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UK court declared the fugitive Indian businessman Vijay Mallya, as “bankrupt”.

The British Court has given a Bankruptcy order against Vijay Mallya on July 26,2021, making it easier for the consortium of Indian Banks led by the State Bank of India to aspire a worldwide freezing order to seek repayment of debt owed by the now-defunct Kingfisher Airlines.

The chief Insolvencies and Companies Court Judge Michael Briggs stated in his ruling that, “As at 15.42 [UK time], I adjudicate Dr. Mallya Bankrupt.” over the virtual court hearing of the Chancery Division of the London High Court.


Vijay Mallya is a 65 year old Indian businessman and the owner of the now-defunct Kingfisher Airlines and the former member of Parliament (Rajya Sabha). He also owned Royal Challenger Bangalore- IPL Team.

He was born on December 18, 1955 in Kolkata. He was the only son of Indian entrepreneur and chairman of the United Breweries group, Vitthal Mallya. Vijay Mallya became the chairman of United Breweries Holdings Limited (UBHL) in 1983 at the age of 27 after his father’s death. He then raised his company swiftly. He increased the turnover of the company by 64% in 1998-1999. He expanded his business by purchasing many other companies. He also invested in newspaper business, chemical business etc. But he got to know that main potential is in Beer and Liquor business only. The company also achieved the milestone and became the 2nd largest spirits company in India under his control of chairmanship.

Vijay Mallya launched Kingfisher Airlines in 2005 with a vision of making it the best five-star airline in India. He wanted to expand his Liquor and Airline Business so he sold the another company formed by his father to fund his airline company. His airline company became India’s no.1 domestic airline company. Newly bought aircrafts, free meals, and in-flight entertainment made Kingfisher a great package in budget. Kingfisher also had separate first class department with free liquor service all these facilities made it the 1st choice of every passenger. Forbes also declared Vijay Mallya as the 40th richest person in India in 2007. Mallya however, was not just satisfied by domestic routes of his airlines and wanted to expand to international routes. But 5 years experience was missing, so the government of India couldn’t allow Kingfisher Airlines to fly international flights. To fly internationally, he leveraged United Breweries to buy Deccan Airlines which was a loss-making company and merged it with Kingfisher Airlines. But it couldn’t make profits. Therefore, in 2010 his business was undergone heavy loss.

To bring this business on track, he kept on taking loans continuously from banks. He gradually took 9000 crores by 17 banks. SBI Bank had announced him Bankrupt but other banks kept on lending him loans because of his status as he was a member of Rajya Sabha. Vijay Mallya’s Kingfisher Company also held service tax of passengers, PF, income tax of employees; but he didn’t give in anything to IT authorities. The company also didn’t pay the salary of its employees or ran out of cash due to which several employees came out in protests. Eventually on 20th October 2012, Kingfisher Airlines was shut and its license was cancelled. Vijay Mallya had the loan of 9,000 crores from different banks and he denied to pay this loan. Ultimately the company United Breweries forced him to resign the post of chairman and agreed to pay him $75M as severance payment, but Indian Courts obstructed this payment.

SBI and other banks filed the case against Vijay Mallya, he offered an amount of 4,000 crores for settlement but lenders demanded at least 4,900 crores. In early 2016, when Mallya was warned about his arrest he fled to United Kingdom on March 02, 2016 mentioning it was just a regular business trip to London.

Loans taken by Vijay Mallya:-

State Bank of IndiaRs. 1,600 crore
Punjab National BankRs. 800 crore
IDBI BankRs. 800 crore
Bank of IndiaRs. 650 crore
Bank of BarodaRs. 550 crore
United Bank of IndiaRs. 430 crore
Central Bank of IndiaRs. 410 crore
UCO BankRs. 320 crore
Corporation BankRs. 310 crore
State Bank of MysoreRs. 150 crore
Indian Overseas BankRs. 140 crore
Federal BankRs. 90 crore
Punjab and Sind BankRs. 60 crore
Axis BankRs. 50 crore

Who are the petitioners?

The petitioners in this case composed of consortium of 13 Indian Banks led by the State Bank of India. The other banks are Bank of Baroda, Punjab National Bank, Jammu and Kashmir Bank, Punjab and Sind Bank, State Bank of Mysore, UCO Bank, Corporation Bank, IDBI Bank, Indian Overseas Bank, United Bank of India, Federal Bank Ltd and JM Financial Asset Reconstruction Co. Pvt Ltd.

The petitioners also contained an additional creditor who had been seeking a bankruptcy order in the UK in context of judgement debt which stands at more than GBP 1 billion.

The consortium of Indian Banks had argued for the Bankruptcy order to be granted. Their representatives said “enough is enough, they have not been paid in full and not quantum of their debt is the subject of a serious dispute warranting the dismissal or further adjournment of the petition, bankruptcy order should be given no further delay”. They were presented by the law firm TLT LLP and barrister Marcia Shekerdemian.

Court denies Vijay Mallya permission to appeal:-

His barrister, Philip Marshall, requested a stay and postponement of the Bankruptcy order as long as legal challenges remain ongoing in Indian Courts.

However, the judge denied the plea, concluding that there was “insufficient proof” that the debt would be paid back to the petitioners in full within a reasonable time period.

Further, an application requesting permission to appeal against the order of Bankruptcy was given, but the judge has refused this as well, concluded that there was no “real prospect of success” of the appeal.

Vijay Mallya Case Highlights:-

  • The 65 year old fugitive businessman, Vijay Mallya is accused of fraud and money laundering allegedly equal to Rs. 9,000 crore.
  • He is under investigation by several agencies and faces charges of cheating, money laundering, criminal conspiracy and diversion of loan funds.
  • These are under investigation by the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), Securities and Exchange Board of India (SEBI) and Serious Fraud Investigation Office (SFIO) for loan defaults of over Rs. 10,000 crore to the consortium of Indian Banks led the State Bank of India.
  • Vijay Mallya had flew away to United Kingdom in 2016 and regardless losing all his court battles against extradition to India in May 2020, he still  hasn’t arrived back to India and still has been fighting in many aspects to avoid extradition to India.
  • He had fled to UK hours before the banks had moved to Supreme Court seeking his detention. India has since been involved in attempts for his extradition.
  • In January 2019, Mumbai High Court declared Vijay Mallya as an economic offender under the Fugitive Economic Offenders Act. ( A person can be termed as a fugitive economic offender under this Act, if there is any arrest warrant against the person for participation or collaboration in economic offences involving at least Rs. 100 crore or more than 100 crore and has fled from India to escape legal action.)
  • He has become the first person to be declared a fugitive offender under the Fugitive Economic Offenders Act.
  • The enforcement directorate has transferred assets worth more than 13,000 crore rupees to banks that suffered losses due to frauds by Vijay Mallya, Mehul Choksi and Nirav Modi.
  • ED said in a statement that “A Debt Recovery Tribunal (DRT) sold shares of United Breweries owned by its former chairman Vijay Mallya and seized by Enforcement Directorate (ED), for Rs. 5,824.50 crore on behalf of the consortium of Indian Banks”.
  • The consortium of Indian Banks had argued for an order that would make Mallya bankrupt for not clearing the judgement debt.
  • Mallya’s legal team contended that the debt remains disputed and the ongoing  proceedings in India obstructed a bankruptcy order from being granted in the UK.
  • The debt in question involves principal and interest at a rate of 11.5% per annum from June 25, 2013.
  • Mallya’s counsel Philp Marshall further argued that the bankruptcy petition should be dismissed.
  • The Judge Brigg declared Vijay Mallya Bankrupt.
  • “As at 15.42 [UK time], I shall adjudicate Dr. Mallya bankrupt”, Chief Insolvencies and Companies Court Judge Michael Briggs said in his ruling during a virtual hearing of Chancery Division of the High Court of London.
  • Further an application requesting permission to appeal against the order of Bankruptcy was given by Mallya’s legal team.
  • But the judge denied his appeal against the order of Bankruptcy concluding that there was “insufficient evidence” that Mallya will go back to India and that the debt would be paid to the petitioners in inside an inexpensive time.
  • Judge Briggs stated that “I have to decide if there is a real prospect of payment of petition debt in full within a reasonable period of time., there is insufficient evidence that he will pay the debt in full within a reasonable period of time”, in reference to defence arguments pointing to a restoration process in India following a Prevention of Money Laundering Act court order for the attachment of Vijay Mallya’s assets.
  • The judge concluded “In my judgement, the sums provided to date are conditional., there is no evidence Dr. Mallya will go back to India to deal with the criminal trial and seek to unlock the allocation of realisations which have been made”.
  • For the time being, Vijay Mallya remains on bail in the UK while a “confidential matter”, perhaps is related to a political asylum in the United Kingdom, in reference to unrelated extradition proceedings.

What happens when a person is declared bankrupt?

  • Bankruptcy is a legal proceeding of a person or other entity that cannot repay debts to creditors. In most of the countries, bankruptcy is imposed by a court order.
  • The bankruptcy process begins when a debtor or creditor filed a petition.
  • All of the debtor’s assets are measured and evaluated, and the assets would be used to repay debt.
  • Under UK law, the bankrupt person must cooperate with the Trustee in Bankruptcy. Once a bankruptcy order is made there is an vesting of all of the bankrupt’s assets in a Trustee in Bankruptcy, who will investigate his affairs and establish his true assets and liabilities, with a purpose to selling relevant assets and paying back to the creditors of bankrupt person.
  • A bankrupt person is subject to certain restrictions, he may not raise credit more than  £500 without declaring he is bankrupt to the person whom he is borrowing.
  • He wouldn’t act as a director of a company.
  • The person is also subject to give information to his trustee and to cooperate with him in the administration and investigation of his affairs.
  • A bankrupt person is automatically discharged from their bankruptcy after 12 months (1 year) unless an order is made suspending this discharge.
  • In cases where the bankrupt is considered culpable for his insolvency, bankruptcy restrictions order may be made to widen some of the restrictions of bankruptcy for up till 15 years.

Hence, Vijay Mallya’s all bank accounts will now get frozen except the money to buy necessities. He will now have to transfer all his assets, his banks and credit cards to a bankruptcy trustee. He will now also be banned from performing as a director of a company or from generating a company without court’s permission.

What does this mean for Indian Banks?

The ruling is considered big win for Indian Banks , The London High Court had declared Vijay Mallya Bankrupt, and this paves the way for consortium of Indian Banks led by the State Bank of India (SBI) to recover debt from the loans taken by Vijay Mallya. They can now pursue a worldwide freezing order to seek repayment of the debt owned by the now defunct Kingfisher Airlines. Vijay Mallya’s business interests ranged from aviation to liquor, his airline kingfisher had borrowed large amount of money from Indian Banks. The move now allows the banks to seize his Indian assets.

India and its extradition plea for Mallya:-

Vijay Mallya is wanted in India for economic offences. He is accused of fraud, criminal conspiracy and money laundering allegedly equal to Rs. 9,000 crore. He had taken 9,000 crore loan from several banks and denied to pay them back. When the banks filed the case against him, he fled to United Kingdom before any proceedings could even start. Since he had fled to UK, India had filed a plea for his extradition. In international law, extradition is a formal and judicial process where the request has been made by one country to another to return the custody of a criminal. Basically, it is the legal process by which a person is transferred from one country to another without the person’s consent. It is a judicial process, here a governmental authority legally turns over an alleged criminal to another government for the person to face prosecution for a crime. In India, the extradition of a criminal or fugitive is administered under the Indian Extradition Act,1962. This is for both extraditing of person to India and from India to foreign countries. The foundation of the extradition could be a treaty between India and another country. 42 countries has extradition treaties with India. In the year 2017, London magistrate court had ordered his extradition to India an gave 14 days to appeal the decision. In that 14 days he had secured the bail in an extradition warrant issued by Scotland Yard and since then his extradition has been propounding up and back, and no complete decision could be come to know.

India termed Vijay Mallya as an economic fugitive offender and started legal proceeding to extradite him back for trial in an Indian Court. He is still fighting his case in UK to avoid extradition to India. Vijay Mallya has been residing in the country for the past 5 years. The 65 year old fugitive Indian businessman remains on bail in the UK while a “confidential legal matter”, believed to be associated to an asylum software in the United Kingdom, in reference to unrelated extradition proceedings.


The British Court declared fugitive Indian businessman Vijay Mallya bankrupt. It is the major victory for Indian Banks. The consortium led by the State Bank of India can now recover the loans given to defunct Kingfisher airlines by seizing Mallya’s Indian assets. Mallya has also been denied from any right to appeal against the Bankruptcy verdict by the UK High court. Indian Banks can now pursue a worldwide freezing order on Mallya’s assets to seek repayment of debt owed by his now-defunct Kingfisher Airlines. In the meantime, Vijay Mallya remains on bail in the United Kingdom while a “secret legal matter”, believed to be related to an asylum application, is resolved in connection with the unrelated extradition proceedings.


  1. (Last modified on July 26,2021 11:33 IST)
  2. (Last modified on July 26,2021 22:16 IST)
  3. (Last modified on July 26,2021)

Author: Nivedita Singh , Maharaja Agrasen Institute of Management and Studies

Editor: Kanishka VaishSenior Editor, LexLife India.

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