Embattled liquor tycoon Vijay Mallya, who is based in Britain for over five years, faces the prospect of bailiffs knocking on the doors of his luxury London home any time now after a British court ruled that a bank pursuing its unpaid dues can take charge of the high value property.
The 65-year-old former Kingfisher Airlines boss intends to appeal against the ruling on Tuesday, when a High Court procedural judge concluded that Mallya’s position in the matter was “completely hopeless” at the end of an extended stay from eviction due to the pandemic.
The 18/19 Cornwall Terrace property, which is located in one of central London’s prime hubs of Regent’s Park near Madame Tussauds wax museum, is of such high value that the court only referred to it as being worth “many tens of millions of pounds”.
Deputy Master Matthew Marsh noted in a virtual hearing this week to deliver his judgment that Mallya’s 95-year-old mother was currently resident at the property. This would imply that Mallya has been predominantly using his Ladywalk mansion in the Hertfordshire village of Tewin, some 40-km outside of London, but has been known to divide his time between his various homes in Britain.
In earlier UK court proceedings, the Cornwall Terrace property was described as a “high class home for Dr Vijay Mallya and his family members and United Breweries Group corporate guests”.
The saga of the legal battle by Mallya and the co-defendants in the case – his mother Lalitha and son Sidhartha Mallya – to hold on to the property dates back to March 2017 when the five-year term on a loan from Swiss Bank UBS expired.
The bank then proceeded to redeem the GBP 2.4 million unpaid amount of the loan, taken out to replace a previous mortgage borrowing from Lloyds Bank. The loan itself was taken out by Rose Capital Ventures, a British Virgin Islands firm linked to the Mallya family trust.
During protracted hearings, Mallya’s legal team claimed that the bank had called in the loan ahead of an agreed period, while the bank had insisted that it is within its rights to call in the mortgage for non-payment.
A court order issued in May 2019 ruled that UBS had an “immediate right to possession” and stipulated that unless the mortgage has been redeemed by April 30, 2020, Mallya and the co-defendants must immediately hand over possession of the apartment by 4pm local time on that date. They were also prohibited from making any further applications to “postpone or suspend the date for giving up possession”.
However, the pandemic led to an “exceptional regime”, which meant the bank was unable to pursue this order within the deadline. It moved the court once again last year, followed by Mallya’s legal team filing an application of stay. It was claimed that the bank had placed “unreasonable obstacles in the path of the defendants” to pay off the loan via liquidation of certain funds.
The court, however, found in favour of UBS on the issue, noting that the bank was within its rights to inquire about the source of funds being used for repayment.
“The concerns raised by the claimant (UBS) were genuine and proper concerns. The claimant has acted reasonably,” ruled Deputy Master Marsh.
He also questioned the bonafide of a so-called “game changer” letter from a company expressing its intent to acquire the property for GBP 43 million, at which point the court was told that it is no longer being pitched as a “home to the Mallya family” and will be sold to realise funds to pay off the mortgage.
Marsh went on to turn down permission to appeal against his ruling, leaving Mallya with a recourse of appealing before a senior judge of the Chancery Division. However, Deputy Master Marsh expressed doubt over the likelihood that another judge would arrive at a different conclusion in a case that is already over 20 months beyond a court-imposed deadline of April 2020.
Meanwhile, Fenner Moeran QC, the barrister for UBS, made it clear that UBS intends to proceed with the enforcement order without delay.
This case marks one of a series of legal proceedings being juggled by the UB Group Chairman, including being declared bankrupt in July 2021 to pave the way for a consortium of Indian banks led by the State Bank of India (SBI) to pursue a worldwide freezing order to seek repayment of debt owed by his now-defunct Kingfisher Airlines.
Meanwhile, Mallya is wanted in India to face fraud and money laundering charges and remains on bail in the UK while a “confidential” legal process is completed.
After his extradition to India was ordered by the UK government in February 2019, Mallya went on to exhaust all legal avenues to contest the order in British courts. The businessman is now believed to be relying on an application seeking political asylum in the UK.