Bengaluru: A State Bank of India-led consortium of lenders said on Tuesday that it would be filing objections to the Dutch beer major Heineken’s application before the Debt Recovery Tribunal seeking to be impleaded in the Vijay Mallya case.
“We will file objections to Heineken’s application seeking impleadment in Vijay Mallya case, tomorrow,” SBI senior counsel Nagananda submitted before Debt Recovery Tribunal Presiding Officer C R Benakanahalli.
Heineken on June 18 had sought permission to implead itself in the case and enjoy the right of first refusal over the UBL shares.
Heineken has some presumptive rights on UBL shares held and owned by Mr Mallya.
Right of first refusal is a contractual term between shareholders which are usually included in the Articles of Association.
If one shareholder wishes to dispose of shares that are subject to a right of first refusal (ROFR), it must first offer them to those other shareholders who have the benefit of ROFR.
Earlier, IDBI Bank pleaded to sustain its August 2015 order relating to attachment of 34 lakh equity shares of United Spirits Limited in the case, since Mr Mallya’s resortment to asset stripping has resulted in eroding of his net worth.
“The Bank hereby makes an humble submission to sustain attachment of 34 lakh equity shares of United Spirits Limited, since Mallya has resorted to asset stripping by resigning from every company, which has resulted in eroding of his net worth,” IDBI Bank counsel N V Srinivasan said.
Mr Srinivasan also submitted that the eroding of his net worth is a violation of agreement between Kingfisher Airlines Limited and IDBI, because the former has to maintain its personal guarantor net worth.
Moreover, Kingfisher could avail loans because of Mr Mallya’s net worth in addition to other securities, Mr Srinivasan submitted.
The IDBI counsel also said that Mr Mallya’s liability to Kingfisher will have to be collected by gaining through the doctrine of reverse piercing because he has controlling interest in all companies and also is the chief promoter and controlling interest.
“Therefore, all his companies will have to be put on one platform and, Mallya has to be looked at as a common denominator and should be held responsible to settle dues of Rs 1,746 crore to IDBI,” he argued.
Challenging the arguments, the USL counsel said Mr Mallya cannot be looked at as common denominator and should be considered independently because the liquor baron is no way connected to USL.
Moreover, USL is not indebted to IDBI as it has cleared all the dues to them, including interests on loan and penalties thereof, he said.
The USL Counsel also questioned the reason for IDBI not make any reference to the clean chit given by the Punjab National Bank (PNB) to USL of clearing all dues.
“I ask myself, why IDBI is not making any submission of PNB giving no-objection certificate to USL, which had cleared all its dues,” he contended.
The USL counsel also said Mr Mallya cannot be looked at as common denominator and should be considered independently.
Countering IDBI argument, Mr Srinivasan said, “The plea of USL not to look at Mallya as common denominator is a pre-designed act by him to divest himself from accountability and run away to London.”
Mr Mallya, whose now-defunct group company Kingfisher Airlines owes over Rs 9,000 crore (Rs 90 billion) to 17 banks, had left the country on March 2 and is in the UK.
The beleaguered businessman has been declared a proclaimed offender by a special PMLA court in Mumbai on a plea by the Enforcement Directorate in connection with its money laundering probe against him in the alleged bank loan default case.