Companies

DRT restrains Diageo from paying Mallya $75 m

Krishnaprasad K Giriprakash Bengaluru | Updated on January 20, 2018

Vijay Mallya

Vijay Mallya

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mallya

Sum is attached till further orders on proceedings initiated by banks are given, says Tribunal

In a setback to Vijay Mallya, the Bengaluru bench of the Debt Recovery Tribunal (DRT) on Monday temporarily restrained UK-based Diageo plc from paying $75 million to him under the terms of an agreement the company signed with him.

In a brief order, CR Benakanahalli, Presiding Officer of the Bench, also directed Mallya not to receive temporarily the sum as per the agreement, and stated that the sum would stand attached till further orders on the proceedings initiated by the banks to recover the money borrowed by Mallya-owned Kingfisher Airlines Ltd.

Also, Diageo plc and Mallya were directed to disclose the details of the agreement to the consortium of banks led by the State Bank of India, which has claimed its first right over the $75 million that Mallya is to get from Diageo under the agreement for stepping down from his position in United Spirits Ltd, which Diageo had acquired.

Banks’ other pleas

The DRT is yet to hear the banks’ other pleas –– for arrest of Mallya, seizure of his passport, and for getting full disclosure of his assets in the country and abroad.

The next hearing has been scheduled for March 28.

Soon after Diageo announced last month that it had signed a deal with Vijay Mallya, which would see him exiting the company completely, the lenders moved the DRT seeking first lien on the $75 million (₹515 crore) payout.

Apart from the money that was to be paid over a period of four years, Mallya entered into a non-compete agreement for the next five years. Mallya’s lawyers had told the tribunal that the payout was based on a non-compete clause as the former liquor baron had a track record of over three decades in the industry.

ED files case

In another development, the Enforcement Directorate filed a case under the Prevention of Money Laundering Act against Mallya and six other executives of Kingfisher Airlines in connection with the alleged default of over ₹900-crore loan from IDBI Bank.

Official sources said the ED is looking into the “proceeds of crime” that would have been generated using the funds of the alleged loan fraud. On Sunday, Mallya claimed he has been trying to reach a one-time settlement with the banks. A statement said that after the closure of the airline, banks have recovered ₹1,244 crore from the sale of pledged shares. Another ₹600 crore had been deposited with the Karnataka High Court. Totally, ₹2,494 crore has been recovered, he claimed.

Published on March 07, 2016

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