Lenders to move DRT to claim Mallya's $75-mn booty

The move by banks comes after Mallya exited the company after he entered into an agreement with its majority owner Diageo

Lenders to defunct Kingfisher Airlines Ltd (KAL) will move Debt Recovery Tribunal (DRT) in Bengaluru against Vijay Mallya, its promoter, next week to claim for recoveries. The lenders are targeting $75 million that Mallya would get from Diageo.

The move by banks comes after Mallya, who built United Spirits as a liquor giant, exited the company after he entered into an agreement with its majority owner Diageo. The deal, inked early this week, absolves Mallya from claims over fund diversion from the company to other UB group firms, including KAL.

Diageo will pay $75 million, or nearly Rs 500 crore, over five years to Mallya in order to bind him with a non-interference, non-compete contract, globally, except in the United Kingdom.

Executives of banks, which are part of the lenders' consortium, met at the State Bank of India (SBI) office to plan legal action, approaching DRT to claim money that Mallya will get was one of them, said senior executive of a Mumbai-based public sector bank. Apart from SBI, officials from lenders including Punjab National Bank, Canara Bank and Oriental Bank of Commerce were present at the meeting.

When asked, an SBI executive said, Finance Ministry was in constant touch with the lenders on Friday. The government has told the banks to pursue all legal provisions in this case.

SBI and PNB have already declared KAL and Mallya as wilful defaulters for failing to pay up dues despite having capacity to do so. Lenders have an option to seek undertaking from him that his stay abroad would not hamper the legal action or proceedings against him at legal forums including courts in India.

An IDBI Bank executive clarified that so far Mallya's availability has not been a problem in legal proceedings for recovery in that case. "Legal system takes time so things have not come to conclusion," he said.

A bank consortium led by SBI has decided to auction Kingfisher House in Mumbai on March 17 in a bid to recover a part of loans worth Rs 6,963 crore from Kingfisher.

Banks have already invoked all recovery mechanisms including Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act with regard to Kingfisher and Mallya.