Vijay Mallya lost an appeal in court on Wednesday to use a UK court fund to pay lawyers in India to fund his many cases before Indian courts. As appeals go, this appeared an extraordinarily brazen one – and was dismissed as such.
It followed from an earlier and more successful plea by Mallya before Judge Bennet in February. Mallya had then sought use of funds deposited in court through sale of his property in France, about 2.8 million pounds (four million dollars, or Rs 29 crore), to pay his lawyers in London. That appeal was allowed. Mallya was allowed to use 1.2 million pounds (Rs 12.3 crore) from that to pay his legal fees in Britain.
That move had been strongly contested by a consortium of Indian banks led by the State Bank of India seeking to secure Mallya’s assets towards repaying the sums he owes to the banks. The banks had argued that the money from at least some of his assets realised through sale of his property in Cannes in France should be given to his creditors, rather than used to pay his lawyers. The money from the French sale had been deposited with the courts.
Mallya then topped that with a fresh application in court on Tuesday of this week. He applied for a further 758,000 pounds out of the 1.6 million pounds remaining in order to pay his lawyers in India. He told the court that he needed 555,000 pounds (Rs 5.7 crore) to pay his lawyers for the cases underway, and another 203,000 pounds (Rs 2 crore) for future legal action that may arise in India.
Mallya argued through Philip Marshall, QC, that the cases were not progressing in India because Mallya could not pay his lawyers to represent him. Those cases, he argued, are tied up with the proceedings in the courts in England, and it was, therefore, proper to use the court funds arising from the French sale to pay his lawyers in India.
Mallya argued that he cannot pay his Indian lawyers himself because his assets have been frozen. The Indian banks represented by the legal firm TLT LLP and in court by Tony Beswetherick, QC, opposed his move, this time successfully.
Justice Miles in his order on Wednesday noted that no breakdown had been offered of why the 550 million pounds was needed now, nor for the 203 million pounds said to have been needed in the future. When making such a claim, he observed, “a breakdown is usually, routinely provided.” A court would need far more information than the “global” amounts provided if it were to consider such a claim, he said.
No information had been offered on any “anticipated steps in proceedings” in India “in even the broadest terms”, Miles said in delivering his judgment turning down Mallya’s appeal. Legal proceedings in India appear stagnant at the moment, he said, and the court in London “can’t tell if they will have an impact on the English bankruptcy proceedings.”
Mallya had sought access to the remaining 1.6 million pounds in an application earlier. The court had refused that portion of Mallya’s claim. The court was right in that refusal, Miles said, and there is now “no basis for appeal against that decision.” He called the present application by Mallya “an inappropriate attempt to bolster the earlier application.”
Judge Miles noted that in the hearings in February the Indian banks had “made a respectful argument albeit it was rejected by the judge.”
Mallya sought to introduce new material claimed as evidence to support his application. Miles said he would not allow consideration of the new material claimed to be relevant. But “even with this new material I would not have ruled in the appellant’s favour,” he said.
The ruling leaves about 1.5 million pounds in court funds for the Indian banks. That little fund relative to the banks’ claim can do little by way of repayment of what they have been owed. But it could potentially, the judge noted, be used towards the costs of realising Mallya’s other assets and to “fund bankruptcy related claims.”
Over the proceedings this week, Mallya was ordered to pay 95 percent of the costs incurred by the banks. A further hearing in the banks’ case against Mallya is due July 26.
—London Eye is a weekly column by CNBC-TV18’s Sanjay Suri, which gives a peek at business-as-unusual from London and around.
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First Published: IST