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Mallya offers to pay up Rs 4,000 crore, SC told

Kingfisher Airlines chairman Vijay Mallya had recently reached out to lenders, to whom he owes nearly Rs 7,000 crore, offering to settle all claims, senior bank executives confirmed to FE. On Wednesday afternoon it was revealed, in a proposal in sealed cover given to SC by Kingfisher Airlines, that Vijay Mallya has indicated his willingness to repay around Rs 4,000 crore loan to banks by September this year – earlier, FE Exclusive story had indicated he was willing to pay Rs 2,000 cr.

However, the consortium of lenders led by State Bank of India (SBI) turned down the Rs 2,000 cr offer saying they were not willing to take a haircut. Kingfisher Airlines (KAL), now declared a wilful defaulter by multiple banks, owes lenders Rs 6,963 crore.

Two senior bankers who are part of the consortium confirmed Mallya had approached lenders through one of his companies asking for a settlement by paying Rs 2,000 crore.

“We cannot accept such a small amount and have rejected the proposal,” one of them said. Even as bankers have been making all efforts to recover their money despite facing some legal hurdles, the Enforcement Directorate has initiated an investigation into the businessman’s financial affairs, suspecting malfeasance. The ED has summoned Mallya and the businessman, currently in London, is expected to appear before the investigative agency by April 2.

A recent auction of Kingfisher Airline’s corporate office in Mumbai flopped without attracting a single buyer, ostensibly because the reserve price was too high. The auction was part of the recovery initiative using the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002.

Another assets that banks have been trying to get possession of is Kingfisher Villa in Goa. However, they have been unsuccessful so far, facing legal hurdles in a local court.

Kingfisher House, pledged to a consortium of 17 banks, has been the bone of contention between banks and the income tax department with both claiming their right to possess the property. In 2013, the I-T department had moved a Bangalore court asking lenders to first settle the dues of the department amounting to Rs 350 crore as the property was attached under the I-T Act. The department claimed KAL had deducted tax at source from employees’ salaries and other payments but had failed to deposit the amount with the government entity.

Mallya has blocked bankers’ attempts to attach the villa in Goa claiming United Spirits (USL) has been a tenant since 2005 and, consequently, banks cannot sell the property without its approval. KAL has been grounded since October 2012 and bankers have recovered just a fraction of their dues by selling securities pledged to it. These include real estate and shares in multiple group entities. Banks had also sold around 4 lakh shares of USL pledged with them for Rs 104 crore in 2014.

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NMTV was launched in the year 1999, and is Maharashtra only accredited 24-hour, 7-day-a-week local cable news station of Navi Mumbai airing news bulletins and programs in English, Hindi and Marathi. NMTV represents the state-of-the-art in local television news coverage, delivering on a commitment of responsible and community-oriented journalism on an around-the-clock basis.

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