In a blow to Deccan Chronicle Holdings Ltd (DCHL), the National Company Law Tribunal (NCLT) in Hyderabad on Wednesday, reportedly admitted an insolvency petition filed by Canara Bank.
Reporting that a company is 'insolvent', when it is unable to pay its debts, the Times of India quoted Canara Bank's counsel as stating that a moratorium period of 180 days would be set if the petition went through.
After the period, a decision is taken on whether to liquidate the company, or revive it with a new management, the TOI report added.
The case will come up for hearing on July 11.
In March this year, the Enforcement Directorate attached assets worth Rs 263.10 crore of Hyderabad-based DCHL in a bank loan fraud case.
The properties, including movable and immovable assets, shares, bank balances, foreign currency receivables and luxurious cars, were attached under the provisions of the Prevention of Money Laundering Act (PMLA).
These properties are other than the properties pledged to banks by DCHL, the ED said.
The bank loan fraud caused a loss of Rs 1,161.93 crore to six public sector banks -- Canara Bank, Andhra Bank, Indian Overseas Bank, Central Bank of India, Corporation Bank and IDBI Bank.
The ED had booked a case under the PMLA against the company and others based on a FIR and charge sheet by the Central Bureau of Investigation (CBI).
The CBI registered the FIR for criminal conspiracy and other provisions for causing wrongful loss of Rs 357.77 crore to Canara Bank.
The CBI registered five more FIRs relating to five PSU Banks and filed 6 charge sheets.
The DCHL had allegedly availed loans by overstating the receivables, under-stating huge loan liabilities by furnishing fabricated financial statements and not disclosing the loans.
In all, it availed 111 loans amounting to Rs 10,000 crore from 16 different banks during 2004 to 2012.
Of this, Rs 2,800 crore is outstanding to various banks as on September 2012 excluding interest.
These loans were used for other than the specified purposes, investing in 20 group companies and firms, acquiring companies with huge premiums, payments to Airbus towards purchase of cargo aircraft and payments to BCCI for Indian Premier League franchisee of Deccan Chargers.
In February 2015, Deccan Chronicle owner T Venkattram Reddy and managing editor T Ravi Vinayak Reddy were arrested and questioned by a team of the CBI from Bengaluru.
The group’s vice chairman PK Iyer, as well as the company's auditors CB Mouli & Associates, are the other accused in the case.