‘We think Diageo is yet to pay Mallya’

By: | Updated: March 10, 2016 1:21 AM

Diageo is required to disclose such payment to LSE, argues SBI; DRT stops payment of $75-m exit fee to Mallya.

State Bank of India (SBI), the lead banker to Kingfisher Airlines, was under the impression that Diageo had not paid a part of the $75-million exit payout to Vijay Mallya when they approached the Debt Recovery Tribunal (DRT) in Bengaluru for blocking the payout. The Bank had moved the Debt Recovery Tribunal (DRT) last week with an interlocutory application (IA) for attaching the payment by Diageo to Mallya. It had also sought impounding Mallya’s passport and his arrest.

“We assumed that Diageo had not made any part payment to Mallya at the time of filing our application in the DRT on March 2. If it is paid already, Diageo had to disclose that to the London Stock Exchange. When they signed agreement with Mallya on February 25, Diageo just mentioned that they will pay immediately. But, they have not clearly said that they have paid the money already. So, we think it is yet to be paid,” a senior counsel to SBI told FE.

The DRT in Bengaluru on Monday restrained payment of $75 million exit fee by Diageo to Vijay Mallya. It ordered for witholding the payment until the pending case is resolved.

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The original application was filed by SBI and other consortium partners in 2013 before DRT for recovery of over R7,000 crore dues from Kingfisher Airlines. The matter is posted for further hearing on March 28.

According to State Bank of India’s (SBI) counsel, Diageo had to pay the first installment of the exit package by end of March this year.

“If it is already paid to Mallya, we need to examine how it can be recovered from him,” the counsel added without explaining the next course of action by them.

Mallya, who stepped down as non-executive chairman of United Spirits, now owned by Diageo, has outsmarted the bank by not only taking the first installment of the package, but also leaving the country before they could move the Supreme Court against his exit.

Diageo sources, however, said that Mallya was paid the first tranche of package immediately after they announced agreement with him on February 25. “As announced, $40 million has been paid to Mallya already. The next tranche is due in 2017. Now it is Mallya’s personal asset and it is for banks to recover,” the company sources said.  Diageo was yet to receive order copy from the tribunal. “We will review once we receive the order copy officially,” the sources said.

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