Vijay Mallya, chairman of United Breweries Holdings Limited, approached the Delhi Court on Friday for a legal representation before a panel of State Bank of India (SBI) members, where they would argue their case against being declared as willful defaulters.
Mallya was quoted saying, "Without a lawyer's assistance, I have been held to be a willful defaulter. This amounts to breach of principles of natural justice," as per Live Mint. His counsel, Rajiv Nayyar, even went to say that if the court were to deny them a representation by a 'trained legal representative', then it would lead to 'miscarriage of justice'.
However, according to Justice Rajiv Sahai Endlaw, the Delhi high court is not the appropriate platform for seeking justice in this case. He said, "It appears that redressal for the grievance brought before the court has to be sought before the Bombay high court," as stated in IIFL. Nonetheless, Mallya and his team have managed to get a hearing and the date has been set for February 1.
According to Money Control, in November 2015, SBI declared Kingfisher Airlines, United Breweries, and their creator Vijay Mallya to be willful defaulters. A defaulter is said to be willful when he does not repay even while having funds and uses them for other purposes, or when he draws off the funds, or even when he sells off assets meant for repaying the bank loan without the bank's knowledge.
Mallya had then approached the Bombay high court with his plea, where he was allowed legal representation before redressal grievance committee. This act was mocked by the SBI personnel as a 'King-fishing expedition' in a tongue-in-cheek humor. The Supreme Court upheld the Bombay court's decision after challenging the same on the grounds that Mallya violated the RBI rule of 'only the borrower be present during the meeting of a redressal committee'. In response, Nayyar referred to the two earlier cases where the Delhi high court allowed the presence of an advocate before a redressal committee.
United Breweries owes a lot of money to United Spirits Ltd, dating back to 2013. But Mallya is currently directing all his funds towards the gigantic dues of the once-flourishing Kingfisher Airlines which is now defunct. However, he has managed to make some money and pay off around Rs30 crores out of its total due of Rs995.4 crores, which was relayed to appease the agitated shareholders at the annual general meeting on Friday.
The local beer giant now needs to be referred to Board for Industrial and Financial Reconstruction (BIFR), which requires a go-ahead from its shareholders who have been told that it's a mere 'regulatory requirement' and that the company is not 'sick' because it is apparently making money.
A company is required to refer to BIFR only when its accumulated losses have resulted in 50% (or more) erosion of its peak net worth during the preceding four years. In case of United Breweries, the accumulated losses have touched 86% as of March 31, 2015. However, United Spirits Ltd CFO provided support to its erstwhile parent, United Breweries, by saying that United Breweries is taking all steps to make sure all the money is recovered and has already had some success with the Rs30 crores.
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