In a major setback for liquor baron Vijay Mallya, the Debt Recovery Tribunal (DRT) today barred him from accessing USD 75 million (Rs 515 crore) exit payment from Diageo till the loan default case with State Bank of India is settled.
DRT, allowing SBI plea, restrained Diageo from disbursing the money for now and set March 28 as the next date of hearing.
SBI had sought DRT's intervention in seeking the lenders' first right on the USD 75-million payout from Diageo to Mallya as part of deal last month.
Under the deal Mallya was to step down as chairman of India's top spirits company United Spirits Ltd in a settlement with its new owner, Britain's Diageo. Mallya was to settle down in London after the deal.
SBI had filed three other applications, including one seeking Mallya's arrest and impounding of his passport, it approached DRT seeking action against him for defaulting on loans.
DRT in its order restraining Diageo from disbursing USD 75 million, said the amount has been attached pending disposal of original application.
It directed Mallya and the companies concerned to disclose the details of the terminal agreement.
The order came hours after Mallya said he was in talks with banks for a one-time settlement of debt that his now-defunct Kingfisher Airlines owes.
In a statement late last night, he had also stated that he had no plans to run away from his creditors.
SBI, which leads the consortium of 17 banks that lent money to the grounded Kingfisher Airlines, had moved DRT against the airline's chairman Mallya in its bid to recover Rs 7,800 crore. SBI had an exposure of over Rs 1,600 crore to the now defunct airline. Since January 2012, the loan was not serviced.
Other lenders include Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Central Bank of India, Federal Bank, Uco Bank and Dena Bank among others.
Last year, SBI declared Mallya as wilful defaulter while PNB had followed suit last month to declare him, his group holding company United Breweries Holdings and Kingfisher Airlines as wilful defaulters.
Diageo was to pay Mallya USD 40 million immediately and the balance in equal installments over the next five years.
The deal also absolved Mallya of all liabilities over alleged financial lapses at the company founded by his family.
After the deal with Diageo plc, Mallya, 60, resigned with immediate effect as Chairman of United Spirits Ltd, which the British firm bought in April 2014.
United Spirits, maker of McDowell's No.1 whiskey and Romanov vodka, had sought his resignation after an internal inquiry found he diverted funds to other companies under his control. Mallya has denied any wrongdoing.
Mallya, who took over United Breweries Holdings or UB Group from his father in the 1980s, had last month signed a global five-year "non- compete, non interference and non solicitation" agreement with United Spirits. He was to take on a ceremonial title as founder emeritus of the Diageo unit.
He started Kingfisher Airlines in 2005 but it was grounded in 2012 amid mounting debt.
Money laundering probe
In fresh trouble for liquor baron Vijay Mallya, the Enforcement Directorate of India has registered a money laundering case against him and others in connection with the alleged default of over INR 900 crore loan from IDBI bank.
Official sources said the agency recently filed charges under the Prevention of Money Laundering Act (PMLA) based on an FIR registered last year by CBI in the same case.
They said while the ED's zonal office here has registered the case, sleuths are also looking at the overall financial structure of the now defunct Kingfisher airlines and a separate probe under foreign exchange violation charges could also be initiated.
"Mallya and others will soon be questioned. The agency has collected relevant documents from concerned authorities and the bank in question," they said.
The ED has pressed charges under various sections of the PMLA against Mallya and others named in the CBI complaint.
The CBI (Central Bureau of Investigation) had booked Mallya, director of Kingfisher Airlines, the company, A Raghunathan, Chief Financial Officer of the airlines, and unknown officials of IDBI Bank in its FIR alleging that the loan was sanctioned in violation of norms regarding credit limits.
The CBI action came as part of its wide probe into criminal aspects of loans declared to be non-performing assets by public sector banks.
The ED is looking into the "proceeds of crime" that would have been generated using the slush funds of the alleged loan fraud, they said.
While a DRT order is expected in this case on Monday, ex-Kingfisher airlines employees have also gone public against Mallya and the company alleging they have been cheated of their remuneration and service benefits.
Mallya had on Sunday said he is making efforts to reach a 'one-time settlement' with banks through additional payments to the lenders, even as he denied "personally" being a "borrower or judgement defaulter" and alleged that "disinformation campaign" was being played to make him a "poster boy" of all bad loans.
The debt-laden airlines had stopped operations in October 2012.