September 20, 2020

SC to look at if hooked up property might be thought of for liquidation to settle dues

New Delhi: The Supreme Court docket Thursday mentioned it will study whether or not property of an organization which have been hooked up by the authorities following authorized proceedings might be thought of for liquidation to settle monetary liabilities. A bench of Justices U U Lalit and Vineet Saran was knowledgeable by senior advocate C S Vaidyanathan, showing for liquor baron Vijay Mallya‘s United Breweries (Holding) Ltd (UBHL), that firm’s property in totality are far higher than its liabilities.

UBHL has challenged the March 6 order of the Karnataka Excessive Court docket upholding the choice of a single choose to wind up the corporate.

Vaidyanathan informed the bench that the court docket mustn’t uphold winding up of the corporate because it has way more entry property than its liabilities.

He mentioned the excessive court docket erred in not accepting its provide of settlement and gave its discovering of upholding the choice to wind up the corporate.

The bench requested in regards to the attachment of the corporate’s properties by the Enforcement Directorate beneath the Prevention of Cash Laundering Act (PMLA) proceedings in opposition to the fugitive businessman, who’s within the UK.

“Inform us whether or not these properties which have been hooked up beneath the PMLA might be thought of for liquidation as a substitute of directing for winding up of the corporate,” the bench mentioned.

The bench, which was initially inclined to concern discover on the attraction of United Breweries, was informed by Solicitor Basic Tushar Mehta, showing for a consortium of banks led by State Financial institution of India, the discover not be issued within the matter.

He mentioned that proceedings earlier than the courts in India are being misused by Mallya in extradition proceedings in opposition to him within the UK and he doesn’t deserve any indulgence of the court docket within the matter.

The bench reminded Mehta that he was showing for the banks and never the federal government and mentioned that this isn’t the PMLA proceedings.

Mehta replied that he was conscious of the very fact however his responsibility won’t diminish in a matter of nationwide pursuits solely as a result of he was showing for the banks.

The bench then informed Mehta, “What’s bothering us is that Mr Vaidyanathan is saying that some property of the corporate are mendacity beneath attachment whereas proceedings have been initiated for winding up of the corporate.”

Mehta mentioned the proceedings beneath PMLA are fully totally different and that the property hooked up beneath the supply would solely be bought after the conviction of an accused.

He mentioned the hooked up properties beneath PMLA can’t be thought of for liquidation as within the occasion of hooked up properties being discovered to be proceeds of crime, they’re liable to be confiscated and can’t be used for settlement.

The bench mentioned the property are solely hooked up and never confiscated since there is no such thing as a conviction as on date.

“So the query stays, why the property hooked up can’t be thought of for liquidation to pay the liabilities,” it mentioned, and requested whether or not the corporate must be wound up with out the properties already beneath attachment being considered.

The bench mentioned, “As soon as property are hooked up, does that imply these property can’t be thought of to be a part of proceedings when the corporate is taken into account for winding up?”

The bench noticed that usually, winding up of an organization is averted as a lot as doable.

The solicitor normal mentioned the court docket has to understand that it’s coping with a fugitive offender and never an harmless man.

The bench informed Mehta, “We’re coping with the corporate, not the person”.

It informed Mehta that if he wished to make these submissions then he has to put on two hats and noticed, “Just one hat won’t do”.

The bench posted the matter for additional listening to on September eight and informed the events that it wanted a solution to the query whether or not the properties beneath attachment might be thought of for liquidation to repay the liabilities of the corporate.

On March 6, the excessive court docket had rejected the provide of Mallya for settlement of money owed of now defunct Kingfisher Airways terming it as “not bona fide and made in good religion” and dismissed the attraction of UBHL in opposition to the order of winding up of the corporate.

UBHL had claimed that the market worth of the corporate’s property is greater than the money owed.

The excessive court docket mentioned that most of the property proposed by the UBHL within the provide of settlement have been hooked up both by the ED beneath PMLA or by the Debt Restoration Tribunal and it can’t prohibit the statutory authorities from discharging their capabilities and order sale of property.

UBHL owes over Rs 6,000 crore and compound curiosity to SBI-led consortium of banks and the lenders have moved the courts and debt restoration tribunal with winding up petitions to recuperate their dues.

The lenders to Kingfisher Airways had filed the case in opposition to UBHL looking for dues from the now defunct airline.

UBHL had given company ensures for loans to run Kingfisher, which has just about triggered the collapse of Mallya’s liquor empire. Mallya owns a 52.34 per cent in United Breweries Holdings Restricted.

Earlier, the Debt Restoration Tribunal right here had ordered the SBI-led consortium of banks to start out the method of recovering over Rs 6,203 crore, at 11.5 per cent annual rate of interest, from the embattled tycoon and his corporations in one other Kingfisher Airways case.