 "Kingfisher says declared wilful defaulter for not paying Rs 7.5 crore")
The now-defunct Kingfisher Airlines (KFA) might have not repaid loans amounting to nearly Rs 6,500 crore borrowed from a consortium of banks, but it was declared a wilful defaulter for not repaying an overdraft of Rs 7.5 crore to the United Bank of India (UBI). The grounded airline company had used this overdraft facility to avoid suspension by the International Air Transport Association.
The airline told the Calcutta High Court that it had every intention to repay this money but failed to do so as State Bank of India (SBI) did not release funds from a trust retention account through which all transactions of Kingfisher was routed. “SBI as the lead bank was operating the trust retention account. Kingfisher had no control over such account,” S Pal, senior advocate arguing on behalf of the airline company, told the court.
The Calcutta High Court last week had dismissed UBI’s decision to declare Kingfisher and its directors wilful defaulters. Bankers familiar with the development said the ruling was in favour of Kingfisher only on “technical ground” and it does not prevent UBI from re-initiating the process of declaring the company a wilful defaulter.
“SBI by its letter dated April 8, 2013, informed UBI the commitment of payment made by Kingfisher to UBI was that of Kingfisher and that SBI was not in a position to make the payment. The net result was that UBI did not receive payment for the temporary overdraft of Rs 7.5 crore from Kingfisher,” Justice Debangsu Basak noted in his judgment on December 24.
The overdraft facility offered by UBI was over and above the loans (around Rs 400 crore) it had given to Kingfisher.
The airline told the Calcutta High Court that it had every intention to repay this money but failed to do so as State Bank of India (SBI) did not release funds from a trust retention account through which all transactions of Kingfisher was routed. “SBI as the lead bank was operating the trust retention account. Kingfisher had no control over such account,” S Pal, senior advocate arguing on behalf of the airline company, told the court.
The Calcutta High Court last week had dismissed UBI’s decision to declare Kingfisher and its directors wilful defaulters. Bankers familiar with the development said the ruling was in favour of Kingfisher only on “technical ground” and it does not prevent UBI from re-initiating the process of declaring the company a wilful defaulter.
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According to Pal, while Kingfisher had requested SBI to transfer the money to UBI, the country’s largest bank SBI had said the balance in the trust retention account was not sufficient for the requested fund transfer. However, SBI had assured that it will make the transfer as and when money is received into that account.
“SBI by its letter dated April 8, 2013, informed UBI the commitment of payment made by Kingfisher to UBI was that of Kingfisher and that SBI was not in a position to make the payment. The net result was that UBI did not receive payment for the temporary overdraft of Rs 7.5 crore from Kingfisher,” Justice Debangsu Basak noted in his judgment on December 24.
The overdraft facility offered by UBI was over and above the loans (around Rs 400 crore) it had given to Kingfisher.