Yes Bank, Dish TV battle moves to SC, case to have broad implications

Yes Bank’s legal dispute with Dish TV India over voting rights in the Supreme Court will not only decide the fate of the company but also impact several other cases where the banks are fighting with defaulters over control over collateral.

Yes Bank acquired 24.5 per cent stake in Dish TV after the promoters failed to repay their debt and banks invoked the pledged shares. In September last year, the founder of Essel group, Subhash Chandra filed a police complaint against the bank and its former management led by Rana Kapoor accusing them of fraud while brokering a merger transaction between Videocon D2H and Dish TV India. The matter is under investigation by the police.

The SC will hear the Yes Bank petition on Monday.

The lender moved the highest court after the Allahabad High Court dismissed its petition on Thursday to quash the FIR filed by Chandra with the Uttar Pradesh police.

As part of its investigation, the Crime Branch, Gautam Buddh Nagar police has frozen the voting rights on the stake held by Yes Bank in Dish TV India. If the voting rights are not restored by the Supreme Court, then Yes Bank will not be able to vote in the company’s shareholders meeting scheduled on Tuesday, lawyers say. “The SC decision will also impact several other cases where the banks are fighting with borrowers over their collateral,” said a lawyer.

Yes Bank wants to replace the current board of Dish TV with its own nominees as the lender is of the opinion that the board is siding with the Chandra family – whose stake in the company has decreased to 6 per cent. .

Yes Bank and Dish TV India did not comment on the matter.

In its petition to the HC, Yes Bank had also challenged notices dated November 4th this year issued by UP police to the bank and the National Securities Depository to freeze its voting rights on Dish TV.

While dismissing the petition, the high court said on Thursday the bank has a statutory remedy to approach the magistrate court under the current laws for relief. “We are of the opinion that the writ jurisdiction should not be exercised to stifle the legitimate investigation. It is well settled that the High Court should normally refrain from giving prima facie decisions, in cases where the entire facts are incomplete and hazy, more so, when the evidence has not been collected and produced before the Court,” the HC said.

The court said the issues involved whether factual or legal are of magnitude and cannot be seen in their true perspective without sufficient material. “In the present matter, we lack sufficient material. Therefore, we are of the opinion that disputed facts cannot be examined under the Article 226 of Constitution of India and once efficacious statutory remedy is available to the petitioner against the notice impugned, then we decline to exercise our discretionary jurisdiction. Accordingly, the writ petition fails and is dismissed on the ground of availability of statutory remedy,” the court said. Article 226 empowers the high courts to issue, to any person or authority, including the government, directions, orders or writs.

Yes Bank had earlier said that the Dish TV’s present board is acting on the behest of the promoters who hold only 6 per cent stake in the company and approved a Rs 1,000 crore rights issue despite its objections. Yes Bank has said Indian lenders have 45 per cent stake in the company and is taking this step to protect the rights of all the shareholders.

In its communication to Dish TV, which was later filed with the stock exchanges, Yes Bank said the board is acting in haste and is taking steps to dilute their stake and hence its demand to reconstitute the board.

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