Following a seven year probe, the Central Bureau of Investigation in it’s case against former promoters of the now Gautam Adani owned NDTV, Radhika Roy and Prannoy Roy, filed a closure report.
Radhika Roy Prannoy Roy Holdings Private Limited (RRPR) is the promoter entity of NDTV. This case revolves around criminal conspiracy, cheating and the fraud allegations against the Roys and others, who were accused of obtaining loans from ICICI Bank under false pretences.
Case Background
In 2009, Prannoy Roy, co-founder of NDTV, got into financial trouble when RRPR, the company linked to NDTV, apparently defaulted on a loan of Rs 375 crore. The case enlisted in 2017 based on a complaint from an individual, Sanjay Dutt, of Quantum Securities Ltd who alleged that RRPR had taken a ₹500 crore loan from India Bulls Pvt Limited to acquire a 20 % stake in NDTV through a public offer. As per the FIR filed by the CBI, RRPR had also taken a loan of ₹375 crore (with Rs 350 crore disbursed) at a steep rate of interest of 19% per annum, interestingly, to repay the previous loan. It was further stated in the FIR, that, the Roys’ pledged whole of their shareholding in collateral for this loan. This was done in contravention to the Banking Regulation, SEBI acts as well as regulatory rules of the Ministry of Information and Broadcasting, and the Ministry of Home Affairs. ICICI bank agreed to a foreclosure of the loan which resulted in a ₹48 crore loss for the bank due to a partial interest waiver.
However, the situation was complicated further when one Sanjay Dutt, lodged a complaint urging the CBI to investigate NDTV’s ownership and ICICI Bank’s role in what he called a “clandestine change of control.” Dutt’s charges were severe, alleging the bank had colluded with the NDTV promoters to hand over control of the news network to a shell company, CBI’s investigation revealed further.
NDTV, following searches conducted on June 5, 2017, asserted that the Rs. 375 crore loan from ICICI Bank, which it was accused of defaulting on, had been repaid over seven years ago. NDTV also asserted that the allegation of failing to disclose the pledging of shares to SEBI was “incorrect and false.” “NDTV and its promoters have never defaulted on any loan to ICICI or any other bank. We adhere to the highest levels of integrity and independence,” NDTV had stated. The Roys denied the allegations, asserting that the loans were obtained in good faith and that the ICICI bank had conducted its own due diligence. They contended that the case was a result of pressure from ICICI Bank to offer their stake in NDTV to Adani Group in 2022, a conglomerate led by billionaire Gautam Adani.
What surprised many was how the CBI had acted on a private complaint when ICICI Bank had never even filed any complaint to formalise it. Journalists and opposition parties protested what they saw as an assault on press freedom, most notably as the NDTV was one of very few channels reporting critically on the Modi government.
Judgement
The CBI concluded that there was insufficient evidence to substantiate the allegations against Prannoy and Radhika Roy. NDTV found that the ICICI bank had sanctioned the loans based on its own assessment and that there was no evidence of wrongdoing on the part of the Roys.
After more than seven years of investigation, the CBI filed a closure report in the Delhi High court, in a case of alleged charges of cheating against former NDTV promoters and directors Prannoy Roy and Radhika Roy as it could not discover any legally tenable evidence in the Rs. 48 crore loss incurred by ICICI Bank in the settlement of a loan in 2009. The closure report is filed with a special court, which will decide whether to accept the report or instruct the agency to continue its probe.
Conclusion
While the CBI’s decision is noteworthy, it is essential to consider the broader setting of the case and the potential implications it might have on similar cases. This case highlights the significance of transparency in financial transactions. It raises questions on the role of auditors and other bodies that overview such transactions to prevent fraudulent activities. This case also sheds light on the challenges faced by banks in assessing the financial powers of the borrowers, particularly in complex corporate structures. It also raises concern about the potential pressure that media outlets face from financial institutions or other powerful entities. It is crucial to protect the independence of the media and ensure that journalists can operate without fear of reprisal. This shows the complex issues of financial dealings under one of India’s biggest news channels and the increasing war between politics, journalism as well as business.
Authors: Aishee Choudhury & Vedaant Dewan