The Supreme Court on Wednesday will take a call on whether corporate honcho and liquor baron Vijay Mallya should be allowed to leave the country at a time when he and his now-defunct company Kingfisher Airlines are yet to clear bad debts of `9,000 crore to various banks.
A set of 13 banks led by the prime lender State Bank of India (SBI) approached the Supreme Court on Tuesday to restrain Mallya from travelling abroad. Represented by Attorney General Mukul Rohatgi, the banks mentioned the case before a Bench headed by Chief Justice TS Thakur, who decided to hear the matter on Wednesday.
The move comes a day after the Debt Recovery Tribunal of Bengaluru passed an order blocking Mallya from accessing `515 crore ($75 million) which he secured from Diageo Plc, the company that took over United Spirits from Mallya, who decided to step down as Chairman of the United Spirits Board.
The banks were disappointed with the DRT order which did not restrain Mallya from leaving the country. The banks even approached the Karnataka High Court for impounding Mallya’s passport and seeking his arrest over non-payment of loans.
The High Court too failed to pass an interim order on March 4, forcing the banks to approach the apex court.
Besides the SBI, the other banks which had lent money to Mallya’s now defunct Kingfisher Airlines are Axis Bank limited, Bank of Baroda, Corporation Bank, Federal Bank limited, IDBI Bank limited, Indian Overseas Bank, Jammu & Kashmir Bank limited, Punjab and Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank and United Bank of India.
In their appeal, the banks said, “The High Court of Karnataka and DRT have failed to protect the interest of the petitioners who advanced large sums of monies to Mallya and also the interest of public at large.” Mallya who owns United Spirits limited had executed a corporate guarantee on December 21, 2010 along with a personal guarantee to repay the entire loan amount.”
Since the amount was not serviced, the unpaid loan was classified as non-performing assets by the banks. They approached DRT in 2013 for recovery of a sum of Rs 6203 crore. During the pendency of this case, the banks noticed that Mallya and his company tried to secretly dispose assets with an aim to defeat the recovery proceedings, the petition by the banks said.
It was only after Mallya disclosed to the Bombay Stock Exchange and london Stock Exchange on February 25, 2016 that he had resigned as Chairman of United Spirits after receiving a payment of Rs 515 crore from Diageo Plc as “severance deal”, the banks stepped up proceedings in DRT. From his statements to the Press, the banks understood that Mallya intends to settle in london. This forced them to seek his arrest and freeze passport.