ADVERTISEMENT

Dish TV Promoter Fails In Fourth Effort To Freeze Yes Bank's Voting Rights

The Delhi High Court order used strong words against a DRT order that directed a status quo on Yes Bank’s shares in Dish TV.

Essel Group promoter Subhash Chandra. (Photographer: Scott Eells/Bloomberg)
Essel Group promoter Subhash Chandra. (Photographer: Scott Eells/Bloomberg)

Yes Bank Ltd. has defeated yet another effort to freeze its voting rights in broadcaster Dish TV (India) Ltd.

The bank owns a 25.63% stake in Dish TV India Ltd., as per stock exchange filings, making it the single largest shareholder in the company. The shareholding is a result of invocation of a promoter pledge in May 2020.

Last week, the Delhi High Court stayed an interim order by the Debt Recovery Tribunal’s Jaipur bench which in effect would have barred Yes Bank from exercising its voting rights at Dish TV’s AGM scheduled for Dec. 30.

The DRT passed the interim order on Dec. 23 while hearing a dispute involving Greatway Estates Pvt. and Yes Bank over a 2.8-acre property based in Delhi that's mortgaged to the bank. As per the petition seen by BloombergQuint, the bank took possession of the property in June 2020 and issued a notice for sale in October 2020.

Aggrieved by the move, Greatway, a Subhash Chandra-led Essel Group company, sought the intervention of the DRT. It also filed another petition with the tribunal seeking it to restrain the bank from dealing in the shareholding it held in Dish TV.

The tribunal, in an interim order, directed a status quo on enforcement of rights arising from the shares held by the parties in the dispute—in short, freezing Yes Bank's voting rights in Dish TV.

The tribunal then posted the case for hearing next on Dec. 29—a day before the much-postponed Dish TV AGM is scheduled to be held.

Yes Bank challenged the DRT's order in the high court arguing that the pledge on the shares was created by World Crest Advisors LLP in favour of Catalyst Trusteeship Ltd. for Yes Bank.

Greatway Estates is neither pledgor of the shares in question nor is it a company whose shares have been pledged and therefore it had no locus to seek a status-quo on the voting rights, the bank argued before the high court.

‘Shocked and Aghast’: Delhi High Court

The Delhi High Court in its order expressed displeasure on the manner in which the status quo order was passed by the Debt Recovery Tribunal, noting the lack of reasons offered by the tribunal.

The high court division bench had strong words for the DRT's presiding officer.

We are completely shocked and aghast to read the impugned order, and the manner in which the presiding officer of the DRT, Jaipur, Vivek Saxena, has proceeded. Either he was ignorant of the aforesaid developments, for which the respondents are responsible, or he has exhibited complete lack of judicial discipline.
Delhi High Court order

The bench noted that the proceedings before the DRT related to Yes Bank’s taking over and attempted sale of the Delhi property which was mortgaged to the bank.

"We are at a complete loss to understand as to how the respondents (Greatway) could have any interest in the pledged shares, which were not pledged by them, and as to how the tribunal could have passed an interim order in respect of the pledged shares," the court added.

The bench of Justices Vipin Sanghi and Jasmeet Singh further went on to stay the proceedings before the presiding officer of the DRT Jaipur bench until further orders. The court will now take up the case next in March 2022.

BloombergQuint has reached out to Dish TV and Yes Bank for a response on the order.

Bombay High Court, NCLT Refuse To Freeze Yes Bank's Voting Rights

The Delhi High Court order also referred to earlier proceedings in the Bombay High Court, which is hearing a suit challenging Yes Bank's ownership of Dish TV shares.

In the suit, filed against Yes Bank and Catalyst Trusteeship, Dish TV‘s promoter entity World Crest Advisors has sought a declaration that it is the true owner of 44,00,54,852 equity shares of Dish TV which are currently held in the bank's demat account.

Last week, the Bombay High Court refused to grant any interim relief or a stay on Yes Bank's voting rights at the Dish TV AGM. But, the court said the AGM outcome will be subject to its final order in World Crest’s suit. The matter will next be heard by the court in February.

Soon after, the Mumbai bench of the National Company Law Tribunal also refused to freeze Yes Bank's voting rights when approached by a group of Dish TV shareholders. The tribunal will hear the matter next on Jan. 4.

Supreme Court Vacates Stay on Yes Bank's Voting Rights

In November, the Supreme Court vacated a stay on Yes Bank's voting rights in Dish TV. The stay was imposed by the Uttar Pradesh police (Office of Crime Branch, Gautam Buddh Nagar) on Nov. 5, via a notice that directed the bank not to transfer or exercise any rights as shareholder of Dish TV.

Subhash Chandra, founder of Dish TV and brother of its current promoter Jawahar Goel, had last year filed a police complaint against Yes Bank and its founder Rana Kapoor, alleging fraud in the bank's conduct of a merger between the company and Videocon D2H in 2016.

The top court expressed displeasure regarding the police action. "We cannot permit police officers sitting in Gautam Buddha Nagar to freeze voting rights of a shareholder," said Justice DY Chandrachud of the apex court.

Now Over To SEBI

Unhindered by multiple courts refusing to stay Yes Bank's voting rights, a promoter entity of Dish TV has filed another petition at the Bombay High Court seeking it to direct Securities and Exchange Board of India to bar Yes Bank, Catalyst Trusteeship and IDBI Trusteeship Services from voting at the Dish TV AGM.

The promoter entity, JSGG Infra Developers LLP, claims violation of SEBI's Takeover Regulations as grounds for its plea, as per Dish TV's filing with stock exchanges.

The Back Story

Yes Bank has been locked in a governance dispute with Dish TV and its board. The bank requisitioned an extraordinary general meeting of shareholders to vote on the appointment of new directors. Dish TV's board rejected the requisition. The matter is now being fought in multiple courts as reported above. Yes Bank has also filed a petition of oppression and mismanagement against Dish TV.

The Essel Group has been founded by media baron Subhash Chandra and his brother is the promoter of Dish TV. Two other leading listed companies of the Essel Group, Zee Entertainment Enterprises Ltd., Zee Media Corp., are also facing institutional investor opposition over governance and related-party transactions at the companies.

An earlier version of this story has been updated to include the latest petition filed by promoter entity JSGG Infra Developers LLP with the Bombay High Court.

Opinion
Yes Bank Approaches Tribunal, Ministry And SEBI Alleging Mismanagement At Dish TV