Mallya case: DRT reserves order on SBI plea for lender's right

The Debt Recovery Tribunalhere today reserved its order on state-run SBI's application seeking securement of the lenders' first right on the USD 75 million payout from Diageo to UB Group promoter Vijay Mallya under a recent sweetheart deal.
The State Bank of India has filed three other applications including one seeking arrest of Mallya and impounding of his passport, as the bank approached DRT seeking action against him for defaulting on loans.
SBI, which heads the consortium of 17 lenders to the grounded Kingfisher Airlines, had moved DRT here against the airline's chairman Mallya in its bid to recover over Rs 7,000-crore dues from him.

DRT judge Benakanahalli, on priority basis, took up the application for securing a first right on the USD 75 million severance package that Mallya will be getting for quitting Diageo-owned United Spirits (USL) as its Chairman last week under a sweetheart deal.
The judge said other three applications - seeking impounding of Mallya's passport, getting him arrested and gettingfull disclosure of his assets in the country and abroad - willbe heard later.
"For now, I am taking up the application seeking tosecure lenders' first right on the payout from Diageo on priority basis. I will take up other applicationslater," he said.

Earlier, after filing the objections before DRT, Mallya's counsel Uday Holla submitted that USD 75 million cannot be attached because his client is getting the severance package after signing a non-compete agreement under which he would not enter into liquor business for next five years.

On the application seeking Mallya's arrest, Holla said such an action would tantamount to demeaning theinstitution of Rajya Sabha because he is a "respected member"of the Upper House.
Holla also claimed his client was a "small-time"defaulter unlike companies like Reliance who he claimed are bigger defaulters, and the banks were hounding the small defaulters and leaving big defaulters off the hook.

George Joseph, counsel for SBI, submitted that going by
Mallya's track record, banks cannot take his statements on face value and be sure of getting money from Mallya if the USD 75 million are not secured.
"Going by Mallya's track record, we cannot take his statements on face value. Once the money is secured, we will be sure that it will not go anywhere, else the bank will not get anything," he said.
Holla also submitted that due to the increasing fuel prices, not only his client's airline Kingfisher Airlines, but also some of the known carriers around the world suffered losses, and to pressure Mallya, asking him to pay the debt "is not okay".

"It is not that (only) Mallya's airline was suffering losses, but other airlines around world also suffered - Swiss Air, theIndian Airlines and four US airlines, also suffered hugelosses. Even as my client was paying up the loans, it is notright to hound my client for the payup," he said.
He said the airline had already paid Rs 1,500 crore and "what is it that the banks want more when he has paid the principal amount in spite of airline industry facing crisis the world over."
Mallya and Kingfisher Airlines owed Rs 7,800 crore toa consortium of 17 lenders led by SBI which had anexposure of over Rs 1,600 crore to the now defunct airline.

Since January 2012, the loan was not serviced.
Otherlenders include Punjab National Bank, Bank of Baroda, CanaraBank, Bank of India, Central Bank of India, Federal Bank, UcoBank and Dena Bank among others.
Last year, SBI declaredMallya as wilful defaulter.
Last month, Punjab National Bank had also declared him, his group holding company United Breweries Holdings and the long-defunct Kingfisher Airlines as wilful defaulters.
As part of a deal, Diageo said it would pay USD 40million immediately to Mallya with the balance being payablein equal installments over the next five years.
It will alsoabsolve Mallya of all liabilities over alleged financiallapses at the company founded by his family.