Embattled liquor tycoon Vijay Mallya offered on Wednesday to repay more than half of the Rs 7,000 crore his now-defunct airline owes creditors, signalling that debt recovery pressures from banks as well as a money laundering probe against him may be working.
Mallya’s lawyers told the Supreme Court that he is ready to pay by September Rs 4,000 crore of the Rs 6,903 crore taken as loans by Kingfisher Airlines (KFA). The offer will be a mix of cash and pledged shares of some of Mallya’s companies.
As on date, KFA owes Rs 9,300 crore to banks and various government departments in loans, interests and other dues.
The offer was made to a consortium of 17 banks – led by the State Bank of India (SBI) – that approached the top court last month to recover its dues.
The court gave a week’s time to the banks to respond to Mallya’s offer.
“If you want to reject it, do so,” the bench comprising justices Kurian Joseph and RF Nariman told the State Bank of India counsel. The court will hear the case next on April 7.
Mallya’s lawyers said an additional Rs 2,000 crore will be paid if KFA wins two civil suits in Bengaluru and Britain.
“Banks should consider seriously what has been offered to them,” Mallya’s counsel told the court, adding that the proposal was sent to the SBI chairperson on Wednesday morning.
Mallya’s counsel asked the proposal to be kept a secret as the “media vitiates the atmosphere.”
The bench was quiet on the request but said, “Media stands for public interest. In this case it only highlighted whether the banks are getting their money. After all it is public money.”
The SBI said it had received the offer for “settlement of dues” from KFA but didn’t confirm the amount.
“The bank along with other consortium members, will examine the same,” the bank said in a statement.
Mallya left India earlier this month, triggering outrage as he is under probe by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) for alleged loan defaults and illegally moving money out of the country.
When the court asked about Mallya’s whereabouts, his lawyers said the tycoon needn’t be physically present for court proceedings and that he had had two videoconferences with banks already.
The ED case is based on a CBI probe into alleged “wilful default” by the high-flying promoter of KFA on a Rs 900-crore loan in apparent connivance with IDBI Bank representatives.
SBI, the largest lender to KFA, had approached the debt recovery tribunal in Bengaluru to restrain Mallya from withdrawing the Rs 515 crore he got as a severance package from Diageo, the world’s largest spirits maker.
KFA, once India’s second-biggest airline, ceased operations more than three years ago after a stretch of losses, leaving creditors, suppliers and employees with dues.
Action against Mallya underscores banks’ frantic efforts to rein in galloping bad corporate debt and mounting non-performing assets. A group of 29 banks revealed in February that they’d written off more than Rs 1.14 lakh crore of bad loans, a figure that was much higher than before.
Once known as the “King of Good Times” for his flashy lifestyle, Mallya has rejected criticism that he left India to avoid repaying his debts.