Trouble Mounts For Mallya: Delhi HC Won’t Hear Plea Against SBI

SBI seems to have learnt its lesson from the Kingfisher episode but will the bank’s action now be enough?

The Delhi High Court on Thursday refused to hear Vijay Mallya’s plea against State Bank of India’s decision to name him a “wilful defaulter” and said he can approach an appropriate forum. This comes after the state-owned lender’s efforts to have an arrest warrant issued against him threatened to derail his sweetheart deal with Diageo Plc.

In November 2015, SBI declared Mallya a “wilful defaulter”, a term that means the company or individual who borrowed money has no intention of paying it back, has diverted the money to some purpose other than the one for which it was borrowed, or has sold the asset acquired or developed with the money without knowledge of the lender.

When Kingfisher Airlines, the Mallya-promoted company to which it loaned money, went aground in 2012, the airline owed 17 banks around Rs 7,000 crore.

This time the lender, who had learnt its lesson from the Kingfisher episode was quick to respond, says a Livemint report.

Mallya, who is the chairman of UBHL, struck a deal with Diageo Plc on 25 Febraury, according to which the latter would pay him $75 million over five years and drop all charges of financial impropriety against him in return for stepping down as chairman of United Spirits, a company now controlled by the UK-based firm. Diageo had been negotiating Mallya’s exit the company for a while.

SBI Acted Quicker This Time, But is it Enough?

The very next year, SBI moved the debt recovery tribunal (DRT) in Bengaluru against Mallya, seeking Mallya’s arrest and the seizure of his passport. The lender also sought a full disclosure of Mallya’s assets and laid claim to the $75 million that Mallya is receiving from Diageo.

But it will be an uphill task for SBI to get lay claim to the money that Mallya is slated to receive from Diageo, the same Livemint report says.

Mallya is talking to high-profile lawyers directly. The settlement (with Diageo) came after three to four months of negotiations. Though lenders can tighten their grip on Mallya, it is not going to be easy for them (to get their hands on the $75 million).

Source to Livemint

Earlier, Central Bureau of Investigation director Anil Sinha too blamed commercial banks for the delay in declaring Kingfisher Airlines and Mallya as defaulters.

Mallya Says ‘Only Regret’ Kingfisher is not Flying

Mallya remains defiant and says the “only regret” he has that the carrier is not flying when the oil price has dipped so low.

“I have no regrets as such. Perhaps the only regret is that Kingfisher Airlines is not flying today when the oil price is so low,” Mallya said.

Global crude oil prices have fallen by almost 75 per cent from the peak seen in mid-2014. While airlines in India still complain that the fall in crude prices has not got translated fully in the aviation fuel prices, their fuel cost has still come down by 30-40 percent.

(With PTI inputs)