India: United Breweries opposes move by banks to sell Mallya assets

Opposing the SBI-led consortium of banks’ plea seeking the restoration of absconding accused Vijay Mallya’s properties, United Breweries (Holdings) Limited —UBHL, or UB Group — on March 5 sought the application’s dismissal. UB submitted its 28-page reply before the special Prevention of Money Laundering Act (PMLA) court, the Times of India reported on March 6.

UB said the plea was not maintainable as the claim for restoration can only be considered during the trial of the case. It said that the property was subject matter of various judicial proceedings. Among the proceedings cited by UB were those initiated by the Enforcement Directorate (ED) under the Fugitive Economic Offenders (FEO) Act. UB said that the banks’ list of properties include those cited by the ED for confiscation under the FEO.

Last month, Mallya was declared a fugitive economic offender and the proceedings on confiscation of properties are pending. The reply also said that in 2017, the Karnataka high court had ordered UB to be wound up as it was unable to pay off debts and an official liquidator was appointed. UB said hence, all the properties and assets were in the custody of the HC since 2012 (when the first plea was moved for its winding up), prior to the FIR or chargesheet in the case.

The company said that, as a result, the PMLA court could not exercise its jurisdiction over its properties. It claimed that the Karnataka HC is the most suited court to hear the matter of disposal of the property and reach a decision for the benefit of all legitimate creditors, including the consortium of banks.

UB also submitted that since further investigations may reveal that one or more of the banks are involved in the alleged money laundering, the plea was not maintainable. The plea also denied the bank’s claim that it had acted in good faith and suffered loss despite taking all reasonable precautions. UB said that the fact that the SBI-led consortium of banks had filed appeals before the PMLA appellate tribunal after a delay of 562 days itself demonstrated that it had not taken all reasonable precautions.

Other parties who submitted their replies seeking dismissal include Mallya Private Ltd, Pharma Trading Pvt Ltd, Gem Investment and Trading Company Pvt Ltd, Kamsco Industries Pvt Ltd and Kingfisher Finvest (India) Ltd.

The replies come a month after the ED gave its nod to the SBI plea. The investigating agency had, however, stipulated that the banks should give an undertaking about returning the money if the outcome of the criminal trial was in favour of the accused. The matter will come up for hearing on March 19 when other parties are expected to submit their reply.

07 March, 2019