The Karnataka government's Mysore Sales International Ltd, in its petition against the liquor major, has alleged that the UB Group outfit has failed to clear dues worth Rs 81 lakh.

Mysore Sales is a distributor of products made by state and union government undertakings as well as private companies.

According to the petition, Mysore Sales was appointed sole distributor of McDowell in 1989, after the Karnataka government notified that it was empowered to specify a government-owned company as sole distributor for products of distilleries, breweries and wineries in the state.

The petition states that the state government had ordered that Mysore Sales be entitled to charge a reasonable margin not exceeding 0.5 per cent for exports and five per cent for sales within the state.

Appeals were filed against the order at the Bangalore high court and thereafter at the Supreme Court by a number of distillers, including McDowell.

While admitting the appeals the Supreme Court had issued an interim stay on the state government order on condition that in case the appellants lost their case at the Supreme Court they would have to compensate Mysore Sales for loss in terms of commission.

The appeals were finally dismissed on December 15, 1995.

Mysore Sales has said in its petition that McDowell did not submit its accounts with the company as instructed by the court and further did not compensate the distributor for the commission lost during the period 1989-95 for sales in which Mysore Sales was not the distributor.

According to the petition, McDowell owes Mysore Sales around Rs 81 lakh, including interest.

Mysore Sales has sought winding up of the company under sections 433(e) and 433(f) of the Companies Act, 1956. The winding-up petition was filed in March this year and McDowell replied in May. The case is expected to be taken up after the vacation of the Bangalore High Court.

McDowell, in its reply, has stated that it has never paid any commission to Mysore Sales, and that Mysore Sales by charging an five per cent margin always recovered the same from the wholesalers.

Therefore, McDowell has argued that the question of paying a compensation to Mysore Sales in lieu of any commission does not arise.

The reply also states that Mysore Sales does not have the infrastructure to deal with the entire production of McDowell in Karnataka, and whenever Mysore Sales has indented for McDowell products, the same has been always been delivered.

It also seeks to point out that since McDowell & Co is registered at Chennai, it does not come under the jurisdiction of the Bangalore high court.

When contacted, Mysore Sales company secretary AM Rao refused to comment on the matter, and also denied that the company is withdrawing the winding-up petition.