Evil Omen’ of Vijay Mallya lurks behind Indian banks and tax departments
It seems that business tycoons believe in ‘Bad Omen’. The repeated efforts of different departments for recovering the loans of Vijay Mallya, chairman of the now defunct Kingfisher Airlines Ltd, by auctioning his assets has been failing to attract potential bidders.
The attached assets including his mansion and luxury airbus has now become a liability for the facilitators.
Now again the e-auction of the luxury Airbus A319 of the liquor baron by the service tax department has attracted only two bidders according to official sources.
“Only two bidders have submitted the earnest money deposit (EMD) as per the norms,” said a source. This is the second time that the service tax department has conducted the auction of Mallya’s Airbus seized by the agency in December 2013, to recover a part of the tax dues of over Rs 400 crore.
But don’t you smell something fishy when you hear that the luxury Airbus had only one bidder during the auction invitation couple of months back?
Earlier on June 30 the department had rejected the lone bid submitted by UAE-based aviation support firm, Alna Aerodistribution. The company had placed a bid of Rs 1.09 crore for the luxury jet, which, sources said was too low.
According to sources, Alna Aero distribution has once again participated in the bidding process that will end on Thursday night.
The luxury aircraft of Mallya is owned by C J Leasing (Cayman) Ltd and was given on lease to Kingfisher. Last year, the Bombay High Court observed there was no legal trouble in auction of the aircraft which is on financial lease. Proceeds of the sale will be deposited with the High Court.
The tax authority has seized at least eight aircraft owned by Kingfisher Airlines and Mallya. Last year, Mumbai International Airport Private Limited (MIAL) had auctioned Mallya’s 11-seater jet to a scrap dealer in Mumbai for Rs 22 lakh.
On August 4, a consortium of banks led by the State Bank of India were once again unsuccessful in auctioning Kingfisher House in Mumbai as it did not attract a single buyer due to the high reserve price of Rs 135 crore.
The reserve price for the trademarks was kept at Rs 366.7 crore, which is not even one-tenth of the price at which it was pledged as a collateral for the loan. Sources, however, said the reserve price was “too high” for any bidder to come in.
“There were no bids, possibly because the reserve price was considered very high. Though the reserve price was set much lower than its original valuation at the time of taking the brand as collateral, people still found it to be high,” a banking source said.
The Kingfisher brand itself was valued at over Rs 4,000 crore by Grant Thornton when the airline was at its peak.
In its annual report for 2012-13, KFA said that at its peak, it was the largest airline in India, with a five-star rating from Skytrax. The airline’s brand had been registered separately from the Kingfisher beer trademarks. A senior banker said, “The interest for this auction could have been from existing airline operators, but no one will come. It is better to start a new airline company than to buy this brand and revive it.”
In a previous attempt at recovery of dues, which have ballooned to over Rs 9,000 crore after taking into account the interest component, the banks had conducted an auction of Kingfisher House last month, but did not find any takers at a reserve price of Rs 150 crore. Sources said the lenders might now try to lower the reserve price in both the cases in their future efforts to sell these pledged assets.
The Kingfisher House property has a built-up area of over 17,000 square feet in posh Vile Parle near domestic airport here.
Mallya, who left India on 2 March and is currently in London, has a non-bailable warrant against him in a money-laundering investigation. His passport has also been revoked. Earlier this week, the government said it has written to the British government seeking Mallya’s deportation.
In an interview to Financial Times, the liquor baron, however, said he is in a “forced exile” and has no plans at the moment to return to India where things are flying at him “fast and furious”.
“I definitely would like to return to India. Right now, things are flying at me fast and furious. My passport has been revoked. I don’t know what the government is going to do next,” he said.
Mallya said he wanted a “reasonable” settlement with creditor banks for his defunct airline, but they “are not getting any money” by taking his passport or arresting him.
Meanwhile, the Enforcement Directorate is banking on 21-year-old treaty to get Vijay Mallya back to India. According to Economic Times, the directorate has written to ministry of external affairs to invoke the Mutual Legal Assistance Treaty (MLAT) which could bring Mallya back.
So why is India now going for this treaty??
- a) Mallya cannot be deported under UK laws because under the 1971 Immigration Act, UK does not require an individual to hold a valid passport in order to remain in the country. That means, Mallya can legally stay in Britain if his passport was valid when he entered the country. He left India on March 2 and the Indian government revoked his passport only after that which means his passport was valid when he entered the UK.
- b) Extradition is possible only if Mallya is recognised as a criminal by both countries.
- c) Mallya can challenge India’s extradition move in UK courts.
