The heavily indebted Indian liquor baron Vijay Mallya has fled the country, the Supreme Court heard on Wednesday, as banks lined up to try to recover more than $1 billion in unpaid loans.

A group of mainly state-run banks had asked the Supreme Court to prevent the flamboyant businessman, who is known for his extravagant lifestyle, from quitting India.

But the attorney general said the 60-year-old had left on March 2 after stepping down as chairman of United Spirits, the Indian arm of Britain's Diageo, following allegations of financial lapses.

"Agencies and the CBI (Central Bureau of Investigation) have told me he left the country on the second of March," said Mukul Rohatgi, representing the banks in court.

"Please ask Mr. Mallya to come back and appear in the Supreme Court and disclose all his assets."

Rohatgi said the state was not looking to take action against Mallya, who is thought to be in London, but wanted him to settle debts worth more than $1.3 billion.

The court said it would issue a notice seeking a response from the businessman on the repayment of the loans.

Repeated calls by AFP to Mallya's mobile and those of his representatives went unanswered on Wednesday.

He announced last month he planned to move to Britain to be closer to his children.

But in an emailed statement to media on Sunday he said he had no plans to run away from his creditors and was hurt the press was painting him "as an absconder".

Mallya was known as the "King of Good Times" before the 2012 collapse of his Kingfisher Airlines, which left thousands of workers unemployed and millions of dollars in unpaid bills.

As his liquor business flourished during the early 2000s he diversified into other areas and in 2005 launched Kingfisher Airlines, named after his company's best-known beer.

The profile of the man once nicknamed "India's Richard Branson" rose further when he acquired a stake in the Force India F1 team and ownership of the Royal Challengers Bangalore cricket team. His fortune reached a peak of $1.6 billion in 2007, according to Forbes.

But he was unable to stop Kingfisher from haemorrhaging cash, and following a pilots' strike over unpaid wages the airline was grounded in 2012 having never made a profit.

The consortium, led by the State Bank of India, had also sought Mallya's arrest and confiscation of his passport. But the debt recovery tribunal and the High Court in southern India, where a separate petition has also been filed, have yet to rule on those requests.

On Monday an Indian tribunal had blocked the $75 million severance payout from Diageo to Mallya at the request of the banks that are seeking the money.

But on Wednesday a spokesman for Diageo told AFP that it had already paid $40 million to Mallya as part of the deal.

"We paid Mallya 40 million US dollars immediately as part of the 75-million dollars agreement he signed with our company on February 25," Kirsty King, a London-based Diageo spokesman told AFP.