Arbitrator asks DCHL to give Rs 50 cr security to Religare

Bombay HC ruling in Feb had asked DCHL to deposit Rs 101 cr worth of security in favour of Tata Capital Ltd

The promoter entities of debt-ridden Deccan Chronicle Holdings Ltd. (DCHL) and the company will have to make a security deposit of Rs 50 crore in favour of Religare Finvest Ltd (RFL) as part of the process to settle its financial dispute with the lender.

This is similar to the Bombay High Court ruling in February, which had asked DCHL to deposit Rs 101 crore worth of security in favour of Tata Capital Ltd.

The Delhi High Court appointed arbitrator on Monday asked DCHL and related parties to furnish security in the form of tangible assets or bank guarantee within the next 4 weeks, which will remain in the joint custody of RFL and DCHL in a locker in nationalized Bank.

In July 2012, the DCHL had disclosed to the stock exchanges that promoter entities pledged 14.5% stake with RFL to raise money.

In a disclosure to the bourses, Religare Finvest said that a little more than 30.2 million shares of DCHL "have been pledged/ available in collateral given by the various clients as a security to secure the loan against securities facility." DCHL promoters held stake in the company via various entities.

Religare was known to have sanctioned a loan of Rs 220 crore to DCHL at 19% interest per annum in 2012, for which a part security was equity stake pledged by the promoters. However, the share price of DCHL saw a sharp fall and was hitting lower circuit on the stock exchanges within a few days after the share pledge.

This prompted RFL to ask borrowers to deposit Rs 40 crore worth of additional security. The borrowers defaulted on this obligation to RFL and the matter reached the court, where DCHL promoters agreed for the matter to be settled through arbitration.

Legal experts involved with the matter believed that DCHL may approach Delhi HC for a stay. However, the company had related parties had not sought any stay so far on a Bombay HC rulling in case of tata Capital.

DCHL and its promoters, who are said to have incurred debts worth around Rs 5,000 crore, have already mortgaged various assets including movable and immovable properties in Hyderabad, Vizag, Vijayawada, Kadapa, Mumbai, Delhi, Bangalore, Chennai to banks and financial institutions. In Hyderabad, they have also mortgaged properties at Gachibowli, Secunderabad, Banjara Hills, Kondapur, Basheerbagh, Kukatpally and Somajiguda.

Apart from equity stake to RFL, the DCHL promoters had assigned their Deccan Chargers franchise agreement without BCCI's consent, in addition to creating a mortgage on their IPL franchise payment, sponsorship payment to be received during the year, amounting to Rs 71 crore.

Of this, the August 17, 2012 disclosure to RoC Hyderabad shows that Religare had a charge on DCHL's 3,602 sq yard property at Karimnagar and 2,519 sq yard plot containing a three-storeyed semi-constructed building at 'A Narayanapuram in Anantapur district that were offered earlier along with the Deccan Chargers assets.