United Bank of India (UBI) has declared Vijay Mallya and three directors of Kingfisher Airlines (KFA) as wilful defaulters. The development was confirmed by the bank’s executive director Deepak Narang.
Besides Mr. Mallya, three other directors — A.K. Ganguly, Subhash Gupte and Ravi Nedungadi — have also been declared as wilful defaulters, Mr. Narang told The Hindu.
The bank has an exposure of between Rs.350 crore and Rs.400 crore to KFA, which was given by the Bangalore branch of UBI.
It may be mentioned that UBI filed a caveat in the Supreme Court against KFA on August 29, 2014, after the Division Bench of the High Court dismissed a KFA appeal against UBI.
Earlier, UBI had identified Mr. Mallya as a wilful defaulter, and asked him to appear before the bank’s panel to hear him out before declaring him as a wilful defaulter. Mr. Mallya later moved the court seeking exemption of his appearance before the panel.
In its July 2012 master circular on wilful defaulters, the RBI had said that a “wilful default” would be deemed to have occurred if a unit has defaulted in meeting its payment / repayment obligations to the lender even when it has the capacity to honour the said obligations. It is also wilful default when the borrower has not utilised the finance from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes. Wilful default also occurs when there is default in meeting payment obligations to the lender and there is siphoning off of funds.
Mallya to challengeLalatendu Mishra writes from Mumbai:
Mr. Mallya and other directors of KFA have decided to challenge UBI’s decision in the Supreme Court where a Special Leave Petition had already been filed. KFA, in a statement, said that the decision depriving KFA of an opportunity to be represented by a lawyer before UBI’s committee amounted to miscarriage of justice, a denial of an opportunity of defending itself and a violation of principles of natural justice. KFA said that in the case of Punjab National Bank, the Delhi High Court had allowed it to be represented by a lawyer. This was, however, denied in the case of UBI. KFA said on August 29, 2014, immediately after an adverse ruling by the Calcutta High Court, it filed a Special Leave Petition before the Supreme Court.
“Even before a copy of the order dated August 28, 2014, passed by the Calcutta High Court has been made available to the parties and even before the Special Leave Petition filed by KFA has been listed before the Supreme Court, UBI has post haste proceeded to purportedly declare KFA and its directors/erstwhile directors as wilful defaulters in respect of an overdraft facility of Rs.7.5 crore. KFA intends to pursue all available legal remedies, including in the Special Leave Petition filed before the Supreme Court,” KFA said in a statement.
Take action: AIBEAN. Anand writes from Chennai
While welcoming UBI’s move, All India Bank Employees’ Association General Secretary C.H. Venkatachalam has urged all the nationalised banks to declare similar defaulters as wilful defaulters, and take criminal action against them. AIBEA had released the names of 4,000 defaulters.
