In a relief to UB Group chairman Vijay Mallya, the Karnataka High Court on Monday granted an eight-week stay on criminal proceedings initiated by the Income Tax (I-T) department against Kingfisher Airlines (KFA) for not remitting tax deducted from employees’ salaries.
The department had filed three cases with the special court for economic offences in Bangalore earlier this year in connection with a tax claim of over Rs 400 crore pertaining to three financial years.
The special court had issued a summons to Mallya in February in connection with the cases. On August 6, Mallya and Kingfisher Airlines moved the high court seeking a stay on the proceedings in these cases on the grounds that the I-T department had initiated the prosecution when other adjudication processes on tax deducted at source (TDS) were still pending. The demand on the TDS had been set aside by the Income Tax Appellate Tribunal last May and various appeals had risen from this.
The carrier, grounded since October 2012, had not returned a profit since it started operations in 2005 and has run up accumulated losses of Rs 16,023 crore as of March 2013.
Both Kingfisher and the UB Group parent company, United Breweries Holdings (UBHL), are fighting a slew of legal battles on various fronts filed by creditors.
The consortium of banks led by State Bank of India (SBI) is demanding dues of Rs 6,203 crore from UBHL — which had given certain corporate guarantees for Kingfisher Airlines — and has moved the Debt Recovery Tribunal to recover the money.
While the consortium recently took possession of the carrier's headquarters in Mumbai, which had been pledged as collateral for the borrowings, it also approached the Karnataka HC seeking the proceeds of the Diageo-United Spirits deal. UBHL had received Rs 1460.37 crore from the sale as part of its stake in United Spirits to the British liquor firm.
Meanwhile, UBHL is also contesting the admission of six winding-up petitions filed by aircraft lessors and financiers of Kingfisher Airlines in the Karnataka HC last year. One of these petitioners has also filed an execution petition in the Delhi HC for executing a money decree passed by a foreign court, the Queen's Bench in the United Kingdom, awarding $16.93 million.