Liquor baron Vijay Mallya got another setback on Tuesday when the Bombay High Court refused to restrain banks from selling shares of United Spirits Ltd (USL) pledged as security against loans to Kingfisher Airlines.



The court order would mean that the consortium of 17 banks would be free to sell shares of the subsidiary companies of the UB Group which had been pledged with the lenders under an agreement in 2010.



The move could jeopardise Mallya's plans to complete stake sale to Diageo Plc and to revive the grounded carrier.



"Ad-interim relief refused," said Justice S J Kathawala after hearing arguments of both the banks and United Breweries Holdings - Kingfisher's parent company - which had filed the suit.



During the course of arguments, the banks informed the court that the process of sale of shares had already begun.



Their counsels informed the court that after the borrower defaulted on repayment, it was decided to sell the pledged shares as per the agreement between the parties. Even those banks which are not part of the consortium have also started selling the shares, they said.



Birendra Saraf, Counsel for UB Group, told reporters that the banks had informed that one crore shares of Mangalore Chemicals and Fertilisers, a subsidiary of UB Holdings, pledged with the lenders, had already been sold.



"The deal was materialised today," he said.



Saraf had told the court earlier that 23 lakh shares of companies, including United Spirits Ltd and Kingfisher Airlines, were pledged in exchange for loans.



With inputs from PTI