Industrialist Vijay Mallya yesterday objected to the State Bank of India’s demand seeking his arrest in the Kingfisher Airline’s multi-billion rupee loan default case.
“We have filed our objections against the bank’s IA (interlocutory application) on the ground that it (Debt Recovery Tribunal) is not the forum to seek a defaulter’s arrest or impound his passport,” Mallya’s lawyer said.
The IA also sought a directive from the tribunal to the authorities for impounding Mallya’s passport, evaluate his assets and claim on the $75mn (Rs5.16bn) severance package British liquor major Diageo and its Indian arm United Spirits Ltd (USL) signed with him on February 25.
Tribunal judge R Benkanahalli said he would hear the case today and issued a notice to Mallya for filing objections, if any.
“The quasi-judicial tribunal is meant to facilitate banks and financial institutions recover speedily outstanding loans and avoid procedural delays in civil courts,” Mallya’s lawyer said.
SBI’s lawyer said he had filed four IAs before the tribunal for Mallya’s arrest, impounding his passport, inventory of his assets in India and other countries and first right over Diageo’s sweetheart deal in lieu of his resignation as chairman and non-executive director of USL.
As part of a deal, Diageo said it would pay $40mn immediately to Mallya with the balance being payable in equal instalments over the next five years. It will also absolve Mallya of all liabilities over alleged financial lapses at the company founded by his family.
Last year Diageo auditors had found that Mallya had diverted Rs72bn of United Spirits Limited (USL) funds to the airline, which was again diverted elsewhere.
Mallya, who is also an independent lawmaker from Karnataka in the Rajya Sabha, is reportedly in New Delhi to attend the budget session of parliament.
An SBI-led consortium of 17 state-run and private banks filed an application before the tribunal a day after seeking a directive to Mallya for paying the amount Diageo and USL agreed to pay him over the next five years, including $40mn this year and the balance $35mn by 2020.
The Debt-ridden Kingfisher Ltd owes the consortium Rs78bn as combined loans, including Rs16bn from lead bank SBI that were raised from 2004 to 12.
The defunct airline suspended operations in October 2012 due to a staff strike over non-payment of salaries and other dues and the civil aviation regulator DGCA terminated its licence subsequently.
The SBI-led consortium moved the tribunal after Cedntral Bureau of Investigation director Anil Sinha expressed concern over its delay in acting against Mallya at the seventh CBI conference on combating financial crimes on Wednesday in Mumbai.
“We had recently (July 2015) registered a case of cheating and fraud against Kingfisher and its erstwhile management involving allegations of defrauding banks up to Rs7,800 crore, borrowed as loans/advances by the bankrupt airline during 2004-2012,” Sinha recalled at the day-long conference, organised by the CBI in partnership with Indian Banks’ Association (IBA).
Observing that there was a growing sense of anguish among the public over increasing bad loans as non-performing assets, Sinha said while banks were strict on retail borrowers, the big borrowers and large-scale fraudsters were able to not only evade the law, but also enjoy the fruits of crime.
“Undue delay in identifying and reporting such a fraud has jeopardised the cause of justice to the offenders benefit, giving them an opportunity to divert funds and destroy evidence,” Sinha added.