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The Calcutta High Court has dismissed United Bank of India's (UBI) decision to declare Vijay Mallya and Kingfisher Airlines as wilful defaulters.
The Kolkata-based lender had in September this year declared the now grounded airline, its Chairman Vijay Mallya and three directors – Subhash R Gupte, Ravi Nedungadi and Anil Kumar Ganguly – as wilful defaulters for non-payment of loans of nearly Rs 350 crore.
Confirming the decision, D Narang, Executive Director, UBI said the ruling was more on technical grounds. The Calcutta High Court’s decision came earlier this week.
According to him, the Court observed that the grievance redressal committee – that declares a borrower wilful defaulter – was not constituted as per regulatory guidelines. Instead of having three members, the grievance redressal committee had four members, thereby, leading to observation.
As per a Reserve Bank of India's (RBI) master circular, the decision to classify a borrower as ‘wilful defaulter’ should be entrusted to a committee of higher functionaries headed by the executive director and consisting of two general managers or deputy general managers as decided by the bank's board.
Further Options
Narang, meanwhile, maintained that the bank was exploring further options; which include setting up a new grievance redressal committee with three members.
Alternatively, it can also move to the Division Bench of the Calcutta High Court against the decision.
“We have not decided on the future course of action. We might constitute a new committee or appeal to the Division Bench against the judgement,” he told Business Line.
New Action
Kingfisher is said to have unpaid loans, amounting to approximately Rs 6,500 crore to a SBI-led consortium of 17 banks.
Apart from Kingfisher Airlines and Mallya, the Kolkata-based lender (UBI) has also ‘identified’ United Breweries (Holdings) Ltd (UBHL) – the holding company – as a wilful defaulter.
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