Bangalore: In a setback for long defunct Kingfisher Airlines Director Vijay Mallya, the Debt Recovery Tribunal has restrained him from withdrawing an amount of approximately Rs 515 crore ($75 million) received from Diageo as a severance package.
Admitting a plea by the State Bank of India, which led a 17-bank consortium of lenders that Mallya borrowed over Rs 7,000 crore from, the court refused to overlook Mallya's debts to the SBI and posted it for hearing on March 28 when the matter of his arrest and seizure of his passport is also scheduled to come up.
The court, while staying disbursement of Diageo's package of Rs 500 crore to Mallya, also asked him to publish his deal with Diageo which absolves him of all liability relating to United Spirits, a company that the family set up and has now been sold to the UK-based Diageo.
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The development comes as a double whammy for Mallya who, along with some others, has today been charged by the Enforcement Directorate under the Prevention of Money Laundering Act in a case related to an IDBI loan to Mallya's Kingfisher Airlines.
Mallya's deal with Diageo is being termed as a sweet one as it absolves him of all liability in United Spirits in a Rs 500 crore deal. Mallya was to receive a significant amount of the package immediately.
Mallya, who has agreed to step down as Chairman of United Spirits Ltd in return for $75 million to be paid by Diageo, has maintained that he is not a "borrower or a judgement defaulter" and he has challenged the "willful defaulter" tag by some banks, which he alleged did not go after borrowers who "owe much more than the amount allegedly owed by Kingfisher Airlines."
He had yesterday also sought to defend himself saying he is being maligned by the media and banks, which are already reeling under severe stress on account of bad loans. “I am being painted as the poster boy of bad loans (NPAs),” he had said in a statement.
Mallya, on the other hand, has also maintained that the lenders were well aware of the financial conditions of Kingfisher Airlines at the time of lending to him. The stance also merits consideration as the banks have woken up to attempt recovery only after the Diageo deal, which spurred rumours of Mallya permanently settling abroad.
However, several loans provided to Mallya's Kingfisher came at a time when the airline was already facing a ‘defunct' stature. The latest charge by the ED is also probing whether Mallya had offloaded a certain amount of the IDBI loan to an offshore account.
The possibility of bank officials receiving kickbacks in the deal is also being looked into.