File photo of Y S Jagan Mohan Reddy with sister Y S Sharmila Reddy.
Credit: DH Photo
Hyderabad: YSRCP chief and former Andhra Pradesh chief minister, YS Jagan Mohan Reddy had approached NCLT's Hyderabad bench against his mother YS Vijaya Lakshmi and sister YS Sharmila Reddy in connection with a dispute over transfer of shares in a company exposing the widening rift in the YS family.
Intriguingly, in the petition, Jagan had mentioned that love and affection between the siblings has now melted down and Sharmila's recent actions had deeply hurt him. Months before the assembly elections, Sharmila joined Congress and taken up the reins of the grand old party as its Andhra PCC chief. She campaigned openly and extensively against Jagan during the polls. Sharmila's open utterances about him had caused significant electoral loss to Jagan who faced a crushing defeat at the hands of TDP led NDA alliance.
Jagan along with his wife YS Bharathi Reddy had filed a petition in NCLT's Hyderabad bench over transfer of shares in Saraswati Power and Industries Pvt Ltd. Jagan and Bharati accused Sharmila, Vijayalakshmi, and two others of transferring shares illegally in July 2024, without following the rules and in violation of a Memorandum of Understanding (MOU) signed earlier.
Jagan and Bharati in the petition stated that the share transfers, carried out through a Board resolution on July 6, 2024, were done without the submission of duly executed share transfer forms or the original share certificates, as required under Section 56 of the Companies Act, 2013.
“The share transfers were a culmination of a deceitful deviance of law. This transfer is clearly in derogation of the express understanding, intent, and text of the MoU and other documents exchanged between the parties,” Jagan and his wife said in the petition.
Sources close to Jagan told DH that the assets are currently under legal attachment and cannot be transferred until the court cases are resolved. YS Jagan approached NCLT as a precautionary measure to prevent legal issues such as the cancellation of his bail. Jagan is currently on bail.
Sources further stated that Sharmila allegedly transferred shares from their mother Vijaya Lakshmi's name, despite being aware of the assets' legal attachment and court restrictions. This action potentially put Jagan in a legally precarious position, as these assets were not supposed to be transferred under court restrictions. Saraswathi power was one of the several companies that are being probed by the CBI and ED in Jagan's quid pro quo case.
According to the petition, Jagan out of pure 'love and affection' signed an MoU on August 31, 2019 to transfer certain properties and shares to Sharmila. This is after Jagan registered a overwhelming victory in that year's assembly polls and became chief minister of Andhra Pradesh.
The case, which was initially listed in the NCLT on September 10, has now been listed for November. It was filed under Section 59 of the Companies Act, which deals with the rectification of the register of members.
MoU signed but not executed
Jagan and Bharathi in their petition said that they played a significant role in the growth of Saraswati Power and Industries. Both claimed that they signed a Memorandum of Understanding (MoU) on August 21, 2019, to allocate shares to Sharmila. However, the share allocation was never finalized that had led to the current dispute.
While there have been reports that assets distribution among the siblings was the trigger point for Sharmila's open defiance, the latest petition by Jagan and his wife only adds credence to those reports. Though an MoU to transfer certain properties and shares to Sharmila was reached in August 2019 it was never executed.
“It is humbly submitted Respondent no. 2 (Sharmila) herein, without gratitude and without regard to the well-being of the Applicant no. 1 (Jagan) conducted series of actions that deeply hurt Petitioner no. 1. Respondent no. 2 herein has also made several untrue and false statements publicly and also conducted actions that have not only been politically opposed to Applicant no. 1 herein but are also blatantly untrue and have caused deep personal disrepute to Applicant no. 1. The actions of Respondent no. 2 herein have strained the relationship between the siblings and have further resulted in melting down of all the love and affection the brother had for his sister i.e. Applicant no. 1 had for Respondent no. 2, especially so when uncharitable aspersions were being made at a personal level which are politically motivated. Applicant no. 1 being immensely agonized by the turn of events, realized that there is no love left between the two siblings decided not to proceed with his expression of intent to transfer the shares/ properties as envisaged under the MOU and Gift Deed,” said the petition.
Jagan also filed four interlocutory applications on the case. The NCLT has issued notices to all respondents and scheduled the next hearing for November 8, 2024.
Jagan fears political pressure
In 2019, YS Jagan Mohan Reddy, out of love and affection for his sister YS Sharmila, signed a Memorandum of Understanding (MOU) to allocate a portion of his self-acquired assets, including shares in Saraswati Power Company, to her. However, since these assets were under attachment by the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) due to ongoing legal cases, the MOU explicitly stated that the transfer would only happen once the legal issues were resolved.
Over time, Sharmila launched her own political party in Telangana and eventually aligned with the Congress party in Andhra Pradesh, leading to a significant political divide between her and Jagan. This rift created tension within the family and further complicated their personal and political relationship.
“Despite being aware that the assets were legally attached and under court restrictions, Sharmila allegedly transferred shares from their mother Vijayamma’s name, citing the MoU. This action potentially put Jagan in a legally precarious position, as these assets were not supposed to be transferred under court restrictions. Jagan's legal team cautioned him that this illegal share transfer could cause significant legal issues, especially with political opponents potentially using the situation to seek a revocation of his bail. The lawyers warned that his association with the disputed transfer could harm his legal standing in ongoing cases,” sources close to Jagan told DH.
Following legal advice, Jagan immediately objected to the share transfer and took steps to safeguard himself from further legal complications. He moved to legally distance himself from the unauthorized actions.
Jagan also said to have expressed disappointment that Sharmila’s use of the MoU to transfer shares constituted a breach of the trust and love that initially motivated him to enter into the agreement. He believed the terms of the MoU were clear, and her actions went against their mutual understanding and with no option left, YS Jagan moved NCLT.
Also Saraswati Power Company is not part of the family’s inherited assets but Jagan's self-acquired property.
“The gift deed was executed as far back as 2021, but Jagan refrained from completing the share transfer, underscoring his intention to wait until all legal matters were settled before proceeding with any asset transfers,” the source added.