Supreme Court Questions Vijay Mallya On Assets, Transfer Of $40 Million To Kids

Liquor baron Vijay Mallya, who is presently in the United Kingdom, was on Thursday questioned at length by the Supreme Court on the "truthfulness" of his disclosure of assets and transfer of $40 millions to his children.

A bench of Justices Adarsh Kumar Goel and UU Lalit put for the queries during the day-long hearing after which it reserved the orders on two pleas of lending banks seeking contempt action and a direction to him to deposit $40 million received from offshore firm Diageo Plc, respectively.

"You answer us whether you have disclosed your assets truthfully? Did you violate the Karnataka High Court order (restraining Mallaya from transferring and alienating assets) by transferring $40 million," the bench asked senior advocate CS Vaidyanathan, representing Mallya.

At the outset, the bench also posed several queries to the consortium of lending banks led by State Bank of India (SBI) and asked whether any criminal proceedings have been initiated against Mallya.

"Was any security taken at the time of giving the loan? Was the security adequate? If not, then why was the loan advanced without sufficient security. Is it not a case of misrepresentation with regard to security?" the bench asked.

The court then asked Mallya why he did not disclose the receipt of $40 million from London-based Diageo and subsequent transfer of money to trusts to which his three children were the beneficiaries. The banks have alleged that Mallya concealed facts and diverted the money to his son Siddharth Mallya and daughters Leanna Mallya and Tanya Mallya in "flagrant violation" of the orders passed by the Karnataka High Court.

Attorney General Mukul Rohatgi and senior advocate Shyam Divan, appearing for the banks, contended that unless Mallya deposits $40 million before this court, he does not deserve to be heard and, moreover, he needed to appear personally as the contempt notice has already been issued.

In response to a query on how the orders of the court would be enforced, Rohatgi said that the government is seeking deportation of Mallya from the U.K. Divan, who initiated the arguments, referred to various orders passed by the Debt Recovery Tribunal (DRT), the high court and the Supreme Court and said that the DRT has passed a decree in favour of the banks and the amount to be recovered is approximately Rs 9,200 crore.

There was a specific order of the high court that Mallya will not transfer or alienate any movable and immovable assets to any person, he said.

Instead of filing a response to the contempt notice, Mallya has filed an application seeking recall of the notice itself, Divan added.

He also referred to the orders of the apex court and said that Mallya was asked to file an affidavit giving complete details of the assets and despite these directions, he did not disclose receipt and subsequent transfer of $40 million to his children. The bench then inquired about the offer made by Mallya that he was willing to pay around Rs 2,090 crore.

"Nothing came forward. No down payment has been made," Divan said.