Big blow to Vijay Mallya: Diageo can't disburse $75 million payout, rules DRT
The Debt Recovery Tribunal (DRT) on Monday ruled that Vijay Mallya cannot withdraw from USD 75 million severance package that he will be getting for quitting Diageo-owned United Spirits (USL) as its chairman.
Zee Media Bureau
New Delhi: The Debt Recovery Tribunal (DRT) on Monday ruled that Vijay Mallya cannot withdraw from USD 75 million severance package that he will be getting for quitting Diageo-owned United Spirits (USL) as its chairman.
The DRT had reserved its order after hearing submissions made by both parties—bankers and Mallya—on 4 March.
SBI had filed three other applications, including one seeking Mallya’s arrest and impounding of his passport, as the bank approached the DRT after Mallya defaulted on loans.
The DRT had taken up on priority the application for securing the first right on the USD 75 million severance package. The DRT had said it would hear the other three applications on a later date.
SBI, which leads a consortium of 17 banks that lent money to the discontinued Kingfisher Airlines, had moved the DRT against Mallya in a bid to recover over Rs 7,000 crore from him.
Mallya and Kingfisher Airlines owed Rs 7,800 crore to a consortium of 17 lenders led by State Bank which had an exposure of over Rs 1,600 crore to the now defunct airline.
Since January 2012, the loan was not serviced. 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 among others. Last year, SBI declared Mallya as wilful defaulter.
Last month, Punjab National Bank had also declared him, his group holding company United Breweries Holdings and the long-defunct Kingfisher Airlines as wilful defaulters.
As part of a deal, Diageo said it would pay USD 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.