Vijay Mallya case: DRT suggest banks to coordinate recovery of Rs 2000 crore parked in courts

The Debt Recovery Tribunal on Tuesday advised SBI-led consortium of banks in Vijay Mallya case to make coordinated efforts among themselves to recover around Rs 2000 crore parked in courts in the country and reduce losses to the tune of over Rs 9000 core incurred by the banks.

DRT Presiding Officer Benakanahalli's suggestion came as the consortium of banks and Diageo (Holdings) Netherlands pleaded before the Tribunal to take up their respective interlocutory applications for hearing on a priority basis.

Benakanahalli said banks should sit and sort out the issue. "I sincerely suggest consortium of banks led by SBI to make a coordinated effort to recover around Rs 2000 crore parked in various courts and reduce the losses to the tune of over Rs 9000 crore incurred by banks," Benakanahalli said.

As the Tribunal began the proceedings, defendants Diageo (Holdings) Netherlands and SBI-led consortium pleaded that their respective interlocutory applications be taken up for hearing on a priority basis.

In response, Benakanahalli said the banks should sit and sort out the issue. The consortium of banks could have earned Rs 200 to Rs 300 crore as interest from the recovered Rs 2,000 crore, he said.

Benakanahalli lamented that the lack of coordination among the banks has resulted in the DRT not getting $75 million attached in spite of its March 7 order. The DRT had in its order barred Mallya from receiving $75 Million from Diageo Plc and its subsidiaries as per the sweetheart deal reached between them.

However, $40 million of the $75 million severance package deal had already been disbursed, following which the bankers' consortium had sought directions from the Tribunal to attach the amount before it.

Following a directive of the Tribunal, Diageo Plc and its two subsidiaries submitted the details of severance package deal, in which the bankers figured out that $40 million of the $75 million was parked in the account held by Vijay Mallya in New York-based J P Morgan Bank.

On May 17, DRT had directed J P Morgan Bank not to disburse to Mallya $40 million and asked it to "attach" (submit) before it statements of accounts held by Mallya in the bank.

Benakanahalli also suggested not to expand the scope of original application by filing too many interlocutory applications, for it would delay the process of justice, while he has to adhere to the Supreme Court deadline of the first week of July. 

As of now, there are 27 interlocutory applications pending before the Tribunal. Diageo Plc earlier today filed a memo seeking inclusion of an interlocutory which was not included earlier.

Diageo Netherlands argued that their interlocutory application must be heard first as it relates to pledging of 26 lakh equity shares of USL to the lenders who had sought proof of evidence from the banks incurring losses to the company by selling the shares at "cheaper" rate.

Vijay Mallya-controlled United Breweries (Holdings) Limited (UBHL) had sought time to submit evidence and substantiate their claim of Rs 594 crore from bankers for compensating the losses incurred by it due to the sale of USL equity shares by lenders at "cheaper" rate.

The bankers had sought DRT direction to ask UBHL to substantiate their claim of Rs 594 crore loss with documents of proof and evidence.

UBHL, in objections filed in the Tribunal on April 5, had contended that the lenders sold 26 lakh equity shares of United Spirits Limited (USL) pledged to them before maturity.

The company, in its objections, had also contended that the lenders' action of selling the equity shares for Rs 1,836.94 per share, instead of a "good" price, when the shares hit a high of Rs 4,080 per share in April last year, caused loss to it.

Subsequently, the SBI-led consortium had on April 13 filed counter objections to UBHL's claim of Rs 594 crore from them for compensating the losses incurred by it due to the sale of USL equity shares by lenders at 'cheaper rate'.

The bankers also had alleged that the Rs 594-crore claim at this point of time was a clear-cut tactic of UBHL to delay the process of justice, knowing fully well that the case is on the verge of disposal. UBHL had filed the application for producing evidence pertaining to its claim of Rs 594 crore from bankers for compensating the losses incurred by it due to the sale of USL equity shares by lenders at 'cheaper rate'.

Kingfisher had filed application for submitting objections to all the facts pertaining to the case. Mallya, whose now-defunct group company Kingfisher Airlines owes over Rs 9,000 crore (Rs 90 billion) to 17 banks, had left the country on March 2 and is in the UK.

After Britain recently declined India's request to deport him, government has approached Interpol for issuance of an arrest warrant against Mallya in connection with a money laundering case being probed by Enforcement Directorate.

The Presiding Officer adjourned the hearing for June 13 after Kingfisher and SBI sought time for furnishing details regarding the case.