Vijay Mallya case: DRT raps banks for casual approach

The order was passed on October 18 on an amended plea by a consortium led by Oriental Bank of Commerce for recovery of payment.

By: PTI | Bengaluru | Updated: October 25, 2016 7:16 pm
Vijay Mallya (Source: File Photo) Vijay Mallya (Source: File Photo)

Terming GoAir and Indigo as “innocent” third parties, the Debt Recovery Tribunal has rapped banks for filing interim applications in a “casual and routine manner” to make them party to the Vijay Mallya case.

“The bankers have filed the applications in a casual and routine manner without all essential details that is required to be furnished in this case,” DRT Presiding Officer K Sreenivasan said in his order.

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The order was passed on October 18 on an amended plea by a consortium led by Oriental Bank of Commerce for recovery of payment. On the same day, DRT had also directed European aircraft manufacturer Airbus to deposit with it Rs 192.51 crore towards pre-delivery payment made by banks for purchase of planes by the now-defunct Kingfisher Airlines controlled by Mallya.

The OBC, Corporation Bank and United Bank of India had made a pre-delivery payment of Rs 192.51 crore to Airbus on behalf of Kingfisher Airlines after both parties had signed a purchase agreement in 2005, but the planes were not delivered. Since Airbus failed to make the pre-delivery payment, the consortium made GoAir and Indigo party to the case by filing applications under garnishee proceedings to recover the money.

It had sought a direction to the budget carriers to deposit the money to be paid by them to Airbus with it, under garnishee proceedings. A garnishment is a means of getting a monetary judgement against a defendant by ordering a third party (the garnishee) to pay the money, otherwise owed to the defendant, directly to the plaintiff.

Sreenivasan observed that just because the banks had outstandings, it would not be correct on their part to seek orders from DRT, to go on breaking contracts of innocent third parties with a defendant when its very territorial jurisdiction and applicable laws are questioned and is pending consideration before Debt Recovery Appellate Tribunal.

“I am therefore of the view that under the circumstances, no order should be passed, without any valid reason or cause, against any specific innocent third party who have nothing to do with the claim made by the applicants against Airbus in the Original Application,” he said.

He also observed that the applicants cannot be permitted to use the tribunal as a tool in search of their enquiries against any third parties without any particulars or valid reasons and in the process trample upon the contracts of ‘innocent Indigo and GoAir.’

He said that though the order was apparently sought against Airbus, it would also affect the contract of innocent Indigo and GoAir with Airbus, for no faults of theirs.