DAILY FROM: AHMEDABAD, CHANDIGARH, DELHI, JAIPUR, KOLKATA, LUCKNOW, MUMBAI, NAGPUR, PUNE, VADODARA JOURNALISM OF COURAGE THURSDAY, FEBRUARY 7, 2019, NEW DELHI, LATE CITY, 30 PAGES SINCE 1932 Fraud Office probe: IL&FS trust took HDFC loan to buy shares from HDFC Redflagson disclosure, valuation KHUSHBOO NARAYAN MUMBAI, FEBRUARY 6 DECISION 2019 A daily Explainer on THE QUESTIONS THAT MATTER Why is VHP lowering the Ayodhya heat? PAGE 16 THE SERIOUS Fraud Investigation Office (SFIO) is probing the role of HDFC Ltd in connection with its ongoing investigations into alleged fund diversion and mismanagement by Infrastructure Leasing & Financial Services (IL&FS) Ltd and a few of its subsidiaries. The agency recently examinedandrecordedthestatement of a top HDFC executive. It may also examine former nominee directors appointed by HDFC on the board of IL&FS, sources told The Indian Express. HDFC has a 9.2 per cent stake in IL&FS. An interim report of the SFIO alleged HDFC indulged in “accommodative lending” to IL&FS HDFC LTD’S twin transactions of IL&FS share sale and funding its purchase by IL&FS Employees Welfare Trust raises red flags on disclosures and corporate governance, particularly given the relationship between HDFC and IL&FS. Since IL&FS is an unlisted firm, it is critical that the valuation of shares is fair and justified because this acts as a price benchmark for future private placement. Employee Welfare Trust (EWT). The report has referred to a transaction during 2013-14 between HDFC and IL&FS EWT where the trust acquired 8 lakh shares of IL&FS Ltd from HDFC at Rs 1,184.50 a share. The SFIO allegedthattheseshareswereacquiredatahighpricewithoutany valuationatatimewhenthetrust was“sufferingfromfundcrunch” asit“notabletogenerateenough cashflowstoserviceitsowndebt and was taking new debt from the group companies to service the existing obligations”. HDFC Ltd did not respond to queries mailed to it Tuesday. Significantly, SFIO alleged these shares were acquired by IL&FS EWT from HDFC Ltd with a Rs 94.76-crore advanced to it by HDFC Ltd itself. “The loan of Rs 94.76 crore received from HDFC Ltd is still outstandinginthebooksof EWT asondateandforservicingof interestonthisdebttheEWTisregularlytakingdebtfromIL&FSLtd or its groupcompanies. The loan taken from HDFC Ltd to finance the transaction has resulted into interest payment of Rs 53.77 crore until June 30, 2018,” said the SFIO interim report. Theprobeagencyhasalleged that collateral against the loan of Rs 94.76 crore was shares that CONTINUED ON PAGE 2 Govt blocks proposal UP stray cattle crisis: Police start on judge for J&K, SC closing cases against angry farmers Collegium asks why MANISH SAHU Proposal in April 2018 to elevate Senior Additional AG Wasim Nargal KAUNAIN SHERIFF M NEW DELHI, FEBRUARY 6 ON APRIL 6 last year, the Supreme Court Collegium, then headed by Chief Justice Dipak Misra, had cleared the decks for the appointment of Senior Additional Advocate General Wasim Sadiq Nargal as a judge in the J&K High Court. This would have made Nargal the first Muslim judge from Jammu in the High Court. Also, Nargal, who was 49 when recommended by the Supreme Court for elevation, would have had more than 12 years as a permanent High Court judge and, by convention of seniority, would have been a potential Chief Justice of a High Court in the country. The Law Ministry returned therecommendation,andayear later, is yet to say why. The current SC Collegium has asked the government to explain. Note ban: 6-fold jump in tax returns under scanner AANCHAL MAGAZINE NEW DELHI, FEBRUARY 6 THE INCOME Tax Department haspicked1.34lakhcasesspecifically related to demonetisation for scrutiny in 2018-19, an over six-foldincreasefromthe20,088 cases that came under the scanner in 2017-18, according to Finance Ministry data. Taxofficialssaidamajorityof the 1,34,574 cases picked for scrutiny were for revising Income Tax Returns (ITRs) for 2015-16, the year prior to demonetisation. “It has been found through data analysis that many taxpayers went back to revise their tax returns for 2015-16, the year before demonetisation. Many such taxpayers have revised details such as cash in hand and otherdetailsfor2015-16inaneffort to conceal the detection of cash post-demonetisation,” a senior tax official said. Separately, 2,99,937 notices were sent by the department CONTINUED ON PAGE 2 BUSINESS AS USUAL BY UNNY CJI-led Collegium asks Govt for information It is learnt that the Centre, which returned the file to the collegium did not provide any specific information as to why it wants the collegium to reconsider its April 2018 decision recommending Nargal’s elevation. Nargal submitted his resignationtothegovernmentinJune 2018 and is now an advocate in Jammu. The Jammu and Kashmir High Court is functioning with just nine judges against the approved strength of 17. Atitslastmeeting onJanuary 16, the collegium headed by Chief Justice of India Ranjan Gogoi said: “As regards Shri Wasim Sadiq Nargal, Advocate, consideration CONTINUED ON PAGE 2 LUCKNOW, FEBRUARY 6 SO DIRE IS the stray cattle crisis in Uttar Pradesh that in several districts,casesfiledagainstfarmers for abandoning their cattle are hitting a roadblock of public resentment and anger. From Auraiya to Shamli, Shahjahanpur to Hathras, Compromise meeting, many suspects untraced REVIEW PLEAS Sabarimala: Board changes stand, SC reserves order ANANTHAKRISHNAN G NEW DELHI, FEBRUARY 6 THESUPREMECourtWednesday reserveditsdecisiononpetitions seeking review of its September 28, 2018 order lifting age restrictions on the entry of women to the Sabarimala temple even as theTravancoreDevaswomBoard, which runs the hill shrine, changed its stand on the ruling. Giving up its opposition, the Board said it was now backing thejudgmentbecause“religious practices have to be consistent with the dominant theme... that allareequalandentitledtoequal rights”. Appearing for the Board, senior advocate Rakesh Dwivedi told the five-judge Constitution Bench of Chief Justice of India Ranjan Gogoi and Justices RFNariman,AMKhanwilkar,DY ChandrachudandInduMalhotra: “Now Board has taken a decision to respect the judgment.” The September 2018 judgment was delivered by a bench CONTINUED ON PAGE 2 police are filing closure reports in cases filed against farmers, witnessesarenotturningupand in many cases, “informal” arrangements are being struck to ensure that farmers don’t face penal action. An illustrative example is from Auraiya where a case was quietly buried. OnJanuary26,Auraiyapolice CONTINUED ON PAGE 2 THE EDITORIAL PAGE WHERE’S THE MONEY FOR BUDGET SOPS? BY AMARTYA LAHIRI PAGE 14 `6.00 (`8 PATNA & RAIPUR, `12 SRINAGAR) WWW.INDIANEXPRESS.COM ALL CHARGES ARE WRONG, SAYS LAWYER EDquestionsVadraover his‘links’toarmsdealer andLondonproperties INX Media case: Indrani seeks to turn approver SADAF MODAK MUMBAI, FEBRUARY 6 Priyanka and Robert Vadra outside the ED office. Reuters Called again today; Priyanka drops him at ED office, says I stand by my family DEEPTIMAN TIWARY NEW DELHI, FEBRUARY 6 BUSINESSMAN ROBERT Vadra, brother-in-lawof Congresspresident Rahul Gandhi, was questioned by the Enforcement Directorate (ED) for over five hoursWednesdayinconnection with a case of alleged money laundering related to properties in the UK. This was the first time Vadraappearedinpersonbefore any central probe agency. He left the ED office at Jamnagar House in New Delhi at 9.40 pm. He will be called for questioning again on Thursday. Vadra’s lawyer Suman Khaitan told reporters that his client had answered all questions and was innocent. “All charges against him are wrong. We will cooper- ate with the agency 100 per cent,” Khaitan said. Intheafternoon,Vadra’swife Priyanka Gandhi Vadra accompanied him to the ED office before heading to her new office at the Congress headquarters — she is now a party general secretary. She told reporters: “I stand by my family... everyone can see what is happening.” The case relates to properties in London which, the ED claims, are linked to Vadra and have been purchased through absconding arms dealer Sanjay Bhandari. In the past, Vadra has denied any association with any property in London. On Wednesday, Vadra was questionedabouthisassociation with Bhandari and financial transactions, ED sourcessaid.He CONTINUED ON PAGE 2 INDRANI MUKERJEA, former director of INX Media, has sought to become an approver in the alleged corruption case where her co-accused include Karti Chidambaram, son of former Union Finance Minister P Chidambaram. Mukerjea recently wrote to a Patiala House court in Delhi, seeking grant of pardon as an accused. The court last month directed that she should be produced before it through video-conferencing on February 7 as she is lodged in a women’s jail in Byculla in Mumbai, facing trial for the murder of her daughter Sheena Bora. The Delhi court will determine whether Indrani has made the plea under fear, pressureorunderthepromiseof any favour. As per procedure, the court will seek the response of the investigating agency, the CBI, following which it will then determine whether to allow Indrani’s plea to grant her pardon as an accused and make her a prosecution witness. CONTINUED ON PAGE 2
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