Money laundering case against Vijay Mallya, tribunal halts Rs 515-cr payout package

In a setback to UB Group promoter Vijay Mallya, the Debt Recovery Tribunal (DRT) on Monday ruled that he cannot withdraw $75-million payout he received from Diageo under a recent sweetheart deal.

Written by Johnson T A , Khushboo Narayan | Mumbai/ Bengaluru | Updated: March 8, 2016 9:00 am
Vijay Mallya, Vijay Mallya usl, Vijay Mallya quits, Vijay Mallya kingfisher, Vijay Mallya news, business news, india news Kingfisher chairman Vijay Mallya

THE ENFORCEMENT Directorate (ED) has registered a case of money laundering against Vijay Mallya, who helmed the now-defunct Kingfisher Airlines, based on an FIR registered by the CBI last year, said officials familiar with the development.

In a separate development on Monday, the Debts Recovery Tribunal passed orders restraining multinational alcoholic beverages company, Diageo Plc, from paying Mallya Rs 515 crore as part of a settlement to exit Diageo-owned United Spirits Limited.

The move by ED, under the Prevention of Money Laundering Act (PMLA), comes after the CBI registered a suo motu FIR against Kingfisher Airlines in July 2015. The company owes at least Rs 7,000 crore to 17 banks; some of them such as the State Bank of India and Punjab National bank have already named Mallya and his company as a “wilful defaulter”.

The CBI had registered the FIR against Mallya. A Raghunathan, chief financial officer of Kingfisher Airlines, and unknown officials of IDBI Bank. It is alleged that the loans were sanctioned in violation of norms regarding credit limits.

Mallya’s spokesperson declined to comment. But ED sources said it will probe if the money lent to Kingfisher was diverted to tax havens abroad. “We have started investigating the case but as of now have no intention of interrogating Mallya,” said an ED officer.

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In Bengalaru, Debts Recovery Tribunal judge C R Benakanahalli temporarily prevented Mallya from receiving the exit package while ruling on an interim application filed by a consortium of 15 banks led by the State Bank of India against Mallya in a debt recovery case from 2013.

Following the announcement last month of Mallya’s exit as chairman from United Spirits Limited in a $75-million deal with Diageo Plc, the banks who had loaned money to Kingfisher had approached the tribunal to stall the severance payment.

The tribunal had reserved its orders on March 4. On Monday, the tribunal also directed USL not to disburse the amount to Mallya until the debt recovery case is settled. “The dispersing of the bank amount is temporarily attached,’’ the order stated.

The DRT, however, did not up take three other interim applications filed by the banks for impounding the passport of Mallya, his arrest and a full disclosure of the liquor baron’s global assets.

The banks’ counsel sought early hearing of these pleas but the tribunal ruled that there was “no pressing hurry” and posted the matter to March 28.

The banks attempting to recover the “bad loans” granted to Kingfisher Airlines include State Bank of India, Bank of India, Bank of Baroda, Central Bank of India, Corporation Bank, Axis Bank, Federal Bank, Indian Overseas Bank, Punjab National Bank, Punjab and Sind Bank, Jammu and Kashmir Bank, UCO Bank, United Bank of India, IDBI and the State Bank of Mysore.

Besides, the service tax department has also moved a fresh plea in Bombay High Court seeking Mallya’s presence in India for ongoing prosecution, said sources. The service tax department has also sought the impounding of Mallya’s passport.

On March 6, Mallya had accused the media of running a “hysterical campaign” against him. He said Kingfisher Airlines had not defrauded banks and was in talks for a one-time settlement of debt. “All enquiries conducted have failed to find any evidence of misappropriation of funds by Kingfisher Airlines or myself for the simple reason that the allegations and the innuendo to this effect is plainly false,” said Mallya.

“My group directly invested over Rs 4,000 crore in Kingfisher Airlines itself which investment stands fully impaired. It is not as though it is only the bank debt that has suffered. The banks will recover a substantial part of their debt and my group’s loss is permanent,” Mallya added.

Mallya said Kingfisher was launched on the basis of a viable business plan vetted by SBI Capital Markets and renowned international aviation consultants. “But despite every effort, it was an unfortunate commercial failure caused by macro economic factors and the then government’s policies,” said Mallya.

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  1. T
    TIHAEwale
    Mar 7, 2016 at 11:24 am
    at last there is prospect of some recovery of unpaid loans from Vijay Mallya
    Reply
    1. V
      Virendra Sason
      Mar 8, 2016 at 4:25 am
      We must thank to RBI Governar Raghuram Rajan. हम माल्या के $ 75 Million की बात पर खुश हो रहे है अभी तो इसके 2,000 गुना अर्थात $ 1,50,000 Million से घिरे माननीय कॉर्पोरेट्स नजर आएंगे।
      Reply
      1. R
        Raj
        Mar 7, 2016 at 12:33 pm
        Hope the courts intervene and give directions to settle pending ries for hundreds of employees.
        Reply
        1. N
          Nampurath Krishna
          Mar 7, 2016 at 4:33 pm
          Great!! This money should be used to pay the hapless employees of erstwhile KINGFISHER AIRLINES !!
          Reply
          1. D
            din
            Mar 8, 2016 at 6:22 pm
            NOW can he tell the country his connection with Congress and who help him hide black money in stan and Asia ? It was money laundring too HAWAL and other land ? HAHUL will hide behind bars with him then Vijai is far claver so only will remain in
            Reply
            1. D
              din
              Mar 7, 2016 at 5:18 pm
              UP TO NOW he was protected by congress for obvious reasons money laundering AND BLACK MONEY Pandavas and Kauravas Chase game is now in full play, Black knights (hi Dynesty) are gradually cornered by NaMo, spectator who were brainwashed by 60 years long play by Kauravas were making notice here and there and were impatient and wanted quick action and move from White Knights Pandavas of NaMo. Black Knights are stanched and drenching with Black money, money syphoning, money laundering, drug money, terror import, communal divide, racial disturbance, hate incitement, power obsession, Now well protected by Black knight Kingfisher is out of the game, other are to fall as microscopic investigation book will open, some media will fall with full noise of un-democracy, freedom of speech suppression, black knight makes next move of importing terror from border to halt white move, BUT wise NaMo will remain calm and quiet to get result yet regrets not having made first and repeated punches on day fist of the game
              Reply
              1. d
                drywpande@yahoo
                Mar 8, 2016 at 3:31 am
                Isn't it interesting to know that all banks and government agencies are after a smaller amount which Mallya is getting while all were sleeping when he sold his entire stake valued thousand of crores. This seems to be a prearranged fight.
                Reply
                1. A
                  ah
                  Mar 8, 2016 at 4:41 am
                  EXCEPT Pillai no Corporate boss have seen Jails for long ........................... this may be just PROPAA by govt. so that INDIANS will feel they are doing something ........................ 500 crore compared to 1.14 lac Crore is nothing, which NEEDS to be recovered ....................... this is all HOG WASH .................... elections are there and need an IMAGE improvment for those accused of ER boys of Industrialists .......................
                  Reply
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