Setback to Vijay Mallya as Indian banks win $1.55 billion debt recovery case in UK court
A UK judge said banks can enforce an Indian court ruling that relates to allegations that Vijay Mallya willfully defaulted on about $1.4 billion in debt for his now-defunct Kingfisher Airlines Ltd.
A consortium of 13 Indian banks led by the country’s largest lender, the state-owned State Bank of India moved a step ahead in its bid to recover £1.145 billion debt from businessman Vijay Mallya when the commercial court on Tuesday dismissed his applications to set aside a ruling of India’s Debt Recovery Tribunal and an associated worldwide freezing order.
The ruling was the first instance of an Indian tribunal’s ruling registered in the English high court, when it was recorded in November 2017. The case is part of the litigation in which the banks are seeking to recover sums lent to Kingfisher Airlines Limited that were guaranteed by Mallya.
The tycoon fled India for the UK, days before the crucial Debt recovery Tribunal ruling. Extradition proceedings to get him back to India are currently underway in a London court. The case is scheduled for a final hearing at the Westminster Magistrates Court on July 11.
Tuesday’s judgement by the commercial court (Queen’s Bench Division), dismissing Mallya’s applications, is expected to enable the banks to enforce the Indian ruling against his assets in England and Wales.
The worldwide freezing order prevents him from removing any assets from England and Wales up to that value or to in any way dispose of, deal with or diminish the value of his assets in or outside of this jurisdiction, up to the same value. Paul Gair, partner at UK law firm TLT that acted on behalf of the Indian banks, said: “Today’s judgment is a very important decision not just for our clients, who want to proceed in this jurisdiction with enforcing the judgment they secured against Dr Mallya in India, but also for Indian and international banks more generally”.
“In a weakened global economy, non-performing loans present a real challenge for lenders, particularly where customers have assets located around the world. The English courts can play a vital role in these cases given that London is the world’s leading financial centre.”
“In dismissing Dr Mallya’s application, the High Court has demonstrated its willingness to recognise judgments granted by courts in other jurisdictions, giving parties opportunities to enforce their judgments against any assets held here.”
Led by SBI, the consortium includes Bank of Baroda, Corporation Bank, The Federal Bank Limited, IDBI Bank Limited, Indian Overseas Bank, Jammu & Kashmir Bank Limited, Punjab & Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank, United Bank of India and JM Financial Asset Reconstruction Co. Pvt. Ltd.