The stock of United Breweries (Holdings), the parent company of the grounded Kingfisher Airlines, was up more than 10 per cent. This follows the Calcutta High Court dismissing the September 2014 decision of United Bank of India to declare Kingfisher Airlines as a wilful defaulter.
The relief for Kingfisher Airlines also spells good news for United Breweries (Holdings). That's because United Bank of India had, earlier this month, "identified'' the latter also as a wilful defaulter.
This was on the grounds that it was a guarantor of loans to Kingfisher Airlines and had the resources to repay the loan dues. Being categorised as a wilful defaulter has significant financial implications, including being cut-off from additional loan facilities from banks and financial institutions.
With Kingfisher Airlines off the hook, at least for now, United Breweries (Holdings) also gets a breather. But the relief may only be temporary.
Officials at United Bank of India have indicated that since the Calcutta High Court's ruling was more on technical grounds, the bank would appeal the verdict.
Among the grounds on which the court had rejected United Bank of India's decision was that the bank's wilful defaulter identification committee and grievance redressal committee were not constituted as per regulatory guidelines. Instead of having three members, it had four members.
The bank officials have indicated that they may set up a new committee with three members, or move the Division Bench of the Calcutta High Court against the decision. United Bank of India might have a strong case since according to the officials, the court had otherwise found no fault in its evidence against Kingfisher Airlines.
The stock of Kingfisher Airlines was suspended from trading on the bourses from December for non-compliance with the Listing Agreement clause relating to timely preparation and disclosure of financial results by a listed company.