HC dismisses Kingfisher Airlines appeal

The company got a showcause notice from United Bank of India for alleged wilful default on payment of dues to the tune of Rs 400 crore

Calcutta High Court on Thursday dismissed an appeal by Kingfisher Airlines against a trial court order that chairman Vijay Mallya and board of directors may be represented by its law officers or company secretary on a showcause notice by United Bank of India (UBI) for alleged wilful default on payment of dues of Rs 400 crore. A Bench of Jayanta Biswas and Iswar Chandra Das upheld an order of judge Dipankar Dutta, who had, on July 10, directed the UBI authorities to give a 72-hour notice to Kingfisher for fixing a date for the meeting.

Justice Dutta directed that the company's law officers or the company secretary may appear before the bank authorities on Mallya and other board members' behalf while dismissed the petition of Kingfisher Airlines challenging a communication by UBI that asked Mallya and other board members to meet the bank officials for alleged wilful default on payment of dues.

The airline authorities had in the petition prayed for withdrawal of the notice of wilful default by UBI and that they be allowed a personal hearing along with legal representative on the issue.

They claimed that the bank authorities have refused to allow any legal representative, which would mean a practising lawyer, to accompany Mallya or his board members for the meeting, which was scheduled to be held at the UBI headquarters here on July nine.

They submitted that the bank cited the Master Circular of Reserve Bank of India (RBI) which has not kept any provision for such representation.

The counsels had claimed that as there was no provision it was the discretion of the bank concerned, but UBI disallowed its contention without citing any reason.

The counsels for UBI had stated that a credit limit of Rs 398.22 crore was sanctioned to Kingfisher Airlines, Bangalore, by the bank.

They alleged that repayment was defaulted and funds were diverted.

It was claimed that a consortium of banks with the lead bank being the State Bank of India had extended loans to Kingfisher. UBI was part of the consortium.