Mallya’s spirited offer to repay only principal may not fly with creditors

In a series of tweets, former liquor baron Vijay Mallya has said he is willing to pay all the money he owes to the ‘Indian public’ , but he, more than anyone else, knows that his latest offer will only stir up a debate in his home country, while the lenders will remain unimpressed.

There are too many cases pending against Mallya including some that are of criminal nature.

The former liquor baron, who fled the country in March 2016, is also accused of round-tripping United Spirits shares.

The almost $2-billion question is how will Mallya be able to convince the legal authorities as almost all his assets worth ₹13,900 crore are under judicial supervision.

The latest tweets from Mallya follow a recent appeal to the Special Prevention of Money Laundering Court where his counsel said the former liquor baron is willing to sign consent terms with the government about paying his dues to the creditors. But Mallya apparently wants to pay up only the principal amount and not the interest component.

“We will be setting a precedent if we allow Mallya to pay up only the principal amount and get away,” a former banker who was associated with the process of getting back the dues from Mallya, said.

In June this year, Mallya filed an application with the Karnataka High Court seeking permission to sell his assets. But nothing has come of it so far.

The Enforcement Directorate (ED) itself has attached Mallya’s various properties worth ₹8,044 crore. This follows a probe launched by the ED over the alleged loan default of ₹6,027 crore availed from a consortium of banks led by the State Bank of India.

The assets attached by the ED includes apartments, shares of various companies, farmhouses and fixed deposits.

Probe by SFIO

There have also been reports regarding a probe by the Serious Fraud Investigation Office (SFIO) which allegedly found that Mallya’s companies created new divisions to avoid taxes while acquiring Deccan Aviation, the owners of Air Deccan. SEBI is also learnt to be investigating allegations of round-tripping with regard to six accounts held by Mallya. The Enforcement Directorate has repeatedly claimed that the assets of Mallya were from the proceeds generated out of criminal activity through default of bank loans.

It has also claimed that Mallya “criminally conspired” with Kingfisher Airlines and UBHL to obtain funds through the banks. Therefore, it won’t be enough if Mallya agrees to return the amount he owes to the banks. That is just one part of the multitude of cases he faces.

Mallya has, however, in earlier statements, claimed that any objections from the law enforcement agencies to his proposal to sell off his assets will demonstrate that there is an agenda against him beyond recovery of dues to public sector banks.

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