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Banks reject Mallya's Rs 4000 Cr payback proposal ; SC asks him to disclose all his assets

LiveLaw News Network
7 April 2016 7:20 AM GMT
Banks reject Mallyas Rs 4000 Cr payback proposal ; SC asks him to disclose all his assets
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In a huge setback to business tycoon Vijay Mallya, consortium of banks led by State Bank of India today rejected his proposal to pay Rs 4,000 crore by September 15 following which the Supreme Court in a significant order directed him to declare all assets including  of his wife and children to ascertain how much can be recovered. 'The assets are to be updated as on March 31, 2016', the court said.

A bench of justices Kurien Joseph and Rohinton Nariman also said Mallya's response by April 26 should also state the amount he was willing to deposit in court to indicate his willingness for a negotiated settlement and to show his bonafides.

The bench also asked Mallya's lawyer to take instructions as to when his client can appear in person before the court in the event of all present negotiations failing.
Led by SBI, the 17 bank consortium is struggling to recover Rs. 6,963 crore debt due from Kingfisher Airlines.


"Shyam Diwan, Learned counsel appearing for the consortium of banks submits that the offer made by banks was considered but they were of the view that it is not acceptable in the present form. However the consortium is not against a negotiated settlement provided the respondent shows his bonafides for it".

"The banks say  respondent shall first disclose all his assets properties movable, immovables tangible, non tangible, share holdings, intetests in fiduciary capacity in various trusts, all other rights and liabilities and that there also should be a substantial deposit made before the court"
"The respondent's counsel says a revised proposal was also made but that was also not acceptable to the banks"

"Shyam Diwan also says for any meaningful negotiation instead of mere correspondence, the respondent's presence was necessary. Respondents lawyer prays for a short time to respond to the matter."


It is to be noted that SC was on March 9  informed by Attorney General Mukul Rohatgi that Mallya had left the country following which the court issued notice to him on the petition by a consortium of 17 PSU banks seeking his summoning and impounding of his passport.

After AG said Mallya could be in London, the bench issued notice to him to be served through his official Rajya Sabha email ID through Indian High Commission at London.
Rohatgi, representing the 17 PSU banks  had told the court that Mallya left the country on March 2, 2016, the day the banks had moved the court seeking to restrain him from going abroad.

Rohatgi told the court that the banks were not after Mallya’s blood but only wanted his passport to be kept impounded  till the loan recovery proceedings are over.

Firing a volley of questions at the consortium of banks, the bench had asked them  why it gave so much  loan to him when they already knew that his assets were mostly abroad.

The bench also asked if so much loans could have been forwarded without securing adequate assets as guarantee.

It also asked why loans were extended to him when he was a defaulter and was facing proceedings in court of law.

The banks informed the SC that Mallya's assets abroad are far in excess to loans taken by him.

The consortium of banks has sought directions for appearance of Mallya in person before apex court and for freezing his passport.

The banks have told the court that Mallya’s dues run into thousands of crores.

It is to be noted that the Debts Recovery Tribunal had on Monday passed orders restraining multinational alcoholic beverages company, Diageo Plc, from payingMallya Rs 515 crore as part of a settlement to exit Diageo-owned United Spirits Limited.

The move by ED, under the Prevention of Money Laundering Act (PMLA), comes after the CBI registered a suo motu FIR against Kingfisher Airlines in July 2015. The company owes at least Rs 7,000 crore to 17 banks; some of them such as the State Bank of India and Punjab National bank have already named Mallya and his company as a “willful defaulter”.

The CBI had registered the FIR against Mallya. A Raghunathan, chief financial officer of Kingfisher Airlines, and unknown officials of IDBI Bank. It is alleged that the loans were sanctioned in violation of norms regarding credit limits.

Last month, the consortium had moved the debt recovery tribunal (DRT) to attach defunct carrier Kingfisher Airlines’ promoter Vijay Mallya’s passport.

The consortium also appealed that the funds  Mallya will receive from Diageo be kept in an escrow account till the liquor baron clears the dues. Punjab National Bank, SBI and nited Bank of India have declared KingFisher Airlines and its promoter Mr. Mallya as a 'wilful defaulter.'

The SBI has the highest exposure of Rs 1,600 crore to the beleaguered Kingfisher Airlines.

Other banks that have exposure to the airline include Punjab National Bank and IDBI Bank (Rs.800 crore each), Bank of India (Rs. 650 crore), Bank of Baroda (Rs. 550 crore), Central Bank of India (Rs. 410 crore).

UCO Bank has to recover Rs. 320 crore, Corporation Bank (Rs 310 crore), State Bank of Mysore (Rs 150 crore), Indian Overseas Bank (Rs. 140 crore), Federal Bank (Rs. 90 crore), Punjab & Sind Bank (Rs. 60 crore) and Axis Bank (Rs. 50 crore)

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