The Supreme Court’s move holding Vijay Mallya guilty of contempt is yet another major blow to the businessman fighting a Rs 9,000 crore loan default case with a clutch of Indian banks and investigative agencies. The SC action will strengthen the case against the billionaire as the Indian government is pushing hard for his extradition from UK.
Legal experts (read an ET Now interview) have pointed out that it is unprecedented that an industry captain is held for contempt of court. “It only shows the extent to which Vijay Mallya or even a successful industrialist can go, behave in irresponsible manner,” said KTS Tulsi, a senior SC advocate, said in the interview. Also, the Court has asked Mallya to appear before 10 July.
This SC move has come after a UK Police last month had arrested him following an extradition request by India. Though Mallya managed to get bail, the development signaled that Mallya can no longer play the victim card in the case and there are tangible charges against him. Till then, Mallya had maintained that he is being wrongly targeted by the Indian government for no fault of his. The Rs 9,000 crore loan default happened following the business failure of erstwhile Kingfisher Airlines and it is wrong to target him for this, Mallya argued.
Though he is right in saying that the money was indeed borrowed by Kingfisher Airlines for the running of his aviation business, the fact is loans were given to the airline based on a personal guarantee furnished by the billionaire. Also, as legal experts pointed out, his conduct following the default---transferring money to kids in violation of court order and his refusal to return to the country to face the law of land—will bring him more trouble before the court. The SC’s contempt order came after the SBI-led bank consortium moved SC against Mallya citing that the beleaguered liquor king allegedly transferred $40 million he received from Diageo Plc in February 2016 to his children, when he owed large amount to banks.
If Mallya fails to appear before the SC before the said date, Indian government will raise his lack of cooperation with local courts as another tool to push for his extradition. This will logically make things more difficult for the absconding businessman. For Mallya, things would not have worsened to this extent had he stayed back in the country to fight the Kingfisher case, instead of leaving the country.
For sure, Vijay Mallya isn’t the only industrialist who is a defaulter to banks in India. There are many others, some with even bigger liabilities. But, Mallya’s conduct throughout the case and his defiant attitude to banks and investigators have dragged him to the current mess. Given the attention Mallya-Kingfisher case has received, banks are unlikely to give up easily as they will have to face public scrutiny. For the Narendra Modi-government too, this case is now way beyond a corporate loan default, and has become a much bigger issue with political importance. Bringing back Mallya would be a major victory for the Modi-government to show that it is determined to fight the battle against wily promoters who have defaulted bank money. This will also be used as a message to other large bank loan defaulters.
All of this means, Mallya will not have an easy escape from the current legal mess. The bank consortium has told the SC that Mallya has not made full disclosure of his asset details both in India and abroad. The SC too have taken note of this saying the billionaire misled the court on his asset details. If Mallya fails to give an explanation on this, he will face even bigger trouble in SC. Mallya should take a cue from the Subrata Roy-Sahara episode where the SC has punished the businessman for not honoring his commitments. Mallya’s ordeal will be less if he returns to India and fight his case in the local courts instead of being in a state of denial. As of now, the former Kingfisher boss is in a deeper mess, a mess that is largely self-created.
Published Date: May 09, 2017 17:04 PM | Updated Date: May 09, 2017 17:04 PM