‘Ask UBHL to deposit in court the money earned from selling shares’

A consortium of 14 banks that have lent money to Kingfisher Airlines Ltd. (KAL) on Friday moved the Karnataka High Court against disbursement of the entire amount realised from the recent sale of 13.61crore shares of United Spirits Ltd. (USL) to the British liquor major, Diageo Plc, by the UB (Holdings) Ltd., which is the guarantor for the KAL.

In its application, the consortium has pointed out that they have to recover around Rs. 6,203 crore dues, as on May 31, 2013, from KAL and UBHL, being secured creditor, and hence sought a direction to UBHL to deposit in the court the entire amount realised from the sale of the shares, which was carried out with the permission of the court.

The consortium comprises Axis Bank, Bank of Baroda, Bank of India, Central Bank of India, Corporation Bank, Federal Bank Ltd., IDBI Bank Ltd., Indian Overseas Bank, Jammu and Kashmir Bank Ltd., Punjab and Sindh Bank, Punjab National Bank, State Bank of India, and UCO Bank.

The court on May 24 had granted conditional permission to UBHL to sell these shares while hearing the petitions filed by some of the unsecured creditors who had moved the court for recovery of dues seeking a direction to sell the assets of the KAL and the UBHL through a wind-up process. UBHL had sought permission to sell shares with an assurance that it would pay the unsecured creditors from the amount realised from the sales.

Appearing for the consortium, senior counsel S.S. Naganand complained that UBHL had filed application for selling the USL sales held by it by suppressing certain facts from the court. He contended that UBHL had assured the consortium that it would pay the dues to the banks from the sale of shares. It has been pointed in the application that KAL, UBHL, guarantor of KAL, or its chairman Vijay Mallya have defaulted in paying both the principal amount and the interest, and now dues have been classified as non-performing assets. Relying on the newspaper report that UBHL has earned around Rs. 3,135 crore by selling shares with the court’s permission, the consortium sought a direction to UBHL to deposit the entire amount with the court until further order. The banks have realised around Rs. 544 crore between March 28, 2013 and April 25, 2013 by selling the shares pledged by UBHL, it has been stated in the application.

Justice Ram Mohan Reddy adjourned further hearing till July 22. Meanwhile, the court also adjourned till July 22 the applications filed by some of employees of the KAL to be part of the present proceedings for seeking payment of salary dues.

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