HC seeks responses of Centre, KFA on PNB plea

PNB challenged an order of a single-judge bench of the high court which had allowed lawyers to represent the airline in the proceedings

The Delhi High Court today sought responses of the Centre and Kingfisher Airlines on a plea that lawyers cannot appear before lending bank PNB in the process to declare the ailing carrier and its guarantors, Vijay Mallya and UBHL, as wilful defaulters.

Punjab National Bank (PNB), in its plea, has challenged an order of a single-judge bench of the high court which had allowed lawyers to represent the airline in the proceedings to decide whether the carrier and its guarantors, Mallya and United Breweries (Holdings) Ltd (UBHL) are to be held wilful defaulters for non-payment of dues of over Rs 770 crore.

A bench of Chief Justice G Rohini and Justice Rajiv Sahai Endlaw issued notice to the airline and the central government seeking their replies within a week on PNB's plea. "We would like to hear the other side (Kingfisher). Issue notice. Returnable on September 15," the bench said.

PNB contended that it had issued notice on August 21 to the airline asking why it and its guarantors be not declared wilful defaulters for non-payment of dues as per RBI guidelines. PNB had said in its notice that in the event of no reply within seven days from August 21, the airline and its guarantors would be deemed as wilful defaulters.

The single-judge bench of the high court in its August 28 order had also stayed the bank's notice to the extent that the airline and its guarantors would be held as wilful defaulters for not replying within seven days. The court had said the operation of the default notice would not come into effect as PNB will have to give to the airline, within a week from August 28, the documents relied upon by it and Kingfisher was given two weeks time thereafter to respond.

In its appeal PNB has said the airline had not disclosed that a similar plea of the carrier, against United Bank of India, was dismissed by a division bench of the Calcutta High Court on July 16. It has also submitted that the airline's appeal against the Calcutta High Court's decision was dismissed by the Supreme Court on September 2.

The Delhi High Court in its August 28 order had held as "unacceptable" the bank's reasons for not allowing the airline to be represented by lawyers in the proceedings initiated to decide whether the grounded carrier is a wilful defaulter for non-payment of dues and directed that two advocates be allowed to represent Kingfisher.

Kingfisher had moved the court seeking directions to the bank to rescind its August 21 notice and those issued earlier as well as to restrain it from taking any action against the airlines in pursuance of the same.

The court had also said that the hearing before the committee will be held on September 22 and would be concluded the same day within six hours in order to prevent any delay. According to PNB, the airline has wilfully defaulted in payment of outstanding dues of over Rs 774 crore. It has also submitted that Kingfisher Airlines has already been held as a wilful defaulter by United Bank of India for non-payment of dues.