Loan default case: SC to hear banks' plea to restrain Vijay Mallya from leaving India

In a move that may compound woes of liquor baron Vijay Mallya, the Supreme Court Tuesday agreed to hear on Wednesday a plea of 13 banks, which had advanced loans of over Rs 9,000 crore to his firm, seeking a direction to restrain him from leaving India.

PTI| Updated: Mar 09, 2016, 00:11 AM IST
PlayLoan default case: SC to hear banks' plea to restrain Vijay Mallya from leaving India

New Delhi: In a move that may compound woes of liquor baron Vijay Mallya, the Supreme Court Tuesday agreed to hear on Wednesday a plea of 13 banks, which had advanced loans of over Rs 9,000 crore to his firm, seeking a direction to restrain him from leaving India.

"List it for hearing tomorrow," a bench comprising Chief Justice T S Thakur and Justice U U Lalit said, when Attorney General Mukul Rohatgi, appearing for the banks, including State Bank of India, mentioned the matter for urgent hearing.

 

The consortium of banks, in their appeal, have assailed the March 4 order of the Karnataka High Court refusing an "ex-parte ad interim" order against Mallya, England-based Diageo Plc and United Spirits Limited.

The banks said that the High Court should have passed an interim order, securing their financial interests, without hearing the industrialist and others including debtor firm Kingfisher Airlines Limited.

 

"It is respectfully submitted that the same is wrong, erroneous and defeats the very purpose of filing the said writ petition. The High Court of Karnataka, at Bengaluru by its impugned order has completely failed to protect the interest of Petitioner Banks who are yet to recover an amount in excess of Rs 9,000 Crores from the Respondent Nos. 1 to 4, " the appeal said.

Prior to moving the High Court, the banks had filed four pleas in the Debt Recovery Tribunal (DRT) at Bengaluru seeking reliefs like freezing of Mallya's passport, arrest warrant against him and issuance of a "garnishee order against Respondent Nos. 10 (Diageo Plc) and 11 (United Spirits Limited) from disbursing USD 75 million".

They had also sought a direction to Mallya that he should to disclose his assets on oath.

The DRT, on March 02, heard arguments only on one plea and did not consider other three pleas which were related to freezing of the passport and restraining Mallya from leaving country, the banks said in their appeal to the apex court.

 

The banks had moved the DRT in the backdrop of Mallya's recent resignation from the chairmanship of United Spirits.

Diageo Plc, the current owner of the liquor company, has agreed to pay USD 75 million (approx. Rs 515 crore) to Mallya as severance package.

The banks' appeal said, "Pending hearing and disposal of the present Special Leave Petition, to pass an interim order directing freezing the passport of the Respondent No 3 (Mallya) or in the alternative directing Mallya to not leave the jurisdiction of this country without prior permission of this court."

Besides SBI, other banks, which have moved the apex court, are: Axis Bank Limited, Bank of Baroda, Corporation Bank, Federal Bank Limited, IDBI Bank Limited, Indian Overseas Bank, Jammu and Kashmir Bank Limited, Punjab and Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank and United Bank of India.

 

The banks have also sought a direction to Mallya to "furnish suitable security for his appearance before the DRT" during the pendency of banks' original applications for recovering debts.

"Direct the Debt Recovery Tribunal, Bengaluru, to expeditiously dispose of the Original Application ... And pending applications pending before the Debt Recovery Tribunal," the plea said.

Besides Mallya and others, the banks have arraigned firms like Kingfisher Airlines Limited, United Breweries (Holdings) Limited, Kingfisher Finvest (India) Ltd, SBICAP Trustee Company Ltd as parties.

The plea said the banks "individually" had advanced loans to Kingfisher Airlines Limited and by way of a Master Debts Recast Agreement (MDRA), executed on December 21, 2010, and other related documents ("Financing Documents"), the existing loans were restructured and was treated as a single facility.

 

"The above accounts were not serviced and were classified as Non-Performing Assets (NPA) by each of the Petitioner Banks. In view of the above, the Petitioner Banks have filed Original Application ... Against Respondent Nos. 1 to 9 herein (Kingfisher and others) before the DRT, Bengaluru ("DRT") inter alia seeking recovery of a sum of over Rs 6,203 crore," the plea said.