Lenders to sell off Kingfisher’s movable assets via e-auction

The reserve price for the assets going on sale has been set at Rs 65 lakh. The auction will let the lenders recover just a small fraction of Rs 6,963 crore that the Kingfisher owes to banks.

By: ENS Economic Bureau | Mumbai | Updated: November 22, 2015 1:27 am
Vijay Mallya Vijay Mallya

After declaring Kingfisher Airlines, its promoter Vijay Mallya and United Breweries Holdings wilful defaulters, banks on Saturday put up for sale some of the airline’s assets including cars and forklifts.

According to an auction notice issued by SBICap Trustee Company, which represents the creditors, the banks will sell moveable pledged assets through an auction over the Internet on December 7. The reserve price for the assets going on sale has been set at Rs 65 lakh. The auction will let the lenders recover just a small fraction of Rs 6,963 crore that the Kingfisher owes to banks.

The assets put up for auction include cars, tractors, forklifts, trolleys, pushback vans, aircraft pullers, cranes, shed ladders, fire extinguishers, generator sets, trolley with staircases. Kingfisher stopped flying three years ago as it ran out of cash. SBI had last week declared Kingfisher Airlines, Vijay Mallya and United Breweries Holdings wilful defaulters. The names will be sent to the RBI and credit information companies shortly and they will not be allowed to raise funds for five years, bankers said.

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SBI’s share of Kingfisher debt is estimated to be the largest at around Rs 1,600 crore. RBI guidelines say that a borrower is termed a wilful defaulter if he has defaulted in meeting the repayment obligations to the lender even when it has the capacity to repay, or has not utilised the money from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes.

SBI had written that the bank’s grievance redressal committee has considered the legal representation of Mallya and has found it to be unsatisfactory. The bank heard his advocates and has rejected their representation, an official said.
In August last year, the bank had sent a notice to the airline and had given time to represent its case.

However, while the Reserve Bank of India’s (RBI) wilful defaulter guidelines do not require a lawyer to be present at the grievance redressal committee meetings, Kingfisher Airlines had moved the Bombay High Court seeking intervention. It was finally resolved in September when the Supreme Court allowed Mallya’s lawyers to be present at the meetings.

SBI has also taken cue from an earlier instance when United Bank’s case of wilful defaulter against Kingfisher Airlines was shot down by the Calcutta High Court since its grievance redressal committee had four members instead of the mandated three.

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  1. Rangarajan Trivasaloor Sundaram
    Feb 13, 2016 at 3:40 am
    The action comes after all most all the leeway given to Mallya to cover his sins.
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    1. A
      author
      Nov 22, 2015 at 11:01 am
      What a joke. A farmer ends his life for 1000 INR and this crook due to his contacts is beyond the reach of his enders. The bank officials who loaned out money to this fraud should be criminally prosecuted and money recovered from whatever means possible.
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      1. G
        Guruji
        Nov 22, 2015 at 10:32 am
        The Bank Officials, the Valuers who essed the KFA loan and sanctioned it should be taken to task, their retirement benefits revoked, how come the collaterals they took at time of giving loan are not valued at least equal to the value of the loan. Most of the Banks being PSU Banks the loss is going to be spread onto small borrowers like Home Loan Borrowers in the form of higher rate of interest. The kind of rigorous due diligence these very Banks do for a small man's Home Loan is not followed in these hogh amount loans , the Bank officials, Politicians, Corporates are in cahoots with each other at the cost of the common India tax payer, as the GOI will have to write off these loans ultimately.
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        1. K
          kulaputra kulaputra
          Nov 23, 2015 at 12:42 am
          This guy still remains an MP - a member of Rajya Sabha. That is why the RS is a bit of a joke in many ways. Should a wilful defaulter be an MP? Will the speaker wake up and dismiss him ? This is a crook who instead of paying employees paid nude models. has money salted away in Caymans. Make sure he does not get to enjoy it. Please punish this guy.
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          1. K
            Kumar Swamy
            Nov 23, 2015 at 2:00 am
            Are they selling the horses?
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