CBI sleuths on Saturday conducted searches at residences and offices of flamboyant business tycoon Vijay Mallya and his now grounded Kingfisher Airlines in the case of a Rs.900 crore loan to it by state-run IDBI Bank Ltd and now declared a non-performing asset.
The searches were conducted at five places -- offices of Kingfisher and residences of 60-year-old Mallya, an independent member of the Rajya Sabha from Karnataka, and others in Bengaluru, Mumbai and near Panaji, the Central Bureau of Investigation said in a statement in New Delhi.
A CBI team from Mumbai searched 'Kingfisher Villa', Mallya's expansive property in the tony Candolim beach area, located 15 km from Panaji.
"Several incriminating documents found during searches are being scrutinised and investigation is in progress," the statement added.
The Bengaluru-based United Breweries Ltd, the holding company with substantial equity stake in the airline, admitted that CBI officials visited its office in Bengaluru, Mumbai and near Panaji.
More From This Section
"We cooperated with the officials and provided required documents and will continue to offer cooperation," it said in a statement.
The investigation agency had registered the case against Mallya as the airline's director, its chief finance officer A. Raghunathan and unknown officials of the Mumbai-based IDBI Bank for allegedly violating banking norms in sanctioning and disbursing credit limit of Rs.900 crore.
"It is alleged that officials of IDBI (Bank) colluded with promoters/directors and CFO of the airline and sanctioned credit limits of Rs.900 crore in violation of banking norms, thereby causing loss to the bank by such fraudulent act," the statement said, adding the loan came in spite of uncertainty over huge loans extended earlier by a consortium of banks to the defunct airlines. Some banks in the consortium have declared Mallya as a "wilful defaulter".
Sources said what raised suspicion was the fact that it was the first exposure of Kingfisher to the bank and the huge loan was granted despite negative rating and net worth of the airline being eroded.
While registering a preliminary inquiry in 2014 into the questionable sanction of loan by the bank, the CBI had said: "There was no need for the bank to take the exposure outside the consortium when already other banks' loans were getting stressed."
Debt-ridden Kingfisher Airlines was virtually grounded on October 1, 2012 as the passenger carrier cancelled all 50 flights after a section of its employees went on strike leaving thousands stranded, while it failed to pay dues running into crores to its service providers, including state-run oil firms, Airport Authority of India and consortiums of Mumbai and Bengaluru airports. It lost its operator's licence on October 20, 2012.
A string of Indian banks have an exposure of nearly Rs.7,000 crore in loans to the airline, with State Bank of India leading with Rs.1,600 crore.
Punjab National Bank, Bank of India and Bank of Baroda have loan exposure in the range of Rs.800 crore, Rs.650 crore and Rs.550 crore.
A consortium of 17-state-owned financial lenders led by SBI was formed to recover the money.
The Kolkata-headquartered United Bank of India (UBI), which was owed Rs.400 crore by Kingfisher, first declared Mallya a wilful defaulter in May 2014. But Mallya's lawyers managed to convince the Calcutta High Court in December that the process of declaring him so was faulty.
However after apex bank Reserve Bank of India (RBI) extended the ambit of the term "wilful" defaulter to include not only the primary defaulting entity, but also the guarantors of its loans, and individuals on the boards of companies declared to be in wilful default, Mallya was again declared a wilful defaulter this year.
Mallya owns a 'Hollywood' style Kingfisher Villa at Candolim in Goa. Another prime property is Kingfisher House, measuring 17,000 square feet in Mumbai's suburban Andheri locality. Reportedly, the property was originally hypothecated to Punjab National Bank in 2010.