The Karnataka High Court order that annulled the sale of United Breweries Holdings' United Spirits stake to Diageo may be opening up a Pandora's box for Vijay Mallya. According to a reports, the order that was passed on 20 December has also sought an investigation into a murky transfer of Rs 4000 crore to tax haven British Virgin Islands before the stake deal happened.
The company judge had approved the sale of UBHL's nearly 7 percent stake in United Spirits without investigating the serious allegations raised by lenders to grounded Kingfisher Airlines, the high court has said.
The lenders had submitted to the high court that the diversion of funds was not in their interest. The UB group has told the company judge that the transfer was done as part of the acquisition of Whyte & Mackay, but lenders have contested this claim saying there is no supporting documents for this, the report said.
The high court, however, has come down heavily on the company saying that it has not approached the court "with clean hands and the transaction in question is not bona fide". It has sought an investigation into the money transfer.
According to the article, UBHL had earlier promised the banks to pay back debt from the proceeds of the stake sale but instead of following through, the company went ahead and sued the banks in various courts.
Apart from the investigation into the diversion of funds, the Karnatake HC also set aside a share pledge made by UB with brokerage and finance companies last year, in the run up to the Diageo deal. In a recent press release, the All India Bank Employees Association had said Kinfisher Airlines owes Rs 2673 crore to public sector banks and had ranked it the top defaulter.
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