New Delhi: Some employees at The Asian Age and Deccan Chronicle – two well-known daily newspapers owned by beleaguered Deccan Chronicle Holdings Limited (DCHL), whose recent corporate insolvency resolution process saw a few hiccups – have not been paid their salaries for the last 12 months.
According to employees that The Wire spoke to, the salary for January 2020 is still awaited by many journalists.
“We received our salary for December 2019 in October 2020. We received nothing in November 2020. The next salary instalment we received was on December 22, 2020. That too just half of our January 2020 salary. We still haven’t received the other half and we are in January 2021,” an employee of The Asian Age, who asked not to be named, told The Wire.
Both the newspapers, Deccan Chronicle and The Asian Age, were printed and circulated during the COVID-19 pandemic and lockdown.
During this time, one employee said, “several staff members who are working every day without being paid during COVID-19 and had to deal with medical emergencies of their ailing parents and pregnant wives”.
The delayed salaries have forced the staff of the two papers to struggle financially in a number of ways. “So many staff members with families haven’t been able to pay their house rent, children’s school fees and have had to move into their parents’ houses or relocate. A staff member has sent his family to his ancestral home and is living with his friends,” an employee said.
“Despite all this, we did not stop working for even one day. We have carried on working, first by wiping out all our life’s savings, and now, by living on borrowed money for months,” the employee added.
Concerns over provident fund
Apart from their salaries, some employees are also concerned about their provident fund contributions and income tax, which were both deducted but have allegedly not been deposited with the authorities by DCHL, whose former promoters are being investigated by the Enforcement Directorate for broader financial fraud.
Only on January 13 did some employees receive messages that their tax deducted at source (TDS) was being deposited.
“Our provident found (the staff’s share and the employee’s share) has been deducted from the salaries we are paid but it has not been deposited since 2019. Our income tax that was deducted is being deposited now and that’s why we haven’t been able to file our income tax returns for 2019-2020. We are in the process of filing it now and have to pay a fine out of our pocket,” said another employee.
An employee of Deccan Chronicle said while some staff members have knocked on the doors of the Labour Commission, high court and the National Company Law Tribunal (NCLT), “they have not got any real relief anywhere”.
“Wherever we appeal, we are asked to go to NCLT. But the NCLT seems oblivious to the continuous, daily suffering of the staff. The brazen violation of laws with regard to non-payment of provident fund is happening under the nose of NCLT Hyderabad and they are doing nothing,” the employee added.
As for the courts and Labour Commission, the employee said, “Their doors seem closed to us because there is some sort of moratorium on initiating cases against companies that are under the Insolvency and Bankruptcy Code (IBC).”
Employees transferred, laid off
Employees claim that here have been several instances of staffers being laid off with just a month’s notice.
Since 2019, several editions of the newspapers – in Kolkata, Mumbai, Kerala and Bengaluru – have been shut down. Staff was first transferred to other cities, but as many would not relocate in the absence of any assurance on the payment of their salaries, they were sent termination letters.
An employee of Deccan Chronicle recently told The Wire that “six of the oldest, and most sincere and efficient of our colleagues (with an experience of 19-25 years in the company) were terminated with less than a month’s notice”. The employee wondered if the piecemeal sacking of employees in various centres at different times is a way of avoiding having to pay a severance package.
A timeline of DHCL crisis
In 2017, Deccan Chronicle Holdings Limited, which faced serious financial losses, defaulted on payments to creditors. Canara Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating the insolvency resolution process against DCHL, stating that it owed Rs 723 crore.
In February 2018, Mamta Binani was appointed as the resolution professional (RP) of DCHL. She published the expression of interest for inviting bids from prospective resolution applicants, and ultimately SREI Multiple Asset Investments Trust-Vision India Fund was selected as the resolution applicant (RA) of DCHL.
The resolution plan was approved by the Committee of Creditors (CoC). In June 2019, it was also approved by the Hyderabad bench of the NCLT.
No respite, despite resolution plan?
On February 28, 2020, seven employees of the Kerala edition of Deccan Chronicle newspaper moved the NCLT against the Deccan Chronicle Holdings Limited represented by the supervisory committee.
They charged that “after the appointment of the RP, she [Binani] along with the other management started discriminating between Hyderabad employees and employees in other places in the country”.
The discrimination, they alleged, ranged from payment of bonus and ex-gratia and increment to even timely payment of salaries.
These employees also questioned why the successful resolution applicant – SREI – had not taken over the management of DCHL.
Who is responsible for salaries?
Ritesh Mahajan, counsel for a section of DCHL’s employees in NCLT, Hyderabad, claimed that there were many red flags in the way the company’s case has been handled.
Explaining the process, he said, “once the resolution plan is approved by the Committee of Creditors and then by the NCLT then it is incumbent on the resolution applicant to invest those funds, as he has committed in his resolution plan, in a time-bound manner.”
“What happens is that the Resolution Professional, who is chairperson of the Supervisory Committee, is given the duty to look after the company from the appointment till the resolution plan is approved by NCLT. During that period, when the resolution plan is not approved, whatever expenses would be there (of the company) are to be contributed by the Committee of Creditors, and thereafter by the Resolution Applicant,” he told The Wire.
He said the CIRP cost – the amount of expenditure incurred during the insolvency period before the resolution plan is approved – was to be contributed by all the bankers who were CoC members. “So there should not be any kind of excuse as far as the salary of the staff is concerned. Those bankers (who lent to the company and are part of CoC) must clear those salaries which are part of CIRP cost as a priority.”
In the case of DCHL, he said, they have cleared salaries till December 2019.
On what should have happened, the counsel said: “When the Resolution Applicant was finalised and it was decided that the company would be given to SREI Fund, then it should have invested that amount which they committed. They had said they would pay 100% of the fee towards the employees within the first six months after taking over the company. But that did not happen.”
Also, he said, till the time the RA paid up, the CoC had to contribute but they did not contribute on time. “Then, the Resolution Professional was duty-bound to clear those dues during his or her tenure, but she did not do so. Also, no hue and cry was raise by her or the Supervisory Committee on CoC not paying up.”
IDBI appeal, a barrier?
Mahajan noted that “usually what happens is that when NCLT approved a resolution plan, the resolution applicant is in a hurry to take over the company. That is what we have seen in most of the cases. But here they were reluctant to take over the company.”
“What reason they (Resolution Applicant) have cited is this IDBI Bank appeal. Once they said during the course of hearing that there is a stay. I vehemently rejected their claim that there is any stay on the proceedings of the CIRP or the resolution plan implementation.”
“The only thing,” he said, “that was observed by the NCLAT was that ‘the implementation of Resolution Plan would be subject to final outcome of this appeal’. That is always there in any case where there is an appeal. We have to be very clear. They did not stay the implementation of the Resolution Plan.”
The Resolution Applicant, he said, should have kept some amount aside (in view of the contentions in the NCLAT case) but implemented the rest of the Resolution Plan. “But they did not do so. They did not take over the company itself.”
‘Instead of safeguarding employees, began transferring, terminating them’
“Then what happened, and very surprisingly,” he said, was that “NCLAT put the Supervisory Committee or Monitoring Committee in-charge to look after the day to day business of the company.”
“Now the Committee is there to safeguard the company and minimise the cost. But what they did was that they started transferring the employees. Employees who were in a particular place for 20-30 years were transferred – like from Kolkata to Hyderabad, or Kerala to Chennai – on the ground that there was no work in their present location. But the offices at their destination stations were also closed,” he added.
Worse still, Mahajan said, the Committee terminated the services of those who did not report at the transferred location. “The employees were not paid salaries for the previous one year. They were also not giving any commitment on when they would pay. We told the NCLT that you pay our salaries and we are bound by your transfers. They were also not paying any transfer allowance. And then when the employees did not report to the transferred location they were terminated.”
He lamented that the NCLAT did not direct the Supervisory Supervisory Committee to not transfer and harass these employees like this, especially when they did not have money to pay them. In a way they are cutting down the size of the organisation when they were there to maintain the assets – the biggest of which in the newspaper industry are the human resource or the journalists.
Mahajan also pointed to the delay in the disposal of the IDBI case by NCLAT, saying usually the tribunal acts much faster.
“Usually NCLAT does not take this much of time to dispose of appeals – they normally take a maximum of two months. But in this case, the appeal filed by IDBI has been pending since mid 2019. In many other cases we have got all order from NCLT, NCLAT and Supreme Court also within one year.”
He said he did not know why they have kept the matter pending for so long. “Actually when they knew that this appeal was causing problems in implementation of the Resolution Plan they should have disposed it of. Now the matter is next due to come up for hearing in February.”
Mahajan said the simple submission of the employees is either the COC or the RA should contribute funds for the payment of salaries of the staff. “It cannot be that no one contributes. They are very clear in the Insolvency and Bankruptcy Code, 2016 that once the insolvency kicks in the bankers must contribute till the Resolution Plan is approved and thereafter the RA will contribute. And when the Resolution Plan is approved but it is not implementable for any reason, the CIRP continues and the CoC contributes.”
Stating that the question was not who should contribute, it was “why is the Supervisory Committee not demanding that money from CoC” if the resolution process is still on.
The Wire has written to the resolution professional Mamta Binani and other members of the supervisory committee, including editor-in-chief T.V.R Reddy for their response on grievances raised by employees of the two newspapers, and this story will be updated as soon as it is received.
Apart from the CIRP process, DCHL and its former promoters are also facing a criminal probe in a money laundering and bank fraud case.
On August 23, 2019, the Enforcement Directorate raided residences and offices of promoters of DCHL, T. Venkatram Reddy and T. Vinayakravi Reddy, under the Prevention of Money Laundering Act (PMLA) 2002 to gather evidence in a bank fraud case.
The Enforcement Directorate started the money laundering probe against DCHL and its management in 2015, based on six FIRs and charge sheets filed by the Central Bureau of Investigation (CBI).
On October 16, 2020, Enforcement Directorate attached assets worth Rs 122.15 crore belonging to DCHL, the two former promoters who were raided and a “benami” company floated by them. This was the second attachment in the alleged loan fraud case of Rs 8,180 crore.
Following this attachment, Enforcement Directorate issued a statement saying “the accused promoters and their close family members continue to “yield indirect control over the print media and are working in senior capacities drawing large monthly salaries”.
Provident fund lost, and allowances stopped
The employees’ petition before the NCLT also charged that “the management of the CD has deducted the Provident Fund before the initiation of the CIRP of the CD for the last 32 months (approx) up to March 2018, but has not credited the same with the PF Authority”. The interest on the PF has also not been credited to the employees.
The plea also claimed that the employees had also “not received the gratuity for 6 to 8 years” and that “the CD has also not cleared conveyance allowance of the reporters since April 2019”.
The applicants said they had also not received their salaries since the approval of the resolution plan in September 2019.
Secrecy over resolution plan
The employees charged that there was also secrecy over the Resolution Plan and “the RP did not even care to disclose the details of the provision made for the employees in the approved Resolution Plan”. Moreover, they said, “Even after repeated requests the approved resolution plan is not shared with the vital component of the organisation, i.e., its human resource.”
On December 5, 2019, the petition stated, the NCLAT, New Delhi, directed that if the RA did not take over charge of the CD, then the supervisory committee with the help of the RP will ensure that the CD remains a growing concern.
Stating that “the RA has left the fate of the CD in the hands of the temporary management of the CD”, the employees charged that “the whole team is acting on a hidden agenda to harass the employees and make them desert the organisation”.
They further alleged that “the employees from Kerala are being illegally transferred to Chennai where they don’t have the proper infrastructure (like computers) to work”. Also, they said, while the salary and allowance dues had not been cleared, the employees were expected to move, incurring more expenditure on rent.
The employees accused the RP of “double standards” saying when it came to making payments or clearing these dues, the RP took refuge under the fact that there was no management, but when it came to issuing transfer orders, there was a management.
On June 17, 2020, about 50 members of the editorial team of The Asian Age wrote to the supervisory committee for DCHL about the hardships being faced by them due to non-payment of salaries and clearance of dues.
In the letter, they wrote that “almost two years ago, if not more, there were assurances from Ms. Mamta Binani and her team that our dues were the priority of the IRP team and that they would be cleared as soon as possible”. But over the years, they said, “our total pending salary and other dues are only increasing, not reducing”.
The employees also wrote that “over the last two years, because of the unbearable financial stress, many members of staff (more than half in Delhi and Mumbai editorial) have resigned and left. Also, all editions of the Financial Chronicle, two editions of The Asian Age and two editions of Deccan Chronicle have been shut down, leading surely to a substantial reduction in costs. Yet there has been no attempt to clear our pending dues.”
The letter had also cited individual appeals of staffers who were in acute financial distress.
One of them wrote about his father’s illness and his struggle to get him treated: “My father has been suffering from dry cough for the last one-and-a-half years. He also has a problem of breathlessness…He has been on medication. After every six months, a CT scan of his chest needs to be done to check whether the medicine is properly working or not. In September 2019, the doctor asked for his CT scan, but it could not be done as I did not have any money…I am the sole earner in my family. My parents are dependent upon me…During this trying time, my pending salaries should be given in order to meet the basic needs of my family.”
Another wrote: “My wife is diabetic and four months pregnant. She needs proper food, medication and utmost care. I stay in a rented flat and the rent of a couple of months is due. It is now very hard for me to manage as all of my savings are almost dried up. A solution is necessary for all…”
One of the employees, who is a single mother, said she was struggling to pay her son’s fees: “I am a single mother and had been saving up for my son’s education since 2005. It was a small installment per month that was meant for his studies abroad. It was meant to mature in a few years, by the time he was ready to go for higher studies. However, due to salaries not being paid, I have had to break my saving to pay my son’s fee and other other costs of running a house. I now have no saving to pay for his further education. I am working everyday, but I am not getting paid for my services.”
But the appeal of the employees had little impact.
The supervisory committee wrote back to them on June 19, 2020, saying “the company is running with decimal/ insignificant advertisement revenues from the start of COVID 19 lockdown, and the collections for the previous business are also not coming in fully to fulfil our commitments”.
With the collections from the government also stuck, it claimed that it was “not in a position to raise any funds to meet the obligations”
Employees raise questions
The Asian Age employees replied on June 30, saying, “The RA has a crucial role to play when it comes to taking other key decisions of the company, so why is it that on the issue of clearing employees’ dues, the RA shrugs its commitment by quoting a pending case?”
They reminded the supervisory committee that “none of the court judgments, which are in the public domain, refrain the RA or the Supervisory Committee from keeping their commitment and implementing the scheme.”
Further slash on salaries
But instead of getting any relief from the Committee, the employees of The Asian Age were in for a rude shock.
On July 22, 2020, the DCHL proposed a change in service conditions of the employees and effected a reduction in the gross salary of 50%, subject to a minimum gross salary of Rs 20,000 per month, from September 2020. A note issued by the company attributed this reduction to “the ever-increasing financial & operational challenges that the company has been going through coupled with continuing serious impact of COVID-19”.
This time, the employees alleged that there was discrimination in the changes as the salary cut for staff in Hyderabad was 20%, and in Chennai, Vijayawada and Visakhapatnam, it was 30%.
With Delhi and Mumbai being more expensive cities, they asked why the staff there and in Kolkata, among others, was being “singled out and discriminated against once again, and being penalised more in a situation that affects us all similarly, equally?”
However, as with other communications, the employees are still awaiting a response.