Deccan case: IDFC mulls legal action to protect its interest

Infrastructure Development Finance Company (IDFC) today said it would take legal action to protect its interests following a complaint lodged against the company in Chennai.

“This is a frivolous legal action. We haven’t even sold the paper to the party concerned. So, we will take all appropriate legal action, clarify our position and protect our interests,” said Rajiv Lall, vice chairman and managing director while speaking to reporters today.

Central crime branch police had registered a First Information Report (FIR) against IDFC and its senior executives, including Lall, deputy managing director Vikram Limaye and also Deccan Chronicle Holdings Limited (DCHL) whose commercial papers (CPs) complainant Photon Infotech Pvt Ltd had bought.

Photon Infotech, in its complaint, had said IDFC was well aware of the bankruptcy of DCHL but didn’t disclose it and obtained addition security from the company. Photon added IDFC sold the CPs to them even after knowing about the bankruptcy. This came to light during the proceedings launched by IDFC at Debt Recovery Tribunal (DRT), Hyderabad, Photon said in its complaint.

To this, Lall said, “We bought the paper ourselves. If we had known, we wouldn’t have bought it (CP) and we couldn’t avoid our own losses, so it is absurd to suggest that knowingly we sold it to somebody else.” Lall also claimed no paper had been sold to Photon directly from IDFC and it was sold by the intermediary. “No paper has been sold to this particular party (Photon) directly from us,” he said.

Photon had also said credit rating agency CARE was duped by both DCHL and IDFC through fabricated and inflated reports which portrayed that DCHL was in a ‘sound financial condition’. Based on such a projection, CARE categorised DCHL’s credit rating as ‘A 1+’.

According to Lall, nobody was aware of the situation at DCHL. Even rating agencies failed to detect it, so there is no merit in these allegations and appropriate action will be taken (from IDFC).