The Kingfisher Airlines Limited, a holding company of Vijay Mallya, on Monday said it is not liable to repay over Rs 6,000 crore debt to the consortium of banks as the lenders have breached terms and conditions of Master Debt Restructuring Agreement between both parties, which caused needless damages to the firm's business.
Resuming the hearing on the Original Application filed by bankers, seeking recovery of over Rs 6,000 crore from Mallya and his companies, KFA Counsel pleaded that the Debt Recovery Tribunal should reject the plea as the lenders have breached MDRA terms and conditions.
Making submissions before DRT Presiding Officer C R Benakanahalli, KFA Counsel submitted that since section 54 of MDRA was breached by lenders, the company is not liable to pay the loans for damages caused by them.
According to MDRA terms and conditions, KFA was to get the working capital fund from the lenders to continue their airline business, which the lenders violated and eventually the company faced further financial problems.
"The lenders breached the agreement by not providing working capital fund to KFA, and due to which the company faced financial difficulties.
"In this situation, how can one expect the company to make repayment, when the lenders failed to provide the promised funds to carry business," he said.
Further quoting from a letter by State Bank of India to Reserve Bank of India, he also submitted that MDRA was arrived at not only to recover the loans provided to KFA, but also to mainly continue the airline business in the interest of the country's economy. Hence the tribunal should consider this submission before giving its verdict.
Counsel also submitted that the lenders have unfairly treated KFA by giving unnecessary press statements which damaged KFA's business prospects by breaching the terms of confidentiality under MDRA.
"The statements of Pratip Chaudhary, the then Chairman of the SBI, that KFA has turned a Non-Performing Asset, hit the company hard in the share market with the scrip value tanking to 11 per cent in morning hours of the trade. This was a breach terms of confidentiality under MDRA," he said.
"This statement also caused not only emotional distress, but also economic distress, and hence I plead before the honourable tribunal to dismiss the lenders' plea and uphold KFA's submissions," he said.