Kingfisher may face action for not paying staff

Kingfisher Airlines’ problems seem to be never ending: While an income tax (I-T) tribunal directed it to clear its dues in weekly installments from April 7, a government official said the civil aviation regulator might take action against the troubled airline, if its employees and vendors were not paid soon.

But the cash-strapped carrier is likely to get more time to repay its service tax dues. Also, it named three independent directors on its board to comply with rules, after the last of its independent directors quit last week amid growing concerns over its survival.

The Bangalore bench of the I-T Appellate Tribunal directed Kingfisher to pay the remaining amount of the outstanding demand of Rs 349 crore to the I-T department in weekly installments of Rs 9 crore, starting from April 7. Kingfisher was also directed to furnish a bank guarantee against the weekly installments.

The bench had ordered Kingfisher to make a payment of Rs 44 crore of the outstanding demand on or before yesterday, which the airline complied with. It directed the department to lift the attachment of bank accounts immediately, so that Kingfisher could start smooth functioning and would be in a position to make the payments.

Spelling more troubles for Kingfisher, a government official in the know said: “The directorate general of civil aviation is likely to take action against Kingfisher, if it does not clear the dues of vendors or make salary payments to its employees soon. There is a concern whether the airline will be able to operate even the current truncated schedule.” He said the decision was likely to be conveyed to the airline chairman, Vijay Mallya, at a meeting that could happen as soon as this week.

Meanwhile, Kingfisher named Manmohan Singh Kapur, Lalit Bhasin and Shrikant Ruparel as new independent directors on its board.

While Kapur is a former chairman and managing director of Vijaya Bank, Lalit Bhasin is an accomplished lawyer and head of law firm Bhasin & Co. Ruparel is a former managing director of Kolhapur Sugar Mills and was on the State Bank of India board for 18 years. Indian rules require at least half of the directors on a publicly listed company to be independent.

“We cannot kill Kingfisher. We might give it some more time, if it pays some dues by March 31,” an official said. Kingfisher, which has cut down its operations substantially and has asked most staffers to stay at home, has agreed to pay Rs 10 cr of its Rs 76-cr service tax dues this financial year.