In yet another attempt to thwart Adani Group’s proposed takeover of a controlling stake in New Delhi Television (NDTV), the media firm said transferring its shares would require Income Tax Department’s approvals. On its part, Adani Group termed it as “without merit or basis in law or fact” and an attempt to “inordinately delay” the deal.
The media firm, in a regulatory update, said the I-T Department had “provisionally” attached shares held by RRPR Holding (RRPRH), a promoter group company, in 2017 and also barred founder-promoters Radhika and Prannoy Roy from selling stake following a dispute in reassessment of taxes.
In a 2018 notification, the department reiterated that attachment would remain in place until completion of the reassessment proceedings, NDTV, said, quoting a letter it received from RRPRH.
According to the loan agreement RRPRH signed with Vishvapradhan Commercial Private (VCPL) in 2009, the I-T Department had estimated a capital gains tax of Rs
175 crore “arising on the sale of controlling interest in NDTV to VCPL”. This was for transferring of controlling interest in NDTV to VCPL for Rs 403.85 crore, the media firm said.
The department has to clarify whether the provisional attachment on RRPRH’s shares held in NDTV was valid. Further, RRPRH also intimated that the promoters (Roys) as individuals would also require independent approvals from the department to deal with any assets, including indirect shareholding in NDTV.
RRPRH also asked VCPL, an indirect subsidiary of Adani Enterprises through which the group had exercised rights to acquire a 99.5% stake in RRPRH, to jointly move the I-T Department.
Adani Enterprises refuted the promoters’ statement of needing the I-T Department’s approval.
“The I-T orders only applies to the shares of NDTV held by RRPRH and in no manner restricts it from completing the formalities in relation to allotment of shares to VCPL on exercise of the warrants,” AEL said in an exchange notice, adding NDTV’s contention lacks “bona fides and has no merit or basis either in law or in fact and is misconceived”.
It also denied prior approvals were required from I-T Department as the order was issued against the Roys individually and do not relate to their ownership in RRPRH.
The Adani Group company has also called upon RRPRH to withdraw the letter immediately and “cease and desist from repeating the misconceived and misleading statements”.
Legal experts said NDTV’s interpretations of the provisions were flawed.
“The position adopted by NDTV appears to be based on a flawed interpretation of provisions of Section 281 of the I-T Act, 1961. The section is triggered in case when there is a transfer of an asset or when a charge is created on an asset whereas in the present case, new shares in RRPRH have been issued (resulting in passing on 99.5% shareholding in RRPRH to Adani) and hence no transfer has taken place by either Roys so as to trigger provisions of Section 281 (though the Adani have the right to acquire entire equity shares held by the Roys in RRPRH, this transfer does not seem to have been effectuated as yet),” Vishwas Panjiar, partner at Nangia Andersen said.
“The 29.18% of NDTV shares held by RRPRH have been regularly shown as part of promoter group holding. Be that as it may, one needs to also note that 29.18% ownership of RRPRH in NDTV is not jeopardised by virtue of attachment by the I-T Department and or exercising warrants by VCPL,” he said.
This is the second time NDTV has expressed its inability to transfer shares, citing legal hurdles. Earlier on August 25, NDTV said its promoters were barred from trading in the securities markets for two years, which would end only by November 26 this year.
On August 23, Adani Group, helmed by billionaire Gautam Adani, initiated an attempt to acquire a total of 55% stake in NDTV through multi-layered transactions. This was perceived as a hostile takeover bid as the news media firm responded immediately through a stock exchange notice, stating the move was without its consent. Adani Group, in its notice to NDTV on Tuesday, had also asked the firm to transfer all its stake “within two days”.