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Thursday, July 19, 2018

Banks move Supreme Court on Vijay Mallya: stop him from moving abroad

Attorney General Mukul Rohatgi said that the plea has been moved by 17 banks, including State Bank of India, against Mallya whose various firms have taken loan from them.

Written by Utkarsh Anand | New Delhi | Updated: March 9, 2016 3:33:58 am
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A SBI-led consortium of 17 banks moved Supreme Court Tuesday to restrain Vijay Mallya from flying abroad because they feared that the founder-owner of Kingfisher Airlines may settle in London to stall loan recovery proceedings against him in India.

The banks contended that the Debts Recovery Tribunal (DRT) should have issued an arrest warrant against Mallya in order to compel him to truthfully disclose all his assets. On Monday, a DRT judge in Bengaluru had restrained multinational alcoholic beverages company, Diageo Plc, from paying Mallya Rs 515 crore as part of a settlement to exit United Spirits Limited.

Attorney General Mukul Rohatgi mentioned the consortium’s petition before a bench led by Chief Justice T S Thakur, which acknowledged the urgency of the matter and agreed to hear the matter on Wednesday.

Rohatgi said Mallya owed more than Rs 9,000 crore to these 17 banks and had also been declared a “wilful defaulter”. The AG cited pending proceedings against Mallya before the DRT and complained that his passport is still to be impounded to stop him from evading recovery proceedings. The DRT judge in Bengaluru had temporarily prevented Mallya from receiving the exit package while ruling on an interim application filed by banks.

Rohatgi pointed out that a restraining order was required to ensure that Mallya, an NRI, doesn’t leave the country while recovery proceedings are underway.

Justice Thakur asked Rohatgi whether it was one of those cases where a defaulter has borrowed from public sector banks (PSBs) and failed to pay up, prompting the banks to write off such loans. “Is is one of those cases where we have already issued a notice to the RBI, seeking details of defaulters? We want to know if banks have given loans although he has failed to repay the old loans,” the CJI asked.
In response, the counsel for RBI submitted that the case relating to PSBs writing off loans as bad debts was a different case — here, the DRT has already initiated proceedings to recover the loans.

In its petition, the consortium challenged the Karnataka High Court order of March 4 whereby the banks’ request for issuing an interim restraint order was turned down. It alleged that the High Court “order has completely failed to protect the interest of the petitioner banks which are yet to recover an amount in excess of Rs 9,000 crore” from Mallya, Kingfisher and United Breweries.

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

The petition added that the High Court ought to have appreciated that the interim order seeking impounding of Mallya’s passport was “very urgent” because if he moved to London, the purpose of filing the writ petition against him would be defeated.

Non-payment of Rs 9,000 crore, the banks contended, “may adversely impact the economy of the nation” apart from defeating the objective of enacting the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

The banks have also raised a grievance against what they described as an “inordinate delay in proceedings” before the DRT, pointing out at least 75 hearings have taken place but Mallya and his companies have been successful in protracting the matter.

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