Days after the Enforcement Directorate moved a special court to declare him a fugitive economic offender, Vijay Mallya, the promoter of the now grounded Kingfisher Airlines Ltd, Tuesday said that he had requested the Karnataka High Court on June 22 to allow his firms to sell assets worth Rs 13,900 crore “under judicial supervision” and “repay creditors including the public sector banks” that have declared him a wilful defaulter.
According to government data as on May 15, Kingfisher Airlines owes Rs 9,990 crore to a consortium of 17 public sector banks. Mallya’s offer to repay state-owned banks and creditors comes three days after the Enforcement Directorate (ED) filed an application before a special court in Mumbai seeking to declare him a ‘fugitive economic offender’ and immediately confiscate his assets worth Rs 12,500 crore under the recently promulgated Fugitive Economic Offenders Ordinance, 2018. Also, a London court is likely to deliver its verdict in the extradition case against Mallya by the Indian government on July 31.
Following Mallya’s court application, Minister of State for External Affairs M J Akbar said: “If Mallya wanted to pay to the banks, I think he had… many, many years in which he could have done so.” Akbar was responding to a question Tuesday about Mallya’s claims that he had tried to settle the dues and had become a victim.
Mallya in his application to the Karnataka High Court has offered to sell fixed assets attached by the ED of Rs 1,699.45 crore, attached shares worth Rs 7,609 crore, fixed deposits lying with various debt recovery tribunals and ED of about Rs 215 crore, sale proceeds of Kingfisher Villa of about Rs 73 crore, Rs 1,473 crore deposited with the Karnataka High Court and shares worth Rs 2,888.14 crore of United Spirits Ltd, United Breweries Ltd and McDowell Holdings Ltd held by six firms of Mallya.
These firms include Devi Investment, Mallya Pvt Ltd, Kamsco Industries, The Gem Investment and Trading, Pharma Trading Company and Vittal Investments.
Mallya Tuesday said he “will continue to make every effort to settle with the public sector banks” adding that the bulk of the claims of the banks were on account of interest and that he was being made a “poster boy” of bank default and a “lightning rod of public anger”.
“On account of various injunctions, attachments and the refusal to grant permissions to sell available assets, the interest keeps mounting. Consequently, the bloated figure of outstanding dues to the banks is largely on account of these mala fide actions. If the criminal agencies such as ED or CBI object to my proposal and object to the sale of assets, it will clearly demonstrate that there is an agenda against me beyond recovery of dues to public sector banks,” said Mallya in a statement.
“If politically motivated extraneous factors interfere, there is nothing that I can do.”
Mallya and Kingfisher Airlines have come under the scanner of the ED, CBI and Serious Fraud Investigation Office for loan defaults and all the agencies have already filed chargesheets against Mallya and the airline company. The agencies have alleged diversion of loan funds by Mallya, which the liquor baron has denied.
According to sources, Mallya’s offer to sell assets to repay banks may not be accepted by investigative agencies. “Ninety per cent of the assets that Mallya has offered to sell has already been attached by ED. The agency has also moved court for confiscation of these assets under the Fugitive Economic Offenders Ordinance, which allows the sale of assets even before the trial begins. In two months, the court will decide on the ED application based on Mallya’s response and if the court allows the plea of the agency, the assets can be sold and banks can be repaid,” said sources.
Mallya also said that the ED has misused its powers under the Prevention of Money Laundering Act (PMLA) by attaching his assets in excess of Rs 9,600 crore.
“The ED has even attached assets acquired in 1902, inherited assets and assets acquired even before KFA was formed. The question of using funds borrowed by KFA for acquisition of such assets cannot possibly arise. How then, can assets created before KFA existed be considered proceeds of crime? The overreach of the ED misusing its vast powers under the PMLA is self evident,” he said. He also said that recovery of loans is a civil matter which has been criminalised in his case.
“The CBI and ED seem determined to frame criminal charges against myself on the pretext of non-payment to public sector banks. However, the motivation seems to be to secure my presence in India to face charges rather than to determine whether or not the evidence collected by the investigative agencies demonstrates whether there are any criminal charges which can be brought against me, or to permit me to actually sell available assets and repay creditors including public sector banks,” he said in the statement.
Mallya also said that his conduct does not amount to “wilful default” as he had made two settlement offers to the banks in March and April 2016, but both the offers were rejected. Mallya and Kingfisher Airlines were declared wilful defaulters by banks in 2015. He also said that in April 2016, he had written to the Prime Minister and finance minister about the problems faced by the airline that led to the loan default.
“These two offers need to be viewed in the context of one time settlements made between public sector banks and borrowers in the past and more recently the bank partial recoveries with significant haircuts under the Indian Insolvency and Bankruptcy Code before the National Company Law Tribunal. These two offers are part of the public record in Supreme Court proceedings,” he said. “Both offers were rejected by the banks – the second revised offer was rejected outright by a junior SBI officer present in court without reference to any of the other banks. Thereafter, I wrote letters to the Chairperson of SBI on May 10, 2016, June 2, 2016, and June 10, 2016, seeking settlement discussions. I respectfully submit that my conduct does not amount to wilful default.”
He also said he has requested the Karnataka High Court to “permit utilisation of the substantial interest accruing on deposits” made with the court in 2013 for payment of legitimate dues of employees of the now-defunct Kingfisher Airlines.