Where Is Vijay Mallya?

The erstwhile “King of Good Times” (the moniker that he liked to be known by) has allegedly fled the Indian coop, in what looks like a desperate attempt to get away from his creditors–a consortium of 13 Indian banks that want their Rupees 9,091 crore (or $1.34 billion per today’s conversion rate) that they had loaned to his Kingfisher Airlines. The airline, once the second-largest in the country, has been grounded since 2012.

The consortium of lenders, led by the State Bank of India, had filed a petition on Tuesday with the Supreme Court of India, the country’s highest court, to ban the liquor baron, and the founder of the now defunct airline, from leaving the country because of the massive amount they are owed. (SBI declared Mallya a wilful defaulter in November.) 

On Wednesday the Supreme Court issued a notice to Mallya and gave him two weeks to respond to why his passport should not be impounded.

Mallya sold in 2012 most of his shares in United Spirits, which was a part of his UB Group, and gave management control to Diageo Plc, maker of Johnnie Walker whisky and Smirnoff vodka, which owns about 55% of the Indian company. In April last year, the United Spirits board started a process to remove Mallya as its chairman due to alleged financial irregularities. Mallya denied those allegations and refused to resign. He finally caved in last month and resigned as chairman of United Spirits, and agreed to give up his board position as well, ending months of acrimonious debate with Diageo. In return, Diageo agreed to pay him $75 million, over a five year period (of which $40 million was reportedly paid to him immediately, with the balance to be paid over five years.) 

It was after this settlement that banks and enforcement agencies moved to take action against Mallya. The banks demanded the first right to the cash and requested the Debt Recovery Tribunal to block the $75 million payment, which it did. (But the $40 million seems to have already been paid before the tribunal’s order.)

The case raises questions of jurisdiction–Mallya is a non-resident Indian and the payment to him was made by a foreign company. So do Indian creditors have the right to that cash to block that payment? These matters will no doubt be dealt in the courts in the next few weeks and may set a precedent for others.

In a press statement over the weekend Mallya blamed the media for carrying out a “near hysterical campaign” against him, adding, “Recognising that the media was indulging in sensationalism, I thought it was best to let the drama play out – never spoil a sensational story with the truth.”
He said that he was trying to make a one-time settlement with the banks, and to that end he had had three meetings and follow up calls in the recent past. He also said that while he had been made “the poster boy of all bank NPAs’ [Non Performing Assets], there were others worse than him who had been let off scot-free. 

“Banks have NPA’s of Rs. 11 lakh crores and have borrowers who owe much more than the amount allegedly owed by Kingfisher Airlines to the Banks – a fact never alluded to or widely reported by the media as in my case. None of these large borrowers (whose debt is significantly more than the KFA debt) have been declared wilful defaulters, but unfortunately, United Breweries Holdings and I have been declared wilful defaulters by certain Banks on technical grounds. I have legally challenged these declarations.” 

Mallya is also accused of money-laundering case against him for allegedly sending overseas Rupees 900 crore ($133 million) that his airline borrowed from a bank.

Mallya dropped off Forbes’ list of the richest 100 Indians in 2014. He was on the list in 2013 at a net worth of $800 million.

He remains chairman of United Breweries, maker of Kingfisher beer, in which Dutch brewer Heineken NV is the single largest shareholder with a 42.07 percent stake.

Vijay Mallya has left India, Centre informs Supreme Court

Industrialist Vijay Mallya left the country the day public sector banks, to whom he owed over Rs. 9000 crore in loans, moved the Debt Recovery Tribunal (DRT) on March 2, 2016 against him.

Attorney-General Mukul Rohatgi, appearing for consortium of banks, revealed this when asked by the apex court about the whereabouts of Mr. Mallya.

Mr. Rohatgi told a Bench of Justices Kurian Joseph and Rohinton Nariman that he asked the CBI about Mr. Mallya, and in turn was informed that the Rajya Sabha MP had left Indian shores on March 2, the very day the banks approached the DRT.

Incidentally, the banks are before the Supreme Court with a plea to restrain him from leaving the country by ordering the seizure of his passport.

"There seems to be very little left for us," Justice Nariman remarked.

"This is the information CBI gave me," Mr. Rohatgi responded.

Mr. Rohatgi said the apex court to pass an order now directing Mr. Mallya to appear before this Bench, passport in hand.

"We are not behind his blood. We want to sit across him and get back our money. We want to settle the loans," Mr. Rohatgi said.

Mr. Rohatgi said the "only information" is on social media sites, which show that most of his assets are abroad. "Only a fraction is in India... may be one-fifth".

"Then how did you give these loans. Was there no secured assets on these loans?" Justice Kurian asked.

Mr. Rohatgi replied that at the time of the loans, Kingfisher Airlines was a brand at its peak, which had assets worth some thousand crores, and then "it crashed".

"We had some assets (as security) for the loans advanced," Mr. Rohatgi said.

The Bench then issued notice to Mr. Mallya through his company United Breweries Holdings Limited, his counsel, the Indian High Commissioner at the U.K. and via his official Rajya Sabha email address.

The court sought a reply in two weeks and fixed the hearing for March 30.

When Justice Kurian asked Mr. Rohatgi what guarantee was there that Mr. Mallya would be in the U.K. to receive notice, Mr. Rohatgi replied, "He has tremendous assets there. We know he would be there... most likely".

Keywords: Supreme Court, Vijay Mallya, Kingfisher Airlines