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The Supreme Court has directed troubled newspaper publisher Deccan Chronicle Holdings (DCHL) to find a buyer for its Banjara Hills properties, mortgaged with Indiabulls Housing Finance (IBHFL), within three weeks.
In 2013, IHFL had taken possession of two residential and three commercial properties mortgaged by DCHL under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities (Sarfaesi) Act after it defaulted on its payments for loans of about Rs 100 crore. A court order dated
April 8 said if DCHL failed to abide by the direction, IBHFL “will be at liberty to put the said properties up for auction”.
An auction by IBHFL to sell one of these residential properties was thwarted by a group of persons in 2013. DCHL then challenged the measures taken by IBHFL through a writ petition before the Andhra Pradesh High Court, which had directed the return of the properties of DCHL saying Sarfaesi did not apply in this case. IBHFL filed a special leave petition before the Supreme Court and raising several grounds on the basis of which the Andhra Pradesh High Court judgment was liable to be set aside.
The apex court’s direction comes after several hearing and DCHL counsel Arvind P Dattar informing the court they were ready to settle the matter and repay the dues to IBHFL.
The Sarfaesi Act allows banks and financial institutions to seize and auction properties when borrowers fail to repay loans. These include a residential house belonging to P K Iyer in the upmarket Banjara Hills in Hyderabad. The second residential property is located at Somajiguda and is owned by DCHL Chairman T Venkattram Reddy’s mother. The commercial properties included the company’s printing press in the Kompally suburb of Hyderabad and DCHL’s head office in Secunderabad.
Troubles at DCHL surfaced in July 2012 when its then managing director N Krishnan resigned. Analysts have traced the debt burden to expansion into unrelated businesses including an aviation venture, book store chain Odyssey and the Indian Premier League franchise Deccan Chargers, which was terminated after it failed to pay the franchise fee of Rs 100 crore.
The Central Bureau of Investigation has booked a case of fraud against DCHL chairman Venkattram Reddy, vice-chairman and managing director Vinayak Ravi Reddy and vice-chairman P K Iyer, along with auditors C B Mouli and Associates after searching their offices and homes. Simultaneously, the Enforcement Directorate is probing DCHL over money-laundering allegations. And Hyderabad police have speeded up a probe into allegations of cheating and forgery levelled a year ago by Karvy Stock Broking Ltd, the registrar of DCHL’s shares.
According to DCHL’s balance sheet, as of March 31, 2013, it owed Rs 3,914 crore to its lenders. Financial institutions, including Axis Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, Tata Capital, IFCI and Jammu & Kashmir Bank, have approached courts to recover loans granted to DCHL.
Although lenders have turned the heat on the debt-laden firm, Deccan Chronicle Holdings is surviving because of the cash flows generated from the publication’s advertising revenue.
