1. The keys to Vijay Mallya’s Kingfisher villa in Goa lie in Lisbon

The keys to Vijay Mallya’s Kingfisher villa in Goa lie in Lisbon

Bankers’ attempts to take possession of Kingfisher Villa in Goa have been thwarted by United Spirits, which claims it has been a tenant since 2005...

By: | Mumbai | Updated: February 12, 2015 8:12 AM
Vijay Mallya, Vijay Mallya Kingfisher Airlines, Kingfisher airlines, delhi High Court, vijay Mallya DIAL

United Spirits has claimed that it has the first right to buy Vijay Mallya’s Kingfisher Villa in Goa as it has been a tenant since 2005. (Reuters)

Bankers’ attempts to take possession of Kingfisher Villa in Goa have been thwarted by United Spirits (USL), which claims it has been a tenant since 2005 and, therefore, has the first right to buy the property. Citing the Portuguese Civil Code, USL has taken the matter to a local court, requesting it to block an auction of the property by the banks. A banker familiar with the matter said the consortium has sought permission from the chief judicial magistrate of Goa to take possession of villa under the Sarfaesi Act but has not yet received any judgment.

Even after Goa became a part of the Indian union in 1963, after several years of Portuguese rule, the Portuguese Civil Code of 1867 is still applicable in Goa when it comes to property issues and marriages. The source added that the company has produced documents like electricity and water bills as proof that it has been a tenant there for the last 10 years.

“The documents are not registered by any authority nor are they stamped. This is just a delaying tactic and the court is looking into the applicability of Portuguese Civil Code in the case,” the person cited above said.

The Goa bench of the Bombay High Court had given lenders the nod to take possession of Kingfisher Villa last year. Kingfisher Airlines, which has not flown since October 2012, owes over R7,000 crore to a consortium of 17 bankers who have been trying to recover their money by selling securities pledged by the firm.

These include real estate and shares in multiple group entities. Banks had also sold around 4 lakh shares of USL pledged with them for R104 crore last year.

The case highlights problems faced by public sector banks in dealing with recovering money from defaulters; bankers say the legal process is a long and tedious one and add that promoters tend to resort to delaying tactics by approaching one court after another.

At present, regulations require state-owned banks to set a reserve price and call an auction to dispose of an asset.

If the first auction is not successful, a new reserve price must be fixed and a second auction called before a bilateral negotiation can begin. The problem, as bankers have pointed out, is that the process takes a long time, often defeating the purpose.

Bankers have also not been able to convert their loans into equity at a price that is favourable to them because of the rules put out by the Securities and Exchange Board of India.

The legal process has been virtually ineffective further frustrating the efforts of banks to recover their dues. Reserve Bank of India data show loans worth more than Rs 2 lakh crore were pending at 33 debt recovery tribunals (DRTs) till FY14, up from Rs 1.43 lakh crore in FY13. The amount recovered from cases decided in the DRTs in 2013-14 was Rs 30,590 crore while the value of loans sought to be recovered was Rs 2.36 lakh crore. Thus, only 13% of the outstanding non-performing assets in the tribunals were recovered in FY14.

Spirited away:

* United Spirits claims it has the first right to buy Kingfisher Villa in Goa as it has been a tenant since 2005

* Citing the Portuguese Civil Code, USL has moved a local court, requesting it to block an auction by banks

* Bankers’ consortium has sought permission to take possession of villa under the Sarfaesi Act but has not yet received any judgment

  1. V
    vijay
    Mar 11, 2016 at 2:35 pm
    kanhaiya's mother and father should be ashamed of themselves for giving birth of this kind of anti social eliments. shame shame shame.
    Reply
    1. R
      Raju
      Feb 13, 2015 at 11:24 am
      Goa liberated on 19th December, 1961, and not in 1963, as you said.
      Reply
      1. S
        seetharaman
        Feb 12, 2015 at 12:53 pm
        This is a silly objection. Banks can still auction the property and the tenant can buy it at the highest bid price using his right to buy it!
        Reply

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