Mallya escalates war on USL board, Diageo pores over 'contract'

Upping the ante to retain chairmanship at United Spirits (USL), embattled Vijay Mallya said on Monday that majority owner Diageo has contractual obligations to support his position even as the British liquor giant said the contract will be valid only if there were no defaults.

UK-based Diageo, which has spent nearly $3 billion for a controlling stake of about 55 per cent in United Spirits (USL), said that it is looking into its contractual obligations towards Mallya and his UB Group, but stopped short of making clear its stand on whether it would vote for his ouster Diageo also did not clarify whether there have been any defaults by Mallya or the UB Group that can nullify the applicability of its contractual obligations.

An emergency meeting of USL shareholders looks likely as Mallya has rejected the Board's call for his resignation even as the alleged irregularities that took place between 2010 and 2013 came under multi-agency scanner.

The boardroom battle at India's largest liquor maker took its toll on the USL share price as also on the stocks of various companies of Mallya-led UB Group.

Diageo shares also fell on London Stock Exchange in the UK and on NYSE in the US.

Mallya, who is fighting multiple battles for his various ventures, including the 'wilful defaulter' charges for loans by long-grounded Kingfisher Airlines, has refused to quit and said that he will discuss the issue bilaterally with Diageo.

"Diageo has contractual obligation to support me as a chairman and director on the USL Board. Today, with their statement, they have confirmed it. I will discuss the issue with Diageo bilaterally," he said.

On whether he will call a special shareholders' meet, he said, "Let us not speculate. Why should I tell anyone about future course of action. I will discuss with Diageo."

Earlier during the day, Diageo said that its contractual obligations to support Mallya's presence would not apply in the event of defaults by the businessman and his Group firm UB Holdings.

USL, the erstwhile flagship firm of the UB Group, has already seen a number of exits from its Board and top management, including that of its executive director and chief financial officer PA Murali last week since the probe was launched by Diageo.

The company appointed Vinod Rao as the head of finance and V. Ramachandran as the company secretary and compliance officer on Monday.