Double whammy! Vijay Mallya, barred from accessing $75 mn, ED case

In a double whammy for liquor baron Vijay Mallya, the Debt Recovery Tribunal today barred him from accessing USD 75 million (Rs 515 crore) exit payment from Diageo till the loan default case with SBI is settled while the ED registered a money laundering case against him in another default case.

The money laundering case launched by the Enforcement Directorate(ED) in Mumbai against Mallya and others was in connection with the alleged default of over Rs 900 crore loan from IDBI bank based on an FIR registered last year by CBI in the same case, official sources said, adding Mallya and others will soon be questioned.

Diageo and United Spirits Ltd, owned by the UK-based firm, have also been restrained by DRT Judge Benakanahalli in Bengaluru from temporarily disbursing the USD 75 million amount to Mallya, who worked out the deal under a severance package.

The tribunal ordered that the amount be attached till the disposal of the original application filed by State Bank of India in 2013 in connection with Kingfisher Airlines’ loan default case.

In his order on the plea by the SBI application seeking the lenders’ first right on the USD 75-million sweetheart deal, the judge also directed disclosure of details of the agreement which they have arrived at.  Three other applications filed by SBI before the DRT will come up for hearing on March 28.

SBI, which leads the consortium of 17 banks that lent money to the grounded Kingfisher Airlines, had moved DRT in Bengaluru against the airline’s chairman Mallya in its bid to recover over Rs 7,000 crore of dues from him. The state-owned top lender had filed three other applications, including one seeking Mallya’s arrest and impounding of his passport, which the judge had said on March 4 would be heard later.

Mallya had to quit recently as chairman of United Spirits a company founded by his family in which he sold majority stake to Diageo.

Official sources said the ED recently filed charges under the Prevention of Money Laundering Act (PMLA) based on an FIR registered last year by CBI in the IDBI loan default case.

They said while the ED’s zonal office in Mumbai has registered the case, sleuths are also looking at the overall financial structure of Kingfisher airlines and a separate probe under foreign exchange violation charges could also be initiated.

“Mallya and others will soon be questioned. The agency has collected relevant documents from concerned authorities and the bank in question,” they said.

The ED has pressed charges under various sections of the PMLA against Mallya and others named in the CBI complaint.

The CBI had booked Mallya, director of Kingfisher Airlines, the company, A Raghunathan, Chief Financial Officer of the airlines, and unknown officials of IDBI Bank in its FIR alleging that the loan was sanctioned in violation of norms regarding credit limits.