Vijay Mallya loses appeal against UK bankruptcy order

Disgraced business tycoon Vijay Mallya lost an appeal in the London High Court on Wednesday against a July 2021 bankruptcy order. This concerns the £ 1.28 billion debt that he owes to lenders including the State Bank of India.

In 2018, Mallya had been declared bankrupt by Chief Insolvency and Companies Court Judge Briggs in London following a petition filed by the Indian banks.

The bankruptcy petition against Mallya was made based on the personal guarantee he had given to lenders for loans to the now-defunct Kingfisher Airlines. However, following objections by Mallya the Insolvency and Companies court ruled in April 2020 that the banks held security over Mallya’s assets. This meant that the banks would have access to assets belonging to Mallya which made the bankruptcy petition “partially defective”.

Mallya’s fresh appeal, made in February this year, stated that the banks’ bankruptcy order should be revoked as the banks had already recovered his assets which amounted to settling his debts. The London High Court judge Sir Anthony Mann was told by counsel representing Mallya that there had been lack of transparency from the banks regarding the recoveries made in India. A statement made by Union Finance Minister Nirmala Sitharaman that banks have recovered money surpassing the amount owed by Mallya was also cited to annul the bankruptcy order.

During the 2020 bankruptcy hearing in London two retired Supreme Court judges Justice Gopala Gowda and Justice Deepak Verma had given evidence in the case through video conference. Giving evidence on behalf of Vijay Mallya, Justice Verma had opined that the bankruptcy petition against Mallya in the UK was illegal. This was countered by Justice Gowda who appeared on behalf of Indian banks, and whose expert evidence contended that Indian banks as commercial entities were entitled to pursue Mallya in the UK.

The judgment on Wednesday confirms that the banks did not hold security over Mallya’s assets, thus overturning the April 2020 order that the bankruptcy petition by the banks was “partially defective.” The judge, Sir Anthony, ended his 44-page judgment by concluding: “The bottom line in relation to this is that the bankruptcy order stands.”

Nick Curling, legal director at TLT which argued on behalf on the Indian banks, told Hindustan Times: “This is a significant result for the banks. TLT are pleased to have delivered this outcome, having acted for the banks since 2017 in relation to the DRT judgment of £1.28 billion, obtained against Dr Mallya.”

Zaiwalla and Co. who represented Mallya told HT, “There is an obvious disconnect with reality on the ground in India. Acting on the banks’ complaint and as confirmed by the Ministry of Finance, the Enforcement Directorate effectively acted as their collection agent and recovered and restored to the banks even more than the full amount of the debt. In circumstances where even the government confirms that the assets were “restored” it is fanciful to imagine that those recoveries are in any sense condition.” Zaiwalla added that Mallya would be “pursuing with vigour” his application to annul the bankruptcy order in England in conjunction with proceedings in the Karnataka High Court to compel the banks to provide proper accounting of the dues recovered.