DRT to decide today on debt recovery from Mallya, Kingfisher
07 June 2016
The Debt Recovery Tribunal (DRT) is expected to issue orders today on how it would take up the 26 applications filed by a consortium led by State Bank of India against Vijay Mallya over unrecovered loans taken to run the defunct Kingfisher Airlines.
This would set the final stage of hearing arguments from both parties by the DRT, which has to comply with the Supreme Court deadline of 9 July to complete the case.
Mallya, in self-exile in the United Kingdom, owes over Rs7,200 crore to a consortium of bankers led by SBI for loans taken to run Kingfisher Airlines. The banks say that Mallya had given personal guarantees apart from pledging his stake in the UB Group companies to raise funds for the airline which grounded due to heavy losses.
This resulted in Mallya losing control over his liquor empire to global players - Diageo in spirits and Heineken in beverages. Mallya claims that his UB Group has pumped over Rs 4,000 crore in Kingfisher Airlines in addition to the loans taken from banks.
Banks first filed a case in 2013 against Mallya in the DRT in Bengaluru, where the UB Group is based, to recover loans. Since then, they have filed an additional 25 applications, including a petition to direct Diageo Plc and United Spirits to stop payment of $75 million for a non-compete agreement signed with Mallya. Diageo has paid Mallya $40 million immediately after the agreement was signed in February.
Mallya has objected to the banks claims saying that they are charging compounding interest over the initial loans and they have recovered Rs1,244 crore in pledged shares since April 2013. An additional Rs1,250 crore has been deposited in Karnataka high court belonging to United Breweries (Holdings).
The Indian government has asked Interpol to issue an arrest warrant against Mallya, after he failed to appear before the Enforcement Directorate investigating a case against him for money laundering. His diplomatic passport, he being a Rajya Sabha member, has been cancelled.
Mallya has been accused of moving out of India substantial part of the Rs900 crore loan taken from IDBI Bank, in violation of a internal committee that recommended against the loan.
The Supreme Court has directed Mallya to disclose his and his family assets in India and overseas, while asking the DRT to complete the proceedings before 9 July.
Mallya says he is keen to settle dues with the banks and also has come up with an offer of settlement, which the banks are yet to decide.