Judge recuses himself from winding-up petitions against UBHL

Justice Byrareddy says a law firm employing his son is now involved in the case

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In a shock to creditors, Judge Anand Byrareddy on Friday recused himself from the proceedings in winding-up petitions admitted against UB Holdings Ltd, saying one of UB Group Chairman Vijay Mallya's affiliates in the case had engaged a law firm that employed his son.

Byrareddy has been hearing the winding-up petitions filed in the company court against the principal holding company of the UB Group.

In two months, Byrareddy had admitted four winding-up petitions against Vijay Mallya's UB Group companies filed by creditors, seeking the winding-up and liquidation of UB Holdings and Kingfisher Airlines.

Two orders were passed in favour of BNP Paribas and Avions de Transport Regional fighting for dues from UB Holdings, while two were in favour of Aerotron and a consortium of banks led by State Bank of India, fighting for loan recovery from Kingfisher Airlines.

Creditors had moved the court to recover dues of Rs 600 crore from UB Holdings and Rs 7,400 crore from Kingfisher.

"The arguments in the court showed the case was drifting in favour of the creditors. However, this was an anticlimax," according to a lawyer not involved with any party.

The judge was set to hear the matter of the appointment of a provisional liquidator in the BNP Paribas winding-up petition on Friday, when a vakalatnama had been served in the court by Poovayya & Co, the law firm engaged by the Prestige Group that has opposed BNP's petition to wind up UB Holdings, according to a person familiar with the matter.

The person said Prestige Group has also alleged dues of Rs 150 crore from UB Holdings but opposed the winding up of the company, saying it believes the firm is commercially solvent and capable of paying back their dues in due course of time if allowed to operate.

Prestige Group has a joint venture with Vijay Mallya's UB Holdings in at least two properties in Bangalore - UB City and luxury residential project Kingfisher Towers, which is under construction.

Despite the counsel for BNP Paribas arguing the party had no objection to Justice Byrareddy continuing to hear the case, the judge chose to exercise his discretion.

"There may be no objections now, but this issue may be brought up later at any point in the proceedings," Byrareddy said.  

This is not the first time that a judge recused himself from the case. Justice J P Devadhar, hearing Vodafone's Rs 8,500-crore transfer pricing case in the Bombay High Court, recused himself, saying his son-in-law had worked with KPMG, an advisory firm that represented Vodafone before the income-tax department's Dispute Resolution Panel.

In a case in the Allahabad High Court filed by Reliance Power, Justice B S Chauhan recused himself citing an instance in which his daughter had advised Reliance Industries as part of a law firm.