UBI to defy HC verdict, declare UBI chief Vijay Mallya ‘wilful defaulter’ soon
29 Dec 2014
The United Bank of India said today it will move to declare United Breweries Group chairman Vijay Mallya a wilful defaulter over his failed Kingfisher Airlines, despite losing its case for the in the Kolkata High Court.
Though the high court upheld UB's appeal against such a move, the bank said since it lost the appeal on technical grounds, it will declare Mallya a wilful defaulter within a month's time.
Apart from Mallya, the bank had also declared three former directors of Kingfisher Airlines - Subhash R Gupte, A K Ravi Nedungadi and A K Ganguly - as wilful defaulters in September this year; and the group took the matter to the court.
United Bank of India executive director Deepak Narang said the court had found no flaw in its evidence, but ruled in favour of Mallya on purely technical grounds. While Reserve Bank of India guidelines require a three-member grievance redressal committee whle United Bank had formed a four-member committee. United Bank will now form a three-member committee and use the same evidence as earlier, Narang said.
Of the total of over Rs8,000 crore owed to banks by Kingfisher Airlines, over Rs300 crore is due to United Bank, which was also the first to declare Mallya a wilful defaulter, making it impossible for the group to get fresh loans.
Narang said that earlier this month, the bank had also identified United Breweries Holdings (UBHL), the guarantor of Kingfisher Airlines, as a wilful defaulter. UBHL is the parent company of Mallya's UB Group.
A borrower is a 'wilful defaulter' if he has not met repayment obligations even when he has the capacity to do so or has not utilised the money from the lender for the specific purposes for which it was borrowed.
The airline has unpaid loans amounting to close to Rs6,500 crore, borrowed from a consortium of 17 banks. A few lenders, including the country's largest lender, State Bank of India (SBI), have joined UBI in deciding to declare Kingfisher a wilful defaulter, but are yet to officialise it.