Can the Karnataka High Court, at this stage, allow an application filed by Vijay Mallya’s United Breweries (Holdings) Ltd. [UBHL] seeking a direction for constituting a committee to monitor sale of the company’s assets/shares when the assets/shares are attached under the Prevention of Money Laundering (PML) Act, and even as criminal proceedings under the PML Act and the Fugitive Economic Offenders Ordinance are going on?
This question is being debated before a Division Bench comprising Justice Raghvendra S. Chauhan and Justice B.M. Shyam Prasad during the hearing of an appeal, filed by the UBHL, which has questioned the February 7, 2017 order of the company court for winding up the UBHL (which was a corporate guarantor for the Kingfisher Airlines Limited-KAL), to recover the money to be paid to the secured and unsecured creditors of the KAL.
Manmohan Singh Kapur, an erstwhile director of UBHL, in his application has sought for a direction from the court to constitute an empowered committee/court commissioner comprising a retired judge of the Supreme Court or the High Court, along with such other persons to monitor and superintend the sale of assets and deposit the proceeds of such sale with the High Court. The applicant has also sought court’s nod to sell the assets, mainly shares of USL held by the UBHL and others, which are attached by the Enforcement Directorate under the PML Act.
It was contended of behalf of the UBHL that if the shares are sold at the present market value the amount to be realised by sale would be sufficient to pay all the creditors, including the banks, and there is no need to continue the winding up proceedings. It was pointed out that a retired judge was appointed to monitor sale of assets in Kirloskar Investment’s case several years ago.
However, counsel for the Official Liquidator (OL) pointed out that the High Court at this stage cannot constitute a committee to settle the issue as it can be done only by the company court based on the findings of the High Court on whether the winding up order is correct or not. It was also contended on behalf of the OL that the attached assets/shares can’t be sold until the the competent court under the PML Act decides whether the attached assets are proceeds of crime or not.
It has adjourned hearing till October 1 to allow both the OL and ED to file their written submissions on the question raised by Bench.
