Karnataka High Court orders issue of notice to Vijay Mallya

BENGALURU: The Karnataka High Court today ordered issue of notice to liquor baron Vijay Mallya and his defunct Kingfisher Airlines and nine other respondents on a petition filed by bankers, including SBI, seeking his arrest and impounding of his passport for defaulting on loans.

The notice, issued by Justice AS Bopanna came even as the Debt Recovery Tribunal reserved its order on one of the four applications filed by State Bank of India, seeking securement of the lenders' first right on the payout from Diageo to Mallya.

Thirteen bankers, including SBI approached the high court seeking arrest of Mallya and impounding of his passport along with two other pleas after they moved the DRT to take up their pleas on a priority basis.

The top state-run lender has approached DRT seeking action against the UB Group promoter for defaulting on loans.

SBI, which heads the consortium of 17 lenders to the grounded Kingfisher Airlines, had moved DRT here against the airline's chairman Mallya in its bid to recover over Rs 7,000 crore due loans from him.

DRT judge Benakanahalli, on priority basis, took up the application for securing a first right on the USD 75 million severance package that Mallya will be getting for quitting Diageo-owned United Spirits (USL) as its chairman last week under a sweetheart deal.

The judge said the other three applications - seeking impounding Mallya's passport, getting him arrested and getting full disclosure of his assets in the country and abroad - would be heard later.

"For now, I am taking up the application seeking to secure lenders' first right on the payout from Diageo and getting full disclosure of his assets in the country and abroad on priority basis. I will take up other applications later," he said.

After filing objections before DRT, Uday Holla, Mallya's counsel, submitted that USD 75 million cannot be attached because his client is getting the severance package after signing a non-compete agreement under which Mallya would not enter into liquor business for the next five years.

On the application seeking Mallya's arrest, Holla said his client's arrest would be tantamount to 'demeaning' the institution of Rajya Sabha because he is the respected member of the upper house of Parliament.

Holla also submitted his client was a "small-time" defaulter unlike companies like Reliance who he claimed are bigger defaulters and the banks were hounding small defaulters and leaving big defaulters off the hook.

"Recently the RBI had said that these banks do not take action against large fries, but small fries. My client Mallya is a small defaulter compared to Ambani's Reliance.

Some of the companies have defaulted to the tune of Rs 40,000 crore, and nothing happens to them," he claimed.