New Delhi: Rana Kapoor, former CEO of Yes Bank, and Venugopal Dhoot, founder and chairman of the Videocon group, were involved in a “conspiracy” against the Essel Group through “forgery” and “cheating” that amounted to “a criminal breach of trust”, according to the FIR lodged in Uttar Pradesh on a complaint by Essel chairperson Subhash Chandra.
The FIR, accessed by ThePrint, is the basis of the criminal proceedings filed by the Uttar Pradesh Police against Yes Bank and Videocon officials. But the Supreme Court stayed the proceedings on 30 November, saying “using criminal procedure to achieve results of civil proceedings will have dangerous consequences” and would lead to a “lawless state of affairs”.
ThePrint details the case and the contents of the FIR.
Issue at hand
Chandra’s complaint relates to the merger between Videocon and Dish TV, an Essel Group firm, in 2016. It alleges that there was a conspiracy behind the merger involving a “quid pro quo” between the accused — Yes Bank’s Kapoor and Videocon’s Dhoot — and that Kapoor had coerced and arm-twisted Dish TV into the merger, which led to the firm accruing huge debts.
As part of its criminal investigation, the UP Police had frozen Yes Bank’s voting rights in Dish TV. Yes Bank is currently the largest shareholder in the company, with a 25.63 per cent stake.
Staying the police action, a three-judge SC bench headed by Justice D.Y. Chandrachud observed, “we cannot permit police officers sitting in Gautam Buddh Nagar to freeze shares and voting rights of a shareholder”, and that “there cannot be short-circuiting of the judicial process by using police action”.
At the heart of the tussle is Dish TV’s Annual General Meeting (AGM), which it has now announced will be held on 30 December.
If Yes Bank is able to cast its votes in the AGM. it would be able to reconstitute the board of directors according to its wishes. Dish TV is currently facing a notice from Yes Bank to remove managing director Jawahar Goel — Subhash Chandra’s brother — and four others from the board. The bank cites opposition to this move as the primary reason for the police action.
Noida deputy commissioner of police Rajesh S. refused to comment on the matter, saying that it was sub judice.
The FIR lists Kapoor, former CEO and MD of Yes Bank, as accused no. 1. Chandra alleges that Kapoor had threatened to recall a loan that had been given to Essel Group unless he agreed to a merger between Dish TV and Videocon.
Videocon officials, including Dhoot, the firm’s founder, chairman and managing director, are also listed among the accused.
Chandra alleges “criminal conspiracy” between Kapoor and Dhoot in September 2016, and claims that employees of both YBL and Videocon approached Dish TV regarding the “acquisition of Videocon D2H Ltd. by Dish TV”.
He further alleges that the plan was to “cheat us” in the matter of the merger, and the acquisition of promoter shares of Videocon D2H by the promoter entities of Dish TV and affiliates.
The FIR says Kapoor had wanted Essel Group to be the borrower as it had no history of defaulting on debt, in contrast to Videocon. Thus, Videocon would be able to clear its debt to Yes Bank — and YBL would be able to recover these stressed loans, which would otherwise have become non-performing assets.
It was decided that Yes Bank would provide funds to Dish TV to pay the cost of acquiring shares in Videocon. This money was to be used to repay Videocon’s outstanding loans from YBL. This, Chandra claims, was presented to them as a “win-win situation”.
Chandra alleges that Kapoor had pressured them into the deal by threatening to recall a Rs 3,300-crore loan already extended to Essel Group. The bank offered to find a way to write off a Rs. 375-crore loan the group had taken from an overseas entity.
“This transaction will keep YBL in a healthy state of affairs, which is very necessary to expand its business. In addition, YBL’s balance sheet will significantly improve as it will be able to show a multi-fold increase in its loan book (utilising our better credit profile) and also report higher revenue by charging fees and interest (on additional exposure),” the FIR says.
“This could significantly boost the profitability and wealth of Sh. Rana Kapoor by multiplying his % shareholding in the bank with the jump in market prices of Yes Bank shares,” it alleges.
The FIR then mentions that Yes Bank share prices went on to rise by 75 per cent in 20 months, from December 2016 to August 2018.
Due to the accused’s alleged actions, Chandra says, Dish TV’s debt rose significantly to Rs 4,200 crore, with an interest liability of Rs 900 crore along with “huge transaction fees to YBL”. For this, Dish TV had to take an additional loan from non-banking financial companies at a higher interest rate.
(Edited by Rohan Manoj)