Indian banks celebrate after Vijay Mallya’s appeal against bankruptcy dismissed; Mallya says he will get an annulment

TOI correspondent from London: A consortium of Indian banks celebrated on Wednesday after the UK high court refused Indian tycoon Vijay Mallya permission to appeal his UK bankruptcy order and the amended bankruptcy petition.

The State Bank of India-led consortium is trying to claw back a £1 billion debt from Kingfisher Airlines founder Vijay Mallya who provided a personal guarantee in 2010 on loans the airline took out. The debt was registered in the English courts in 2017 and Mallya was made bankrupt in England in 2021.

Mallya’s appeal against the bankruptcy order was that he did not owe the banks anything at the time of the petition as half or more of the petition debt had been received by the banks and the rest was interest which was being challenged in separate court proceedings in India.

Judge Sir Anthony Mann refused him permission to appeal saying the interest challenge which has not even got as far as full issuing, let alone service “is not one which has obvious merit”.

A Debt Recovery Tribunal had made orders restoring to the banks the assets of Mallya, UBHL and associated companies which had been subjected to the attachment orders. As partof that process the banks were required to provide bond undertakings pursuant to which the banks undertook to restore assets to the ED if required. Until the conclusion of Mallya’s criminal trial in India there was a continuing risk that the relevant tribunal might order the assets to be returned, the banks claimed. Mallya disputed this, saying the debt had been discharged.

Mann refused permission to appeal the bankruptcy order on this point, saying,“Mallya’s presence was necessary for a criminal trial, and he had declined to return to India voluntarily. Accordingly, it was his decision to absent himself that was holding up the trial. At the time of the hearing an extradition order had been made but it has still not been enforced. Apparently Dr Mallya is still resisting extradition on other bases which have yet to be resolved.”

Mann instead allowed an appeal by the banks who were appealing beingforced to amend the bankruptcy petition, in which they had to agree they would relinquish any security held if Mallya was declared bankrupt. Mann found their original bankruptcy petition not faulty and there was no evidence they held security over his assets.

Mann also refused Mallya permission to appeal the amended bankruptcy petition.

Nick Curling, legal director at TLT LLP, who represented the banks said: “This is a significant result for the banks.”

Mallya’s lawyer, Zaiwalla & Co managing partner Leigh Crestohl, said it was fanciful to say the recoveries were “conditional”. “Mallya will pursue with vigour his application to annul the bankruptcy order,” he said.