Saturday, Dec 20, 2014

United Bank slaps wilful defaulter tag on Mallya, three KFA directors

Kolkata | Posted: September 2, 2014 5:46 am

Public sector lender United Bank of India on Monday declared Kingfisher Airlines chairman Vijay Mallya and three other directors of the grounded airline ‘wilful defaulters’.

The lender is the first bank in the country to declare Mallya a wilful defaulter. “We declared Mallya and three other directors of Kingfisher Airlines as wilful defaulters after no one from the company turned up before our internal committee this morning,” United Bank of India executive director Deepak Narang told FE.

The bank had asked Mallya and all other directors of the carrier to appear before its internal grievances redressal committee at 10.30 am. Apart from Mallya, the bank declared Subhash R Gupte, AK Ravi Nedungadi and A . Ganguly as wilful defaulters. Gupte and Nedungadi resigned from the board of directors of the beleaguered air carrier this year, while Ganguly, who was an independent director on the board, quit the company in 2012. “We will now inform the RBI and Sebi about our decision and follow necessary procedures,” said Narang.

Once a person is listed as a wilful defaulter, no additional loan is extended to him by any bank or financial institution.

“Now, the Kingfisher board should force them (Mallya and three other directors) to step down as they can’t raise money for the company,” Narang added.

A borrower is a wilful defaulter if he has not met repayment obligations even when he has the capacity to do so or has not utilised the money from the lender for the specific purposes for which finance was availed of, and instead has diverted the funds for other purposes.

Significantly, the Calcutta High Court on last Thursday dismissed an appeal by Kingfisher Airlines against a trial court order that Mallya and the board of directors may be represented by its law officers or company secretary in the wilful defaulter case.

A division bench, comprising Justice Jayanta Biswas and Justice Iswar Chandra Das, dismissed the appeal of the grounded airlines. The airline had, in the petition, prayed for withdrawal of the notice of wilful default by the public sector bank and that they be allowed a personal hearing along with legal representative on the issue. Earlier, the bank asked Mallya to appear before its internal committee or send a representatives to defend himself.

But Kingfisher Airlines moved the Calcutta High Court, challenging the communication from the bank. Cracking down on Kingfisher Airlines for non-payment of over R300-crore outstanding dues, the bank had issued wilful defaulter notice to the liquor baron along with directors of the company in May this year.

fe Bureau | The Financial Express

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