Banks change tune on Vijay Mallya offer; urge HC to sell assets to pay off bank dues

After the latest application made by Vijay Mallya in the Karnataka High Court, expressing his willingness to settle the dues of defunct Kingfisher Airlines to several banks, the consortium of bank led by SBI, the biggest creditor has filed a memo to consider the repayment offer. The banks have urged the high court that in case it was to consider the settlement offer made by Mallya, the dues to the banks should be considered a priority.

The document seen by Business Today states, "In so far as assets belonging to the appellants (UBHL) are concerned, the same may be sold/disposed of expeditiously in accordance with the directions of this Hon'ble court and proceeds thereof may be released in favour of the respondents (banks) on priority."

This is a marked difference from the earlier stand, where the banks had rejected the settlement offer made by Vijay Mallya. The memo further seeks from the court release of Rs 651 crores along with the accrued interest and additional sum of approximately Rs 380 crores, both deposited with the high court by UBHL. While Mallya has been seeking a court monitored committee to oversee the sale of shares and assets offered by him, the banks on the other hand, in their fresh contention, want the entire process to be undertaken by the recovery officer of Debt Recovery Tribunal (DRT), since some of the assets mentioned in the settlement offer have already been attached in pursuant of the Debt Recovery Certificate issued by DRT. During the oral submission made by the bank consortium's counsel on 3rd January 2019, he stated that any further consideration to accept the offer will be done once Vijay Mallya is able to show bonafide intention to settle the debts with the banks, through agreeing to the release of funds lying with the high court.

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Interestingly, it seems like the banks have hedged their position quite well for now on the offer that has been made. While the banks seek sums deposited with Karnataka High court to be released to them, they have also urged the court to not construe the memo as giving any concession whatsoever in the matter of recovery of dues from either Vijay Mallya or the companies controlled by him and also as an acceptance of the offer made in entirety.

The memo also states, "It may be made clear by this Hon'ble court that any disposal of property in accordance with order on IA 3/2018 (settlement offer) shall not in any manner prejudice other proceedings initiated by the respondents (banks) whether in India or abroad against appellant (UBHL) Dr. Vijay Mallya, including proceedings before the UK court and those proceedings may continue without consideration of the outcome of the appeal in the Karnataka High Court."

On the 22nd of June this year, Vijay Mallya through his counsel filed an interlocutory application seeking relief and appointment of a court committee to crystallise his assets, so that there could be a definitive sum made available to service all the debts . The revised and the latest offer made by him on the 16th of August sets out a complete list of assets to service the existing debts. Business Today perused the 8 page document where Mallya lists assets of over 15,000 crores. The documents set out the market value of the attached assets and sums deposited with various courts that are available at the disposal, whose value if realised could benefit all parties.

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