In a blow to beleaguered businessman Vijay Mallya, the Debt Recovery Tribunal on Thursday ordered the State Bank of India-led consortium of banks to start the process of recovering over R6,203 crore debt at 11.5% annual interest rate beginning July 26, 2013, from the embattled tycoon and his companies in the Kingfisher Airlines case.
The bench passed the order on the original application filed by a consortium of 17 banks led by SBI in June 2013, thus bringing to an end the over three-year legal battle the consortium has fought with Mallya in the tribunal.
Mallya left India on March 2, 2016, for London after the banks moved the tribunal in February 2016 to expedite the hearing on its recovery petition.
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Pronouncing the order, K Sreenivasan, the DRT presiding officer, also directed the consortium of banks to initiate the recovery proceedings by attaching the properties of Mallya and the airline for defaulting on loans up to R9,091 crore, including compound interest, an SBI counsel told reporters.
SBI had filed three other applications, including one seeking Mallya’s arrest and impounding of his passport, for defaulting on loans.
Sreenivasan ordered that if, in spite of the sale of the properties mentioned in schedules, the OA (the Original Application) amount was not fully realised, then the applicant bank was at liberty to proceed against the person and other properties of the defendants as required under law and also as advised.
In the event of failure of defendants to pay the OA amount, the applicant bank was at liberty to sell the hypothecated, mortgaged, movables and immovable properties described in the schedule of the main petition, according to law as sought by the applicant bank, he said.
The consortium of banks had also moved a petition in the Karnataka High Court with a set of appeals and the DRT took up the case on a fast-track basis after the Supreme Court directed it to do the same.
On March 7, 2016, the tribunal had ordered British liquor major Diageo not to pay Mallya the $75-million (Rs 504 crore) severance package in return for quitting as chairman of its Indian arm United Spirits until a decision was arrived at in the debt recovery case. But by then Diageo had paid $40 million and the remaining money is to be paid over a period of five years subject to fulfilment of certain conditions. Later, passing an order pertaining to another interlocutory application the DRT directed Diageo to deposit with it the remaining $35 million.
Following the failure of Mallya to respond to the tribunal’s earlier directives, the consortium sought a recovery certificate from it to sell his properties in lieu of the defaulted loans to his airline in June last year. Earlier, in 2015, SBI and Punjab National Bank had declared Mallya, Kingfisher Airline and its holding firm United Breweries (Holdings) as ‘wilful defaulters’.
The consortium partners include other state-run and private banks such as Bank of Baroda, State Bank of Mysore, Axis Bank, Corporation Bank, Federal Bank, Indian Overseas Bank, Jammu and Kashmir Bank, IDBI Bank, Punjab National Bank, Punjab and Sind Bank, UCO Bank and United Bank of India.