Home >companies >news >Debt tribunal dismisses Kingfisher Airlines application

Bengaluru: The Debt Recovery Tribunal (DRT) in Bengaluru dismissed an interlocutory application (IA) filed by Kingfisher Airlines Ltd on Friday in which the grounded carrier sought to make amendments to an original application (OA) and press a counterclaim seeking 3,000 crore in damages from a consortium of creditors.

Kingfisher counsel had presented their arguments on 5 July, but the tribunal had reserved its order to either admit or dismiss the application.

State Bank of India, leading the 17-member banks consortium, filed an OA in June 2013 seeking to recover money owed by Kingfisher Airlines.

KG Raghavan, senior counsel appearing for Kingfisher Airlines, said on 5 July that the lenders’ consortium refused to comply with a master debt recast agreement (MDRA) reached on 21 December 2010 with creditor banks following a one-time relaxation of restructuring guidelines sanctioned by the Reserve Bank of India.

The MDRA included conversion of debt of up to 1,355 crore from lenders to share capital and conversion of debt of up to 648 crore from promoters to share capital as well as rescheduling of repayment of the balance debt to lenders over nine years with a moratorium of two years, according to a Kingfisher airlines filing with the Bombay Stock Exchange.

“This attempt on the part of the bank to stifle every attempt that was made by the first respondent (KFA) to come back to its feet by resorting to what I may call as extra-constitutional methods is the grounds on which we seek that they (secured lenders) are liable to pay us damages," he said before the tribunal.

Raghavan had said that the failure by lenders to comply with MDRA by not disbursing much needed working capital to Kingfisher resulted in the grounding and ceasing of operations by the airline.

He went on to say that the ‘breach of terms and conditions’ of MDRA by the lenders amounted to a ‘wilful default’ by the banks.

Ironically, State Bank of India declared Vijay Mallya, the beleaguered of UB Group, which operated Kingfisher Airlines, a wilful defaulter in November last year over non-repayment of loans.

S Naganand, senior counsel appearing for the banks, had said on Tuesday that there was no explanation for how KFL had arrived at the number.

Seeking the dismissal of the application on the basis that it was a belated claim and barred by time as Kingfisher had not quantified its claims in over three years since the filing of the OA, he said that this attempt by the airline was nothing but a “foundation for challenges to be made in the future against any order by the tribunal."

The tribunal has been hearing the case on a regular basis after the Supreme Court directed it to dispose of the case within two months or by 9 July. The tribunal is likely to seek more time from the apex court to hear the case as some of the parties involved are yet to make their case. SBI has completed its final arguments in the case.

Mallya left for the UK on 2 March as Kingfisher creditors, which claim they are owed 9,000 crore by the grounded airline, closed in on him.

Subscribe to newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperLivemint.com is now on Telegram. Join Livemint channel in your Telegram and stay updated

Close
×
My Reads Logout