Banks get goahead to recover ₹9,000 cr from Vijay Mallya
SIGN OF BAD TIMES Debt Recovery Tribunal rules in favour of lenders; Mallya likely to appeal against order
BENGALURU: Banks moved a step closer towards recovering the ₹9,000 crore that Vijay Mallya owes them, with a debt court in Bangalore ruling in their favour.
The ruling narrowed options for Mallya, the chairman of Kingfisher Airlines and an erstwhile member of Parliament, who flew to the UK in early march as creditors closed in on him. A Bengaluru lawyer involved in the legal proceedings who asked not to be identified said Mallya is likely to file an appeal. To do so, however, he will have to deposit 75% of the amount claimed by the banks with the court.
On Thursday, the Debt Recovery Tribunal (DRT) in Bangalore said in a 145-page order that banks should start the process of recovering ₹6,203.35 crore (the amount they claimed Mallya owed them in 2013), plus interest at 11.5% a year. Mallya’s companies, Kingfisher Airlines Ltd, United Breweries Holdings Ltd (UBHL) and Kingfisher Finvest Ltd, along with the one-time liquor baron, are liable to pay the amount.
Mallya’s once sprawling empire has since been sold. United Spirits is now controlled (and majority owned) by Diageo Plc. United Breweries’ largest shareholder is beer company Heineken (with Mallya having a lower shareholding, and one that is largely pledged to banks).
Businesses should realise “it will be no longer possible for them to avail loans of public money, default in repayment, and try to get away through the lanes and by-lanes of twisted facts,” the court, presided over by presiding officer K Sreenivasan, said.
The order brings to an end a three-year legal battle in the court by a consortium of 17 banks seeking to recover money owed to them by Kingfisher Airlines, which was grounded in 2012 under the weight of debt and accumulated losses. If the lenders can’t recover the money through the sale of “properties mentioned in the schedule”, they can “proceed against the person and other properties of the defendants as required under law and also as advised,” the court’s order said.
Mallya’s office and the UB Group did not respond to e-mails seeking comment.
State Bank of India (SBI) has written off ₹7,016 crore in loans by 63 wilful defaulters, including Kingfisher Airlines, Daily News & Analysis (DNA) reported on November 16. Finance minister Arun Jaitley clarified the same day that the write-off did not mean a loan waiver and that defaulters would be pursued.
In March 2016 SBI moved the debt court for a second time to seek an arrest warrant against Mallya, revoke his passport, and to seize a $75-million payout to him by spirits maker Diageo Plc. The money, $40 million of which has already been paid to Mallya, was in return for him stepping down as chairman of United Spirits Ltd, which the UK-based firm acquired from the businessman.
Mallya left for the UK days before the creditors moved against him. The external affairs ministry in April last year revoked his passport. Mallya resigned from the Rajya Sabha later, telling chairman Hamid Ansari that he did not expect to get “a fair trial or justice”.