DRT Order On Vijay Mallya Case

IN THE DEBTS RECOVERY TRIBUNAL, KARNATAKA
AT BANGALORE
Dated this the 19th day of January, 2017
Present: Shri. K. Srinivasan

Presiding Officer
OA No.766/2013
BETWEEN:
STATE BANK OF INDIA

A banking corporation constituted under the State Bank of
India Act, 1955 (23 of 1955),
having its Corporate Centre at State Bank Bhavan,
Madame Cama Road,
Nariman Point,
Mumbai - 400 021,
And having its Industrial Finance Branch at

61, Residency Plaza, Residency Road,
Bengaluru - 580 025
2. (Deleted as per order dated 13.06.2016)
3. BANK OF BARODA
a body corporate under the
Banking Companies (Acquisition and Transfer of
Undertaking) Act, 1970 (5 of 1970)
having its head office at
Baroda House,
P.B.No.506, Mandavi,
Vadodara 396 006
Acting through its branch office
at P.O. Box 11745,

Samata Building,
2 OA NO.766/2013
General Bhosale Marg,

Nariman Point, Mumbai - 400 021

6. CORPORATION BANK
a body corporate under
Banking Companies [Acquisition and
Transfer of Undertaking] Act 1980
(40 of 1980) having its Corporate Office at
Mangaladevi Temple Road,
Pandeshwar, Mangalore 575 001
And having its Industrial Finance Branch, at
Rallaram Memorial Building
1st Floor, CSI Compound, Mission Road,
Bengaluru - 560 027.
7. THE FEDERAL BANK LIMITED,

a company within the meaning of the Companies Act, 1956,
having its registered office at
Federal Towers,
Aluva - 683101, Kerala
And having its branch

office at St. Marks Road,
9, Haleyon Complex,
St. Marks Road,
Bangalore - 560001
8. IDBI Bank Limited

a company incorporated
under the Companies Act, 1956 and a banking company
within the meaning of the Banking Regulation Act, 1949
IDBI Tower, WTC Complex,
Cuffe Parade, Mumbai - 400 005,
3 OA NO.766/2013
Maharashtra, India
And acting through its branch office at

Corporate Banking Group-FAMG
9th Floor, IDBI Tower, WTC Complex
Cuffe Parade, Colaba
Mumbai 400 005
9. INDIAN OVERSEAS BANK,

Undertaking) Act, 1970
having its Central Office at
763, Anna Salai,
Chennai 600 002
And its branch office at

Harikripa, 26-A, S.V. Road
Santacruz (W) Mumbai 400 054
10. JAMMU & KASHMIR BANK LIMITED,

a banking company incorporated under the provisions of the
Jammu & Kashmir Companies
Act No. XI of 1977 (Samvat)
having its registered office at
Corporate Headquarter,
Maulana Azad Road,
Srinagar, Kashmir -190 001
Syed House, 124 S.V. Savarkar Marg,
Mahim (West), Mumbai - 400 016
11. PUNJAB & SIND BANK,

a body corporate under Banking Companies (Acquisition and
Transfer of Undertaking) Act, 1980 having its Head office at
21, Rajendra Place, New Delhi -110 008
And having amongst others, a branch office at
4 OA NO.766/2013
J.K. Somani Building, British Hotel Lane,

Fort, Mumbai - 400 023.
12. PUNJAB NATIONAL BANK,

Undertaking) Act, 1970 (5 of 1970)
having its Head Office at
7, Bhikaji Cama Place,
New Delhi 110 607
Acting through its Large Corporate Branch

at Centenary Building,
28, M.G. Road, Bengaluru - 560 001
13. STATE BANK OF MYSORE

a body corporate constituted
under The State Bank of India
(Subsidiary Banks) Act, 1959, having its Head Office at
Kempe Gowda Road,
Bengaluru 560 009
And its Corporate Accounts Branch
at No.18, Ramanashree Arcade
M.G. Road
Bangalore - 560 001
14. UCO BANK,

a body corporate constituted
under the Banking Companies
(Acquisition & Transfer of Undertakings)
Act, 1970 and having its head office at
10, BTM Sarani,
Kolkata -700 001,
West Bengal, India.
5 OA NO.766/2013

1st Floor, 13/22,
K.G. Road,
Bengaluru 560 009
15. UNITED BANK OF INDIA

Banking Companies
(Acquisition and Transfer of Undertaking
Act, 1970 (5 of 1970)
11, Hemanta Basu Sarani, Kolkata 700 001
Acting through its branch

office at 40, K.G. Road,
Bengaluru 560 009
16. JM FINANCIAL ASSET RECONSTRUCTION

CO. PVT. LTD
Having its registered office at
7th Floor, Cnergy,
Appasaheb Marathe Marg,
Prabhadevi,
Mumbai - 400 025 APPLICANTS
AND
1. Kingfisher Airlines Limited,
A public limited company
incorporated under the Companies Act, 1956
and having its registered office at
UB Tower, Level 12,
UB City, 24, Vittal Mallya Road,
Bangalore - 560 001
2. United Breweries (Holdings) Limited

A Public company incorporated under
6 OA NO.766/2013
the Companies Act 1956 and having its registered office at

UB Tower, Level 12, UB City,
24, Vittal Mallya Road,
Bengaluru 560 001, Karnataka, India
3. Dr. Vijay Mallya,

Son of Late Sri Vittal Mallya and
Residing at 3, Vittal Mallya Road,
Bengaluru - 560001,
Karnataka, India
4. Kingfisher Finvest (India) Ltd

UB Tower, Level 12,
UB City, 24, Vittal Mallya Road
Bengaluru 560 001
5. SBICAP Trustee Company Ltd

No.8, 5th Floor, Khetan Bhavan
198 Jamshedji Tata Road
Churchgate
Mumbai - 400 020.
6. The Commissioner of Service Tax - I

Central Excise Building,
M.K. Road,
Churchgate, Mumbai - 400 020.
7. Diageo Holding Netherlands B.V.

Molenwerf 12, 1014 BG Amsterdam,
The Netherlands.
8. Unit Trust of India Investment

Advisory Services Limited.
Unit No.2, Block B, 1st Floor, JVPD Scheme,
Gulmohar Cross Road, No.9,
Andheri (West),
Mumbai 400 049.
7 OA NO.766/2013
9. Standard Chartered Bank.

1 Basinghall Avenue,
London . DEFENDANTS
Counsel on record/appeared for:
Applicants : Mr Naganand for M/s. Dua Associates
Applicant No.8 : Mr N V Srinivasan
Defendant No.1 : Mr.Raghavan for M/s Rajesh Associates
Defendant No.2 & 3 : Mr Uday Holla for M/s. Holla & Holla
Defendant No.4 : Mr.Poovaiah for M/s.Poovaiah Associates
Defendant No.5 : Mr.G.N. Satya Murthy
Defendant No.6 : Mr.Advaith M. Sethna
Defendant No.7 : Mr.Sondhi
Defendant No8 : Mr.Krishnamurthy for M/s.GKM Associates
Defendant No.9 : Mr.Krishnamurthy for M/s.GKM Associates
Third Party (USL) : Mr. C.K.NandaKumar
FINAL ORDER IN OA NO.766 OF 2013
1) The present Application is filed by the Applicants-Banks
under Section 19 of the Recovery of Debts Due to Banks
and Financial Institutions Act, 1993, against Defendants
No.1 to 4 for recovery of a sum of Rs.6203,35,03,879.42
(Rupees Six Thousand Two Hundred and Three Crores
Thirty Five lakhs Three Thousand Eight Hundred and
Seventy Nine and Paise Forty Two Only) as on 31.05.2013
with further interest thereon @ 15.20% p.a. with monthly

8 OA NO.766/2013
rests from 01.06.2013 till payment; and other consequential
reliefs.
2) The facts that led to filing of this colossal suit by the

Applicants-Banks are as follows
AVERMENTS MADE BY APPLICANT BANKS IN BRIEF:-
i) According to the Applicants-Banks, 1st Defendant is a
Company carrying on business in Airlines. During the
year 2008 one M/s. Deccan Aviation Limited merged
with Defendant No.1-Company and the merged entity
was renamed as Kingfisher Airlines Limited, viz.,
Defendant No.1 herein.
ii) In the year 2005, Defendant No.1 approached the
Applicants-Banks for providing Working Capital and
Term Loan facilities including short term loans and
entered into respective loan agreements with the
Applicant-Banks. However, in view of the financial
difficulties faced by it, Defendant No.1 committed
default in repayment of such loans and on demands of

9 OA NO.766/2013
banks for repayment of the loans, the 1st defendant
requested applicant banks, inter alia, to restructure and
recast the said loan facilities. Pursuant to such a
request, a Lenders Meeting was held on various date
including in April 2010 between the applicant-banks and
Defendant No.1, in which a final decision was made to
restructure and recast the aforementioned credit
facilities of Defendant No.1. It was also decided in the
said Meeting to appoint the 1st Applicant-State Bank of
India as Lenders Agent. After considering all the
relevant aspects, the parties entered into a Master
Debt Recast Agreement (hereinafter referred to as
MDRA) dated 21.12.2010 (Ex.A-5) along with various
other supplementary agreements, not only to secure
the existing securities but also to create further
securities.
iii) Under the terms of the MDRA all the Term Loans
existing then were merged and treated as a single
Rupee Term Loan Facility and the various working

10 OA NO.766/2013
capital facilities as a single Working Capital Facility and
these facilities were governed by the terms and
conditions of MDRA and other documents and were
secured by the securities created under security
documents. The said MDRA and the allied documents
superseded all previous proposals, agreements, etc.
and Defendants No.2 and 3 agreed to stand as
guarantors for repayment of the outstanding loans by 1 st
defendant to applicant banks and in confirmation of
such promise, executed a separate agreement of
guarantee also in favour of applicant banks vide
Ex.A.26 and Ex.A.,27. Subsequently, on 24.12.2010 the
said MDRA was amended through an Amendatory
Agreement (Ex.A-6)
iv) Pursuant to the terms of MDRA, as amended, a
Security Trustee Agreement dated 21.12.2010 (Ex.A-7)
was also entered into among Applicants and
Defendants No.1 and 5, by which Defendant No.5 was
appointed as the security trustee for the benefit of the

11 OA NO.766/2013
Applicants-Banks and, inter alia, to hold the security
documents and securities created by Defendant No.1 in
favour of Defendant No.5 for the benefit of applicants-
banks.
v) In view of the common interest of the Applicant
Banks in the borrower, i.e., Defendant No.1, an Inter
Creditor Agreement dated 21.12.2010 (Ex.A-8) was
also entered into between the Applicant-Banks and
Defendant No.5 along with confirmation letter to the
said agreement (Ex.A-9); and a Trust and Retention
Accounts Agreement dated 21.12.2010 (Ex.A-10).
Pursuant to execution of the above documents,
Defendant No.1 created various securities as
mentioned in Para No.5.11 in the Amended OA. In
confirmation of creation of the above securities, the
Defendants have executed the following documents
among other documents:-
a) Unattested Memorandum of Hypothecation

(Ex.A-11); b) Irrevocable Power of Attorney
12 OA NO.766/2013
(Ex.A-12); c) Agreement to assign trademarks

executed by Defendant No. 1 in favour of
Defendant No.5 (Ex.A-13); d) Memorandum of
Entry dated 18.03.2011 (Ex.A-14) e) Declaration
by a Director of Defendant No.1 dated
18.03.2011 (Ex.A-15); f) Unattested
Memorandum of Hypothecation dated 18.03.2011
(Ex.A-18); g) Release of Residual Interest
Agreements dated 21.12.2010; (Ex.A- 20); h)
Release of Residual Interest Agreement dated
21.12.2010; (Ex.A-21).
vi) In addition to the above, Defendant No.5,
Defendants No.1 and 2 and Defendant No.4, entered
into a Pledge Agreement dated 21.12.2010 (Ex.A-23)
pledging thereby certain shares owned by the Pledgors
i.e., Defendant No.2 and Defendant No.4 in favour of
Defendant No.5 for the benefit of the Applicants-Banks
for securing their respective outstandings from
Defendant No.1. The details of pledged shares are as
mentioned in Para No.5.12 in the Amended OA.
However, the said pledged shares were sold and a sum

13 OA NO.766/2013
of Rs.544,47,13,110/- was appropriated by the
Applicants-Banks and credited towards the loan
accounts.
vii) As stated above, in addition to the above, Defendant
No.2 and Defendant No.3 have provided their corporate
and personal guarantees in favour of the Applicant
Banks for securing the repayment of the outstandings
of the Defendant No.1 under the MDRA to the
Applicants-Banks and have respectively executed a
Corporate Guarantee Agreement (Ex.A-26); and
Personal Guarantee Agreement (Ex.A-27) both dated
21.12.2010.
vii) The 10th Applicant Bank Jammu & Kashmir Bank
Limited had its own exclusive securities in its favour
and although they were also covered under the
aforesaid guarantee agreements, yet 10th applicant was
also a party to the MDRA. The details of their separate
securities are stated in Para No.5.15 of the amended
OA. As the outstanding amounts due from Defendant

14 OA NO.766/2013
No.1 far exceed the amounts which would be recovered
from the sale of the pledged shares, the Applicant
No.10 has joined in filing this Application.
viii) It is further stated that after execution of the MDRA,
Defendant No.1 sought for additional loans from the
consortium of banks for revival of its business, which
was also sanctioned by the applicant-banks as
mentioned in Para 5.16 of the amended OA. Defendant
No.1 have executed necessary loan documents
evidencing availing of the additional loans and the
terms and conditions upon which said additional loans
were availed. Those documents are marked as Ex.A.28
to Ex.A.57. The aforementioned additional loans were
also guaranteed by Defendant No.2 and Defendant
No.3.
ix) After availing of the loans, the Defendants have failed
to repay the same with interest, on account of which the
Applicant-Banks have declared the account of

15 OA NO.766/2013
Defendant No.1 as NPA on various dates between
02.11.2011 and 31.03.2013.
x) Subsequent to classification of the account of
Defendant No.1 as NPA, the Applicant No.1 in its
capacity as lenders agent issued a notice dated
02.01.2012 under Ex.A-58 and Ex.A-58(a) followed by
further such notices dated 2.2.2012 under Ex.A-59 to
Ex.A-61(a) and dated 02.04.2013 (Ex.A-68 and Ex.A-
68(A) to both Defendants No.1, 2 and 3. After service of
said notices, both Applicants-Banks and Defendant
No.1 had several meetings as per the minutes of the
meetings held on 17.12.2012, 04.01.2013, 18.01.2013,
12.02.2013 and minutes of the meetings were filed as
documents (Ex.A-62 to Ex.A-65).
xi) Since the Defendants failed to comply with the demand,
a recall notice dated 02.04.2013 was issued by
Applicant banks to Defendants as per the terms of the
MDRA, demanding repayment of the loan including
interest [Ex.A-67 to Ex.A-67(b)], followed by another

16 OA NO.766/2013
notice dated 2.4.2013 [Ex.A-68 to Ex.A-68(a)] by which
the applicants-banks invoked the aforesaid guarantees
of Defendants No.2 and 3 also. Thus, including interest
and costs up to the date of filing of this OA the
defendants No.1 to 3 jointly and severally became due
and liable to pay to the Applicant-Banks the amount of
Rs.6203,35,03,879.42 claimed in the OA with further
interest thereon from the date of OA, till the date of
realization. The Applicant-Banks have also initiated
action against the secured assets of the Defendants
under the SARFAESI Act and these documents are
filed as Ex.A-90 to Ex.A.121. The said measures
initiated under the provisions of the SARFAESI Act
were objected to by the defendants 1 to 3 but were
rejected by the Authorised Officer of the banks.
Therefore, according to the applicant banks, the 1 st
defendant as principal borrower and 2nd and 3rd
defendants as guarantors for the 1st defendant are all

17 OA NO.766/2013
jointly and severally due and liable to pay the claim
made by them in the OA.
xii) The Applicants-Banks further stated that
Defendant No.4 is admittedly a 100% subsidiary of
Defendant No.2 and a member of the UB Group of
Companies under the Chairmanship of Defendant No.3
and the said two companies also share certain key
managerial personnel. It is further stated in Para
No.5.25(e)A and B and 5.25(f) of the amended OA that
lakhs of shares were sold and purchased among
Defendants No.2 and 4 and its another group Company
by name M/s. UB International Trading Limited. It is
further stated that these shares were sold away without
any circumstances warranting such sale and were not
bona fide at all. Defendant No.4 is nothing but a conduit
for Defendant No.2 to carry on the business of 2nd
Defendant under the veil of separate corporate entity,
whereas the major assets and liabilities of Defendant
No.4 relate only to Defendant No.2.

18 OA NO.766/2013
xiii) It is further stated that, a perusal of the Audited
Balance Sheet of Defendant No.4 dated 31/03/2012
[Ex.A-126 and Ex.A-126(a)] will make it clear that
Defendant No.4 is liable to pay to Defendant No.2 a
sum of Rs.857,38,48,208/-; and admittedly from one
M/s.Diageo transaction Defendant No.4 has received a
sum of Rs.946,87,92,000/-, which amount was not paid
in the normal course by Defendant No.4 to Defendant
No.2 in discharge of its loan liabilities to Defendant
No.2, which goes to prove collusion between 2 nd and 4th
defendants to siphon of the amounts which otherwise
should have reached the loan accounts of Applicant-
Banks. This is further proved by the fact that no attempt
was made by Defendant No.2 to recover its dues from
Defendant No.4. Therefore, if a Recovery Certificate is
issued by this Tribunal in favour of Applicant-Banks the
banks will be entitled to the shares held by Defendant
No.2 in Defendant No.4-Company as the 2 nd and 4th
defendants are attempting to dilute the obligations of

19 OA NO.766/2013
Defendant No.2 as Corporate Guarantor. The applicant-
banks therefore averred that in view of the conduct of
Defendants No.2 and 4, it is necessary to lift the
corporate veil of Defendant No.4 and hold them liable
for the entire OA claim jointly and severally with
defendant nos.1 to 3. It is further stated that in the light
of the fact that Defendant No.4 is a wholly owned
subsidiary of Defendant No.2 and that it is being
entirely controlled by Defendant No.2 on a day-to-day
basis; and as Defendant No.4 does not have any
independent business of substance, Defendant No.4 is
also jointly and severally liable along with Defendants
No.1 to 3 to pay the Applicants the amount claimed in
the OA.
xiv) The Applicant-Banks have filed necessary documents
totally marked as Ex.A1 to A-137 including duly certified
statement of accounts marked as Ex.A-73 to Ex.A-89;
Ex.A-128; Ex.A-131 to Ex.A-135 to substantiate the
claim made by them in the OA. The Applicant-Banks

20 OA NO.766/2013
have also prayed for interest @ 15.20% p.a. with
monthly rests pendentelite and future interest. Hence,
the OA is filled for an order as prayed for against
defendants 1 to 4.
3) WRITTEN STATEMENT OF DEFENDANTS NO.1,2&3:-
i) Though separate Written Statements were filed by
Defendants No.1, 2 and 3, the defense taken by each
of them is more or less repetition of each other and
broadly proceeds on the following lines.
ii) It is stated that the OA is not maintainable; that the
Applicant-Banks have suppressed the fact that on or
about 26/04/2013 United Spirits Limited (USL) which is
a tenant in respect of a mortgaged property known as
Kingfisher Villa at Goa has filed a Suit in Goa, being a
Special Civil Suit No.31/2013/A, for a declaration that
said property is free from any mortgage and in the
alternative for redemption of the same by deposit of
Rs.35.00 Crores; that the said suit was filed against the
21 OA NO.766/2013
Applicant-Bank and Defendants No.1 and 2; that interim
orders were passed in the said Suit, pursuant to which
USL has deposited Rs.35.00 Crores in the Goa Court,
which is still in force; and that the Applicant-Banks
have preferred an Appeal against the said order before
the Honble Bombay High Court, which is pending.
iii) It is further contended that, with effect from 5/9/2008
the name of Deccan Aviation Limited was changed to
Kingfisher Airlines Limited (KFA) and Defendants No.2
and 3 were allotted fully paid up shares in KFA
(Defendant No.1); that due to meltdown in global
economy and increase in Aviation fuel price the
Defendant No.1-Company was affected; that the
problem also occurred due to some defects in design
and manufacture of the planes; that 1st and 2nd
Defendants have filed a suit claiming damages of over
Rs.1300.00 Crores in OS No.6406/2012 on the file of
City Civil Court, Bangalore, against the manufacturers
of such defective planes; that in view of these factors

22 OA NO.766/2013
the Applicant-Banks recognized the need for recasting
the debt of Defendant No.1; that after several meetings
and negotiations an agreement called Master Debt
Recast Agreement (MDRA) dated 21.12.2010 was
entered into for providing additional working capital
facilities to Defendant No.1; that inspite of requests by
the 1st Defendant from time to time and the Promoters,
the Applicant-Banks committed breach of material term
of the MDRA, viz., Clause No.3.1B of the MDRA, under
which the banks were required to provide the much
needed working capital to 1st defendant from time to
time, and because of the willful repudiation of the
reciprocal obligations of the Applicant-Banks under the
MDRA, the 1st Defendant was disabled to service the
restructured account.
iv) Defendants No.1 to 3 further stated that apart from non-
sanctioning of the additional Working Capital Finance
(WCF), the banks have also started recovering interest
in the account of defendant No.1, leading to defaults in

23 OA NO.766/2013
repayment of the various loans by Defendant No.1; that
the banks have also failed to pay the statutory dues to
Tax and other Authorities as per the terms of the Trust
and Retention Accounts Agreement dated 21.12.2010
and appropriated all the monies to the loan accounts;
that the banks have charged interest @ 13.50% to
14.00% p.a. instead of 11.10% as agreed under the
MDRA, which interest alone aggregates to Rs.300.92
Crores upto 31.03.2013; that all these actions of the
Applicant-Banks crippled the operations of the 1 st
Defendant and it was unable to pay even the salaries of
its approximately 7000 employees and also resulted in
suspension of the permit of Defendant No.1 by
authorities to operate the Airlines; that all attempts of
Defendant No.1 to bring in FDI capital investment to the
extent of USD 250 Million were also spoilt because of
adverse publicity given by one or the other Applicant-
Banks constantly and in particular by the 1 st Applicant-
Bank, in print and electronic media.

24 OA NO.766/2013
v) Defendants No.1 to 3 further stated in their Written
Statements that Applicant-Banks have committed
serious breaches of Lenders Liability and in particular
regarding their obligations of strict confidentiality, about
which the banks have signed an undertaking binding
themselves to maintain confidentiality of the
information, by giving disparaging statements about the
defendants to print and electronic media and the
Parliament.
vi) Defendants No.1 to 3 further contended that the MDRA
was entered into only after the Applicant-Banks were
convinced about the viability and sustainability of the
Cash Flows and operations of Defendant No.1, which
was also reaffirmed by SBI Capital Markets Limited
(SBI CAPS) and Mr. Manet Paes, ex- employee of Air
India who were appointed by the Applicant-Banks to
conduct such a study and inspite of these reaffirmations
the banks decided not to consider these reports; and
the banks did not consider the viability reports based on

25 OA NO.766/2013
wrong assumptions. Defendant No.1 further contends
that the further proposal of Defendant No.1 which was a
robust revival plans to be implemented in two phases
without the requirement of any funding from the banks
for either Phase was also refused by the Applicant-
Banks, although the other business partners of
Defendant No.1 including the Oil Companies, Lessors
and Suppliers of parts supported the efforts of 1 st
Defendant to renew its permits; that the blatant
discrimination by the Banks is evident from the fact of
extension of loans and advances and other facilities by
them to Air India for a term of 15-20 years, which were
restructured from time to time in spite of repeated
defaults by Air India; that the MDRA was expressly a
long term arrangement with the repayment spread over
a period of 9 years till the year 2019 in view of the
specific directions of the RBI, but the applicant-banks
have breached this fundamental term of the MDRA and

26 OA NO.766/2013
recalled the entire loan in less than two and half years
from executing the MDRA.
vii) It is further contended that Defendant No.2 by itself and
through its subsidiaries and associates have funded
Defendant No.1 in excess of Rs.5,000/- crores from
inception and Rs.3,199.68 Crores from 01/04/2011 to
31/03/2013, which is far in excess of the 15%
Promoters commitment which was required to be
infused to Defendant No.1 under the terms of MDRA.
viii) Defendants No.1 to 3 further contend that the
cascading effect of these actions of the Applicant-
Banks coupled with negative media statements caused
panic amongst the revenue authorities, aircraft lessors,
other business partners and the Regulatory Authorities;
and the payment of employees salaries got delayed,
due to which certain section of employees struck work
and finally all these actions drove the creditors to file
various winding up petitions against Defendant No.1-
Company before the Hon'ble High Court of Karnataka.

27 OA NO.766/2013
This has further resulted in Service Tax notice dated
13/07/2012 attaching Kingfisher House; that the banks
cannot be permitted to take advantage of their malafide
actions; and that the applicant banks ought not to have
recalled the loans of Defendant No.1.
ix) It is further contended by Defendants No.1 to 3 that the
Applicant-Banks have alleged that an event of default
had occurred under the MDRA and that the shares
pledged under the Pledge Agreement dated 21/12/2010
entered amongst Defendants No.2, 4 and 5 have
become enforceable; that classification of the account
as NPA vide notice dated 15/03/2013 was in violation of
the terms of the MDRA and the directions of RBI in
relation to the Civil Aviation Sector dated 27/08/2010
and 13/09/2010; and on receipt of said notice
Defendants No.2 to 4 have filed a suit in Suit
No.311/2013 against the Applicant-Banks and SBICAP
Trustee on the file of the Hon'ble Bombay High Court
for a declaration that the guarantees given by 2 nd and

28 OA NO.766/2013
3rd defendants are void ab initio and non est as it was
obtained by coercion; and other consequential reliefs.
In spite of the same the Applicant-Banks have issued a
notice dated 22/04/2013 (Ex.A-67 to Ex.A-68(a) and
Ex.A-70 and Ex.A-70(a) to Defendant No.1 to make
payment of the entire amount claimed in the OA, which
was duly denied by Defendant Nos.1 and 2 vide its
letter dated 17/04/2013 (Ex.A-69 and Ex.A-71). Apart
from the above, the Applicant-Banks have also
proceeded against the defendants under the
SARFAESI Act, which was also not in accordance with
the provisions of the Act; that on 07/08/2013 the 12 th
Applicant (Punjab National Bank) declared Defendants
No.1 to 3 as willful defaulters, which were vehemently
objected to by the defendants by letters dated
07/08/2013 and 04/09/2013; that subsequently on
19/08/2013 the Applicant-Banks filed winding up
petitions against Defendants No.1 and 2 on the file of
the Hon'ble High Court of Karnataka; and have also

29 OA NO.766/2013
filed Writ Petitions on 29/08/2013 against Defendants
No.1 to 3 and the defendants placed reliance on the
orders passed on these Applications.
x) It is further contended that the banks being State
under Article 12 of the Constitution of India cannot
discriminate between Defendant No.1 and Air India,
who owes in excess of Rs.40,000.00 Crores to the
banks; that there are number of precedents of large
borrowers where the banks have shown considerable
forbearance and facilitated multiple restructuring of
loans where the claim of the banks were far more than
what is claimed by the banks in the present OA; that
considering that this Tribunal does not have jurisdiction
to entertain, try and dispose of the present dispute the
Defendant No.1 has prayed for dismissal of the OA.
xi) Thereafter, in the Written Statements the
Defendants No.1 to 3 proceeded to deal with para-wise
averments made by the Applicant-Banks in the OA.
Defendants No.1 to 3 denied that Sri S. Ranga Vittal

30 OA NO.766/2013
and Sri Srinivasa Sekaran are the Authorised signatory
of the banks; that the MDRA and other financing
documents do not confirm exclusive jurisdiction upon
Courts and Tribunal at Bangalore; that the Original
Application is not filed within the period of Limitation;
that the immovable property Kingfisher Villa is the
subject matter of the Suit pending in Goa court and
hence no order can be passed; that no pledge was
created in favour of Applicant-Banks in respect of
shares pledged by 2nd Defendant with the 10th Applicant
(J & K Bank) and ICICI Bank; that the banks have also
filed an injunction suit on the file of City Civil Court at
Bangalore in OS No.25887/2013; that the 1st Defendant
also filed suits on the file of City Civil Court at Calcutta
and an Appeal against the interim order passed therein
before the Hon'ble High Court at Calcutta and in view of
such pending proceedings any order passed by this
Tribunal would result in multiplicity of proceedings; that
in view of all these the Defendants No.1 to 3 denied

31 OA NO.766/2013
that the Applicant-Banks were entitled to the benefit of
the pledged shares; and that the banks are not entitled
to invoke the pledge agreement.
xii) Defendants No.1 to 3 further contended that the
Guarantee given by them is void ab initio. Thereafter,
these defendants proceeded to deny the averments
made by the applicant-banks in each of the paragraphs
on the above lines and finally prayed for dismissal of
the OA.
xiii) The defendants have also questioned the rate of
interest charged by the applicant banks as exorbitant
and without basis
xiv) Even though the Written Statements filed
separately by Defendant No.1, 2 and 3 run to 60 pages
each, the sum and substance of defense taken by
these defendants and as stated alone are as follows:
a) The Applicant-Banks have failed to act as per the

terms of MDRA by not releasing additional working
32 OA NO.766/2013
capital facilities to Defendant No.1 from time to

time;
b) Action of the applicant-banks in making public
statements about the 1st Defendant in violation of
the confidentiality agreement has resulted in
negative publicity to Defendant No.1 and has
caused damages to its efforts to bring in FDI
capital investment to the tune of USD 250 Million;
c) Applicant-Banks have no right over the pledged
shares of Defendant No.1 in favour of Applicant
No.10;
d) This Tribunal has no jurisdiction to proceed in the
matter in view of the pendency of suits before the
City Civil Courts at Bangalore, Goa and Calcutta
and at Bombay High Court;
e) Banks being State as defined under Article 12 of
the Constitution of India have shown
discrimination between Defendant No.1 and Air
India and other companies where the banks have
shown considerable forbearance and facilitated
multiple restructuring of loans;
f) The guarantees of Defendants No.2 and 3 are
void ab initio;
g) The declaration of the loan account of Defendant
No.1 as NPA by the Applicant-Banks were not
33 OA NO.766/2013
properly done and were in violation of the

guidelines issued by RBI from time to time and in
relation to the Civil Aviation Sector.
h) The statement of accounts filed by the banks are
not certified by banks.
i) The rate of interest charged by the banks is
exorbitant and has no basis.
4) WRITTEN STATEMENT OF DEFENDANT NO.4:-

i) The 4th Defendant has filed separate Written Statement.
Initially the 4th Defendant filed its Written Statement
mainly supporting the Written Statement filed by
Defendants No.1 to 3. However, subsequent to
amendment of the OA, whereby the relief claimed in the
OA was extended to defendant No.4, the Defendant
No.4 filed Additional Written Statement in which it would
state that the same was being filed without prejudice to
the result of any proceedings challenging the order of
the Tribunal in IA No.5081/2013 (lifting of its corporate
veil).
34 OA NO.766/2013
ii) It is further stated that the claim made by the applicant-
banks in the OA against Defendant No.4 is
unsustainable; that the validity and effect of the pledge
agreement dated 21.12.2010, to which Defendant No.4
is a party, is under consideration in Suit No.311/2013
before the High Court at Bombay and hence the said
issue cannot be entertained by this Tribunal in this OA;
that Defendant No.4 is not liable to pay the claim made
in the OA against Defendants No.1 to 3, since
Defendant No.4 has nothing to do with those claims
against Defendants No.1 to 3 as it (Defendant No.4), as
a subsidiary company is a separate legal entity distinct
from its Holding Company and the business of
subsidiary company is not the business of the Holding
Company; that the Hon'ble Supreme Court in
Vodafones case clearly held so in Paragraph Nos.254
to 260 of the said judgement; that no fraud was pleaded
nor any restraint orders were allegedly violated by
Defendant No.4 while doing their business of buying

35 OA NO.766/2013
and selling of shares, hence its Corporate veil cannot
be lifted as sought by the Applicant-Banks; that it is not
correct to say that Defendant No.2 controls day-to-day
activities of Defendant No.4 and the allegations made
by the Applicant-Banks in this connection are vague
and unsubstantiated; that the liability of Defendant No.4
while executing the MDRA was only with regard to the
limited security furnished by Defendant No.4 to the
Applicant-Banks pursuant to the Pledge Agreement
dated 21.12.2010, which was to secure the various
facilities of Defendant No.1 in the form of pledge of
74,56,339 equity shares of Defendant No.1 held by
Defendant No.4 and not to any other asset of
Defendant No.4.
iii) Defendant No.4 would further contend that even
though the applicant-banks were fully aware of the fact
that Defendant No.4 was a part of the Promoter Group
yet in the MDRA Promoter is defined to mean only the

36 OA NO.766/2013
2nd Defendant (UBHL); and even though the applicant-
banks were fully aware at all material times that this
defendant held a substantial stake in United Spirits
Limited (USL) a fact which is in the public domain,
thought it fit only to insist upon pledge of the aforesaid
74,56,339 equity shares of Defendant No.1 held by this
defendant and no more. Therefore, it is contended by
defendant No.4 that the relief prayed for against them
for the entire suit claim is not maintainable.
iv) Defendant No.4 would further state that 5,60,22,23
equity shares of Defendant No.1 were released by them
for reporting the same to the Bombay Stock Exchange
and the National Stock Exchange as there was no
restraint order whatsoever against this defendant at the
relevant point of time.
v) Defendant No.4 has further denied as false
the allegations made by the Applicant-Banks against
them to the effect that the shares were sold by them

37 OA NO.766/2013
(Defendant No.4) at a loss; that the transactions of this
Defendant No.4 were not bona fide and that this
Defendant was acting as a conduit for Defendant No.2.
It is further contended that such actions were initiated
only for the benefit of Defendant No.4 and its
shareholders and creditors and that there was nothing
to show that the liabilities of Defendant No.4 to
Defendant No.2 were incurred subsequent to the
MDRA.
vi) Defendant No.4 further contended that, no doubt, this
defendant is a subsidiary of Defendant No.2-
Company, but it cannot be said that mere transactions
between two subsidiary companies of a parent
company can be tainted by such vague and
unsubstantiated allegations, as the transactions of
Defendant No.4 had been conducted in the normal
course of business for the benefit of 4 th defendant, its
shareholders and creditors and not otherwise.

38 OA NO.766/2013
vii) Defendant No.4 has finally stated that it has
been in existence and carrying on business long prior to
MDRA; that it has no liability to the Applicant-Bank; and
that the claim of the Applicant-Banks that a sum of
Rs.1,000.00 Crores is to be paid from the proceeds of
the Diageo transaction is not maintainable.
viii) On the above basis, Defendant No.4 has sought for
dismissal of the Original Application.
5) The parties have also let in their evidence by filing their
respective affidavit of evidence. The applicants have filed
their affidavit of evidence on 6.3.2014 through one Mr Ranga
Vittal working as Assistant General Manager and
Relationship Manager in first applicant Bank. A gazette
notification and a letter of authorization dated 8.6.2013
authorizing the said deponent Mr Ranga Vittal to represent
all the applicant banks was filed in original and were marked
as Ex.A3 to Ex.A4. The MDRA, Amendatory Agreement to

39 OA NO.766/2013
MDRA, The Security Trustee Agreement, the Inter-Creditor
Agreement, The confirmation letter to the Inter-Creditor
Agreement and the Trust and Retention Accounts
Agreement were filed in original by the applicant banks and
are marked as Ex.A5 to Ex.A10. All the other documents
referred to by the applicant banks are filed in original and
marked as Ex.A.11 to Ex.A.137.
6) The defendants 1 to 4 have also filed their evidence
affidavit on 2.6.2016 and 28.6.2016 through Sri A
Raghunathan (D1); Sri A.K. Nedungadi (D2); Dr.Vijay Mallya
(D3) and Sri P Subramoni (D4) and have marked as the
same Ex.D1 to Ex.D.99
7) The sixth defendant namely the Commissioner of
Service Tax 1, Mumbai, has filed the written statement on
4.9.2011 in the form of an affidavit, but has not filed any
document.
40 OA NO.766/2013
8) On 18.10.2016 and 24.10.2016, the applicant banks
have let in further evidence through AW2, namely, one
Mr.R Srinivasa Sekaran working as Senior Vice-President
(Credit-Administration) in the first applicant bank at its
Singapore branch and through him, the applicant bank have
marked original documents marked as Ex.A127 to Ex.137.
The said AW-2 was also duly authorized to give such
evidence by the banks vide Ex.A-4.
9) Subsequently, on 11.11.2016, the 4th defendant has
filed his evidence affidavit through one Mr.Subramoni, who is
a Director of fourth defendant, but has not marked any
documents on their side. In the said evidence affidavits of
the above parties, the respective parties have only reiterated
what has been stated by them in their respective pleadings.
After filing evidence affidavits, the defendants 2, 3 and 4
have filed necessary applications seeking permission to
cross examine AW1 and AW2 which was allowed. Based
on the evidence affidavits, AW1 and AW2 witnesses,

41 OA NO.766/2013
namely, Mr S Ranga Vittal and Mr R Srinivas Shekaran of
applicant banks, were cross examined by 2nd, 3rd and 4th
defendants on 11.8.2016, 23.9.2016, 27.9.2016, 25.10.2016,
16.11.2016, 17.11.2016 and on 18.11.2016.
10) The defendant No.6 (Service Tax Commissioner) filed
affidavit of evidence and the same is considered as evidence
of DW1 and the same was marked as Ex.D1.
11) The defendant No.1 filed affidavit of evidence and the
same is marked as evidence of DW2 and the same was
marked as Ex.D2, and list of documents is marked as Ex.D3
and 2nd list is marked as Ex.D4 and 1st list with 23 documents
are marked as Ex.D5 to and D27 and 2nd list with 21
documents are marked as Ex.D28 to D48.
marked as Ex.D49 and list of documents is marked as
Ex.D50 and 25 documents are marked as Ex.D51 to D75.

42 OA NO.766/2013
marked as Ex.D76 and the list of documents is marked as
Ex.D77 and 22 documents are marked as Ex.D78 to Ex.D99.
marked as Ex.D100.
15) Apart from the above, both the applicants and
Defendants 1 to 4 and 8 have also filed number of interim
applications seeking various reliefs as mentioned therein.
Those applications are also dealt with in this order itself and
disposed of accordingly.
16) I have gone through the pleadings, documents and
evidence of the respective parties and also heard at length
and extensively the submissions made by the learned senior
counsel Mr Naganand and his associates for DUA

43 OA NO.766/2013
Associates appearing for applicant banks, Mr.Raghavan and
his Associates for Rajesh Associates appearing for
Defendant No.1, Mr. Uday Holla and his Associates for Holla
and Holla Associates appearing for Defendant 2 and 3 and
Ms. Nalina Mayegowda and Mr.Ramesh for Poovaiah
Associates appearing for Defendant No.4 and Ld.Senior
Counsel Mr. Krishna Murthy appearing for 9th defendant in IA
No. 2365/16 and Mr. Sondhi, Ld.Senior Counsel appearing
for 7th defendant in IA No. 2355/16 filed.
17) On the basis of the above pleadings, exhibits and oral
and documentary evidence, the following points arise for my
consideration:-
POINTS FOR CONSIDERATION RELATING TO

DEFENDANTS 1 TO 3
1) WHETHER this Tribunal has got jurisdiction to

entertain try and dispose of the present OA?
2) WHETHER the corporate and personal guarantees
executed by second and third defendants dated
21.12.2010 and marked as Ex.A.26 and Ex.A27
are vitiated by coercion by applicants?
44 OA NO.766/2013
3) WHETHER the applicant banks have committed any

breach of its lenders liability including its
obligations for strict confidentialities?
4) WHETHER the applicant banks are under obligation to
Restructure the loans as banks being a State under
Article 12 of Constitution of India?
5) WHETHER the applicant banks are properly
represented by its officer Mr S Ranga Vittal namely
AW1 and Mr.R Srinivasa Sekaran, namely AW2?
6) WHETHER the OA was filed within the period of
limitation?
7) WHETHER the banks have failed to act as per the
terms of MDRA?
8) WHETHER permission of Company Court is
required to be obtained by the applicant banks
for proceeding with OA in view of winding up
order passed against the 1st Defendant company?
9) WHETHER the rate of interest charged by the
applicant banks is exorbitant and without any basis?
10) WHETHER the personal guarantee namely Ex.A-27
executed by third defendant is void in view of the third
defendant claiming to be a NRI and in view of Foreign
exchange Management (Permissible Capital Account
transactions) Regulations 2000?
11) WHETHER guarantee deeds namely Ex.A-26 and
Ex.A-27 are to be held as invalid for want of payment of
sufficient stamp duty as provided under Karnataka
Stamp Act?
POINTS FOR CONSIDERATION RELATING TO 4TH

DEFENDANT:-
12) WHETHER the corporate veil of the 4th defendant can

be lifted so as to render them liable for the suit claim as
sought by the applicant-banks?
45 OA NO.766/2013
13) WHAT is the extent of liability of the 4th defendant in the

OA?

DEFENDANT
14) WHETHER the 6th defendant has got first charge

over the movable and immovable properties of
defendants 1 to 3?

APPLICANT (IDBI BANK LTD) AND 7TH TO 9TH
DEFENDANTS
As far as the claim of 8th applicant and 7th to 9th
defendants are concerned, the same are being dealt with
separately in this order in which dealing with the IAs filed by
them, as they have not filed any written statements in the
main OA.
DISCUSSIONS, ANALYSIS AND REASONS IN

MAIN OA
POINT NO.1:
18) WHETHER this Tribunal has got jurisdiction to

entertain try and dispose of the present OA?
46 OA NO.766/2013
ANSWER:
i) Applicants and defendants 1 to 3 filed various suits on
the file of Honble High Court at Mumbai, City Civil
Courts at Bangalore, Goa and Mumbai, Bombay, calling
in question the mortgage of banks over a property
called Kingfisher Villa; Ex.A26 and Ex.A27 corporate
and personal guarantees of second and third
defendants; and relating to sale of shares of 4 th
defendant. These are the grounds stated by defendants
1 to 4 to seek an order on the question of jurisdiction.
According to the said defendants, this Tribunal has no
jurisdiction to proceed with the OA proceedings, in view
of pendency of various suits in the said Civil Courts.
The 3rd defendant also took a plea that he executed the
personal guarantee at Goa. Therefore, according to 3rd
defendant, this Tribunal lacks territorial jurisdiction as
well. The 1st defendant has filed a copy of the interim
order dt: 29.04.2013 and final order dt:01.11.2013

47 OA NO.766/2013
passed by the Court of Civil Judge Senior Division at
Mapusa, Goa in SPL No.31/2013 and marked the same
as Ex.D5 and D6. The said orders are marked as
Ex.D28 & D29 and also Ex.D66 and D67. Further this
order was passed at the instance of Untied Spirits
Limited which claimed itself as a tenant in the said villa
against the action initiated by the applicant-banks
against the 1st defendant under the SARFAESI Act.
Hence these orders have nothing to do with the present
OA proceedings. Hence, there is no impediment in
proceeding with this OA.
ii) Under Ex.D74 defendants have filed a copy of interim
order dt:03.10.2013 passed by Honble High Court of
Karnataka where suit was filed by 2nd and 4th
defendants and the said suit also has no bearing on the
proceedings in the OA.
iii) Admittedly, in none of the above cases, none of the
above parties have obtained any order of stay of
proceedings before this Tribunal.

48 OA NO.766/2013
iv) Secondly, under Section 17 of Chapter 3 of Recovery of
Debts Due to Banks and Financial Institutions Act, 1993
[RDDB & FI Act], this Tribunal is vested with exclusive
jurisdiction, powers and authority to entertain and
decide applications from the Banks for recovery of
debts due to such banks. In fact, under Section 18 of
the same chapter, the jurisdiction, power and authority
of all other Courts except the Supreme Court and High
Court under Article 226 and 32, are barred in relation to
recovery of debts due to banks. Further, from a reading
of Section 34 under Chapter 6 of the said Act, it is clear
that the provisions of RDDB & FI Act shall have over-
riding effect against all other laws and the provisions of
this Act shall be in addition and not in derogation of
certain other enactments mentioned therein.
v) In view of the above statutory provisions, the question
of this Tribunal lacking in jurisdiction in matters of
recovery of debts due to banks does not arise and
on the contrary in view of the above statutory

49 OA NO.766/2013
provisions, it is the said Civil Suits which lack
jurisdiction to deal with the subject matter of this OA.
vi) The third Defendant claims lack of territorial jurisdiction
to this Tribunal because he claims to have executed his
personal guarantee (Ex.A27) at Goa. A perusal of the
Ex.A27 personal guarantee clearly belies the contention
of the third defendant. The said Ex.A.27 was executed
on 21.12.2010 at Bangalore and not at Goa as claimed
by third defendant. Further at page No.12 of the said
guarantee, the address of third defendant is found to be
at Bangalore and under clause 22[ii] of the said
personal guarantee, the third defendant has submitted
to the exclusive jurisdiction of the Courts and Tribunals
in Bangalore in connection with his personal guarantee.
vii) In view of the above, the contention of the third
defendant with regard to the territorial jurisdiction is
found to be baseless and have no merit and is rejected
as such
50 OA NO.766/2013
viii) In the light of the above discussions, it is held that this
Tribunal has got exclusive jurisdiction to entertain, try
and dispose of the present OA filed the applicant banks
against the defendants. Hence, point No.1 is found in
favour of Applicant Banks and against the defendants.
POINT NO.2:
19) WHETHER the corporate and personal
guarantees executed by second and third defendants
dated 21.12.2010 and marked as Ex.A.26 and Ex.A27
are vitiated by coercion by applicants?
ANSWER:
i) The second defendant is a Public Limited Company
and the third defendant is Group Chairman of his
various companies under the umbrella of group called
UB Group of Companies. The second and third
defendants were enjoying huge credit limits from
various banks across the country, namely, applicant
banks to the tune of more than Rs.6000 crores. The

51 OA NO.766/2013
third defendant was a Member of Parliament in Rajya
Sabha. The first defendant initially availed credit
facilities from the applicant banks and have committed
default in repayment of the same. The applicant banks
then formed Consortium of Banks and held several
meetings and negotiations with first and second
defendants represented by third defendant as its Group
Chairman / Chairman / Managing Director etc. After
various such meetings which are recorded in minutes of
meetings filed by applicant-banks and marked as
Ex.A62 to A65 the applicant banks and Defendants 1
to 3 have finally arrived at a major restructuring of loans
of the first defendant and have entered into an
exhaustive document called Master Debt Recast
Agreement (called MDRA) dated 21.12.2010, as per
the said MDRA, the original of which was filed and
marked as Ex.A.5, the second and third defendants
were required to give corporate and personal
guarantees for the repayment of the outstanding loan

52 OA NO.766/2013
amounts of Defendant 1 mentioned in said MDRA.
Before, at and after the execution of Ex.A5 MDRA and
Ex.26 and 27 guarantees, the defendants 2 and 3 have
not made any complaint as to how they were coerced
by the applicant banks into signing those guarantees.
The main contention of the second and third defendants
with regard the coercion is that applicant banks have
withheld the credit facilities and insisted on execution of
the said guarantees for restructuring of the loans. The
defendants 2 and 3 were in the process of arranging for
foreign direct investments from various parties and
therefore were unable to delay the process of
restructuring and were therefore were compelled to
execute the said guarantees. Therefore, the defendants
2 and 3 claim that it had amounted to coercion and
hence the guarantees were to be held as void abinitio.
First of all, no documents whatsoever was produced
nor filed by defendants 2 and 3 to substantiate these
allegations. Secondly, there is no pleading that the

53 OA NO.766/2013
banks withheld further facilities as coercion to execute
Ex.A26 and Ex.A27.
ii) The above contention of coercion raised by second and
third defendants are so unworthy of any consideration
for the simple reason that there was none. Not only the
applicant banks are dealing with the public money, but
it was also the defendants 1 to 3, who knowingly
availed public money as loans from the Banks with a
promise to repay the same. It is the bounden legal duty
of the banks and the borrowers to ensure that such
loans are properly secured by mortgage over
immovable properties, hypothecation over movables
and guarantees of directors and all other types of
guarantees including even that of third parties wherever
offered or possible. The second and third defendants
cannot expect the banks to give away public money as
loans to them without even guarantee from them for the
repayment in addition to other securities and loan
documents. In fact, the second and third defendants

54 OA NO.766/2013
would have done well to have volunteered execution of
such guarantees, being the holding company and the
Chairman and as Rajya Sabha member. It is
unfortunate that the defendants are challenging these
guarantees without any basis or material to support
their contention of coercion. If insistence on guarantees
by the banks for realizing the loans are to be
considered as coercion, then no loan can be properly
secured by any bank. In fact, the banks will be failing in
their legal and public duty in discharging of their
functions if such guarantees are not obtained. Further,
the defendant 2 being the parent company of first
defendant and third defendant being the Group
Chairman and man of sufficient net worth and as
Member of Rajya Sabha, were bound to execute
guarantee documents for the repayment of loan availed
by first defendant. The third defendant who was also a
Member of Parliament cannot be heard to say without
any basis or material that he was coerced by

55 OA NO.766/2013
Nationalized banks into execution of personal
guarantee at the time of availing thousands of crores as
loans from the banks. At best, this claim of defendants
2 and 3 can add a bit of humour value in this otherwise
serious claim for recovery of thousands of crores of
public money. In fact the 3rd defendant by alleging
coercion has hardly set a role model in himself as Rajya
Sabha member.
iii) One of the contentions raised by the Learned Counsel
appearing for Defendants 2 and 3 is that the Bank
being in a dominant position have given undue
pressure to Defendants 2 and 3 to sign their guarantees
by withholding the credit facilities and also by charging
very high rate of interest when the defendants were in
dire need of funds. This contention is also
unacceptable. In fact one of the judgement cited by the
learned counsel for Defendants 2 and 3 is directly on
the point (AIR 1924 PC 60). That was the case where
alleged unconscionable interest charged was

56 OA NO.766/2013
challenged as coercion since lender was considered to
be in a dominating position. The argument was that
the lender took advantage of the position of the
borrower as the borrower was in urgent need of money.
The learned counsel for the appellant therein argued
that the mortgagees were thereby placed in position to
dominate the will of the mortgagor. In the said
decision, their Lordship have clearly held that urgent
need of money on the part of the borrower will of itself
not place the parties in that position. In para 13 of the
said judgement, it is observed as follows:-
Their lordships think it right to observe that

the judgement now pronounced is not in
accord with the principles laid down by the
Appellate Civil Court of Calcutta in Abdul
Majeed v. Khirode Chandra Pal I.L.R. 42
C.690, that where there is ample security, the
exaction of excessive and usurious interest in
itself raises a presumption of undue influence
which it requires very little evidence to
substantiate. Their Lordships think that
57 OA NO.766/2013
decision to be wrong. There is no such

presumption until the question has first been
settled as to the lender being in a position to
dominate the borrowers will
iv) In the present case no pleadings or documents are
produced to prove that the banks have dominated the
will of defendants 2 and 3. In fact as stated above vice-
versa may be true in this case with worries for the
banks to recover such a huge outstanding.
v) Therefore, it is clear from the above that the question of
coercion on the basis of banks being in an
advantageous/dominant position to take guarantee,
charge interest etc. raised by the defendants 2 to 3 are
baseless. In fact, in my view, it was the defendants 1
to 3 herein who were in dominant position of
demanding restructuring of the loan by not repaying the
huge loans already availed by them from the banks. In
my opinion, therefore, it was the bank which, just for the
sake of arguments, can be heard to say that they were

58 OA NO.766/2013
coerced into entering into MDRA so as to recover its
huge outstandings and not the other way around.
However, in view of the above, I am therefore of the
considered view that the defendants have not
experienced any coercion at any stage and they have
entered into the guarantee agreements MDRA and all
other documents voluntarily.
vi) In fact several meetings have taken place between the
applicant-bank and the defendants, the same was
recorded as Ex.A62 to 65, Ex.D57, 58, 59, 60 and
Ex.D85, 88, 89 and 91 and in none of those meetings
objections have been raised by 2nd and 3rd defendants
about their respective guarantees, and the allegation
that such guarantees were given by the 2nd and 3rd
defendants under coercion is totally unfounded and
baseless. In fact the 2nd and 3rd defendants are not
even third parties to 1st defendant their holding
company and group chairman and hence bound to
guarantee repayment of said huge loans availed by him

59 OA NO.766/2013
from applicant-bank. Hence, the contention regarding
coercion is found to be absolutely baseless and
not supported by any materials on record.
Accordingly, the said contention is rejected. Point
no.2 is found against defendants.
POINT NO.3:
20) WHETHER the applicant banks have committed any

breach of its lenders liability including obligations for
strict confidentialities?
ANSWER:
i) The contention of the defendants 1 to 3 is that the
applicant banks have failed to follow the terms and
conditions of MDRA by not releasing additional working
capital facilities and thereby committed breach of
lenders liability. This is not correct. In fact, certain
additional credit facilities were given by the banks to
Defendant -1 in the form of bank guarantee facilities.

60 OA NO.766/2013
These facilities are clearly spelt out in para No.5.16 of
the amended OA.
ii) Further, this is a strange contention. The first
defendant had availed huge loans from the banks and
had already committed default in repayment of the
same with interest to the banks. The banks had every
right to proceed against the first defendant for recovery
of then outstanding dues. However, the banks have
considered the request made by the first defendant and
has worked out a plan by restructuring the loan for
repayment under Ex.A.5 of MDRA. When the loans
were restructured, the applicant banks have already
burnt their fingers due to default of first defendant in
repayment of the loans already availed. Not only the
first defendant miserably failed to repay the initial loans,
but had the audacity/courage to find fault with the banks
for not giving further loans. Such a plea is
unacceptable. The defendants 1 to 3 while making hue
and cry about lenders liability seems to have forgotten

61 OA NO.766/2013
about their own borrowers liability to repay the loans
already availed. The lenders liability cannot mean only
lending, but will purely correspond proportionately with
the conduct of the borrower in discharging his own
liability. A person already in breach and with unclean
hands cannot complain against the banks.
iii) Let me now go through certain important conditions in
Ex.A5 MDRA. The said MDRA itself is an agreement
made at the request of defendants 1 to 3 for
restructuring of their loans. Therefore, the defendants
cannot be heard to say they were being discriminated
against other borrowers and that they were not given
opportunity to restructure their loans like other
companies.
Under clause 3 [ia] of MDRA, the first

defendant clearly admitted the amounts
borrowed from the banks. Under clause 3 [ii],
3b, 3c ii and iii, the defendant has agreed to
pay interest on various basis as claimed by the
applicant banks.
Under clause 3.7, the parties have agreed
for mode of appropriation of repayments.
Under clause 3.10, the rights and obligations of
62 OA NO.766/2013
each of the loans were agreed to be several

and independent.
Under clause 5.1, the first defendant has
created securities over the properties
mentioned therein.
Under clause 6.1 [vi] a] of Articles VI, the
borrower was require to notify the banks about
any winding up proceedings against it.
Under clause 8.3, the borrower has agreed
to the rights of banks to take steps as
mentioned therein.
iv) It would be clear from the above and other clauses
mentioned in Ex.A5 MDRA that banks have complied
with the terms of MDRA, but however, it was the first
defendant who had miserably failed to repay the loans
availed by it even after MDRA. Therefore, the applicant
banks were forced to issue a recall notice dated
2.4.2013 on defendants 1 to 3 which is marked as
Ex.A68 to A70. It is clearly stated in the said recall
notices of the applicant banks that the first defendant
has failed to repay the loans with appropriate agreed
interest to the applicant banks thereby rendering
themselves liable to repay the entire amounts
outstanding with interest to the applicant banks. The 2nd

63 OA NO.766/2013
defendant has acknowledged receipt of the said recall
notice by his reply letter dated 17.04.2013 marked as
Ex.A69 but however failed to comply with the demands
made therein. The 3rd defendant also acknowledged
the receipt of said notice and under Ex.A71 replied to
the said notice but failed to comply with demand made
by the applicant-banks.
v) The applicant banks have initially granted loans to the
first defendant which was also incidentally to support
the airline industry only. The applicant banks have also
recast and restructured the loans in Ex.A5 of MDRA
when the first defendant failed to repay the same. The
applicant banks have extended additional credit
facilities to the first defendant subject to servicing of
interest, etc by defendants. It is clear from the above
that the applicant banks have done their best under the
given circumstances to support the 1st defendant airline
industry and it is the first defendant as the borrower and
the second and third defendants as guarantors who

64 OA NO.766/2013
have committed breach of their promises and
undertakings given under various loan documents
including the MDRA filed and marked by the parties as
Ex.A3, A6 to A57. In view of the defaults committed by
the first defendant, the second and third defendants as
guarantors are also equally, jointly and severally liable
to pay the banks claim in the OA to the same extent as
that of the first defendant. I therefore hold that the
applicant banks have not committed any breach in
lenders liability and it is the defendants 1 to 3 who have
committed breach of their promise and undertakings to
repay the loans availed from the banks.
vi) The defendants 1 to 3 further contended that their
prospects of getting foreign direct investments were
completely damaged because of the disparaging public
statements made by the first applicant bank before
media and in Parliament in response to queries of
concerned Department about the status of the accounts
of defendants 1 to 3, in violation of the agreement for

65 OA NO.766/2013
confidentiality. This contention is wholly unacceptable
for the reason that inspite of such publicity, the
defendants were able to rope in international
companies like 7th defendant. Apart from that, the
applicant banks have a duty to inform the public and
also the Parliament when questions were raised about
the status of the defendants accounts involving
thousands of crores of public money. Therefore, the
question of maintaining confidentiality about such
accounts does not arise and such agreements cannot
be enforced as being against public policy. No violation
can be complained about such legally unacceptable
agreements. Further such agreements can at best
work to protect against competitors and not public and
parliament.
vii) Last but not the least, the defendants have not even
produced any material both documentary or oral to
substantiate that their attempts to get fresh direct
investment could not be fructified only because of the

66 OA NO.766/2013
public statements made by the banks about defendants
defaults. Further, from the statements made by
Defendants 1 to 3, it appears that they were planning to
get foreign investors successfully without disclosing
their actual liability to the said investors because if the
defendant had actually disclosed their said liabilities to
the foreign investors duly and honestly, the alleged
public statements by applicant banks would not have
affected the alleged investments by foreign investors,
as they would already be in knowing of things through
the defendants themselves and would not have backed
out on readings newspapers, statements of applicant
banks as alleged by defendants 1 to 3. It may be
because the defendants 1 to 3 had plans to involve
some innocent third parties in their debt trap. I am also
of the definite opinion that in any case no foreign
investors will make investments in such a magnitude
without conducting due diligence on their own and
when such due diligence is conducted or if conducted

67 OA NO.766/2013
properly, the foreign investor would come to know of
the true picture about defendants 1 to 3 on its own and
would make its own independent decisions. Hence, it
is absolutely a worthless contention raised by
defendants 1 to 3 which is liable to be rejected as false
and is hereby rejected. The point No.3 is therefore
answered against the defendants and is in favour of the
applicant banks.
POINT NO.4:
21) WHETHER the applicant banks are under obligation to

Restructure the loans as banks being a State under
Article 12 of Constitution of India?
ANSWER:
i) The defendants 1 to 3 have taken a curious stand that
the banks cannot discriminate against them under
Article 12 of Constitution of India against other
borrowers as according to defendants, the banks are
falling within the definition of State under the

68 OA NO.766/2013
Constitution of India. The defendants have given
names of certain companies in their written statement
and have shown some amounts as outstanding dues
from those companies to the banks including Air India
and have stated that the banks have not taken any
action for recovery of its dues from those companies
and have restructured their loans whereas the banks
have not restructured the loans of defendants 1 to 3
and have also taken legal action against the defendants
1 to 3 for recovery of the loan outstandings. The
defendants have made these allegations without
producing any documentary evidence to support them.
It is not in knowledge of anyone as to whether the
amounts mentioned by the defendants are actually
outstanding in the books of banks and whether or not
the banks have initiated any action against those
named for recovery of such outstandings. The
defendants have not produced any materials to
substantiate these contentions. Secondly, it is none of

69 OA NO.766/2013
the business of the defendants to raise such issues
without first making repayment of their dues to the
banks. The defendants being themselves a defaulter
cannot be heard to say that they should be treated on
par with other alleged defaulters. The contention of the
defendants 1 to 3 to apply Article 12 of the Constitution
of India is, to say the least, is showing disrespect to the
Constitution of India and an attempt to take advantage
by misinterpreting the avowed principle mentioned
herein claiming equality in default is nothing but mock
at the system. Moreover, the question of recovery of
dues due to banks and other financial institutions is
covered under the special enactment namely Recovery
of Debts Due to Banks Act and the borrowers therein
have nothing to do with their rights enshrined under the
Constitution of India. It is upto the banks who have
lent monies to recover their outstanding loans from the
borrowers in the manner known to law at appropriate
time and that cannot be a ground for the defendants to

70 OA NO.766/2013
escape their own liability. The complaint of the
defendants that their loans are not being restructured
and that loans of others are being restructured is also
factually wrong. The very MDRA which is the basis of
claim of the applicant-banks in OA, was borne out of
such a restructuring and hence the contention of the
defendants even on the ground alleged discrimination
falls to ground. Hence the said ground is rejected.
POINT NO.5:
22) WHETHER the applicant banks are properly

represented by its officer Mr S Ranga Vittal namely
AW1 and Mr.R.Srinivasa Sekaran, namely AW2?
ANSWER:
i) The applicant banks are properly represented by their
appointed Officer Mr Ranga Vittal and Mr. R.Srinivasa
Sekaran in view of the Ex.A3, A4 and A5. Ex.A3 is a
gazette notification by which certain class of officers
mentioned therein were authorized to sign all

71 OA NO.766/2013
documents on behalf of the bank. Both the above
officers being Assistant General Manager and Senior
Vice-President (Credit Administration) fall under the
said class and category of officers of the Banks.
Secondly, by Ex.A.4, the consortium of Banks have
designated and authorized State Bank of India
represented by AW1 and AW2 to represent the banks
in all legal proceedings. Hence, I hold that the
applicant banks were properly represented by AW1 and
AW2.
ii) The learned counsel for 4th defendant also raised an
issue on the question of lack of knowledge of AW1
about the method of calculation of amounts shown in
the statement of accounts and the answer of AW1 on
this point during cross examination. It is now well
settled that calculations in the statement of account of
any nationalized Banks are made by computers and not
manually by the officials concerned. Therefore, the
above question and answer are irrelevant. Secondly, in

72 OA NO.766/2013
a claim of this magnitude, no one can be expected to
personally know the method of each calculation.
Thirdly, all the statement of accounts are duly certified
by the applicant banks under Bankers Books of
Evidence Act and marked as Ex.A-72 to Ex.A-89.
Marking of statements duly certified under Bankers
Book of Evidence Act is prima facie evidence of
correctness of the statement of accounts under the Act
and the defendants have not produced any evidence to
rebut the same.
iii) Further, the defendants 1 to 4 have cross examined
AW1 to AW2. But nothing worthwhile has been
extracted or elucidated from such cross examination.
Even during the course of arguments on various dates,
none of the counsel appearing for Defendants 1 to 4
have pointed any discrepancy between the chief
examination of AW1 to AW2 and cross examination
Under the circumstances, the oral evidence of AW1 and
AW2 fully supports the case of applicant banks and the

73 OA NO.766/2013
learned counsels for Defendants 1 to 4 were not able to
impeach the said evidence on any aspect of the case.
Hence, the said oral evidence is taken as
complementing the claim of the bank made in the OA
coupled with the documents filed and marked as
exhibits
POINT NO.6:
23) WHETHER the OA was filed within the period of
limitation?
ANSWER:
i) Admittedly, the Ex.A5 MDRA was executed on
21.12.2010 and the accounts were classified as NPA
on 31.12.2011 and the suit was filed on 25.6.2013. It is
well within time prescribed under the Act. Secondly, the
defendants have not even stated as to how the suit is
barred by limitation. A mere allegation only is made
without showing any reasons to substantiate the same.
Further, in number of meetings, the minutes of which
are filed and marked as exhibits, the defendants have
repeatedly admitted the claim of the applicant banks.

74 OA NO.766/2013
Therefore, there is continuous acknowledgement of
liability by defendants 1 to 3. Hence, this contention is
rejected as factually and legally baseless. Hence, this
point is found against the defendants.
POINT NO.7:
24) WHETHER the banks have failed to act as per the
terms of MDRA?
ANSWER:
i) In view of the discussions above, it is held that banks
have acted as per the terms of MDRA. Hence, this
point found in favour of the applicant banks.
POINT NO.8
25) WHETHER permission of Company Court is required

to be obtained by the applicant banks for proceeding
with OA in view of winding up order passed against the
1st Defendant company?
ANSWER
i) The learned counsel appearing for 4th defendant
strenuously argued that permission of the Company
Court must be obtained before proceeding with OA,

75 OA NO.766/2013
since the first defendant company is wound up by an
order of Honble High Court of Karnataka and placed
reliance on the decision of Honble Apex Court reported
in (2016) 9 SCC 44. Learned Senior Counsel
appearing for applicant banks equally strenuously
argued that such permission is not required at this
stage and placed reliance on a judgement reported in
(2000) 4 SCC 406. After hearing the arguments of both
the learned counsels and after going through the said
judgements, I am of the clear opinion that the present
proceedings being one initiated by the secured
creditors for recovery of their dues and is standing
outside the winding up of proceedings, the permission
of the Honble Company Court is not required at this
stage. However, the applicant banks are directed to
obtain such permission during recovery proceedings
before the learned recovery officer so as to associate
official liquidator in the sale process for recovery of its
dues.
76 OA NO.766/2013
POINT NO.9
26) WHETHER the rate of interest charged by the applicant
banks is exorbitant and without any basis?
ANSWER
i) The applicant banks have collected interest at the
rate of 15.20%p.a. compounded monthly which
according to Defendant No.1 to 4 is exorbitant. There
is no basis for the defendants to say so. The interest
charged by the applicant banks are in tune with the
terms of MDRA particularly clause No.3.2 and its sub-
clauses of MDRA and at page Nos.81, 110, 115, 123,
124, 191, 595 of personal guarantee and page No.595,
600, 616 and 620 of corporate guarantee as found in
Volume No.1 of OA Book. Having agreed to a
particular rate of interest in the form of MDRA it is not
open to the defendants 1 to 4 to say that the interest
charged was exorbitant. Further, the said interest is
charged by the applicant banks as the transactions
between the parties were purely commercial in nature.

77 OA NO.766/2013
Hence, the interest charged upto the date of OA will
have to be the same. However, this tribunal has power
and discretion to alter the rate of interest subsequent to
filing of OA. Hence taking into consideration of the
totality of the circumstances I am of the view that
interest at the rate of 11.50% p.a with yearly rests from
the date of filing of OA till the date of realization will
meet the ends of justice. Hence interest is awarded at
the rate of 11.50% p.a with yearly rests on Rs.
Rs.6203,35,03,879=42.
POINT NO.10
27) WHETHER the personal guarantee namely Ex.A-27

executed by 3rd defendant is void in view of the third
defendant claiming to be a NRI and in view of Foreign
exchange Management (Permissible Capital Account
transactions) Regulations 2000?
ANSWER
i) The contention of the third defendant is that the
personal guarantee namely Ex.A-27 executed by him in
favour of applicant banks is an invalid document and

78 OA NO.766/2013
legally unsustainable in view of section 4 of the said
regulations. This contention is wrong. Section 3 of the
said regulation clearly permits such a guarantee by any
NRI. Section 3 of the said regulations permits capital
account transactions of a person who is a resident
outside India. As per Section 3 of the said regulations,
such transactions are specified in Schedule II of the
said regulations. Under clause No.(c) of the said
Schedule II, (classes of capital account transactions of
persons resident in India) a guarantee by a person
resident outside India in favour of, or on behalf of, a
person resident in India is clearly permitted. In view of
such clear permission granted under the said
regulations,the submission made by the learned
counsel for third defendant is legally unsustainable.
Hence, the contention of the third defendant deserves
to be rejected and is hereby rejected. Hence, this
point is answered against the third defendant.

79 OA NO.766/2013
POINT NO.11
28) WHETHER guarantee deeds namely Ex.A-26 and
Ex.A-27 are to be held as invalid for want of payment of
sufficient stamp duty as provided under Karnataka
Stamp Act?
ANSWER
i) The said question does not arise at all at this stage in
view of Section 35 of the Karnataka Stamp Act. As per
said the Section, when once an instrument has been
admitted in evidence, such admission shall not be
called in question at any stage of the suit or
proceedings on the ground that the said instrument has
not been duly stamped. In the present case, such
instrument namely the guarantee deeds have been
already admitted into evidence without any objection
from the defendants and have also been marked as
above. Therefore, the question of going into the
validity of the said instruments on the ground of non-
payment or insufficient payment of stamp duty does not
arise at this stage. Even otherwise the instruments are

80 OA NO.766/2013
properly stamped as a bond. Hence the said guarantee
deeds are properly stampled. Therefore, the question is
answered against the defendants.
POINT NO.12:
29) WHETHER the corporate veil of the 4th defendant can

be lifted so as to render them liable for the suit claim as
sought by the applicant-banks?
ANSWER:
i) It is pertinent to place on record that, this issue is
already decided by this Tribunal by its order dt:
16.07.2016 passed in IA No.5081/2013. The said order
has not been set aside till date. The 4th defendant has
filed an Appeal against the said order before the
Honble Debt Recovery Appellate Tribunal at Chennai
in A.I.R. No.507/2016 and the Honble Debt Recovery
Appellate Tribunal rejected the appeal on the ground of
delay by its order dt:28.11.2016, against which the 4 th
defendant filed a Writ Petition No.61676/2016 on the

81 OA NO.766/2013
file of Honble High Court of Karnataka and while
disposing of the said writ petition by its order
dt:06.12.2016, the Honble Division Bench of the
Honble High Court of Karnataka has directed this
Tribunal to proceed in the matter without being
influenced by the observations made in the above said
order dt:16.07.2016 of this Tribunal.
ii) In this connection, it is also relevant to note that, a
perusal of Para 3 of the said order shows that the Ld.
Senior Advocate Mr. Uday Holla appearing for the Writ
Petitioner himself apprehended before the Hon'ble High
Court of Karnataka that the observations made in the
order dated 16/07/2016 while disposing of the IA shall
cause prejudice to his client in the final hearing before
the Tribunal.
iii) Therefore, considering all these factors and in view of
the result in said order dated 16.07.2016, I applied my
mind to the facts and circumstances of the case
independently (uninfluenced by the observations made

82 OA NO.766/2013
by this Tribunal in the said IA order) as mandated by
the Honble High Court of Karnataka and has reached
the following conclusion on these issues as below, as
far as the 4th Defendant is concerned :
iv) The case of applicant banks is that the 4 th defendant is
nothing but a conduit of second defendant, which itself
is a corporate guarantor to the first defendant; the 4 th
defendant has not produced any acceptable evidence
or even any evidence to prove that it is completely a
separate legal entity with its independent business and
hence corporate veil should be lifted and thereby it (D4)
should be held liable for the entire extent of suit claim
along with Defendants 1 to 3.
v) Per contra, the learned counsel for 4th defendant
repeatedly made a parrot like argument that the shares
of Defendants 1 to 3 in United Spirits Limited were sold
to M/s Diageo PLC only in the normal course of its
business and therefore the banks have no right to forfeit
the same, except to be satisfied with the pledged

83 OA NO.766/2013
shares of 4th defendant with the banks insofar as the
liability of 4th defendant is concerned.
vi) In my view, the purpose of lifting the corporate veil is
not only to see whether a parent and subsidiary
company are one and the same although they may
appear in two bodies like twins, the soul being one and
the same; that the transactions of the subsidiary is only
with the parent and its group companies; that the profit
and loss of the subsidiary will depend wholly on its
business with the group companies; that whatever
liability that was incurred by the parent company will
befall on its subsidiary as well or vice-versa; that both
are managed by the same team and headed by the
same persons; and that therefore the veil was hung
only to cover the internal connection from others but
also, lifting of veil is required to be done in the present
case to fix the extent of liability of 4th defendant vis--vis
defendants 1 to 3.
84 OA NO.766/2013
vii) In spite of giving all the opportunities, the 4 th defendant
has failed to convince me that they are in no way
connected to 2nd defendant and that the 2nd and 4th
defendants are completely separate and independent
legal entities doing business in their own field. If the
case of 4th defendant is to be accepted, then the 4th
defendant should have produced records and
documents before this Tribunal to prove that the 4th
defendant has been doing business in general; dealing
with its own set of clients; selling of shares in general
for various other clients outside UB Group and also for
public wherever possible.
viii) The learned counsel appearing for 4 th defendant was
only anxious to prevent the banks from lifting its
corporate veil and has not put forth any other
arguments or filed any relevant documents to show that
the 4th defendant had independent existence;
independent business of its own; and independent
clientele. The Ld. Counsel for 4th defendant was only

85 OA NO.766/2013
bent upon arguing that its corporate veil is not to be
lifted. It is intriguing as to why 4th defendant should
worry about its veil being lifted when according to them
they are so independently doing their own business and
sale of the shares were only a part of their whole
business. If only what they have stated were true, the
4th defendant should not be complaining on this aspect
and should have lifted the veil themselves voluntarily
and proved their innocence/ independence as
contended. Unfortunately, for obvious reasons, the 4th
defendant has failed to do so. The more they resist to
lift their veil, the more is the suspicion about their
transactions in question.
ix) Under the circumstances, this Tribunal has to come to
the irresistible conclusion that the 4th Defendant is
nothing but an extended arm of 2nd Defendant; and a
conduit of Defendant No.2 and hence the corporate veil
of Defendant No.4 stands lifted; and Defendant No.4 is

86 OA NO.766/2013
held to be joint and several with that of Defendants 1 to
3 to the extent of entire suit claim.
x) I have come to this conclusion not only after hearing
the arguments of the learned counsel for 4th defendant
and their pleadings in the form of written statement and
evidence affidavit and not only because of common
team of management, common shareholders, common
place of business and registered office, but also
because of complete failure of 4th defendant to prove
before this Tribunal that they have any independent
business to do and their doing the business of 2nd
defendant was only a part of business of defendant
No.4. Further, the argument of the learned counsel for
4th defendant that transactions of sale of shares was not
secretly done nor was there any violation of any Court
order is not sufficient enough to claim complete
independence. Similarly, the claim of 4 th defendant that
no pleadings about any fraud were made against them
by applicant banks are also not enough to claim that

87 OA NO.766/2013
they (D4) are independent and is not liable for the suit
claim. The learned counsel appearing for 4th Defendant
has argued that the Bank also not come forward to
prove that the defendant is conduit to second
defendant. This is in the special knowledge of the 4th
defendant and as per Section 106 of Evidence Act, the
4th defendant alone shall prove with proper oral and
documentary evidence that they have nothing to do with
second defendant. The banks cannot be expected to
have any access to these oral and documentary
evidence which 4th defendant alone can produce.
Therefore, the argument of the learned counsel
appearing for 4th defendant fails.
xi) In my view, the allegations of secrecy and fraud are
additional factors to lift the veil and/or fix the liability of
defendant No.4. Mere additions of these allegations or
absence thereof alone will not decide the issue.

88 OA NO.766/2013
xii) Therefore, this point is answered against 4th defendant,
whose corporate veil stands lifted.
xiii) The Ld. Counsel appearing for Defendant No.4 has
relied on several decisions/judgments as listed at the
end of this order with regard to lifting of veil, but in
those judgments the facts are entirely different.
Besides, in all the cases cited by the Ld. Counsel the
businesses of holding and subsidiary companies were
different. But, in this case, there is no material on
record to hold that the business of Defendant No.2 and
Defendant No.4 are different. Hence, these judgments
will not be of any help to the 4th Defendant.
xiv) Now let me proceed to decide about extent of their
(D4s) liability.
POINT NO.13:
30) WHAT is the extent of liability of the 4th defendant in the

OA?
89 OA NO.766/2013
ANSWER:
i) The learned counsel appearing for 4th defendant has
argued that in any case the liability of the 4 th defendant
can be only to the extent of shares pledged by it with
the Banks and sold and realised and cannot go beyond
this. The ground on which the learned counsel argued
is that the pledge of shares was given like a guarantee
and hence it is implied that the liability of the 4 th
defendant can be only to the extent of value of the
property offered as guarantee and not beyond.
ii) This argument of the Ld. Counsel may be sustained by
a third party guarantor and not by the 4th Defendant
who is held to be a conduit of 2 nd Defendant after lifting
its corporate veil. Hence, this argument cannot fetch
any water for the 4th Defendant.
iii) In view of the above decision made in Point No.12
above, it therefore follows that the 4th defendant has no
independent existence of its own and was surviving
only with the business it was doing among the group

90 OA NO.766/2013
companies of UB Group. Such business was being
done by 4th defendant, which is nothing but an extended
arm of defendant No.2, a branch of defendant No.2 and
had no character of its own, no identity of its own and
no business of its own. When such is the case, the
liabilities of its own cannot be far behind the liability of
2nd defendant; and the liabilities of both also have to go
hand in hand. The Ld. Counsel appearing for 4 th
defendant would submit that there are other small
creditors to 4th defendant. But, the Ld. Counsel has not
been able to file any documents or any other proof to
prove that 4th Defendant was absolutely an independent
Company with business of its own and that the present
transactions of 2nd Defendant was only a mere part of
its entire business. Absolutely there is nothing on
record to suggest any such valuable independent
business of 4th Defendant. Under the circumstances, a
direct conclusion to which one can arrive at is that 4 th
Defendant is inseparable from 2nd Defendant. Further,

91 OA NO.766/2013
it is also pertinent to note the fact that defendant 2 has
not taken any action against defendant 4 for recovery of
its huge dues that runs into about Rs.1000 crores. All
these only goes to show that defendant 4 and 2 are one
and the same.
iv) In view of the above, I hold that 4th Defendant is also
due and liable along with Defendants No.1 to 3 to pay
the claim made by the applicant-banks in the OA to the
applicant banks.
POINT NO.14
31) WHETHER the 6th defendant has got first charge over
the movable and immovable properties of Defendants 1
to 3?
ANSWER:
i) The 6th defendant has claimed certain monies as
arrears of service tax with interest that was collected by
the first defendant and not remitted to sixth defendant.
The sixth defendant has filed his written statement in
the form of affidavit, but not filed any separate evidence

92 OA NO.766/2013
affidavit. Further, the sixth defendant has also not filed
any evidence to prove that the first defendant collected
the service tax from its customers and failed to remit to
the sixth defendant. The sixth defendant has also not
filed any material to substantiate its claim of more than
Rs.58 crores, before this Tribunal. The sixth defendant
claims first charge over the properties of defendants 1
to 3 for recovery of its outstandings mentioned above.
The said claim of sixth defendant cannot be accepted in
view of Section 31[b] of the RDDB & FI Act according
to which the rights of secured creditors to realise
secured debts due and payable to them by sale of
assets over which security interest is created shall have
priority and shall be paid in priority over all debts and
government dues including revenues, taxes, cesses
and rates due by them to the Central and State
Government or any local authority. Further, even
according to the 6th defendant, u/s 88 of Finance Act
1994, the claim of the sixth defendant will be subject to

93 OA NO.766/2013
the banks claim. Hence, the claim of the sixth
defendant for first charge over the charged assets of
defendants 1 to 3 is rejected and it is held that claim of
the sixth defendant will be considered for distribution
only as second charge subject to first charge of
applicant banks being fully satisfied. Hence, this point
is found against sixth defendant.
FINAL ORDER IN IAs RELATING TO DEFENDANTS 7

TO 9
FINAL ORDER IN IA.No.5080/2013;
IA.No.2928/2015; IA No.2188/2016;
IA No.2355/2016; AND IA No.2365/2016
IA.No.5080/2013 (Filed by Applicant-Banks) :-
32) The above lA is filed by the applicant-banks (called
Banks) to declare and direct that:
a) The pledge created by 3rd defendant, i.e., Vijay
Mallya over 1,04,86,666 shares of M/s. United

94 OA NO.766/2013
Breweries Limited on 30.08.2013 in favour of
unknown pledgee; and
b) The pledge created by 3rd defendant, i.e., Vijay
Mallya and his son Siddartha Mallya over
1,04,64,288 shares of M/s United Breweries Ltd.,
on 30.08.2013 in favour of unknown pledgee, are
illegal, null and void and that the said shares are
free of encumbrance;
c) To direct the 3rd defendant, Vijay Mallaya to declare
on oath all particulars relating to the purported
pledges and deposit any consideration/proceeds
arising out of the creation of the aforementioned
pledges by 3rd defendant; and
d) To restrain transfer, alienation, disposal or creation
of any 3rd party interests in any manner over the
pledged shares, pending disposal of the l.A.

95 OA NO.766/2013
I.A.No.2188/2016:- (FILED BY APPLICANT-BANKS) :-
33) The above IA is filed by applicant-banks seeking an
order of attachment before judgment attaching the
properties/assets of the defendant No.3 as described in the
schedule thereunder or direct the defendant No.3 to furnish
security equivalent to the value of the outstanding dues to
the applicants, till disposal of the main application; and
To restrain Opponent No.2 from in any manner making
payment to defendant No.3 or any other person claiming
through him any amount whatsoever including the dividends
in respect of the shares described in the schedule and
restrain defendant No.3 from in any manner disposing of the
shares described in the schedule without the prior
permission of this tribunal and in the light of the urgency,
grant an exparte order to the same effect till the disposal of
this application.
96 OA NO.766/2013
IA.No.2928/2015 (FILED BY APPLICANT-BANKS) :-
34) The above lA is filed by the applicant-banks (called
Banks)
a) to grant an exparte ad-interim order of injunction
restraining Unit Trust of India Investment Advisory
Services Limited and Standard Chartered Bank from
handing over to Diageo PLC or Mr.Siddartha Mallya or
Defendant No.3 or to any other person/entity except
the Applicant-Banks, 1,04,86,666 equity shares of
United Breweries Limited held by Defendant No.3 and
1,04,64,288 equity shares of United Breweries Limited
held jointly by Mr.Siddartha Mallya and defendant
No.3 and/or from dealing in any manner with
aforementioned shares; and
b) Pending further orders of this Tribunal, Unit Trust of
India of India Investment Advisory Services Limited
and Standard Chartered Bank may be directed to
deposit the share certificates with respect to the

97 OA NO.766/2013
aforementioned shares before this Tribunal, in the
interests, justice and equity.
IA No.2355/2016 (FILED BY 7TH DEFENDANT) :-
35) The above IA is filed by Defendant No.7 seeking to
vacate the order dt:17.05.2016 made in IA No.2188/2016
whereby the shares of defendant No.3 in Watson Ltd. were
attached.
IA No.2365/2016 (FILED BY 9TH DEFENDANT) :-
36) The above IA is filed by Defendant No.9 seeking to
vacate the order dt:17.05.2016 made in IA No.2188/2016
whereby the shares of defendant No.3 in Watson Ltd., were
attached.
i) Let me now deal with IA No.5080/2013 filed by the
Applicant-Banks.
ii) Though the lA is one, several consequential
prayers are made in the single lA.
iii) The averments made by the banks in the affidavit
filed in support of the said IA is that the suit is filed against

98 OA NO.766/2013
the defendants for recovery of a sum of
Rs.6203,35,03,879.42 with interest @ 15.20% P.A on the
same from 01.06.2013 till date of payment.
iv) The applicant further states in its affidavit that by
an interim order dt.03.09.2013 passed in W.P.No.38870,
39048 to 39052 of 2013, the Honble High Court of
Karnataka restrained the defendants No.1 to 3; that the
banks were shocked to know that the defendants pledged
the above said shares the fact of which the banks came to
know from press reports and on verification of records in the
BSE and NSE; that an application for attachment of assets
and shares of 3rd defendant was pending before this Tribunal
for orders; that the said pledge was created by the 3 rd
defendant in violation of the oral undertaking given by his
Advocate before this Tribunal and Clause No.5(ii)(g) of the
Personal Guarantee dt.21.12.2010 given by the 3rd
defendant to the banks for securing the payment of amounts
from the 1st defendant under MDRA; that the banks were
99 OA NO.766/2013
unable to get the details about the Pledges; that the value of
those shares is about Rs.1667,38,16,740.00; and that the 3 rd
defendants attempt to create any third party interest over
the said shares should be curtailed.
v) The 7th defendant M/s Diageo Holdings
Netherlands B.V.; 8th defendant M/s UTI Investments
Advisory Services Ltd., and the 9th defendant Standard
Chartered Bank, have filed their respective objections. But
though they filed objections separately, their objections were
nothing but a repetition of each others case. Hence, the
objections raised by defendants 7 to 9 are given below:
OBJECTIONS OF 7th , 8th AND THE 9th DEFENDANTS :-
37) The main objections of the said defendants as stated in
their respective objections are that the petition is not
maintainable; that the subject shares do not form part of the
securities held by the banks; that the said shares are
pledged with defendants 7 to 9; that this Tribunal lacks
jurisdiction to affect third parties rights; that the banks have

100 OA NO.766/2013
no rights over the pledged shares; that the 3 rd defendant and
his son Siddharth Mallya owned an overseas company
named, M/s. Watson Limited and in the year 2007, they
availed a loan from ICICI Bank, U.K., against the security of
the subject shares; that in the year 2013, the 9th defendant
Standard Chartered Bank, at the request of the said Watson
Ltd., took over the said loan of the said Watson Ltd., from
ICICI Bank U.K., pursuant to which the said security pledged
shares were transferred to and continued with the Standard
Charted Bank under a Pledge Agreement dt.29.07.2013; that
as per the agreed terms and conditions of the said Shares
Pledge Agreement dt.20.07.2013 which was in continuation
of the previous agreement, the 9th defendant will have the 1st
charge over the shares; that the transactions entered into
among the 3rd defendant and his son on the one hand and
the 9th defendant was a bonafide one; that at this stage, the
7th defendant guaranteed the repayment of the loans availed
by the said Watson Ltd., from the 9th defendant by a Back
Stop Guarantee Agreement dt.05.08.2013 under which the

101 OA NO.766/2013
7th defendant guaranteed the repayment of the Ioan by
Watson Ltd., to Standard Charted Bank in default of the 3 rd
defendant and will settle the loan to the said bank and will
stand subrogated to the rights of the bank as against the 3 rd
defendant, his son and Watson Ltd., in which event the
pledge of shares already pledged by the 3rd defendant and
his son in favour of Standard Chartered Bank will stand
transferred to the 7th defendant; that the said Watson Ltd.,
defaulted in repayment of the loans of SCB who took
recovery action for their outstandings; that at this stage, this
Tribunal has passed an interim restraint order dt.19.06.2015
against any dealing with the subject shares; that this was
followed by a further interim order dt.15.07.2015 in
I.A.No.2928 of 2015 filed by the banks against 8 th and the
9th defendants praying for a restraint order against them
from handing over the shares to the 7 th defendant; that in
view of the said orders, the 9th defendant Standard Charted
Bank demanded settlement of their dues from the 7 th
defendant guarantor who settled the dues of SCB on

102 OA NO.766/2013
29.01.2016; and that because of the action of the banks, the
7th defendant was forced to settle the guaranteed dues of the
9th defendant.
38) The 7th defendant further stated in its objections that the
applicant-banks had no rights over these shares as it was
not a part of securities under the MDRA; that the banks
recourse is only against the 1st defendant and its guarantors
and the banks cannot affect the rights of 3rd parties in the
name of recovering their dues from the 1st defendant; that on
the date of oral undertaking given by the Counsel for the 3 rd
defendant before this Tribunal, the defendants 7 to 9 were
not even parties to the proceedings and hence the same will
not bind them; that the said pledge was created by the said
persons in favour of 9th defendant even before the order was
passed by this Tribunal; that because of the actions of the
banks and in obtaining such interim orders without the
disclosure of full details, the defendants 7 and 9 were
adversely affected; that the pledge was created even before

103 OA NO.766/2013
the interim order dt.30.08.2013; that the oral undertaking
given by the defendants 1 to 3 before this Tribunal was
without any rights over the shares as even on that date, the
defendants 1 to 3 had no absolute rights over the shares
which were already pledged with 9th defendant in
continuation of the loan of ICICI Bank U.K., in the year 2007;
and that the applicant-banks having failed to properly and
adequately to secure their exposure, cannot seek to affect
third parties.
39) The said defendants have filed copies of the necessary
documents in support of their contentions.
40) I have heard the arguments of the Ld. Counsels
appearing for the respective parties and have also gone
through the related documents filed by the parties. The
following points arise for my consideration:-
a) WHETHER the Banks have established their rights

over the subject shares?;
104 OA NO.766/2013
b) WHETHER the rights of the 7th and the 9th

defendants as pledgees will prevail over the rights of
the applicant-banks?; and
c) TO what relief the parties herein are entitled?
REASONS AND DISCUSSIONS
41) The main contention of Applicant-Banks to seek an
order as prayed for in the IA No.5080/2013 is that they have
the first charge over the said shares in view of the oral
undertaking given by the Ld. Counsel for Defendant No.3
before this Tribunal on 26/07/2013; and in view of Clause
No.5(ii)(g) of the Personal Guarantee and Corporate
Guarantee executed by Defendants No.2 and 3. According
to the Ld. Senior Counsel Mr. Naganand appearing for the
Applicant-Banks, these Clauses found in the Guarantee
Agreements act as a clear bar against 2nd and 3rd defendants
from dealing with the subject shares in any manner
whatsoever. The Ld. Senior Counsel Mr.Sondhi appearing
for the Defendant No.7 and Mr.G.Krishnamurthy appearing
for the defendants 8 and 9 submitted that the guarantees are

105 OA NO.766/2013
private contracts between banks and 2nd and 3rd defendants,
which cannot affect any 3rd party. In this connection, the Ld.
Counsel also cited certain decisions. This argument is
unacceptable as the defendants No.2 and 3 have already
restrained themselves under the Guarantee Agreements
from encumbering their assets. Therefore, the said Clause
which is a term of the guarantee agreements will apply in full
force on the 2nd and 3rd defendants who will be completely
bound by such term of the agreements. Any violation of the
said clauses by 2nd and 3rd defendants will not be binding on
the Applicant-Banks. In the present case, in gross violation
of such undertakings the 3rd defendant had proceeded with
the sale of his shares in the 2nd defendant-Company. The 7th
Defendant is now pleading that they are the bonafide
guarantor and on settlement of dues as claimed by the 9th
Defendant, they stand subrogated to the rights of the 9th
Defendant. Their further contention is that in view of the
continuance of the transaction since 2007 and in view of the
fact that these shares are not the subject matter of securities
106 OA NO.766/2013
taken by the applicant-banks under the MDRA (Ex.A-5), it is
not open to the banks to seek an order of attachment or
restraint, etc., against subject shares. The Ld. Senior
Counsel Mr.Sondhi appearing for the 7th Defendant further
contends that if at all the Applicant-Banks have any right, it
will be only after the satisfaction of the claim of 7th Defendant
over the subject shares. Further, the 7th Defendant is willing
for any negotiated settlement on this issue with the
Applicant-Banks and in fact they are also willing for sale of
the subject shares and share the proceeds of such sale of
shares with the Applicant-Banks, after satisfying their claim.
The contention of the 7th Defendant is that they are bonafide
guarantor for defendants No.2 and 3, which is established by
the fact that all their documents are dated 26/07/2013 and
that they have invested around 135 Million USD of their hard
cash; that no malafide guarantor would do such a thing.
Further, if the deal was not bona fide, the 7 th Defendant
would have back-dated its documents and would not have
mentioned the same date on which the alleged oral

107 OA NO.766/2013
undertaking was given; and all these go to show that the
transaction of 7th Defendant was bona fide and should be
held as such. The Ld.Senior Counsel also argued that the
order of restraint was passed only in 2015, i.e., after 2 years
from the date of transactions and hence the transactions
have to be held to be valid.
42) The Ld. Senior Counsel Mr. Naganand appearing for
the Applicant-Banks would submit that although 7th
Defendant may have invested its money in the subject deal,
the same was not done bonafidely and in any case the 7 th
Defendant ought to have enquired about the claims of the
banks before making such huge investment. According to
the Ld. Senior Counsel, the 7th Defendant have miserably
failed in its due diligence and for their failure they cannot say
that they (7th Defendant) should be protected.
43) At the outset, I would like to place on record that as far
as the oral undertaking of Advocate appearing for
Defendants No.2 and 3 is concerned, I have to say that it is

108 OA NO.766/2013
no longer a point of dispute since it is clearly admitted by
none other than 3rd Defendant himself in his Statement of
Objection filed before the Honble High Court of Karnataka at
Bangalore in contempt proceedings in CCC No.1224/2014
(Civil), which has been produced by the Applicant-Banks by
Memo dated 11/01/2017, wherein at Para No.13 the 3 rd
Defendant has stated as follows :- there has been no sale
of disposal or alienation of the assets by this respondent
contrary to the oral undertaking given by the counsel for this
respondent before the Debt Recovery Tribunal on
26.07.2013.. Therefore, the factum of such oral undertaking
given by the Ld.Counsel appearing for defendant No.3 is not
only admitted but is also binding on the defendant No.3. The
Ld.Counsel appearing for defendants 1 to 3 would submit
that such oral undertaking was not recorded and hence was
not valid. In this regard, the Ld.Senior Counsel Mr.Naganand
appearing for applicant banks has rightly placed reliance on
the judgment reported in (2000) 1 GLR 715 wherein the
Honble Gujarat High Court has clearly held as follows:

109 OA NO.766/2013
It is undoubtedly true that mere failure to record

proceedings of the day by some inadvertence or
otherwise would not absolve a person from the
consequences of breach of the undertaking if it is
clearly established from other material with fair
amount of exactitude which could spell out actual
words spoken, to whom the undertaking was given,
whether to the court or to the party and thirdly for
what purpose the undertaking was given. The
purpose for which undertaking has been given also
assumes importance from the fact, as we have
noticed in the definition, and as we will presently
see, that it is an essential ingredient of an
undertaking to become foundation for a potential
contempt proceedings that it must be made to a
court in order to achieve some advantage, whether
by acting positively or by forbearing to do
something to obtain an order or ward off suffrage of
an order which it would otherwise be subjected to
or is likely to be subjected to.
44) Therefore the admitted oral undertaking given before
this Tribunal is of binding nature and any action in violation
by the party is void. According to me, a bonafide person is

110 OA NO.766/2013
one who acts without notice of existing encumbrance over
the thing he has acted upon. I have to see whether the 7 th
Defendant satisfies this test. The 7th Defendant has not
produced any document to show that it has conducted its
due diligence before involving itself into such a big deal. A
due diligence is one which includes, apart from routine
testing of the title, etc., encumbrances also. The
encumbrance here in the present case is the oral and written
undertakings given by Defendants No.2 and 3 in the
Personal and Corporate Guarantees executed by them
(Ex.A26 and Ex.A27) and the huge claims of banks against
them. The said admitted oral undertaking and the clauses in
the said guarantees and the claims in OA, act as
encumbrance and when the banks have made a colossal
claim of around Rs.6200.00 Crores against Defendants No.2
and 3, which factor has appeared in the press and which
was also widely covered by the Press and media almost on
every date of hearing, it is not possible to accept that the 7 th
Defendant was an innocent guarantor. No doubt, the 7th

111 OA NO.766/2013
Defendant may be a bona fide person but not an innocent
guarantor. The 7th Defendant has grossly failed in conducting
proper enquiry into the affairs of the 2nd and 3rd Defendants,
who are already wilful defaulters. In this context it is also
pertinent to note that, it was in public domain that Defendant
No.3 was a wilful defaulter. Defendants No.7 and 9 ought to
be knowing that they are dealing with a wilful defaulter and
not a genuine person. If Defendants No.7 and 9 knowingly
were dealing with a wilful defaulter, they were only taking a
risk of their investments knowingly and they cannot be held
to be a bona fide purchaser and for such acts of such
persons this Tribunal cannot have sympathy.
45) Apart from the above, I am also of the view that the 9 th
Defendant took over the loan from ICICI Bank, U.K., on
05/07/2013, when even on the said date the above oral
undertaking and the clauses in the Guarantee Agreements
were operating in full force against Defendants No.2 and 3.
Therefore, pledge of shares in favour of Defendant No.9 was

112 OA NO.766/2013
in itself illegal and no title could have passed to Defendant
No.9 under such illegal pledge agreement. Further, when
Defendant No.9 (SCB) itself has not get the title for the
above reasons, the question of demanding payment from the
7th Defendant as guarantor and handing over said shares
does not arise.
46) Apart from the above, it is not known as to why the 7 th
defendant extended the subject guarantee to 9th defendant.
The object of this guarantee is not spelt out by both
Defendants No.7, 9 and 2 and 3 anywhere. Admittedly, the
7th defendant is not in the business of banking or financing
and hence there was no need for 7th defendant to issue such
a guarantee. When this question was put to the Ld. Senior
Counsel appearing for defendant No.7, he would submit that
the guarantee was issued not for free but was duly
supported by financial consideration of USD 5 million. This
argument is also unacceptable because no one will give a
guarantee for USD 135 million by taking USD 5 million that

113 OA NO.766/2013
too for a willful defaulter. The story is unbelievable. There is
more to it than that meets the eye. Further, it is pertinent to
note that, the then prevailing market value of shares of UBL
was about Rs.1005.65 per share. Hence, the approximate
amount that may be recovered by the sale of these shares
was about Rs.2106.93 Crores. However, the dues that are
claimed to be outstanding to SCB (Defendant No.9) were
about Rs.850.84 Crores. The object behind the attempt to
transfer the entire pledged shares in question, the value of
which is far higher than the dues said to be outstanding to
SCB is apparently suspicious.
47) Further, if the 7th Defendant is to be held as bona fide
person, they would have directly got the pledge of the shares
of Defendant No.2 from Defendant No.3 by taking USD 5
million from defendants No.2 and 3 by settling the dues with
Defendant No.9. There was absolutely no need for
Defendant No.7 to give a back stop guarantee to Defendant
No.9 for and on behalf of Defendant No.3, which guarantee

114 OA NO.766/2013
would become enforceable in the event of defendant No.3
committing any default in repayment of their dues to
Defendant No.9. Nothing more needs to be looked into than
the fact that such back stop agreement is nothing but a back
door agreement. Obviously, that was not the intention of
Defendant No.7. Defendant No.7 wanted to buy the shares
but instead of buying them straight away has aided
Defendant No.3 in this round about method. Thus,
Defendants No.3, 7 and 9 have in a way colluded to take the
deal out of the reach of the secured creditors, viz., applicant-
banks.
48) The Ld. Counsel appearing for 7th defendant cited a
judgment of the Honble High Court of Kerala reported in
MANU/KE/0087/1962 to emphasise that the principles of lis
pendens will not apply to movables; and certain other
judgments on various other points. I find these judgments
are inapplicable to the facts of the present case. In so far as
the judgment of the Honble High Court of Kerala is

115 OA NO.766/2013
concerned, I have to state that the guarantee of 7th
defendant and the pledge of subject shares in favour of 9th
defendant are affected not only because of pending litigation
but because of the said oral undertaking and personal
guarantees of defendants No.2 and 3. Therefore, the said
judgment will not be applicable to the facts of this case.
49) It is necessary that the commercial world in India
should realize that it will be no longer possible for them to
avail loans of public money, default in repayment and tried to
get away through the lanes and by-lanes of twisted facts.
50) In view of the above findings I have no hesitation to
hold that creation of charge or pledge etc., by the 3 rd
Defendant in favour of both Defendant No.9 and 7 are in
violation of terms of the said oral undertaking and the
Guarantee Agreements; and pendency of OA and hence are
not legally valid and are hereby set aside.

116 OA NO.766/2013
51) It is also relevant to place on record that in the present
case, relief is claimed against Siddarth Mallya who is the son
of Vijay Mallya, who is not even added as a party in the OA
or IA. Therefore, it is made clear that this order will not in any
way affect the rights of said Siddarth Mallya, Diageo
Holdings Netherlands B.V and SCB (Defendants No.7 and 9)
in any manner in so far as the shares in the name of
Siddarth Mallya individually or jointly with Vijay Mallya to his
own extent only are concerned.
52) Therefore, this Tribunal is not passing any order as
against the shares of Siddarth Mallya, who is not a party in
the OA as well as in the IA, either in his individual name or
jointly with Vijay Mallya, to the extent only of his (Siddarth
Mallyas) share in these shares.
53) For the aforesaid reasons, I proceed to pass the
following order :
117 OA NO.766/2013
ORDER
a) IA.No.5080/2013 filed by the applicant-banks

stands allowed and the interim order dated
19/06/2015 passed in said IA is made absolute;
b) I.A.No.2188/2016 filed by applicant-banks stands

allowed.
c) IA.No.2928/2015 filed by the applicant-banks

stands allowed.
d) Consequently, IA No.2355/2016 filed by 7 th

defendant stands dismissed
e) Consequently, IA No.2365/2016 filed by 9 th

Defendant stands dismissed.
FINAL ORDERS IN ALL MISC I.A.s IN THE O.A

APPLICATIONS FILED BY APPLICANT BANKS
I.A.NO. 2593 OF 2013 (for Injunction against defendants

1 to 3):-
54) The above application is filed by the applicant banks for
an order of Injunction against the defendants 1 to 3
debarring them from transferring, alienating or otherwise

118 OA NO.766/2013
dealing with, disposing of or creating any third party interests
or encumbering in any manner any property or assets
(movable, immovable, tangible or intangible) belonging to
them with out the prior permission of the Tribunal.
I.A.NO. 2594 OF 2013 (for ABJ against D-2):-
55) The above application is filed by the applicant banks to
pass an order of attachment before Judgement attaching the
properties/assets of defendant No.2 described in the
schedule to the application which are owned by the
defendant No.2 or direct the defendant No.2 to furnished
the applicant till disposal of the main application.
I.A.NO. 2595 OF 2013 (for ABJ against D-3):-
pass an order of attachment before Judgement attaching the
properties/assets of defendant No.3 described in the
schedule to the application which are owned by the

119 OA NO.766/2013
defendant No.3 or direct the defendant No.3 to furnished
the applicant till disposal of the main application.
I.A.NO.2596 OF 2013 (to disclose assets against D-1):-
order and require any responsible officer of the defendant
No.1 to disclose on oath by way of an affidavit stating the
particulars/detailed description of the properties/assets of the
defendant No.1 including movables, immovable, tangible
and intangible properties, interalia, those as described in the
schedules therein.
I.A.NO.2597 OF 2013 (to disclose assets against D-2):-

120 OA NO.766/2013
schedules therein.
I.A.NO.2598 OF 2013 AND I.A.NO.1058 OF 2016 (to direct

the 3rd defendant to disclose his assets):-
schedules therein.
COMMON ORDER PASSED IN I.A.NO.2593/13; 2594/13;

2595/13; 2596/13; 2597/13; and 2598/13:-
60) The respondents/defendants 1 to 3 have filed their
respective objections in the above I.A.s. Though separate
objections are filed, all the three objections of respondents 1
to 3 more or less state the same averments and are
repetition of each other. Secondly, the objections are nothing

121 OA NO.766/2013
but repetition of the written statement filed in the main O.A.
and the contentions raised are the same. Further, in the
entire objections that runs in to more than about 55 pages,
major part of the objections is only denial of the averments
made by the applicant bank in its main O.A. and only a bare
and formal denial of the averments made by the banks in the
affidavit filed in support of the I.A., is found in a small portion
of the affidavit filed by the respondents. In the entire
objections filed, no specific reason and/or explanation is
given as to why an order as prayed for in the above I.A.s
should not be granted. The suit is filed for recovery of more
than Rs.6200 crores and the prayers made in the I.A.s are
the bare minimum requirements that is expected of from the
Respondents 1 to 3. No prejudice will be caused to the
respondents if these petitions are ordered/allowed finally.
Further, the O.A itself is allowed by final order. Therefore,
the above I.A.s deserves to be allowed and hence each of
the above I.A.s stand allowed.

122 OA NO.766/2013
I.A.No.3508/14 AND 3509/14 (for ABJ against D-2 & D4):-
61) The above I.As are filed by the applicant banks pass an
order of attachment before judgement attaching the
properties/assets of the 2nd and 4th defendant respectively
described in the Schedule to the I.A. or direct the 2 nd and 4th
defendant to furnish security equivalent to the value of the
outstanding dues to the applicants.
COMMON ORDER PASSED IN THE ABOVE I.A.NOs.3508

AND IA No.3509/ 2014:-
62) The above I.A.s are filed against 2nd and 4th defendant
seeking to attach before judgement certain rights, benefits
and privileges arising out of the subject shares held by 2 nd
defendant in one M/s.United Breweries (Holdings) Ltd
including the dividends, bonus issues, etc. and to attach
properties of 4th defendant. Even in the schedule to the
application, certain details are not furnished such as amount
of dividend. Hence, these I.A.s are closed for the present
granting liberty to the applicant banks to proceed with such

123 OA NO.766/2013
of its claims in its recovery proceedings pursuant to the
Recovery Certificate issued in its favour in the main O.A.
I.A.NO.2285 OF 2015 (against 3rd party M/s.United Spirits

Ltd):-
63) The present I.A. is filed by the 8th applicant bank, i.e.,
IDBI Bank Ltd., separately in the O.A. filed by consortium of
banks. The prayer made in the present petition is to attach
34,59,090 number of equity shares of USL pledged by USL
Benefit Trust in favour of security Trustee for the exclusive
benefit of the petitioner, pending disposal of the main O.A.
ORDER PASSED IN I.A.NO.2285 OF 2015:-
i) At the outset, it is not clear from the prayer as to who is
USL from records, it may be assigned as M/s United
Spirits Ltd. Secondly, the said USL is not even made as
a party in the main O.A. as well as the petition.
Anyhow, let me state the grounds on which the present
petition is filed.
124 OA NO.766/2013
ii) The grounds on which the present petition is filed are
that the petitioner is the 8th applicant in the main O.A.
which is filed against defendants 1 to 3 for recovery of
Rs.6203,35,03,879.42 with interest and cost; that the 1st
applicant is the lenders authorised agent; that the
petitioner has lent a sum of Rs.750 crores and
Rs.110.92 crores as Rupee Term loan and additional
facilities respectively to the respondent; that an amount
of Rs.807.94 crores is outstanding in the RTL account
as on the date of O.A. including interest; that by
separate loan agreements dt.19.01.2010 and
08.04.2010, the said USL had availed loans from this
petitioner; that as security the above said shares were
pledged with this petitioner by the said USL by a pledge
agreement dt.17.06.2010; that the corporate and
personal guarantee issued by the 2nd and the 3rd
defendant have a relation with the said USL; that the
companies are interrelated; that the 3 rd defendant, his
son and his wife have got majority of shares in the 2 nd

125 OA NO.766/2013
defendant company who has given its corporate
guarantee to the applicant banks; that the said USL had
approached the petitioner for permission to sell shares
to acquire a liquor company Relay B.V. and other
consequential reliefs; that any dilution of securities of
the 3rd defendant would affect the securities; and that
the USL decided to prepay the loan to the petitioner
vide its letter dt.16.05.2013.
iii) The petitioner would further state that the bank agreed
to the proposal vide its letter dt.06.06.2013 on certain
conditions but without accepting the said conditions, the
said USL has repaid a sum of Rs.628 Crores to the
petitioner bank; that the 2nd and the 3rd defendants have
proceeded to sell their 13,61,2591 shares in USL to
Relay B.V. and Diageo plc; that this will again affect
the recovery proceedings; that the conduct of USL, USL
benefit Trust and the 2nd and the 3rd defendants in not
taking permission of the petitioner bank was only to

126 OA NO.766/2013
deprive the bank of its rightful claims; that as per
Cl.No.26 the 2nd and the 3rd defendants have agreed
not to strip their assets; that inter corporate transfer of
sale or transfer of shares should not be permitted to the
detriment of the banks; and that in view of the above, it
is necessary to grant the prayer made in the I.A.
iv) The respondents have filed their respective objections
to the said I.A. denying the averments made in the I.A.
v) The reliefs claimed in the I.A. cannot be granted for
the following reasons:-
a) The relief claimed in the I.A. is beyond the scope of
the main prayer made by the applicants in the O.A.
and hence can not be granted;
b) Secondly, the necessary part, namely, M/S.United
Spirits is not even made as a party in the I.A. cause
title and hence the I.A. is hit by non joinder of
necessary party;
127 OA NO.766/2013
c) thirdly it is not backed by the authority of the 1 st
applicant bank who is appointed as the Lenders
Agent to represent them all in the O.A.;
d) fourthly, the conditions on which the present
applicant bank agreed to settle the matter with the
said 3rd party is challenged by the said 3 rd party
before the Honble High Court of Karnataka and
hence no relief can be granted in the I.A. as the
issue is pending consideration before the higher
forum, namely, the Honble High Court of Karnataka;
e) Fifthly, the said 3rd party can not be treated as a
garnishee since the 8th applicant is staking its claim
not towards part of the claim made by the consortium
in the O.A. but also for recovery of its own balance
outstanding amount of around Rs.40 Crores in its
subject account of the 3rd party.

128 OA NO.766/2013
vi) For all the above reasons, the application fails and is
hereby dismissed, granting liberty to 8th applicant to
pursue its own legal remedies for recovery of its dues.
I.A.NO.4064 OF 2015 (FOR ABJ AGAINST

D-2 and D-4 M/S.MCFL):-
64) The present I.A. is filed by the applicant banks against
defendants 2 and 4 for an order of Attachment before
Judgement attaching the shares as described in the
schedule thereunder written and the dividend of 6%
amounting to Rs.1,07,00,000/- and Rs.14,00,000/- proposed
to be paid by M/s. Mangalore Chemicals and Fertilizers Ltd.,
to defendants 2 and 4 and further direct the said company
not to pay the said amounts to anyone without the
permission of the Tribinal.
The prayer made in this I.A. is also objected to by the
respondents therein.
129 OA NO.766/2013
65) The interim order passed in this I.A. shall continue and
shall be decided by the ld.Recovery Officer finally in the
recovery proceedings pursuant to the recovery certificate.
I.A.NO.1022 OF 2016 (FOR IMPOUNDING

PASSPORT OF D-3):-
66) The present I.A. is filed by the applicant banks for
freezing and impounding of passport of the 3rd defendant or
in the alternative directing the 3rd defendant not to leave the
Country with out the prior permission of the Tribunal. The
prayer made in this I.A. is also objected to by the
respondents therein who have filed their respective
objections.
67) The ld.Counsel submits that the 3rd defendant has
already left the Country and in view of such submission, this
I.A. is dismissed as infructuous.

130 OA NO.766/2013
I.A.NO.1023 OF 2016 (FOR ARREST

WARRANT AGAINST D-3):-
68) The present I.A. is filed by the applicant banks to issue
a warrant of arrest against 3rd defendant to show cause as to
why he should not furnish security for his appearance. The
prayer made in this I.A. is also objected to by the
respondents therein who have filed their respective
objections.
69) The ld.Counsel submits that the 3rd defendant has
already left the Country and in view of such submission, this
I.A. is dismissed as infructuous.
I.A.NO.1024 OF 2016 (FOR GARNISHEE

ORDER AGAINST D-7):-
70) The present I.A. is filed by the applicant banks seeking
a Garnishee order against 7th defendant and Diageo plc from
disbursing an alleged sum of USD75 Million to 3 rd defendant
and to direct the 7th defendant or the said Diageo plc to

131 OA NO.766/2013
deposit the same in to this Tribunal and to direct them to
disclose on oath the details of all the benefits to 3 rd
defendant, 7th defendant, Diageo plc, and USL including the
details of movables and immovable properties, tangible and
intangible assets., The prayer made in this I.A. is also
objected to by the respondents therein who have filed their
respective objections.
71) The interim order passed in this I.A. shall continue and
shall be decided by the ld.Recovery Officer finally in the
recovery proceedings pursuant to the recovery certificate.
I.A.NO.1286 OF 2016 AND I.A.NO.2189 OF 2016 (TO

DIRECT THE D-3 AND D-2 TO DEPOSIT USD 40M.):-
a direction to 3rd and the 2nd defendant to deposit
USD40Millon in to this Tribunal or any other sum received
from Diageo plc/Relay B.V./7th defendant/United Spirits Ltd

132 OA NO.766/2013
and further restrain the 3rd defendant from disbursing the
USD40Million to any one.
ORDER PASSED IN I.A.NO.1286/16 AND

I.A.NO.2189 OF 2016:-
73) I am not proposing to pass any order in this I.A. as the
matter regarding the amount involved in this I.A. is pending
adjudication before the Honble Supreme Court of India.
Hence this I.A. is closed.
I.A.NO.1785 OF 2016 ( TO DIRECT THE D-3 TO DEPOSIT

USD40M.):-
a direction to 6th defendant to deposit in to this Tribunal the
sale proceeds which may be received from sale of aircraft
Airbus on 12.05.2016 and 13.05.2016 and to restrain the 6 th
defendant from creating any 3rd party interest over the sale
proceeds.
133 OA NO.766/2013
75) This I.A. is dismissed as infructuous since, according to
the ld.Senior Counsel f
I.A.NO.2538 OF 2016 (TO DIRECT PAYMENT OF

Rs.1012.98 CRORES TO D-6):-
76) The present I.A. is filed by the 6 th defendant seeking a
direction against the applicant banks to deposit the sum of
Rs.1012.98 crores first before making any payment to the
banks.
77) There was no representation for the applicant/6 th
defendant during final hearing of the O.A. and I.A.s and
even during when the matter was posted for clarifications on
many hearing dates. In any case, the ld.Recovery Officer is
directed to settle the claim of secured creditor banks which
alone shall rank first in terms of priority in settling the claims,
out of any monies recovered from the defendants. If any
balance is found in excess of the banks claims, the same

134 OA NO.766/2013
can be paid to the 6th defendant by the ld.Recovery Officer
during the recovery proceedings after appropriate proof by
the 6th defendant with regard to its claim.
I.A.NO.5092 OF 2016 (FOR ABJ OF MOVABLES

IN KINGFISHER Villa):-
an order of Attachment before Judgement of movable assets
situated in the secured asset, i.e., Kingfisher Villa, House
No.194-E, Condolim Village, Goa.
79) The 3rd party M/s.United Spirits Ltd., claims to be the
owner of portion of the movables that is presently found in
the said Villa and states that as they are owner of the
movables and not the defendants, the same can not be
attached and/or sold to realise the claim made in the O.A. by
the applicant banks.
80) In view of rival claims of the applicants and the 3rd party
over the movables at the above Villa, the application is
allowed subject to proof of rival claims by the respective

135 OA NO.766/2013
parties before the ld.Recovery Officer in the recovery
proceedings.
I.A.No. 3509 of 2014 (BY APPLICANT BANKSFOR ABJ

AGAINST 4TH DEFENDANT):-
81) The above I.A. is filed seeking an order of attachment
before judgement attaching the properties/assets of 4 th
defendant described in the schedule thereunder written and
pending disposal of the I.A. to direct the respondent 4th
defendant to furnish security to the suit claim.
ORDER IN I.A.NO.3509 of 2014
82) Since the extent of liability of the 4th defendant itself is
decided in the final order only, this I.A. is dismissed for the
present with liberty to the applicant banks to peruse the
same during recovery proceedings.
I.A.No. 5382 of 2016 (BY D-4 AGAINST TO ISSUE

SUMMONS TO NOTARY):-
83) The above I.A. is filed by the 4 th defendant to issue
summons and enforce attendance of Mr.S.Vijaykumar and

136 OA NO.766/2013
Mr.A.C.Subbuswamy both Advocates and Notary Public; to
direct them to produce their registers; and to further direct
Mr.S.Vijayakumar, Advocate and Notary to file an affidavit
that AW-1 appeared before him and signed the evidence
affidavit.
84) In the affidavit filed by the applicant/4 th defendant it is
stated that the affidavits filed by the AW-1 and Aw-2 are
defective as the same are signed by the said Notaries Public
in the Advocates office of the applicant banks and that the
said affidavits are not in compliance with the Notaries Act
and the rules thereunder. Therefore the applicant/4 th
defendant prays for summoning the said Notaries to the
above extent.
ORDER IN I.A.NO. 5382 of 2016
85) It is sad to note the extent to which the 4 th defendant
goes to involve innocent 3rd party advocates by creating a
blot on their carriers, in their unjustified quest to wriggle out
of the liability. The 4th defendant should have the principle of

137 OA NO.766/2013
live and let live and not live and let die. Further marking of
any document can be objected to on any ground only before
marking and not after. In the present case, the evidence
affidavits of both Mr.Ranga Vittal and Mr.Srinivasa Sekaran
were already marked as Ex.A1; Ex.A-127 and Ex.A-130
respectively in the presence of the ld.Counsel for the 4th
defendant and in fact the Counsels of all the defendants. No
objections were raised by any of them at the time of
marking and the evidence affidavit of both the gentlemen
were marked as above.
86) Subsequently, both AW1 and AW2 were cross
examined on several dates as mentioned above and in none
of the said dates, the witnesses were cross examined on this
issue. In fact, not even a suggestion was putforth to the
said witnesses on the above issue. Therefore, the question
of summoning third party advocate who notarised the
evidence affidavit has no merit and has no basis. The
present IA is filed without any merits and is only a blatant

138 OA NO.766/2013
attempt to protract the proceedings. The attempt of 4 th
defendant to make a mountain out of mole hill is deprecated.
Therefore, IA deserves to be dismissed with costs and the
same is hereby dismissed with a cost of Rs.50,000/-.
ORDER IN IA 5382 OF 2016
In the light of the above discussion, this IA is dismissed
with cost of RS.50,000/-.
GENERAL
87) Although, orders in number of IAs filed in this OA are
separately passed, it is hereby made clear that all these IA
orders shall form integral part and parcel of this final order
passed in the OA and will not be considered as separate
orders. It is mentioned individually only for the purpose of
convenience and easy reference and not to be read as
separate, independent and individual orders. Hence, it is
made clear once again that all these IA orders shall be part
and parcel of the final order passed in the main OA and

139 OA NO.766/2013
these IA orders, according to its result, shall stand
appropriately merged with the final order.
88) All other orders in I.A.s shall merge with this final order
passed in the main O.A.
ORDER
I. Present OA stands allowed as prayed for with costs in
the following manner
a) Defendants No.1 to 4 jointly and severally shall
pay a sum of Rs.6203,35,03,879=42 (Rupees Six
Thousand Two Hundred and three Crores Thirty
Five Lakhs Three Thousand Eight Hundred and
Seventy Nine and Paise Forty Two only) with
further interest at the rate of 11.50% p.a with
yearly rests from the date of the application till the
date of complete realization.
b) The charge of 6th defendant shall rank as 2nd
charge over the schedule properties and other

140 OA NO.766/2013
receivable after satisfaction of all claims of
applicant banks.
c) In the event of failure of defendants to pay the
said OA amount, the applicant bank is at liberty
to sell the hypothecated /mortgaged
movables/immovables properties described in
schedule of the main petition according to law as
sought by the applicant bank in the OA.
d) In spite of sale of the properties mentioned in the
Schedule/s, if the OA amount is not fully realized,
then the Applicant Bank is at liberty to proceed
against the person and other properties of the
defendants as required under law and also as
advised.
e) Applicant Bank shall file latest Memo of calculation
of OA amount together with interest, costs etc., to
be paid by Defendants duly taking into account the
amount/s if any paid by the Defendants and/or
amount realized by sale of assets, etc., during the

141 OA NO.766/2013
intervening period after filing the OA, to enable the
office to prepare Recovery Certificate for the
amount to be paid by the Defendants to the
Applicant Bank.
f) Office is directed to issue Recovery Certificate as
sought by the Applicant Bank in the OA and do the
needful as required under law forthwith.
All other orders in I.A.s shall merge with the order
passed in the main O.A.

[Dictated to Steno, transcribed by him and after necessary corrections, signed and pronounced by me in the Open
Court on this the 19th day of January, 2017]
Presiding Officer
DRT, Bangalore.
142 OA NO.766/2013
ANNEXURES
Witness Examined for the Applicant :

AW1 Sri.Ranga Vittal, Asst.Gen.Manager & Relationship
Manager AMT IV of the State Bank of India.
AW2 Sri.R.Srinivasa Sekaran, Senior Vice President
(Credit Admin) at State Bank of India
List of Documents Exhibited for the Applicant :
Ex.A1 : Affidavit of AW1
Ex A2 : List of Documents
Ex.A3 and A126 : 124 Documents
Ex.A127 : Affidavit of AW2
Ex.A128 to A137 : 10 documents
Witness Examined for the Defendants :

DW1: Sri.P.H.Thakur Asst.Commissioner, Service Tax.V
Commissionerate, Mumbai, Def.No.6
DW2: Sri.A.Raghunathan, Def.No.1
DW3: Sri.A.K.Ravi Nedungadi, Def.No.2
DW4: Sri.Vijay Mallya, Def.No.3
DW5: Sri.P.Subramani, Def.No.4
List of Documents Exhibited for the Defendants:
Ex.D1 : Affidavit of DW1
Ex.D3 : 1st list of documents
143 OA NO.766/2013
Ex.D4 : 2nd list of document

Ex.D5 to D27 : 23 documents as per 1st list
Ex.D28 to D48 : 21 documents as per 2nd list
Ex.D50 : List of documents
Ex.D51 to D75 : 25 documents
Ex.D77 : List of documents
Ex.D78 to D99 : 22 documents
Presiding Officer
DRT, Bangalore.

DRT Order On Vijay Mallya Case

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IN THE DEBTS RECOVERY TRIBUNAL, KARNATAKA

Dated this the 19th day of January, 2017

Present: Shri. K. Srinivasan

STATE BANK OF INDIA

And having its Industrial Finance Branch at

2. (Deleted as per order dated 13.06.2016)

at P.O. Box 11745,

General Bhosale Marg,

4. (Deleted as per order dated 13.6.2016)

5. (Deleted as per order dated 13.6.2016)

7. THE FEDERAL BANK LIMITED,

And having its branch

8. IDBI Bank Limited

And acting through its branch office at

9. INDIAN OVERSEAS BANK,

And its branch office at

10. JAMMU & KASHMIR BANK LIMITED,

11. PUNJAB & SIND BANK,

J.K. Somani Building, British Hotel Lane,

12. PUNJAB NATIONAL BANK,

Acting through its Large Corporate Branch

13. STATE BANK OF MYSORE

14. UCO BANK,

And its branch office at

15. UNITED BANK OF INDIA

Acting through its branch

16. JM FINANCIAL ASSET RECONSTRUCTION

2. United Breweries (Holdings) Limited

the Companies Act 1956 and having its registered office at

3. Dr. Vijay Mallya,

4. Kingfisher Finvest (India) Ltd

5. SBICAP Trustee Company Ltd

6. The Commissioner of Service Tax - I

7. Diageo Holding Netherlands B.V.

8. Unit Trust of India Investment

9. Standard Chartered Bank.

FINAL ORDER IN OA NO.766 OF 2013

1) The present Application is filed by the Applicants-Banks

under Section 19 of the Recovery of Debts Due to Banks

and Financial Institutions Act, 1993, against Defendants

No.1 to 4 for recovery of a sum of Rs.6203,35,03,879.42

(Rupees Six Thousand Two Hundred and Three Crores

Thirty Five lakhs Three Thousand Eight Hundred and

Seventy Nine and Paise Forty Two Only) as on 31.05.2013

with further interest thereon @ 15.20% p.a. with monthly

rests from 01.06.2013 till payment; and other consequential

2) The facts that led to filing of this colossal suit by the

AVERMENTS MADE BY APPLICANT BANKS IN BRIEF:-

i) According to the Applicants-Banks, 1st Defendant is a

Company carrying on business in Airlines. During the

year 2008 one M/s. Deccan Aviation Limited merged

with Defendant No.1-Company and the merged entity

was renamed as Kingfisher Airlines Limited, viz.,

Defendant No.1 herein.

ii) In the year 2005, Defendant No.1 approached the

Applicants-Banks for providing Working Capital and

Term Loan facilities including short term loans and

entered into respective loan agreements with the

Applicant-Banks. However, in view of the financial

difficulties faced by it, Defendant No.1 committed

default in repayment of such loans and on demands of

banks for repayment of the loans, the 1st defendant

requested applicant banks, inter alia, to restructure and