The king in bad times: Vijay Mallya (centre). The Supreme Court has issued notice to beleaguered liquor baron Vijay Mallya on a plea by a consortium of 17 banks led by the SBI seeking his personal appearance before it along with his passport as it was told that he has already left the country. Meanewhile, British liquor major Diagio plc has confirmed paying the Indian industrialist $40 million (Rs.275 crore) as part of the $75 million (Rs.516 crore) agreement it entered with the latter on February 25.
A bench of Justice Kurian Joseph and Justice Rohinton Fali Nariman issued notice as Attorney General Mukul Rohatgi said that Mallya left soon after the consortium moved applications on March 2 before the Bengaluru-based Debt Recovery Tribunal to restrain British liquor major Diageo from paying him $75 million.
Urging the court to ask Mallya to “appear before the court and bring his passport”, Rohatgi said that the businessman is now posting messages like “I am not an absconder. I will come and clear the dues” on his social media account
Telling the court that the banks were only interested in the recovery of loans given to Mallya’s now defunct Kingfisher Airlines, he said: “We are not after everybody. We are not after his blood.”
He said that Mallya was using one pretext or the other for avoiding the settlement of the loans and had tried to delay the proceedings before the debt recovery tribunal in Bengaluru and Goa.
He said that according to their information Mallya possesses “tremendous” movable and immovable assets in Britain that are far in excess of the loans that he has to pay.
The notice, returnable in two weeks, will be issued to him personally, through his company United Breweries (Holding) Limited, through his lawyers who appeared for him in the Karnataka High Court and in DRT and through the Indian High Commission in London.
The notice will also be served on him on his official Rajya Sabha email ID.
The court directed the next hearing of the matter on March 30.
The bank consortium had sought the court’s order restraining Mallya from leaving the country, his arrest and impounding of his passport, and have challenged the March 4 order of the Karnataka High Court not accepting their plea.
The high court instead of passing an interim order restraining Mallya from leaving the country as sought, had asked him, Diageo Holding Netherlands B.V., Diageo Holdings and United Spirits Ltd to file their objections to the banks’ plea, the banks said in their plea, adding that the high court ought to have appreciated that the plea for an interim order seeking impounding Mallya’s passport “was very urgent” as he was to “succeed in moving away from India and settling in London”, then the purpose of the entire exercise would be defeated.
They said by way of Master Debt Recast Agreement, the existing loans were restructured and treated as a single facility on December 21, 2010,” and Mallya and United Breweries (Holding) Ltd executed a corporate guarantee and personal guarantee on the same date itself assuring the repayment of entire amount.
Since these accounts were not serviced and were declared as Non-Performing Assets, the consortium moved DRT for the recovery of the money.
Addressing the court, Rohatgi said that the secured assets which Mallya has pledged are not even one-15th of the more than Rs.9,000 crore which he had taken for his now defunct Kingfisher Airlines.
As the court asked how the banks could advance such a huge loan without matching securities and “if loans were against secured assets”, he said that they were given against the brand and logo of Kingfisher Airlines which at that point of time was huge but now has collapsed.
To this, Justice Joseph asked “if it is permissible” to advance loans against brands and logos.
Besides State Bank of India, other banks who gave loans include State Bank of Baroda, State Bank of Mysore, Axis Bank, Corporation Bank, the Federal Bank, Indian Overseas Bank, Jammu and Kashmir Bank, IDBI Bank, Punjab National Bank, Punjab and Sind Bank, UCO Bank and United Bank of India.
“We paid Mallya $40 million immediately as part of the $75-million agreement he signed with our company on February 25, with the balance ($35 million) being payable in equal instalments over five years,” Diageo spokesperson Kirsty King said from London on telephone.
Asked about the Debt Recovery Tribunal’s (DRT) March 7 order to it not to pay Mallya any part of the severance package till its next hearing on March 28, King said the company was yet to receive such an order.
“We understand that the Debt Recovery Tribunal is in the process of issuing an interim order, which we will review once the full details are available,” King said, adding the company was yet to receive the notice.
The tribunal’s presiding officer, R. Benkanahalli, on March 7 directed Diageo and its Indian subsidiary United Spirits Ltd (USL) not to pay Mallya till the disposal of the State Bank of India’s application and ordered temporary attachment of the deal amount till March 28.
As part of the sweetheart deal, Mallya resigned as chairman and director of USL and agreed not to compete with Diageo in spirits business the world over for the next five years and not to interfere in its Indian arm’s business matters.
Though SBI rushed to the tribunal a day after the agreement on February 26 to advance hearing on its original application filed in June 2013 for recovery of loans it and 16 other state-run and private banks advanced to Mallya’s now defunct Kingfisher Airlines in 2004-12, it was not aware of the Diageo’s part payment to the 60-year-old liquor baron.
“We were not aware that Diageo had paid Mallya $40 million and even Mallya’s counsel (Uday Holla) did not tell the tribunal during arguments on March 4 about the payment. We will seek action against him (Mallya) for suppressing the fact,” SBI counsel said from New Delhi.
As a lead bank of the consortium of 17 banks to which Kingfisher owes Rs.9,091.39 crore as combined loans with interest, the SBI filed four interlocutory applications in the tribunal on March 2 after CBI director Anil Sinha expressed concern over its delay in acting against Mallya.
“We have also filed a caveat before the Debt Recovery Appellate Tribunal in Chennai to hear us before adjudicating on any appeal on Mallya against the Bengaluru tribunal’s March 7 order till its next hearing on March 28,” the counsel said on the condition of anonymity. (IANS)