HC asks liquidator to appear before Appellate Authority

HC asks liquidator to appear before Appellate Authority

Picture for representation

The High Court of Karnataka directed the Official Liquidator to appear before the Appellate Authority on August 21, while hearing a petition by the United Breweries Holding Limited (UBHL).

A division bench of Justices Raghvendra S Chauhan and H T Narendra Prasad heard the UBHL's plea, seeking permission to sell its assets to clear the debt it owes to the consortium of banks and others. It also challenged the Enforcement Directorate's objections to sell the assets it confiscated.

The UBHL had stood guarantor for loans provided to the now-defunct Kingfisher Airlines by the banks.

Senior Counsel Sajan Poovayya, representing UBHL, argued over the interlocutory application, seeking permission of the court to sell the shares and assets that are attached by the Enforcement Directorate.

The petitioner submitted that if the shares of the company are allowed to be sold at the present value, it can fetch Rs 15,000 crore, of which 10,000 crore can be used to settle the dues with the banks, while Rs 2,500 crore can be paid to other creditors.

The counsel for the Enforcement Directorate, however, informed the court that a petition has to be argued before the Appellate Authority, constituted under the Prevention of Money Laundering Act, 2002, on August 21.

The council also said that despite the high court not staying the winding up order, dated February 7, 2017, the Official Liquidator did not appear before the Appellate Authority.

The council for the Official Liquidator argued that the liquidator is reluctant to appear before the Appellate Authority since it is not made a party to the case.

The court then ordered the Official Liquidator to appear before the Appellate Authority,  saying the liquidator is the custodian of the interest of secured and unsecured creditors and must function as the court's agent.

The court expressed concern over striking a balance to ensure justice to the petitioner, banks and the Official Liquidator. It has adjourned the case to August 22.