DRT rules against Mallya accessing Rs500-cr from Diageo deal
08 March 2016
A Debt Recovery Tribunal (DRT) today ruled that liquor baron Vijay Mallya cannot access the Rs515 crore he got after parting with his spirits business to Diageo, until a case filed against him by the State Bank of India (SBI)-led consortium is disposed of.
The 'King of Good Times' had his worst day today with the Enforcement Directorate (ED) also registering a case of money laundering against him.
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, had submitted that the $75 million (Rs515 crore) 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.
Thirteen bankers, including SBI, had also approached the Karnataka 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.
Separately, the Enforcement Directorate (ED) today registered a money laundering case against Mallya and others in connection with the alleged default of over Rs900 crore on loans from IDBI bank.
Official sources said the agency filed charges under the Prevention of Money Laundering Act (PMLA) based on an FIR registered last year by the CBI in the same case.