Vijay Mallya faces DRT heat, consortium of banks allowed to recover Rs 9,000 cr from liquor baron

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The Debt Recovery Tribunal on Thursday ordered the SBI-led consortium of banks to start the process of recovering Rs 6,203 crore, at annual interest rate of 11.5 per cent, from embattled tycoon Vijay Mallya and his companies in the Kingfisher Airlines case. “I hereby ask the bankers to start the process of recovery of Rs 6,203 crore at the interest rate of 11.5 per cent per annum from Mallya and his companies including UBHL, Kingfisher Finvest and Kingfisher Airlines,” DRT Presiding Officer K Sreenivasan said in his order.

At the jam-packed new rented space of DRT which was inaugurated today, Sreenivasan also disposed of as many as 20 Interlocutory Applications including several by Mallya and his companies. United Breweries (Holdings) Ltd (UBHL) is promoted by Mallya, of which he was made the Principal Officer last September in the absence of a Managing Director, while Kingfisher Finvest is a holding company.

The order brings an end to the nearly three-year legal battle in the Tribunal by the consortium, comprising 17 banks, to recover the money owed to them by the defunct airlines. The presiding officer in a recent directive had reserved orders on the Original Application filed by the consortium and also 30-odd Interlocutory Applications, including several by Mallya and his companies, without specifying any date.

The lenders had moved the DRT in 2013 to recover dues from the defunct airline. SBI had filed three other applications also, including one seeking Mallya’s arrest and impounding his passport, for “defaulting” on loans. Mallya has been declared a Proclaimed Offender by a special PMLA court in Mumbai after he left the country on March 2 last year for the UK. It was on an Enforcement Directorate plea in connection with its money laundering probe against him in the bank loan default case.

The DRT had on March 7 last year restrained Mallya from withdrawing USD 75 million exit payment from British liquor giant Diageo as part of a severance package for quitting Diageo-owned United Spirits (USL) as its Chairman under a “sweetheart deal”. However, on July 13, the tribunal ruled that the order had become “infructuous” as USD 40 million had already been transferred prior to the March 7 directive.

Later, passing orders on another IA, the tribunal had directed Diageo Plc to deposit with it the remaining USD 35 million. The DRT had on July 16 allowed another IA of the bankers for lifting of corporate veil to pierce the protection against personal liability enjoyed by individuals controlling Kingfisher Finvest. It had also dismissed the IA filed by Dutch beer major Heineken seeking impleadment in the Mallya case to enjoy Right of First Refusal over UBL shares. Heineken has some presumptive rights on UBL shares held and owned by Mallya