In what spelled double trouble for beleaguered liquor baron Vijay Mallya on Monday, the Debts Recovery Tribunal (DRT) in Bengaluru barred him from withdrawing the $75 million (Rs515 crore) exit payment by British liquor giant Diageo till the disposal of Kingfisher Airlines’ loan default case filed by the State Bank of India (SBI), while the Enforcement Directorate (ED) registered a money laundering case against him for defaulting on a loan repayment worth Rs900 crore to the Industrial Development Bank of India (IDBI).
Diageo and United Spirits ltd (USl), owned by the UK-based firm, have also been restrained by DRT Judge Benakanahalli from temporarily disbursing the amount to Mallya, who worked out the deal under a severance package.
The tribunal ordered that the amount be attached till the disposal of the original application filed by the SBI in 2013.
In his order on the plea by the SBI seeking the lenders’ first right on the $75-million sweetheart deal, the judge also directed disclosure of details of the agreement they have arrived at.
The SBI, which leads the consortium of 17 banks that lent money to the grounded Kingfisher Airlines, had moved the DRT against Mallya in its bid to recover over Rs7,000 crore of dues from him.
The State-owned top lender had filed three other applications, including one seeking Mallya’s arrest and impounding of his passport, which the judge had said on March 4 would be heard on March 28.
Mallya had to quit recently as chairman of United Spirits, a company founded by his family, in which he sold majority stake to Diageo.
Under the deal, that also ended a year-long boardroom battle at United Spirits, Diageo has agreed to pay Mallya $75 million.
The settlement was sealed even as at least three banks, including the SBI, declared the defunct Kingfisher Airlines, Mallya and his group holding firm United Breweries Holding ltd, as “wilful defaulters” to recover unpaid loans.
The DRT had on March 4 reserved its orders on the application by the SBI seeking the lenders’ first right after hearing arguments by both sides.
Delivering the order on Monday, it said, “The defendant (Mallya) temporarily shall not draw the amount mentioned in the present application till disposal of original application as sought by the applicant banks.”
It also added, “Diageo plc, Diageo Netherlands and USl shall not dispense the amount to Mallya or any of his agents, nominee or asignee till the disposal of the original application. Amount mentioned in IA is attached.
“The defendants, Diageo plc, Diageo Netherlands and USl are directed to furnish details of the termination agreement arrived between them.”
Mallya and Kingfisher Airlines owed Rs7,800 crore to the consortium led by SBI, which had an exposure of over Rs1,600 crore to the airline.
Other lenders include Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Central Bank of India, Federal Bank, Uco Bank and Dena Bank.
last year, the SBI declared Mallya a wilful defaulter while Punjab National Bank had also declared him, his group holding company United Breweries Holdings and Kingfisher Airlines as wilful defaulters last month.
As part of the deal, Diageo said it would pay $40 million immediately to Mallya with the balance being payable in equal installments over the next five years.
It will also absolve Mallya of all liabilities over alleged financial lapses at the company founded by his family.
The ED on its part booked Mallya for money laundering relating to loan default of over Rs900 crore loan from IDBI.
Official sources said the agency recently filed the case under the Prevention of Money laundering Act (PMlA) based on an FIR registered last year by the CBI in the same case.
They said while the ED’s zonal office in Mumbai registered the case, sleuths are also looking at the overall financial structure of the now defunct Kingfisher Airlines and a separate probe under foreign exchange violation charges could also be initiated.
“Mallya and others will soon be questioned. The agency has collected relevant documents from concerned authorities and the bank in question,” sources said.
The ED has pressed charges under various sections of the PMlA against Mallya and others named in the CBI complaint.
The CBI had booked Mallya, director of Kingfisher Airlines, the company, A Raghunathan, Chief Financial Officer of the airlines, and unknown officials of IDBI in its FIR alleging that the loan was sanctioned in violation of norms regarding credit limits.