The Controversial debt of Vijay Mallya

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Basant Gupta, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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Controversial businessman Vijay Mallya’s troubles mounted further, with the Supreme Court issuing notice to him seeking his response within two weeks on pleas filed by a consortium of banks demanding direction for freezing his passport and his presence in the court. However, what came as a surprise was the revelation by attorney general Mukul Rohatgi that Mallya had left the country a week back and was probably in London.

“I spoke to the CBI a little while ago and it told me that on March 2, he (Mallya) left the country,” Rohatgi told the bench comprising justices Kurian Joseph and R F Nariman. The bench, therefore, allowed the plea of the AG that the notice to him can be served through his official Rajya Sabha e-mail ID, the Indian High Commission at London, through the counsel representing him before various high courts, the Debt Recovery Tribunal and also through his company.

The next hearing has been scheduled for March 30.

During the brief hearing, the AG said that an amount of more than Rs 9,000 crore was due to various banks and on one or the other pretext, Vijay Mallya avoided to settle them.

There have been various proceedings going on against him in debts recovery tribunals in Bangalore and Goa, he said.

The AG said that Mallya has assets, both movable and immovable, abroad which are far in excess of the loans secured by him in the country. At this, the bench wanted to know how the banks granted him loan under such circumstances. The AG said the loans were granted keeping in mind that Kingfisher Airlines had a fleet of aircraft as well as brand value, and loans were given also on the basis of the logo. The aircraft were attached to the third party. He told the bench that it is permissible to grant loans on intangible assets when Justice Joseph asked if the banks could have granted loans when pledged assets had only one-tenth or one-fifteenth of the value of loan.

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