of Criminal Procedure (CrPC) required the parties in cases such as the above to remain present in court for hearings. Therefore, unless an exemption was granted by the court, Tata and the other directors of Tata Sons facing the above proceedings will need to remain present in the court.
  • User 

    RIL to gain from personal data laws: Merrill Lynch
    India's new policies around personal data protection (PDP) bill may fetch revenues to the tune of USD1-2.5 billion for the Reliance Industries, while it will have negative implications for companies like Facebook, Amazon, Google and Walmart, said a Merrill Lynch report.
    The report noted that the new regulation or policies around the PDP bill and the guidelines on foreign internet companies and draft e-commerce policy will not go well with India businesses of the US companies, including Facebook, Amazon, Google and Walmart.
    "As and how the new privacy law guidelines become clear, we believe Reliance Industries may be a beneficiary by generating revenues from digital ad (currently not earning any revenues as regulation is not clear). This revenue opportunity could be $1-2.5 billion for RIL overtime," said the Merrill Lynch research report.
    Explaining it further, the report said that most social media platforms have between 200-300 million active users in India, accounting for 13-14 per cent of the global base, and with growing influence of these companies on social media platforms, the government is looking to place some checks and balances -- especially as it heads into elections. 
    However, the report added: "Overall, we do not expect any material negative impact on US internet companies and expect them to tweak their business models to comply with the law of the land."
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


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