DRT allows SBI’s plea to recover dues from Vijay Mallya, associated firms

The Debt Recovery Tribunal’s order allows the banks to sell ‘wilful defaulter’ Vijay Mallya’s properties to recover the unpaid loans


Vijay Mallya and his firms—the defunct Kingfisher Airlines, United Breweries and Kingfisher Finvest—are liable to pay the money that, together with interest, adds up to more than Rs9,000 crore. Photo: Mint
Vijay Mallya and his firms—the defunct Kingfisher Airlines, United Breweries and Kingfisher Finvest—are liable to pay the money that, together with interest, adds up to more than Rs9,000 crore. Photo: Mint

Bengaluru: The Debt Recovery Tribunal (DRT) in Bengaluru on Thursday ruled in favour of creditors seeking to recover more than Rs9,000 crore in unpaid loans they extended to Vijay Mallya’s defunct Kingfisher Airlines Ltd.

In a 145-page order, the DRT’s presiding officer K. Sreenivasan asked a consortium of banks led by State Bank of India (SBI) to start the process of recovering the Rs6,203.35 crore they claimed in 2013, at a yearly interest rate of 11.5%, until the whole amount is paid back.

Mallya flew to the UK in March last year as creditors closed in on him. He and his companies Kingfisher Airlines, United Breweries Holdings Ltd and Kingfisher Finvest India Ltd are liable to pay the money that, together with interest, adds up to more than Rs9,000 crore.

Businesses should realize that “it will be no longer possible for them to avail loans of public money, default in repayment and try to get away through the lanes and by-lanes of twisted facts”, the DRT order said.

The order brings to an end a three-year legal battle in the tribunal by a consortium of 17 banks seeking to recover the money owed by Kingfisher Airlines, which was grounded in 2012 under the weight of heavy debt and accumulated losses.

It allows the lenders to sell properties seized from Mallya to recover the money. SBI and tax authorities have been unable to sell properties such as Kingfisher House in Mumbai, Kingfisher Villa in Goa and Mallya’s personal jet, among other possessions, because of high base prices and a weak real estate market.

“In spite of sale of properties mentioned in the schedule, if the OA (original application) amount is not fully realised then the applicant bank is at liberty to proceed against the person and other properties of the defendants as required under law and also as advised,” the DRT order said.

Lenders will now have to file a memo with the original claim plus interest and other costs to be recovered from Mallya and his firms, after which the DRT will issue a recovery certificate.

“The next step is to get a recovery certificate from the DRT so that sale of assets can be pushed for with a shorter notice period,” said a senior official at SBI with direct knowledge of the case. He didn’t want to be named.

“We will await a copy of the orders passed by the DRT and file an appeal accordingly,” said UB Group spokesperson Sumanto Bhattacharya.

The defendants are likely to approach the debt recovery appellate tribunal within 60 days, according to a Bengaluru-based lawyer directly involved in the case who asked not to be named. The order cannot be executed by the banks until the end of the appeal period, which gives Mallya and his firms 60 days to chalk out a strategy, the lawyer said.

According to the DRT Act, an appeal can be heard only if the appellant—Mallya and his companies in this case—deposit 75% of the amount claimed. This amount can be waived or reduced by the judge hearing the case.

SBI has written off Rs7,016 crore in loans by 63 wilful defaulters, including Kingfisher Airlines, Daily News & Analysis newspaper reported on 16 November.

Finance minister Arun Jaitley said the same day that the write-offs don’t mean a loan waiver and that defaulters will be pursued.

In March last year, SBI moved DRT for a second time to seek an arrest warrant against Mallya, revocation of his passport, details of his assets and liabilities as well as an order to seize a $75 million payout made to him by spirits maker Diageo Plc. The money, $40 million of which has already been paid to Mallya, was in return for him stepping down as chairman of United Spirits Ltd, which the UK-based company acquired from the businessman.

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