In a major setback to UB (Holdings) Ltd, the Karnataka High Court on Friday ordered issuance of public notices on the pleas of three foreign firms and a consortium of Indian banks for winding up the holding company.

Justice AS Bopanna passed the order, while admitting the petitions filed by Switzerland-based IAE International Aero Engines AG, England-based Rolls Royce and Partners Finance Ltd and RRP Engine Leasing, a consortium of banks led by State Bank of India and Hindustan Petroleum Corporation.

UBHL had given corporate guarantee to the petitioner-companies on behalf of the grounded Kingfisher Airlines when the latter entered into agreement for purchase of aircraft and aircraft engines. The airline subsequently defaulted on the payment of dues. UBHL also failed to pay dues even after the petitioner-companies invoked corporate guarantees and raised demands. Meanwhile, UBHL had contended that pleas for winding up are not maintainable due to the dispute raised in various suits over the dues from Kingfisher, while also claiming that the corporate guarantees given by it were null and void.

However, the High Court held that “the defence raised (by UBHL) not only appears as moonshine, but is a mirage; rather it is a tailored defence as it appears from the circumstance”.

“It is difficult for this Court to accept such contention on its face value as a valid defence,” it said while noticing that many disputes were raised by UBHL after the winding up pleas were filed. Though UBHL and its Chairman, Vijay Mallya, had admitted in their communication earlier the difficulty to make payments, they had not raised these disputes then.

Kingfisher and UBHL owes around ₹153 crore to IAE, ₹57 crore to Rolls Royce, ₹5,823 crore to banks, ₹66 crore to HPCL and ₹2.96 crore to RRp Engines.

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