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'Not Case Where Company Needs to be Wound Up as Assets Exceed Outstanding Liability', SC in Vijay Mallya case

By Rocky Das      01 October, 2020 04:07 PM      0 Comments
'Not Case Where Company Needs to be Wound Up as Assets Exceed Outstanding Liability', SC in Vijay Mallya case

Vijay Mallya, the owner of Kingfisher Airlines has been declared a fugitive for several years on the charge of being a defaulter for not paying his loans taken from several banks. The total estimated loan taken by him from IDBI and SBI as well was estimated at 14000cr rupees. With the ongoing investigation, his assets and properties were seized by the ED to date. 

The bench of Justices U.U. Lalit, Vineet Saran, and Ravindra Bhat of the Hon’ble Supreme Court deferred the challenge of Mallya’s United Breweries Ltd. Company to be wound up on the order of the Karnataka High Court to October 8 as the bench needs to examine the facts whether the attached asset of the fugitive can be used to settle the debts to the bank or not.

Senior Advocate of Vijaya Mallya, C.S. Baidyanathan has argued to the court that as the assets of the company have exceeded the total outstanding liability and debts, it should be inappropriate to direct the company to be wound up. He further added to his arguments that the assets are attached to the ED as it has seized it during the investigation and is not entitled to be used for the settlement of debts of the banks. 

On replying to the question asked by Justice Lalit, Advocate Baidyanathan explained that an appeal has been made to the Prevention of Money Laundering Act (PMLA) tribunal suggesting that an attachment was made for paying off the debts and liabilities yet the challenge to the attachment by banks is pending and also noted that not a single asset attached by the ED has been acquired since 2009. He further responded that most assets are in the form of shares.

The bench further asked whether the PMLA operates on the basis that the petitioner has crime in hands to which Advocate Baidyanathan replied that his client was the guarantor on the behalf of his airlines Kingfisher on which the banks had sanctioned the loans is completely liable to pay off the debts. He further added that the investigation made by PMLA concluded that the loan sanctioned by IDBI was not backed by any market commodities and the loan purpose was towards the payment of aircraft, salaries to the employees of the aircraft but it was later revealed some inconsistency in the payments and most of the loan amount was remitted outside India for which the PMLA considered the case to be one involved in money laundering aspect.

Counter to the Petitioner, Senior advocate Mukul Rohatgi argues that the appeal is totally void and bogus as the director of such company is not aware of the debts. Regardless he is simply making false allegations despite correct facts and figures and this appeal shout not considered as a valid one on the basis of the crime made by the fugitive himself. 

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