Hyderabad: The Central bureau of Investigation (CBI) has registered a case against the promoters of debt-laden publishing firm Deccan Chronicle Holdings Ltd (DCHL) and its auditors on Tuesday after conducting searches at the premises of the company’s headquarters in Secunderabad.
The case has been registered against chairman T. Venkattram Reddy, vice-chairman and managing director T. Vinayak Ravi Reddy and vice-chairman P.K. Iyer for cheating and criminal conspiracy and other relevant sections of the Indian Penal Code, according to a statement by the CBI.
CBI teams searched the offices of Deccan Chronicle and the residential premises of its promoters on Monday, acting on a complaint filed by Canara Bank in connection with an alleged fraud committed at its corporate branch in Secunderabad.
The investigating agency said the accused entered into a “criminal conspiracy” to cheat Canara Bank and availed excessive finance without adequate drawing power by allegedly “submitting false and fabricated financial statements and by supressing the borrowings taken from other banks”. Their actions led to a cumulative loss of Rs.357.77 crore for Canara Bank as of September 2012, the Bangalore-based bank’s complaint said.
Canara Bank had filed a first information report with the CBI’s Bangalore office in February.
The CBI raids come after searches were conducted by teams from the income-tax department a few weeks ago.
DCHL’s auditors C.B. Mouli & Associates have also been named by CBI. “It is further alleged that the company had submitted false and fabricated balance sheets, concealing its actual borrowings from Canara Bank and other banks and had also alienated the security hypothecated/mortgaged to Canara Bank,” the investigating agency said.
Deccan Chronicle shares rose 4.55% to Rs.2.76 on the BSE on Tuesday while the exchange’s benchmark Sensex gained 0.59% to close at 19,439.48 points.
The financially troubled publisher of Deccan Chronicle, Financial Chronicle and Asian Age newspapers and the Telugu daily Andhra Bhoomi has been battling various cases in the high court of Andhra Pradesh and the debt-recovery tribunal in Hyderabad after it failed to repay loans availed from various financial institutions.
Deccan Chronicle’s current liabilities amounted to Rs.4,017.11 crore at the end of the quarter ended 31 March.
Financial institutions, including IFCI Ltd, Jammu and Kashmir Bank Ltd, Axis Bank, ICICI Bank Ltd, Kotak Mahindra Bank Ltd, Yes Bank Ltd, Tata Capital Ltd, PVP Capital Ltd, National Pension System Trust, and Royal Sundaram Alliance Insurance Co. Ltd, have approached courts to recover loans granted to Deccan Chronicle. Hong Kong-based newsprint supplier Adonis Ltd and Chennai-based Photon Infotech Pvt. Ltd have also approached the high court of Andhra Pradesh.
The first sign of trouble at the company surfaced with the resignation of its former managing director N. Krishnan in July last year. Four of DCHL’s independent directors resigned on 8 December on undisclosed grounds and were replaced by three additional directors.
The publishing firm in February announced its intention to separate its print business into a new entity, Land Interactive Media Ltd. The move is being opposed by some of the creditors who have moved the Andhra Pradesh high court.
HT Media Ltd, the publishers of Mint and Hindustan Times competes with DCHL products in some markets.