India: Diageo challenges order permitting United Spirits share sale
Diageo has challenged an order of Indias Prevention of Money Laundering Act court, which permitted the sale of assets seized from Vijay Mallya to repay a consortium of banks some of the £1.15 billion they claim he owes to them, The Drinks Business reported on July 5.
Last month the Indian courts allowed the sale of shares Mallya held in United Breweries and United Spirits worth more than £600 mln but Diageo, through its Dutch subsidiary, contends it has a prior claim to some £30 mln worth of the USL shares and has been given three weeks by the court to press its case.
Diageo has previously told its shareholders that it laid claim to the shares as part of a complicated loan to Watson Ltd, the company behind Mallyas Formula 1 grand prix racing team, originally granted by Standard Chartered Bank and backed by the shares as collateral.
When Mallya defaulted, as part of the 2013 takeover of USL, Diageos Dutch subsidiary had to repay the debt of more than £100 mln. Ever since, it has been seeking through Indias courts to reclaim the shares pledged by Mallya to Standard Chartered to back that debt.
Meanwhile, in the London Courts Diageo is seeking a total of more than £250 mln from Mallya and his son Sidhartha for breach of contract and the failure to repay debts. They were ordered to pay by the end of November but failed to do so.
At the end of this month a judge will hear closing submissions on whether Mallya should be declared bankrupt.
He is due to be extradited to India to face charges of corruption and money laundering but despite running out of legal avenues in the UK courts, he remains on bail at his mansions in Hertfordshire and London.
The UK cannot execute the extradition warrant until a confidential legal matter is resolved. That is widely thought to be a plea by Mallya for political asylum.
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