DRT orders banks tostart recovery of loans from Mallya, firms

In yet another blow to 'wilful defaulter' Vijay Mallya, Debt Recovery Tribunal today ordered the SBI-led consortium of banks to start the process of recovering over Rs 6,203 crore, at 11.5 per cent annual interest rate, from the embattled tycoon and his companies in the Kingfisher Airlines case.
"I hereby ask the bankers to start the process of recovery of Rs 6203,35,03,879 crore and 42 paise at the interest rate of 11.5 per cent per annum from Mallya and his companies, including UBHL, Kingfisher Finvest and Kingfisher Airlines," DRT Presiding Officer K Sreenivasan said in his order here.
At the jam-packed, newly rented space of DRT which was inaugurated only this morning, the Presiding Officer disposed of 20 InterlocutoryApplications (IAs), including several by Mallya and his firms.

The lenders had moved DRT in 2013 to recover dues from the defunct airline.
SBI had filed three other applications, including one seeking Mallya's arrest and impounding of hispassport, for 'defaulting' on loans.
Sreenivasan decreed that if, in spite of the sale of the properties mentioned in schedules, the OA (the Original Application) amount was not fully realised, then the applicant bank was at liberty to proceed against the person and other properties of the defendants as required under law and also as advised.

In the event of failure of defendants to pay the OA amount, the applicant bank was at liberty to sell the hypothecated, mortgaged, movables and immovable properties described in schedule of the main petition, according to law as sought by the applicant bank, he said.

The PO also said: "The applicant bank shall file latest memo of calculation of OA amount together with interest, costs etc, to be paid by defendants duly taking into account the amounts, if any, paid by the defendants and or amount realised by sale of assets, etc, during the intervening period after filing the OA, to enable the office to prepare Recovery Certificate for the amount to be paid by the defendants to the applicant bank."
Sreenivasan said that the office is directed to issue Recovery Certificate as sought by the applicant bank in the OA and "do the needful as required under law forthwith".

The order brings an end to the nearly three-year legal battle in the Tribunal by the consortium, comprising 17 banks, to recover the money owed to them by the defunct airlines.
On 'lifting of corporate veil', Sreenivasan said it was
intriguing as to why Kingfisher Finvest should worry about its veil being lifted when according to them they are so independently doing their own business and sale of the shares was only a part of their whole business.
The bankers had filed IA seeking lifting of corporate veil to pierce the protection against personal liability enjoyed by individuals controlling Kingfisher Finvest.

The doctrine of Lifting of Corporate Veil means disregarding the corporate personality and looking behind at the persons controlling the company.
Sreenivasan further said if only what they have stated was true, Kingfisher Finvest should not be complaining on this aspectand should have lifted the veil themselves voluntarily and proved their innocence/independence as contended.
"Unfortunately, for obvious reasons, Kingfisher Finvest has failed to do so. The more they resist to lift their veil, the more is the suspicion about their transactions in question," he said.
"Under the circumstances, this tribunal has to come to the irresistible conclusion that Kingfisher Finvest is nothing but an extended arm of Mallya," he added.

Mallya has been declared a Proclaimed Offender by a special PMLA court in Mumbai after he left the country on March 2 last year for the UK.
The declaration came on an Enforcement Directorate plea in connection with its money laundering probe against him in the alleged bank loan default case.
DRT had on March 7 last year restrained Mallya from withdrawing USD 75 million exit payment from British liquor giant Diageo as part of a severance package for quitting Diageo-owned United Spirits (USL) as its Chairman under a 'sweetheart deal'.
However, on July 13 the tribunal had ruled that the order had become 'infructuous' as USD 40 million had already been transferred prior to the March 7 directive.

Later, passingorders on another IA, the tribunal had directed Diageo Plc todeposit with it the remaining USD 35 million.
DRT had on July 16 allowed another IA of the bankers for lifting of the corporate veil.
It had also dismissed the IA filed by Dutch beer major Heineken, seeking impleadment in the Mallya case to enjoy Rightof First Refusal over UBL shares.
(REOPENS MDS12)
Commenting on the development, UB group said that it would challenge the order of the DRT by filing an appeal against it.
"We will await a copy of the orders passed by the DRT and file an appeal accordingly," said a UB Group spokesperson.