Trouble mounts for Vijay Mallya: IT dept warns against buying company shares in e-auction

The Income Tax department has warned people against buying stocks of embattled liquor tycoon Vijay Mallya's company. Over 41 lakh equity shares of United Racing and Bloodstock Breeders Ltd (URBBL) were put up for sale through e-auction by Debt Recovery Tribunal-II on September 29. The auction is set to take place on October 30.

"We are cautioning the public that buying Mallya's shares in his subsidiary company United Racing and Bloodstock Breeders Ltd (URBBL) in the e-auction will be at their own risk because they (shares) are under our charge (custody) against the outstanding demand in a tax evasion case," N Rathi, an Income Tax official was quoted saying by News18.

DRT has put the shares up for auction to recover the money lent to the liquor baron by more than 17 banks.

According to The Times Of India, a certificate ordering the recovery of Rs 6,203 crore along with interest was ordered as per a DRT notification in the 'SBI and Others versus Kingfisher Airlines Ltd and Others' case.

The notification read, "The sale will be of the shares in one single lot with a reserve price of Rs 24.53 crore." The DRT added that in case the e-auction failed, a manual one will take place on October 31.

However, the I-Tax Department said that they have already placed charges on the shares and the sale of the shares will be deemed void.

"We have created two years ago a charge against the said shares on account of the outstanding demand from his airline. Sale or transfer of these shares will be void in terms of Section 281 of the Income Tax Act, 1961. Any person purchasing such shares will be doing at his/her own risk," Rathi added.

The DRT had held an auction on September 19 in which Choudhary Aviation Facilities bought two of Mallya's helicopters for Rs 8.75 crore and Rs 4.37 crore.