The rise and fall of liquor baron Vijay Mallya since he took over as the chairman of UB Group in 1983, inheriting the business empire from his father Vittal Mallya, almost seems like a fairy tale. At the peak of his success, the UB Group had become a Rs 9,000 crore business empire. It is ironical that Mr Mallya's fairy tale ended on a sad note, after he last month stepped down as the chairman of United Spirits, but what is even more ironical is that it will be his lenders who are expected to turn out as the ultimate losers.
Mr Mallya, who has just turned 60, according to reports has said that he wants to spend more time in England with his children. But, in that case, what shall be the fate of the 17 public sector banks which owe US$ 1.4 billion or Rs 9,400 crore in debts to Mr Vijay Mallya's now defunct Kingfisher Airlines, and their pending court cases, once he moves out of the country, is a big question.
Two of the most prominent banks, namely Punjab National Bank (PNB) and the State Bank of India (SBI), recently declared Mr Mallya as a willful defaulter, which means a defaulter who has the means to repay, but not the intent.
A consortium of 17 public sector banks filed a petition in the Supreme Court on Tuesday, asking the apex court not to allow Vijay Mallya to leave the country. Mr Mallya is currently fighting many loan repayment cases against different banks in various Indian courts. Once he moves out of the jurisdiction into another country, he will be difficult to catch hold of. The Supreme Court is expected to hear the petition tomorrow.
A debt recovery tribunal on Monday halted the payout of US$ 75 million (Rs 515 crore) as settlement, which Vijay Mallya was to receive after resigning as chairman of United Spirits from spirits giant Diageo. The creditor banks had argued that they had the "first right" to the Rs 515 crore payment. The tribunal's decision had come in response to a petition filed by the State Bank of India, which owes Rs 1,600 crore to Kingfisher Airlines.
On Monday the Enforcement Directorate had also filed a money-laundering case against Mr Vijay Mallya for allegedly sending Rs 900 crore abroad which he had borrowed from a bank.
Just a few days back, Raghuram Rajan, the RBI governor had publicly criticized Vijay Mallay while speaking at the WorldEconomic Forum by saying that loan defaulters should not flaunt their money in public. He had said, "If you flaunt your birthday bashes even while owing the system a lot of money, it does seem to suggest to the public that you don't care. I think this is a wrong message to send."
But irrespective of the mounting criticism against him, it seems that Vijay Mallya will have the last laugh. Even his stepping down as the chairman of United Spirits is least expected to increases any chances of the lending banks for recovering their money, with assets of Kingfisher being sold as scrap and the Kingfisher shares which were pledged as security getting reduced to nothing more than garbage.
Mr Mallya was removed from the FORBES list of billionaires in 2012, all thanks to the Kingfisher debacle, but the truth is that he is a shrewd businessman, who has lots of influential friends and lots of personal wealth spread across the globe. If the apex court fails to tighten its noose on Vijay Mallya now, the lending banks are most likely to pay the price.
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