E-Malt.com News article: India: United Breweries (Holdings) Ltd, Vijay Mallya seek legal representation for their wilful defaulters hearing
United Breweries (Holdings) Ltd and its chairman Vijay Mallya on January 22 approached the Delhi high court seeking legal representation at a hearing before a State Bank of India (SBI) panel where they would need to explain why they should not be declared wilful defaulters, Livemint reported.
“Without a lawyer’s assistance, I have been held to be a wilful defaulter. This amounts to breach of principles of natural justice,” Mallya said.
Rajiv Nayyar, counsel for United Breweries and Mallya, said denial of an opportunity to be represented by a trained legal representative at the hearing “would amount to miscarriage of justice”.
Justice Rajiv Sahai Endlaw said the Delhi high court may not be the correct forum to deal with the matter. “It appears that redressal for the grievance brought before the court has to be sought before the Bombay high court,” Endlaw said.
The case will be heard next on 1 February.
In November 2014, India’s largest lender, SBI, declared United Breweries, Kingfisher Airlines Ltd and Vijay Mallya wilful defaulters.
Kingfisher Airlines approached the Bombay high court, which allowed it legal representation before the redressal grievance committee, which will decide if it is a wilful defaulter.
This was challenged by SBI in the Supreme Court on the grounds that it violated rules set by Reserve Bank of India (RBI) which stipulate that only the borrower be present during the meeting of a redressal committee.
The Supreme Court upheld the Bombay high court’s order and allowed legal representation to Kingfisher Airlines.
Nayyar relied on two earlier orders passed by the Delhi high court whereby the choice of an advocate during a grievance redressal committee meeting had been allowed.
A default is considered to be wilful when a borrower has not repaid even when he can do so, when sanctioned funds have been diverted for other purposes, when a borrower has siphoned off funds or when a borrower disposes of assets pledged for availing of the loan without the bank’s knowledge.
In a development in Bengaluru, United Spirits Ltd (USL), India’s largest spirits maker now controlled by Diageo Plc, announced it has recovered dues worth Rs.30 crore from the original advance of Rs.995.4 crore from its erstwhile parent, United Breweries Holding Ltd, in the second quarter of FY16. “The company has recovered some money—Rs.30 crore—in the last few days,” said Sanjeev Churiwala, chief financial officer of USL, while addressing shareholders on January 22.
“The company will take all the steps to ensure the money is recovered,” he added.
United Breweries Holdings Ltd owes loans, advances and deposits to USL dating back to July 2013.
At the United Breweries Holdings annual general meeting in November, Mallya confirmed he was focused on settling dues of the now defunct Kingfisher Airlines.
At the January 22 meeting, held to seek shareholders’ nod to refer the company to the Board for Industrial and Financial Reconstruction (BIFR), Churiwala allayed shareholder unrest stating that referral to BIFR is only a “regulatory requirement”.
“The company is not sick,” he added.
To be sure, under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), if the accumulated losses of a company, at the end of any fiscal have resulted in erosion of 50% or more of its peak net worth during the preceding four fiscal years, such a firm is required to report to BIFR.
Accumulated losses of the company as of 31 March 2015 touched 86% of its peak net worth during the four preceding fiscals. This mandates the company to make such a regulatory requirement.
Churiwala pointed out that over the last two quarters USL had made profits, bumping up the net worth of the firm.
“Net worth of the company is positive, as of 30 September. The company has reported profits and a net worth is Rs.1,667 crore,” he said.
27 January, 2016