The Supreme Court on Thursday (August 27,2020) asked the Centre to examine whether the assets of United Breweries Holdings Limited (UBHL) attached by the Enforcement Directorate could be available to save the “winding up” of the company and clearing the dues of over Rs 9,000 crore to be paid to banks. Former liquor baron Vijay Mallya holds a little over 10 percent shares in the UBHL which is majorly owned by Dutch beer maker Heineken and British spirit maker Diageo. Mallya’s shares in the company, along with other assets, were attached by the Directorate of Enforcement as alleged crime proceeds in their investigation into a case against Mallya registered under the Prevention of Money Laundering Act (PMLA). Prior to his escape from the country in 2016, he took loans from a consortium of banks but failed to repay. According to Mallya’s lawyers, the outstanding dues are worth Rs 6,203 crore.
Senior advocate CS Vaidyanathan, who appeared for Mallya, informed the Court that the assets of the company are more than its liabilities. If the assets lying under the attachment with the ED are allowed to be used, this can save the company from winding up and also help banks receive their dues. He informed the Court that the banks have approached the Debt Recovery Appellate Tribunal with this prayer.This submission did not meet approval from the State Bank of India (SBI), which forms part of the consortium of banks waiting to get its dues. Solicitor General Tushar Mehta told the Court not to entertain Mallya’s request as it will be misused by him in his extradition proceedings. Mehta said, “We cannot ignore the fact that he is a fugitive economic offender. What he owes to the banks is Rs 9,777 crore. Under PMLA, a criminal trial will take place and if it is found to be part of proceeds of crime, the same shall be confiscated.”
The bench of Justices UU Lalit and Vineet Saran said, “At present, we are dealing with the company, not the person. You are wearing two hats. Be clear whether you appear for both (SBI and ED).” Mehta said, “There is more responsibility on our (SBI) part to protect the interest of our nation.” The bench gave Mehta time to think over and state its stand on September 8, the next date of hearing.The bench reminded Mehta that the principle of law requires the Court to save a company from winding up. The question posed by the bench was, “Once assets are attached (under PMLA), does it mean under the law that it cannot be considered as part of the company assets.” The court on March 6, 2020, refused to consider this aspect as it had no jurisdiction to direct the ED on the attached assets. The ED has so far recovered Rs 2,877 crore under its investigation.Meanwhile, in a related development, the Supreme Court on Thursday reserved orders on a review petition filed by Vijay Mallya challenging the May 10, 2017 order of the top court holding him guilty for committing contempt of court. The former liquor baron was accused of transferring $40 million received from British spirit maker Diageo to the bank account of his children. Mallya was accused of not disclosing this transaction to the Court and for siphoning the amount from the bank despite the Court restraining him from dealing with any of his moveable and immovable assets. The contempt petition against him was moved by the SBI.
The bench of Justices UU Lalit and Ashok Bhushan reserved orders after hearing Mallya’s lawyer Jai Munim who stated that an affidavit by Mallya was not considered before the order of contempt was passed. The bench said that the affidavit did not materially influence the finding against the contemnor.