Employees of beleaguered media group Deccan Chronicle Holdings Limited (DCHL) have approached the court, contending that the company’s decision to close bureaus and transfer them is illegal.

The DCHL has its headquarter in Hyderabad and runs English dailies Deccan Chronicle, The Asian Age, Financial Chronicle and Telugu daily Andhra Bhoomi. In 2015, its chairman and one of the vice-chairmen—the Reddy brothers—were arrested for availing of loans to the tune of Rs10,000 crore in the company’s name by duping banks. In 2017, the company was declared insolvent for failing to pay its creditors. Bids were invited for its takeover and Kolkata-based Srei Multiple Asset Investments Trust-Vision India Fund (Srei) had emerged as the winning bidder.

Over the last two months, the DCHL has shut its bureaus in Kolkata, Kochi, Mumbai and Bengaluru. Their employees have been transferred to the company’s offices in Hyderabad and Chennai. In February 2019, when insolvency proceedings were still under way, Financial Chronicle was discontinued as a daily. However, its staff was retained and business news in Deccan Chronicle and The Asian Age began appearing on two pages under the Financial Chronicle masthead.

The employees of the bureaus that have been shut contend that their transfer order is illegal owing to the company’s status quo.

Legal nitty-gritty

The National Company Law Tribunal (NCLT, the government body that adjudicates matters pertaining to corporates) had approved Srei’s takeover plan on June 3, 2019. Normally, the new management takes over a company immediately but Srei hasn’t assumed charge of the DCHL yet.

The National Company Law Appellate Tribunal (NCLAT, it hears appeals against the orders of the NCLT) had stated in its order dated December 5, 2019, that since Srei had not taken over the DCHL, the company remained a “going concern”.

Ritwik Mukherjee, former senior assistant editor with Financial Chronicle, Kolkata, told Newslaundry that when a company is a going concern, it is not allowed to make any change in its structure. He claimed that the closure of bureaus and editions is in the contempt of court.

Supreme Court lawyer Pavan Kumar Duggal agrees. “If the NCLAT says that the company is a going concern, you can not alienate. If the transfers has the effect that it nullifies the order of NCLAT, it is not acceptable under the law,” he said.

Allegations against management 

Advocate Ritesh Mahajan, the lawyer representing the company’s employees at the NCLT, said the DCHL issued the transfer letters on December 18, two days before the NCLT was going to be closed for vacation till December 31. The transferred employees were asked to join their new office on January 1.

Mahajan said the company chose to send the transfer orders on the day that it did to block the possibility of the employees approaching the NCLT. Further, he said the transfer order stated that the employees would attract disciplinary action if they didn’t join the new office on January 1.

The employees wrote to General Manager (Accounts, Administration & HR) VV Srinivasa Sesha Sai, who had signed the transfer orders, to reconsider the decision but their pleas were turned down.  

Mahajan asked how transfer orders could be issued when the company has no management. He said this move was a ploy to make employees resign.

The formal complaint of the employees has raised five points: misuse of authority by the HR in asking them to join new offices; non-payment of dues and false assurances regarding job security; failure of Srei to take possession of DCHL; impropriety by temporary management in taking such drastic measures; and the failure of NCLT-appointed officials in ensuring a timely resolution of the company's woes.

Mahajan put the blame on the aforesaid official, Resolution Professional (RP) Mamta Binani. She is the President of the Institute of Company Secretaries of India and, as the RP of the DCHL’s insolvency process, responsible for the company’s fate. On her recommendation, the company could have been either liquidated or sold off to any interested party. Binani had invited bids for the sale of the DCHL and upon Srei showing interest, she saw to it that the committee of creditors also approved of the prospective buyer’s revival plan.

A highly placed official involved in the matter, requesting anonymity, told Newslaundry that Srei hasn’t been able to assume charge of the company because one of the creditors of the DCHL, IDBI Bank, has appealed to the NCLAT, requesting that it be given the reins of the troubled media group. The official said Srei is ready to immediately take charge of the company if the NCLAT rules in its favour.

The hearing was scheduled for January 6 but the date has now been extended to January 28. On January 6, the tribunal said, “The concerned authority is directed not to initiate any disciplinary action for non-compliance of the transfer order till the next date of hearing, which is directed to be kept in abeyance.”

Double whammy for employees

The transfer orders have aggravated the troubles of the company’s employees, who say they have not received salary for six months.

Mukherjee said the company transferred him to Mumbai when it shut its Kolkata bureau. Within seven days, the Mumbai edition was also closed and he was asked to join the office in Rajahmundry in Andhra Pradesh.

Employees’ lawyer Mahajan said the transfer letters came at a time when it had become nigh impossible for employees to even commute to the office and back because of lack of money. He emphasised that owing to the non-payment of salaries, several employees have had to borrow money to make ends meet. Relocating to another city with the entire family would put a tremendous financial burden on them, he noted.

Rudrendu Purohit, who used to work with the advertising department of Asian Age in Kolkata, told Newslaundry that he had contacted the management to release his pending salary, which he needed for his mother’s treatment. He said the management didn’t respond and he had to pawn off his sister’s jewellery to be able to pay the hospital bill.

Reportedly, employees in many offices haven’t been paid salary and benefits for six months. Further, they allege that while the management duly deducted Provident Fund (PF) contribution from their pay till June 2019, it has not been credited to their PF account for about 32 months. The gratuity dues are also pending, they say.

Kolkata employees are peeved for another reason. In December, Binani had visited their office and assured them that Srei would take over in January 2019 and there would be no pay-cut, retrenchment or transfer. She had said their salaries would be regularised from January and all the dues would be cleared by March 2020. She had told them there was no chance of reversal of these commitments and that they could tell their families that the worst was over.

The senior official involved in the company’s transition said salaries have been delayed as the DCHL itself hasn’t received payment for government advertisements. The official underlined that while several bureaus had to be shut owing to fund crunch, the company hasn’t fired any employee. 

-Ends-