Thursday, 11 May 2017

INDIA: Kingfisher Airlines Vijay Mallya Guilty Of Contempt

The Supreme Court on Tuesday held Vijay Mallya, promoter of the defunct Kingfisher Airlines, guilty of contempt and directed him to appear before it on July 10. Mallya has previously expressed his reluctance to come to India for fear of being made an example of over corporate defaults even though others owe banks more than he does.

Mallya was held in contempt by a two-judge bench comprising justices Adarsh Kumar Goel and UU Lalit. He had failed to make a true and faithful disclosure of all his assets as directed by the top court earlier besides having transferred a $40-million Diageo payout on the eve of the order.

Any person held guilty in a contempt case is required to appear personally to defend himself. Alternatively, Mallya could seek more time to appear through his defence team in the top court led by senior advocate CS Vaidyanathan.

Mallya moved to London in March last year as a consortium of 17 lenders led by State Bank of India sought to recover their money. The banks say they are owed a total of more than Rs 9,000 crore stemming from loans made to Kingfisher Airlines, which stopped flying in October 2012.

Mallya insists that Kingfisher's collapse was a genuine commercial failure due to soaring international oil prices. But banks and enforcement agencies allege that Mallya has siphoned off funds overseas and must return the money to them.

India has sought to extradite Mallya from the UK after he's ignored several demands to appear for questioning by investigative agencies. The businessman insists that he wants to reach an agreement on the loans, but has so far only offered conditional settlements that the banks are refusing to accept. They have instead insisted that he make a large one-time deposit to prove his bona fides.

The banks, through attorney general Mukul Rohatgi, had urged the court to ask Mallya to reveal details of his assets. Mallya had revealed the assets of his wife and three children, but these had not included the Diageo payout which he had received just before he filed his statement.

The banks then insisted that he be hauled up for contempt. Mallya argued that there was no order to show that payout while revealing his assets. In any case, he argued, the amount had since been trusts in the name of his children and could not be recovered.

The payout should not have been transferred without first repaying his debts to Indian banks as per Debt Recovery Tribunal (DRT) and Karnataka High Court orders. The attorney general had demanded that Mallya be asked to get the money back and deposit it with his debtor banks or be hauled up for contempt.

The maximum punishment for contempt is six months in jail and a fine. The court told Mallya to appear on July 10 to argue on the quantum of punishment. Mallya is unlikely to accept the order without demur, sources said, as this would prejudice his cases pending in the DRT and the high court. Mallya did not reply to a mail from ET.

The Rs 500-crore payout from Diageo had been in exchange for walking away from United Spirits besides being absolved of any "personal liability" at that time.

Since then Mallya is said to have been living in Britain, having defied several court orders to return to India. On Twitter, he has repeatedly appealed to the Supreme Court to help revive his attempt to reach a one-time settlement with Kingfisher Airlines' creditors.

"Wish the Hon'ble Supreme Court would intervene and put an end to all this (litigation) by directing banks and us to negotiate and settle. We are ready," Mallya tweeted on Friday. In April last year, the Supreme Court had directed Mallya to disclose all assets held by him and his family, after his creditors rejected an offer to repay Rs 4,000 crore to settle the debt of the grounded carrier.

Later in July last year, the consortium of lenders filed the contempt petition in the Supreme Court for not disclosing his assets as directed by the apex court. The Supreme Court directed Mallya once again in October 2016 to disclose all assets held by him and his family. Mallya had agreed to disclose a list of assets held by him to the apex court on condition that the information not be passed on to the banks.