The application heard by the DRT on Monday pertained to SBI's plea seeking first rights on the $75 million that was being paid to Mallya for exiting USL's board.
In a double blow to Vijay Mallya, the Enforcement Directorate has filed a case of money laundering and the Debts Recovery Tribunal (DRT) has frozen a payment of $75 million that was to be pocketed by Mallya as part of a deal with spirits make Diageo.
The money to be paid by Diageo was part of the deal put in place to make Mallya quit the board of United Spirits Ltd (USL). The DRT order has come after State Bank of India (SBI) moved four applications before the DRT including one that sought his arrest and impounding of his passport.
The application heard by the DRT on Monday pertained to SBI's plea seeking first rights on the $75 million that was being paid to Mallya for exiting USL's board.
DRT judge CR Benakhanalli, hearing SBI's application said, "For now, I am taking up the application seeking to secure lenders' first right on the payout from Diageo on priority basis. I will take up other applications later." The next hearing will take place on March 28 in Bengaluru.
Indian banks led by SBI had lent Rs 7,000 crore to Mallya's now defunct Kingfisher Airlines and are struggling to recover the money. Three banks -- SBI, United Bank of India and Punjab National Bank -- have declared Mallya a wilful defaulter.
In a press statement, Mallya had defended himself saying, "Banks have bad loans of Rs 11 lakh crore and have borrowers who owe much more than the amount allegedly owed by Kingfisher Airlines. None of these large borrowers have been declared wilful defaulters, but unfortunately I have been declared a wilful defaulter by certain banks on technical grounds."
Neutral observers have warned that although the DRT's interim order sends a positive signal to banks, it doesn't guarantee that the $75 million in question will go to the banks kitty. "This interim order restraining Diageo from paying Mallya shows that the DRT thinks there is merit in the case. If banks argue well, they can get the $75 million in the next hearing. What will help them are the weak arguments being made by Mallya's counsel. Mallya's lawyers have been arguing that stopping payment to Mallya will bring disrepute to the Rajya Sabha since their client is an MP. This argument will not hold before the DRT,"said JN Gupta, former executive director of Securities and Exchange Board of India (Sebi).
Meanwhile the Enforcement Directorate has also booked Mallya under the Prevention of Money Laundering Act (PMLA) based on a First Information Report (FIR) filed by the Central Bureau of Investigation (CBI). The CBI had booked officials of IDBI along with Mallya and Kingfisher Airlines former Chief Financial Officer A Raghunathan for alleged irregularities in the loans sanctioned by the bank.
The ED will also be looking at the books of Kingfisher Airlines to ascertain various omissions that point to money laundering by Mallya. Sources in SBI have told dna that Kingfisher Airlines had made payments to a Mauritius-based aircraft leasing company that was far in excess of prevailing lease rentals for the aircraft. ED sources have revealed that they will be monitoring a string of money transfers from Kingfisher Airlines to other offshore companies as well.
In addition, ED sleuths will also be scrutinising transactions involving other companies owned by Mallya across the world. Mallya owns companies in the US, the UK, the Netherlands and is also the chief beneficiary of a family trust based in Panama.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Mallya")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}