Even before any decision could be taken on a petition filed by IFCI in the AP High Court seeking liquidation of Deccan Chronicle because the media house had huge liabilities, a major scam has engulfed the company.
Financial services and stock brokering firm KARVY filed a complaint alleging that promoters of the Deccan Chronicle Holdings Limited (DCHL) have resorted to financial fraud invoking provisions under Sections 420 (cheating), 406 (criminal breach of trust), 458 (wrongful restraint) and 471 (passing off forged documents as genuine).
Deccan Chronicle promoters T.Venkat Ramireddy, T.Vinayak Reddy, PK Ayyar were named in the Karvy complaint as being responsible for the fraud. Uma Maheshwar Reddy, a Karvy employee, filed a complaint on Tuesday in the Central Crime Police station in Hyderabad. The police then filed an FIR in the 12 additional chief metropolitan magistrate court in Hyderabad.
According to the Karvy complaint and the FIR in the police station, the DC promoters together took a loan of Rs 170 Crores from financial services firm Future Capital. For this the promoters took a non-disposal undertaking power of attorney (NDU-POA) in favour of Future Capital, wherein they have undertaken not to dispose of the shares without the consent of the lender. To facilitate this loan, Karvy confirmed to Future capital that there were 11,28,51,000 shares of DHL their demat accounts. These shares amount to an equity of 54% in the DC group and
On June 1, 2012, the promoters informed Karvy that the arrangement with Future is being terminated.and the Deccan promoters asked Karvy to transfer a part of the shares to accounts held with another depository participant, Religare Enterprises. After asking for a a letter from Future Capital to confirm these facts, Karvy went ahead even before reciving the letter “considering the reputation of the Deccan promoters”
However Future sent a fax message to Karvy confirming that it had provided Rs120 crore to Deccan and Rs50 crore to Aviotech Ltd, a group company, and that they had a Charge I Lien (first rights) on an aggregate of 11.2851 crore Deccan shares held in the accounts of the promoters. But the records available with Karvy showed that the accounts now held only 6.04 crore shares. Future also sent a letter said to have been issued by Karvy which confirms that the total quantity of shares in their depository accounts covered under the NDU-POA stands at 11.2851 crore.
However Karvy now says it never issued any such letter and claims it is a forgery. They allege the depository account holders used a forged letter, committed a fraud and misrepresented the facts that a higher number of shares existed in their accounts for availing of a loan against them thereby committed a breach of trust and forgery.