For the Abhimnanyus stuck in the Chakravyuha of NDTV Stock, news of the investment of $5M into the eCommerce venture IndianRoots.com may have given hope that NDTV stock still has value. According to the filings with Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), dated May 19, 2107, NDTV Holdings want to divest 2% to Nameh Hotels and Resorts Pvt. Ltd. A Postal Ballot that seeks voting / consent from all shareholders, to this effect has been sent to all members and they are required to vote and send this back to the Company / Scrutinizer by June 21st, 2017.
I hate to be the bearer of bad news but I don’t see how this or any other such transaction can happen as there are many questions that need to be answered before that. The most important one that comes to mind is the issue of who really owns 29% of the NDTV, is it RRPR or VCPL? Without this the Roys own only 32% of NDTV and therefore cannot affect this sale as they do not have the majority ownership of NDTV and more importantly as explained below, the entire voting right (29 plus 32) is at present invalid.
- The August 1, 2014 letter written by Dy. Commissioner of Income Tax to NDTV (at the end of the post and also available on the BSE and NSE website) citing Media reports of a takeover of NDTV quoted Section 281 of Income Tax Act, 1961 saying,
- The letter goes on to state categorically (Page 9) that
Certain transfers to be void owing to non-payment of taxes…
and goes on to list the outstanding amount of taxes still not paid. Until these are paid, no transfer of ownership can take place. Fast forward to the present, the matter of how much NDTV owes to the Income Tax Dept (IT) is in the Delhi High Court and before the Income Tax Appellate Tribunal (ITAT), along with a slew of other charges. In other words, ITD has not accepted sale of stock by RRPR to VCPL.
any change on the company’s assets or shares of NDTV including subsidiaries, etc. or transfer or part with possession thereof in any manner, such charge or transfer shall be void unless previous permission of the Assessing Officer is obtained.
- The Securities and Exchange Board of India (SEBI) has in its status report in WPC 11148 of 2016 (before the Delhi High Court) on December 15, 2016 has this to say about the transfer of shares between RRPR (also Roys) and VCPL. The show cause notice is to be issued but the matter is under investigation. This trade happened in August 2009. The entire details of how RRPR (a shell company) was created and how ownership changed hands to VCPL can be found in my book NDTV Frauds.
- It is pertinent to note that in a filing before the Delhi High Court in August 2016 (WPC 984/2015) and the filing below by SEBI, it is clearly established that Roy’s carried out an illegal change of control of the listed Company – NDTV. Thus, what is obvious is the fact that the voting rights on the entire holding of Roys (29% plus 32%) are at present invalid and of course under adjudication by SEBI and further sub-judice as various matters are pending with the High Court in Delhi. So how come they are selling “material” assets of a public listed Company by voting in this postal ballot and that too being done to a “shady” acquirer (KJS Group) who have been accused and now stand convicted in the Coal Scam of UPA days!
Who or what is preventing SEBI from issuing a Show Cause notice? Shouldn’t SEBI be first determining / disposing off the pending investigation and cases against the Roy? How can the Roys vote when their control over NDTV itself has been questioned by SEBI?
- According to the report of Director General Investigation, ITD, which found the founders Prannoy Roy and Radhika Roy have avoided paying income tax by not disclosing their income from proceeds of sales to VCPL, itself a shell company with no business activity. Therefore, the legality of the sale to VCPL is still in question and is in the Delhi High Court.
Will the SEBI, ED and IT act now?
Why is the SEBI not issuing a Show Cause notice to NDTV on the VCPL trade? Why is SEBI and the BSE and NSE not questioning this postal ballot process where Roy’s are voting with 61% brute majority? A few months ago, a change of leadership at the SEBI evoked hopes that perhaps things will start moving. Yet the more they change the more they appear to remain the same.
What is the Income Tax Department waiting for? They have invoked provisions of Sec 281 and are now sleeping/ being negligent when the Tax matters are sub-judice and they have recoveries pending of over 800 crores! Besides, ED is carrying out FEMA investigations and has determined violations more than Rs. 2000 crores, shouldn’t all these agencies ensure that assets of NDTV are not frittered away to questionable buyers at unexplained valuations? How are all these agencies putting Government revenues (taxpayer money) at risk of being unrecoverable from what may remain a shell company (NDTV). Shouldn’t, a First Information Report (FIR) be filed by the Economic Offences Wing (EOW) or the Central Bureau of Investigation (CBI)? A word of caution here – Let history not repeat itself (remember that Karti Chidambaram flew the coop before Enforcement Directorate could issue the summons on PMLA). All government agencies must act in tandem and ensure that justice is done. Of course, an important question here is who do all these departments come under? Doesn’t the buck stop with the concerned Ministry ultimately? Or is it that some people continue to protect the old Lutyens club to which the Roy’s belong?
Modi ji you keep saying Sabka Saath, Sabka Vikas
NDTV inaction – Kiska Saath, Kiska Vikas?
Abhimanyus are still waiting.
Copy of Income Tax findings to NDTV
1. The conversion rate used in this article is 1 USD = 66.16 Rupees.
2. Text in Blue points to additional data on the topic.
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