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Vijay Mallya offers banks their money, again

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Vijay Mallya offers banks their money, again

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"I request the banks with folded hands, take 100 percent of your principal back immediately," said Mallya.

The keyword that emerged from the hearings in Vijay Mallya’s appeal against extradition is that this has been a very “dense” case. Clare Montgomery arguing for Mallya used that expression often enough for Judge Irwin to remind her politely that the point has been made. But it was a point perhaps worth repeating because that’s one thing we all agree on. If the lawyers arguing the case can get lost in the maze of allegations and defences teased out of hazy facts, the rest of us can perhaps get understandably and pardonably lost.
London Eye
The arguments and counter-arguments presented in court through the hearings at the Westminster magistrates court over the course of a year became a challenge to follow at times. More clarity on the case might well emerge outside of the courtroom than within —  Mallya offered some on stepping out of the court at the end of the three-day appeal hearing. But every clarification in this saga only sets off a spiral fresh dispute, a dense-looking spiral.
Is he willing to repay money to the banks? This question was not a part of the “dense case”, but the question by itself is dense enough. Mallya’s answer: “I request the banks with folded hands, take 100 percent of your principal back immediately.” That he has said before. But, CNBC TV-18 asked, if his assets have been frozen, how then could he repay? Vijay Mallya’s response to this is worth repeating below in full:
“The Enforcement Directorate attached the assets on a complaint by the banks that I was not paying them. That is clearly stated in the provisional attachment orders. I have not committed any offences under the PMLA (Prevention of Money Laundering Act) that the Enforcement Directorate would suo motto attach my assets.
“It is the very same banks who complained to the ED to attach my assets because I was not paying the banks. Now I’m saying, please, banks, take your money. But ED is saying no, we have a claim on these assets. So the Enforcement Directorate on one side, and the banks on the other are fighting over the same asset.
“I haven’t borrowed any money from the Enforcement Directorate. In fact, I did not borrow any money myself from the banks, Kingfisher Airlines did. I’m willing to honour my guarantee and pay them in full. I do not want any discount on the principal and the hangover of loss of public money. So many companies are now changing hands with significant haircuts being taken by banks. I don’t want any haircut, I want them to take their money in full.”
Some of the difficulty with this offer is easy to spot. Vijay Mallya mentions the “principal” he is willing to repay. Banks have a nasty way of adding interest to principals, it’s what they live on. Mallya has set up a settlement route through the Karnataka High Court. Bank managers haven’t quite turned up to collect bagfuls of money due to them to lend happily ever after. Bank managers do have also a longstanding relationship with calculators; it could be their calculation that they could seize more than they could hope to be given voluntarily back. Or, they may simply not see enough liquidity within Mallya’s reach to get paid back even the principal.
Claimants have been queuing up, jostling one another out of the queue rather, to use the courts to recover what they believe due from Mr Mallya. Diageo has claimed back $40 million they had given him, and a London court, separately from extradition matters, wants Mallya to repay Diageo. In another proceeding, a consortium of Indian banks has pleaded for him to be declared bankrupt so they could divide up his assets. Another case arose over his London home. That is besides all the cases underway in India. It might just be the case that Mallya himself loses track of just how many cases he’s involved with. How dense a legal mess could that be?
The density such as it seems to worry his lawyers, and no doubt his creditors, far more than it does him. He stepped out of the High Court beaming at the end of three days of hearing of his appeal against extradition. This is the broadest smile he has worn around a court over the last three years of one round of proceedings after another. It is not likely to become infectious to his creditors.
 
London Eye is a weekly column by CNBC-TV18’s Sanjay Suri, which gives a peek at business-as-unusual from London and around.
Read his columns here.
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