In an interview given to UK-based Financial Times, beleaguered liquor-baron Vijay Mallya said something that wouldn’t be music to the ears of 17-Indian banks, to whom Mallya owes Rs 9,000 crore money borrowed by Kingfisher Airlines that was grounded in October, 2012.
“By taking my passport or arresting me, they are not getting any money,” Mallya told the paper in his first interview after leaving the country on March 2, with seven bags and an unidentified woman to UK and shortly after receiving a Rs 500 crore parting pay from Diageo, after stepping down as the chairman of United Spirits.
Mallya is currently chased by the Narendra Modi-government, banks and investigating agencies on charges of loan default and alleged financial irregularities.
Mallya’s thought process is abundantly clear. The man is least shaken by the actions of the government that cancelled his passport and is now pushing for his deportation or that of investigating agencies and even the Supreme Court that has asked him to return to India and repay the money he owes to banks. In the interview to FT, Mallya said he remains an Indian patriot who is “proud to fly the Indian flag”, but as the outcry around him continues, he is more than happy to stay safe in the UK.
Further, Mallya blamed the electronic media for ‘inflaming’ the government against him and moulding public opinion. More importantly, the industrialist once hailed as the ‘King of Good Times’ and ‘India’s Richard Branson’ finds the amount banks are seeking from him an inflated figure. “It is grossly unjust to apply compound interest and artificially inflate this figure,” Mallya told the reporter in the interview.
What one should note here is this: The dominant mood of the former Kingfisher chief is that of defiance in a battle versus banks. Moreover, he is in no mood to give in to the pressure. Going by the course of the case, it is doubtful if the government’s pressure tactics with Mallya, to get back the money he owes the banks, will work.
Even Mallya’s deportation from UK wouldn’t be easy to implement for the Ministry of External Affairs given the strong human rights laws and the nature of the legal system of that country, where it is highly difficult for a foreign country to convince the local authorities on extradition requests. Mallya would fight the case with his battery of lawyers to prove his point that he is facing an unfair treatment from the Indian government.
Mallya’s argument that it is 'unfair' on the part of the banks to charge interest on the principal amount is baseless. Any relaxation that banks may consider offering to Mallya in the repayment of his dues will set a precedent in other cases of default where the banks chances of recovery are even more less. As former RBI deputy governor, K C Chakravarty pointed out in an interview to New York Times, Mallya is only the symptom of the underlying problem and the not the problem.
Not an easy battle for banks/government
Going by the current indications, it is very unlikely that Mallya would return willingly to India. As far as the deportation plans go, it wouldn’t be easy for the Modi-government to win this herculean task, unless it puts it foot down and requests the UK-authorities keep their promise on bilateral cooperation in dealing with offenders. But, for that the government will need solid proof of financial irregularities by Mallya in the Kingfisher case. Charges of loan default can be easily contested by the millionaire in the UK courts as something caused by business failure, which is part true in the Kingfisher case.
One should note that (and as Firstpost has highlighted in a previous article) the Central Bureau of Investigation (CBI) has not yet found any strong evidences against Mallya on fund diversion even though the Enforcement Directorate (ED) claims otherwise. The only way to nail Mallya in the court of law is to gather foolproof evidence against the King of Good Times through a thorough investigation.
The Indian banking sector, neck-deep in bad debts, has almost 11 per cent of the total bank loans given under the stressed category. The Mallya-Kingfisher episode assumes as the first major case, where banks, government and judiciary are acting together in a loan default case that makes recovery possible. For that same reason, success in the battle against Mallya assumes critical significance. For either way, it will send out a strong signal to the other large defaulters. Let’s admit that Kingfisher is a classic example of a case where both banks and investigating agencies have acted too late. But, it’s better late than never.