The TOI correspondent from London:Vijay Mallya’s appeal against a bankruptcy order made in the UK courts concluded on Thursday with the judge overseeing the hearing of three separate appeals referring several times to the “Alice in Wonderland world of the case” and “going down rabbit holes”. Judge Sir Anthony Mann has reserved judgment.
The Indian businessman repeated his arguments that the assets realised by the banks exceeded what he owed them so he should never have been made bankrupt.
All the while Mallya is declared bankrupt, a trustee in bankruptcy can investigate his assets, including those in offshore trusts.
The court heard that there are “potentially valuable assets and trusts” that the bankruptcy trustee can “challenge”, citing the VDMS Trust, and Sileta Trust, which owns Mallya’s London townhouse Cornwall Terrace. “Dr Mallya has disavowed any interest in this trust and in his car collection. He says he is not a beneficiary but a trustee in bankruptcy would want to investigate this. When people say why are we doing bankruptcy, there is clearly a purpose to it,” Tony Beswetherick KC, instructed by TLT LLP, representing the banks, explained. Mallya last week filed an application to annul the bankruptcy order
Mallya was made bankrupt by the UK high court following an amended bankruptcy petition brought by a State Bank of India-led consortium of banks to whom he owes £1.05 billion (as of June 2020). They registered the 2017 Bengaluru DRT judgment of Rs 6,203 crores against him in the UK high court in Nov 2017. The judgment relates to Kingfisher Airlines failing to meet debt repayments and Mallya having provided a personal guarantee.
Mark Watson-Gandy, representing Mallya, said Mallya had paid back Rs 8,645 crores at the time the bankruptcy order was made — in terms of assets realised by the banks by way of sale — so the bankruptcy petition ought to have been dismissed as this exceeded the debt he owed in the DRT, and the 11.5% interest rate was the subject of an ongoing challenge in the Karnataka HC, which retired SC judge Justice Verma had said had a good prospect of success.
However Beswetherick said the banks’ recoveries were all “contingent” as the banks had given an undertaking to the courts in India they would restore Mallya’s assets to the central govt should Mallya be convicted in India of a money laundering offence, were he to return and face criminal trial. He currently has indefinite leave to remain in the UK.
Mallya was also appealing against the amended bankruptcy petition that the banks filed in which said they would give up their rights of security over “Indian property of the debtor” in the event a bankruptcy order is made. Mallya argued the banks could not give up their security as they were prevented from doing so by Indian law and there was a public interest in them keeping it as it was public money. But Beswetherick said “Indian law was irrelevant” as the case was about English insolvency laws. The third appeal was by the banks, who were appealing against earlier being accused of having security over some of Mallya’s assets, and knowing they did and not declaring it on the original bankruptcy petition, which led to them being forced to amend it.
Beswetherick said: “The banks say they do not have any security over any of Mallya’s assets in India or UK.” Watson-Gandy retorted the banks had claimed to be secured creditors during various proceedings in India.
Mann commented: “In this Alice in Wonderland world of this case Mallya says the banks held security and the banks deny that they did.”
