State bank of india and Others vs Kingfisher Airlines Ltd others on 27 January 2020

1. 1) The present appeal is filed under Section 30(1) of the Recovery of Debts and Bankruptcy Act, 1993, by the Appellants to set aside the order dated 28.02.2019, passed by the Recovery Officer-1, Debts Recovery Tribunal-II, in TRC No.255/2017 in OA No.766/2013 and further to direct the Respondent No.1 to immediately transfer 50,75,000 shares of United Spirits Limited owned by Kingfisher Finvest India Limited to the Demat Account of Ld. Recovery Officer, costs and other reliefs.

2. 2) It is the case of the Appellants that, at the request of Kingfisher Airlines Limited ('KAL'), the Appellants since 2005 had provided Working Capital Facilities (both fund-based and non-fund based) and Rupee Term Loan Facilities including short term loans to KAL. However, KAL had failed to adhere to the terms contained in the respective Working Capital/Rupee term Loan Agreements. In April 2010, the request of KAL to recast the loans was considered by the Lenders and in pursuance of the same, the Appellants and KAL entered into the Master Debt Recast Agreement(MDRA) and on 24/12/2010, the Appellants i.e.

TRC No.255 of 2017 in QA No.766/2013

SBI(Appellant No.1) and KAL entered into an Amendment Agreement to the MDRA. To secure the obligations under the MDRA and the Financing Documents including payment of the various facilities together with all interest, fees, commissions, commitment fees, default interest, additional interest, prepayment premium, reimbursements, costs, charges, expenses and other monies, KAL had created securities for the benefit of the Appellant Banks (except Appellant No.7). In addition to the securities provided by KAL, United Breweries( Holdings) Limited ('UBHL') provided guarantee in favour of the Appellant Banks by executing the Corporate Guarantee Agreement dated 21/12/2010 with Appellant No.1. Further, Dr.Vijay Mallya provided personal guarantee in favour of Appellant Banks for securing the obligations of KAL under the MDRA and other financing documents by executing the Personal Guarantee Agreement dated December 21, 2010.

Further submission of the Appellants is that, due to non-servicing of interest, invocation of Stand-by Letters of Credit and Bank Guarantees, development of Letters of Credit, non-repayment of term loan installments etc., the accounts of KAL

with each of the consortium banks were classified as Non-performing Asset(s) ("NPA"). As the event of default under the MDRA had occurred and was subsisting, the Appellant No.1 as the Lenders' Agent issued notices to UBHL (in terms of Section 3 of the Corporate Guarantee Agreement dated 21/12/2010 ) and Dr.Vijay Mallya (in terms of Section 3 of the Personal Guarantee Agreement/Deed of Guarantee dated 21/12/2010), declaring that the principal and all accrued interest on and all other monies in respect of the various facilities to KAL, be paid by UBHL and Dr.Vijay Mallya forthwith, and upon non-compliance of notice, the Appellant Banks filed the OA No.766/2013 before the Tribunal against KAL, UBHL, Dr.Vijay Mallya and KFIL, *inter alia*, praying for recovery of a sum of Rs.6203,35,03,879.42 with further interest at the rate of 15.20% per annum and other dues from 01/06/2013. This Tribunal, vide its final order dated 19/01/2017, held that KAL, UBHL, Dr.Vijay Mallya and KFIL are jointly and severally liable to pay a sum of Rs.6203,35,03,879.42 to the Appellants together with interest at 11.5% p.a. with yearly rests. Further, pursuant to the above final order, the Tribunal issued the Recovery Certificate dated 21/02/2017 in favour of Appellants.

Further submission of the Appellants is that, pursuant to the Final Order of this Tribunal in OA No.766/2013 and the Recovery Certificate being issued, the Appellants have commenced the process of recovery of the OA amount before the Ld. Recovery Officer-1, Debts Recovery Tribunal-II. During the course of the recovery proceedings, the Ld. Recovery Officer issued an 'Order of Attachment of shares and direction to deposit the same in this Tribunal dated 21/06/2018 and has attached 11,73,180 shares of USL held by KFIL. This was followed up by orders dated 09/10/2018 and 23/10/2018, directing HDFC Bank Limited to transfer the said shares which were free from any attachment by the Enforcement Directorate to the Demat Account of the Ld. Recovery Officer.

Further submission of the Appellants is that, HDFC Bank Limited, vide its letter dated 31/10/2018 to the Ld. Recovery Officer, informed that 10,15,000/- shares of USL held by KFIL stood pledged in favour of the Respondent No.1. In view of the said response, the Ld. Recovery Officer has issued an order dated

07/11/2018 to HDFC Bank Ltd., calling upon them to provide further details regarding the alleged pledge in favour of Respondent No.1.

Further submission of the Appellants that, HDFC Bank Ltd., has vide its letter dated 12/11/2018 provided certain details relating to the alleged pledge in favour of the Respondent No.1. It is pertinent to state that the counsel for the Appellants and Respondent No.1 appeared before the Ld. Recovery Officer on 19/11/2018, 20/11/2018, 26/11/2018 and 27/11/2018 on each of which occasions, the matter was adjourned at the request of the Respondent No.1 to enable them to produce documents to evidence its interest in the attached USL Shares and its right to retain those shares. The Appellants have also filed on 26/11/2018 a memo highlighting a list of documents for a direction by Ld. Recovery Officer to Respondent No.1 for production of same. Further, it is submitted that the Respondent No.3 had not responded to the notices of the learned Recovery Officer or participated in the proceedings before the Ld. Recovery Officer.

Further submission of the Appellants is that, in view of the fact that despite grant of sufficient opportunity, the Respondent No.1 failed to produce all the documents sought for by the Ld. Recovery Officer; the LD. Recovery Officer has gone ahead with hearing arguments of the parties on 23/01/2019 and 04/02/2019 and thereafter passed the Impugned Order dated 28/02/2019 without insisting for production of documents by the Respondents as directed by him.

3) Appellants filed W.P.No.12697/2019 before the Hon'ble High Court of Karnataka challenging the impugned order dated 28/02/2019 passed by Recovery Officer, and the Hon'ble High Court vide order dated 19/07/2019 disposed of the Writ Petition and directed Appellants to approach this Tribunal in view of availability of statutory remedy under RDB Act. Thus, the Appellants have filed appeal to set aside the Impugned order and to direct the Respondent No.1 to immediately transfer 50,75,000 shares of United Spirits Limited owned by Kingfisher Finvest India Limited to the demat account of Ld. Recovery Officer.

4) The grounds of appeal filed by the Appellants are as follows:

The Impugned Order passed by the Tribunal is absolutely erroneous, lacks application of mind and is contrary to the facts and law placed before the Ld. Recovery Officer. The Impugned Order has condoned the baseless and illegal conduct of the Respondent No.1 in retaining the attached USL shares with them despite there being no valid pledge in existence as on the date of Impugned Order.

Further submission of the Appellants is that, the Ld. Recovery Officer in the Impugned Order dated 28/02/2019 has relied on the extracts of Board Resolutions of the Respondent No.1 dated 01/09/2010 and 30/08/2012 to reject the contention of the Appellants that the Respondent No.1 has failed to produce evidence for having a valid pledge over the shares of USL pledged to the applicants. Further contention of the Appellants is that, a bare perusal of the extract of the Board Resolution dated 01/09/2010 produced by the Respondent No.1 shows that the Board of KFIL had authorized the alleged pledge of USL and KAL shares as security to 'Short Term Financial Assistance' of Rs.162

Crore proposed to be availed by KFIL with a tenor of '366 days w.e.f. date of disbursement' and to secure the finance facility of Rs.300 Crore proposed to be availed of by UBHL. Under these circumstances, it was incumbent on the Respondent No.1 to produce the statement of loan accounts to show the details of borrowings and repayments which were secured by the alleged pledge to prove that the pledge is legally valid and subsisting. However, the Respondent No.1 despite having been granted sufficient opportunity, failed to do so. Therefore, the finding of the Ld. Recovery Officer regarding the validity of the pledge in the absence of any cogent documentary evidence substantiating compliance with various statutory requirements and procedures is incorrect.

Further submission of the Appellants is that, the Ld. Recovery Officer has in the Impugned Order dated 28/02/2019 held that in view of Clause 28 of the Share Pledge Agreement dated 09/09/2010, the pledge created by the pledger is a continuing pledge and is applied to all other loans available by the borrower from the Respondent No.1 and does not require any fresh pledge document to be executed. This is a complete misinterpretation of the said provision.

Further submission of the Appellants is that, the Ld. Recovery Officer has erroneously arrived at the finding that the Respondent No.1 has proved that the pledge of USL shares by KFIL and UBHL in its favour is prior to any rights claimed by the Appellants and that merely by obtaining judicial order from a Court/Tribunal, the Appellants cannot claim a better right or title over the Respondent No.1's specific prior charge rights. Further, the order of the Ld. Recovery Officer that no valid pledge was created in favour of Respondent No.1 is incorrect and that the Respondent No.1 has got prior pledge etc. It is further submitted that, when the Appellant Banks have entered into a Master Debt Recast Agreement dated 20/12/2010 and when there is default by Certificate Debtors then, Appellants have got every right to proceed against the remaining shares. It is further submitted that, when the Respondent No.1 has realized the amount after sale of shares of KFIL and KAL, the contention that rejection of claim of Appellants by Ld. Recovery Officer is incorrect. When once amount due to Respondent No.1 from UBHL or other sister concerns is realized, then it has no right to retain the same.

It is further submitted that, the observation of the Ld. Recovery Officer regarding pendency of SLP No.967/2014 on the file of the Hon'ble Apex Court, and also Company Application if decided against UBHL reverting of shares in favour of Respondent No.1 would seriously prejudice it is incorrect. When the pledge created in favour of Respondent No.1 is determined and seized, then its withholding other shares belonging to UBHL and KFIL is incorrect and cannot be sustained. The Ld. Recovery Officer has erroneously waived reference to admittance of payment by Respondent No.1 and failed to consider the Master Pledge Recast Agreement and other documents by Appellants before the Ld. Recovery Officer. The Ld. Recovery Officer has failed to take note of failure on the part of the Respondent No.1 to furnish the documents regarding pledge of remaining shares and its right to retain. The Ld. Recovery Officer has also failed to take note of conduct of Respondent No.1 in delaying the recovery and the huge sum is due to the Appellants Banks. The Ld. Recovery

Officer has failed to consider the genuine request made by the Appellants and proceeded to hold that, the shares held by Respondent No.1 cannot be dealt with. Accordingly, the Appellants have prayed for allowing the appeal as prayed for.

5) The Respondent No.1 through its counsel has filed detailed objections denying the contentions raised by the Appellants in their appeal memo except to the fact that disputed shares were pledged to it. It has further contended that, since the shares of KFIL and KAL have been pledged for the loans borrowed by said companies by way of Master Facility Agreement dated 09/09/2010 and availed loan of Rs.200 Crore by UBHL and subsequently on the same day two more loans were granted by it. Further, as per the Master Facility Agreement dated 21/12/2010 Respondent No.1 lent Rs.200 Crore to UBHL and all the shares in question were pledged to it by UBHL and sister concerns.

It has further contended that, since the shares have been already pledged, as per the direction of the Hon'ble Company Judge, it has sold about 1,36,12,591 shares of USL to Diageo PLC and another and recovered its amount. However, it is the contention of Respondent No.1, that as per share pledge agreement, it continues to be a pledgee, as the agreement provides for further loans that may be granted, and therefore the pledge in favour of this respondent is subsisting and the same shares cannot be pledged in favour of the Appellant Banks as they are already encumbered. It is further contended that, the Hon'ble Division Bench of the Hon'ble High Court of Karnataka, in Company Appeal in O.S.A.No.25 of 2013, by BNP Paribas, has set aside the sales of shares in favour of Diageo PLC and another and the matter is now pending before the Hon'ble Apex Court. It has further contended that, in case if the order of the Hon'ble Division Bench of the Hon'ble High Court of Karnataka in Company Appeal is upheld, then shares will have to be reverted back and it has to pay back the amount to Diageo PLC. In view of the above fact, when the shares are already pledged, they are not available for the pledging by any Banks. It has denied all other allegations made in the appeal memo and sought for dismissal of the appeal. It has further contended about its right to retain the shares until its dues are paid. Accordingly, the Respondent No.1 prayed for dismissal of the appeal.

6) On the above background, I have gone through the records and heard the arguments advanced by Learned Senior Counsels appearing for both sides; and the following points arise for my consideration:

- (a) Whether the order of the learned Recovery Officer-1, DRT-II suffers from infirmity and as such it requires to be set aside? and

- (b) To what relief, the parties are entitled?

**: - REASONS - :**

7) The learned Senior Counsel for the Appellants Sri S.S.Naganand would vehemently argue that, the Appellants being the Consortium Banks have lent huge amount to Kingfisher Airlines Limited since 2005 and at its request in the month of April 2010, recast of the loan was considered by entering into an Amendment Agreement to Master Debt Recast Agreement (MDRA). The Kingfisher Airlines Limited, after having taken various loan facilities from the Consortium Banks committed default and the loans have become NPA. Further, Dr. Vijay Mallya provided personal guarantee for Kingfisher Airlines Limited under MDRA and other financial documents, and subsequently by filing an OA No.766/2013, final order was obtained for Rs.6203,35,03,879.42 with further interest and Recovery Certificate was also issued. When the Recovery Certificate was put into execution by bringing the shares held by Kingfisher Airlines Limited and Kingfisher Finvest (India) Limited (for the purpose of brevity the Kingfisher Airlines and Kingfisher Finvest (India) Limited in short referred as KAL and KFIL). The Respondent No.1 resisted the same on the ground of its having subject shares pledged to it as security, and which were attached by the learned Recovery Officer. The Recovery Officer attached 10,15,000 shares which stood in the name of Kingfisher Finvest(India) Limited which were pledged to Respondent No.1 herein. Subsequently, the Respondent No.1 moved an application before the learned Recovery Officer.1, DRT-II and the learned Recovery Officer raised the attachment by holding that the shares attached were already pledged to Respondent No.1. He would further argue that, the very raising of attachment itself is incorrect and arbitrary as more than Rs.6,203 Crore are dues from the Kingfisher Airlines Limited. In fact, at the time of availing the loan, Dr. Vijay Mallya has provided personal guarantee as well as shares pertaining to KAL and KFIL in addition, UBHL provided guarantee in favour of Appellants Bank by executing a Corporate Guarantee Agreement dated 21/12/2010. So, the sum and substance of the arguments would be, when there is a huge amount due to Consortium Banks which obtained final order and Recovery Certificate against the KAL, UBHL and KFIL and also Dr.Vijay Mallya who are also liable to pay the said amount on the basis of the Corporate Guarantee Agreement dated 21/12/2010 by offering the shares of KAL and KFIL securities then, raising of attachment by Ld. Recovery Officer is incorrect. According to the learned Senior Counsel, once Original Application is allowed and Recovery Certificate is put into execution, the Company Court has no role in prohibiting the DRT from recovering the amount out of the shares which are not subject matter of the loan agreements.

8) In support of his argument, he has cited the decision in the case of **Maharashtra State Co-operative Bank Limited Vs. Assistant Provident Fund Commissioner and others** reported in **(2009)10 SCC 123** and connected appeal and in the case of

**Lallan Prasad Vs Rahmat Ali and others**, reported in **AIR 1967 SC 1322** that, *"a pawnee has only a special property in the pledge' but the general property therein remains in the pawner and wholly reverts to him on the discharge of the debt. A pawn therefore is a security, whereby a contract a deposit of goods is made as security for a debt. The right to property would be vested with the pledgee only, so far as it is necessary to secure the debt."* According to the learned Senior Counsel, when the loans which were availed from the Respondent No.1 by UBHL or other sister concern have been recovered in entirety, the Respondent No.1 cannot contend that the remaining shares are still encumbered on the ground of the judgment of Division Bench, setting aside the order of permission to sell the shares to Diageo in OSA Nos.26 to 30 and 43 of 2013 wherein, UBHL, KFIL, Diageo PLC and other Consortium Banks are parties. When in the above appeal, the Division Bench of Hon'ble High Court of Karnataka, set aside the order of the Hon'ble Company Judge, then, there is no impediment to proceed with remaining shares held by the Respondent No.1 i.e. HDFC Limited. According to the learned Senior Counsel, the status-quo order issued by the Hon'ble Apex Court in SLP(C-967/2014 with connected SLPs would not come in the way of remaining shares held by the Respondent No.1 on the basis of alleged pledge.

9) In the decision in the case of **Balakrishna Gupta and others Vs Swadeshi Polytex Ltd., and Another** reported **(1985) 2 SCC 17**, it has been held that, "*the right to property rests in pawner and does not pass to pawnee*" and by relying on the said ratio, he would argue that, once dues of the Respondent No.1 is/was recovered by sale of shares to Diageo PLC, there is no necessity to withhold the shares thereby depriving the Consortium Banks from recovering the amount by sale of the shares. When the huge amount is due as NPA and Recovery Certificate is obtained, then it is the wisdom of Recovery Officer to attach the shares belonging to Certificate Debtor Company as proved under the provisions of RDB Act. He would further argue that, under Section 73 of CPC, the creditors can join and seek for recovery of their respective dues as per ratable distribution which is well recognized. At the most, the Respondent No.1 can harp upon the amount due to it and not regarding other assets. There is no dispute about the fact that, the shares are held with

TRC No.255 of 2017 in QA No.766/2013

Respondent No.1 and after the sale of shares to Diageo PLC, there remains 50,75,000 shares after 10,15,000 shares were split on 2018. The Company application No.437/2013 is still pending and it would not bar the jurisdiction of DRT to recover the amount.

10) The learned Senior Counsel Sri S.S.Naganand would further argue that the Company Application No.437/2013 in which, the Hon'ble Single Judge passed order for sale of shares was in respect of winding up of United Breweries (Holdings) Limited and the shares sought to be attached by the Recovery Officer is in respect of another group company i.e. Kingfisher Finvest(India) Limited which is not in winding up and hence attachment of shares of Kingfisher Finvest(India) Limited which is Certificate Debtor No.4 in the final order and Recovery Certificate obtained by the Appellant Banks would not be coming within the purview of the contentions raised by the Respondent No.1 herein. The status-quo order of the Hon'ble Apex Court is in respect of the shares sold pursuant to the order passed by the Hon'ble Company Court in the above Company Application and will not apply to the shares of Kingfisher Finvest(India) Limited which is available for attachment for the satisfaction of dues of Respondent No.1. He would further argue that, even in the event of the Hon'ble Apex Court setting aside the order of the Company Court and setting aside of the sale of the shares, proceeds of which were used for appropriation of dues of Respondent No.1, the Respondent No.1 would not be put to any adverse situation as the shares are presently being traded at two and half times of price at which they were sold pursuant to the order of the Hon'ble Company Court. Hence, the Respondent No.1 would get back those shares which are substantially of higher value at the current market price which can be realized for better price, and even in the event of the adverse fluctuation in the market if the prices of shares move downwards, the appellant Banks are willing to execute affidavit-cum-undertaking before the Recovery Officer to indemnify any loss if occurred to the Respondent No.1 in such an eventuality.

11) Per contra, the learned Senior Counsel Sri Dhyan Chinnappa, for Respondent No.1 would vehemently argue that, when once the shares are pledged to Respondent No.1, the same cannot be pledged in any Bank as they are encumbered. The learned Senior Counsel referred to various documents produced before the Tribunal such as, the Share Pledge Agreement dated 09/09/2010 by KFIL and UBHL in its favour and another Share Pledge Agreement on the same date by UBHL and Respondent No.1. On the very same day, Master Facility Agreement was executed between KFIL and Respondent No.1 thereby offering shares of UB Spirits, KAL and KFIL. So, according to the learned Senior counsel for Respondent No.1, when once the shares of above said companies are pledged with Respondent No.1 under various agreements, which is prior to the loan agreements entered between UBHL, KFIL and KAL and Consortium Banks, then, all the shares are encumbered which cannot be made subject of subsequent charge. His apprehension is that, there is every chance of reversing the order of the Hon'ble Company Judge, in such an event, the Respondent No.1 has to pay back the amount to Diageo and another company towards consideration amount of shares sold. Further, the Respondent No.1 has got prior charge over the Appellants/Consortium Banks, therefore, the learned Recovery Officer has rightly passed the order raising attachment. Regarding the right of pledger and pledgee and law relating to it, he has cited the decision in the case of the **Bank of Bihar Vs. State of Bihar and others**; wherein, the Apex Court has categorically held that, *"the right of pledgee cannot be extinguished by the seizure of goods in its possession in as much as the pledge of goods was not meant to replace the liability under the Cash Agreement. An unsecured creditor could not have a higher rights than the pawner and was entitled to surplus money after satisfaction of plaintiffs dues."* He has also cited another decision in the case of **Central Bank of India Vs. Siriguppa Sugars and Chemicals Private Limited and others, reported in (2007)8 SCC 353**, wherein it is held that, *"the rights of unsecured creditors cannot prevail over the rights of the pawnee of the goods."* With the help of the above two decisions, he would argue that, when all the shares are already pledged and created charge in respect of the loan advanced by the Respondent No.1, the right of Appellants/Consortium Banks is secondary and it will not prevail over the right of the Respondent No.1 on the ground of repayment of the entire loan amount unless the terms of contract provide for. So, his contention is that, the Respondent No.1 has advanced on more than one occasion and the Master Facility Agreement has created right in favour of the Respondent No.1 to deal with the shares in case of default.

12) I have considered the above rival contentions of the Senior Counsels appearing for both sides. It is not in dispute that, the respondent No.1 has realized its dues lent to the United Breweries (Holdings) Limited and Kingfisher Fininvest (India) Limited by sale of shares pursuant to the order of the Hon'ble Company Judge which was set aside by the Division Bench and in respect of which subsequently the Hon'ble Apex Court has passed an order of status-quo. Thus, the Respondent No.1 cannot claim to be pledgee for any future loan, which is not subsisting after recovery of its dues, under the agreement as contended by the Respondent No.1. It is unlikely that the Respondent No.1 would lend any further amount to United Breweries (Holdings) Limited which is in winding up nor to its associate company, KFIL, which are Certificate Debtors in the present proceedings before this Tribunal. Such being the case, when the Appellant Banks who are holding final order and Recovery Certificate for over Rs.6203 Crore plus interest from 2013 and are seeking attachment of shares of Kingfisher Fininvest(India) Limited which is available to the extent of 50,75,000 shares pursuant to share split. It is also not in dispute that the money lent by the Appellant Banks No.1 to 12 are public money and the Recovery of Debts And Bankruptcy Act, 1993 and SARFAESI Act have been enacted by the Parliament, for expeditious recovery of such huge NPAs which are menace to the economy as the burgeoning NPAs are pulling down the economic growth. Hence, the appeal filed by the appellant banks for setting aside the order of the Recovery Officer whereby the attachments were raised merit consideration in the facts and circumstances of the case which are discussed supra. Further, the Appellant Banks have also undertaken to execute a requisite undertaking in the form of indemnity to indemnify the Respondent No.1 in the event of the Hon'ble Apex Court passing order setting aside the sale of shares to Diageo PLC and another, and consequently if Respondent No.1 suffers any loss due to such retransfer of shares and subsequent sale thereof towards recovery of amounts due to refund of amounts to Diageo PLC. The matter therefore merits consideration even from the public interest i.e. recovery of public money of over Rs.6200 Crore plus interest which is lent by Appellants No.1 to 12 to KAL, in which the Certificate Debtors, Kingfisher Airlines Limited, United Breweries (Holdings) Limited, Dr. Vijay Mallya and Kingfisher Finvest(India) Limited, are liable to pay the said dues, for which attachment of subject shares was made.

13) Further in the decision in the case of **Allahabad Bank Vs Canara Bank, reported in (2000)4 SCC 406**, it has been held that, *"the pendency of winding up proceeding before the Company Court is not a bar to proceed with the execution of Recovery Certificate issued by the Tribunal."* When the Consortium Banks obtained final order and Recovery Certificate against KAL, UBHL, KFIL and Dr.Vijay Mallya, it can certainly seek for attachment of shares belonging to defendants' company though originally pledged with the Respondent No.1. The Respondent No.1 can recover its amount secured by pledge by sale of the pledge of shares which it has done by selling portion of pledged shares, pursuant to the order of the Hon'ble Company Court and when the Respondent No.1 has realized its dues as such, then there is no bar under Section 73 of CPC and Section-19(9) of RDB Act to proceed

against the other shares of the Corporate Debtor Companies continued to be held by Respondent No.1, after recovering its dues. Therefore, I am of the firm view that, the contention of Respondent No.1 is untenable and not justified. The learned Recovery Officer has failed to understand Section-73 of CPC besides Section-19(9) of RDB Act regarding rateable distribution. In view of the judgment in the case of Allahabad Bank Vs. Canara Bank, the Recovery Officer has got every right to proceed further and the apprehension of Recovery Officer regarding status-quo order is not proper for the reason that it confines to sale of shares to Diageo PLC and another pursuant to order of the Hon'ble Company Court. As rightly pointed out by the learned Senior Counsel Sri S.S.Naganand, the Appellants are prepared to undertake in case of loss sustained by the Respondent No.1 on account of sale of shares. So, this aspect has to be decided keeping in mind the claim of nationalized banks on the one hand and the likely claim of Respondent No.1 on the other in case of Hon'ble Apex Court, setting aside sale of shares offered pursuant to Company Court order. No doubt, no one should suffer loss on account of the sale of the shares which can be ensured by imposing suitable conditions.

14) Considering all above facts, the order of the Recovery Officer requires to be interfered by allowing this appeal to the extent as stated infra, I therefore pass following:

**: - ORDER - :**

The appeal filed by the Appellants is hereby allowed.

The order passed by the learned Recovery Officer-1, DRT-II dated 28/02/2019 in TRC No.255/2017 in OA No.766/2013 is hereby set aside.

The Respondent No.1 is hereby directed to transfer 50,75,000 shares of United Spirits Limited owned by Kingfisher (India) Limited to the D-Mat account of the learned Recovery Officer as detailed Annexure-A forthwith.

The Appellant Banks are directed to file appropriate Affidavit-cum-undertaking before the Recovery Officer-1, DRT-II, for indemnifying

Respondent No.1 in the event of setting aside of sale of pledged shares effected pursuant to order dated 24/05/2013 of Hon'ble Company Court, and Respondent No.1, put to any loss as a consequence thereof.

There will be no order as to costs.

(Dictated to the Stenographer (N), after its transcription and necessary corrections, signed and pronounced by me in the Open Court on this 27^th day of January 2020)

27/1/2020.

**(K. RAVINDRAN NAIR)** **Presiding Officer** **I/c DRT-II, Bengaluru**