Supreme Court Dismisses Appeal in the Case of United Breweries Holdings against Karnataka High Court Order
Supreme Court on 26th October, 2020, three judge's bench comprising of Hon'ble Uday Umesh Lalit, Justice Vineet Saran and Justice S. Ravindra Bhat dismissed an appeal which was filed by the company of Vijay Mallya's United Breweries Holdings Limited against the Karnataka High Court's order directing for winding up of the company for recovery of dues payable by Kingfisher Airlines Ltd.
The Apex court thus was in agreement for the winding up of the 102-year old parent company of the United Breweries Group.
The company was represented by Senior Advocate C.S. Vaidyanathan, representing the company, stated that Mallya is a corporate guarantor and is unable to service all the debts, he informed the court accordingly. However, the attached properties are said to be valued at more than Rs. 14,000 cores and the assets are split between three parties, Mr. Mallya, United Breweries Holdings Limited and other entities, as stated by his Advocate. The total dues of UBHL to its creditors, as per the Karnataka High Court order in February 2018, were around Rs 7,000 core.
On 30th September, 2020 the United Breweries Holding Ltd had told the Supreme Court that it had offered over Rs 14,000 core to various banks to settle its dues and that the company's assets exceeded its total debt. Vaidyanathan insisted that the Enforcement Directorate (ED) had attached many assets of the company, as a result of which none was available to the banks.
Vaidyanathan had vehemently asserted that the High Court should have considered these aspects and that this should not be a case for winding up. Even in the past, similar position was taken by the company, when it was argued that the total debt of the company was valued at Rs. 7,000 core. It had offered to pay all its dues to the lenders considering its assets exceeded its debts, the Senior Counsel critically pointed the out the same.
When the Bench inquired about the extent to which the assets are termed as "proceeds of crime" by the investigating agencies, Vaidyanathan submitted that according to them, all the assets were proceeds of crime.
The consortium of Banks led by the State Bank of India was represented by Senior Advocate Mukul Rohtagi. The advocate informed the Supreme Court that so far amount upto Rs. 3,600 crore have been recovered but Rs. 11,000 core is still pending to be recovered from Mr. Mallya and United Breweries Holding Limited.
Senior Advocate Rohtagi remarked that the Enforcement Directorate (ED) ought not to have attached the properties of the company as these were 'encumbered assets' and thus banks had the first priority to claim over the said assets.
After hearing all the parties, the Court concluded and proceeded to dismiss the appeal against High Court's order.