Kingfisher Airlines (KFA) has told the Calcutta High Court, in the course of hearings on the wilful defaulter case, that State Bank of India (SBI) held back R7.5 crore to United Bank of India. However, the court pointed out that SBI had informed Kingfisher that the balance in its account was not sufficient for the requested transfer of funds.
KFA owes about R8,000 crore to a consortium of 17 banks.
Arguing on behalf of KFA, senior advocate S Pal told the court that SBI, which was operating the trust retention account (TRA), did not forward R7.5 crore to UBI as repayments from KFA. The intended repayment was for an overdraft granted to the company by the bank when KFA faced a threat of suspension by International Air Transport Association (IATA).
According to the judgement, Pal had argued that, “Kingfisher Airlines had no control over such (trust retention) account. It had every intention to repay the sum of R7.5 crore taken as loan from the bank.”
Pal had also said that it was SBI who did not make over the funds to the bank from out of the TRA. “The writ petitioners cannot be foisted with the default of State Bank of India in not paying the sum of R7.5 crore to the United Bank of India,” Pal said, adding that there were sufficient funds in the TRA with SBI to pay United Bank.
However, Justice Debangsu Basak pointed in his judgement on December 24 that Kingfisher wrote a letter to SBI requesting it to transfer the rupee equivalent of $52,27,588 to United Bank from funds coming into TRA. SBI, by its letter dated January 10, 2012 informed Kingfisher that, the balance in the account was not sufficient for the requested transfer of funds and had assured that it will make payment as and when money is received into the TRA.
“By a letter dated January 11, 2012 Kingfisher informed United Bank of India that, the temporary accommodation granted by United Bank of India will be squared up before the end of January 2012 positively,” the order said.
It added that UBI did not receive the promised remittance by the end of January 2012 after which it wrote to KFA on February 2, 2012 to make the promised payment. This was followed up by a letter on October 10, 2012 to SBI for payment.
The order explained that SBI had told United Bank on April 8, 2013 that the commitment of payment was made by Kingfisher to UBI and SBI was not in a position to make the payment. After that UBI has not received the money from KFA, the order said.
UBI, which was the first to declare UB Group chairman Vijay Mallya a willful defaulter, has loaned R300 crore to the company. Moreover, even though the court has quashed the decisions of the identification committee and the grievance redressal committee with regard to the willful defaulter tag, it did not prohibit the bank from declaring Mallya wilful defaulter.
“This will not prevent the United Bank of India to proceed against the writ petitioners to classify them as wilful defaulters under the relevant circulars of the Reserve bank of India in accordance with law and in terms of the orders passed in the earlier writ petition,” the order said.