>Vijay Mallya’s quiet departure , a week before the Supreme Court heard a plea from a consortium of lenders to his defunct Kingfisher Airlines seeking an order restraining the businessman from leaving the country, glaringly exposes the loopholes in the system that prevails in India. The court was informed by the government that the liquor baron flew out on March 2, the same day the banks had moved the Debt Recovery Tribunal to have Mr. Mallya arrested and his passport frozen. The failure on the part of the tribunal and subsequently the Karnataka High Court to act immediately to ensure that Mr. Mallya remained within the country to face judicial proceedings prompted the lenders to petition the Supreme Court. The >Kingfisher Airlines promoter faces cases for the recovery of about Rs.9,000 crore the airline owes the banks — for which he had stood personal guarantee. That a consortium of 13 banks, which includes the country’s largest lender, the State Bank of India, and the might of the government were unable to restrain a person declared a “wilful defaulter” from evading due process and flying abroad right under the nose of the authorities, reflects poorly on the justice and law enforcement systems. Timely judicial orders protect the parties’ interests, but in this case even the DRT order stopping a >payment of $75 million from Diageo to Mr. Mallya appears to have come too late as the British company had already paid him a significant part of the amount. Even a look-out notice issued to all airports had no effect, according to the Central Bureau of Investigation.
Mr. Mallya has sought to project the corporate loan default as a case of business failure due to macroeconomic factors and adverse government policies. The banks, however, say he is a wilful defaulter. The CBI also alleges corruption in a Rs.900-crore loan sanctioned by top officials of >IDBI Bank despite the airline’s poor credit rating. And the Enforcement Directorate has registered a money-laundering case against him in connection with the same transaction. Mr. Mallya has sought to portray himself as a wronged man, singled out for multiple proceedings while those who owe much bigger sums have not been designated as defaulters or investigated. He has also claimed that banks had recovered Rs.1,244 crore through the sale of pledged shares and that another sum of Rs.1,250 crore deposited in the High Court is available for recovery. These charges and claims can only be judicially settled, for which Mr. Mallya’s presence and availability are vital. He would do well to return to the country if he wishes to establish his innocence and bona fides. For the banks and their recovery processes, it is a question of credibility, as they can ill-afford to give the impression to the average borrower that a high-flying debtor can get away with brazen default. For Mr. Mallya, the lesson from this episode is that flaunting his wealth may give a man an appearance of flamboyance in good times, but it ill-serves his reputation in circumstances of adversity, especially when he is perceived to be flouting the law.
