Karnataka HC dismisses UB Holdings' appeal against winding up petition

Decision comes after UBHL appealed against the order on November 19th

In yet another blow to UB Holdings Ltd, a division bench of the Karnataka High Court has upheld the decision of a single judge bench to admit BNP Paribas’ winding-up petition against the principal holding company of Vijay Mallya-led UB Group. The decision on Monday comes after UBHL has appealed against the order November 19, when Justice Anand Byrareddy admitted an appeal by the French bank seeking the winding up of UB Holdings in an attempt to recover dues of about Rs 200 crore.

 

The division bench said the earlier order was being upheld on Monday in the interest of not only BNP Paribas seeking the winding up, but in the interest of public property and all the creditors yet to recover their dues from the company.  A UB Group spokesperson declined to comment on Monday’s order. The company’s shares closed at Rs 26.10 apiece, down 2.25%, Monday on the Bombay Stock Exchange 

 

Justice Byrareddy had also admitted the winding-up petition of French-Italian aircraft manufacturer ATR on Dec 13,seeking dues of about Rs 90 crore, and gave both the appellants four weeks of time (from the day of the order) to publish a newspaper advertisement intimating public of the same.

 

However, the Division Bench also denied UB Holdings’ counsel, led by Harish Salve, a stay on the publication of a newspaper advertisement on the Court’s decision asking all creditors to approach the Court to stake their claim to dues from the company. The advertisement is due to be published by BNP Paribas on December 18. 

 

UB Holdings had sought a stay on the advertisement for about four weeks, citing “serious consequences” as a result of the advertisement, but the judges turned down the request saying “A stay would give the public an impression that the Courts are coming in the way of the recovery of public money.” 

 

BNP Paribas had financed the purchase of three aircrafts by KF Aero, which in turn had leased it out to UB Group firm Kingfisher Airlines Ltd. BNP’s petition is one of five against the company seeking total dues of Rs 600 crore, filed by Avions de Transport Régional (ATR),  Intl Aero Engines (IAE), Rolls-Royce & Partners and RRPF Engine Leasing. 

 

In the last 30 days, lenders have moved swiftly to corner Mallya, embroiled in a series of litigations, over dues from UB Holdings and grounded carrier Kingfisher Airlines, as they try to monetise the personal and corporate guarantees given to them in lieu of their loans of Rs 600 crore and Rs 7000 crore to the two companies respectively. 

 

SBICAP Trustee Company, has moved to pick up Kingfisher House in November and the Court last week authorised them to march ahead with recovering their secured credit even as the winding up petitions are still being decided by the Court. Meanwhile the I-T department on Friday issued a public notice reiterating their claim to the Mumbai property as they allege Kingfisher Airlines has not remitted to the government authorities the income tax dues of about Rs 350 crores it collected from its employees. The I-T department alleged it has the first right to the property attached under the second schedule of Income-tax Act, 1961

 

A villa in Goa also pledged as collateral for funds has been seized by SBICAP, on behalf of the State Bank of India with the largest exposure to Kingfisher Airlines with dues of about  Rs 1600 crore. Mallya’s team have taken the matter to a Goa court where it is being decided now.