UB Group can’t revoke power of attorney unilaterally: Bankers

This includes shares held in United Spirits,Mangalore Chemicals & Fertilisers and KFA.

Vijay Mallyas UB Group cannot unilaterally revoke a power of attorney (PoA) given to IDBI Trusteeship Services in order to protect shares pledged against loans given to Kingfisher Airlines,clarified bankers. Senior executives at IDBI Bank say that a PoA held by IDBI Trusteeship on behalf of UB Group and its lenders can only be revoked if all parties agree to it.

Unless the underlying transaction has been closed,the PoA legally cannot be revoked unilaterally, an executive at IDBI Trusteeship said. Bankers added that the UB Group may be using delaying tactics to prevent a further sale of shares pledged against loans to Kingfisher Airlines.

The clarification came in the light of reports suggesting that the UB Group had revoked a PoA given to IDBI Trusteeship,implying that the latter cannot sell on behalf of the bankers,and anyone buying these shares could face legal action. IDBI Trusteeship holds PoA for shares pledged against the R430-crore loan to Kingfisher.

Further,officials at State Bank of India confirmed that the consortium of 17 lenders led by SBI has residual rights over the shares pledged as part of that transaction.

SBI officials also confirmed that the consortium of lenders has sold the shares pledged against loans from the consortium of lenders.

This includes shares held in United Spirits,Mangalore Chemicals & Fertilisers and KFA. Cumulatively,bankers have been successful in recovering only Rs 800-1,000 crore from a total exposure of Rs 7,000 crore.

Banks are now approaching the debt recovery tribunal and filing a claim under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act to recover more funds.