Supreme Court dismisses Vijay Mallya’s offer to pay dues; United Breweries Holdings to be wound up

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October 27, 2020 3:00 AM

The Supreme Court on Monday dismissed fugitive industrialist Vijay Mallya’s ‘offer’ to pay the huge dues of United Breweries Holdings (UBHL) to lenders, a move that paves the way for the 102-year-old firm’s winding up and liquidation.

Just last week, the Supreme Court turned down the government’s appeal against an arbitration that Vedanta-Videocon won – the two were awarded $476 million – way back in January 2011!The apex court will, no doubt, hear arguments about the efficacy of the current content regulation mechanism in the ongoing petition.

The Supreme Court on Monday dismissed fugitive industrialist Vijay Mallya’s ‘offer’ to pay the huge dues of United Breweries Holdings (UBHL) to lenders, a move that paves the way for the 102-year-old firm’s winding up and liquidation.

UBHL’s offer to settle its Rs 14,518 crore dues as per the corporate guarantees extended to the defunct Kingfisher Airlines will be no longer valid.

The lenders had rejected the proposal on the grounds that it was neither “bona fide” nor “genuine”, and the liabilities were far in excess of its “inflated” assets.

A bench led by Justice UU Lalit declined to interfere with the Karnataka High Court order that upheld the winding up of the liquor company. UBHL had appealed against the HC’s March 6 order that upheld the winding-up order passed in February 2018 for its failure to pay admitted liabilities to unsecured and secured creditors as per the corporate guarantees extended to Kingfisher Airlines.

Senior counsel CS Vaidyanathan, appearing for UBHL, argued that since the company’s assets exceeded the total debt, it was not a fit case for directing its winding up. Its attached assets worth Rs 14,518 crore were sufficient to meet the liability of the SBI-led consortium of banks, he said.

The Enforcement Directorate (ED) had in June and September 2016 passed two provisional orders attaching all assets of UBHL, Mallya and the contributory companies as alleged proceeds of crimes under the Prevention of Money Laundering Act.

Seeking dismissal of the UBHL’s appeals, senior counsel Mukul Rohatgi, representing the lenders, contended that the banks have been able to recover only Rs 3,519 crore from sale of assets, and another Rs 11,000 crore is yet to be recovered from Mallya and UBHL. Besides, he said, the ED should release UBHL assets that have been provisionally attached as these were mortagaged/ encumbered to banks and the lenders have the first claim over them.

While the SBI-led consortium of 14 banks had alleged that the UBHL liabilities (as on August 31, 2020) exceed Rs 11,179 crore and are far in excess of its assets (Rs 4,968 crore), UBHL had told the apex court that its balance dues are around Rs 5,958.97 crore after deducting Rs 2,877.55 crore that have been recovered from sale of its assets by the banks.

Earlier, the apex court had rejected the petition from Mallya, the UB Group chairman, seeking review of its 2017 order that held him guilty of contempt of court for transferring the $40 million payment and did not find any “error apparent on record” to justify interference.

It had on May 10, 2017, held Mallya guilty of contempt of court, and asked him to appear before the court on various dates. While his lawyer claims to have no information about him, the apex court has asked the counsel to give a concrete response on November 2 about when Mallya will appear before the Supreme Court so that the matter of his sentence in the contempt proceedings can be heard.

Mallya has been in the UK since March 2016 and remains on bail on an extradition warrant executed three years ago by Scotland Yard on April 18, 2017. In May, Mallya lost his appeals in the UK Supreme Court against his extradition to India.

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