In pact with United Spirits to settle litigations, says ABD

Kishore Chhabria-led Allied Blenders & Distillers today said it has reached an agreement with Vijay Mallya-controlled United Spirits to sort out all litigations between them, ending two decades of intense legal wrangling and public spats.

The settlement involves Allied Blenders & Distillers (ABD), the flagship company of Chhabria, paying a one-time settlement fee of Rs 8 crore to United Spirits, ABD executive vice-chairman and chief executive Deepak Roy told PTI here.

As to when the payment would be made to the Mallya company, Roy said, "as soon as the courts agree to our settlement."

The multiple cases pending in the Delhi and Calcutta high courts relate to the ownership of the Officers Choice whisky brand, which is the flagship brand of ABD now, and which had in July became the world's largest whisky brand, overtaking UB's McDowell's.

"Chhabria-controlled ABD and Vijay Mallya-controlled United Spirits reached an agreement to settle out of court all pending litigations," a statement from the Chhabria group said here today.

Calls to UB Group president and group chief financial officer Ravi Nedugandi remained unanswered.

When asked about the impact of the settlement, Roy, who owns 5 per cent in ABD, said, "though there never had been any threat to our brand, this would help us focus fully on growing our business."

With the withdrawal of these litigations, it brings to an end 20-year old dispute between the Chhabria group and erstwhile Shaw Wallace Group, which is now part of Mallya's United Spirits, ABD said.

When asked whether smoking peace with Mallya would see ABD entering the capital markets soon, Roy said, "although the settlement removes the ban on us from entering the capital markets, we are not hard-pressed for money now. But over time we will surely be going public."

Roy had earlier said that ABD was planning to raise Rs 500 crore from markets.

Both the companies have also agreed to withdraw all allegations made against each others in court proceedings, the statement said, adding the consent terms signed by the two companies were filed in the Calcutta High Court today.

Expressing satisfaction over the settlement, Chhabria said, "even though these litigations held no risk for either Officers' Choice or the company, with the settlement the company will be free from all legal tangles and will be able to focus on developing the company to its full potential."

The tussle between the two companies started when United Spirits filed a case in the Delhi High Court (originally filed by Shaw Wallace before it was merged with United Spirits) seeking return of the Officer's Choice brand around 20 years ago.

In the Calcutta High Court, United Spirits had filed a case against ABD to restrain it from raising fresh capital.

Kishore Chhabria's late brother Manu Chhabria owned Shaw Wallace before it was sold to United Spirits.

The settlement could help the cash-strapped UB Group as it is in talks to strike a deal with English liquor giant Diageo for a stake sale in United Spirits, said analysts.