A consortium of 17 banks filed a contempt application with the Karnataka High Court against Vijay Mallya, along with his beleaguered Kingfisher Airlines and United Breweries Holding Limited (UBHL), for allegedly violating an undertaking given to the Debt Recovery Tribunal (DBT) to neither deal with not alienate unencumbered assets.

Kingfisher and UB Group chairman Vijay Mallya
Vijay MallyaReuters

Chintan Chinappa, counsel for the consortium, submitted an application before the High Court Justice N K Patil, claiming Mallya had violated the undertaking given to the DRT on unencumbered assets and went ahead with creating pledges.

Justice Patil has now ordered a notice to Mallya and two other companies, and has posted the matter for another day, reported PTI. 

The beleaguered airline has an outstanding amount of over ₹7,000 crore to be paid to the banks. The consortium has initiated recovery proceedings under the legal recourse mechanism on the basis of the underlying assets used as collateral, which includes real estate and stock holdings in multiple group companies.

Kingfisher Airlines

The Reserve Bank of India Governor Raghuram Rajan has called on the banking industry to take up the case of wilful defaulters severely and actively pursue recourse to trim their losses, which have been a massive drain on the government coffers.