Standard Charted Bank alleges Mallya colluded with bankers

Standard Charted Bank today levelled allegations of collusion between liquor baron Vijay Mallya and consortium of banks led by SBI, during the hearing of its interlocutory application seeking vacation of the Debt Recovery Tribunal interim order, preventing it from transacting with British liquor giant Diageo Plc.
Making submissions before DRT Presiding Officer C R Benakanahalli, SCB's counsel G Krishnamurthy argued that the fact that Mallya did not object to the interim order passed by DRT preventing SCB's transaction with Diageo Plc stands clear 'testimony' to collusion between the liquor baron and banks.
Elaborating, he said, "When DRT passed the interim order, preventing any transaction between Diageo Plc and SCB, Mallya did not object to it - This stands clear testimony to a collusion between Mallya and banks."

"Mallya could have objected to the interim order, but did not do it. Why he did not object? Because it served his purpose as the interim order prevented the sale and transfer of UBHL shares that were to be acquired by Diageo who had issued a guarantee to SCB for around Rs 877 crore loan to Watson, a holding company of Mallya," Krishnamurthy added.
Diageo, the world's largest spirits maker which acquired control of United Spirits (USL) in 2012, had issued a guarantee to SCB for a USD 135 million (around Rs 877 crore) loan to Watson to release certain United Breweries Holding Limited (UBHL) shares that were to be acquired as part of the deal.

The company, in their statement, had said that the risk had arisen due to default by Watson in May and DRT preventing sale or any other transfer of such UBHL shares in June as part of the enforcement process pending further orders following the petition by bankers.

Responding to SCB's allegations, the bankers' Counsel, in a counter argument, said, "If the bankers had colluded with Mallya, we would not have been waging a court battle against the high-profile defendent."
Making submissions before the tribunal, Krishnamurthy pleaded for vacating its interim order to allow transaction between Diageo Plc and SCB.
Submitting the grounds for vacating the interim order, Krishnamurthy argued that the DRT does not have the power to hear the case where the two entities were foreign entities and were not party at the time the transaction deal was struck.