Vijay Mallya Barred From Accessing Rs. 515 Crore Severance Pay

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Mumbai: Liquor baron Vijay Mallya can’t access the 75 million dollars or Rs. 515 crore he received from liquor company Diageo as part of a settlement.

The Debt Recovery Tribunal has said he can’t touch the money for now.

Mr Mallya received the severance payment as part of his settlement with United Spirits, the Indian unit of the world’s largest liquor company Diageo, which required him to step down as chairman.

State Bank of India, which heads a consortium of 17 lenders to the grounded Kingfisher Airlines, had moved the Debt Recovery Tribunal in Bengaluru against the airline’s promoter Vijay Mallya in its bid to recover over Rs. 7,000 crore loans owed by the now-defunct carrier.

The country’s largest bank had sought to secure lenders’ first right on the $75 million or Rs. 515 crore severance package that Mr Mallya will be getting for quitting Diageo-owned United Spirits (USL) as its chairman.

SBI had also filed three other applications, seeking Mr Mallya’s arrest and impounding of his passport and full disclosure of his assets in the country and abroad. The tribunal had said it would hear these three applications at a later date.

As part of a deal, which was announced last month, Diageo said it would pay $40 million immediately to Mr Mallya with the balance being payable in equal installments over the next five years. It will also absolve Mr Mallya of all liabilities over alleged financial lapses at the company founded by his family.

SBI declared Mr Mallya a wilful defaulter last year for non-payment of dues owed by his defunct Kingfisher Airlines.

Mr Mallya earlier said he was in talks with banks for a one-time settlement of debt that Kingfisher Airlines owes, adding that he had no plans to run away from his creditors.

Kingfisher Airlines, once India’s second-biggest carrier, stopped flying in 2012, leaving its creditors, suppliers and employees with unpaid dues and salaries.

The Indian banking sector is grappling with rising non-performing assets (NPA). Gross NPAs of public sector banks stood at Rs. 3.60 lakh crore at December-end, up from Rs. 2.67 lakh crore at the end of March 2015.  In Budget 2016, Finance Minister proposed infusion of Rs. 25,000 crore into public sector banks under the ‘Indradhanush’ initiative.

Agency