Deccan Chronicle moves Hyderabad HC to stop management change

Hyderabad-based Deccan Chronicle Holdings Limited (DCHL), which is facing a host of criminal and civil cases filed by the lenders in addition to an ongoing CBI probe into its financial affairs, has approached Hyderabad High Court seeking directions to prohibit the Company Law Board (CLB)'s Principal Bench of New Delhi from proceeding with a case initiated by the Serious Fraud Investigation Office (SFIO).

The SFIO had filed a petition before the CLB, New Delhi, in September this year asking for a change of management at DCHL, among other actions on grounds that the present management had committed irregularities in conducting the affairs of the company.

On August 25 this year the Ministry of Corporate Affairs had directed the SFIO to file a petition against the DCHL management after an inspection report filed by the serious fraud agency in September, 2013, after it had gone through the books of the media house. The company vice-chairman Vinayak Ravi Reddy in his writ petition argued that the case was filed just on the basis of an inspection report even before a proper investigation was carried out to consider such a serious action like change of the management. The petitioner also argued that the Principal Bench of CLB, New Delhi can not proceed with the SFIO petition as several cases pertaining to the company were already being adjudicated by the Chennai bench.

"So far as the irregularities in conducting the affairs of the company in violation under various sections of the Company Act 1956 is concerned, the same are procedural latches and the same cannot lead to a conclusion that such violations are all prejudicial to the interest of the company or the public interest," the petitioner argued.

That the company had defaulted on loans to the tune of over Rs 4,000 crore owed to various banks and financial institutions had come to light in 2012 when IFCI filed a winding up petition in the AP High Court after the media house promoters failed to repay the debentures on maturity.

Later, Canara Bank had formally filed a complaint with the Central Bureau of Investigation against the promoters of DCHL, including its chairman T Venkattram Reddy alleging the financial irregularities such as mortgaging the same property with multiple lenders, absence of proper accounts pertaining to the loan proceeds among other things.