Global private equity major DE Shaw has been accused of "fraudulently" entering into a deal to acquire stake in Amar Ujala Publications, which has now approached the Delhi High Court against the US-based firm.
DE Shaw had acquired 18% stake in Amar Ujala Publications in 2007 for Rs 117 crore and the deal was approved by FIPB, the government body responsible for clearance to foreign direct investment (FDI) proposals.
However, the Hindi print media company last month complained to the FIPB that DE Shaw was in violation of foreign investment rules and termed the deal as illegal.
DE Shaw has already filed a suit against Amar Ujala in this regard.
Now, Amar Ujala has filed a civil suit before the Delhi High Court, wherein it has claimed that the agreement was entered into fraudulently between the erstwhile management of Amar Ujala Publications Ltd and DE Shaw on the basis of false representations made by the global fund house.
When contacted, a spokesperson of Amar Ujala stated that they would strictly follow the FDI Policy and FEMA Rules in the matter.
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The spokesperson added that they had filed a complaint with the FIPB, RBI and Information and Broadcasting Ministry that "the Agreement with the DE Shaw were illegal and invalid and that they would be guided by the instructions of the said departments and would not succumb to the threats of the foreign investor."
Amar Ujala has also claimed that DE Shaw misled the FIPB by not informing them about the guaranteed rate of return and their right to attach 100% shares of the company in case of default, which is in contravention to a sectoral FDI cap of 26%.
Last month, FIPB sought clarifications from DE Shaw on whether the said FDI was in conformity with all the terms and conditions specified in its approval dated June 14, 2007.
FIPB also sought to know from DE Shaw that whether its investment was linked to any assured returns or special rights and has also demanded the copy of their deal agreement.