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.