Supreme Court Questions Vijay Mallya On Transfer Of $40 Million To Children

Supreme Court Questions Vijay Mallya On Transfer Of $40 Million To Children

New Delhi: Liquor baron Vijay Mallya, who is presently in the United Kingdom, was on Thursday posed searching questions by the Supreme Court which asked him about the "truthfulness" of his disclosure of assets and transfer of $40 millions to his children.

A bench of Justices Adarsh Kumar Goel and U U 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 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 C S Vaidyanathan, representing Mallya.

At the outset, the bench also posed several queries to the consortium of lending banks led by State Bank of India and asked it 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 the loan was advanced without sufficient security.

"Is it not a case of misrepresentation with regard to security?," the bench asked.

The court then asked Mallya as to why he did not disclose the receipt of $40 million from London-based company Diageo Plc and  subsequent transfer of money to trusts to which his three children were the beneficiaries.

The banks have alleged that Mallya concealed the 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.

"He did not disclose the $40 million deal with Diageo to this court. He took the Supreme Court for a ride, cares two hoots for the courts," Rohatgi said.

In response to the query as to how the orders of the court would be enforced, he said that the government is seeking deportation of Mallya from the UK.

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 crores.

At present the question is to bring $40 million back and a direction be issued to this effect, he said, adding "Mallya must appear in person before this court".

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.

"What will happen to remaining amount," the bench asked. Instead of filing a response to the contempt notice, Mallya has filed an application seeking recall of the notice itself, Divan said, adding "there should not be any subversion of orders of this court and the high court".

Divan 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.

The bench then asked as to how the decree of the DRT to recover Rs 9,200 crore would be executed.

"There are hundreds of creditors against him. I am SBI.

Give my money back, I will go home. Our concern is with the Rs 9,200 crore. God knows, how will it get the money back," the Attorney General said, adding that Mallya has taken this court for "a ride".

The bench asked Vaidyanathan, Mallya's counsel, about the response on the contempt notice.

The lawyer said that an application for recall of the order has been filed and according to him, no contempt is made out and hence, the plea itself can considered as the reply.

"Before the contempt order was passed, I had already disclosed about the $40 million," he said, adding Mallya had also disclosed the assets of his wife and children.

Regarding the banks' arguments that Mallya violated the order of the Karnataka High Court, Vaidyanathan said, "It is rather unusual and extraordinary. If I (Mallya) have violated the orders of the high court, the contempt proceedings should have been launched in high court not in the Supreme Court".

Regarding the $40 million, Vaidyanathan said it was received in pursuance to the non-competing agreement with Diageo Plc.

To this, the bench said, "As per the order of high court, the moment any property belonged to you, there was an injunction on it. He (Mallya) is faced with a scenario where there is are dues of Rs 6,200 crore public money on him. All properties belonging to you are under the injunction order".

"Why there was so hurry to dispose of that money ($40 million)? It comes to your pocket and is transferred very soon, within a day," the bench asked.

Mallya's counsel said the money which came from Diageo belonged to his children and not him.

The bench shot back: "Somebody who is faced with a default of Rs 6,200 crore and suppose if he gets Rs 3,000 crore, he should have given it to repay the dues".

Vaidyanathan maintained that the $40 million was not covered under the injunction order.

"Today, will the highest court of this land decide on the alleged contempt of the Karnataka High Court order without being any application for contempt? No specific contempt plea has been filed. My right to appeal against the high court's order can't be taken away like this.

"This man (Mallya) has been made a poster boy of default. Even the worst criminal, like a terrorist, is entitled to avail his rights given under the Constitution," he said, adding, "this case can't be treated as a unique case".

"Why this man is being targeted in this manner when his business has suffered a loss. It is not his fault that his business failed.... Why this special treatment? Why my right to appeal is being taken away," he said.

In October last year, the court had rapped Mallya for not making full disclosure of his overseas properties and had asked him to do so within a month.

The bench had also pulled up Mallya for not giving details of $40 million which he had allegedly received from British firm Diageo in February last year, saying it was of the "prima facie view" that proper disclosure as per its earlier order was not made.

The banks had on August 29 last year told the Supreme Court that Mallya had deliberately not made full disclosure of his assets including the $40 million he received on February 25 from Diageo.