Battle over KF airlines’ dues to play out in court

A simmering dispute between the former chairman of the defunct Kingfisher Airlines, Indian businessman Vijay Mallya, and Indian banks who had lent the company money has escalated exponentially and will likely manifest in courtrooms.

- Ashis Ray

India has alleged Mallya colluded with senior executives of IDBI Bank to obtain a ₹950 crore loan for Kingfisher Airlines.

(GETTY IMAGES)

The sharp disagreement is over Mallya claiming that more than the sum owed has been realised by the banks and accounts not provided; whereas the banks’ position is to the contrary.

Kingfisher Airlines, once enjoying a large chunk of market share in Indian civil aviation, closed down in 2012.

Mallya, who had given his personal guarantee, against the firm's borrowings, thereby became liable to repay the banks. In 2017, a debt recovery tribunal (DRT) determined ₹6,204 crore was payable.

The current drama began to unfold after a statement by the Indian finance minister, Nirmala Sitharaman, in the Lok Sabha on December 17 last. She told the House that the Indian Directorate of Enforcement (ED) had collected ₹14,131.60 crore from sale of Mallya’s properties and assets attached by it and that this amount had been returned to the lender banks.

Mallya’s London solicitors Zaiwalla and Company pointed out to the banks’ solicitors TLT LLP, “This information was also confirmed in the Annual Report 2024-2025 of the Indian Ministry of Finance...”

Following Sitharaman’s submission, Mallya filed a writ petition in the Karnataka high court on February 3 this year, seeking disclosure of details of recoveries by the banks. The banks were served noticed by the concerned judge, but responded only on the 10th of last month with a “Statement of Objections" that said more money was due.

The banks asserted ₹217,471 crore were due, of which ₹10,814.54 crore had been recovered, thereby still leaving ₹6,656.96 crore outstanding. Zaiwalla and Company communicated to TLT LLP, “These figures are inconsistent with the list of recoveries mentioned in... the Statement of Objections itself, They are also inconsistent with the Finance Minister's statement.”