Fugitive Indian liquor tycoon Vijay Mallya, whose flamboyant personality was once reflected in the Kingfisher slogan, ‘king of good times,’ is now seen as a king fallen on hard times. He must not have had a good night’s sleep since the consortium of banks that had lent him money for his venture Kingfisher Airlines started chasing him for Rs 9,000-crore default. To escape arrest he fled the country two years ago and decided to set up a new home in the UK, believing he would be able, by using the best of legal expertise in the country, to convince the British court that he was not a wilful defaulter – that the default by Kingfisher Airlines was a result of ‘business failure’ within a wider context of a ‘global financial crisis’ and that its owner had ‘no fraudulent intentions’ – and thus avoid extradition or repayment of the outstanding loans. However, the British court and the British police have upset his calculations. He was arrested last year by Scotland Yard on an extradition warrant. The extradition case is going on.
On Tuesday, the king of good times received another big blow. The High Court of England upheld an Indian court’s ruling that a consortium of 13 Indian banks were entitled to recover their dues from him amounting to over Rs 1 lakh crore. The consortium comprising the State Bank of India, Bank of Baroda, Corporation Bank, Federal Bank, IDBI Bank, Indian Overseas Bank, Jammu and Kashmir Bank, Punjab and Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank, United Bank of India and JM Financial Asset Reconstruction Company had got a favourable judgment from the Debt Recovery Tribunal (DRT) in Karnataka last year. The DRT passed an order saying Mallya was “liable” to pay the banks over Rs 6,200 crore with interest.
With the DRT judgment in their favour the banks got an order to freeze the assets across the world of Mallya for the sake of recovering their dues. The freeze order involved Mallya’s personal and business interests in England and Wales, including three companies, Ladywalk LLP, Rose Capital Ventures Ltd and Orange India Holdings. The freeze order restrained Mallya and his companies from removing any of their assets in the jurisdiction up to a limit of £1,140-million and in any way disposing of, dealing with or diminishing the value of any of their assets whether they are inside or outside the jurisdiction up to the same value. The freeze order really drove the king into worse times as he was allowed by the court only a weekly allowance of £5,000. (Later, after he appealed for enhancement in the court, his weekly allowance was raised to about £18,000.)
The fact that the High Court of England refused to overturn the Indian court’s order establishes that his plea that the default in payment of loans was owing to business failure has been rejected. He has been accepted as a wilful defaulter. This is a big victory for the banks as even after they had been able to prove in the Indian court that he was a wilful defaulter they were not sure whether the British court would accept their plea. But the High Court of England did not disappoint them. They accepted the evidence presented by the banks and the government of India to prove ‘dishonesty’ on the part of Vijay Mallya on the ground that he acquired the loans through misrepresentation and had no intentions of repaying them. Mallya›s defence that he had no ‘fraudulent’ intentions fell apart. What was yet another setback to him was the refusal by Judge Andrew Henshaw of the High Court of permission to him to appeal his ruling, which now leaves him with the only option of directly petitioning the UK’s Court of Appeal.
The judgment of the England High Court, though related to Mallya’s case, has much wider implications. It has very clearly established that the British courts are willing to give weight and importance to and respect for judgments delivered in courts of India. The judgment holds significance in the times of globalization when it is common for a business entity to have commercial interests in more than one country. A number of Indian business entities have investments in the United Kingdom, and therefore the example of an unethical Indian businessman slipping away to the UK to escape lenders and live life big with the investments in that country may not end with Vijay Mallya. Andrew Henshaw’s judgment in Mallya’s case has given the Indian banks, the Indian government and the Indian investigative agencies a hope that they would be able to get this Mallya and any future Mallyas extradited for prosecution.