Wilful defaulter norms don't apply to us, says Vijay Mallya's Kingfisher Airlines

Written by fe Bureau | Mumbai | Updated: Sep 17 2014, 15:48pm hrs
KingfisherSBI had issued a notice to the company on August 19 alleging wilful default in repayment of dues. Reuters
Kingfisher Airlines Ltd (KFA) on Tuesday said Reserve Bank of India (RBI) guidelines on wilful defaulters do not apply to the company. The company is advised that none of the parameters constituting wilful default governed by the master circular issued by the Reserve Bank of India apply to the company, KFA said in a filing to the BSE.

The State Bank of India had issued a notice to the company on August 19 alleging wilful default in repayment of dues. A consortium of 17 banks is yet to recover close to Rs 7,000 crore from KFA with SBI's share being the largest at around Rs 1,600 crore.

In response to the said notice, the company replied requesting SBI to disclose any and all documents, materials, details, evidence that may have been referred to or relied upon by SBI in support of the allegations of the notice, for the company to be able to properly deal with the allegations in the notice, the statement said.

To justify its stand, Kingfisher went on to add that the Delhi High Court has said that it is trite law that the material that is relied upon by any authority in arriving at a decision must be made available to the affected party and that such right is an integral part of the principles of natural justice that are enshrined in Article 14 of the Constitution of India.

However, SBI has till date not provided the information sought by the company, KFA said.

Earlier this month, Kolkata-based United Bank of India declared UB Group chairman Mallya a wilful defaulter for non-payment of over Rs 300 crore dues. It also declared other three directors of Kingfisher Airlines -- Subhash R Gupte, Ravi Nedungadi and AK Ganguly -- wilful defaulters.

New Delhi-based Punjab National Bank (PNB) has also declared KFA a wilful defaulter against which the company moved the Supreme Court. The apex court , however, denied relief to the company.

The airline is already engaged in legal battles with the lenders and other financial institutions and, in May, an SBI-led consortium moved the Supreme Court, claiming that both Vijay Mallya and the defunct Kingfisher Airlines were jointly and severally liable to pay the total outstanding dues. According to RBI guidelines, a borrower is termed a wilful defaulter if he has defaulted in meeting the repayment obligations to the lender even when it has the capacity to repay, or has not utilised the money from the lender for the specific purposes for which finance was availed of, but diverted the funds for other purposes.