The Karnataka High Court on Tuesday refused to interfere with the proceedings initiated by a consortium of banks against industrialist Vijay Mallya and two of his companies — UB (Holdings) Ltd, Kingfisher Airlines Ltd — before the Debt Recovery Tribunal (DRT) in Bangalore to recover a due of ₹6,200 crore.
Recovery certificate Justice AS Bopanna passed the order asking UBHL, Kingfisher and Mallya to approach the Debt Recovery Appellate Tribunal (DRAT) at Chennai against the November 12, 2013, order of the DRT, which refused to reject the application filed by the banks seeking grant of recovery certificate.
The banks had sought recovery certificate from the DRT under the Recovery of Debt Due to Banks and Financial Institutions Act, 1993. In his order, Justice Bopanna said it was not established that there is an inherent lack of jurisdiction to DRT or there is a statutory bar or any violation of statute… Also, proceedings or the action (before DRT) cannot be termed as arbitrary, unreasonable and unfair at this stage requiring the High Court’s interference.
"Further, in circumstance where huge amounts are claimed to be due and an application seeking recovery certificate is filed before DRT, notwithstanding the other proceedings that are initiated, the present application seeking recovery certificate will only result in determination of the claims and not a parallel execution proceedings at this state…," the Court observed.
Pending proceedings Mallya and his companies had contended that DRT could not entertain such a plea as the banks could approach the DRT only after recovering the due amount by selling the secured assets as per the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002
They have also claimed that legal DRT cannot act when legal proceedings are pending before the Bombay High Court on validity of corporate and personal guarantees given by UBHL and Mallya.
The banks questioned actions of Mallya and his companies in approaching the High Court directly without moving the DRAT first as per the law.