The London-headquartered global liquor giant Diageo Plc has questioned the jurisdiction of the Debt Recovery Tribunal (DRT) in ordering the attachment of the $75-million exit payout that it was to pay liquor baron Vijay Mallya. The company stated that its agreement with Mallya was reached outside India and hence the money was to be paid outside and cannot be attached in an Indian court.
In an objection to State Bank of India (SBI’s) memo filed before the DRT Bengaluru on Thursday, Diageo objected to the plea for depositing the amount with DRT. The SBI, in its memo dated April 13, had sought for directing Diageo to deposit $40 million, which is part of the agreement between Mallya and Diageo, with the DRT.
While seeking rejection of the bankers’ memo, Diageo said it cannot be ordered for depositing $40 million with the DRT because it has already paid that amount to Mallya. As regards to the balance $35 million, the company said it will be paid in future subject to fulfillment of certain conditions by Mallya. In fact, the amount is not guaranteed to be paid to Mallya in case of non-fulfillment of certain conditions, sources informed FE.
“Therefore the question of attachment of $75 million payout does not arise and the DRT cannot order the same,” Diageo said in its objection. Diageo, further, stated that it is a UK-based company which had signed an agreement with Vijay Mallya outside India and agreed to pay the amount to him outside the country.
As per the agreement reached on February 25, 2016, in lieu of Mallya stepping down as chairman of United Spirits (USL) and also not competing with it in the liquor business anywhere in the world except the UK, Diageo, which now owns the USL, had agreed to pay $75 million. It had paid $40 million immediately on signing the agreement and agreed to pay the balance in five equal installments of $7 million each over the next five years. The next payment is due on February 25, 2017 and the last in February 2021. According to the objection filed by Diageo counsel at DRT, the company contended that it is not a party in the Original Application (OA) filed in 2013 by a consortium of banks led by SBI and hence it cannot be made party in the ongoing debt recovery case.
In their OA filed in August 2013, the consortium of banks under the leadership of SBI had moved DRT for recovery of debt of close to R7,000 crore from Kingfisher Airlines.