The bank filed four applications on March 2, 2016, seeking orders for restraining payment of the severance package to Mallya and issue direction for depositing the money with the DRT. (Reuters)
The debt recovery tribunal (DRT) on Friday reserved orders on an application moved by State Bank of India (SBI) pertaining to the attachment of the $75-million severance package Diageo has promised UB Group chairman Vijay Mallya. A ruling on this application is expected to be made on Monday.
SBI’s plea in the DRT holds that the bank should have the first right of the funds from Diageo as Mallya had stepped down from the board of United Spirits and the money should be deposited in the DRT.
There are four applications pending with the DRT and this was the one particular application (severance package) it chose to deal with on Friday. The other applications deal with matters like seizure of Mallya’s assets, impounding of his passport and his arrest.
The bank filed four applications on March 2, 2016, seeking orders for restraining payment of the severance package to Mallya and issue direction for depositing the money with the DRT. Senior counsel Uday Holla, who appeared on Mallya’s behalf, filed his objections on Friday afternoon and later presented his argument.
After an hour of arguments and counter-arguments from SBI and Mallya’s counsel, presiding officer judge R Benakanahalli reserved his orders. The DRT indicated it would take up other applications immediately thereafter.
In his argument, Holla submitted that the $75-million severance package being paid by Diageo to Mallya cannot be attached by the DRT because Mallya is getting the sum from Diageo for signing a non-compete agreement.
Under this agreement, he will not enter into the liquor business and compete with Diageo for the next five years. He also argued that Mallya is not barred from entering into any such business deal by any court. He referred to various judgements of the Supreme Court and high courts to prove that the money cannot be attached by the court.
Holla further submitted that Mallya is a respectable member of the Rajya Sabha and he would not leave the country, demeaning the Parliament.
Making a counter-argument, George Joseph of Dua Associates, which represents SBI, argued that Mallya’s statements that appeared in the newspapers cannot be taken for its face value. “He is only taking everybody for a ride. In fact, he himself is demeaning the Parliament by not repaying the debt to the banks. It is a sin not to repay loans, which run into Rs 10,000 crore after including interest over the years,” he said.
He stated that it was essential to direct Mallya to deposit the money with the DRT so that it will not go anywhere. He also argued that Mallya has not made any affidavit by himself and it was filed by a general power of attorney holder on behalf of Mallya. The GPA holder has not given proper reason for Mallya’s absence and she does not even know where Mallya is staying currently, he said.
After listening to the arguments on both sides with respect to garnishee application, Benakanahalli reserved orders.