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Rediff.com  » Business » Deccan Chronicle sues its lenders over loan spat

Deccan Chronicle sues its lenders over loan spat

July 11, 2013 10:24 IST

Deccan ChronicleHyderabad-based media firm Deccan Chronicle Holdings Ltd has taken Future Capital and Tata Capital to court after the lenders attached the debt-ridden company’s properties following a loan default, according to court documents.

The suits have been filed in the Bombay high court, which will be heard in the coming weeks.

An email sent to DCHL did not elicit any response till press time.

DCHL had taken a Rs 170-crore (Rs 1.7-billion) loan from Future Capital, but just before the sale of the finance company to private equity firm Warburg last year.

The promoters of the Future group had taken over the entire loan exposure at the book value.

The move by DCHL to sue its lenders has taken Future group by surprise as it was the media firm that defaulted on the loan.

A Future group official said the suit had been filed by DCHL after Future attached its properties in Mumbai.

The official did not want to be named.

DCHL has sued Tata Capital in the same court after the latter took action to get back its Rs 100-crore (Rs 1-billion) loan.

In February this year, the high court had asked DCHL to furnish a bank guarantee to Tata Capital or the Tatas could attach a 2,152 sq yard property in Mathuradas Mills compound in Lower Parel, Mumbai.

The legal suits come at a time when the Central Bureau of Investigation announced on Tuesday it had registered a case against the promoters of DCHL following a complaint by Canara Bank.

The case is also registered against T Venkattram Reddy, DCHL chairman, for criminal conspiracy, cheating and forgery.

The investigative agency also named P K Iyer, vice-chairman, and Vinayak Ravi Reddy, managing director, who, together with Venkattram Reddy, form the promoters’ group. The company’s auditor, C B Mouli and Associates, was also named in the first information report.

The trouble started when the media firm started defaulting on loans to financial institutions and also allegedly created charge on shares and assets already pledged with others.

According to the FIR, during 2009-2011, the accused entered into a criminal conspiracy to cheat Canara Bank by availing of the open cash credit limit, with periodical enhancements and multiple short-term loans, aggregating Rs 1,230 crore (Rs 12.3 billion) from the bank.

The promoters availed of excessive bank finance without adequate drawing power by allegedly giving false financial statements and suppressing the loans taken from other banks, according to the statement.

The firm is now in debt of around Rs 4,000 crore (Rs 40 billion).

Its not known whether Future and Tata Capital will join in the case filed by Canara Bank against Deccan.

BS Reporter in Mumbai
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