PMLA clean chit to Chanda Kochhar may help Videocon debt recast plan: Dhoot

An order by the Enforcement Directorate’s (ED’s) adjudicating authority to offer a clean chit to former ICICI Bank chief executive officer Chanda Kochhar and dismiss the attachment of her property by the ED will help Videocon Industries’ (VIL’s) application for a debt recast filed under Section 12A of the Insolvency and Bankruptcy Act.

The company’s promoter Venugopal Dhoot said their application is currently pending with the Committee of Creditors, which will soon vote on their proposal. “With the Prevention of Money Laundering Act adjudicating authority dismissing the attachment of Kochhar’s property and giving a clean chit, Indian banks will be able to vote more comfortably since a major overhang is now gone,” said Dhoot.

While rejecting the ED’s claim, the adjudicating authority said it agrees with Kochhar’s contention that the Rs 300-crore loan given to Videocon was in line with ICICI Bank's credit policy and earlier practices. Besides, the loan was repaid to ICICI Bank. “The said loan account of Videocon International Electronics (VIEL) was never declared a non-performing asset,” stated the order.

The order, dated November 6, said the decision and the transaction of investment of Rs 64 crore in Nupower Renewables (NRL) — managed by Deepak Kochhar, husband of Chanda Kochhar — by Dhoot is not linked with the first information report (FIR) filed by the Central Bureau of Investigation (CBI).

“The FIR alleges no other illegal gratification, undue benefit other than for sanctioning rupee term loan of Rs 300 crore to VIEL (a VIL subsidiary), corresponding to which it is duly established by defendants that the investment made by V N Dhoot of Rs 64 crore to NRL through Supreme Enterprises (a VIL subsidiary) was a genuine business investment contemplated much ahead in time of sanction of the loan,” stated the report.

The order says other senior officials of ICICI Bank at that time, though known and identified, were neither interrogated for the alleged scheduled offences by the CBI nor interrogation, if any, was revealed by the CBI or the ED, the authority’s order dated November 6 said, while dismissing the ED’s attachment of properties.

This order, say VIL promoters, will help them to bring Videocon Group — facing bankruptcy proceedings in Mumbai courts after it defaulted on loans of Rs 40,000 crore — on track.

The offer made by VIL on August 31 this year said the company was impacted by the Supreme Court’s decision to cancel 2G-based telecom licences, which resulted in a loss of Rs 10,000 crore to the company. Besides, the collapse of demand for cathode ray tube televisions and the crash in real estate also impacted its cashflow.

Despite setbacks and losses, Videocon Group said it paid all its loans within the prescribed time and without any concessions, until May 2016.  

In its latest proposal, Videocon promoters have said since 1984 when Videocon Group started its business till December 2016, it was never a defaulter and managed to take on competition from cheap products made in China and dumped on Indian markets. Hence, it should be given a chance to get its company back.

Apart from Dhoot’s proposal, lenders will also vote on offers made by other bidders.

Srikrishna report not submitted to ED under ‘client-attorney privilege’ by ICICI Bank

The ED adjudicating authority order mentions the enquiry report prepared by Justice B N Srikirishna on behalf of ICICI Bank against Chanda Kochhar has not been submitted to the investigating agencies.

The order says ICICI Bank, in its communication dated February 18, 2019, has claimed ‘client-attorney privilege’ on the report.

Hence, the said enquiry was a non-judicial inter enquiry, and the ED has rightly not considered the report as a relied upon document, the order quoted Kochhar as saying. In any event, Kochhar said she has denied all allegations made in the said internal report obtained by the bank and the conclusion arrived at therefrom.

The Srikrishna report was the basis of Kochhar’s removal from the bank by its board.