Banks approach Supreme Court for relief.
By Sreekanth A. Nair
Business tycoon Vijay Mallya left India on the same day a consortium of 13 banks, to whom he owed $13.24 billion in loans, led by State Bank of India, approached the Debt Recovery Tribunal (DRT) on March 2.
This was revealed by Attorney-General Mukul Rohatgi when he appeared for the consortium in the Supreme Court. The consortium that couldn’t get an order from the DRT preventing Mallya leaving India has now moved the apex court.
The petitioner banks are SBI, Bank of Baroda, Punjab National Bank, State Bank of Mysore, UCO Bank, United Bank of India, Indian Overseas Bank, Punjab and Sind Bank, Axis Bank, Bank of Baroda, Corporation Bank, Federal Bank and IDBI Bank.
“The HC failed to protect the interest of the petitioner banks who are yet to recover an amount in excess of Rs 9,000 crore from Kingfisher Airlines, United Breweries Ltd, Vijay Mallya and Kingfisher Finvest (India) Ltd. Petitioner banks individually advanced to Kingfisher Airlines loans of thousands of crores of rupees. By way of a Master Debt Recast Agreement (MDRA) of December 21, 2010, and other related documents, the existing lands were restructured and treated as a single facility. United Breweries and Mallya have on December 21, 2010, executed both corporate guarantee and personal guarantee promising repayment of the entire amount due to the banks,” the petitioner banks said.
Rohatgi also urged the Supreme Court to pass an order asking Mallya to appear before the court.
“We are not behind his blood. We want to sit across him and get back our money. We want to settle the loans,” he said.
He informed the court that when the banks issued loans to Mallya’s Kingfisher Airlines, the company was at its peak. But it crashed afterwards. He also said that most of Mallya’s assets are in foreign countries.
Since most of his assets are in the UK, he is believed to be in England. Earlier, he had said that he wanted to settle down in London.
Meanwhile, British liquor company Diageo Plc said on Wednesday that it has already paid Mallya $40 million of a $76 million settlement plan. The first portion of the settlement plan was paid on February 25 when the agreement was signed. Next installment is due in 2017. Mallya also resigned as the chairman of United Spirits on the same day as part of the settlement.
“Diageo will pay $40 million of this amount immediately with the balance being payable in equal instalments over five years. Diageo’s payment obligations are subject to Dr Mallya’s ongoing compliance with the terms of today’s agreement,” the company had said.
But Mallya may not be able to spend the money as a tribunal has ordered that he cannot spend the money received from Diageo. The Enforcement Directorate has registered a case against Mallya for willfully defaulting on a $132 million loan from IDBI bank in conspiracy with some bank representatives.
On Wednesday, Kingfisher Airlines employees staged a protest outside the house of Mallya in Mumbai demanding their pending salary from July 2012 onwards. The company owes around $118 million to its employees. They also sought Prime Minister Narendra Modi’s intervention in the issue to take action against Vijay Mallya.