Mumbai: The Karnataka High Court has observed that businessman Vijay Mallya’s extravagant lifestyle and personal indulgence appear to be delaying the closure of loan recovery proceedings linked to the now-defunct Kingfisher Airlines.
According to a Bar and Bench report, the court made these remarks while ruling in favour of Diageo Holdings Netherlands BV in a dispute involving shares of United Breweries Limited (UBL).
Court Questions Banks Over Recovery
A division bench of Justices D K Singh and T M Nadaf questioned why a consortium of banks led by the State Bank of India (SBI) continued pursuing UBL shares despite substantial recoveries.
The court noted that banks had already recovered assets worth Rs 14,131.6 crore against an original Kingfisher Airlines loan of Rs 6,203 crore.
It observed that the recovery figures raised questions about the need to pursue additional shares.
The bench also said the responsibility for bringing the recovery proceedings to a close rested with the banks and the Union government.
What Did The Court Say About Mallya?
The High Court described Mallya’s rise and downfall as an example of how personal excess and overconfidence can damage a business empire built over decades.
Once popularly called the "King of Good Times", Mallya witnessed the collapse of Kingfisher Airlines following its debt-heavy expansion.
According to the report, the bench observed that personal indulgence, vanity and hubris appeared to have contributed to the prolonged dispute.
How Did The Share Dispute Begin?
The dispute involved UBL shares owned individually by Vijay Mallya and jointly with his son, Sidhartha Mallya.
In July 2013, Standard Chartered Bank extended a USD 135-million loan to Watson Ltd, an overseas company associated with Mallya.
Diageo guaranteed the loan, while UBL shares were pledged as security.
After Watson defaulted, Diageo paid USD 140.97 million to Standard Chartered in January 2016 and claimed rights over the pledged shares.
However, the SBI-led banking consortium also sought the shares to recover outstanding Kingfisher Airlines dues.
Why Did Diageo Win The Case?
The High Court ruled that the 2013 share pledge in favour of Standard Chartered took priority over the banks' competing claim linked to a 2010 debt-recast agreement.
It also noted that Sidhartha Mallya was not a party to that agreement.
The court clarified that Vijay Mallya's personal guarantee did not automatically create ownership rights for banks over shares jointly held with his son.
The bench consequently allowed Diageo's appeal and overturned the earlier orders of the Debt Recovery Tribunal and Debt Recovery Appellate Tribunal.
The ruling strengthens Diageo's claim over the disputed shares while raising questions about the prolonged recovery proceedings involving Kingfisher Airlines.
