Diageo plc today challenged Debt Recovery Tribunal's power to direct it to deposit USD 40 million, a part of USD 75 million payout package signed with liquor baron Vijay Mallya who is facing a multi-agency probe including for alleged money laundering.
The company contended before the tribunal that the amount was paid outside India.
"The amount of USD 40 million, which is a part of USD75 million payout package between Mallya and us, was paid outside India and hence the DRT does not have power to directus to attach the money before the tribunal. Such a deal doesnot fall in the jurisdiction of DRT," Diageo argued.
As soon as the proceedings began at the tribunal here, DiageoCounsel submitted the copy of the objections filed againstSBI-led Bankers' memo, seeking depositing of USD 40 millionbefore the DRT.
The consortium led by State Bank of India had filed a memo putting a claim on the payout of USD 40 million to Mallyaby Diageo as part of the sweetheart deal.
According to the deal, Diageo agreed to pay Mallya USD75 million in five instalments in lieu of the liquor baron stepping down from the post of Chairman of United Spirits.
An amount of USD 40 million was paid immediately after Mallya quit from chairman's post.
Making submissions before DRT Presiding Officer C R Benakanahalli, Diageo's counsel prayed that the tribunal should rejectthe bankers' memo for its inconsistent claims on relief.
Diageo also argued that USD 40 million was paid to Mallya on February 25, much before DRT's March 7 order, and hence the attempt of the bankers to recreate liability is questionable and untenable.
The IDBI Counsel also said that Mallya's liability to
Kingfisher will have to be collected by gaining through the doctrine of reverse piercing because he has controlling interest in all companies and also is the chief promoter and controlling interest.
"Therefore, all his companies will have to be put on one platform and, Mallya has to be looked at as a common denominator and should be held responsible to settle dues of Rs 1,746 crore to IDBI," he argued.
Challenging the arguments, USL Counsel said Mallya cannot be looked at as common denominator and should be considered independently because the liquor baron is no way connected to USL.
Moreover, USL is not indebted to IDBI as it has cleared all the dues to them, including interests on loan and penalties thereof, he said.
The USL Counsel also questioned the reason for IDBI not make any reference to the clean chit given by the Punjab National Bank (PNB) to USL of clearing all dues.
"I ask myself, why IDBI is not making any submission of PNB giving no-objection certificate to USL, which had cleared all its dues," he contended.
USL Counsel also said Mallya cannot be looked at as common denominator and should be considered independently.
Countering IDBI argument, Srinivasan said "the plea of USL not to look at Mallya as common denominator is a pre-designed act by him to divest himself from accountability and run away to London."
Mallya, whose now-defunct group company Kingfisher Airlines owes over Rs 9,000 crore (Rs 90 billion) to 17 banks, had left the country on March 2 and is in the UK.
The beleaguered businessman has been declared a proclaimed offender by a special PMLA court in Mumbai on a plea by the Enforcement Directorate in connection with its money laundering probe against him in the alleged bank loan default case.
