The banks may not manage to get their dues back, but the Service Tax Department in Mumbai certainly wants its pound of flesh from Vijay Mallya. The one-time liquor baron who is currently in the UK has seen his pride and joy, his private Airbus A319 Corporate Jet registered VT-VJM being put up for e-auction by Service Tax officials on an “as is” basis.
This is the second jet of Mallya’s that is being disposed of. last year, an old Hawker jet was sold as scrap by the Mumbai airport authorities to recover past dues.
Mallya was the first businessman in India to buy this Airbus Corporate Jet, although Mukesh Ambani followed suit a year or so later. No other Indian industrialist has such large private jets.
The disposal of this jet however highlights the struggle between Mallya’s creditors for Kingfisher Airlines. Mallya
owes Indian banks, mainly from the private sector, over Rs9,000 crore; there are also dues to employees; the Income-Tax Department; the Airports Authority of India, other private airport operators, oil companies as well as more mundane suppliers such as caterers and ground handling companies.
The list also includes passengers who had booked tickets on the airline and even frequent flyer mile owners, who are also creditors of the airline.
The Hyderabad Airport operator, part of the GMR Group has filed a cheque bounce case against Mallya who gave several personal guarantees for his airline. The question of who gets first right to the money collected from the disposal of Kingfisher’s remaining assets is one that will probably be answered in the courts.
However, much like the failed auction of Kingfisher Airlines House off the Western Express Highway by the State Bank of India, there are doubts on this auction as well. It is not clear whether the aircraft is in a flyable condition and will a buyer spend money on an aircraft that sits on the ground.
Unlike the old Indian Airlines aircraft auctioned a few years ago, this aircraft is a relatively young plane and was frequently used by Mallya as well as his political and entertainment industry friends over the years.