New Delhi: Lok Prakashan, which publishes Gujarat Samachar, along with the chief editor of the Gujarati daily, allegedly routed more than Rs 27 crore to corner shares of National Thermal Power Corporation (NTPC) and Tata Consultancy Services (TCS) during their Initial Public Offerings, Enforcement Directorate (ED) submitted Saturday to an Ahmedabad court.
Alleging that these amounts were routed through two firms, Excell Multitech Ltd and Zenet Software Ltd, the agency said Lok Prakashan cornered 6,46,922 shares of NTPC and 13,780 shares of TCS. The chief editor, ED said, cornered 85,600 shares of NTPC reserved for the retail category.
The federal probe agency made these allegations to oppose the bail application of Bahubali Shantilal Shah, managing director of Lok Prakashan. Shah was arrested on 15 May from his Ahmedabad residence. However, as his health deteriorated, he was admitted to a private hospital the same night. His brother Shreyansh Shah is the chief editor of the newspaper.
Later, on 16 May, the special PMLA court in Ahmedabad granted Shah interim bail after his counsel, Devang Vyas, moved a bail application requesting release until his regular bail application is pending. The court also documented that the ED did not oppose his interim bail, nor did it seek his remand on humanitarian grounds.
As reports of Shah’s arrest and bad health emerged, the opposition Congress raised the matter and attacked the Narendra Modi government, terming the arrest ‘an attempt to silence’ Gujarat Samachar, which has been in circulation since 1932.
Reacting to Shah’s arrest, Leader of Opposition in Lok Sabha Rahul Gandhi said it was “another conspiracy to suppress the voice of not just one newspaper but the entire democracy”.
“The arrest of Bahubali Shah is a part of the same politics of fear that has now become the identity of the Modi government. The country will not be run by sticks or fear—India will be run by truth and the Constitution,” he wrote on X.
How the probe started
The ED’s case stems from a 2016 SEBI complaint alleging Excell Multitech Ltd and Zenet Software Limited Ltd routed large sums to Ahmedabad-based Sugandh Estates and Investments Pvt Ltd. This firm, in turn, allegedly opened multiple fraudulent accounts to corner shares of NTPC and TCS, which were reserved for retail investors during their IPOs.
SEBI mandates that any company floating an IPO keep around one-third of its shares reserved for retail or non-institutional investors. Both NTPC and TCS floated IPOs in 2004.
Based on this complaint, ED opened an ECIR on 16 August, 2023, and issued summons to the directors of these two firms to record their statements. On 28 November, 2023, the director of one the firms submitted the books of accounts.
Basing its allegations on what it found in these books of accounts, the ED submitted that Lok Prakashan paid Zenet Software Rs 15 crore and Excell Multitech Rs 5.96 crore.
It further alleged that Gujarat Samachar editor Shreyanshbhai Shah paid Zenet Software Rs 3.3 crore while the other firm got Rs 2.86 crore from him.
Bahubali Shah was summoned for questioning four times, the first being 27 December, 2023, but he appeared only on 28 February, 2024, submitting before investigating officers that he was approached by Dhiren Vora on behalf of these companies, ED submitted.
Vora is the son of one of the directors looking after day-to-day affairs of these firms, and Bahubali Shah allegedly accepted having received shares by financing the two firms.
“When he was shown a copy of ledger statement of Zenet Software Limited and Excell Multitech Limited which reflects that Lok Prakashan Ltd transferred Rs 15 cr & Rs 5.96 cr cr and in return Lok Prakashan received shares of NTPC and TCS reserved for retail investors along with other documents, he stated that Lok Prakashan gave funds to these entities for investment through Vora. In lieu of the same, shares were given to Lok Prakashan by these entities,” the ED submitted in the affidavit, a copy of which ThePrint has seen.
Vora’s statement was subsequently recorded during the investigation.
ThePrint contacted Bahubali Shah’s counsel Devang Vyas through WhatsApp for comment on ED’s allegations but had not received a response by the time of publication. This report will be updated if and when a response is received.
The agency also alleged that Bahubali Shah did not respond to three summonses issued in March 2024. During search proceedings on 15 May, he was asked about documents related to shares of NTPC and TCS, which were sought on 28 February, 2024, for which he sought another two weeks.
“The analysis of the material gathered and statements of various persons recorded under Section 50 of PMLA clearly points out that Bahubali Shah is guilty of money laundering. Disclosure made by Shah in his statement/s recorded under PMLA warrant his custodial interrogation,” the ED submitted.
“Shah is son of the founding-editor of Gujarat Samachar and a highly influential person having family business running across various sectors including construction, chemical industry, fishing, trade and financial services. Therefore, it is possible that he may influence the witnesses/ other co-accused,” the agency added.
The next hearing on Bahubali Shah’s bail application is to be held on 10 June.
(Edited by Tony Rai)