Kingfisher Airlines, UB submit documents to counter allegations by bank, which is trying to recover Rs9,000 crore
Bengaluru: Vijay Mallya-controlled Kingfisher Airlines Ltd and United Breweries (Holdings) Ltd on Thursday filed objections against allegations made by the State Bank of India (SBI) before a Debt Recovery Tribunal (DRT), where India’s largest lender is trying to recover ₹ 9,000 crore from the indebted businessman.
The DRT has given the affected parties time till Friday to file their objections, if any.
The world’s largest distiller and controlling shareholder of United Spirits Ltd, Diageo Plc, has filed its objection against attaching collaterals held by the company through its unit Watson Ltd. The company was formerly controlled by Mallya.
Diageo had taken over Watson in 2013 after United Spirits, which was controlled by Mallya at the time, defaulted on a loan to Standard Chartered Bank. Diageo repaid the loan to Standard Chartered and is now holding collaterals including shares in another Mallya firm, United Breweries Ltd.
The tribunal also granted other defendants, who have not filed their evidences, time till Friday to submit their responses, while the matter will now be heard on a daily basis starting Friday, according to two people close to the development. They requested anonymity.
“Kingfisher Airlines and United Breweries (Holdings) have filed an 80-page document registering their objections and evidences on the original application made by SBI. Both companies have dismissed several claims made by SBI," said one of the people cited above.
The hearing includes the matter of an ex-parte interim order passed by the DRT on 17 May, asking JP Morgan Chase Bank (North America) not to disburse an amount of $40 million that has been paid out by Diageo Plc to Mallya. The $40 million was part of a $75 million sweetheart deal that Mallya got for stepping down as chairman of United Spirits on 25 February.
However, Mallya’s legal team has approached the Karnataka high court, challenging the DRT order restricting the $40 million payout.
The case in question refers to the 2013 (original application) filed by SBI against Mallya, who owes more than ₹ 9,000 crore to banks after his Kingfisher Airlines incurred heavy losses and accrued debts since its inception in 2005.
The case gathered steam after Mallya’s $75 million deal in February. SBI filed four interlocutory applications on 2 March seeking Mallya’s arrest, impounding of his passport, disclosure of all assets and liabilities and stopping the $75 million payout by Diageo, Mint reported on 2 March.
On the same day, Mallya left for the UK where he continues to reside. In an interview to Financial Times on 29 April, Mallya said that he was in “forced exile" and that reporting by the Indian media had moulded public opinion against him.
Separately, Diageo Holdings Netherlands BV (DHN), a Diageo group unit, has filed its objections at the tribunal against attaching the collaterals of Watson, according to the second person cited above.
Lawyers representing Diageo did not divulge further details.
Watson had taken a $135 million loan facility from Standard Chartered. In May 2015, the borrowings under this facility matured and went into default.
Following extensions, the guarantee was called by Standard Chartered on 29 January this year.
Later, Diageo settled the guarantee with Standard Chartered and fully provided for the $135 million principal amount outstanding under the facility in its results for the six-month period ended 31 December 2015.
In aggregate, Diageo paid Standard Chartered approximately $141 million under this guarantee, including the $135 million principal amount, as well as payments of default interest and various expenses.
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