Petition by Vijay Mallya's Kingfisher Airlines to keep Mumbai office rejected

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SummaryKFA is seeking to restrain SBI-led lenders' consortium from taking possession of Kingfisher House.

The Karnataka High Court on Wednesday dismissed a plea by Kingfisher Airlines seeking to restrain the SBI-led lenders’ consortium from taking possession of the company’s headquarters, Kingfisher House, in Mumbai. The airline, which is fighting winding-up petitions by various creditors including the consortium, had filed its application on November 14 seeking a stay on the banks’ move to recover their debt.

The court had previously granted an interim stay on the airline’s application, giving it more time, as the carrier had said that attempts to revive operations were on.

Earlier this year, the SBI-led consortium, which is claiming dues of R6,203 crore from KFA, had begun the process of taking possession of Kingfisher House under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act. The property, along with a villa in Goa, was among the collateral given to the consortium at the time of a debt recast in 2010.

During arguments last week, the airline had questioned the consortium’s move to enforce the security and simultaneously pursue a winding-up petition for the remaining part of the debt. The lenders’ consortium had argued that its entire debt will not be recovered with the sale of collateral and that it will have to approach the court as an unsecured creditor for the balance amount.

In a recent submission to the court, KFA, which has been grounded for more than a year, has estimated its assets to be worth a little less than R612 crore including the Mumbai headquarters. The airline had reported a net loss of R716 crore in the quarter ended September. In recent months, the UB Group has said that it was in talks with a potential investor in its efforts to revive the carrier.

Last month, a Goa court directed the consortium to maintain status quo on an injunction on the villa after the it made an attempt to take possession of the property.

The Karnataka High Court recently admitted a winding-up petition filed against the airline by Aerotron, a UK based aviation services firm, which is claiming dues of $6 million. Aerotron is among several companies who have filed winding-up petitions in the Karnataka High Court.

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