ED opposes regular bail of Gujarat Samachar co-owner, says 'involved in IPO scam'

Ahmedabad: The Enforcement Directorate (ED) on Saturday opposed the bail application of Bahubali Shah, the co-owner of "Gujarat Samachar", who was arrested earlier this month in an alleged IPO scam.

"Bahubali Shah is son of the founding-editor of Gujarat Samachar and a highly influential person having family business running across various sectors including construction, chemical industry, fishing, trade and financial services. Therefore, it is possible that Bahubali Shah may influence witnesses/other co-accused," ED has stated in its affidavit opposing the bail.

The affidavit filed by Neeraj Kumar Yadav, assistant director, ED, New Delhi, has stated that the medical records of Shah revealed that he didn't suffer from a paralytic episode and hence he shouldn't be granted regular bail.

Shah, 73, was arrested on May 15 night and was granted medical bail by a special designated court the next day on medical grounds. Days before arrest, the family run newspaper was raided by income tax officials. Later, ED raided the premises of the newspaper and locations linked to it. Gujarat Samachar is a leading daily which is managed jointly by Shah and his brother Shreyansh Shah.

Following "Operation Sindoor", the X account of the newspaper was also blocked over its posts which were reported to be "critical of the government."

ED's case against Shah and others is based on a criminal complaint initiated by Securities Exchange Board of India (SEBI) back in 2016 in connection with certain illegality during the Initial Public Offer (IPO) of NTPC and TCS against the directors of two firms- Excell Multitech Limited and Zenet Software Limited.

These two firms, according to ED, provided finance to Sugandh Estate and Investments Private Limited, which in turn opened a number of fictitious accounts and fraudulently cornered the IPO shares of TCS and NTPC Limited, which were reserved for retail investors (RII).

Based on this criminal complaint, ED started an investigation dated August 16, 2023 under money laundering charges.

ED stated that it summoned all accused including Rajesh Kumar Patel, Kirtiben Patel, Saryuben Vora, Rakesh Sureshchandra Shah and Bhupendra T Joshi, who all are associated with the two firms.

According to ED, Saryuben Vora, the then director of Excell Multitech Limited and Zenet Software Limited, in her statement dated November 28, 2023 allegedly submitted ledger copies of books of accounts of the two firms which "reflected that the majority of the amount were financed by Lok Prakashan Limited and Shreyanshbhai Shah."

ED has said that the above two firms "used to finance Sugandh Estates and Investments Private Limited to corner the shares of TCS and NTPC."

Through the books of accounts ED allegedly found the details of the amounts which Lok Prakashan, the publisher of Gujarat Samachar, and Shreyansh Shah, the co-owner of the newspaper, allegedly financed.

The ED has claimed that Lok Prakashan and Shreyansh Shah financed more than Rs27 crore to the two firms.

The ledger copy of books of accounts of Excell Multitech Limited and Zenet Software Limited also revealed that Lok Prakashan Limited received 6,46,922 shares of NTPC and 13,780 shares of TCS.

The table produced by the ED claims that over Rs16 crore was refunded through demand drafts by the two firms.

Similarly, Shreyansh Shah, editor-in-chief of Gujarat Samachar and managing director, received 85,600 shares of NTPC and over Rs2.76 crore was refunded by Zenet and Rs2.86 crore by Excell Multitech.

ED has claimed that it sent summons to Bahubali Shah on four occasions from December 27, 2023 to February 21, 2024.

Shah finally appeared before the agency on February 28, 2024. He allegedly told ED he got associated with these companies through Dhiren Vora, who is the son of Saryuben. Dhiren allegedly approached Shah claiming to be dealing in the stock market and promised financial benefits.

Shah told ED that he had given funds to these firms through Dhiren Vora for "investment." Following the submission of the affidavit, the lawyers of Shah sought time to file their response. The matter will be heard on June 10.