Banks in the consortium that lent huge sums of money to the now defunct Kingfisher Airlines may have to fight a long-drawn legal battle to recover their dues from its promoter and liquor baron Vijay Mallya.
>Kingfisher Airlines – which stopped flying in October 2012—owes the banks around Rs.9,000 crore.
Banks which are still struggling to recover their dues are now involved in a major legal battle. State Bank of India — the country’s largest lender — which leads the consortiumthat has extended loans to the troubled airline, said on Thursday that they were currently fighting more than 20 cases in various courts including the debt recovery tribunal (DRT).
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The proceedings have witnessed as many as 500 hearings and 180 adjournments with more to come.
All the banks in the consortium have authorised SBI to deal with all the legal issues in connection with Kingfisher Airlines and Mr.Vijay Mallya.
On 26 February, Mr.Mallya had struck a $75 million deal with U.K-based Diageo Plc– the owner of United Spirits Ltd.—for stepping down as the chairman and non-executive director of the liquor company.
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Diageo said it had absolved Mr. Mallya of all liabilities with regard to alleged financial regularities in the past. Diageo will pay Mr. Mallya $40 million immediately with the balance to be paid over a five-year period.
SBI said that on the same day it moved Debt Recovery Tribunal (DRT) Bengaluru seeking a garnishee order against Diageo to restrain it from paying $ 75 million to Mr. Mallya and deposit the sum with the tribunal. SBI also moved the DRT for advancement of the matter which was listed for hearing on 8 March.
“As senior advocates had advised that it will not be possible to directly approach the Supreme Court for seeking relief in respect of the deal, State Bank of India additionally filed four applications in DRT Bengaluru seeking various reliefs,” the lender said.
“As Hon’ble DRT Bengaluru did not grant any relief on 2nd March, 2016, State Bank of India filed a writ petition before the Hon’ble Karnataka High Court on 3rd March,” the bank further said.
After not getting any relief either from the DRT and Karnataka High Court, SBI filed a special leave petition before the Supreme Court on 8 March. Banks sought an order for restraining Mr. Mallya from travelling abroad.
While the apex court ruled in favour of banks,it was too late. On March 2 Mr. Mallya flew out of India, probably to London. Diageo had also confirmed that Mr. Mallya was paid $ 40 million – the first instalment of the deal.
It was speculated by a section of the media that SBI was not prompt enough to move against Mr. Mallya. SBI, however, strongly refuted such charges.
“Banks and in particular, State Bank of India has taken all prompt action in getting relief as required and there was no laxity on the part of the banks in seeking appropriate reliefs and it did all that was possible at its command,” SBI said.