SBI seeks Vijay Mallay’s arrest; DRT reserves order on recovery plea

05 Mar 2016


The Karnataka High Court on Friday issued notice to liquor baron Vijay Mallya and nine others on a plea by the State Bank of India (SBI) seeking his arrest and impounding of his passport in the multi-crore loan default by his defunct Kingfisher Airline.

Admitting the petition, Justice AS Bopanna issued notice to Mallya, his Kingfisher and United Breweries Holdings Ltd as well as British liquor major Diageo plc and its Indian arm, United Spirits Ltd for their response and posted the case for hearing next week.

While issuing the notice, the judge also observed that the Debt Recovery Tribunal, which is hearing the case, was free to pronounce order on the bank's applications as it deemed fit.

The Debt Recovery Tribunal, however, reserved an order on one of the four applications filed by State Bank of India, seeking securement of the lenders' first right on the payout from Diageo to Mallya.
Thirteen bankers, including SBI, approached the high court seeking arrest of Mallya and impounding of his passport along with two other pleas after they moved the DRT to take up their pleas on a priority basis.

SBI, which leads the consortium of 17 lenders to the grounded Kingfisher Airlines, had moved DRT against Mallya in its bid to recover over Rs7,000 crore over due loans.

DRT judge Benakanahalli took up the case on priority basis in order to secure the first right on the $75 million severance package that Mallya will be getting for quitting Diageo-owned United Spirits (USL) as its chairman under a sweetheart deal.

The judge said he will hear the other three applications seeking impounding Mallya's passport, getting him arrested and getting full disclosure of his assets in the country and abroad later.

"For now, I am taking up the application seeking to secure lenders' first right on the payout from Diageo and getting full disclosure of his assets in the country and abroad on priority basis. I will take up other applications later," he said.

Filing objections before DRT, Uday Holla, Mallya's counsel, submitted that the $75 million cannot be attached because his client is getting the severance package after signing a non-compete agreement under which Mallya would not enter into liquor business for the next five years.

Also, Holla said, Mallya's arrest would be tantamount to 'demeaning' the institution of Rajya Sabha because he is the respected member of the upper house of Parliament.

Holla also submitted his client was a "small-time" defaulter unlike companies like Reliance who he claimed are bigger defaulters and the banks were hounding small defaulters and leaving big defaulters off the hook.

"Recently the RBI had said that these banks do not take action against large fries, but small fries. My client Mallya is a small defaulter compared to Ambani's Reliance.

Some of the companies have defaulted to the tune of Rs40,000 crore, and nothing happens to them," he claimed.

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