Bench says the deal is void until a conclusion is reached on winding up petitions against UB Holdings
BENGALURU : In a setback to Vijay Mallya-led UB Holdings Limited, the Karnataka High Court on Friday annulled the sale of stake in United Spirits Ltd to UK distiller Diageo Plc by United Breweries Holdings Ltd.
The ruling came in response to creditors of United Breweries appealing for a winding-up petition against the company.
A Division Bench comprising Justices N Kumar and Rathnakala said the deal is void until a conclusion is reached on the winding up petitions against UB Holdings. The high court also said it would retain the 2.5 bln rupees deposited by United Breweries Holdings in August. The money was paid from the proceeds of the stake sale to Diageo.
The court also asked Diageo to return the shares bought from UBHL as the company is mired in a whirlpool of winding-up petitions by creditors, who are seeking recovery of unpaid dues from Mallya’s firm.
BNP Paribas, a lessors of grounded Kingfisher Airlines Ltd, had filed a winding-up petition against United Breweries in November last year following payment defaults by the airliner. At the time of the filing of the winding-up plea, Kingfisher Air owed over 1.46 bln rupees to BNP Paribas.
UB Holdings is contesting a total of six winding-up petitions by aircraft lessors and lenders to the grounded airline. The airline owes around $2.5 bln to banks, airport operators, and other creditors. A consortium of banks, led by State Bank of India, is now trying to recover dues through sale of available collateral.
Commenting on the Karnataka High Court order, UB Group Chairman Vijay Mallya said in a statement that, “we will take all necessary steps to protect Diageo’s interests as well as our own.” Similarly, Diageo said it is awaiting receipt of the detailed written order of the division bench of the Court of Appeal in Karnataka.
It added, “we do not believe that there are any grounds for declaring the sale of the 10,141,437 shares in United Spirits Limited (USL) (6.9 per cent of USL) purchased by Diageo on 4 July 2013 from United Breweries (Holdings) Limited (UBHL) as void.”
Shares of United Breweries (Holdings) ended down 0.40% at 24.75 rupees on the National Stock Exchange, while those of Kingfisher Air ended up 2.63% at Rs 3.90. -Cogencis