Coffee Day Enterprises ropes in retired CBI DIG to scrutinise books of accounts

Coffee Day Enterprises on Friday said it has decided to engage the services of Central Bureau of Investigation former DIG Ashok Kumar Malhotra to scrutinise the books of accounts of the company and its subsidiaries.

Malhotra will also investigate the circumstances under which Coffee Day Enterprises late founder V G Siddhartha had written the purported letter dated July 27, alleging harassment by the income tax department.

"Malhotra will be assisted by Agastya Legal LLP, New Delhi, consisting of legal professionals lead by their senior partner M R Venkatesh, practicing advocate in High Court and Supreme Court of India who also possesses educational background of a chartered accountant," Coffee Day Enterprises said in a regulatory filing.

Earlier, Coffee Day Enterprises had appointed global accounting firm EY to scrutinise the books of accounts of the company and its subsidiaries. But, it was ascertained that the global accounting major had conflict of interest.

"It has been ascertained by the board in discussions with EY that the said firm has certain conflict of interest to carry out the above referred assignment, since they are rendering services in the area of taxation, software and have also carried out due diligence of the company/ subsidiaries, on behalf of third-party clients," Coffee Day Enterprises said.

"Consequently, the Board has decided to engage the services of Ashok Kumar Malhotra, retired DIG (deputy inspector general) of Central Bureau of Investigation (CBI), to carry out the assignment. Ashok Kumar Malhotra has handled several high-profile cases ranging from investigations involving bank, securities-related cases of Harshad Mehta and other matters. He has also been assisting the Supreme Court of India in several matters," the company added.

Coffee Day Enterprises said its board further understands that Malhotra will appoint and take support of any other professionals or firms to expedite this assignment.

The purported letter written by Siddhartha, which is believed to be the final note by the late promoter and widely circulated on social media, contained statements, alleging harassment of Siddhartha by the income tax department.

Siddhartha was confirmed dead on July 31 after his body was found in the Netravati river in Dakshina Kannada district of Karnataka, a day after he went missing.

On the same day, Coffee Day Enterprises had named independent director S V Ranganath as the interim chairman of the company.

In the letter, Siddhartha had said there was a lot of harassment from the previous director general of the income tax department in the form of attaching "our shares on two separate occasions to block our Mindtree deal and then taking position of our Coffee Day shares, although revised returns have been filed by us".

"This was very unfair and has led to a serious liquidity crunch," the letter, bearing a purported signature of Siddhartha, had said.

However, the department had denied charges of harassment during their probe against Siddhartha and had pointed out that the signatures of the entrepreneur available with them were different from those on a letter being widely published on the social media.

"The authenticity of the note is not known and the signature does not tally with Shri V G Siddhartha's signature as available in his annual reports," the statement from the department had said.

In a press statement issued on July 30, Coffee Day Enterprises had admitted about the purported letter signed by Siddhartha and said it has shared it with the authorities.

"The board also reviewed a copy of the letter purportedly signed by V G Siddhartha dated July 27, 2019 and has shared a copy of the letter with relevant authorities," it had said.

The statement had further said that the board has also sought the assistance of local and state authorities, who are doing their utmost, and relevant officers of the company are cooperating with the authorities as requested.