Home ECONOMY Bank terms Kingfisher, Mallya wilful defaulters; airline protests

Bank terms Kingfisher, Mallya wilful defaulters; airline protests

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Kolkata, Sep 1 :

State-run United Bank of India (UBI) Monday declared the defunct Kingfisher Airlines, its promoter Vijaya Mallya and its three directors as wilful defaulters after they did not turn up for a meeting with its grievances redressal panel, an official said.

“We have declared Kingfisher Airlines, its chairman (Mallya) and three directors on its board as wilful defaulters as per the RBI circular pertaining to loan advanced to the airline,” a senior official of the bank’s recovery cell told IANS here.
Kingfisher Airlines
The three directors are A.K. Ganguly, Subhash R. Gupte and Ravi Nedungadi.

The bank had advanced about Rs.400 crore to the airline in 2006-07 from its Bangalore branch towards working capital and operational expenses.

“The airline is also liable to pay compounding interest on the principal amount of Rs.400 crore we have advanced to it,” the official said on condition of anonymity as he was not authorised to brief media.

As per the Reserve Bank of India (RBI) circular, a defaulting company or person will not be allowed to borrow money from any bank and will cease to hold any official post in the company.

Ganguly and Nedungadi are also directors on the board of United Breweries (UB) Ltd. in Bangalore.

The bank’s recovery cell summoned Mallya and the directors after a division bench of the Calcutta High Court Aug 28 dismissed the airline’s petition to send a legal representation and exempt them from appearing before the redressal panel.

The bank also filed a caveat in the Supreme Court Aug 29 against the airline after the high court ruling last week.

In a belated response, the beleaguered airline said the bank had post-haste proceeded to declare it and its directors as willful defaulters “in respect of an overdraft facility of Rs.7.5 crore” even before a copy of the high court order was made available to the parties and before its special leave petition was listed in the apex court.

“We intend to pursue all available legal remedies, including the SLP filed in the Supreme Court Aug 29 against the high court order,” the airline said in a statement from Mumbai late Monday.

Observing that being declared a willful defaulter would have serious consequences, including penal, the airline said the bank had deprived it an opportunity to be represented by a trained legal practitioner, resulting in violation of the principles of natural justice.

“The Calcutta High Court failed to consider the most relevant fact that the Delhi High Court ruled Aug 28 in a case we filed against Punjab National Bank (PNB) involving similar facts and circumstances and held that the courts have always leaned towards allowing representation through legal practitioners to obviate any handicap that the person may feel in representing his case,” the airline said.

Noting that its prayer to be represented by an advocate in the petition against PNB was allowed by the Delhi High Court through an order, a copy of which was made available to it only Monday, the airline quoted further from the order in support of its stand.

“In cases where adverse decision would have serious civil and pecuniary consequences, denial of representation through a legal practitioner may in given facts be violative of natural justice. Indisputably, the consequences of holding the petitioner as a wilful defaulter would be serious for the petitioner and the petitioner ought to be afforded adequate opportunity to present its perspective on the issue,” the order had said.

The Director General of Civil Aviation (DGCA) had suspended the airline’s permit in October 2012 on safety concerns and indefinite strike by its employees.

The grounded airline reported a net loss of Rs.4,301 crore for 2012-13.

With an accumulated losses of Rs.16,023 crore and a negative net worth of Rs.12,919 crore, the airline has an exposure of Rs.8,000 crore in the form of debts from a consortium of 14 banks, aircraft leasing firms, airport operators, state-run oil marketing firms and other vendors.

(IANS)