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Kingfisher Finvest on Tuesday pleaded before the Debt Recovery Tribunal (DRT) Bengaluru that Interlocutory Applications (IAs) filed by the State Bank of India (SBI) consortium against the company in the Kingfisher Airlines Ltd case be dismissed.
Senior counsel for Kingfisher Finvest, appearing before DRT Presiding Officer C R Benakanahalli, in the SBI consortium vs Kingfisher Airlines, said IA filed by the SBI consortium cannot be considered at this stage as such pleas against it could be either considered at final disposal of present original application (OA) or banks be made to file a separate or a fresh OA.
Also Kingfisher Finvest opposed lifting of corporate veil.
But the SBI consortium insisted that DRT should ‘lift the corporate veil’ to make the borrowers be made accountable and protection against personal liability enjoyed by an individuals controlling the company made to pay.
The doctrine of Lifting of Corporate Veil means disregarding the corporate personality and looking behind the persons controlling the company.
In other words, where a fraudulent and dishonest use is made of the legal entity, the individuals concerned — in this case Mallya — will not be allowed to take shelter behind the corporate personality. In this regard, the court will break through the corporate veil.
SBI consortium’s senior counsel in his counter argument said, “We filed OA against Kingfisher Finvest as United Spirits Ltd (USL) gave money to Kingfisher Finvest to buy shares. With that money, Kingfisher Finvest bought shares of USL, Kingfisher Airlines and McDowell Holdings.”
USL shares were pledged to banks. Kingfisher Finvest sells the USL shares and keeps the proceeds. But the proceeds actually should reach USL, and in turn, banks should have got the sale transaction proceeds. But Kingfisher Finvest kept it.
This is a fraudulent transaction, hence, corporate veil be lifted to fix liabilities.
DRT Presiding Officer after hearing both SBI consortium and Kingfisher Finvest adjourned for the day and is likely to pass order on Wednesday.
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