The Karnataka High Court Friday declared sale of United Spirits Ltd's 1.9 million shares by United Breweries Holding Ltd (UBHL) to British spirits major Diageo plc null and void.
Business tycoon Vijay Mallya is chairman of UBHL of the UB Group, which runs diversified businesses ranging from breweries to an airline.
Annulling the sale, a division bench of Justice N. Kumar and Justice Rathnakala said the share deal could not be allowed till the pending winding-up petitions of six creditors to the UBHL's airline business was concluded.
The bench also directed the British liquor major to return the shares equivalent to around 15 percent sold by UBHL for Rs.472 crore in July, as the holding company was a direct party in the winding-up case.
Diageo bought 25 percent equity stake (10.1 million shares) in United Spirits and became the largest shareholder in Mallya's spirits business.
The six creditors filed petitions in the high court early this year to wind-up the holding company's defunct Kingfisher Airline for failing to pay their dues amounting to Rs.600 crore despite several reminders.
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The six are IAE International Aero Ltd, RRPF Engine Leasing, Rolls-Royce & Partners Finance, Avions de Transport Regional GIE and PNB Paribas, which supplied aircraft, components and funds to the crisis-ridden airline.
On Dec 16, Justice Anand Byrareddy of the high court dismissed an appeal filed by UBHL against the winding up petition filed by BNP Paribas for "lack of merit".
The high court also dismissed Dec 16 the holding company's petition against the creditors on lack of merit and after the Income Tax department had attached all assets of the cash-strapped airline for failing to remit taxes dues amounting to Rs.350 crore during assessment years 2010-11 and 2011-12.
The defunct airline had deducted tax at source from its employees' salaries and other payments from 2010 to 2012, but failed to remit the amount to the government account.
Meanwhile, the holding company said it would decide on moving the Supreme Court in January after studying the high court order.