Banks consortium wants SC to order arrest of Vijay Mallaya

New Delhi: A consortium of 17 banks led by State Bank of India on Tuesday moved the Supreme Court to restrain Vijay Mallaya from leaving the country and for his arrest and presence in courts in India for recovery of over Rs. 9,000 crores from the defunct King Fisher airlines.

A Bench of Chief Justice T.S. Thakur and Justice Uday Lalit agreed to hear the matter on Wednesday on an urgent mention made by Attorney General Mukul Rohatgi for early listing of the application.

The AG told the bench “he (Vijay Mallaya) is a now a citizen of a foreign country and may leave. He owes banks Rs 9000 crores, the AG said. The CJI asked the AG whether this case was part of the petition relating to non-performing assets of the banks. But the AG said it was a different case.

The consortium of banks had initially approached the Debt Recovery Tribunal for the arrest of Vijay Mallaya. But the DRT had only issued a garnishee order preventing the London-based Diageo Plc from transferring any money to Mallya for the time being.

He received a $75 million payout for selling United Spirits to Diageo. The Karnataka High Court had also declined to issue an arrest warrant against him.

In the appeal, the banks said that Mallya had publically declared his intention to stay in London to back their claim and once he is allowed to leave the country he may not come back to India. The banks also sought an order for impounding his passport, which would curtail his movements in and out of the country without court permission.

The banks said that the Tribunal and the High Court were wrong in refusing to pass interim orders against Mallya.

The High Court had completely failed to protect the interest of the petitioner banks, which are yet to recover an amount in excess of Rs 9000 crores from Respondents 1 to 4 (Kingfisher Airlines, United Breweries, Dr Vijay Mallya and Kingfisher Finest (India) Ltd).

The banks claimed that they had individually advanced loans worth crores to Kingfisher and this had been restructured into one by another agreement on Dec 21, 2010.

UB and Mallya had executed corporate and personal guarantees to repay this amount due by that agreement. This loan had since been declared to be an NPA and recovery proceedings were pending.

The banks said that grave miscarriage of justice would be caused if the proceedings are delayed any further or Respondent 3 (Mallya) succeeds in settling in London.

The proceedings have been unnecessarily prolonged and dragged on by the respondents (Mallya and his entities) defeating/frustrating the very purpose of enacting the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.