SC to take up Diageo-USL case on Jan 31

Foreign company submitted that 'a lot of prejudice has rubbed on to it' due to name of seller, United Breweries

The Supreme Court on Monday started hearing various cross-appeals in a case related to British liquor company Diageo’s acquisition of United Spirits shares from promoter UB Holdings. However, owing to the large number of parties involved and the shortage of time, the court deferred taking up the matter to January 31.

Diageo had filed an appeal against the Karnataka high court’s decision to annul a Rs 1,460-crore transaction in which UB Holdings sold the company 6.9 per cent stake in United Spirits while there were five winding-up petitions against UB Holdings in the court. UB Holdings is said to have filed seven appeals against the high-court decision.

Diageo said “a lot of prejudice has rubbed on to it” due to the name of the seller, United Breweries (Holdings). “We are not concerned with the local issues; we want to come to India, and have invested Rs 5,000 crore,” the company’s counsel Mukul Rohtagi told a bench. He added the United Spirits shares were bought in a transparent manner and all required sanctions had been secured from the Reserve Bank of India, the Securities and Exchange Board of India, the Competition Commission, etc.

The counsel also justified the price of the shares, a bone of contention among the parties.

While a single-judge bench of the high court had granted permission for the sale of shares to Diageo by UB Holdings, a division bench of the court had reversed that decision, following an appeal.

A State Bank of India-led consortium of banks, fighting for dues of Rs 6,000 crore from Kingfisher Airlines, for which UB Holdings stood guarantee, filed an appeal in the Supreme Court saying it wasn’t heard by the lower court before the order was passed. The banks’ stand was opposed by others who said banks were “playing a fast and loose game”.

The parties to argue at the next hearing are United Breweries (Holdings), BNP Paribas, RRPF Engine Leasing, Rolls Royce & Partners Finance, IAE International Aero Engines AG, Avions de Transport Regional GIE and the consortium of banks.

The Karnataka High Court is hearing three pending appeals for the winding up of UB Holdings in a case related to dues of Rs 600 crore; the matter has been adjourned to Tuesday. In the last two months, two such appeals, by BNP Paribas and Avions de Transport Regional, have been admitted in the court.

A special court for economic offences has turned down UB Holdings Chairman Vijay Mallya’s request to stay criminal proceedings against him in a case related to Kingfisher Airlines’ dues to the Income Tax department.

The department had alleged the company collected dues from its employees but didn’t remit these to the government. It has alleged non-payment of about Rs 350 crore from the company.