SBI told to adjust Mallya's Rs 2k-cr HC deposit

Tribunal suggests that the adjustment would bring down liabilities of banks and reduce interest

The Debt Recovery Tribunal (DRT) here   advised State Bank of India (SBI) to consider the option of adjusting Rs 2,000 crore deposited by Vijay Mallya in the high court against loans taken to run the now-defunct Kingfisher Airlines.

Presiding Officer C R Benakanahalli made an oral comment that the adjustment of dues would bring down liabilities for the banks and reduce interest. DRT was hearing the arguments in the case, first filed in 2013, to recover Rs 7,200 crore owed by Mallya and his companies.

Mallya had said in his application that the banks had already received Rs 1,244 crore in pledged shares since April 2013. An additional Rs 1,250 crore has been deposited in the HC belonging to his United Breweries (Holdings).

DRT also directed the counsels to stop filing additional interlocutory applications, saying it would make it difficult to comply with the Supreme Court’s directive to complete the case before July 9. The Tribunal has set the next day of hearing on June 13.

Mallya,  reportedly in exile in the UK, owes Rs 7,200 crore to a consortium of bankers led by State Bank of India, for loans taken to run the Kingfisher. The banks say Mallya had given personal guarantees, apart from pledging his stake in UB Group companies to raise funds for the airline. This resulted in Mallya losing control over his liquor empire to global players - Diageo in spirits and Heineken in beverages. Mallya claims UB Group  pumped  Rs 4,000 crore in Kingfisher, in addition to the loans taken from banks.

To recover the loans, the banks first filed a case in 2013 against Mallya in DRT here, where UB Group is based. Since then, they have filed 25 more applications, including a petition to direct Diageo and United Spirits to stop payment of $75 mn for a non-compete agreement signed with Mallya.  Diageo paid Mallya $40 mn immediately after the agreement was signed in February.

The SC asked Mallya to disclose his and his family’s assets in India and abroad, while asking DRT to complete the proceedings before July 9.

Mallya says he is keen to arrive at a settlement with the banks.

WEIGHT OF DEBT
Turbulent times of the beleaguered liquor baron

• Mallya pledges shares to raise funds for Kingfisher Airlines
• SBI and consortium of banks provide total loans of Rs 7,200 crore
• Mallya raises Rs 900 crore loan from IDBI Bank  bypassing internal report
• Kingfisher Airlines grounded in 2012
• SBI consortium files case in Debt Recovery Tribunal in 2013
• CBI and Enforcement Directorate register case against Mallya, IDBI employees
• Mallya signs non compete agreement with Diageo, earns $75 million
• Banks appeal in DRT, Karnataka high court and Supreme Court; apex court directs Mallya to disclose assets
• Mallya flees India, stays in forced exile in the UK
• Mallya promises to settle dues
• Supreme Court directs DRT to dispose case by July 9
• DRT hears case, asks banks to adjust Rs 2k cr deposited by Mallya in  high court