New Delhi/Mumbai: India labelled Vijay Mallya a “fugitive" while the businessman’s lawyers said his creditors only want him arrested amid heated arguments in the Supreme Court over a case that is set to test the government’s resolve to go after defaulters and recover unpaid dues.
At a hearing in New Delhi, attorney general Mukul Rohatgi said the founder of the collapsed Kingfisher Airlines Ltd left India surreptitiously without paying his creditors. The ex-billionaire’s lawyer, C.S. Vaidyanathan, argued that Mallya, who fears arrest back home, may not return, setting the stage for a prolonged legal standoff between banks, the government and the lawmaker who owes about ₹ 9,100 crore.
“Battle lines are being drawn with the government resorting to brass-knuckle tactics to bring back Mallya," said Pooja Dutta, managing partner at Mumbai-based Astute Law. “It remains to be seen how long the standoff will continue."
A consortium of lenders pressed for full settlement of dues in court on Tuesday after rejecting Mallya’s proposal for a one-time negotiated deal. The tycoon, who earlier this year said he was moving to England to be closer to his children, has said he isn’t a “willful defaulter" and was making efforts “in all sincerity" to pay up. The foreign ministry revoked his diplomatic passport and an ethics panel threatened to expel him from the upper house of parliament, where he’s been a member for almost 12 years.
Mallya, through his lawyers, has denied claims that he deliberately defaulted on the loans. The tycoon offered last week to deposit $240 million with the Supreme Court to show his intent to repay debt. The court on Tuesday ordered him to disclose all his assets to lenders.
“The moment he comes, he will be sent to Tihar jail," Vaidyanathan told the court, referring to South Asia’s biggest prison complex in New Delhi. “He wants a negotiated settlement."
The man at the center of India’s battle against soured loans was ranked the 45th-richest Indian by Forbes in 2012, with a net worth of $1 billion. He was earlier elected to the Rajya Sabha in 2002 and again in 2010, both as an independent. Sumanto Bhattacharya, a spokesman for Mallya and his UB Group, couldn’t be reached on his mobile phone.
Mallya previously offered ₹ 4,000 crore by the end of September and a further ₹ 2,000 crore if United Breweries Holdings Ltd, the parent of Kingfisher, wins a lawsuit alleging defective engines from International Aero Engines AG contributed to the carrier’s collapse. Lenders rejected the ₹ 6,000 crore settlement offer.
“He is a fugitive," Rohatgi argued. “He left India without paying the banks."
The foreign ministry said 22 April that it was seeking legal advice on Mallya’s extradition a few weeks after Rohatgi said he had left India. As a member of the upper house of India’s parliament, he had a diplomatic passport.
“We don’t routinely comment on individual cases," the UK home office said in a statement. “As a matter of longstanding policy and practice the UK will neither confirm nor deny that an extradition request has been made or received until such time an arrest has been made in relation to that request."
An ethics panel of the house issued a “show cause" notice on Monday, giving him a week to explain why his membership shouldn’t be cancelled, said Karan Singh, chairman of the committee. The measure came a day after the foreign ministry revoked his passport. The government says he owes banks about ₹ 9,100 crore.
India’s Enforcement Directorate, a specialized financial investigation agency focused on foreign exchange and anti-money laundering laws, will pursue all legal processes, Karnal Singh, its chairman said last week.
Mallya has maintained that Kingfisher was an “unfortunate commercial failure" because of macroeconomic factors and government policies. He has sparred with local media for portraying him as the poster boy for the nation’s bad loans.
Mallya, 60, presided over a beer and liquor empire a few years ago, a business he took over from his father in the 1980s. He started Kingfisher Airlines in 2005 and it was one of India’s leading carriers until it was grounded in 2012 amid mounting debt. Bloomberg