State Bank of India (SBI), the country’s largest lender by assets, is set to take possession of Kingfisher House, one of the prime real estate properties of the group, intensifying its battle against Vijay Mallya’s Kingfisher Airlines to recover its long-pending dues.
SBI has received a favourable court order to this effect from the Chief Metropolitan Court in Mumbai, according to a senior SBI official.
“CMM (Chief Metropolitan Magistrate), Mumbai has upheld our claim to take physical possession of Kingfisher House. We are proceeding with further formalities,” the official told News At Click.
The ruling came after SBI moved the court claiming the property under the Sarfaesi Act to recover at least part of its dues.
The grounded airline, which owes about Rs 7,000 crore to a clutch of banks, has an exposure of about Rs 2,000 crore to SBI alone, making it the largest lender to the firm. This includes an interest overdue.
Kingfisher House, one of the major properties of Mallya spread over 17,000 square feets, houses some of the key offices of Kingfisher. According to the SBI official, the bank has initiated the process to take control of the property.
To be sure, even if SBI manages to take possession of the property and sell it, that will help the lender to recover only a fraction of the total repayment obligations.
A consortium of banks, which lent thousands of crores to Kingfisher over years, have been struggling hard to recover their dues from Mallya.
The lenders have embarked upon a legal battle with the airline and its promoters across various courts after Mallya sought legal intervention on the matter.
Last year, Kolkata-based United Bank of India (UBI) had tagged Mallya as wilful defaulter, even though Mallya managed to get a stay from the Kolkata High Court on technical grounds. UBI is currently in the process of classifying Mallya as a wilful defaulter again.
A wilful defaulter is a borrower who does not pay back money to the bank even if he has the capacity to do so. Typically, such a scenario arises either due to the diversion of funds from the intended purpose or a case of financial fraud.
Once a borrower is tagged as wilful defaulter, the company, its promoters or directors, cannot access the financial system or take charge of operations in any other companies.
SBI too is going ahead with the process to declare Mallya as a wilful defaulter at the earliest even as the liquor baron continues to take on the lenders in court rooms seeking legal protection on the matter, the official said.
SBI had first issued a wilful defaulter notice to Kingfisher in September but since then Mallya has moved the courts seeking legal intervention.
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