The High Court of Karnataka
Observing that a consortium of banks has already recovered assets worth ₹14,131.6 crore from fugitive businessman Vijay Mallya against an outstanding loan of ₹6,203 crore extended to the now-defunct Kingfisher Airlines, the High Court of Karnataka has questioned the banks’ action of continuing claim over 2.09 crore shares of United Breweries Ltd., (UBL) held by him and his son before they were attached by the authorities.
The court noted that Union Finance Minister Nirmala Sitharaman had informed the Lok Sabha on December 17, 2024, that assets worth ₹14,131.6 crore, besides UBL shares, had been restored from Mr. Mallya to the consortium of banks.
A Division Bench comprising Justice D.K. Singh and Justice T.M. Nadaf made these observations while allowing two petitions filed by Diageo Holdings Netherlands B.V and setting aside the 2017-18 orders passed by the of the Debt Recovery Tribunal (DRT) and Debt Recovery Appellate Tribunal (DRAT), which had the consortium of banks to attach 1,04,86,666 UBL shares held by Vijay Mallya and 1,04,64,288 shares jointly held by him and his son, Siddhartha Mallya.
At present these shares form part of attachment of assets made by the Enforcement Directorate under the Prevention of Money Laundering Act.
No justification
“We are of the view that when the consortium of bank’s claim for their dues against the loan of ₹6,203 crore has got almost settled by making recovery of assets worth more than ₹14,131.6 crore, there would be no justification for their claim over the UBL shares,” the Bench observed.
Further, the Bench observed, “More than anything else, we are also of the view that it is Vijay Mallya’s flamboyant lifestyle, excessive personal indulgence and his personal vanity are coming in the way of giving quietus to the claims of the consortium of banks against the loan of ₹6,203 crore advanced to the defunct Kingfisher Airlines Ltd.”
However, the Bench made it clear that “it is for the consortium of banks and the Government of India to give quietus to the proceedings when ₹14,131.6 crore worth of assets have been restored to the consortium of banks against their loan of ₹6,203 crore.”
The Bench held that the pledge of the UBL shares in favour of Standard Chartered Bank (SCB), United Kingdom, whose rights were subsequently acquired by Diageo after it discharged the loan obligation of an Mallya’s oversees company Watson Ltd., had priority over the claims of the State Bank of India-led consortium of banks.
“...the share pledge agreement dated July 29, 2013 executed by Vijay Mallya and Sidhartha Mallya over the UBL shares [in favour of SCB, UK] would have priority over the consortium of banks as they held only a personal guarantee and an unsecured negative covenant,” the Bench said.
Contrary to records
The Bench also rejected the DRAT’s observation that Diageo was part of the Mallya group, stating that this was contrary to the record and the banks’ own case. The Bench described the transactions involving Diageo, SCB, Watson and the Mallyas as bona fide commercial transactions.
On consortium of banks’ allegation that pledging of shares to SCB, U.K., was a violation of an oral undertaking given by his advocate before the before the DRT, the Bench, while noticing that the oral undertaking was not recorded in writing by the DRT, said that “an oral undertaking which was not recorded in the court’s order will not by itself nullify the pledge subsequently created.”
Published - October 15, 2026 07:08 pm IST