Vijay Mallya
Kingfisher Airlines Chairman Vijay Mallya speaks to the media during a news conference in Mumbai November 15, 2011 [Representational Image].Reuters File

British liquor giant Diageo on Friday said that it has asked liquor baron Vijay Mallya to return Rs 260 crore ($40 million) paid to him as part of a deal which saw him stepping down from United Spirits (USL).

The deal included an upfront payment of the amount, with the balance being paid in equal instalments over the next five years, provided Mallya comply with the terms of the agreement such as a five-year global non-compete (excluding the United Kingdom) and non-interference, among others, reported Times of India.

Diageo has stopped payment of Rs 45.5 crore ($7 million) a year to Mallya as part of the deal and sought compensation for the losses incurred by it.

The British firm had agreed to pay Mallya Rs 487.5 crore ($75 million) over five years as global non-compete and non-interference fee post his exit from United Spirits Ltd (USL).

"Diageo and other group companies have demanded from Mallya the repayment of $40 million which was paid by Diageo on February 25, 2016, and also sought compensation from him for various losses incurred by the relevant members of the Diageo group on account of the breaches committed by him," Diageo said in its preliminary results for the year ended June 30, 2017.

Diageo has paid Rs 260 crore ($40 million) of the total Rs 487.5 crore ($75 million) on signing of the agreement on February 25, 2016, while the balance $35 million was to be paid in equal instalments of Rs 45.5 crore ($7 million) a year over five years. This was subject to and conditional on Mallya's compliance, with certain terms of the agreement, the statement added.

"While the first instalment of $7 million would have become due on February 25, 2017, owing to various reasons, including breaches of several provisions of the 25 February Agreement committed by Mallya, Diageo believes that it was not liable to pay such amount, and is very unlikely to become liable to pay future instalments, to Mallya," said Diageo.