A consortium of Indian banks led by the State Bank of India (SBI) are pursuing their bankruptcy order against liquor tycoon Vijay Mallya in the High Court in England, as they seek to establish that any settlement offer made by him is now “dead in the water”.
In a hearing in the insolvency division of the High Court in London on Tuesday, Justice Michael Briggs heard arguments from the banks, represented by barrister Marcia Shekerdemian, that pursuing the bankruptcy order was required as the banks were not secured creditors, as claimed by Mallya.
It follows Justice Briggs’ ruling back in April in the case when he had concluded that Mallya should be given time until petitions pending in India can be determined before a decision is made on a bankruptcy order in London.
“There can be no doubt that it is appropriate to make a bankruptcy order in this case. The numerous hurdles being put up by VJM (Mallya) are without merit,” note the arguments laid out before the court on behalf of the banks.
The banks’ legal team argued that the assets of United Breweries Holdings Limited (UBHL), being relied on by Mallya as part of a second settlement offer, are “unquestionably under the control of its Official Liquidator” and therefore not available to Mallya or the erstwhile management of UBHL.
“This means that the Second Settlement Offer is effectively dead in the water as neither VJM nor his associates nor the erstwhile management have any control over UBHL’s assets, which form part of that offer,” they argued.
Mallya’s legal team, led by barrister Philip Marshall, countered that the banks were secured creditors and that the petition should be dismissed.
A reference was also made to the parallel extradition proceedings against Mallya, with the banks highlighting that the 64-year-old had been refused permission to appeal to the High Court on the grounds that he “would not receive a fair trial in India because of his political beliefs”.
“This court should not look beyond those decisions,” it was noted.
According to the UK Home Office, Mallya’s extradition to India on charges of fraud and money laundering was ordered in February 2019 but it cannot comment on an “ongoing legal case”.
With all avenues of legal recourse exhausted in the UK after his permission to appeal in the UK Supreme Court was denied in May, the next steps in the extradition process remain uncertain as the UK government does not formally confirm or deny any applications made before it for asylum.
The SBI-led consortium of 13 Indian banks also includes Bank of Baroda, Corporation bank, Federal Bank Ltd, IDBI Bank, Indian Overseas Bank, Jammu & Kashmir Bank, Punjab & Sind Bank, Punjab National Bank, State Bank of Mysore, UCO Bank, United Bank of India and JM Financial Asset Reconstruction Co. Pvt Ltd.
It had initiated bankruptcy proceedings against Mallya in December 2018 as part of efforts to recoup around 1.145 billion pounds in unpaid loans.
Judge Briggs has reserved his judgment on the future course of the petition following this week’s hearing and will hand down the ruling at a later date.
In his April ruling, he had noted that the legal cases being pursued by Mallya in India stood a reasonable prospect of success. The banks have returned to court with an amended petition and sought the bankruptcy order to secure the money owed.