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Court Stays Debt Panel's Order Against Mallya's United Breweries
UB group argued that Debt Recovery Tribunal had no jurisdiction to pass an order to issue a recovery certificate and demand notice to it
Photo Credit : Reuters
The Karnataka High Court has stayed for three months the Debt Recovery Tribunal's order issuing a demand notice to Vijay Mallya-owned United Breweries Holdings Limited (UBHL) and Kingfisher Airlines to pay Rs 192 crore on an application by three banks.
The petitioner, UBHL, has challenged the DRT order which had allowed the application of the banks -- Oriental Bank of Commerce, United Bank of India and Corporation Bank -- on March 28, and issued the demand notice on June 7 to pay Rs 192,51,08,484.67 within 15 days from the date of receipt.
UBHL had argued that DRT had no jurisdiction to pass an order to issue a recovery certificate and demand notice to it and had also argued the Tribunal had misconstrued the law and arrived at an erroneous conclusion.
Meanwhile, Dutch beer major Heineken filed an application before DRT seeking to be impleaded in the case.
Making a submission in the DRT, Counsel for Heineken said the company seeks permission to implead itself in the case and enjoy the right of first refusal over UBL shares.
Heineken has some presumptive rights on UBL shares held and owned by Mallya. "We are seeking permission to implead in the case to have the first right of refusal over UBL shares," he said.
Right of first refusal is a contractual term between shareholders which are usually included in the Articles of Association.
If one shareholder wishes to dispose of shares that are subject to a right of first refusal (ROFR), it must first offer them to those other shareholders who have the benefit of ROFR.
Making separate submissions, counsel for United Spirits Limited (USL) pleaded for vacating interim applications pertaining to attachment of USL shares and also sought dismissal of petition for attachment of dividend.
"Since we have not been made a party to Original Application filed by bankers, we are neither a guarantor nor borrower. I am a third party in this case. Therefore, we have nothing to do with the case," he said.
Also only three per cent shares is held by UB Group companies in USL, Mallya and his family, and hence there is no relation with it, the counsel argued.
The counsel also said USL had paid all the money borrowed from PNB and IDBI. "Despite recovery of dues (Rs 514 crore), IDBI claimed recovery of further Rs 40 crore and also claimed dividends from 2013."
"Also IDBI has no right to sit in judgement over whether loan transaction repayment is valid," the counsel said. "This is a clear case of extraction of more money from USL just because it is controlled by a foreign company," he said.
Senior counsel for bankers Nagananda pleaded with DRT not to vacate interim order on Watson Limited.
The Tribunal has attached shares of Watson Limited, a holding company of Mallya. British liquor giant Diageo has sought vacation of Watson Limited order.
Mallya, whose now-defunct group company Kingfisher Airlines owes over Rs 9,000 crore (Rs 90 billion) to 17 banks, had left the country on March 2 and is in the UK.
The beleaguered businessman has been declared a proclaimed offender by a special PMLA court in Mumbai on a plea by the Enforcement Directorate in connection with its money laundering probe against him in the alleged bank loan default case.