Vijay Mallya row: DRT to pass interim order in Indigo, GoAir case

Bengaluru: The Debt Recovery Tribunal will pass an interim order on Tuesday on the plea of a consortium of banks seeking a direction to Indigo and GoAir airlines under garnishee proceedings to deposit with it the money to be paid to Airbus by them, in a Kingfisher Airlines case.

"I am under pressure, and I wouldn't want any further delays. I would pass an interim order, tomorrow, on interim applications filed by the bankers," DRT Presiding Officer K? Srinivasan said during the hearing of the interim applications by the banks led by Oriential Bank of Commerce.

He also directed Airbus to produce a letter containing details of its account held in whichever bank for freezing Rs 196 crore until the case is disposed of.

A garnishment is a means of collecting a monetary judgment against a defendant by ordering a third party (the garnishee) to pay the money, otherwise owed to the defendant, directly to the plaintiff.

Airbus had availed Rs 196 crore from the consortium of banks on behalf of Vijay Mallya-controlled Kingfisher Airlines in 2005. Though Airbus is in receipt of the money, it failed to deliver the planes to the now-grounded Kingfisher Airlines.

The Oriental Bank of Commerce, Corporation Bank and United Bank of India, had made pre-delivery payment of Rs 196 crore to Airbus on behalf of Kingfisher after both the parties had signed a purchase agreement.

Since Airbus failed to repay the pre-delivery payment, the bankers made GoAir and Indigo as parties in the case by filing interim applications, asking the tribunal to direct the budget carriers to deposit money to be paid to Airbus with it, under garnishee proceedings.

In a counter move, the budget air carriers filed objections to the interim applications filed by bankers.

Making submissions before the tribunal, Airbus counsel said the company was needlessly being dragged into the matter as it is neither a borrower nor a defaulter.

In fact, the company is a victim in this case for someone else's mistakes, who owe public money availed from banks, the counsel said.

He also challenged the jurisdiction of DRT to adjudicate on the matter as Airbus had arrived at the?agreement with Kingfisher as per English laws.

"The honorable DRT does not have the jurisdiction over the matter," he argued.

However, Bankers' Counsel Mohammad Ibrahim contended that the contract was signed in India between banks, Kingfisher and Airbus and the aircraft were to be delivered in India, and the?money was paid by banks in India.

DRT Bengaluru had passed an order for attachment of the money lying with Airbus in February 2014.

Subsequently, the aircraft-maker moved DRAT Chennai contending that DRT Bengaluru does not have jurisdiction to pass order as the authority lies with London courts, as per the agreement between the lenders, Kingfisher and Airbus.

The now-defunct Kingfisher Airlines owes over Rs 9,000 crore to a consortium of 17 banks led by SBI. Mallya, who left the country on March 2 and is now in UK, has been declared a proclaimed offender by a special PMLA court in Mumbai on a plea by Enforcement Directorate in connection with its money laundering probe against him in the alleged bank loan default case.