Kolkata-based United Bank of India (UBI) on Monday declared as “wilful defaulters” Kingfisher Airlines, its promoter Vijay Mallya, and three directors on the airline’s board.
UBI is the first bank to make such a declaration against Mallya, who is the chairman of all United Breweries group companies. UBI is a part of the State Bank of India-led consortium and has an exposure of around ₹400 crore to Kingfisher.
“We have declared Vijay Mallya and three other directors of KFA as wilful defaulters after they failed to turn up for a grievance redress meeting. The Reserve Bank of India, SEBI and other authorities have also been alerted,” Deepak Narang, Executive Director, United Bank, told
The other directors named defaulters are AK Ganguly, Subhash R Gupte and Ravi Nedungadi.
Kingfisher Airlines filed a special leave petition before the Supreme Court to get a stay against UBI's decision. UBI has already filed a caveat in the Supreme Court.
A “wilful defaulter” tag means Mallya cannot be on the board of any company nor can he raise money from the public. He can also be subjected to criminal proceedings under Sections 403 and 425 of the IPC, dealing with misappropriation and fraud.
According to Narang, KFA representatives were to meet bank officials at 10-30 a.m. on Monday to discuss settlement of dues and offer reasons why action should not be taken against the promoter and board members.
The meeting was scheduled as per a Calcutta High Court directive that wanted KFA to be represented by the company officials not lawyers. KFA abstained from today’s meeting.
According to Narang, in a letter to UBI, the airline’s officials claimed they would challenge the Calcutta High Court order and, and till then no action should be taken. But UBI decided to declare Mallya as a defaulter.
‘Miscarriage of justice’ In a statement, the airline said it has been demanding that UBI permit it to have legal representation of its choice at the hearing to be held before the Grievance Redressal Committee set up by UBI.
“The basis for KFA’s demand is that being declared a wilful defaulter entails serious consequences, including penal consequences. Hence, depriving KFA of an opportunity to be represented by a trained legal professional is a miscarriage of justice, a denial of real and reasonable opportunity of defending itself and a violation of the principles of natural justice.”
Sources in the banking sector indicate that other lenders are likely to follow suit against KFA.