SBI declares Vijay Mallya, his firms wilful defaulters
23 November 2015
The country's largest lender State Bank of India (SBI) has joined other lenders in declaring liquor baron Vijay Mallya and the two companies he founded - Kingfisher Airlines and United Breweries Holdings Ltd (UBHL) - as wilful defaulters.
Earlier, state-run United Bank of India, in September 2014 had tagged Mallya and his firms as wilful defaulters.
The company couldn't be reached for comment. However, reports said Mallya has the option to challenge the label in the Supreme Court through review petitions.
SBI has exposure of Rs1,600 crore to Mallya's firms. Altogether, UBHL has a total outstanding of Rs6,900 crore lent to the long-grounded Kingfisher Airlines by a consortium of 17 lenders led by SBI.
SBI had first issued a wilful defaulter notice to Kingfisher in September 2014, prompting Mallya to move court seeking legal intervention.
The Bombay High Court allowed Mallya to be represented by his legal counsels in August 2014 following which the SBI had moved the Supreme Court challenging it on the grounds that the high court order violated RBI rules on grievance redressal committee. It supposedly allows only the borrower to present his case in person.
However, the apex court upheld the HC verdict and asked SBI to consider this only as ''a one-off instance'' and allow Mallya's lawyers to represent him at the grievance redressal committee meeting held recently. However, the lawyers, reportedly, could not present a case of genuine distress in not paying the money they owe banks.
Following this, the 17 creditors to the grounded carrier has said that they would e-auction assets of the grounded airline. in their bid to part-recover their dues and accrued interest on the principal. The loans have not been serviced from January 2013.
The airline had taken the loan in early 2010 after a second debt restructuring for the airline.
Out of this, the bankers, which recalled the loan in February 2013, could recover only around Rs 1,100 crore after selling pledged shares of UB Group companies.
This February, the SBI took over the airline's Kingfisher House, near the Mumbai airport, after a court battle.