Vijay Mallya case: Debt recovery tribunal adjourns 7 June hearing

0
70

Bengaluru/Mumbai: A debt recovery tribunal (DRT) in Bengaluru on Friday adjourned the 7 June hearing in a case where a consortium led by India’s largest lender State Bank of India (SBI) is trying to recover unpaid dues of Rs.9,000 crore from indebted businessman Vijay Mallya.

On Thursday, Mallya-controlled Kingfisher Airlines Ltd and United Breweries (Holdings) Ltd had filed objections against allegations made by SBI before the tribunal. On Friday, the tribunal asked all related parties to decide and let it know which applications should be heard on priority basis for speedy resolution of the case.

Lawyers of United Breweries (Holdings) and Kingfisher Airlines pleaded for more time to submit further evidence to disprove the allegations made by the bank. Though SBI’s lawyers objected to this, the tribunal accepted the request and extended the date to submit more evidence. Lawyers representing Mallya have agreed to conclude their final arguments by 16 June.

On Thursday, Diageo Plc., the world’s largest distiller and controlling shareholder of United Spirits Ltd, also filed its objection against attaching collaterals held by the company through its unit Watson Ltd. The company was formerly controlled by Mallya. Watson was taken over by Diageo in 2013. During Mallya’s leadership of the company, Watson had taken a $135 million loan facility from Standard Chartered. In May 2015, the borrowings under this facility matured and went into default.

Following extensions, the guarantee was called by Standard Chartered on 29 January this year. Later, Diageo settled the guarantee with Standard Chartered and fully provided for the $135 million principal amount outstanding under the facility in its results for the six-month period ended 31 December 2015. In aggregate, Diageo paid Standard Chartered approximately $141 million under this guarantee, including the $135 million principal amount, as well as payments of default interest and various expenses.

Diageo’s unit filed a memo and Standard Chartered filed evidence before the tribunal on Friday.

The tribunal had granted other defendants time till Friday to submit their responses before starting hearing on a daily basis.

The hearing includes the matter of an ex-parte interim order passed by the DRT on 17 May, asking JP Morgan Chase Bank (North America) not to disburse an amount of $40 million that has been paid out by Diageo Plc to Mallya. The $40 million was part of a $75 million sweetheart deal that Mallya got for stepping down as chairman of United Spirits on 25 February.

However, Mallya’s legal team has approached the Karnataka high court, challenging the DRT order restricting the payout.

In 2013, SBI moved a petition against Mallya, who owes more than Rs.9,000 crore to banks in loans and interest taken for his Kingfisher Airlines. The airline, which made heavy losses and piled up debt since inception in 2005 was finally grounded in 2013.

The case gathered steam after Mallya’s $75 million deal in February. SBI filed four interlocutory applications on 2 March seeking Mallya’s arrest, impounding of his passport, disclosure of all assets and liabilities and stopping the $75 million payout by Diageo, Mint reported on 2 March.

On the same day, Mallya left for the UK where he continues to live. In an interview to Financial Times on 29 April, Mallya said he was in “forced exile” and that reporting by the Indian media had moulded public opinion against him.