Strong words. The notice has also called upon Business Standard to "print and publish an unconditional apology in the form and substance acceptable to our clients on the front page of the forthcoming issue of
Strong words. The notice has also called upon Business Standard to "print and publish an unconditional apology in the form and substance acceptable to our clients on the front page of the forthcoming issue of
Business Standard as prominently as the articles in question and further call upon you to send the draft of the proposed apology for our clients’ approval, within 48 hours of the receipt of the notice."
Till November 3, Business Standard had not published any apology. The 14-day deadline expires on November 13. Whatever the outcome, the fact remains that this is the first time that a corporate house has taken such a tough stand against a national newspaper. Reliance Industries’ executives are totally non-committal but it does appear that they are absolutely serious about pursuing the issue. Despite attempts, T.N. Ninan, editor of Business Standard, could not be contacted by Outlook.
What’s the controversy all about? It’s once again the ghost of Harshad Mehta’s securities scam. On October 19, Business Standard carried a story which claimed that "a prominent finance company is said to be planning to move the special court of Justice S.N. Variava to ascertain the fate of the Reliance shares it had lodged for transfer, even as a huge bunch of duplicate shares in lieu of these shares is said to be floating in the market". The story implied that Reliance had issued duplicate shares that could run into crores.
The next day, Reliance issued a statement that through its registrars and transfer agents, Reliance Consultancy Services, it had issued approximately four lakh duplicate shares in the last few years. "This amounts to less than 0.09 per cent of the total equity of the company, which is negligible," said the statement.
Over the next few days, Business Standard carried stories claiming that the scam-tainted Fairgrowth Financial Services had sought details from Reliance to trace almost 15 lakh shares which had been lodged for transfer. Interestingly, Fairgrowth in its appeal to the special court had asked the court to intervene in seeking details from broker Pallav Sheth who had claimed to have collected these 15 lakh shares from Reliance. It also asked for details of transfer deeds which had been earlier lodged with Reliance Consultancy and later asked for a withdrawal.
The origins of the duplicate shares can be traced back to a case in February last year when a total of 26,650 shares issued by Reliance and standing in the name of Rajul Vasa (25,950 shares) and Gajendra Vasa (700 shares), along with transfer deeds executed by the Vasas in blank, were delivered in the market in Settlement 21 of 1993-94. After changing several hands, the shares were lodged for transfer with Reliance, which however refused to transfer them since the signature of the transferor differed from that lodged in the company’s books.
Meanwhile, V.K. Jain, the last broker who had handled the shares, lodged his claim before the BSE after securing an arbitration award for Rs 1.06 crore for bad delivery. Reliance gave a cheque for that amount to the exchange, thereby admitting the issuance of duplicate certificates.
That Business Standard did not seek the company’s version of the story is one of the main issues the legal notice harps on: "Our clients say that contrary to established norms of journalism, you did not even care to make enquiry with our clients before printing and publishing the articles in question." Says a leading industrialist, seeking anonymity: "The message Reliance is sending is clear: the days of Reliance-bashing are over."
Reliance has also complained to the Press Council of India. Says Justice P.B. Sawant, chairman: "To my mind, this is the first instance that a complaint has been filed against some reporting on the stock market. Since they have decided to slap a legal notice, the Press Council will have to wait till the court gives its decision."
The real issue however may be neither the damages claim nor the legal notice. The point is that Reliance has made it clear that journalists better be sure of all the nuances of what they write, or the Rs 8,000-crore fist of Reliance could come your way. With India’s largest private sector corporation setting the precedent, are more companies going to follow suit?
Tags