On October 30, a certain company, which goes by the name Quantum Securities Private Limited (QSL), issued a public notice in The Economic Times. The notice, calling for the attention of shareholders/investors of New Delhi Television Limited (NDTV), sought to bring to their notice that NDTV had allegedly not revealed its financial liabilities in a presentation it had recently made to investors, fund managers and equity brokers.

Now, since the notice is replete with jargon, both economic and legal, here’s the long story cut shot: QSL contends that NDTV, when it made presentations to potential investors on October 13 in Mumbai, should have disclosed all its loan and tax liabilities, which, according to QSL, NDTV failed to do.

However, the 450-crore tax liability (the first and the most substantial of the five liabilities that QSL points out in the notice), according to NDTV, was levied on an “erroneous and incorrect view taken by the tax department”.  Currently, the issue is sub-judice and pending before the Income Tax Appellate Tribunal (ITAT) and the Delhi High Court.

Since practically all of NDTV’s recent financial transactions and tax liabilities, as explained in a detailed three-part story in the Hoot, fall in the grey area, a lot of the story plays out in semantics. But first, the elephant in the room: why is QSL bothered whether NDTV is being honest to its potential investors? That’s because QSL is a minority shareholder in NDTV, and according to its director Sanjay Dutt, it’s his duty to safeguard other minority shareholders’ interests.

NDTV, though, refutes all of QSL’s allegations. Responding to Newslaundry’s queries, NDTV cited injunction orders by the court, which purportedly, restrains QSL and Dutt from “issuing any defamatory letters, notices, emails, etc, in connection with and / or pertaining to and / or relating to the Plaintiff [NDTV], its senior officials and promoters”.

In the email response, NDTV also pointed out how Securities and Exchange Board of India (SEBI) had initiated proceedings against QSL, Dutt and his wife for violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

As for the actual allegation made by QSL – which pertains to NDTV not disclosing its liabilities in a presentation made to probable investors – NDTV claimed that it had notified them to the stock exchanges and had stated them in its annual report, which is a public document.

It is important to mention here though that NDTV had in fact not voluntarily declared its Rs 450 crore-tax liability to any of the stock exchanges. A Money Life report published in May reveals that the Bombay Stock Exchange (BSE) had to issue a notice to NDTV, asking it to explain why it had not done so. The National Stock Exchange (NSE), however, didn’t send a formal notice to NDTV asking it to declare its liabilities, something that may not have been a case of simple oversight, as NSE has a formal association with NDTV’s business news channel, NDTV Profit.

Again, NDTV’s argument that it did make its liabilities public does not directly answer QSL’s contention. While ethically it is definitely not the best practice to not disclose your financials in entirety to someone you’re attempting to raise money from, legally it is a grey area. NDTV can always claim – as it has in this case – that information that’s public need not be disclosed all over again.

This is, however, not the first time that Dutt and NDTV have clashed. In 2013, Dutt had alleged that chairman Prannoy Roy had received irregular promoter funding amounting to Rs375 crore by pledging NDTV shares – a transaction which, according to him, was against the Reserve Bank of India (RBI) rules. This had led to NDTV pressing defamation and contempt of court charges (as the legality of the transaction was already in the courts then) against Dutt, both of which continue to be sub-judice till date.

In a fresh hearing today, the Bombay High Court, upon hearing the latest development, issued a  notice to the respondents asking them to explain why action under the provisions of the Contempt of Courts Act should not be initiated against them.  The next hearing is  scheduled on December 8, 2014.

The NDTV and QSL standoff is intriguing in more than one ways, though. Dutt has worked as a consultant with NDTV and insists that he has a lot of respect for NDTV, the brand. “I have nothing against NDTV – it’s a phenomenal brand. I am not passing any value judgments here, just protecting my and other minority shareholder’ interests.”  Dutt has evidently spent a lot of money fighting this long legal battle with NDTV, but curiously refuses to sell off his shares. “I haven’t spent so much money on public notices and legal fees to sell off my shares,” he said when speaking to Newslaundry.

Update:  NDTV did  communicate, albeit verbally, its tax liabilities during the meeting, as corroborated by video recordings of the same.  Also, NDTV has clarified that the meeting was not with probable investors but only stock analysts.