Action is being sought against Mallya for debt of over Rs. 7,000 crore.

Why go after Kingfisher alone when Ambanis Reliance a bigger loan-defaulter asks Mallyas lawyer
news Corporate Debt Sunday, March 06, 2016 - 18:10

Even as the judicial noose around liquor baron Vijay Mallya drew tighter, his lawyer Uday Holla sought to shift attention away from Mallya to some of the other major corporate defaulters in the country, including Reliance.

On Friday, the Debt Recover Tribunal in Bengaluru took up on a priority basis, the application of public-sector banks for securing lenders’ first right on the $75-million severance package that Mallya is to receive from Diageo-owned United Spirits (USL), and reserved its orders on the matter. The DRT is also to hear three other applications seeking Mallya’s arrest, the impounding of his passport, and the full disclosure of all of his assets in India and abroad. The applications have been filed by 17 lenders, including SBI, in an attempt to recover debts of over Rs. 7,000 crore.

Holla, while filing objections before the DRT, based his arguments partly on the contention that his client was really a small-time defaulter, and that the banks were discriminating against smaller companies in their pursuit of defaulters. The banks were taking action against small fry while letting the big fish get away, the lawyer claimed. “My client Mallya is a small defaulter compared to Ambani's Reliance. Some of the companies have defaulted to the tune of Rs 40,000 crore, and nothing happens to them," he claimed.

Holla also argued that his client’s airline Kingfisher Airlines had suffered as a result of a global increase in fuel prices, which affected major airlines around the world. "It is not that (only) Mallya's airline was suffering losses, but other airlines around world also suffered - Swiss Air, the Indian Airlines and four US airlines, also suffered huge losses. Even as my client was paying up the loans, it is not right to hound my client for the payup," he said.”

The strong action against Mallya and Kingfisher Airlines sought by SBI and other public-sector banks comes at a time when the high levels of bad debts of public sector banks (with non-performing assets of over three lakh crore) have caught public attention. According to one report of The Economic Times, this is one reason for the aggressive pursuit of Mallya. "The action from SBI to recover dues is aimed at sending a message that the bank is serious about getting back its money," the paper quoted an unnamed senior official of the bank as saying.

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