“If information on the affairs of close relatives of powerful politicians is to be withheld by the media, the only result will be the secrecy of power that will spawn all manner of corruption,” say the DUJ and NAJ.
“If information on the affairs of close relatives of powerful politicians is to be withheld by the media, the only result will be the secrecy of power that will spawn all manner of corruption,” say the DUJ and NAJ.
Amit Shah and son Jay Shah. Credit: PTI
New Delhi: In a resolution passed on October 15, the Delhi Union of Journalists and the National Alliance of Journalists have condemned the criminal defamation case filed by Jay Shah against The Wire. The BJP president’s son filed the case after The Wire published an investigative report detailing the sudden increase in turnover of a company owned by Jay Shah after the Narendra Modi government came to power. This case, the journalists’ groups said, is part of a larger pattern of defamation cases being filed to “target journalists and news agencies” and “terrorise or browbeat them”.
The full text of their resolution is reproduced below.
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There is something particularly undemocratic about the use of defamation suits and prosecutions when they seek to protect those in power. When used against the media they are even more distasteful, for the aim then is not only to intimidate but also to prevent the people from access to information.
When those close to powerful personages are seen receiving unusual advantages, then the people have a right to know whether the advantages are legitimate or wrought by influence. The transparency that law enforces on corporates is not meant to be stymied by defamation actions,when information in the public record is reproduced or relied upon in the media.
The government has come out in defence of Jay Shah. And Jay Shah himself has called The Wire report and story “The Golden Touch of Amit Shah” false.
The DUJ demands to know which statement in the report or story is false, for till date there is no clarification on where the falsehood, if any lies. Conversely, if there is no factual error in the story, it is even more important to know why Jay Shah finds it derogatory— for then, clearly, it is not the media that has contributed to the derogation of his reputation but the factual situation to which he alone has contributed.
The DUJ is asking for a clear statement from the Union government on both the aforesaid points. The Union government has stepped in to assert the legitimacy of Jay Shah’s business, and therefore it is for the government to tell the people what part of the story is false and then demonstrate why it is false.
If information on the affairs of close relatives of powerful politicians is to be withheld by the media, the only result will be the secrecy of power that will spawn all manner of corruption. If state power is used to maintain defamation suits and prosecutions in order to shroud the affairs of public persons and their close relatives, instead of coming out with the truth in the public domain, it is not only an assault on the press but a direct assault of constitutional democracy itself.
‘Please understand, he got a letter of credit, he did not get a loan,’ the BJP president told a TV channel on Friday.
‘Please understand, he got a letter of credit, he did not get a loan,’ the BJP president told a TV channel on Friday.
Screenshot of Amit Shah being interviewed on Aaj Tak. Credit: YouTube
New Delhi: BJP president Amit Shah broke his silence on the swirling controversy surrounding his son, telling the India Today group on Friday that although “no one has levelled allegations of corruption”, the decision to file criminal and civil defamation cases against The Wire for writing about the business affairs of Jay Amitbhai Shah was a sign that he was open to an enquiry.
The BJP leader defended the growth in revenue of one of Jay Shah’s companies, Temple Enterprise, noting that the commodities business was marked by high turnover but low profits and that his son’s firm had lost a crore and half of rupees despite earning revenues of Rs 80 crore. Though this loss was duly reported by The Wire in its recital of the company’s fortunes, Amit Shah claimed that it was not.
Shah said this in response to a question from India Today TV’s Rahul Kanwal at a specially held event, ‘Gujarat Panchayat’, telecast by Aaj Tak from Ahmedabad on October 13.
When Kanwal asked next whether it would have been possible for Jay Shah’s small companies to receive the kind of “unsecured loans and letters of credit they did if he was not Amit Shah’s son”, the BJP president denied there had been any such loans. “Pehle aap samajh lijiye ki letter of credit mila hai, loan nahin mila hai” (‘Please understand, he got a letter of credit, he did not get a loan). Shah then went on to explain how the LC was fully secured against the cash margin and goods purchased.
The ‘letter of credit vs loan’ explanation refers only to the Rs 25 crore borrowed by another of Jay Shah’s companies, Kusum Finserve, from the Kalupur Commercial Cooperative Bank. However, Amit Shah’s denial of any unsecured loan or borrowing by his son’s companies is contradicted by Jay Shah’s own filings with the Registrar of Companies and other official statements for his company, Temple Enterprise Private Limited.
Portion of Temple Enterprise’s financial statement reflecting unsecured borrowing from KIFS Financial Services Ltd.
In a reply to The Wire last week, and duly noted in the story published on October 8, Jay Shah’s lawyer had said, “Since working capital facilities were not available to a new business/company, interest bearing Inter Corporate Deposits (ICD) were taken from time to time from KIFS Financial Services Ltd., a registered NBFC, to run this business.”
However, Amit Shah’s unwillingness to acknowledge the reality of his son taking an unsecured loan from KIFS Financial Services Ltd. of Rs 15.78 crore means the question that Aaj Tak said everyone is asking still remains unanswered: How did a small company with little to show by way of track record in the years preceding 2015-16, suddenly manage to make such unsecured borrowings?
The lender, KIFS, is a non-banking financial company promoted by Rajesh Khandwala, in-law of Parimal Nathwani of the Reliance group. The company has had several run-ins with the Securities and Exchange Board of India.
If he pointed a finger towards Robert Vadra’s wealth increasing due to his proximity to the Congress president, shouldn’t he ask if the sudden rise in Jay Shah’s fortunes is connected to his father’s position as BJP president?
If he pointed a finger towards Robert Vadra’s wealth increasing due to his proximity to the Congress president, shouldn’t he ask if the sudden rise in Jay Shah’s fortunes is connected to his father’s position as BJP president?
From left to right: BJP presidet Amit Shah, Prime Minister Narendra Modi, Amit Shah’s son, Jay Amitbhai Shah. Credit: BJP, PTI
One of the themes in the prime minister’s campaign speeches and rallies during his early years in office, that struck an immediate chord with the country, was his comments on how the relatives of powerful politicians grow rich after their parents reach high office. This was, of course, something the Indian people knew to be a fact but Modi was the first senior politician to speak about it, freely, frankly and frequently.
As far back as August 2013, in Bhuj, Modi said:
“Bhai-Bhateejavad purane dino ke dharavahikon mein bharastachar ke mool mein hua karta tha. Samay ke saath isme badlav aaya hai. Bharastachar mein ek naya dharavahik mama-bhanja aaya aur ab yeh saas, bahu aur damad ki aur badh gaya hai.”
(Nepotism, the favouring of brothers and nephews, were a staple of serials in the past. Over time, this has undergone a change. Then uncles and nephews appeared, and now mothers-in-law and sons-in-law have entered the plot)
Twenty five months later, speaking in San Jose in September 2015, he was more explicit:
“Hamare desh mein rajnetaon par kuch hi samay mein aarop lag jate hain. Usne 50 crore banaya, usne 100 crore banaya. Bete ne 250 crore banaya. Beti ne 500 crore banaya. Damad ne 1000 crore banaya. Chachere bhai ne contract le liya…ye sunne ko milta hai ki nahi milta hai? Mere deshvasiyon, main aaj aapke beech mein khada hoon, hai koi aarop mujh pe?”
(In our country, politicians very quickly start attracting allegations. That person made 50 crore, another 100 crore. The son made 250 crore, the daughter 500 crore and the son-in-law 1000 crore…. Don’t we hear this all the time?… My countrymen, I am now standing in front of you. Are there any allegations against me?
At the time, the case that seemed to best illustrate Modi’s rhetoric was that of Robert Vadra. The Hindu and the Business Standard, in a series of reports, alleged his companies fortunes had jumped from Rs 50 lakhs to over Rs 300 crore in just six years. The issue most referred to was the purchase of 3.5 acres by Vadra’s Skylight Hospitality in Manesar in February in 2007. Reports said that 24 hours after Vadra bought the land it was mutated in his name. Six weeks later the Haryana government gave permission for commercial use, thus dramatically increasing its value. Sixty five days later the land Vadra bought for 7.5 crores was sold to DLF for 50 crore, a profit of 770%.
Yet at the time Skylight Hospitality bought the land its total assets were one lakh and the payment for the land was shown as a book overdraft. The newspapers suspected that the money was advanced by DLF because they knew Vadra would be able to get the land use changed and then they could buy it from him with both parties benefiting. In other words, it was a sweetheart deal. This impression was apparently corroborated by the fact that when Ashok Khemka, the inspector general of registration, started an inquiry into Vadra’s land dealings he was immediately transferred, even though it was 11 at night.
Many people believe that recent reports by NDTV and TheWire.in about the companies of Amit Shah’s son, Jay Shah, bear an uncanny resemblance to the Vadra saga. The points made by the two media organisations are claimed to be factually correct and haven’t been disputed though, like the Vadra case, the inferences or conclusions are said by the subjects to be defamatory.
TheWire.in reports that the turnover of one of Jay Shah’s companies “increased 16,000 times over in the year following the election of Narendra Modi as Prime Minister”. NDTV adds that in the same year loans to two of Jay Shah’s companies “rose to 53.4 crore, a jump of 4,000 per cent” compared to a total of Rs 1.3 crore upto 2013-14.
Going into further detail, the two media houses say one of the companies, Temple Enterprises, received an unsecured loan of Rs 15.76 crore even though it had a 10 year “unimpressive track record”. A second company, Kusum Finserve, incorporated in 2012 and with meagre profits of Rs 1.73 crore after a first year loss, received a line of credit of Rs 25 crore. NDTV even questions if it was entitled to this credit. The Wire adds Kusum Finserve, despite no experience in the energy or infrastructure sectors, received a Rs 10.35 crore loan from a public sector enterprise IREDA to set up “a 2.1 MW wind energy plant”.
All of this leads NDTV to comment: “Whether he (Jay Shah) was deserving, or benefited from a famous surname, can only be established by an inquiry”. Separately, The Wire has reported that Tushar Mehta, additional solicitor general, secured permission to represent Jay Shah in court, even though government law officers can only represent private parties in exceptional circumstances. The website also claims this was granted on October 6, though its story on Shah, which was the first to appear, was only published on October 8.
Several questions are now likely to come to the mind of the Indian voter.
If the Shah story is reminiscent of the Vadra episode, don’t the prime minister’s comments in 2013 and 2015 apply as much to the former as they do to the latter?
If one was an example of “bhai-bhateejavad” isn’t that also true of the other?
If Vadra’s good fortune creates suspicion because his mother-in-law is Congress president, are we not entitled to ask whether Shah’s luck is connected to his father’s position as BJP president?
In Vadra’s case, nothing criminal has so far been found – and that’s also true of Jay Shah – but that didn’t stop the opposition and media raising doubts, so now if the opposition and media are doing the same to Shah, is it really unprecedentedly awful and unwarranted? Indeed, isn’t it the duty of the two to raise questions in the interest of democracy even if, occasionally or more often, they turn out to be misplaced?
Both as a candidate and in office the prime minister had a lot to say about Robert Vadra. It was, of course, mainly based on suspicion but the Indian people applauded him for it. Today’s he’s silent. So don’t we have the right to ask why a man who loves to speak suddenly has nothing to say?
Karan Thapar is a Delhi-based journalist and television anchor.
This article first appeared in The Tribune on October 13, 2017 and is republished with permission
Now that the government has stepped in to bat for BJP president Amit Shah’s son, it should clear up questions about Rajesh Khandvala’s KIFS – with which he has had business dealings.
Now that the government has stepped in to bat for BJP president Amit Shah’s son, it should clear up questions about Rajesh Khandvala’s KIFS – with which he has had business dealings.
From left to right: BJP president Amit Shah, Shah’s son, Jay Amitbhai Shah, and KIFS chief Khandwala
Rohini Singh’s story in The Wire on October 8 was a recital of facts on record. The meteoric rise in the financial fortunes of Jay Shah’s Temple Enterprise is a story of numbers that could be explained as a text book case of superb management or, if not, by the providential infusion of finances. As yet no explanation at all has come forth, except governmental assertions of the legitimacy of a private business.
A defamation complaint, whatever its merit or lack of it, is no explanation to the public, and can never be a substitute for democratic accountability. Now that the government has stepped in without a moment’s delay not only to vouch for the legitimacy of Jay Amit Shah’s business dealings, but also by anticipating his need for legal representation by giving permission for the additional solicitor general to take up cudgels on his behalf – well before even the publication of the story – the matter is squarely one of governance and hence one which calls for answers to the public. Even otherwise, corporate governance is by itself a matter that calls for accountability to the public.
India is a democracy and the public’s interest in both political and corporate governance means the call for explanations cannot be simply brushed aside. The manner in which some trading companies were opened and shut by Jay Shah, son of BJP president Amit Shah, for example, raises many serious questions which still elude answers. While railway minister Piyush Goyal contended these were legitimate businesses which were run and shut by Jay Shah, the questions that need clear answers are whether regulatory and corporate governance norms were properly followed in the way some of these businesses were conducted.
These answers could be provided by the Reserve Bank of India/Securities and Exchange Board of India or even the finance ministry which broadly interfaces with these regulatory institutions.
The first aspect which needs regulatory clarity is what is the nature of the relationship between Jay Shah and Rajesh Khandwala, owner of KIFS Financial Services, which lent Rs. 15.78 crore to Shah’s company Temple Enterprise Pvt Ltd in the form of an unsecured loan.
The relationship between Jay Shah and Rajesh Khandwala is no ordinary matter because Rajesh Khandwala, the lender of an unsecured loan, was also a partner with Jay Shah in a limited liability company, Sattva Tradelinks, which was opened and shut within the same year in 2015.
There are strict NBFC norms which govern a business relationship where the lender becomes a partner in another business with the borrower. For one, specific RBI permission is needed to ensure that no conflict of interest arises when a lender becomes an equity partner with the promoters of the borrowing company. This becomes a very complicated business relationship and it this risk that partly discourages the RBI from allowing diversified corporate groups to own a bank. There is always the risk of such corporate groups’ promoters channeling funds to other businesses where they may have an interest.
So did Rajesh Khandwala’s NBFC, KIFS Financial Services, take RBI permission when he formed Sattva Tradelinks, a limited liability company in partnership with Jay Shah? These are regulatory issues which need answers.
Why an unsecured loan of Rs. 15.78 crore given to Jay Shah’s company is not reported properly in the balance sheet of KIFS is the next question. There is a regulatory requirement that unsecured loans be separately reported in the balance sheet.
The nature of business interactions between Jay Shah and Rajesh Khandwala, therefore, points to a special relationship. In this context it may be interesting to study the background of the Khandwala family which has been in the share broking and financial services business for over two decades. The record shows a persistent, regulatory discord with SEBI, which had imposed fines and trading bans on them from time to time. Rajesh Khandwala and his brother Jayesh P. Khandwala have been running businesses under the KIFS banner since 1995, as a family enterprise.
As per the information memorandum submitted by KIFS Financial Services to the Bombay Stock Exchange (BSE) at the time of its public listing in May 2013, a prohibitory order was passed by SEBI against Jayesh P. Khandwala, the brother of the managing director and promoter of the family entity back in 2006.
However, the SEBI order was set aside by the Securities Appellate Tribunal (SAT) in April 2012 and remanded back for further trial. At this point, it was also clarified in the record of the proceeding that Jayesh Khandwala was neither a director nor a shareholder of the applicant company and has no interest in the assets of the applicant company. The proposed listed company had only Rajesh Khandwala as promoter because the elder brother’s reputation had taken a beating following alleged market transgressions of the family firm in its previous avatar.
KIFS Securities, a portfolio manager that also controls KIFS Financial Services, had several run-ins with SEBI and there were also several criminal cases pending against it in various courts, as per the disclosure document filed by the company with the stock market watchdog in October 2015. Note that this is information provided by the company itself in the disclosure documents required for listing.
KIFS Securities was earlier known as Khandwala Integrated Financial Services and its name was changed in May 2010 on conversion from a private limited to public limited company.
In November 2006, SEBI, in a disgorgement order, indicted KIFS for its role in the IPO scam earlier that year. When a person or entity in the securities market makes a profit by fraudulent means, a disgorgement order is issued to repay those gains to affected investors with interest. The matter was settled through the consent order mechanism in which KIFS neither admitted or denied guilt.
In May 2007, the regulator passed an ad-interim ex-parte “cease & desist order” in the matter of NSE F&O transactions. Again the matter was settled through a consent order.
In the same year, SEBI initiated inquiry proceedings against the KIFS group in a dispute relating to trading of Ranbaxy Laboratories shares. In 2010, SEBI issued a warning to KIFS in an inquiry proceeding in the matter of www.valuenotes.com.
KIFS, however, claimed that there was no pending “material” litigation or legal proceeding against it. KIFS also said that there were no material civil cases pending against it but admitted there are disputes relating to broking and depository participant services. Thus KIFS claimed that the series of criminal and regulatory proceedings enumerated above were not material to their business prospects.
KIFS had also formally admitted there were cases in which it was fined by the exchanges, depository, SEBI in the routine course of business for violation of securities law, which it claimed, do not ‘materially’ affect its finance and operations.
A criminal case of cheating was filed against KIFS in the court of the Chief Judicial Magistrate, Bhavnagar. The case was still pending when the company filed the disclosure document with SEBI.
In sum, the background of Khandwala and KIFS itself raises a lot of issues of propriety and governance which could have a bearing upon the nature of the partnership between Rajesh Khandwala and Jay Shah.
The BJP leader also described the defamation cases Jay Amit Shah is filing against The Wire as an attempt to “suppress the voice of the media.”
The BJP leader also described the defamation cases Jay Amit Shah is filing against The Wire as an attempt to “suppress the voice of the media.”
Yashwant Sinha. Credit: PTI
New Delhi: Former finance minister and BJP leader Yashwant Sinha said that the BJP has “lost the moral high ground” due to the way it has reacted to the recent story in The Wire on the business dealings of party president Amit Shah’s son, Jay Amitbhai Shah.
In an interview to NDTV on Wednesday, Sinha said the BJP ought not to have fielded senior ministers to defend Jay Shah, or have farmed out a top government lawyer, Tushar Mehta, to represent someone who is essentially a private businessman. “Looking at all this, therefore, perhaps the high moral ground that we had occupied all these months and years appears to have been lost somehow.”
He was answering questions about the controversy triggered by The Wire‘s story on Amit Shah’s son.
“I don’t want to comment on the merits of the story which has appeared in The Wire because that is a matter of enquiry and investigation, ” said Sinha, “but I would certainly like to say that the manner in which a Central minister jumped into the fray in defence of Jay Shah is not called for. He is a central minister. He is not a chartered accountant of the firm of Jay Shah. Similarly, another minister of the UP government jumped to his defence. These are avoidable and should not have happened.”
Sinha also questioned the way in which clearance was given for the additional solicitor general to represent Jay Shah.
Asked if the controversy had dented the image of the party and the prime minister, Sinha said, “I will say that an episode takes place, your reaction to that determines whether you are still occupying the high moral ground or you have quit that high moral ground. From the way we have responded – the party and government – it appears we have lost the high moral ground.”
Sinha also described the defamation cases Jay Amit Shah is filing against The Wire with the backing of the government as an attempt to “suppress the voice of the media.”
“Media is a very important, integral part of democracy, that is why it is regarded as the fourth estate, the fourth pillar of democracy. To try and suppress the voice of the media either directly or though any other means, including for instance these defamation cases running up to to Rs 100 crore was also avoidable,” he said.
Following The Wire‘s investigative report on the dramatic increase in revenue of a company owned by Jay Shah in the year following the election of Prime Minister Narendra Modi, Jay Shah has filed a criminal defamation suit in an Ahmedabad court. He also announced his intention of suing The Wire for Rs 100 crore.
The Wire report also drew attention to the loans given to Jay Shah’s firms, including from a state-run firm that reports to the Ministry of New and Non-Renewable Energy (MNRE).
“The way the loan was given to Jay Shah by the [MNRE] and the way Piyush Goyal [who was in charge of that ministry at the time] defended him, it gives the impression that there’s something wrong,” NDTV quoted Sinha as saying.
“The government should order an inquiry because too many government departments are involved,” Sinha said, backing opposition demands for a probe into the BJP president’s son’s business affairs.
In a subsequent interview to The Wire, Sinha had also attacked the Modi government’s failure to address the Kashmir issue, and said that India has already lost the people of the Valley emotionally.
Jay Amit Shah’s response to Rohini Singh’s report.
Today morning, a news website ‘The Wire’ published an article titled “The Golden Touch of Jay Amit Shah” authored by Ms. Rohini Singh. The editor of the website is Mr. Siddharth Varadarajan.
The article makes false, derogatory and defamatory imputation against me by creating in the minds of right-thinking people an impression that my business owes its ‘success’ to my father Shri Amitbhai Shah’s political position.
My businesses are fully legitimate and conducted in a lawful manner on commercial lines, which is reflected in my tax records, and are through banking transactions. I had taken loan either from NBFC or Non-funded Credit Facilities from Cooperative Bank on purely commercial terms strictly in accordance with law. I have repaid the loans by cheque on commercial rate of interest and within the time stipulated. I have mortgaged my family property with the cooperative bank to get the credit facilities.
My lawyer has given details of my legitimate transactions to the Author of the website and all questions posed by her were answered with details since I had nothing to hide.
Since the website has proceeded in making an absolutely false imputation in a highly slanted article thereby damaging my reputation I have decided to prosecute Author, Editor/(S) and the Owner/(s) of the aforesaid news website for criminal defamation and sue them for an amount of Rs. 100 crores. Both the actions will be filed at Ahmedabad where I stay, carry on my business and where the cause of action has arisen.
If anyone else republish/re-broadcast the imputations made in the said article, whether directly or indirectly, such person or entity will also be guilty of the very same criminal and/or civil liability.
My client, Mr. Jay Shah, having received a questionnaire from you, has instructed me to answer the questions posed by you as under:
Temple Enterprise . Ltd.
This company is engaged in the business of import and export of Agri commodities like Rapseed DOC, Castor DOC meal, Desi Chana, Soyabean, Corainder seeds, Rice, Wheat, Maize etc. The business ownership and management was principally held by Mr. Jay Shah and Mr. Jitendra Shah (an old family friend) and their associates. Mr. Jay Shah is a qualified Engineer having done his B.Tech from the renowned Nirma University and Mr. Jitendra Shah was already engaged in the business of commodities for the last several years and his companies had been recording an annual turnover of over Rs.100 Crores.
Mr. Jay Shah, Mr. Jitendra Shah and their associates invested share capital and unsecured loans in this company. Since working capital facilities were not available to a new business/ company, interest bearing Inter Corporate Deposits (ICD) were taken from time to time from KIFS Financial Services Ltd., a registered NBFC, to run this business. Tax has been deducted on the interest paid (TDS) regularly and the principal and interest amount has been repaid in full.
Mr. Rajesh Khandwala, the promoter of KIFS is the sharebroker for the family of Mr. Jay Shah for the last several years. This NBFC has been providing loans to Mr. Jay Shah’s and Mr. Jitendra Shah’s other businesses regularly for the last several years. Mr. Jay Shah has had family relations with Mr. Rajesh Khandwala much prior to the marriage of Mr. Nathwani’s son to Mr. Khandwala’s daughter, about 4 years ago.
It may be noted that in the commodity business, a turnover of about Rs.80 crores is not an abnormally high turnover, since this is a high risk, high volume and low margin business, more particularly, in view of the fact that Mr. Jitendra Shah’s companies were already having annual turnover of over Rs. 100 Crores. Unfortunately, the business activities of the Temple Enterprise Pvt. Ltd. resulted in losses due to which the business activities were stopped sometime in October, 2016.
All the above transactions are through banking channels and duly reflected in the account books and the tax records of the company.
Sattva Tradelink
Though this LLP was formed by Mr. Jay Shah with Mr. Khandwala, in view of adverse market conditions no business was carried out and the LLP was wound up and has already been struck off from the Registrar records.
KusumFinserve
This entity is engaged in the business of trading in stocks and shares, import and export activities and distribution and marketing consultancy services. This entity has also been regularly raising ICDs / loans from KIFS Financial Services for the last several years and the amount of Rs.4.9 crores was the outstanding closing balance from them. These amounts were used for regular working capital. Tax has been deducted on the interest paid (TDS) and principal and interest amount has been repaid in full.
The LLP has not taken any funding /loan from Kalupur Commercial Co-op. Bank Ltd. Only a Non Fund based Working Capital facility in the form of Letter of Credit (LC) upto Rs.25 crores has been sanctioned and is availed from time to time. This facility has been secured on usual banking terms which include hypothecation of the goods purchased under the LC, cash margin of 10% and collateral security of a property belonging to Mr. Jay Shah’s father and another property of Kusum Finserve (Purchased on 5th April, 2014 through a duly executed purchase deed) which is duly reflected in the financial statement of April, 2014 to March, 2015.
In fact, the goods purchased under LC are stored at the Warehouse/port under CM (Collateral Manager) arrangement and goods are allowed to be lifted from the warehouse only on the basis of PAY & PICK, meaning thereby, upon deposit of the full amount of the goods sought to be lifted, in a Fixed Deposit. The bank issues Delivery Order after receiving full payment and then goods are released from the custody of the CM. The bank receives payments before the retirement of LC on its due date resulting in this being a non-funded and no-risk facility for the bank.
The loan taken from IREDA for setting up a 2.1 MW wind energy plant is based on the equipment prices prevailing at that point of time as per industry standards (approx Rs.14.3 crores) and duly appraised and sanctioned in the normal course of business. The outstanding loan as on 30-06-2017 is Rs.8.52 crore and interest and repayment of loan are regular.
It may be noted that the sum of Rs.21.2 crores is the total revenue of the company and not the profit. This includes Rs.16.2 crores which is the trading turnover from the sale of shares and not the profit. The profit earned by this company was only approximately Rs. 15,000/-. All the above transactions are through banking channels and duly reflected in the account books and the tax records of the company.
It may be noted that LLP has no dealing with JSW or any company controlled by Mr. Sajjan Jindal.
Finally, there is no overdue of principal or interest on any loan.
In view of the answers and explanations detailed above, the facts are absolutely clear and you are requested not to publish anything in this behalf, which would not only infringe my clients’ privacy rights but would also be libelous and/or defamatory.
Mr Jay Shah is a private citizen doing his legitimate business. His business transactions are honest, legal and bonafide. Your questionairre indicates that your intention is to drag him into a false and a manufactured controversy. Any slant or imputation which alleges or suggests any impropriety on his part will not only be false but also malicious and defamatory. It will also be a breach of his fundamental right to privacy. He shall, in that event reserve the right to prosecute you for defamation and also sue you for the civil wrongs.
Notwithstanding the above, if you or anyone in the print, electronic or digital media carries and/or broadcasts any defamatory and/or false imputations including those which breach his fundamental right of privacy and/or defame him, Mr. Jay Shah reserves the right to prosecute and sue such person/entity including anyone who carries or broadcasts a repetition of such libelous / defamatory statement.
BJP president Amit Shah’s son, Jay Shah, has seen a dramatic increase in some of his businesses since Narendra Modi became prime minister.
BJP president Amit Shah’s son, Jay Shah, has seen a dramatic increase in some of his businesses since Narendra Modi became prime minister.
Jay Shah, Prime Minister Narendra Modi and BJP president Amit Shah, seen here at the wedding reception of Jay in 2015. Credit: BJP
Key highlights:
Turnover of a company owned by Shah’s son increased 16,000 times over in the year following election of PM Narendra Modi
Revenue from company owned by Amit Shah’s son jumped from just Rs 50,000 to over Rs 80,00,00,000 in a single year
Firm of Amit Shah’s son, whose business is chiefly stock trading, turns to windmill generation with PSU loan
Do a story on Amit Shah’s son’s ‘honest, legal, bonafide’ businesses and ‘he shall reserve right to prosecute you’, his lawyer warns The Wire
New Delhi: The turnover of a company owned by Jay Amitbhai Shah, son of Bharatiya Janata Party leader Amit Shah, increased 16,000 times over in the year following the election of Narendra Modi as prime minister and the elevation of his father to the post of party president, filings with the Registrar of Companies (RoC) show.
Company balance sheets and annual reports obtained from the RoC reveal that in the financial years ending March 2013 and 2014, Shah’s Temple Enterprise Private Ltd. engaged in negligible activity and recorded losses of Rs 6,230 and Rs 1,724 respectively. In 2014-15, it showed a profit of Rs 18,728 on revenues of only Rs 50,000 before jumping to a turnover of Rs 80.5 crore in 2015-16.
The astonishing surge in Temple Enterprise’s revenues came at a time when the firm received an unsecured loan of Rs 15.78 crore from a financial services firm owned by Rajesh Khandwala, the samdhi (in-law) of Parimal Nathwani, a Rajya Sabha MP and top executive of Reliance Industries.
One year later, in October 2016, however, Jay Shah’s company suddenly stopped its business activities altogether, declaring, in its director’s report, that Temple’s net worth had “fully eroded” because of the loss it posted that year of Rs 1.4 crore and its losses over earlier years.
The Wire sent a questionnaire to Jay Shah on Thursday seeking details about the shifting fortunes of Temple Enterprise and his other business ventures, as obtained from RoC filings, which he said he could not immediately respond to as he was travelling. On Friday, however, Shah’s lawyer, Manik Dogra, sent in a response with a warning that criminal and civil defamation proceedings would be launched in the event of “any slant or imputation which alleges or suggests any impropriety on his part.”
As is obvious, the story the RoC documents themselves tell do not indicate anything more than the bare fact of various loans and revenues, which have not been denied by Shah’s lawyer. The world over, it is normal for the business affairs of politicians’ relatives in democracies to be subjected to public scrutiny, especially when there is a sudden change in fortunes that coincides with an uptick in the political cycle. During UPA-II, for example, the Congress party spent the better part of three years confronting questions about how party president Sonia Gandhi’s son-in-law, Robert Vadra, had managed to grow his real estate businesses on the basis of loans, including unsecured advances by real estate giant DLF. Indeed the sharpest attacks on Vadra’s affairs were from the BJP.
Though Shah’s lawyer has not disputed the information drawn from Shah’s submissions – filings that companies must mandatorily make with the RoC to enablepublic viewing and examination – The Wire will be happy to publish any response from Shah as and when it is received.
The shifting fortunes of Temple Enterprise
Temple Enterprise was incorporated in 2004 with Jay Shah and Jitendra Shah listed as its directors. BJP president Amit Shah’s wife, Sonal Shah, also has a stake in the company.
In 2013-14, Temple Enterprise did not own any fixed assets and had no inventories or stock. It also got an income tax refund of Rs 5,796. In FY 2014-15, it earned Rs 50,000 as revenue. However, in 2015-16, the firm’s revenues jumped to over Rs 80.5 crore, a growth of 16 lakh percent. Reserves and surplus turned negative to Rs 80.2 lakh from Rs 19 lakh the previous year. Trade payables were Rs 2.65 crore, up from Rs 5,618 the previous year. The assets of the company were only Rs 2 lakh. The firm had no fixed assets the year before. Short-term loans and advances were Rs 4.14 crore, up from Rs 10,000 the year before. Inventories were Rs 9 crore, up from zero the previous year, according to the firm’s filings.
The massive increase in revenues is described in the filings as coming from the “sale of products”. This included Rs 51 crore of foreign earnings, up from zero the previous year.
The filings also reveal an unsecured loan of Rs 15.78 crore from a listed entity, KIFS Financial Services. The revenue of KIFS Financial Services for the same financial year when the loan was given was Rs 7 crore. The annual report of KIFS Financial Services also does not reflect the Rs 15.78 crore unsecured loan given to Temple Enterprise.
Rajesh Khandwala, the promoter of KIFS Financial Services, first agreed to respond to The Wire’s questionnaire sent on Thursday seeking clarification on his firm’s dealings with Shah’s companies but subsequently did not respond to calls and messages. KIFS, a non-banking financial company (NBFC), has had run-ins with SEBI in the past.
Parimal Nathwani (left) and Rajesh Khandwala (right), with their respective spouses. Credit: parimalnathwani.com
Khandwala’s daughter is married to Parimal Nathwani’s son. Ahmedabad-based Nathwani heads the Gujarat operations of Reliance Industries and has operated for years at the intersection of business and politics. He is an independent member of parliament from the upper house. His re-election to the Rajya Sabha in 2014 was supported by BJP legislators in Jharkhand.
A source close to Amit Shah told this reporter that neither Nathwani or Reliance had any role to play in the facilitation of the unsecured loan from Khandwala’s firm to Temple Enterprise. On his part, Jay Shah’s lawyer said in his written response to The Wire that Khandwala is an old friend of the family.
“Rajesh Khandwala, the promoter of KIFS is the sharebroker for the family of Jay Shah for the last several years. This NBFC has been providing loans to Jay Shah’s and Jitendra Shah’s other businesses regularly for the last several years. Jay Shah has had family relations with Rajesh Khandwala much prior to the marriage of Nathwani’s son to Khandwala’s daughter, about 4 years ago,” says the statement from Shah’s lawyer.
In response to the query about the loan, Jay Shah’s lawyer wrote:
“Jay Shah, Jitendra Shah and their associates invested share capital and unsecured loans in this company [Temple Enterprise]. Since working capital facilities were not available to a new business/company, interest bearing Inter Corporate Deposits (ICD) were taken from time to time from KIFS Financial Services Ltd., a registered NBFC, to run this business. Tax has been deducted on the interest paid (TDS) regularly and the principal and interest amount has been repaid in full.”
In 2015, the same year KIFS provided an unsecured loan to Shah’s firm, Khandwala and Shah also formed a limited liability partnership (LLP), Sattva Tradelink, though this was dissolved later. The Wire had asked Jay Shah to describe his dealings with Khandwala, incuding Sattva Tradelink. Replying on Shah’s behalf, his lawyer said: “Though this LLP was formed by Jay Shah with Khandwala, in view of adverse market conditions no business was carried out and the LLP was wound up and has already been struck off from the Registrar records.” (emphasis added).
It is not clear what Shah’s lawyer meant by ‘adverse market conditions’, for the year the LLP was formed was also the year Khandwala’s firm lent Rs 15.78 crore to Shah’s company and the latter went on to book revenues of Rs 80.5 crore.
Specific questions to Khandwala about why the annual report of KIFS Financial Services for the loan year does not mention the loan to Jay Shah’s company went unanswered.
After the boom, the bust
According to Shah’s RoC filings, Temple Enterprise is described as being engaged in wholesale trade and more than 95% of revenues come from the sale of agricultural products. “Temple Enterprise is in the business of import and export of agri commodities like rapeseed DOC, castor DOC meal, desi chana, soyabean, coriander seeds, rice, wheat, maize etc,” notes the statement from Shah’s lawyer. The statement also credits the business acumen of Shah’s partner, Jitendra Jayantilal Shah, and the education Amit Shah’s son received for the performance of the company. “The business ownership and management was principally held by Jay Shah and Jitendra Shah (an old family friend) and their associates. Jay Shah is a qualified engineer having done his B.Tech from the renowned Nirma University and Jitendra Shah was already engaged in the business of commodities for the last several years and his companies had been recording an annual turnover of over Rs.100 crore,” says the statement.
Shah’s lawyer also said a turnover of Rs 80 crore in the commodity business is not “abnormally high.”
What does appear a little abnormal, however, is that the firm, whose revenues jumped from just Rs 50,000 to over Rs 80 crore in a single year (FY 2015-16) stopped its business activities last year. The explanation offered by Shah’s lawyer: “Unfortunately, the business activities of the Temple Enterprise Pvt. Ltd. resulted in losses due to which the business activities were stopped sometime in October, 2016.”
From stock trading to power generation
Kusum Finserve is a limited liability partnership incorporated in July 2015 with Jay Shah owning a 60% stake in it. It was formerly a private limited company, Kusum Finserve Private Ltd, before being converted into an LLP. The private limited company also got inter-corporate deposits from KIFS Financial worth Rs 2.6 crore in FY 2014-15. The partnership generated Rs 24 crore as income as per its last filings.
The filings also reflect an unsecured loan of Rs 4.9 crore but do not specify from whom. Shah’s lawyer says the main business of Kusum Finserve is “trading in stocks and shares, import and export activities and distribution and marketing consultancy services.” He adds that KIFS Financial Services has regularly been giving it loans. “This entity has also been regularly raising ICDs/loans from KIFS Financial Services for the last several years and the amount of Rs. 4.9 crore was the outstanding closing balance from them. These amounts were used for regular working capital. Tax has been deducted on the interest paid (TDS) and principal and interest amount has been repaid in full,” the statement says.
While the main business of the firm is trading in stocks, its RoC filings reveal it is involved in diversifying into a completely unrelated field: it is setting up a 2.1 megawatt windmill plant worth Rs 15 crore in Ratlam, Madhya Pradesh.
Loans from a cooperative bank, and a PSU
Shah’s filings with the RoC also reflect Rs 25 crore worth of finance from the Kalupur Commercial Cooperative Bank. The board of directors of the bank include individuals from the Nirma group and Nirma university. The chairman emeritus of the bank is Nirma’s Ambubhai Maganbhai Patel.
File photo of wind turbines in Rajasthan Credit: REUTERS/Pawan Kumar
The properties mortgaged include one owned by BJP president Amit Shah, valued at Rs 5 crore, and another transferred by an associate of Amit Shah, Yashpal Chudasama, to Kusum Finserve Private Limited in 2014. Shah did not reveal what the value of the 2002 square foot property was but market estimates put it at Rs 1.2 crore. Chudasama, a former director of the Ahmedabad District Cooperative Bank, was chargesheeted by the CBI in 2010 for attempting to “convince, coerce, threaten, and influence witnesses on [Amit Shah’s] behalf to conceal the truth from the CBI” about the fake encounter of Sohrabuddin and his wife Kauser-bi. In 2015, a special CBI court discharged Chudasama from the case, just as it had discharged Amit Shah too in December 2014.
Asked how Kusum Finserve had managed to raise a loan of Rs 25 crore from a cooperative bank against collateral valued at under Rs 7 crore, and whether other properties had also been mortgaged, Jay Shah’s lawyer said the bank did not give the firm a “loan” but a “non fund based working capital facility in the form of a Letter of Credit up to Rs 25 crore.” This facility is availed “from time to time,” says the lawyer’s statement. “This facility has been secured on usual banking terms which include hypothecation of the goods purchased under the LC, cash margin of 10% and collateral security of a property belonging to Jay Shah’s father and another property of Kusum Finserve (purchased on April 5, 2014 through a duly executed purchase deed) which is duly reflected in the financial statement of April, 2014 to March, 2015,” says the statement.
“The bank receives payments before the retirement of LC on its due date resulting in this being a non-funded and no-risk facility for the bank,” Shah’s lawyer said.
Railways minister Piyush Goyal, formerly minister in charge of the Ministry of New and Renewable Energy. (Credit: Piyush Goyal/Facebook)
Besides the cooperative bank, Jay Shah’s partnership has also availed of a Rs 10.35 crore loan from a public sector enterprise, Indian Renewable Energy Development Agency (IREDA), described as a ‘mini ratna’ on its website, in March 2016. It is controlled by the Ministry of New and Renewable Energy. Piyush Goyal was the minister at the time the loan was sanctioned.
“The loan taken from IREDA for setting up a 2.1 MW wind energy plant is based on the equipment prices prevailing at that point of time as per industry standards (approx Rs 14.3 crore) and duly appraised and sanctioned in the normal course of business. The outstanding loan as on 30-06-2017 is Rs 8.52 crore and interest and repayment of loan are regular,” says Shah’s lawyer.
What is not clear are the parameters by which a partnership whose primary business, according to Shah’s lawyer, is “trading in stocks and shares, import and export activities and distribution and marketing consultancy services” decided to apply for and get a loan sanctioned for a 2.1 MW wind energy plant despite lacking any experience in the infrastructure or electricity sector. The Wire has reached out to IREDA about its lending policies and will add its response later.
From Shah’s lawyer, a threat
While replying to The Wire‘s questions on behalf of his client, Jay Shah’s lawyer warned that any story on Jay Shah’s business dealings could have adverse legal consequences:
“In view of the answers and explanations detailed above, the facts are absolutely clear and you are requested not to publish anything in this behalf, which would not only infringe my clients’ privacy rights but would also be libelous and/or defamatory.
“Jay Shah is a private citizen doing his legitimate business. His business transactions are honest, legal and bonafide. Your questionnaire indicates that your intention is to drag him into a false and a manufactured controversy. Any slant or imputation which alleges or suggests any impropriety on his part will not only be false but also malicious and defamatory. It will also be a breach of his fundamental right to privacy. He shall, in that event reserve the right to prosecute you for defamation and also sue you for the civil wrongs.
“Notwithstanding the above, if you or anyone in the print, electronic or digital media carries and/or broadcasts any defamatory and/or false imputations including those which breach his fundamental right of privacy and/or defame him, Jay Shah reserves the right to prosecute and sue such person/entity including anyone who carries or broadcasts a repetition of such libelous/defamatory statement.”
Rohini Singh is an investigative reporter who worked at the Economic Times till recently. In 2011, she broke the story of Robert Vadra’s business dealings with DLF.
Note: In an earlier version of the article, it was stated that the reserves and surplus of Temple Enterprise rose to 80.2 lakh in 2015-16, whereas it turned negative compared to the previous year. The reserves of the company at the end of the year are inconsequential for the larger investigation into the huge increase in turnover of the company.
