After being suspended by the National Stock Exchange for non-compliance of listing agreement, Deccan Chronicle Holdings Ltd (DCHIL) seems to be slipping further into legal complexity.
The promoters of the company – T Venkattram Reddy, Vinayak Ravi Reddy and P K Iyer – have been summoned by a local court in connection with a cheque-bounce case.
The summons have been issued following a case filed by ICICI Bank, one of the biggest lenders of DCHL. The trio and the other directors of the company have been asked to appear in the court on April 10, 2013.
According to the bank, it had advanced Rs511 crore to DCHL over a period of time, including a working capital of Rs350 crore. While a part of the loan was repaid, about `350 crore was pending, for which the company on November 6, 2012, issued a cheque drawn on Canara Bank.
However, the cheque was returned by Canara Bank citing insufficient funds in the DCHL account. Following this, ICICI Bank wrote to DCHL on November 28, asking the media group
to repay the due amount within 15 days.
However, with the repayments not forthcoming, the bank has filed a petition under Section 138 of the Negotiable Instruments Act in a local court. Taking cognisance of the petition, the court has issued summons to the promoters to appear and explain the cheque dishonour.
While the cheque was apparently signed by DCHL’s vice-chairman Vinayak Ravi Reddy, the loan was backed by the mortgage of the company’s assets.
In fact, there are multiple cases pending against DCHL at various forums including the Andhra Pradesh High Court, Calcutta High Court and the Debts Recovery Tribunal in Hyderabad. Some of the lenders including IFCI had sought the winding up of DCHL for recovery of their dues.
The Chennai-based PVP Ventures, which had earlier tried to buy Deccan Chargers through an auction process, has also filed a cheque bounce case against DCHL.
“There is a web of cases against DCHL now. While some of the litigations are civil in nature and would take more time to get adjudicated, the cheque bounce cases are now looking serious. Particularly the case of ICICI Bank, which involves Rs350 crore, would be difficult for the company to settle out of court at this point considering its liquidity situation. However, since it is sub-judice it would be unfair to get into the merits of the case,” a source tracking the developments said. Kotak Mahindra Bank has already proceeded against DCHL under the provisions of the Sarfaesi Act, 2002.