Court hearing against UNI transfer

IN Media Practice | 24/04/2007

The Delhi High Court has decided to hear on May 31 the arguments on a petition challenging the transfer of more than 50 percent shares of news agency United News of India (UNI) to Mediavest India Pvt Ltd, owned by media baron Subhash Chandra of Zee Television.

Justice G.S. Sistani fixed May 31 to hear the arguments on the petition by Bhopal-based Dainik Sandhya Prakashan, dismissing the news agency`s contention that the petition was devoid of merit and should be dismissed.

Urging the judge to dismiss the petition challenging the transfer of its share to the Zee TV`s sister concern, UNI counsel Sandip Sethi said Saturday: ?The suit should be dismissed as it is not maintainable.?

He said the deal for transfer of UNI`s 50.5 percent shares to Mediavest was finalised before Dainik Sandhya Prakashan had submitted its offer.

Counsel for Sandhya Prakashan Rajiv Bansal, however, contended that the deal was not transparent as the shares were transferred clandestinely.

The matter is also pending before the Company Law Board (CLB) and would come up for hearing on May 1, said Bansal, adding, ?We are prepared to argue our case.?

At this, the court fixed May 31 to hear contending arguments on the petition, saying the suit cannot be dismissed without hearing both the parties.

The court said the interim order pronounced on Sep 29, 2006, to maintain status quo as of date would continue.

Meanwhile, the UNI chairman and the news agency separately filed their replies to the allegations in the petition by the Bhopal-based Hindi eveninger.

Sandhya Prakashan, in its petition, has contended that its bid for 14,811 shares of UNI for Rs.400 million was not accepted whereas shares were sold to Mediavest India Pvt Ltd, according to media reports, for Rs.320 million.

The petition said UNI has a total of 25,000 shares, out of which only 10,189 shares were subscribed till March 31, 2006.

Sandhya Prakashan said the news agency had a surplus of Rs.131.5 million as of March 31, 2003, but due to mismanagement and alleged siphoning of funds by the directors its tangible net worth has reduced to minus Rs.20.2 million, which implies that it has a net liability of that much amount.

Sandhya Prakashan had expressed interest in investing in UNI on Aug 31, 2006, and made a financial offer on Sep 2, 2006, the petition said.

It added that on Sep 4 last year, it offered to purchase 14,811 equity shares for Rs.400 million and gave Rs.40 million as advance, promising to pay the rest in 30 days, said the petition.

But Sandhya Prakashan received a letter from the UNI Sep 9, rejecting the bid saying that the quantum of financial nature of the plaintiff`s offer was not the only consideration, said the petition.

The petitioner had prayed for grant of permanent injunction restraining the UNI chairman from issuing the shares to any other company or individual as the deal was ?not transparent?.

The petitioner also sought a direction to the Registrar of Companies not to register the ?illegally allotted? shares in the name of Mediavest India Pvt Ltd.