Sunday, June 4, 2023

Vijay Mallya’s Last-Ditch Stand

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Though the liquor baron has given a proposal to the Supreme Court, offering to repay Rs 4,000 crore to banks by September, it remains to be seen if he actually does.
By Rajendra Bajpai

Liquor baron Vijay Mallya has cocked a snook at the government and his public sector bank creditors and flown off to England where he is comfortably ensconced in his 30-acre country home at Hertfordshire on the outskirts of London.

Though his new offer to pay Rs 4,000 crore as partial settlement of the now-defunct Kingfisher Airlines’ debts by September may have come as partial relief, the banks are still clueless as to how to recover the remainder of the loans he owes them.

The Supreme Court, which received Mallya’s latest proposal, has given the lender consortium of 13 banks a week’s time to respond. Mallya has, however, also indicated to the court that the atmosphere in India is too “vitiated” for him to immediately return.

The government, meanwhile, is in a state of despair because it is unable to serve a non-bailable warrant on the fugitive businessman. It can cancel Mallya’s diplomatic passport and start extradition proceedings against him but that is no guarantee it will be able to bring him back to the country. After all, it has so far failed to bring back Lalit Modi, the cricket czar, who is wanted in India but living comfortably in London, as well as Ravi Shankaran, retired naval officer, who was wanted in connection with the war room leaks.

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“There is no chance he will come back,” said Ramesh Vaidyanathan, founder and managing director of law firm Advaiya Legal. “The only way out for the government is to get a conviction and get him extradited. You are looking at a good 10 or 15 years.”

He told India Legal that the government could not have stopped him from leaving the country as there was no court order to stop him. All that the banks can do now, he said, is to write off their loans. The only people who have really suffered are employees who have not been paid.

Mallya, who was summoned by the CBI for questioning, has said it was not the right time to return because he has already been branded a criminal by the country’s media, although earlier he had said he was not an absconder. “I am an international businessman. I travel from India frequently. I did not flee from India and neither am I an absconder,” he said.


In an email interview to The Sunday Guardian, he said: “Loan defaults are a business matter. When the banks give out loans, they know the risks involved… don’t make me the villain. I have the best intentions. I’m quiet because I fear my words will be twisted like those of others.”

He added: “I am an Indian to the core. Of course I want to return. But I am not sure I will get a fair chance to present my side. I’ve already been branded as a criminal. I do not feel the time is right. I feel passions are high.

“People need to think rationally. They need to understand that business, whether large or small, has risks involved. But I hope I return one day. India has given me everything. It made me Vijay Mallya. Most big business houses are running a whole lot of lies about me. Speculations rule the papers. TV channels claim to have information about me from their sources. It’s a big agenda that some people are pushing against me. I am being victimized,” he said.

A non-bailable warrant was issued by a Hyderabad court after an application by GMR Hyderabad to whom Mallya owes about Rs 8 crore. A cheque of Rs 50 lakh issued by Mallya to the company also bounced.

Richie Rich

Vijay Mallya’s unencumbered assets are:

United Brewery – Rs 3,496 crore

UB Holdings – Rs 62 crore

Mangalore Refinery – Rs 21 crore

Kingfisher Towers – Rs 950 crore

Kingfisher House – Rs 150 crore

Kingfisher Villa – Rs 90 crore

Also has properties in Britain, France, South Africa and the US. Has a stud farm in Karnataka, a F1 racing company, Royal Challengers IPL team, a football club and a 93m-long luxury yacht


CBI plans to investigate the role of banks in advancing large sums to Mallya and his companies. Banks converted 20 percent of the loans into equity of Kingfisher Airlines when the company was going down. That led to a loss of Rs 800 crore. The government is also examining a possible money laundering case against Mallya. There are several ways in which he could have sent money to his overseas account. One was over invoicing aircraft lease contracts. “We are examining all undue accommodation entries. Those who facilitated these undue accommodation entries, including bank officials will be examined,” CBI director Anil Sinha, reportedly said, adding that nobody will be spared.

KFA employees are also planning a joint action against Mallya for their unpaid dues. They haven’t received salaries for more than three years. Rahul Chaudhry of law firm Lall, Lahiri and Salhotra said KFA had lost much of its goodwill. “Banks should have moved earlier to monetize Kingfisher trademarks rather than sit idle for three years when it was apparent Kingfisher was doomed to fail,” he said. Now it remains to be seen whether anyone will come forward to run an airline business under that trademark, he said.

Kingfisher’s losses total more than Rs 16,000 crore. Besides, employees are owed more than Rs 300 crore as unpaid salaries. Mallya’s unencumbered assets are: United Brewery — Rs 3,496 crore; UB Holdings — Rs 62 crore; Mangalore Refinery — Rs 21 crore; Kingfisher Towers — Rs 950 crore; Kingfisher House — Rs 150 crore and Kingfisher Villa — Rs 90 crore.

But creditors will not be able to lay their hands on all the assets without the help of a court order. Mallya also has properties in Britain, France, South Africa and the US. He owns a stud farm in Karnataka, a F1 racing company, Royal Challengers IPL team, a football club and a 93m-long luxury yacht.

The Default Lines

After Vijay Mallya’s glaring loan fiasco, here is a list of some Indian companies that are also willing loan defaulters. The total amount due from them is allegedly Rs 40,528 crore

Deccan Chronicle Holdings Limited – Rs 409 crore

Winsome Diamond & Jewellery – Rs 900 crore

Zoom Developers Pvt. Ltd – Rs 1,647 crore

Beta Naaptol Mumbai – Rs 951 crore

Rank Industries Ltd – Rs 551 crore

Raza Textile Ltd – Rs 951 crore

Varun Industries Limited – Rs 1,129 crore

Reid & Taylors Ltd – Rs 94 crore

XL Energy – Rs 413 crore

Vimal Industries — Rs 45.29 lakh

Manorama Foods Pvt Ltd – Rs 621 lakh

Mahaluxmi Rice Mill – Rs 600 lakh

Times Overseas – Rs 150 lakh

Forever Precious Jewellery & Diamonds Ltd – Rs 747 crore

Ashtavinayak Steel Pvt Ltd – Rs 12 crore


In his non-compete agreement with Diageo, which bought his United Spirits, the UK was excluded, giving rise to rumors that he may start a liquor business in that country. He already has a large chunk of Whyte and Mackay spirits company. According to several lawyers India Legal spoke to, there is a case here to believe that there is a similar business in the UK which is indirectly owned by him either through a family member or by a group of companies.

Mallya’s absence from India will be an opportunity for his partners in Indian companies to raise their stake and take control of the business. It is possible that Dutch brewer Heineken, a partner in United Brewery, will do just that.

Mallya is also likely to lose his position as a director in several companies as soon as Securities and Exchange Board of India notifies that “willful defaulters” cannot be directors of companies. Mallya has already been declared a willful defaulter.

For a man in his position, these setbacks may be minor. In India, court cases will dog him for the rest of his life. In England, as a free man, he can start new businesses.

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